IAG has announced a 6.4% reduction in insurance profit, a profit dip of $39 million. Insurance profit slipped from from $610 million to $571 million.
IAG Managing Director and Chief Executive Officer Peter Harmer (pictured right) said the 1H17 result reflected a strong performance in IAG’s consumer businesses, further signs that commercial pricing has passed the bottom of the cycle, and a focus on creating a more efficient business with customer needs at its core.
“This is a sound result for our core businesses in Australia and New Zealand, reinforced by the strength and integrity of our brands, our sharpened customer focus, and the quality and passion of our people."
Net profit after tax also fell $20 million from $466 million to $446 million. Net natural peril claims costs exceeded allowances by $80 million and hit $420 million for the half, with the Kaikoura earthquake contributing $117 million.
Looking ahead, the firm maintained its full year reported margin guidance of 12.5-14.5%, as IAG expects to face continued claim cost pressures.
New technology to speed claims process
As outlined at the IAG strategy day on 8 December 2016, Harmer said the company is driving customer and business benefits through its leading and fuelling themes.
Leading initiatives in place include a $75 million venturing fund to work with emerging and established business on new products and services, a Singapore-based InsurTech innovation hub to co-create solutions for future customer needs, and the increased use of aerial drones so customer claims are assessed quickly and safely after severe weather events.
“Through leading, we put customers at the centre of what we do by the enhanced use of technology, offering innovative new products through our core businesses, and identifying new ways to meet ever-changing customer needs.
“We are already seeing positive results, with our customers’ measure of our performance across our different brands above industry average. Our customer feedback is put into action through our ‘listen, learn and act’ model which enables us to implement improvements, from the front line through to senior management, to continuously drive better outcomes.”
Harmer said IAG was creating a more efficient organisation by simplifying the way it does business, optimising its resources, leveraging the benefits of its supply chain and continuing to build partnerships.
“Our optimisation program to simplify our operations and drive cost savings is well underway. We’re on track with our plans to partner with global experts to simplify processes and reduce complexity, and to significantly reduce our core claim and policy administration systems.
“We are doing this in the context of rapidly changing and heightened customer and societal expectations, so it’s more important than ever to focus on our core businesses while planning and implementing new ways of doing business,” Harmer said.
You can read the report here.