- Shares in Insurance Australia Group (IAG) have dipped after the business increased its net natural perils claim expectations for FY22
- IAG has been inundated with storm damage claims from Victorian, South Australian and Queensland customers, with the cost of bad weather events expected to total $169 million
- The insurer had increased its peril allowance for FY22, but following the recent storms the business has decided to increase the allowance to $1.04 billion
- The $280 million increase on FY22’s previous allowance will see IAG’s insurance margin guidance range drop to between 10 and 12 per cent
- Insurance Australia Group shares are down 6.61 per cent at $4.52 each
Shares in Insurance Australia Group (IAG) have dipped after the business increased its expected net natural perils claim for FY22.
IAG revealed it had been inundated with storm damage claims from Victorian, South Australian and Queensland customers in recent weeks.
The insurer said it had received roughly 14,000 claims as of November 1, with the number expected to rise further in the coming days.
The net cost for the series of bad weather events is anticipated to be $169 million, the maximum retention for a first loss under IAG’s catastrophe program.
As a result of the unexpected Spring storms, the ASX 200-lister has increased its peril allowance for FY22 from $765 million to $1.04 billion.
The $280 million increase is primarily related to the increase in claims from East Coast customers over the last four months.
Additionally, the original $765 million expectation was already an increase on FY21’s allowance, but CEO Nick Hawkins said further help was required.
“Our priority is to help affected customers across our NRMA Insurance, SGIC, CGU and WFI brands as soon as possible,” Mr Hawkins said.
“Our Major Event team is in place all year round to respond to severe weather events like this and we have allocated extra resources to support our customers impacted by the recent weather events.”
As a result of the allowance increase, IAG has lowered its FY22 reported insurance margin guidance range from between 13.5 and 15.5 per cent, to between 10 and 12 per cent.
“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,” Mr Hawkins added.
Following today’s revision, Insurance Australia Group shares were down 6.61 per cent at $4.52 each during midday trade.