Our material issues
Material issues affect IAG’s ability to deliver on our purpose to make your world a safer place. IAG prioritises the most important issues through engagement with key internal and external stakeholders through an annual materiality process.
Customers, employees, partners, shareholders and the communities in which we operate have been engaged in this year’s process. We then prioritised these issues based on their impact on the economy, society and the environment and their potential to affect our business performance.
Understanding these material issues helps us to concentrate our efforts on the areas where we can achieve the best positive impact while delivering on our purpose.
The material issues we identified in 2019 are:
Post disaster relief and emergency response
More than nine million Australians have been impacted by a natural disaster or extreme weather event over the last 30 years. Through research, the Australian Business Roundtable for Disaster Resilience and Safer Communities has found that the total costs of natural disasters in Australia are forecast to more than double in real terms to $39 billion per year by 2050. IAG’s success is determined by how well we support our customers to get back on their feet when disaster strikes. We have a responsibility to support the people and businesses we protect when they need us the most and have the skills and experience to offer our customers rapid support to help them recover. We also promote disaster resilience and mitigation to help our customers and their communities be as prepared as possible for the risks they may face.
Customer and partner experience
Business success relies on the delivery of meaningful and valuable customer and partner experiences through the interactions we have every day, from face-to-face to technology solutions. For our business, this experience needs to be replicated across our network of operational partners, community partners, distributors and suppliers. Increasing customer and partner advocacy supports our purpose and organisational strategy. We are focused on putting the customer at the centre of decision making and believe this requires understanding of the diverse needs and behaviours of the customer segments we serve. Getting this right is critical to our long-term success.
Trust in institutions
Although research from Edelman through the Trust Barometer shows an increase in trust across government, business, non-government organisations and media, we continue to see the issue of trust in institutions raised in media and public discussion. Trust is also a particularly relevant issue for financial institutions after the Hayne Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. We believe trust is the foundation of our business and maintaining and building it is essential to our long-term commercial viability.
Access and affordability of insurance
Many people do not have adequate insurance cover due to affordability issues, a lack of understanding around the level of protection they require, or a lack of suitable insurance products. We know that inadequate insurance reduces the ability of individuals, communities and our economy to recover from adverse events. As a major insurer, we have a responsibility to ensure insurance remains accessible and affordable. With increased risk, this is not easy. We recognise the need for us to ensure products are in place to meet customers’ and community needs. We need to continue to focus on how insurance can be affordable for all, acknowledging our commitment to financial inclusion. We also need to assist customers and communities to understand the level of protection they require. If we focus on our purpose of making your world a safer place we will not only improve the resilience of our current customers and communities but also open new market opportunities for IAG.
Community connection and resilience
Communities are rapidly evolving and face new and increasingly complex challenges. Both individuals and communities need to be equipped with the knowledge and skills to survive, adapt and grow when facing stresses and shocks – whatever these may be. We know communities are more resilient when they are well prepared and connected. Communities which are resilient recover more quickly, adapt and thrive after shocks and stresses. They also rebuild and own assets more quickly, which provides insurance opportunities. Improving shared understanding of the risks people face is critical to improving safety on our roads, in our homes and in businesses.
Climate change and its impacts
We recognise climate change as one of the biggest threats to our society and way of life today. This risk is heightened through urbanisation and further coastal development. The risk of extreme and destructive weather events will increase if we don’t succeed in reducing our global greenhouse gas emissions. This is particularly relevant to our business. We are there when extreme weather events occur and pay out claims to help our customers and communities recover. As a result, climate risk presents clear challenges for the sustainability of our business – but it also creates significant opportunities. We are well-positioned to use our industry expertise to help customers, partners and communities understand and manage the changing risk environment, build resilience and navigate the transition to a low carbon economy.
Material issues are used to inform the IAG Strategy, including our safer communities’ approach. We also ensure the United Nations’ Sustainable Development Goals (SDGs) are an important consideration in the development of strategy, risk management and to ensure we are implementing business activities with consideration of the wider social, environmental and economic context.
Identifying our material issues
We identified a range of issues and topics through research and engagement including:
- Interviews and feedback from investors
- Customer and broker feedback and trends
- Customer and community insights from Human Centred Design
- Employee surveys
- Targeted stakeholder surveys as part of the materiality assessment
- Strategy and trend analysis and risk assessments
- Insights from the Ethics Committee and Consumer Advisory Board
- Insurance and banking peer review
- Media review
- Indices, standards and industry benchmarks such as Global Reporting Initiative (GRI) and Dow Jones Sustainability Index (DJSI)
We surveyed a range of stakeholders representatives, and some of our employees, and asked them to prioritise a range of economic, environment and social aspects based on importance to them.
We then held a cross functional materiality workshop to test the insights from the stakeholder surveys, and assess and prioritise our material issues. Participants included representatives from our insurance and operating divisions, as well as functions that align to external stakeholder groups (for example Customer Experience, Investor Relations and Corporate Affairs).
Issues and topics were mapped and prioritised on two dimensions:
- Importance to stakeholders, determined by levels of interest and concern
- Business impact, in the context of our financial performance and strategy, the regulatory and competitive environment. We also considered the areas where we can make the greatest positive impact.
Validation and review
Results from the materiality workshop were reviewed in the context of completeness and stakeholder inclusiveness, and feedback on the draft materiality matrix was sought from stakeholders.
Material issues were reviewed and approved by our leadership, and the materiality assessment was also reviewed by EY as part of the sustainability assurance process.
Our approach to reporting
Our safer communities reporting (including shared value and sustainability reporting) is developed in line with the Global Reporting Initiative (GRI) guidelines. In 2019 our reporting uses GRI Standards’ Reporting Principles for Defining Report Content of Stakeholder Inclusiveness, Sustainability Context, Materiality, and Completeness.
Since our inaugural report in 2004, we have obtained independent assurance of our sustainability and non-financial reporting. This year we engaged Ernst & Young (EY) to assure selected Customer, Community, Workforce and Environment indicators, as well as our adherence to the GRI G4 Principles for Defining Report Content of Stakeholder Inclusiveness, Sustainability Context, Materiality and Completeness.
The assurance was performed to a limited level in accordance with the ISAE 3000 Assurance Engagements Other than Audits or Reviews of Historical Financial Information standard.
Results of the assurance can be found in the 2019 assurance statement provided by EY.