Victorian storms hit IAG hard

Severe weather in Victoria in early March have resulted in around 24,000 claims, forcing IAG to cut its insurance outlook by between 1-1.5% to between 10.5 and 12% for the year to June 30.

IAG, Australia's largest car and home insurer, expected costs of the claims to reach and exceed its budgeted allowance of $135 million, after which its reinsurance cover would assist it to cover the rest.

Despite the hit, IAG's managing director and chief executive Michael Wilkins said that the immediate priority was to assist the group's customers who were adversely impacted by the hailstorms and heavy rain that lashed Melbourne between March 6 and 9 of this year.

He also added that despite the high costs of the claims, he was confident of meeting the insurance margin of 10.5-12% due to improved business performance.

A conservative estimate of the losses caused by the storm were estimated so far in excess of $250 million, which would make it Australia's most expensive disaster since the bush fires that razed Victoria in February 2009 on Black Saturday.  

The Insurance Council of Australia (ICA) says about 36,000 insurance claims have been lodged by owners of damaged cars, homes and businesses, but that number is expected to rise as the full extent of the damage becomes known.

 Fellow insurer Suncorp has also indicated losses arising from the storms, with forecasts by brokers expecting its profit to be cut by up to 8% for the financial year.