Introducing our approach

To achieve our ambition and purpose, we live by a set of principles:

1. Experts in the fundamentals of insurance

We’re focused on what we do best and getting the fundamentals right. This means excelling at understanding and pricing risk, managing claims and distributing our products. It’s about keeping our costs low to make insurance affordable. We take pride in knowing our business and the industry intimately.

2. Disciplined insurance leaders

We’re not just good at insurance; we’re good at business. We are high performing and professional. We’re clear about our strategy and we execute it well. We set measurable goals and we pursue them with vigour. We’re only satisfied when we deliver our best.

We expect a lot from our leaders. They live our values and lead by example. We give them responsibility and hold them accountable for their results. In return, we reward performance. Our business is only as good as its people and so we plan ahead by developing our future leaders.

3. Passionate about our customers

At every interaction, we demonstrate our passion for our customers, gaining our customers’ trust and loyalty, and making our customers our advocates. It’s not just about paying claims. We differentiate ourselves by the way we help our customers recover from the unexpected – getting them back on the road or back to work, or replacing their assets as quickly as possible.

4. Innovative and one step ahead

We’re determined to keep moving and be one step ahead of our competitors. By listening to our customers we stay relevant and generate new ideas, cementing our competitive advantage. We gain insights into how we need to adapt and evolve. It’s often the little things that we can continually improve that make the biggest difference.

5. Sustainable, so that we are around for the long term

We’re a successful and sustainable business that is around for the long term. This means bringing emerging risks and trends into today’s decision making. We deliver for our shareholders, customers, people, and the community by taking a balanced approach across the five key dimensions of Economic, Customer, Workforce, Community and Environment.

These principles are consistent across all of our businesses and are the foundation on which we operate.

Our strategic intent is to manage a portfolio of high performing, customer-focused diverse operations that provide general insurance in a manner that delivers superior experiences for stakeholders and creates value for shareholders.

We deliver on this intent by actively managing our portfolio to drive operational performance and execution.

Active portfolio management enables the Group to deliver a more consistent performance, despite owning a group of general insurance businesses operating at different stages in both the economic and the insurance cycle. Our approach includes two key components:

• strategic portfolio management: deciding where to compete and invest and what the optimal composition of the portfolio should be; and
• operational portfolio management: optimising the performance of the current assets.

Our portfolio management is underpinned by our well developed approach to assessing and managing risk which is integral to how we manage our day to day operations. Our corporate governance structure and risk management framework provide the oversight for this approach. More details are located in the Corporate Governance section of this website.



Strategy	Improving performance in our key markets of Australian and New Zealand	Pursuing selective growth opportunities	Driving greater operational performance and accountability
Customer	Listening to our customers and giving them the products and services they want; exceeding their expectations of us so they continue to choose our brands	Developing a deep understanding of customers and target markets, selectively pursing customer opportunities	Our relationships with our customers, and accountability for performance, rest with the operating businesses that are closest to the end customer
Workforce	Ensuring that we have the right people in the roles; not only recruiting the right people now, but also into the future	Developing the capacity and ability to transfer capability, and ensuring those called on to do this are supported	Linking Group and divisional strategy to individual scorecards for our people against which their performance is assessed
Community	Sharing our knowledge and promoting initiatives that reduce risks in the broader community; building and maintaining open relationships with our key stakeholders	Engaging in open dialogue with key stakeholders, sharing knowledge and experience	Aligning our approach to community investment with our core business; risk management
Environment	Managing our operations’ impact on the environment by driving efficiencies in our consumption of resources; and managing the impact of the environment on our business, our customers and the communities the we serve, helping them to manage and adapt to the impact of increasingly severe and more frequent weather events	Understanding and managing environmental risks in target markets, and helping our partners and businesses manage these risks	Establishing 5% year on year carbon emission reduction targets to assist us reach our goal of carbon neutrality by 2012
Economic	Improving the underlying operational performance of our Australian and New Zealand businesses	Applying the portfolio management approach in all markets, and maintaining strict acquisition criteria; maintaining sufficient capital to leverage opportunities	Ensuring our business is run efficiently, with a focus on controlling costs

Strategy Maps facilitate the translation of the strategic plan into a robust Balanced Scorecard, which measures progress against goals and objectives.

The Group Strategy Map is used by operating divisions to develop divisional strategy maps which support the corporate strategy.

Divisional performance is monitored via Balanced Scorecards and the reviews are facilitated by IAG’s Corporate Office on a quarterly basis.

Each individual has a Balanced Scorecard, which clearly links individual goals to corporate or divisional objectives.

Together with the balanced scorecards, we review our performance by looking at a suite of metrics, or key performance indicators from across the economic, customer, workforce, community and environmental levers. These have been included in the data summary section of this website.

