Insuring the future

For an insurance company, the future is even more important than the present. We price our products before we know their final cost.

Our long-term viability depends on our ability to calculate risk based on what we believe will happen not now, but days, months, even years from now. Long-term thinking is critical to our success.

As Australasia’s leading general insurance group, insuring more than $900 billion of property assets, we have a responsibility to be around for the long-term. Only then can we continue to pay our customers’ claims, ensure insurance is affordable and accessible, and deliver returns to our shareholders.

For this reason, our view of sustainability is that it is not in addition to, or peripheral, to the way we do business. It is fundamental to it.

Being sustainable is about being a well managed company. Our purpose and values are at the core of who we are, how we operate and build relationships. It is the quality of these relationships that will distinguish us over the long-term.

We will be a sustainable business by engaging our employees, satisfying our customers, intermediaries and business partners; supporting our communities; and working effectively with our suppliers and other stakeholders. In turn, managing our business in this way will drive long-term value for our shareholders.

In this report we focus on how our employees contribute to IAG being a sustainable organisation. In Australia and New Zealand, we pay out more than $12 million in claims on average every day. That is a truly overwhelming figure when you think about what it represents: thousands of people experiencing some kind of traumatic event or loss every day. In their time of need, our customers turn to us.

A single person can and often does make a world of difference. And when these people come together to help as a team, the effect is even more powerful. We were acutely reminded of this when Cyclone Larry hit northern Queensland in March this year.

Our assessors dealt with over $165 million in claims in Cyclone Larry’s aftermath. We are still there, helping the people of Innisfail rebuild. We are tremendously proud of how our employees responded, but not surprised. We were there for our customers during the Sydney hailstorms back in 1999 and there for them when the Canberra bushfires hit in 2003. Helping people is what we do.

For our employees to continue in this tradition, we need to provide them with a great workplace. We need to be a company that people want to work for every single day. It’s encouraging to see that, via our annual employee survey, 76% of our respondents say they value IAG’s focus on balancing our social, environmental and financial responsibilities. That gives us a lot to build on.

In 2005/06 we saw a lift in engagement of our employees of two percentage points to 56% in Australia , and four percentage points to 54% in New Zealand. Overall, our Australian employees’ engagement with the company has increased by 11 percentage points since we started measuring it in 2003. This year the improvement can be partly attributed to lifts in the extent to which employees are able to appropriately influence what happens within their team (21% increase); employees’ perceptions of how managers support our people practices (19% increase); perceptions of how IAG considers the personal wellbeing of employees when making decisions (9% increase); and the extent to which IAG’s purpose resonates with our employees (six percent increase).

But we can do better. Our employee turnover in Australia is 20.6% - higher than we’d like it to be. This is something we must and will improve, particularly in light of shrinking domestic and New Zealand labour forces. We are already providing pathways for women who are entering the workplace after having a family, and are looking to attract older workers by offering flexible options.

We also need to get better at building our leadership capability, particularly in relation to supporting our people through major change, and providing opportunities for input and involvement. And we need to get better at integrating our values, our purpose, and all the ways in which we support and develop our employees so that these things become part of their everyday experience at IAG.

In 2006/07, we look forward to including more information on how our people in Asia feel about working at IAG.

Risks and opportunities