After IAG reported a deficit of A$448 million in the prior fiscal year, the profit for the 12 months ending in June represented a significant reversal.
Due to significant Covid-related business interruption insurance claims, as well as needing to set aside substantial sums of money to provide reimbursements to offended customers and repair historical payroll errors, its Australian operations suffered a loss last year.
Inflationary pressures that contributed to an increase in premiums received from policyholders in Australia and New Zealand have been mitigated, according to IAG's managing director Nick Hawkins, by premium hikes for policyholders.
However, rising natural danger claims, such as storm claims, have decreased IAG's insurance margins.
Investors were informed that premium collections in New Zealand climbed by 7%, with premium hikes for policyholders accounting for the majority of the growth.
However, as a result of an increase in extreme weather claims, the insurance earnings from its New Zealand business dropped from A$305 million to A$220 million.
The premiums collected by IAG operations in New Zealand totaled $3.19 billion, with high rise in premiums charged to companies as the value of commercial property increased, leading owners to increase the sum insured on their premises.
IAG is a significant insurer of residential and infrastructure construction in New Zealand, and both industries have a healthy backlog of projects.
IAG has been striving for cost reductions by using automation and simplicity in New Zealand.
According to the report, State and AMI's usage of "robotics" has sped up the process of processing motor insurance claims and assigning repairers.
However, employment expenses grew as a result of IAG bringing positions back from abroad and raising frontline team salaries to match those of competing businesses.
IAG informed investors that landlord insurance, young drivers, and small and medium-sized enterprises were among its key areas for expansion in New Zealand.
IAG's storm and flood claims
Across its Australian and New Zealand businesses, insurer IAG paid more than A$1.1billion (NZ$1.3b) in claims on storms, floods and other natural perils in the 12 months to the end of June 2022.
