IAG

IAG CEO Peter Harmer To Retire

IAG Chairman Elizabeth Bryan has announced that Peter Harmer, IAG Managing Director and CEO, has announced his intention to retire by the end of the year.

Harmer has agreed to a nine-month period of transition to ensure a smooth changeover while a search for Harmer’s replacement takes place. Nick Hawkins, IAG CFO, has been immediately appointed as Deputy CEO and will be accountable for the management and performance of the company’s day-to-day operations during the transition period.

Mark Milliner, IAG CEO Australia, continues to lead the Australian business and remains focused on business growth and responding to the bushfire recovery process, as well as the ongoing operational challenges of COVID-19.

Bryan said that the company was fortunate to have two such experienced and well-respected executives in Hawkins and Milliner during the transition period.

“The arrangements we have announced today reflect the strength and stability of our senior management team and will ensure the smooth operation of the company through challenging times,” said Bryan. “The board has been in discussion with Mr Harmer for some time about his plans following a period of illness last year, and the company is well prepared for a transition.”

IAG says Harmer will remain responsible for the overall strategic direction and performance of the group during the transition period and will directly lead the company’s response to the COVID-19 emergency. Bryan said Harmer has made an enormous contribution to IAG and was widely regarded as one of the best insurance executives of his generation.

“Peter has been pivotal to the creation of a more innovative and customer-focused IAG,” said Bryan. “He has taken important steps to simplify the company while driving a culture that values digital innovation and puts the customer first. Peter will leave IAG in a strong position for future success.”

“It has been a tremendous privilege to lead IAG and after five years in the role, I believe it’s the right time to hand over the reins to my successor, who will lead the next stage of IAG’s growth and evolution,” said Harmer. “My immediate priority is guiding IAG’s response to, and recovery from, COVID-19, as well as managing our key external stakeholder relationships in what is an increasingly complex and dynamic environment.

“As confirmed in IAG’s business update on 30 March 2020, the underlying performance and financial position of IAG remain strong. We are well-placed to maintain and build on that as we meet customer needs through our core insurance offerings and adjacent and complementary services, conducted under an iconic range of leading brands.”

Mike Wilkins Becomes QBE Chairman

QBE Insurance Group has announced that former IAG CEO Mike Wilkins has been elected to take over as Chairman of the Group Board, starting from 1 March 2020.

Wilkins succeeds W. Marston Becker who is not standing for re-election, and who will retire from the Board on 30 April.

Wilkins joined the QBE Group Board in November 2016 and is currently Deputy Chairman of the People and Remuneration committee. He is also a member of the Audit and Operations and Technology committees.

Wilkins was previously the Managing Director and CEO of Insurance Australia Group (IAG).

IAG Presents Auto Industry Scholarship Award

IAG has teamed up with AAPR’s Auto Industry team to recognise and assist automotive repair businesses that support the collision repair industry and employ apprentices.

As a result, IAG presented the AAPR Auto Scholarship Award to Cessnock Smash Repairs and its apprentice, Matt Brandt, the first winners of the award.

“This Auto scholarships programme provides a unique platform and opportunity to support the collision repair industry, that aligns to IAG’s vision,” said Troy Johns, Specialist – Industry Relations at IAG. “AAPR’s Auto Scholarship programme, supported by WorldSkills Australia, SAPE and other key industry stakeholders, reflects our focus on supporting emerging talents, the future of vehicle repairs and the rapidly changing technology in the modern motor vehicle. It is exciting and a great pleasure to congratulate our first recipient, Cessnock Smash Repairs and their apprentice Matt Brandt.”

Cessnock Smash Repairs is a family-based business that has been operating for over 30 years, run by Greg and Jennifer Gearing, supported by their two daughters and many long-standing employees.

“We have great pleasure in accepting this award from Troy and would like to thank the local Newcastle team from IAG, Greg Preston [from] AAPR, Ian Vickery [from] WorldSkills Australia, Adam McDonald [from] TAFE NSW Glendale campus and a special thanks to Beau Knowles from Sydney Automotive Paints and Equipment, which supplied and contributed to this award with a GYS induction system,” said Jennifer. “This will complement our high standards in auto repairs using innovative equipment which benefits our whole team and our customers.”

Insurer-Owned Repairer In NZ Said To Reduce Consumer Choice

An automotive industry association in New Zealand is warning the quality of vehicle repairs may drop as IAG opens its own panel beating shop under a new trial.

