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Strong companies are sustained because they understand, and respond to, changing customer and community priorities. Insurance Australia Group is built on companies with heritages that date back more than 100 years. The consistent theme in their long-term success is a recognition that insurance is an essential community service. Through insuring with these companies, customers pool their risks, giving protection to those who suffer a loss.
At Insurance Australia Group our value, and future sustainability, comes from continuing to deliver on the expectations our customers and the community have by:
- Paying claims. In 2004, we paid out approximately $4.2 billion in claims, or $11 million every day. The very reason our customers pay premiums is the peace of mind that comes with knowing if they experience a loss, we'll cover their legitimate claims.
- Pricing risk. Our customers expect us to be expert in pricing risk. We must ensure that we neither underprice risk, putting our ability to pay claims into question, nor overprice risk, putting the affordability of insurance into question.
- Managing costs. For the community, pooling and diversifying risk should reduce the cost of insuring against those risks. As a result, managing costs and being as efficient as possible are essential aspects of our culture. And that means managing claims costs, legal fees, taxes and charges as efficiently as possible for our customers.
- Helping to reduce risks. One of the greatest benefits we can provide our customers (and the broader community) is to identify the very risks being insured against and help to reduce them.
Fewer risks mean customers can avoid unnecessary hardships, and they can benefit from lower premiums too. That's why we've focussed our energy into reducing those risks most common or devastating for our customers including:
- Slowing the effects of global warming, which we believe is linked to the increasing number of catastrophes;
- Improving safety on the road and at work; and
- Reducing crime.
The environment
Our research shows a definitive link between rising global temperatures and the increased frequency and ferocity of weather events. Today, there is a higher probability of severe hailstorms, droughts, flooding, higher winds and more severe hurricanes, all of which put our customers, and the community, at greater risk. That's why Insurance Australia Group is reducing its own environmental footprint, and encouraging both its customers and suppliers to do the same. We also formed the Australian Climate Group which advocates lower CO2 emissions.
Road safety
One of the major causes of trauma for our customers is being involved in a car crash. So finding ways of helping reduce the frequency of such accidents is a key priority for Insurance Australia Group. We publish the 101 worst crash sites each year and work with the Roads & Traffic Authority to find ways to reduce the accident rates at these sites. Such improvements range from physical changes to the road (for example, building roundabouts and longer onramps to arterial roads for merging traffic) to improved road signage and driver visibility. Our Technical Research Centre also recently published a Reversing Visibility Index which rates motor vehicles on the effectiveness of their rear vision. It has identified one of the factors behind parents reversing over infants, and should lead to automotive innovations improving rear vision for drivers.
Workplace safety
The number of accidents in the workplace still remains too high. This is a problem in both office and more physical-based work environments. These risks are of considerable concern to our customers. That's why we've taken our role as the country's largest workers' compensation underwriter and claims manager seriously by developing programs to help drive behavioural change, such as our CD Rom, Risk Radar. And at the same time, we're focussed on improving our own workplace track record.
Crime reduction
Many of our commercial customers, home and car owners suffer the effects of crime each year. Apart from motor vehicle collision, the highest percentage of claims we pay involve theft. Insurance Australia Group works closely with local communities and the police to help reduce crime. We've undertaken sophisticated analysis of crime patterns based on our own claims data, introduced measures to reduce the sale of stolen goods, and sponsored local community-based policing activities.
These examples show how working to reduce risk, and consequently the number of claims, makes good commercial, and good common sense. And finding the alignment between what makes sense for our customers and for our business ensures we remain a sustainable company.
We are reporting for the first time how we measure our activities against the internationally recognised Global Reporting Initiative (GRI) framework for sustainability reporting. This, and subsequent reports, will allow our customers, and the community, to judge our progress. We acknowledge we have some way to go, but we're pleased we have identified new opportunities to continue to evolve our products and practices in way that meets the changing needs of our customers.
In reading this report, I trust the passion and enthusiasm the people in our companies have for ensuring our business is truly providing a community-based service is obvious.
Michael Hawker
Chief Executive Officer
Insurance Australia Group
indicates that KPMG has provided assurance on the figures. For more information please see the Assurance statement.