This year we have begun reviewing the specific indicators that we report within our customer, workforce, community and environmental sections and will be testing their appropriateness. We have reported on a similar set of indicators for a number of years and recognise that to ensure our stakeholders are getting the best information possible about IAG, these indicators should also be reviewed. This will involve ongoing improvement and refinement of the indicators that we report including enhancing and strengthening the on-going monitoring processes. For the first time this year we are reporting turnover of employees within one year of employment and a lost time injury severity rate figure to give context to the lost time injury frequency rate figures that we already report.

We continue to use the Global Reporting Initiative (GRI) (138kb .pdf) Sustainability Guidelines (including the Financial Services Sector Supplement), as the basis to determine the content of the report. A GRI index, which details the location of each of the standard disclosures is included. Our Corporate Strategy, Group performance during the year and the risks and opportunities identified through our Risk Management Framework also inform our reporting.

Our engagement with stakeholders and feedback from them throughout the year is critical as this report is for them. This is why we continue to choose to be assured against the AA1000 AccountAbility Principles Standard, which considers inclusivity, materiality and responsiveness. This standard holds companies to account for their management, performance and reporting on business sustainability issues, ensuring that they take responsibility and report transparently on the impacts to the operation of their business, decisions, actions, products and performance. Importantly, the standard asks companies to engage with their stakeholders and to be accountable to them.

Effective stakeholder engagement is a key strategic priority for IAG and it is embedded in our Group Strategy, reflecting our commitment to be accountable to those that we have an impact on or who impact us. It is about being inclusive, through the identification of all of our stakeholders; ensuring that we evaluate all issues in a consistent framework, and that we respond in a way that meets the needs and concerns of our stakeholders. Engaging with our stakeholders allows us to understand and respond to stakeholder issues and needs and we are clear about who our stakeholders are, focusing on how we might best engage with them on an on-going basis. IAG operates in a devolved model, which means that responsibility for engagement with all of our different stakeholders is assigned throughout the organisation, to those areas or people closest to the stakeholder. We believe that this puts us in the best position to listen to our stakeholders, respond to them and be able to integrate their feedback into our operations, whether this be our customers, the communities that we operate in, our employees or any other stakeholder that we engage with.

While IAG is broadly aligned with the principles of AA1000 APS, there are opportunities for us to strengthen this alignment, for example by ensuring that there is a consistent standard of engagement with our stakeholders across our devolved operations.

We engage with our stakeholders on an on-going basis and have undertaken a specific piece of stakeholder engagement to get their feedback on what we did well in the 2009 report, and what we need to improve on. Stakeholders want:

• Greater transparency on how we have performed against target
• Clarity on our approach to sustainability and the link to our corporate strategy
• Refining and increasing the quantitative data we report on
• More disclosure about our approach to the community

Operating in a devolved business structure means that there will be some issues that are relevant at a divisional level that may not be relevant at a Group level. In this report, we aim to strike a balance between these issues to give our stakeholders a flavour of both Group-wide and divisional issues. To ensure that we get this balance right, each of our divisions is responsible for bringing to the table the issues and opportunities that impact them. The materiality of these issues to IAG and our divisions is then considered against the interests of our stakeholders, and this determines the issues that are reported.

As our Risk Management Framework is part of the way that we operate and implement our strategy, the issues we deem material for reporting purposes align to the issues that we think are important for the sustainability of our business. The AccountAbility 5-part materiality test was also utilised to challenge our internal materiality assessment, which also takes into account commercial sensitivities. This test looks at issues against the criteria of the potential impact on short term financial performance, the level of community concern, the extent of regulation, and gives consideration to issues that have been identified as a priority by our peers and the extent to which we can influence the issue. Potential issues are rated against these criteria as high, medium or low, and where an issue has been rated as high, it is has been included for discussion in this website content.

The case studies included in the Case Studies and Key Risks and Opportunities section of this website discuss a number of IAG’s material issues. However there are some issues and risks that have not been included or discussed as they are considered commercially sensitive.

In the coming year IAG will be reviewing the business sustainability reporting suite to ensure that our reporting reflects our devolved operations and provides our stakeholders with the most relevant and useful information.

Engagement is managed across the Group, focussing on:

• gauging stakeholder expectations;
• identifying and acting on the gap between those expectations and reality;
• educating stakeholders on our business, how it operates, and what we aim to achieve;
• taking on board feedback from our stakeholders, to inform our strategy and internal decisions;
• continuous monitoring of changing stakeholder views and needs; and
• maintaining a relationship of mutual respect, building credibility and earning trust.

Effective stakeholder engagement is a key strategic priority for IAG, so each division is accountable for demonstrating how they are engaging with their stakeholders. How this feedback feeds back into our business will depend on the stakeholder and nature of the engagement with them.

