IAG today reported a net loss of $460 million for the six months to December 31, primarily due to the expected cost of COVID-19 business interruption claims.

The figure compares to a $283 million profit for the previous corresponding period.

But CEO Nick Hawkins told insuranceNEWS.com.au he is pleased with the company’s underlying performance and momentum.

Gross written premium (GWP) rose 3.8% to $6.19 billion and the underlying margin increased to 15.9%. Insurance profit increased more than 33% to $667 million.

“On the underlying performance of the company the margins look good and there is a little bit of growth in the organisation,” Mr Hawkins told insuranceNEWS.com.au today.

“It just feels like there is a bit more momentum at IAG today than there was six or 12 months ago so we are pleased with that.”

GWP growth was “predominantly driven” by rate increases across commercial and home, and across all key classes in New Zealand, but there was also some increase in customer numbers.

“In our direct personal lines business across Australia and New Zealand we have seen increasing customers as well as pricing flow through the portfolios,” Mr Hawkins said.

“We haven’t increased the number of customers for some time at IAG so we’re really pleased with that.”

On the business interruption issue Mr Hawkins says the proposed second test case will being greater clarity on how policies respond.

“Assuming that we did not exclude a pandemic and therefore our policies respond, how do they respond? Our wording wasn’t put together to contemplate a pandemic scenario because we thought we’d excluded it,” he told insuranceNEWS.com.au.

“So therefore the second test case is really about creating those guardrails at industry level as to how our policies would respond assuming a pandemic exclusion doesn’t occur.

“What’s really important here is the way the industry addresses this with speed and brings the issues to a head as quickly as possible through the courts so we have clarity on whether or not the exclusion applies, and secondly the guardrails on how our policies respond to different scenarios.”