Vero faces bigger bill for Canterbury quakes because of new over-cap EQC claims

Friday 12th February 2016

Vero New Zealand, the general insurer owned by Australia's Suncorp Group, has increased its assessment of the likely cost from the series of Canterbury earthquakes by $123 million, largely because of new claims that exceed the Earthquake Commission's $100,000 cap.

Chief executive Paul Smeaton told BusinessDesk the insurer anticipates its share of the 585 over-cap EQC claims will be about 125, which have been accounted for in its latest results. At the insurer's current pace, Smeatson expects to complete the quake programme before Christmas.

The increase in over-cap claims and an unexpected increase in the frequency of commercial claims weighed on Vero's first-half earnings announced yesterday. Suncorp's New Zealand general insurance division posted a 17 percent drop in trading profit to $83 million as a 15 percent increase in claims to $303 million offset a 2.7 percent increase in gross written premium to $681 million.

"Our view is that in the second half that will normalise and our profit will improve as a result of that," Smeatson said.

Vero joins other insurers that have increased the likely bill of the Canterbury quakes, with more complex claims taking longer to sort out and as repair and rebuild costs rise.

Smeaton said Vero's growth in gross written premiums outperformed the wider sector, with a 10 percent increase in motor premiums getting a boost from the insurer's corporate relationships.

BusinessDesk.co.nz

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