Engagement with our people, our customers and our community is discussed within the Workforce, Customer and Community sections of the website. However there are also a number of other key stakeholders that IAG engages with to seek feedback and input from on a regular basis:

Shareholders
Government and regulators
Suppliers
Business organisations and industry bodies
Unions

Shareholders

As well as institutional investors, IAG has one of the largest retail investor bases in Australia, with around 865,000 retail shareholders.

Our shareholders clearly have an interest in our financial success, as well as the ability to shape that success through their investment decisions.

We engage in and encourage dialogue with all shareholders, through a variety of formal and informal channels including:

• Half and full year results announcements, webcast via our website;
• Investor reports;
• Annual General Meeting – while we encourage shareholders to attend, we webcast the AGM for those who are unable to do so;
• Annual Review and Report;
• ASX announcements, also posted on our website;
• Investor strategy days;
• Investor road-shows following half and full year results announcements;
• A shareholder centre on our website that provides up-to-date and relevant information;
• One on one meetings with shareholders held throughout the year;
• A dedicated investor relations mailbox for retail investors.

Government and regulators

We engage with governments on a number of areas of policy, including regulation and prudential supervision, consumer protection and taxation.

In addition to representing our own and our stakeholders’ interests, we provide support in a range of ways, from writing statutory insurance classes such as compulsory third party, to helping ease the strain on government services after a natural disaster by looking after our customers.

IAG maintains a dedicated Government and Industry Affairs unit, and operating businesses are also actively involved in the public policy process. We participate in parliamentary inquiries, make submissions and research policy issues to provide insurance protection and security to the community. All public submissions to Government are available to view or download. 

As an international group, we engage with governments in Australia, New Zealand, the UK, and across Asia.

In Australia we are in continual dialogue with:

• the Federal and State Governments;
• federal regulators such as Australian Securities and Investments Commission (ASIC), Australian Prudential Regulation Authority (APRA) and Australian Competition and Consumer Commission (ACCC);
• statutory scheme regulators such as WorkCover Authority and relevant motor vehicle third party liability regulators; and
• industry associations such as the Insurance Council of Australia (ICA) , Business Council of Australia (BCA), and Australian Services Roundtable.

In New Zealand, we have contact with the national government, as well as the New Zealand Securities Commission and the Commerce Commission and the Ministry of Economic Development.

In Asia, IAG has ongoing relationships with regulators in the countries in which we operate, including the Insurance Regulatory and Development Authority (India), the Ministry of Finance, Office of the Insurance Commission (Thailand), Bank Negara (Malaysia), Monetary Authority of Singapore (Singapore) and China Insurance Regulatory Commission (China).

In the United Kingdom IAG engages with the Financial Services Authority and Lloyd’s of London.

IAG does not make direct contributions to any political party. However, IAG does engage in the democratic process by participating in lunches, dinners, conferences or other events with political parties. IAG representatives will make a financial contribution to attend these functions and events. Consistent with Australian legislative requirements, IAG discloses all political contributions that are made to political parties.

IAG's political contributions policy contributes to IAG’s long-term sustainability by our commitment to excellence in all of our dealings with policy-makers, regulators and public officials.

Suppliers

Our suppliers enable us to provide a service to our customers. Our suppliers are crucial to our ability to help customers recover after a claim, through providing smash repairs, building services, whitegoods, medical treatment and a range of other services.

The management of supplier relationships sits with the businesses which are closest to them, with only some procurement located centrally. Both formal and informal channels exist to manage these relationships within our supplier guidelines.

Supplier guidelines (XXkb .pdf)

Formal:

• contract re-negotiation;
• quarterly performance report feedback;
• monthly KPI meetings; and
• specific sustainability reporting queries/feedback;

Informal:

• ad hoc queries; and
• day-to-day contact.

We aim to establish strong relationships with our suppliers and facilitate a two-way dialogue. This means we can anticipate issues before they occur, and address them quickly if they do.

Business organisations and industry bodies

Participation and involvement in business organisations and industry bodies is encouraged where relevant for the Group. For example we are actively involved with the Insurance Council of Australia, Business Council of Australia (BCA),  Australian Services Roundtable, the World Business Council for Sustainable Development and the Geneva Association.

Our employees and the business as a whole are involved in a number of business organisations and industry groups. Where relevant and appropriate, we encourage our people to take part in public debate on areas of relevance to our core business. Our managers regularly speak at seminars, conferences and public hearings.

Unions

Our consultation process with the Finance Sector Union (FSU) is detailed in the IAG Enterprise Agreement 2003 (Agreement). Under the Agreement, we consult with the FSU regarding workplace change programs impacting on employees.  There are also specific consultation provisions dealing with situations when positions are being made redundant and/or employees are being retrenched.

IAG representatives meet with the FSU on a regular basis to discuss any issues that may impact on employees who are FSU members.  In addition, FSU representatives are invited to address new recruits at our induction programs and may assist employees in accordance with the grievance procedure contained in the Agreement.

These processes are similar in New Zealand and detailed in the respective union collective employment agreements.