IAG has raised its full-year natural perils forecast by 36.6% to $1.045 billion and lowered its reported margin guidance following SA and Victorian storms that have been declared a catastrophe by the Insurance Council of Australia (ICA).

The insurer in August had boosted its net perils cost forecast for this year to $765 million from $658 million in the previous 12 months, post quota share, but IAG says experience for the fiscal year to date has been seasonally unexpected and has exceeded assumptions.

The $280 million increase announced today equates to about 360 basis points at the reported insurance margin level, leading IAG to lower its guidance range to 10-12% from 13.5-15.5% previously.

“We remain confident in IAG’s operational momentum in FY22, after the strong start in the first quarter that we reported at the recent AGM,” CEO Nick Hawkins said.

The southeast Australia storms declared a catastrophe by ICA brought hail damage in SA and severe winds that toppled trees and damaged property in Victoria. Intense storms also hit Queensland on the weekend.

IAG had received approximately 14,000 claims by 4pm yesterday, with the number expected to rise over coming days. The net cost for the event is anticipated to be $169 million, the maximum retention for a first loss under the insurer’s catastrophe program.

“Our major event team is in place all year round to respond to severe weather events like this and we have allocated extra resources to support our customers impacted by the recent weather events,” Mr Hawkins said.

“We have people on the ground across SA and Victoria assessing claims and commencing repairs, and our drive-in specialist hail repair sites will be open from next week in Elizabeth and Salisbury South in Adelaide to assess and triage hail-damaged vehicles.”

IAG’s $1.045 billion figure includes $535 million for the first four months of the financial year.

The figure for the year to date, in addition to last week’s storms, comprises $204 million for the September quarter, $142 million for other weather events across eastern Australia in October and $20 million for attritional events last month.

The insurer had bumped up its perils allowance for this financial year after disaster claims exceeded expectations last year and in the 2020 financial year, which included the Black Summer bushfires and major hailstorms.