OPERATING PERFORMANCE
BUSINESS
Business operations contain all commercial insurance products sold in Australia under the CGU, WFI, NRMA Insurance, RACV, SGIO and SGIC brands, and niche products sold through brands such as Swann Insurance.
RESULTS
Business generated relatively flat gross written premium of $2,962 million, despite shedding almost $130 million of premium after selling the car dealership portion of Swann Insurance in August 2016. After allowing for the car dealership divestment, premium growth was over 4%.
This result reflected targeted rate increases in most classes, with increased momentum over the course of the year. Other contributing factors were the shedding of poorly performing business, notably in workers’ compensation and property; strong growth from underwriting agencies; steady retention rates; and lower new business opportunities and volumes.
Business reported a lower insurance profit of $204 million, which equates to a reported insurance margin of 9.2%. This was slightly lower than the 10.0% achieved in the 2016 financial year, because of the net effect of increased large losses; a similar net natural peril claim cost; higher prior period reserve releases; and a favourable credit spread movement of $23 million.
A weaker underlying margin of 6.9% was driven by an increase in large losses in property classes compared to prior years.
In the second half of the year, IAG and Suncorp agreed to combine their similar sized marine portfolios within National Transport Insurance, Australia’s leading truck insurance specialist which is equally owned by IAG and Suncorp. The move creates Australia’s leading marine insurance specialist, Marine Protect: Powered by NTI.
Business has continued to improve its products, strengthen its partnerships and improve the quality of its customer service, and received industry recognition for its achievements, including:
- the Mumbrella collaboration award for CGU and its advertising and media agencies, for work in ‘Seeing It Through’ for Tropfest, the world’s largest short film festival (July 2016);
- CGU being voted ‘General Insurer of the Year’ for the second year in a row in the annual National Insurance Brokers Association Insurer Survey by Brokers (September 2016); and
- the 2017 Nielsen Insurance Relationship Survey, which used a net promoter score across the Australian broker market, rated CGU above its major competitors in terms of advocacy.
During the year, CGU became a foundation sponsor of the Collingwood Football Club Women’s team, and extended its Premier Partnership with Collingwood Football Club through to the end of the 2022 season.
