IAG shareholders, who are also employees, hit out at the insurer’s proposed pay deal as simmering tensions over remuneration conditions spilled into the open at today’s virtual annual general meeting.

One of the shareholders says the wage proposals as put forward by IAG were “insulting” to staff who have stood by the business during difficult times. The insurer was also accused of having a “bias against re-employing past staff”.

As insuranceNEWS.com.au has reported, the Finance Sector Union has threatened industrial action.

IAG again defended its proposed enterprise pay and conditions agreement, which was made following the August 2020 pay review and reflected the business impact of COVID-19. There would be no increase in fixed pay for senior managers including executives and no increase in fees for directors.

Eligible employees below the top three layers of management were given a fixed pay increase of 1% and noone received a payment under the insurer’s short term incentive plan for the last financial year.

“We also believe that the remuneration structure that we have throughout the organisation is fair to our executives and to all our staff members, that we pay good market rates to all our people and that we have a very positive working environment,” Chairman Elizabeth Bryan said.

Outgoing CEO Peter Harmer says the insurer has “re-included reference to the [short term incentive]” following representation from the union after having initially removed it from the enterprise agreement.

“In relation to the enterprise agreement, originally we did seek to eliminate reference to the [short term incentive] not because we were concerned about paying it,” Mr Harmer said.

He says it was “simply because as we have had the experience of this year already, there may be financial circumstances when we are unable to pay a short term incentive or to pay a bonus.”

“It is a bonus which is designed to reward superior performance and I think it’s really important that we continue to have that sort of mindset towards our bonus,” he said.

Mr Harmer says the decision to offshore jobs to India and the Philippines a few years ago "raised some risks" when the pandemic broke out. He made the comments in response to a shareholder who said outsourcing the jobs to another country has left consultants unable to fully manage case situations.

According to Mr Harmer, the insurer has since moved more than 500 roles permanently back here and to New Zealand.

IAG says it has dropped its initial support for a plan to raise by 14 metres the wall of the Warragamba Dam in the Hawkesbury-Nepean Valley region.

The insurer says it made the decision after it was made aware the plan could lead to the probable loss of significant Indigenous cultural heritage sites and important natural habitats.

The decision led to the withdrawal of resolutions at today’s meeting by the Colong Foundation for Wilderness, which has been urging the insurer to drop its support for the wall extension.

Mr Harmer also provided a trading update for the first quarter of the 2021 financial year, ending September 30.

“In the opening quarter we have recorded low single digit gross written premium growth, despite incurring an adverse foreign currency translation effect from New Zealand,” he said.

“Our insurance profit for the quarter reflects the seasonally low incidence of natural peril events in this period, while underlying profitability has been similar to that seen in the second half of the previous financial year.

“Within our underlying insurance margin, COVID-19-related effects have been broadly neutral in aggregate during this period, with some benefit from lower motor claims frequency offset by incremental expense and provisioning impacts.

“And we continue to retain a strong capital position, well above our targeted benchmarks."

Mr Harmer is retiring, to be replaced by former CFO Nick Hawkins on November 2.