Cheap capacity means no ILS for Suncorp

The availability of cheap reinsurance in the Australian market has made it unnecessary for Suncorp, one of the biggest insurers in Australia and New Zealand and one of the largest users of reinsurance in the world, to tap the insurance-linked securities (ILS) markets so far, the company’s buyer said.

But he added that the option is on its radar and it does consider all the risk transfer options available to it.

Anthony Day, the chief executive of Suncorp Commercial Insurance, which ceded around A$1 billion of business in the 2013/2014 period, said that in a market characterised by significant capacity and benign losses, it has achieved rate reductions across the board.

This has made it unnecessary to seek alternative forms of risk transfer.

“The availability of traditional capacity at competitive terms, combined with the robust regulatory environment in Australia, means that alternative risk transfer mechanisms have not been utilised. Nevertheless, we continue to review and consider options that are available,” Day said.

He added that the ILS markets are not currently utilised by Suncorp except via transformers to replicate traditional capacity. They make up less than 5 percent of overall placement.

Day joined Suncorp in 2008, bringing with him some 30 years of experience working with local and international insurers in various claims, underwriting and senior management positions. He was appointed commercial insurance CEO in 2009.

Suncorp is Australia’s largest general insurer and largest personal injury insurer. Day is responsible for the group’s Australian commercial insurance operations which include the Suncorp, GIO and Vero brands, as well as the workers’ compensation and compulsory third party insurance businesses.

The group’s reinsurance team is part of the commercial insurance division, reporting to Day. He, in turn, reports to the group CEO.