Amanda Whiting: IAG chief executive on the company reporting a tenfold increase in insurance profit

IAG, the country's largest insurer, has reported a significant increase in insurance profit in the 12 months to the end of June.

The company, which owns the State, AMI and NZI brands, said it had collected 19 percent more in premiums from retail customers in New Zealand than in the previous year.

Chief executive Amanda Whiting says the company has worked through a big year for the sector. 

"We've been focusing on supporting customers who we know have been experiencing cost of living challenges - so we've been doing a fair bit around that, we've been making sure that we're bolstering our customer care."

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Episode Transcript

Speaker 1 (00:00):
Now New Zealand's biggest insurance company, IAG has reported a
half a billion dollar profit for the year. That's up
nearly one thousand percent on last year. This is the
company that owns State Ami INSIYE various others as well.
Amanda Whiting is the chief executive. Hey, Amanda, hi here
there are you going? Well? Thank you? That's a big one,
isn't it?

Speaker 2 (00:19):
The year?

Speaker 1 (00:20):
Yeah?

Speaker 2 (00:21):
Half a billion big year.

Speaker 1 (00:23):
Why do you say it's a big year.

Speaker 2 (00:25):
It's been a big year because we've been working through
the tail end of our claims from the big event
in twenty three. It's also been a big year because
we've been focusing in on supporting customers. So we know
as sort of experience and the cost of living challenges,
so we've been doing a fit bit around that. We're
making sure that we're bolstering our customer care team, making
sure that we're supporting those customers who do need that

(00:47):
support through things like deferring their payments or pausing their insurance,
reviewing their cover, making sure they're not paintings that they
don't need, looking at ways that we can support them
around payment methods, and making sure we're not charging them
to that and then also obviously making sure we're at
claims time if it makes sense, then we're waiving excesses.

(01:07):
You know, it's pretty important from a profit perspective that
we run a sustainable business. We need to be here
to pay claims. And if you compare this year to
last year, sure there's a big difference, but actually if
you look over the last five years, it's it's about
the same. Well, it is about the same underlying so.

Speaker 1 (01:26):
Well, because but you're talking about underlying, let's just look
at the net profit right this year is five hundred million.
Year before, sure, yeah it was a low one. It
was less than fifty year before two four two, two
hundred and forty two million, year before three hundred and
thirty four million, year before three hundred and fifty seven million.
Five hundred million is much bigger than anything else.

Speaker 2 (01:44):
There, much bigger base to heather. So one of the
things that I'd like to highlight is we cover over
a trillion dollars worth of our sets currently. Over those
years that would have been a lot different. And so
you know, cover a trillion dollars of assets. You need
to make sure that you are making money because we
absolutely needed to make money to pay claims, and we

(02:06):
can't predict what's going to happen, So something could happen
today and we need money in the account to pay
claims for customers perceiving it or to worry. And that's
really important because it's such an important part of our economy.
You know, we need to make sure that there are
sustainable insurance companies out there that are able to pay claims.

Speaker 1 (02:23):
So this year, the retail customers pay premium increases of
nineteen percent? Is that right?

Speaker 2 (02:29):
Yeah? That is right? Yep?

Speaker 1 (02:30):
Or was it the year before?

Speaker 2 (02:33):
I think it was slightly less For what I've been
in the high high single digit.

Speaker 1 (02:37):
I think it was twelve. Well, at least that there
was the gross the gross profit, yeah, premium.

Speaker 2 (02:43):
Look at the thing, and if I talk about.

Speaker 1 (02:44):
Amanda and the year before, I just want to I
just want to follow this through though. In the year
before it was seven percent. So what's going on here?
Like if we just look at the gross premium that
you're charging fifteen percent this year down to seven percent
two years ago, how has it more than doubled two years?
How's that justifiable?

Speaker 2 (03:02):
Oh, there's a lot of input costs here. Head One
of the biggest drivers of the cost is reinsurance and
we all know that reinsurance is actually the insurance that
we buy to ensure that we're protecting against a big event.
Over the last three years, our insurance has gone up
sixty one percent and that has had a significant impact
on premiums in New Zealand. And so again, we just

(03:24):
need to make sure that we are you know, charging
the premier and it's appropriate to make sure that we're
a sustainable business.

Speaker 1 (03:31):
I mean, that would be okay, right, Amanda, would be
I would be fine with that if you guys were
ending up with a profit that looked a little bit
lease than it is. But it looks like you're banking
a lot of that stuff for yourselves. It's not just
going out to the reinsurers.

Speaker 2 (03:45):
Yeah, look, I think it is. I mean, it's a
pretty volatile industry to be in. You'll see this go
up and down. You need to look at a multi
year event like we just seemed to look at that
through the multi years and you know, it might look
on its own like it is a large profit, but
remember where anything could happen tomorrow. When we had two
hundred claims out of an event last week. You can

(04:05):
just have these events just pop up at any time,
you know, I get that.

Speaker 1 (04:08):
Okay, So do you need to have a certain level
of cash in the bank in order to feel yet comfortable.
We can cover everything.

Speaker 2 (04:14):
Absolutely when we want to have the right level of capital. Oh, look,
it's a different you know, we structure our capital quite differently,
and I am not the expert on that, but we
need to make sure that we've got the right level
of capital.

Speaker 1 (04:27):
What happens when, Amanda, when you guys have got enough
money in the bank, do you start dropping the premiums
right down to single figure increases again?

Speaker 2 (04:34):
Yeah, look what I am expecting to see this year, Actually, Heather,
it is a bit of relief. So we're looking at
sort of being much more in line with inflation this year.
Because we have secured our reinsurance, we're seeing some of
the inflation come off and we want to pass that
back to customers. And when the other thing that we
do is we're focusing on our own expenses. Of course,
that's really important. We don't want to be charging customers

(04:57):
more than they need to pay. So we've been doing
a lot of work reducing our extincts so that we
are not part of anything additional customers.

Speaker 1 (05:04):
All right, So what CPI at the moment, is it
like about three and a half or thereabouts.

Speaker 2 (05:08):
Yep, about that.

Speaker 1 (05:09):
So that's what we should be looking forward to as
a three and a half percent premium increase.

Speaker 2 (05:13):
Yeah, we're seeing, we absolutely seeing things stabilize. So I'm
thinking that it's going to be more like that for
our personal ed customers.

Speaker 1 (05:21):
Well, that just sounds fantastic. Amanda really appreciated. Amanda Whiting,
chief executive at IAG New Zealand. For more from Hither
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