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IAG seeks to move past 'historical failures' amid shareholder anger

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IAG says the business has its sights set on the future, having made the necessary adjustments and actions to correct the lapses that plunged the insurance group into a full-year loss of $427 million.

Shareholder anger was apparent at last week’s annual general meeting (AGM), as 57% of votes cast went against the adoption of the insurer’s remuneration plan, which was presented in the insurer’s 2021 annual report.

One shareholder who took part in the AGM asked if it was time for the board members to consider their positions in light of poor results and mis-steps. Another asked if the insurer will remove current executives and managers and rehire former staff who performed well during their tenure.

Elizabeth Bryan, who stepped down as chairman after the AGM, as previously announced, sought to defend the insurer.

She acknowledged what she says is “justifiable shareholder displeasure” but stressed the insurer has held those responsible to account.

Major changes have been made within the business, with IAG now in position to look ahead, not back, she said.

“In short, we drew a line in the sand and moved to a focus on improving future performance, having dealt with historical failures,” Ms Bryan said.

“In restoring dividends and paying a short term incentive bonus, the board signalled both externally and internally that IAG had addressed the issues it faced, and was now focused on the future,” Ms Bryan said.

CEO and MD Nick Hawkins in his address says he expects the Intermediated Insurance Australia business to be a positive contributor to IAG’s long-term performance.

He says the insurer has already made many changes to its technical systems and risk maturity to prevent a recurrence of past issues.

“When we complete this work, we will be able to provide consistent products and services to customers wherever they are – from wherever our people are,” Mr Hawkins said.

“And there have been major improvements in our risk infrastructure. We have made significant progress in implementing a $100 million program of work to improve our fundamental risk practices.”

He says the business recorded mid single-digit gross written premium growth (GWP) in the first quarter of this current financial year.

“GWP guidance remains ‘low single-digit growth’ for the full year,” Mr Hawkins said. “It factors in portfolio management in Intermediated Insurance Australia.

“We still expect this to constrain volume growth for the balance of the year.”