IAG New Zealand’s annual insurance profit grew 938% in its 2024 financial year, a sign the country’s largest general insurer has recovered from the impact 2023's North Island’s natural hazard disasters had on its finances.
IAG NZ reported its full-year results for the 2024 June-year on Wednesday, revealing an insurance profit of NZ$500.7 million. That's an increase of around NZ$452.5 million from the NZ$48.2 million insurance profit reported in its 2023 annual results.
IAG is the largest general insurer in Australia as well as NZ and reported a group net profit after tax of A$898 million (NZ$984 million) to the Australian Stock Exchange.
IAG NZ Chief Executive Amanda Whiting said the NZ insurance profit had been driven by fewer devastating weather events as well as growth in Gross Written Premiums (GWP) and stronger returns on investments.
“This year’s result reflects the absence of any major natural disaster or significant weather events. It is important to maintain the strength of our business, so we can secure the capital we need to support and protect New Zealanders,” she said.
Whiting added that insurers needed to take a multi-year view of their financial performance given NZ’s susceptibility to natural hazards and their volatility.
“Within the insurance cycle, we need to balance out the bad years with the good.”
Gross Written Premium (GWP) for IAG NZ jumped 15% to NZ$4.12 billion in the 12 months to June 2024. This is up from 2023, when annual GWP grew by 12% to NZ$3.58 billion. Premiums rose 7% in the 2022 financial year.
Whiting said IAG NZ understood the impact premium increases have had on some of its customers, and the company had “bolstered” its support for anyone experiencing cost-of-living pressures.
“With inflation now beginning to ease, and our long-term reinsurance arrangements announced in June, we expect premium increases to stabilise,” she said.
The IAG group announced in July it had entered into a comprehensive five-year natural perils reinsurance agreement with Berkshire Hathaway Inc and Canada Life Reinsurance subsidiary National Indemnity Company.
This agreement will provide up to A$680 million (NZ$744.9 million) of additional protection across the group annually, and up to A$2.8 billion (NZ$3 billion) over the entire five-year period.
With a combination of reinsurance protections and quota share agreements, the IAG group has set out a natural hazard allowance of A$1.28 billion (NZ$1.4 billion) in the 2025 financial year, which is 17% higher than a year earlier.
IAG NZ’s insurance margin for the 2024 financial year jumped to 22.5%, up from 2.4% in the 2023 financial year. IAG said the increase reflected a higher underlying margin of 16.9% (up from 13.5% in 2023) as well as “significantly lower” natural perils.
The NZ insurer said it insured over NZ$1 trillion of the country’s assets during the 2024 financial year and has continued to protect one in two NZ households. It received 552,000 claims and paid out NZ$2.8 billion in claims in the 2024 period.
Whiting said as of June 30, IAG NZ had closed approximately 97% of more than 50,000 claims received from Cyclone Gabrielle and the North Island floods last year.
This includes 98% of home claims, 99% of contents claims and 99% of motor claims.
Whiting described the Government’s focus on climate adaptation – all parties in Parliament voted for a select committee inquiry into climate adaptation back in May – as a “great start”.
But she said further action was needed and IAG NZ was committed to “playing our part”.
48 Comments
What you all discuss here and see here is only the surface.
Monopolies or duopolies as we have here in several sectors do rake out large amounts of capital from the country.
However, the unseen damage that is far more devastating is the damage they do to the kiwi supply chain industries.
The exercising of their market power turns a lot of supply chain industries into zombie industries.
Supply chain companies making barley enough money to survive just, but definitely not thriving and growing. Serfs serving the governor industry elites.
What is the costs to NZ of stifled industries? Zombie industries? Another reason to leave NZ? Low tax take, low productivity, low enthusiasm to enter these industries.
Why does the Govt let them roam unabated?
This is actually really good news. If it means the end of insurance inflation, there isn't really much inflation left other than local rates.
I have said in the past that I wonder if deflation could start to become a problem. We've already seen it with fruit and veg with previous high prices being wound back, could we see it with insurance, restaurants, etc too?
Deflation should be the norm. Deflation is what should happen when society learns to produces things more efficiently, and where there is competitive pressure on prices. This is what we should expect in a modern capitalist society in the midst of a technolgical revolution. The only reason we aren't seeing this, ultimately, is too much government intervention (spending, and currency manipulation). We see it some sectors (consumer electronics and appliances come to mind) but not overall.
The only reason we aren't seeing this, ultimately, is too much government intervention (spending, and currency manipulation)
I suggest it's just wrong type of spending and intervention, by government as a representative of the people. Government ideally is supposed to regulate the imbalances and iniquities of capitalism, and provide or enable the social and community services for the people, that "the market" can't or won't.
I agree with your reasoning re deflation but it's components of capitalism and humanity that are preventing the flow through. The individuals forming government are merely caught up in the prevailing dogma.
