IAG outlines affordability steps at shareholder meeting
IAG CEO and MD Nick Hawkins says the insurer will “focus on building customer and community resilience” to address rising costs.
Fielding questions at last week’s annual general meeting, he acknowledged the difficulties customers face amid higher premiums, which he said are driven by increased supplier, parts and trade costs.
He said the insurer is working to address the increases, including new arrangements with reinsurers – a “major driver of the cost of property insurance of the last couple of years”.
“We are also doing what we can to manage our own costs, which, of course, helps our customers. A good example is the multi-year reinsurance perils cover we announced in June, which helps stabilise the impact of increased reinsurance costs in the event of further extreme weather.
“Encouragingly, when we look ahead for our customers, we see the potential to limit future premium increases driven by reinsurance and natural perils costs.”
IAG expects the arrangements with Berkshire Hathaway’s National Indemnity Company and Canada Life Reinsurance will bring up to $680 million in additional protection a year across the five-year program.
Mr Hawkins also detailed the insurer’s work to extend temporary accommodation arrangements and introduce flexible payment schemes for customers.
He said the group is reviewing the federal flood inquiry report, which is an “important opportunity” for the industry to “listen, learn and build on the changes we have already made since those floods”.
IAG chair Tom Pockett responded to a shareholder’s question about the insurer’s previous failure to provide promised discounts, after the Australian Securities and Investments Commission launched action against QBE last week.
IAG was fined $40 million last year after it failed to provide discount promises offered to customers under its NRMA-branded motor, home, boat and caravan policies.
“We advised ASIC of the issue, and we went about a process of refunding all those mispriced policies in a very orderly and timely fashion,” Mr Pockett said. “This was undoubtedly an issue that happened. We found it, we corrected it, we reported it to the authorities, and we have strengthened our controls around the matter and we’re confident these matters won’t rise again.”