Insurance Australia Group
(ASX:IAG) has flagged further increases in premiums above the rate of inflation as events become more risky to insure.
Yesterday, IAG CEO Mike Wilkins delivered on his commitment two years ago to turn around the fortunes of the group, by unveiling a $329 million first-half profit. The general insurer's net profit for the December 31 half was up from $4 million previously and significantly better from the $261 million loss in the 2008 financial year.
Mr Wilkins said that, in the final six months of last year, the weather was milder than usual, resulting in natural peril claim costs of $121 million, considerably lower than the $166 million IAG had put aside to cover those types of claims.
However, Mr Wilkins said the way IAG priced weather-related events focused on long-term trends, which were still volatile.
Also adding upward pressure to insurance premiums are more valuable household goods, such as plasmas TVs that need to be insured, plus a continuing rise in wages and wage compensation claims.
IAG’s 2009 net profit came to $181 million.
