Country’s largest insurer reveals 18.8% increase in premiums

Friday, 16 February 2024

IAG is not a name familiar to many households, but it owns State, AMI, NZI, Lantern Insurance, Swann Insurance, NAC Insurance and and Lumley.

IAG, the country’s largest insurer, collected a record $2 billion in premiums from households and businesses in New Zealand in the last six months of 2023.

That was 18.8% higher than the $1.69b it collected in the same period in 2022, and was the result of premium increases on house, car, contents and business insurance.

In New Zealand, IAG owns the State, AMI and NZI brands, and is the largest general insurance company.

Chief executive Amanda Whiting said it was a “solid” result for the insurer in New Zealand.

The insurance group’s shares are listed on the Australian ASX market, and after several weak years, its share price rebounded last year, though is still not close to its peak of $9.10 in 2019.

At the start of 2023, its shares were trading at A$4.76, but started trading on Friday morning at A$6.32.

IAG chief executive Amanda Whiting says the company’s focus is on delivering for its customers.

After a run of extreme weather events in Australia and New Zealand, including last year’s Auckland anniversary weekend flooding and Cyclone Gabrielle, IAG has lifted its premiums, with many homeowners paying 20% to 30% more for their house and contents cover.

Despite the high premium increases, IAG said it had high “retention rates” in New Zealand as people continued to hold onto their insurance.

IAG group chief executive Nick Hawkins told investors on Friday: “The increased frequency and severity of natural perils, inflation and increased reinsurance costs have flowed through to premium increases.

“We know this has added to our customers’ cost of living pressure in a difficult environment.”

Whiting said IAG had received over 52,000 claims from last year’s Auckland anniversary weekend flooding, and Cyclone Gabrielle, and had settled 99% of motor and content claims, and 96% of home claims.

It had paid out over $1b in claims on those two events, she said.

Whiting said the results reflected the progress the company continued to make against its strategic priorities.

“Our focus continues to be on delivering for our customers by building a strong and resilient insurance business, so we can be here for New Zealanders when they need us the most.”

The increases in premiums raised the insurer’s insurance margins, and lifted what it called its “insurance profit” to $204m in the last six months of 2023 from $136m in the corresponding period the previous year.

The premium increases were not unexpected. In October, Hawkins said the company expected to achieve “low double-digit gross written premium growth” in the current financial year.