“There’s unfortunately still quite a lot of cost coming through,” he said,noting that higher costs of building products,the greater frequency and severity of large events and higher reinsurance costs would be reflected in pricing,especially for home insurance.
It comes amid aparliamentary inquiry launched last year into the insurance sector examining issues including the affordability of insurance. And,as December-quarter consumer price index data revealed,insurance and financial services showed the highest price increases across the year,with insurance prices rising 16.2 per cent – the strongest annual rise since 2001.
Hawkins said the outlook for motor insurance premiums was better for customers on the back of lower second-hand car prices and easing inflationary pressure for parts,and that he expected high single-digit growth in premiums over the next 12 months.
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“I think there’s two slightly different stories there,” he said,with property premiums continuing to increase by at least 10 per cent a year and motor premium growth expected to ease slightly.
Over the half,IAG’s net profit dropped 13 per cent to $407 million. Shares in IAG fell 3.5 per cent to $6.10 a share on Friday.
Hawkins said there was a slowing down in IAG’s volume growth,with the insurer’s direct business in New Zealand going backwards and its direct business in Australia growing by a relatively modest 20,000 customers.