Gympie storm knocks Youi profits for six
SEVERE hailstorms in Gympie and Sydney have helped squash profits at Sunshine Coast-based insurer Youi.
Investments in marketing and call centres, along with regulatory compliance costs, also hurt earnings at the 11-year-old insurer.
Youi posted an operating half-year profit of $46 million, down from $51 million, according to accounts released by Youi's South African parent firm Outsurance Holdings.
It is reversing a decline in gross written premiums - a measure of customer and price growth. While Youi had started life with rocketing growth in GWP, carving out market share from the likes of sector giants Suncorp and IAG, that trajectory had crumpled in recent years.
But things are improving again, with GWP rising 2.9 per cent to $351 million in the last half. A spokeswoman said it was "largely driven by an increasing number of policies for the period”.
Youi's latest result was also banged up by two large hailstorms - one in Gympie in October and another in Sydney in December - with losses capped at $17 million after reinsurance, which is disaster insurance for insurers.
The industry suffered another battering again in February with flooding in Townsville, which would affect upcoming results. "It is still too early to confirm total costs for Townsville, however, we see a reinsurance trigger as a likely scenario,” Youi's spokeswoman told The Courier-Mail.
That would see it join insurers including Suncorp and RACQ in using reinsurance to cover the Townsville flooding.
Cost-to-income ratios, a measure of efficiency, was squeezed at Youi in the last six months from 29.5 per cent to 30.7 per cent.
"This outcome is attributed to large investments in support infrastructure, call centre capacity and marketing initiatives to drive increased new business activity. The low levels of premium inflation as well as regulatory compliance expenses also contributed to the higher cost-to-income ratio,” the accounts said.
Youi flagged "very low premium inflation” in motor insurance. That contrasts with some figures industrywide, with latest Insurance Council of Australia statistics show between the December quarter 2017 and December 2018, motor insurance premiums rose by 5.5 per cent.
For building insurance, ICA figures noted a 4.9 per cent lift.