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Suncorp-Metway Limited (SUN) said its general insurance business would improve its underlying margin by at least 3% over the next two years. The company said the improvement in the underlying insurance margin would be underpinned by the group’s Building Blocks program, which would deliver $235 million in annual benefits by June 2013.

Suncorp said the program would consist of five key projects providing one view of insurance pricing and claims, as well as the group’s customers, employees and finances.

The company said project costs of $120 million would be absorbed within the existing cost base by cutting discretionary spending and redirecting other capital expenditure.

CEO, Patrick Snowball, said Suncorp’s move to a functional model and a single view of pricing and claims would ensure the general insurance business leverages scale advantages across all of its brands and unlocks the potential in functional capability that has not been realised to date.

Personal insurance chief executive, Mark Milliner, said the strategy was to move from a portfolio of separate businesses to a single functional model.

“One pricing system and one pricing team gives us a consistent view across the portfolio and minimises conflicts between brands, which will help lift yield on new and renewal policies,” Mr Milliner said.

“A single claims model will reduce repair costs and times and optimise our purchasing systems but, more valuably, it will allow our brands to share knowledge and resources when and where it matters most.”

The company said its commercial insurance business is targeting market share growth, particularly in the SME segment.

Commercial insurance chief executive, Anthony Day, said the commercial insurance business would also benefit from simplified structures that reduced duplication and contained expenses.

Suncorp said its Vero New Zealand business plans to double sustainable net profit after tax by June 2013.

As at 1025 AEST, Suncorp-Metway shares were down 18c to $7.81.

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