The new model proposed by the company, which in New Zealand includes Lumley, NZI, State and AMI, would see its customers required to have their vehicle repaired at an IAG-owned repairer.

Neil Pritchard, General Manager of the Collision Repair Association (CRA), has branded the move anti-competitive and says it signals the erosion of consumer choice and competition in the industry.

“Our concern is that under a model where the insurer dictates the standard and scope of the repair, there will be no oversight in place to protect the consumer,” said Pritchard. “Even seemingly minor or cosmetic repairs to modern vehicles may have underlying damage to sensitive radar and sensors, requiring specialist expertise and equipment to diagnose and effect suitable repairs, and it is important that motorists have a resolution structure in place which provides a degree of independence in the event of any issues.”

Pritchard says customers may also find their new vehicle warranties are voided if repairs are not made at an approved repairer, especially if genuine parts are not used.

“While the Consumer Guarantees Act will remain as a potential means of redress, the prospect of facing their insurer in a disputes tribunal hearing will be off-putting for many motorists. It is also unclear what happens if a customer has a poor service interaction with an IAG repair shop and whether they will be forced to use it again in the future if they remain with that insurer.”

Pritchard says there are also potential concerns around how this move will be communicated to customers.

“Existing customers of IAG may see the fine print of their terms and conditions simply adjusted when it comes to their annual renewal. New customers may be required to ‘opt-out’ when applying for insurance for the first time or face higher premiums,” he says.

Pritchard says IAG’s claims that the new venture is necessary due to processing delays in the current repair network is only a smokescreen for the introduction of a purely profit-driven strategy.

“This model is rare overseas, and the move to become more vertically integrated here is purely profit-driven and at the expense of consumer choice. Our concern is that New Zealand consumers are being used as part of a trial which could then be expanded into their other markets through IAG Australia. We would like to see the insurer working more closely with existing repairers to help reduce repair times and communication with customers.”

IAG Net Profit Boosted By Thailand Pull-Out

Australia’s Insurance Australia Group (IAG) announced that its net profit for the financial year ended 30 June 2019 jumped by nearly 17 per cent to A$1.08 billion, more than the A$1 billion predicted by local analysts.

The main factors in IAG’s profit jump are the sale of its Thai operations, strong performance by its Australian Personal Insurance division and strong growth in New Zealand.

Profit in the insurance division dropped by 13 per cent due to large natural disaster claims, but the sale of the Thailand operations brought in profit of more than A$200 million.

IAG Acquires Majority Stake In Digital Car Subscription Platform

Insurance Australia Group Limited (IAG) has acquired a majority stake in trading platform and digital car subscription service, Carbar.

Carbar was established in 2016 in Melbourne, expanded to Sydney in June 2019, and is Australia’s first car subscription platform. It caters to customers looking for alternative forms of vehicle ownership and now has plans to expand across Australia in 2020.

Carbar offers a car subscription starting at $109 per week which includes registration, insurance, roadside assistance and maintenance. IAG hopes to better understand the changing mobility trends while providing new sources of value to customers through Carbar.

Carbar plans to expand its vehicle subscription model while supporting the growth of its online car trading platform that removes the uncertainty often associated with buying a new or second-hand car.

“We are thrilled to partner with Carbar which will play a central role in our approach to the future of insurance and the changing mobility needs of our customers,” said James Orchard, IAG Executive General Manager of Innovation.

“Carbar has pioneered the car subscription model in Australia. We look forward to combining its world-class digital capabilities with IAG’s assets and scale to provide new mobility experiences for customers today and in the future.”

 “IAG’s support will be instrumental in growing and developing our business,” said Desmond Hang, Carbar CEO and co-founder. “We look forward to working closely with its team to further expand Carbar and grow our car subscription capabilities.”

IAG Releases Its 2017-18 Quality Report

IAG has released its sixth Quality Report, providing an insight into the monitoring, assessment and quality repair standards across IAG’s nationwide property and motor repair network.

The report is the industry’s only statement that provides annual data on motor and property repair standards.

IAG Executive General Manager of Short Tail Claims, Steven Fitzpatrick, said the report reflects the importance IAG places on delivering safe, quality repairs and great customer service.

