IAG customer retention rates high despite rising premiums

IAG says customer retention rates are the strongest it’s seen despite premium increases put through in response to the high level of natural catastrophe claims and inflation impacts.

CEO Nick Hawkins told the annual general meeting (AGM) this morning that claim lodgements from extreme weather events across Australia and New Zealand doubled last financial year.

“In this environment, we have been increasing our premiums, but we are also heartened by the high retention rates, which are the strongest we have ever seen,” he said.

The company has received about 2000 claims following the latest NSW, Victoria and Tasmania flooding.

Mr Hawkins said greater earn-through from premium increases, which also reflect anticipated higher reinsurance costs, will be seen in the second half as policies are renewed.

IAG reiterated its forecast for mid-to-high single digit growth in gross written premium (GWP) this fiscal year while reported insurance margin guidance remains for a range of 14-16%.

“We are seeing a continuation of trends evident from last financial year,” Mr Hawkins told the AGM, which was held as a hybrid event in Sydney and online.

IAG was questioned at the meeting about its cyber security protections and the holding of customer data.

Director David Armstrong, standing in for Chairman Tom Pockett, said the company took cyber and data risk seriously and had multiple layers of defence in place to help mitigate the risk.

Mr Armstrong said legal data retention standards and schedules varied according to information involved and IAG would continue to review schedules.

“The Optus breach in particular has caused a lot of organisations to rethink their data policies and procedures and we will be undertaking a review in that regard,” he said.

IAG reported that it was on track to meet its target to cease insuring entities mainly in the business of extracting fossil fuels, including oil and gas, and power generation from coal by the end of this financial year.

Mr Armstrong said the company, which doesn’t invest in companies involved in thermal coal mining, was also reviewing its policy in relation to investments in companies involved in the extraction of other fossil fuels.

As of June 30, the insurer’s underwriting exposure to the fossil fuel extraction sector was less than 0.01% of total GWP, while it currently has only two investments related to gas and oil, he said.