An insurance leader has commended a prudential regulator for firmly urging financial companies to develop stronger climate change planning, as the insurer revealed that natural peril claims costs significantly impacted its half-year profit margins.
IAG chief executive Peter Harmer
said that he was pleased that APRA
member Geoff Summerhayes urged companies to disclose and better prepare for climate change risks. The $14 billion insurer posted a 6.5% dip in interim insurance profit over the first half of the year.
“IAG has a long history of understanding climate change and its impact on insurance companies’ profit and loss statements, and their future prospects,” Harmer told The Australian. “No insurer gets this right consistently. There is a real challenge to get in front of this curve.”
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“Geoff Summerhayes’ speech has really brought attention to this issue, which can only be a good thing.”
IAG revealed that the group’s insurance margins dropped from 14.9% to 13.5% over the six months through December due to increased coverage for natural disasters. The insurer identified natural peril claims costs, which exceeded the budget by $80 million, as well as continuing high claims in NSW compulsory third-party claims insurance as reasons for the dip.
Natural disasters continue to put a strain on insurer profits this year. According to the Insurance Council of Australia
, the recent NSW bushfires and Sydney hailstorms resulted to combined losses of more than $70 million. IAG said it had received 13,000 claims from the hailstorms since Saturday.
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