“In the past year we completed more than 60,000 quality inspections across our motor and property repairs,” said Fitzpatrick. “In the motor vehicle industry, the increased use of advanced technology is making the modern vehicle not only safer, but smarter. We’re focused on ensuring our assessors and partners continue to build their knowledge, keep up to date with the latest technology and are suitably trained.

“At the same time, we want to provide our customers with the best possible experience and the peace of mind that their vehicle is being repaired to the highest possible standard through our National Metropolitan and Rural Partner Network. This latest IAG Quality Report reflects our dedication to quality repairs, continued improvement and leading industry initiatives across the Motor and Property portfolios, to ultimately meet IAG’s purpose – we make your world a safer place.”

The report shows that IAG undertook more than 440,000 motor vehicle repair assessments and completed 54,108 quality inspections. Potential quality issues were identified in approximately four per cent of inspections.

For the sixth consecutive year, IAG achieved an I-CAR Gold Class Insurance Certification.

I-CAR Presents Gold Class Insurer To IAG

Mark Czvitkovits, CEO I-CAR Australia, presented the new Gold Class Insurer plaque to Steve Fitzpatrick, EGM Motor Repair Model, IAG.

IAG was the first and for several years the only Australian Insurer to attain this internationally recognised status. Their ongoing commitment to training has seen IAG retain their Gold Class accreditation for six years.

To attain and maintain Gold Insurer status a minimum of 60 per cent of the company’s assessors must maintain their individual Platinum Status by completing 10 initial I-CAR training courses then a further two courses in the following years. Nationally in excess of 90 per cent of IAG assessors have Platinum status.

Insurers Reject Royal Commission Claims Of Misconduct

Some of Australia’s leading general insurers have rejected allegations of misconduct following examination of their behaviour during the Hayne royal commission’s sixth round of hearings.

Suncorp-owned AAI, which offers insurance under several brands including AAMI, denied the suggestion it had sold misleading policies, while Allianz rejected the commission’s findings of poor culture affecting compliance.

Insurance Australia Group accepted it engaged in conduct that fell below community standards but rejected counsel assisting’s findings that its behaviour constituted misconduct.

Youi also rejected claims made against it, saying counsel assisting Rowena Orr QC failed to prove the case studies were attributable to its particular cultural and governance practices. The company said council assisting sought to portray Youi in the worst possible light and urged the commissioner to reject the findings.

The Australian Securities and Investments Commission, under fire for failing to take appropriate action against insurers over issues raised during the hearings, said politicians are to blame.

“The insurance sector has been exempted from a range of laws which have seen ASIC’s ability to review the sector severely limited,” ASIC senior executive and former long-time head of the regulator’s insurance team, Greg Kirk, told the Australian Financial Review.”

Federal Treasurer, Josh Frydenberg, said he would look to introduce remediation power to help improve compensation outcomes for affected customers.

Insurers Under Fire At Hayne Royal Commission

General insurers have come under fire during the Hayne Royal Commission, which finished its examinations last Friday.

The commission heard insurers Allianz and IAG may have engaged in misconduct, while the Insurance Council of Australia (ICA) was criticised for failing to act against members that breached the insurance code of practice.

In relation to Allianz, Counsel Assisting Rowena Orr said the commission is open to find the company engaged in misconduct via misleading statements published on its website. The failure to report that misleading and deceptive conduct to ASIC and to have a compliance system in place could also amount to misconduct.

Orr said Allianz’s behaviour, which included seeking to manipulate independent reports, fell below community standards, adding that monitoring and supervision remains an issue for the company. According to Orr, Allianz’s culture fails to consider risk and compliance a priority, while the company responds defensively when challenged.

Swann Insurance also came under fire when Counsel Assisting Mark Costello suggested the commission could find the company engaged in misconduct by giving incentives to authorised representatives (ARs) to sell as many add-on policies as possible with no regard to the suitability of those products. Costello also told the commission that parent company IAG failed to properly oversee Swann.

Regarding the ICA, Orr told the commission the council had not applied any sanctions despite the code governance committee determining there were 33 breaches and around 31,000 incidents of self-reporting since July 2014.

In response, ICA CEO Rob Whelan said the council only applied sanctions when breaches are not remedied, resolved or corrected.

While acknowledging its limitations, Whelan told the commission the ICA believes in self-regulation and that the code should not form part of consumer contracts.

A report containing questions arising will be published on Friday 28 September, with the parties involved able to respond by October 1.