Rubbish. We don't see deflation because companies use a practice of charging "what the market will bear". This mostly bears no relationship to the cost of producing the product of service other than it is invariably more than that cost. If the market is used to a particular pricing level, then that is what will be charged, or more. and once profit margins are established they will try to be maintained. The ONLY time prices will fall is when sales stop.
As with supermarkets and banks... competitors dont come.
For domestic entrants ...if they can find a backer who's not got their fingers in the existing pie. . they will play the same old game sooner or later as who wants a low margin biz.
For international entrants. We are a rounding error .. the only reason to come would be because of the high margin.. but if the made their offering competitive there wouldn't be a high margin to want.
As with banks and supermarkets. We actually need to legislate against profiteering that happens due to our market size. And to encourage competitors through better taxation whilst they start up
Agreed.
Supermarkets are a good example. Market probably too small for a new entrant from overseas, but potentially if we made a sufficient tax incentive (on the assumption that the gain to society and the wider economy from lower grocery prices is better than any potentially lost tax to the government) it could be a lot more appealing.
Incumbent players would throw their toys out of the cot, but we should just take the approach of "beatings will continue until morale improves", so to speak.
If we all paid less for groceries, less on housing, and less on insurance, the rest of the economy would benefit greatly.
I hate the idea.
but capitalism starts to fail when we have only a handful of players in certain markets taking obscene margins and showing zero signs of healthy competition.
The way they are lobbying successive governments to minimize any anti competition measures is actually anti capitalist.
The problem is the size of our market and size of our government... makes it quite easy to game the system for big companies.
Possibly we need a competition commission given special powers to enact changes over long periods... with no means for govt intervention.. like an rbnz for competitions.
This does make me think of those crooks that have a good thing going unnoticed and then get caught because the get a little bit greedy.
Insurers jumping on the opportunity to hike premiums because of "climate change" impact may find people eyes are opened to the long con.
Obviously Berkshire has made a fairly good return over the decades and the focus is placed on their investments. Maybe that is encouraged to overshadow the value being extracted through reinsurance.
I wonder how Lloyds is getting on. Oh 2023 only 125% up on 2022.
"Lloyd’s, the world’s leading marketplace for insurance and reinsurance, today announces its Full Year 2023 financial results (FY2023), which demonstrate solid profitability on both the underwriting and investment sides, and a strong balance sheet.
The market delivered an underwriting profit of £5.9bn (FY2022: £2.6bn) – a £3.3bn increase on the previous year. This contributed to a 7.9 percentage point improvement in the combined ratio to 84.0% (FY2022: 91.9%) – the strongest result since 2007. Underwriting benefited from lower costs from large risks and natural catastrophe claims, with the underlying combined ratio (combined ratio excluding major claims) of 80.5% (FY2022: 79.2%). "
That makes zero difference to the NZ consumer getting ripped off. We need anti-trust laws to break up the cartels and make them price takers rather than price makers.
If that results in the market being “too small” for bloated international business to operate in, then good riddance I say!
I submitted a claim for my falling fence, IAG responded to my claim after several days, then organised an inspection 2 months later as the only next date available, assessor came & assessed for about 10mins, after 23 days received a call from IAG stating they will get back as soon as the assessor prepares his report. I got the repair done privately. Gave them 0 on NPS. No wonder their profits are up.
New Zealanders like to be ripped off!
See the latest coments from Antonia Watson: The head of ANZ says the big banks can't afford to be New Zealand owned and have to make profits to keep their overseas shareholders happy.
And: ANZ New Zealand chief executive Antonia Watson told Morning Report it was true bank profits in New Zealand were higher than many places overseas.
She said they needed to provide reasonable a return to shareholders so they would continue to invest in New Zealand.
What an arrogance!!!!!!!!!!!!!!!!!!!
He's not, he's just trying to explain that margin requirements often scale relative to turnover. If you sell hamburgers and your sales are $300k a year, you are going to need to make a higher margin % from them than the chain store down the road selling $300k a week.
Why isn't there an enquiry into the insurance industry in NZ, like there has just been for banking, and also Supermarkets? There does seem to be a lack of competition.
Also we need a government run system, like we used to have with State, and like we currently have with banking with Kiwibank.
Another symptom of IAG holding 50% of the insurance market with Vero holding a further 20%.
Such little competition they don’t need to be competitive.
IAG have also been rolling out their own bodyshops (Repair Hub) which only repairs IAG customer vehicles. So they are able to manage the costs of the repairs to some degree. Having said that they did provide an awesome repair service to me when I used them.
After having my bis insurance with them for 10 years, this year they just whacked 10% on. My broker repriced elsewhere and my feet did the talking. I'm happy to say I removed 40k of business from them. Never had a claim, so over 10 years they squeezed 250k out of me.
It's a rort. Starting to think self insuring some of it is the way forward.
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