Shares in general insurance provider Suncorp Group Ltd (ASX: SUN) have crashed 9.5% today after the business warned that its half-year margins would be down for the six-month period ending December 31 2015.
The group blamed the squeeze on the increased cost of claims thanks to adverse weather events and a lower Australian dollar. The impact on the underlying margin in the personal insurance business was described as "significant" and will test the group's recent focus on efficiency-led profit growth.
There is little an insurance business can do in the face of an increased volume and cost of claims other than price in premium growth, although this is not possible after the event and the competitive general insurance market means consumers will simply look elsewhere if premiums rise ahead of competitors.
Suncorp did state that it expects to report gross written premium growth for the six months ending December 2015 as the group confirmed its half year results will be released on February 11 2016.
Suncorp's problems are also dragging down general insurance rival Insurance Australia Group Ltd (ASX: IAG) today as its shares fall 4% to $5.20, while QBE Insurance Group Ltd (ASX: QBE) is also down 3.3% to $11.75.
