IAG is “super focused” on insurance affordability after its first-half results revealed the toll of rising premiums on customers.

Rate rises affected new business volume growth in the July-December period, with the Direct Insurance Australia personal lines division recording net growth of only about 21,000 customers.

“We’re super focused on ... the affordability of what we do to the communities of Australia and New Zealand and we’ve had significant changes in the cost structure of our businesses,” CEO Nick Hawkins said on Friday during an earnings call.

“As you know, reinsurance perils, inflationary pressure … we know that’s resulted in higher premiums and we know that’s put more pressure on household budgets. So that’s worrying ... we’re looking at lots of ways to try to ease that because we know that’s difficult to sustain.”

He says the insurer has made changes to take the pressure off its cost base, such as improving its repair operations, but the outlook for personal motor is better than for property, which faces cost pressures from rising reinsurance rates as frequency and severity of events is increasing.

“That outlook’s pretty tough and so I don’t think we can walk past that, and that’s why stakeholders are engaging in those sort of medium-term issues ... investment [in] mitigation, strengthening the resilience of our country are really important.”

IAG made a first-half insurance profit of $614 million, up 75.4% from a year earlier.

Higher premium increases across IAG’s three divisions – Direct Insurance Australia, Intermediated Insurance Australia, and New Zealand – drove the first-half result, leading gross written premium to increase 12.5% to $7.94 billion. That rise is the strongest in nine years and exceeds the 7.5% increase from a year earlier.

Group net profit after tax declined 13% compared with a year earlier to $407 million, with the weaker result attributed to the previous corresponding half benefiting from a $360 million pre-tax business interruption claim provision release.

Direct Insurance Australia made an insurance profit of $248 million, up from $167 million a year earlier; Intermediated Insurance Australia’s insurance profit increased to $162 million from $49 million; and New Zealand’s insurance profit went up to $204 million from $136 million.