Suncorp, which owns a 50 per cent stake in AA Insurance, has warned of premium increases as it battles rising costs from repairing damaged cars and houses as well as an increase in the EQC levy.

The New Zealand arm of the ASX-listed Suncorp Group revealed a net profit after tax of $165 million for the year to June 30 - down 23 per cent on the prior financial year.

Suncorp NZ chief executive Jimmy Higgins said it had a disrupted year with the impacts from Covid-19 causing a war for talent in the tight labour market and employee sickness.

"Multiple weather events experienced during the year resulted in the highest volume of claims since 2018; and customers experienced longer waiting times for repairs to their homes and vehicles because of the delay in getting materials."

On top of that it had experienced a volatile investment market.

Its general insurance business, which includes Vero Insurance, Vero Liability and AA Insurance, which it owns jointly with the NZ Automobile Association, saw a 15 per cent fall in its net profit to $150m.

Gross written premiums were up 14 per cent through a combination of customer growth and premium price rises that were needed to offset inflation pressures.

Higgins warned that premiums would continue to be impacted by the pressure on materials and labour costs in repairing homes and cars, as well as the increases in Toka Tū Ake EQC levies following the increased EQC cap changes in October later this year.

"The tight employment market and the living cost pressures in New Zealand makes it difficult to attract and compete for talent in other countries," Higgins said.

Storms like the one that hit Westport last year have pushed up reinsurance costs. Photo / George Heard

The industry was also facing headwinds with natural hazard weather events becoming more frequent and expensive, which had resulted in significant increases to its reinsurance costs.

"The strength of our reinsurance programme allows us to provide insurance protection to customers throughout New Zealand and we are continuing to provide support to those customers that experience vulnerabilities, particularly as they manage through the costs of living pressures that exist in New Zealand today."

Life insurance

Its life insurance business Asteron Life reported an after-tax profit of $15m - down $23m on the prior financial year - due to the adverse impact of the rising interest rate environment.

Higgins said new business was in line with the prior period despite the disruptive year for advisers due to Covid-19 and business interruptions from ongoing regulatory and licensing changes.

"Our Asteron Life business continues to perform strongly, maintaining margins in line with growth and producing positive net experience profits."

Higgins said a key focus for Asteron Life was assisting customers to access insurance benefits despite the current capacity constraints of the New Zealand health system as a result of Covid-19, which had caused delays in surgeries and rehabilitation.

"The current environment presents challenges from economic factors and New Zealand's health system constraints, together with emerging risks around potential impacts of Long Covid, and market disruption from the proposed New Zealand Income Insurance Scheme."

Higgins said when it came to the insurance scheme it was critical to think about the role advisers played in financial advice and literacy.

"Equally important is ensuring customers have access to quality case management and rehabilitation services that are essential for good customer outcomes especially for longer duration claims. Asteron is monitoring these risks and is well placed to meet these challenges," he said.

Parent company Suncorp Group announced a net profit of A$681m, down 34 per cent.