What do IAG NZ’s financial results really say?
What do IAG NZ’s financial results really say? | Insurance Business New Zealand
Insurance News
What do IAG NZ’s financial results really say?
“Affordability is a challenge,” says CEO
Insurance News
By
Daniel Wood
“Today’s results reflect the progress we have continued to make against our strategic priorities,” said Amanda Whiting (pictured above). “Our focus continues to be on delivering for our customers by building a strong and resilient insurance business.”
The CEO of Insurance Australia Group (IAG) New Zealand was commenting on her firm’s half yearly financial results on Friday last week.
“That’s the challenge of our industry isn’t it?”
Soon after their release on Friday, Insurance Business asked Nick Hawkins (pictured immediately below), IAG’s CEO and managing director, how he interpreted his firm’s New Zealand results?
“New Zealand’s had a tough calendar year in 2023,” said Hawkins. “Obviously, it had significant perils in the North Island, Auckland and the broader North Island in the first half of the calendar year.”
He said the timing of these natural catastrophes illustrate one of the insurance industry’s biggest challenges.
“What we saw on the second half was very low perils,” said Hawkins. “So that’s the challenge of our industry, isn’t it? The way we have to scale up and deal with these large events and then, actually, the results for the headline numbers for New Zealand are pretty good – that was predominantly because perils were very low.”
Insurers as “shock absorbers”
The CEO said this “reminds everyone” of the important role insurers play as “shock absorbers.”
“That we’re really able to take on their [consumers’ and businesses’] risk and then when they have these big moments that we play a pretty important role,” said Hawkins.
What’s behind GWP increases in New Zealand?
IB asked about the GWP increases for New Zealand that showed nearly 19% growth. What are the main drivers?
“It’s the same themes we’re seeing in Australia,” he said. “We, along with the industry, have had significantly higher reinsurance costs that we’ve had to face into in that market, together with our own assumptions around perils, together with inflationary pressure.”
He also mentioned the familiar issue of supply chain costs, including parts and labour.
“We’ve had to reflect that in pricing back to our customers,” said Hawkins.
Solid results but it’s “tough out there”
He suggested there were no surprises in the results.
“We’ve said it’s a solid result, [and] we can see the momentum that we’re building across the business,” said Hawkins. “Importantly, we set out a plan and a strategy and you can see evidence in the results of us delivering against that.”
However, he said his firm is also reflecting on how “it’s pretty tough out there” on the budgets of households and businesses.
“We’re definitely acknowledging that affordability is a challenge in Australia and New Zealand,” said Hawkins. “Insurance [cost] is not helping with that.”
He referred again to the industry’s own input costs issues.
“We know that’s impacting our pricing,” he said. “It’s pretty tough and affordability is a real challenge.”
Ongoing impact: 2023’s flood and cyclone
In her firm’s results announcement, Whiting commented on the ongoing impact of last year’s devastating floods and cyclone.
“For instance, the 2023 North Island floods and Cyclone Gabrielle events are still having a profound impact on our communities,” she said in a media release. “We are working hard to resolve our customer’s claims as quickly as possible.”
A small percentage of claims from those natural catastrophes are still unresolved.
Payouts for those claims, according to IAG, topped AU$1 billion.
“We were heartened by insurers’ rapid response to the events and remain in close communication with the industry to reinforce our expectations that they need to resolve claims in a manner that is fair and timely, putting the interests of each customer at the centre of their response,” said the regulator.
Are you an insurance professional? How do you see IAG NZ’s results? Please tell us below
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