Suncorp Group and Insurance Australia Group (IAG) both released their 1H25 financial results this week. The two big insurers reported healthy profits in the context of a relatively benign six months for natural catastrophes. Insurance Business asked Jarrod Hill (pictured), CEO of CGU and WFI, what his firm’s results mean for brokers?
The leader of IAG’s intermediated divisions placed the results in the context of improved underwriting discipline. He also gave credit to a decision, a few years ago, to remove some volatility from financial results by purchasing a ‘super stopper’ on perils.
He said this ‘super stopper’ provides an aggregate cover if all the perils in a year go above the allowance made in insurance pricing. This is an added reinsurance cost, he said, but has improved the firm’s capital position and the capital returns used to support the business.
“We've delivered a solid result,” he said. “What that’s enabled us to do is intensify our focus on, how do we uplift that service proposition? How do we turn this into a disciplined growth business? Particularly, how do we serve the broker?”
Hill said, at CGU, executive general manager Damien Gallagher has an internal initiative called “broker love.” He said that focuses on the fundamentals of service to brokers, including returning emails and phone calls.
“Those fundamentals of service that our brokers are getting frustrated with,” said Hill.
He said there are no plans to deliver new broker products in the next six months.
“What we're really focused on is the continued uplift in our service proposition to brokers,” said Hill.
The leader mentioned net promoter scores (NPS).
“Every single NPS metric we use to measure our service has improved in the last half,” said Hill.
However, without sharing the NPS figures, he did say these improvements have a long way to go.
“We're not where we want to be, particularly on a number of those NPS scores,” said Hill.
One of the hurdles, he said, is returning phone calls.
“We've got to be efficient and we've got to remove frictional cost,” said Hill. “We can't have a broker sitting on the phone for 20 or 30 minutes waiting to contact us.”
However, he said investments in generative AI (gen AI) have significantly improved the claims process for brokers in some insurance lines.
For simple property claims of under $20,000, he said, the time from notification to settlement and payment has gone down by between 50% and 70%. Hill said CASI is currently being expanded across other commercial classes, including motor.
IB suggested to Hill that some of the tone and content of the results presentations, delivered by both his firm and Suncorp, were different to years prior. There seemed to be less focus on profits and more on weather perils, the need to build resilience and the ongoing financial pressures felt by many customers.
Hill suggested that some of that change in tone and content could be attributed to six months of low perils during that reporting period - but the awareness that costly perils are likely around the corner. For example, he said, the devastating flooding still impacting customers in north Queensland.
“So maybe that's why we're a little bit guarded,” said Hill.
He suggested that, when this year’s heavy wet weather period, is over the firm could show more confidence and certainty around financial results.
“We’re probably also conscious it's a challenging time for customers that have seen a number of years of rate increase to offset inflation and increased perils,” said Hill. “So it's recognizing that as well.”
On Thursday, IAG reported a net profit after tax (NPAT) of $778 million, up 91% and gross written premium (GWP) of $8.43 billion. The trans-Tasman firm attributed the profit increase to a post-tax release of the COVID business interruption provision, an increase in net earned premiums and an improvement in insurance profits.
Are you a broker? How do you see IAG’s financial results? Please give us your analysis below
