Suncorp CEO Steve Johnston has voiced support for the Federal Government’s $10 billion guarantee to set up a cyclone reinsurance pool for northern Australia, saying the insurer is keen to use its knowledge of the region to help with the design of the scheme.

“At Suncorp we stand ready to support the Government’s efforts to improve insurance affordability in northern Australia through the establishment of a reinsurance pool,” Mr Johnston told an investor forum this morning.

“In terms of the pool, it’s very early days but our discussions with the Government to date have been both constructive and well intentioned.

“As the region’s largest insurer, we understand the issues better than anyone and we’re looking to take an active role in helping design the scheme.”

Suncorp and the insurance industry at large have long opposed a reinsurance pool, preferring instead that the Government direct its resources into mitigation works, although Allianz has been in favour of it.

However since the Government announced last week it would go ahead with the reinsurance pool, ending weeks of speculation, the insurance industry has pledged its support for the scheme.

The Insurance Council of Australia says the industry will work with a Treasury-led taskforce on the design and operation of the pool, which will come into effect from July next year.

Mr Johnston also touched on how Suncorp has performed so far in this current financial year.

He says the general insurance business continues to perform well after achieving a 39.5% rise in first-half cash profit to $509 million.

“While the weather has continued to be challenging, this underlying momentum has continued into the second half,” Mr Johnston said.

“Our Q3 valuations across insurance point to continuing favourable experience for long-tail portfolios and the overall adequacy of our [business interruption] reserving.

“In the [first-half] result we appropriately provided for business interruption claims… and unlike many of our competitors, we avoided deeply discounted ... capital raising through the COVID period.”

He says the business has got about $60 million remaining in its budgeted natural hazard allowance with some six weeks to go before this financial year ends.

“So I guess the way I would look at that in the construction of the allowance… you know going to a La Nina weather pattern and to have landed about where we are today is not a bad outcome I think in the context of historical La Nina years,” Mr Johnston said.

“But I caveat it by saying we’ve got six weeks to go and there’s a bit of weather around at the moment so we continue to monitor that very closely.”

Suncorp Insurance Product & Portfolio CEO Lisa Harrison says the business will use a new pricing engine later this year for some of its home brands.

She says CaPE - acronym for Customer and Pricing Engine – will be a “huge positive” for the business.

“It will allow us to utilise real time data, it will allow us to utilise customer data and regularly update our risk selection factors,” Ms Harrison said.

“So that’s hugely important for us to get the appropriate balance in place in terms of both pricing for risk and being disciplined in pricing for risk and ensuring an optimal customer and unit outcome.”