Australia’s 2022 nat cat claim to reach whopping $770m: IAG
Extreme weather events have raised IAG’s expectation for natural perils claim costs.
The Insurance Australia Group Limited (IAG) has increased its expectation for FY2022 net natural perils claim costs to A$1.045b ($770m) compared to the previous assumption of A$765m ($568m), following the South Australian hail and Victorian wind event, and other events that impacted the second half of October.
“Net natural perils claim costs for the first four months have exceeded IAG’s previous assumptions by approximately A$280m. The revised FY2022 expectation also includes approximately A$510m for perils events for the remainder of the financial year,” IAG said.
IAG previously advised that they will raise the natural perils allowance significantly from 2021 to 2022, however the insurer said that claims experience year-to-date has been seasonally unexpected and has exceeded the assumptions underpinning the increase.
The A$280m increase in net natural perils claim costs equates to approximately 360 basis points at the reported insurance margin level. As a result, IAG has lowered its FY2022 reported insurance margin guidance range from 13.5 - 15.5% to 10.0 - 12.0%. Other assumptions remain unchanged, with inherent uncertainty in the revised net natural perils claim costs expectation.
IAG estimates that the A$270m (post-quota share) deductible attached to the FY22 aggregate cover has been eroded by A$209m as a result of recent weather events. Total protection available under the aggregate cover amounts to A$236m, post-quota share. After allowing for quota share arrangements, the combination of all catastrophe covers on 1 November results in IAG having a maximum event retention of A$95m.