No one’s sure quite how IAG could make a killing in the public liability and professional indemnity markets, but CEO Michael Hawker has a plan. Whether that plan involves brokers isn’t yet clear.

Mr Hawker told a recent Australia-Israel Chamber of Commerce audience that if all goes well with the legislative reforms being adopted in NSW, IAG may expand into the two volatile markets.

“We are actively looking at entering into some of the different insurance markets that we are currently not in,” Mr Hawker said. “We for instance do not write public liability insurance on a broad base. It’s part of our home policy and it’s part of our business policy, but we are not independent public liability insurers.”

IAG Head of Media Relations Jason Falinski told Sunrise Exchange News that some market research has been carried out into the company’s entry into the liability markets, but there is still no concrete plan to expand because a lot of the NSW reforms are yet to go through.

“We have started some research so we can make educated guesses of the impact, but until there is clear legislation for us to look at we really don’t know,” he said.

Nor has the company worked out distribution possibilities. Mr Falinski was not able to indicate whether the insurance would be sold direct or through brokers.

An expansion into new markets would allow IAG to meet its aim of doubling in size within five years. But with major losses for the insurer anticipated for 2001/02, some observers suggest that may be difficult to achieve.

Mr Falinski said IAG will assess the commercial viability of the markets they want to expand into as “stand-alone markets. But obviously we’d need to consider our capital adequacy reserves as [expected losses] would make an impact.”

Mr Hawker said if the insurance market stabilises with the legislative changes being considered in NSW, insurers will be able to charge lower premiums. “If we see the second leg of what’s been proposed by the NSW Government get legislated, then I think that they’re creating an outcome which is measurable.

“If the law was changed, and we think the market’s stabilised… we are likely to go into that market.”