Australia

IAG has market-leading shares in personal and commercial insurance lines in Australia, with products sold under brands including NRMA Insurance, CGU, WFI, SGIO and SGIC.

Australia achieved like-for-like gross written premium growth of over 3% driven by ongoing rate increases in motor, home and commercial policies. The business’ reported insurance margin of 19.6% was boosted by significant prior period reserve releases, a favourable perils outcome and the initial impact of the recent 12.5% quota share agreements. Australia’s underlying margin of 12.9% reflected a sound performance.

Consumer

IAG is the largest personal lines insurer in Australia, offering motor and home products across the country under a range of brands, supplemented by Compulsory Third Party insurance in New South Wales, the Australian Capital Territory and South Australia.

Consumer increased its gross written premium by 1.6% to $6,214 million. Excluding the effect of New South Wales Compulsory Third Party-related changes, like-for-like gross written premium growth was over 4%.

Reported premium growth in personal motor policies exceeded 5% as higher rates met increased claim costs.

Reform to the New South Wales Compulsory Third Party scheme resulted in significant reduction in average premium price, alongside lower claim costs.

There was also 4% growth in home premiums as rate increases were partially offset by slightly lower volumes.

Online sales channels for our flagship consumer brands continued to register substantial growth, with NRMA Insurance conducting approximately 28% of new business sales and renewals online during the 2018 financial year.

Business

IAG sells a range of commercial products in Australia through its suite of brands. IAG’s Business offering has a strong small-medium-enterprise emphasis, and a leading market share in rural areas.

Business reported a slight decrease of 1.1% overall in gross written premium this financial year, but like-for-like premium was marginally higher, after allowing for discontinued Swann Insurance activities.

The overall Business premium outcome included:

• a continuation of rate increases across most business classes;
• remediation of the property and fleet portfolios;
• underwriting agency-derived growth, primarily from NTI;
• retention levels in key portfolios which were slightly lower than last year, however higher than expected;
• lower new business volumes; and
• an approximate $40 million reduction from divested or discontinued Swann Insurance activities.

A focus on maintaining underwriting and pricing discipline across Business segments through targeted portfolio reviews was a feature of the 2018 financial year, and appropriate rate increases occurred across all portfolios with varied impact on volumes.

Growth in the direct market was supported by improved digital capability and a targeted CGU marketing campaign. This area represented 24% of overall Business premium.

Customer initiatives

During the year, Australia enhanced its product offering, strengthened its partnerships and improved the quality of customer service by:

• opening the first NRMA Insurance hub in Liverpool, New South Wales, offering immersive installations and educational zones;
• piloting a digital capability to provide customers having motor repairs completed with email and SMS status updates and the expected completion date;
• including Compulsory Third Party in the new NRMA Insurance customer management system, providing knowledge management tools to optimise the customer experience;
• launching the CGU ‘More Time’ campaign to provide small business owners with a specialised portal which incorporates time-saving solutions through partnerships with Airtasker, Squirrel Street and Legal Access Services; and
• continuing the foundation partnership with Tropfest, including screening two short films commissioned by CGU highlighting the contributions of migrant small business owners, supporting the most recent CGU Direct marketing campaign.

This year, the NRMA Insurance and CGU brands’ strong levels of service and partnership capabilities continued to be reflected in industry recognition from key bodies including the Australian and New Zealand Institute of Insurance and Finance, National Insurance Brokers Association and Insurance Business Australia magazine.