Weather, fires batter the bottom line

PEOPLE wanting to buy insurance can expect higher prices if damaging weather patterns continue, the Insurance Australia Group (IAG) warned after the bushfire crisis knocked down its first half net profit by 43.4 per cent to $283 million.

The insurer’s natural peril claims, such as those from bushfire victims, cost almost $100 million more than its allowance for the six months to December 31. Heavy rain which flooded parts of southeast Australia last weekend also prompted IAG to lower full year margin guidance.

“The inescapable reality is if the cost of providing a good service goes up, someone has to pay for that,” chief executive Peter Harmer said as he explained the consequences for customers.

The insurer offers home and motor insurance through brands such as NRMA, CGU and SGIO.