In results released this month from Youi’s parent, South Africa-based Outsurance, the Australian operation said underlying earnings rebounded to $117 million in the year ended June 30 from the year-earlier $37 million.
“Strong premium growth continued and favourable weather conditions supported the significant increase,” the accounts said.
Youi, which came to Australia in 2008, uses reinsurance, which is insurance for insurers for protection in big disasters.
But the accounts noted a hardening reinsurance market – where prices become higher and conditions tougher – was “particularly prominent in Australia” following “higher frequency and severity of natural perils events”. East coast flooding early in calendar 2022 alone cost the industry almost $5.9 billion.
Youi this year retained reinsurance for a big disaster, triggered after $40 million in damage from one event. But it did not renew “aggregate” reinsurance, which offers protection after an accumulation of smaller wild weather events and in theory smooths out an insurer’s results.
“Aggregate natural perils treaties are no longer available at affordable outcomes,” the accounts said.
While the sector had a relatively benign financial year 2022, and might suffer less damage in a dry El Nino spell this year, Mr Simpson said it was tough to predict how quickly reinsurance providers would come back.
“You’ve got to become more and more optimistic as there are more and more … near clean years,” he said. But he added international and local factors would impact the availability of reinsurance.
Like other companies, Youi’s result noted a customer satisfaction index had fallen to 86 per cent from 88.2 per cent. The decline fall outpaces yearly gains achieved since 2019 for Youi.
The fall was linked to factors including increasing prices and Youi’s taking on new staff as it expands. Strategies were in place to improve customer interactions, Youi said.
Its gross written premiums, measuring changes in customer numbers and pricing, rose 21.5 per cent to $1.37 billion, with the lion’s share in its home and car insurance. Youi said premium rises had “accelerated sharply since the latter part of the 2022 financial year”, blaming higher repair and reinsurance costs, and pricing for natural disasters.
Mr Simpson said premiums for home and motor cover were lifting in the “early double-digit” percentage levels.
