In a note to clients, UBS analyst Scott Russell said the reinsurance news was timely given the recent weather activity over greater Sydney - which is too early to quantify.

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But Russell warned the lift in Suncorp’s natural hazard budget to $1.16 billion could be too light if “elevated weather activity” persists. “If FY23 were to experience similar weather pattern events to FY22, we estimate the new arrangements would produce net losses around $200 million higher versus the prior corresponding period,” he said.

There have been concerns that reinsurers are losing interest in Australia because of the escalating risk profile and that higher costs will need to be passed onto customers in the form of higher premiums.

Suncorp’s Johnston has previously called on the government to make insurance tax-free due to premiums soaring in the face of repeated natural disasters, as the insurer takes control of its supply lines in the face of rising inflation.

Johnston claimed GST, stamp duty and the emergency services levy make up between 30 and 45 per cent of premiums sold in Queensland and NSW.

The recent east coast floods exposed the creeping affordability crisis of insurance premiums in communities that are affected by extreme weather, with thousands of uninsured people grappling with how to rebuild their homes.

Suncorp said it was making good progress on flooding claims from earlier this year with around 1000 additional staff recruited to fast track repairs.

Last week, Suncorp confirmed it was contemplating a potential demerger of its smaller banking business.

The insurer’s shares closed slightly higher at $11.02 on Monday.