Executives at Australian financial services giant Suncorp Group said that the newly created federal cyclone reinsurance pool has become a stabilizing force for catastrophe-exposed portfolios and cushioned the reinsurance spend against severe weather, but even a federal backstop may not overcome the future increased physical risk faced by many of its customers.
"In terms of the future in the hands of the gods to some extent, I would call to the point that the favorable reinsurance renewal that we just completed, we have taken the opportunity to further increase that allowance, build more resilience into it, prepare ourselves, obviously, in a world where these events are increasing so that we can absorb the financial cost within the allowance not exceed the allowance at the expense of our shareholders," Suncorp CEO Steve Johnston told shareholders last week.
Cyclone Pool Takes The Immediate Pressure Off
Johnston credited the government's cyclone reinsurance pool with reducing the financial strain of Cyclone Alfred.
