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The Australian personal insurance operation, which contributes around 60% of the Group’s GWP, continued to perform strongly despite heightened competitor activity and several severe weather events. PORTFOLIO MIX |
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FINANCIAL PERFORMANCE |
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Gross written premium Net earned premium Combined ratio Insurance margin |
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| WOOD CHOPPER TO THE RESCUE |
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Imagine the horror of waking up with a tree at the foot of your bed. That’s what happened to customer Richard Wardlaw when rain and windstorms battered the Melbourne area in February this year. “It was 4am, my wife was away and I was asleep. Torrential rain and storms had softened the ground so when the winds came, I woke up to a giant crash and found water pouring into the bedroom. Our giant poplar tree had crashed into the house and was balancing on a cross beam and window frame, perfectly aimed at our bed. “I was shaken, but thankful to be alive. “After the initial shock of what had happened, the clean up task seemed daunting. From the beginning, CGU was there coordinating the entire effort. The position of our house and the block of land meant that cranes couldn’t get access and it was simply too dangerous for tree loppers to chop the tree into bits. “That’s when CGU decided the only way to get this tree out of our house was by helicopter – a sight I thought I would never see.” |
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In this section:
Year in review
Our customers' perspective
Our community
Looking forward
YEAR IN REVIEW
In the past year, our Australian personal insurance operations achieved an insurance margin of 16.0%, and combined ratio of 92.2%.
We continued to focus on providing help beyond the claim, working with our suppliers to provide a seamless service to our customers when they need it most, at claim time.
This focus has delivered customer retention rates of over 90% for the past three years for directly sold business, while customer complaints decreased to 0.3%, their lowest levels since IAG listed.
A number of significant storms influenced the personal insurance result. The worst of these storms occurred in Sydney and Melbourne in early February 2005. These storms resulted in nearly 25,000 claims.
This year, we also commenced the process of building on IAG’s established distribution network by progressively converting 24 of our branches to franchises. The process was the result of a national review of IAG’s branch network which looked at the needs of customers, the opportunity for growth in each market and the long term financial viability of each site.
It means we will be able to maintain the most extensive customer-facing network of any insurer in Australia, with 320 branches and country service centres across metropolitan and regional Australia.
Our share of the CTP insurance market remained stable in all markets, with shares of around 40% and 2% in NSW and Queensland, respectively. As no other insurers have entered the ACT CTP market, our share remains at 100%.
OUR CUSTOMERS’ PERSPECTIVE
We recognise that paying a claim goes only part of the way to meeting customers’ needs. Events which lead to a claim can be stressful or traumatic, so providing a customer experience which takes some of the worry out of the aftermath of an event is a key differentiator for IAG.
Storms in Mudgee and Ulladulla in NSW in April 2005 left thousands of cars with hail damage.
To ensure customers didn’t have to wait long for their car to be repaired, IAG has facilitated the widespread use of Paintless Dent Repair, a high quality, fast method of repair which is used internationally on hail damaged cars.
To help customers lodge their claims quickly, we despatched Help Vans to affected locations, and assisted our customers to protect their property by providing tarpaulins. Finally, for those customers whose homes had been made unliveable by the storms, we arranged temporary accommodation.
Our efforts to help our customers aren’t limited to those affected by storms.
We take the leg work out of having customers’ cars repaired by giving them access to a high quality, rigorously assessed pool of repairers.
We conduct random quality audits of cars repaired by members of our repairer network, we can provide customers a post-repair quality check at no cost, and provide a lifetime guarantee on the quality of the work for approved repairs.
This year, we launched our Care & Repair Centres in metropolitan NSW. They are designed to make the repair process even more convenient. The service has been operating for some time in Queensland, Western Australia and South Australia, where it has driven consistently high customer satisfaction levels.
This method of allocating repairs through these Centres has also increased quality of repairs in all the markets in which Care & Repair operates.
The preferred builders we work with to help our home insurance customers are subject to similar quality controls as those which govern our preferred smash repairers. We also give our customers access to quality suppliers to help replace stolen or damaged goods.
This year saw a new addition to our home insurance product line. Landlords insurance was launched in March 2005, to cater to the increasing number of property investors. This product provides benefits to landlords for a number of common risks faced by them.
OUR COMMUNITY
Part of our purpose is to reduce risk in the community. In the context of our personal insurance operations, this translates to reducing risk at home and on the road.
Severe head injury is the most common cause of death from accidents for people aged under 40 and a leading cause of disability in the Australian community. Head injuries sustained in motor vehicle crashes costs the NSW community more than $180 million every year.
This year, we took a significant step towards reducing the severity of head injuries suffered by accident victims, with the launch of the Head Injury Retrieval Trial (HIRT).
IAG has committed $11.2 million to the trial over three years, which is being carried out by NRMA CareFlight throughout Greater Sydney and surrounding regions.
The trial entails sending a specialist doctor and paramedic by helicopter directly to randomly selected crash scenes to assist people identified as having severe head injury.
We have also continued helping local communities to reduce risk through our communityhelp grants programme.
In 2005, IAG awarded 150 communityhelp grants, with a total of around $530,000 going to fund community projects including:
Since the communityhelp grants programme began in 2003, IAG has given more than $1.3 million in grants to community groups across Australia.
Our preferred smash repairers are our partners in providing quality smash repairs to our customers, and we’re committed to ensuring the sustainability of the smash repair industry.
In 2000, IAG launched its Jumpstart Autobody Scholarship programme for school leavers interested in a career in smash repair.
In June this year, the first group of NRMA Insurance Jumpstart Autobody Scholarship holders graduated. As recognition of their commitment throughout the programme, IAG recently presented the nine participants and their employers with $5,000 each.
In 2004, the Scholarship was joined by the Jumpstart Autobody Traineeship, which allows students to train for a career in smash repairing while completing high school. To date, 230 students have found a job with our preferred smash repairers through the $7.4 million programme.
LOOKING FORWARD
In the next year, we aim to maintain the high retention levels which have characterised our home and motor portfolios.
We will remain focused on using sophisticated risk rating to ensure low risks don’t subsidise high ones. In the next year, we will refine this focus to develop ways to ensure that those customers who take measures to reduce their risk are increasingly rewarded by discounts or lower premiums.
We will continue to seek community partnerships which provide relevant, useful risk mitigation tools, driving both customer retention and risk reduction.
We will also work with our preferred suppliers to continue to develop and implement supply chain models which drive greater efficiency, quality and customer satisfaction.
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