IAG today announced plans to add one million new customers primarily through the expansion of the NRMA Insurance brand as part of CEO Nick Hawkins’ five-year vision for the business, which also involves the revitalisation of the insurer’s loss-making intermediated division.

At this morning’s business update the insurer again reaffirmed its earnings guidance, confirming it aims to achieve a 10-12% reported insurance margin for this financial year against a backdrop of “low single-digit” gross written premium growth.

The five-year business growth agenda outlined by Mr Hawkins and his team follows what has been a difficult period for the insurer, having made a $427 million loss in the last financial year.

Measures have been taken to avert a repeat of the past lapses that led to the FY2020/21 loss, which includes a $1.15 billion pre-tax provision for business interruption claims related to the pandemic and $238 million for customer refunds arising from past pricing issues.

“We’ve gone to a lot of trouble over the last year or two years to significantly [change] the way we run the company,” Mr Hawkins said.

He says the business interruption issue “was partly driven by lack of some of that accountability and some of the complexity in actually how we were set up as a company”.

“We are confident on the settings we now have on that to ensure that things like the issues around business interruption do not happen again,” Mr Hawkins said.

He says his five-year blueprint to expand the insurer’s current 8.5 million customer base in Australia and New Zealand by one million to take it to 9.5 million is already taking shape through the launch of the NRMA Insurance brand nationally to WA, SA and the NT and introduction of Rollin’.

IAG launched Rollin’ last month with a digital motor insurance offering aimed at consumers in their 20s and 30s.

“Our direct business in Australia has launched its growth plan, taking NRMA Insurance national and setting itself up as a serious player in the youth market with Rollin’, and our New Zealand business continues to strengthen its foundations and deliver ongoing strong results,” Mr Hawkins said.

Direct Insurance Australia aims to bring on board 750,000 of the one million customers the company is targeting over the next five years and deliver $400 million of value through initiatives to increase claims and supply chain effectiveness.

Direct Insurance Australia Group Executive Julie Batch says the business is not attracting as many younger customers as it should, describing the situation as a “missed opportunity”.

“It is absolutely critical for our future that we build our customer base now by introducing our brands and creating relationships with Australians at a much earlier age,” Ms Batch said.

“So, we are solving this problem by launching a digital business for the younger generation.”

She says next year Rollin’ will expand its offerings to include usage-based insurance, single item and renter’s insurance.

Intermediated Insurance Australia Group Executive Jarrod Hill, who took up the role in September, says steps taken to improve the division over the last 18 months are now beginning to flow through to profitability.

These steps include exiting the IAL personal lines business.

He reiterated the division still aims to achieve an insurance profit of at least $250 million by the 2023/24 financial year. The division lost $10 million in the last financial year.

“Work is already underway to consolidate our product set and we are continuing to improve our pricing and portfolio management capability,” Mr Hill said.

“Our intermediaries will see a more responsive Intermediated Australia that offers certainty around the risks we will and will not write.

“We will also be more consistent around pricing and risk selection so that brokers and partners can confidently promote our products to their customers.”

Mr Hill says he is establishing a dedicated underwriting office for Intermediated Australia to drive a “step change” in its underwriting process and will appoint a senior leader to this role in the very near future.