A turnaround in Australia’s weather patterns appears likely to shine on our insurers, with fewer storms likely to boost their profits.

Suncorp Group (ASX: SUN) believes that the company will see less claims this year, following natural disasters like last year’s hail storm on Christmas Day in Melbourne, and widespread flooding in Queensland and Northern NSW, according to The Australian Financial Review.  Suncorp and Insurance Australia Group (ASX: IAG) were both hit by a deluge of claims last year.

Suncorp’s chief executive, Patrick Snowball, has told the newspaper that the company’s insurance business was stabilising, and was hopeful of seeing a return to revenue and profit that he expects from a business of Suncorp’s size.

Suncorp alone has paid over $1 billion in additional reinsurance expenses over the last five years, and was hit with $1.2 billion in claims above what it had normally budgeted for major events and catastrophes.

QBE Insurance (ASX: QBE) reported a 13% increase in profits to June 2012, after the cost of large individual risk and catastrophe claims dropped significantly in the 2012 financial year. Claims dropped from over US$1 billion down to US$592 million.

Most major insurers have increased their premiums in the wake of several natural disasters in Australia and New Zealand. Canstar research shows that the cost of insuring a home in Melbourne and country Victoria had increased by an average of 31% over the last year. Some insurers are even refusing to offer cover in high-risk zones such as those prone to flood, fire or cyclones; or are pushing premiums so high, people are forced to go elsewhere.

Many home insurance policies don’t have automatic flood cover, and the addition of this as standard has been the main cause of higher premiums. The government has implemented new regulations for flood cover that come into effect in June 2014, and it appears the insurers are starting to make the changes now in response to those new regulations.

Despite Suncorp’s views, the Insurance Council of Australia has warned that bushfires were more likely in coming months than over the previous couple of years. The wet weather Australia has seen over the past two years, means grasslands have grown dramatically and provide an abundant fuel source for bush fires.

The Council has urged households to review their levels of insurance for both their home and contents and their vehicles, and to ensure they knew what was and wasn’t covered.

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Motley Fool writer/analyst Mike King owns shares in QBE. The Motley Fool’s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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