IAG updates FY22 perils claims costs following severe SA storms

IAG updates FY22 perils claims costs following severe SA storms | Insurance Business Australia

IAG updates FY22 perils claims costs following severe SA storms

Insurance Australia Group (IAG) has updated its net natural perils claims costs for the financial year-to-date (FY22) following the recent storms that devastated some parts of South Australia (SA), Victoria (Vic), and Tasmania (Tas).

Last week, significant hail, rain, and strong winds hit some parts of SA, Vic, and Tas – forcing the Insurance Council of Australia (ICA) to declare an insurance catastrophe for these areas.

On November 01, IAG updated its FY22 net natural perils claims costs by recording 14,000 claims following the devastating storms, with total claims expected to rise further over the coming days. It also anticipates that net cost for this event could be $169 million, the maximum retention for a first loss under the insurance giant's catastrophe program.

As a result, the insurance giant increased its expectation for FY22 net natural perils claims costs to $1,045 million, a dramatic jump from the previous assumption of $765 million. This estimate includes $535 million for the first four months of FY22 as follows:

  • $204 million for events incurred in three months ending September 30;
  • $142 million for weather events across Eastern Australia in October;
  • $169 million attributable to the South Australian and Victorian event; and
  • $20 million of attritional events incurred in October.

IAG managing director and CEO Nick Hawkins commented: “We remain confident in IAG's operational momentum in FY22, after the strong start in the first quarter that we reported at the recent AGM.”

Read more: ICA declares insurance catastrophe for severe SA storms

Hawkins also offered assurances that IAG's major event team is in place all year round to respond to severe weather events like the recent storm, and the group has allocated extra resources to support affected customers.

“We have people on the ground across South Australia and Victoria assessing claims and commencing repairs, and our drive-in specialist hail repair sites will be open from next week in Elizabeth and Salisbury South in Adelaide to assess and triage hail-damaged vehicles,” he continued.

However, under SA's current border regime, insurance disaster responders would be subject to several restrictions, including prohibited entry altogether or having to quarantine for 14 days. Therefore, the ICA is communicating with state governments to ensure that insurance disaster responders can safely travel across borders to support customers.

Aside from updating its FY22 net natural perils claims costs, IAG recently announced in the United Nations Climate Change Conference (COP26) a profit downgrade due to several severe weather events that hit SA and the eastern states in October, as reported by the Sydney Morning Herald.