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Insurance giant IAG has signalled premiums for home and motor cover are likely to rise by between about 5 and 9 per cent over the next year, due to a wave of natural disaster claims and surging inflation.
IAG chief executive Nick Hawkins said the large number of claims from wild weather, alongside shortages of skilled workers and building materials, could also cause delays in repairing damaged properties.
IAG’s profits were hit by high natural peril claims, and company lifted its allowance for disasters for the year ahead.Credit:Dan Peled
Following an investor update, Hawkins said he thought the wider insurance sector would continue to face a range of inflationary forces over the next 12 to 18 months, before the pressure on prices started to ease after that.
IAG, which sells insurance under brands such as NRMA, CGU and SGIO, released its results on Friday, reporting net profit after tax of $347 million for the year to June, up from a loss last year.
After a horror year of natural disasters and a sharp rise in inflation, Hawkins said home and motor premiums were currently rising by “mid to high single digits” in percentage terms, compared with “low single digit” increases a year ago.
He expected premiums would continue rising at their current pace over the next 12 to 18 months, though the exact increase customers faced would depend on where they lived and their risk of disaster.
“There’s definitely a theme here that we are seeing inflationary pressure around claims, reinsurance, perils, and other things. We’re mitigating some of that, but unfortunately some of that’s going to be reflected in pricing,” Hawkins told The Sydney Morning Herald and The Age.
Alongside rising premiums, which have also been predicted by analysts, insurers are also taking longer to deal with claims due to the large number of natural disasters, labour shortages and supply chain bottlenecks.
“Access to both skilled labour and access to certain building products just makes timing a bit more difficult for us to manage, in relation to making good a damaged property. What we are doing though, is trying to access everything we can to accelerate that, and mitigate that as much as possible,” Hawkins said.