Live markets, Tuesday, November 2, 2021

Shares of Insurance Australia group fell more than 4.5% on Tuesday morning after revealing that wild weather claims were still over budget, forcing profit margins down.

Violent storm and hail activity through October has caused claims to rise to around 14,000 as of November 1 in South Australia, Victoria and south-eastern Queensland. Requests are expected to continue to increase over the next few days.

Victoria was recently hit by high winds, while South Australia suffered a big hailstorm last week. Credit:Paul Jeffers

IAG systematically underestimated the cost of claims related to natural perils and considerably increased its provision for these claims during the past financial year.

IAG, which owns brands such as NRMA Insurance, CGU and WFI, said the net cost of the last wild weather event is expected to be $ 169 million, “the maximum retention for a first loss under the disaster program of IAG “.

The second half of October forced IAG to increase its forecast of natural hazards to $ 1.045 billion, from a previous assumption of $ 765 million.

These changing assumptions have forced IAG to lower its insurance margin forecast for 2021-2022 by around 3%, a key indicator of profitability.

IAG chief executive Nick Hawkins said the group’s major events team was in place to respond to severe weather events and additional resources had been allocated to support affected customers.

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

“We remain confident in the operational dynamics of IAG in 2021-2022, after the good start of the first quarter which we reported at the recent annual general meeting.”

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