Digital claim lodgements processed by Insurance Australia Group’s (IAG’s) Direct Insurance Australia (DIA) arm – which includes high-profile consumer-facing brands NRMA Insurance, RACV, CGU, SGIO – have nearly doubled over the last year, as the insurance group advances on its “digital to the core” objectives.
Announcing details in its 2023 Half Year report, released on Monday, IAG revealed that 47 per of motor claims and 36 per cent of home claims are now lodged online, up from 27 per cent and 20 per cent, respectively, over the previous corresponding period.
Online business sales within the DIA are also up, with IAG reporting NRMA’s NSW, Queensland and Tasmanian insurance arms increasing overall digital sales by more than 13 per cent (with a total of 42 per cent conducted online). However, online renewals remained steady, year-on-year, at 39 per cent.
“Customer take-up of digital channels gained traction over the half and we are seeing further simplification gains through supply chain and claims initiatives,” IAG chief executive Nick Hawkins said in his presentation to investors.
Hawkins added that “new mobile, automation and online features were introduced across IAG in the first half, delivering simpler and faster experiences for our customers, partners and brokers”.
The insurance group singled out the DIA’s successful introduction last year of a motor claims tracker (in May) and a property repair tracker (in September), noting that a total of 425,987 customers have made use of the capabilities since their respective deployments.
The tracker platforms also include the ability for customers to view content items and applicable settlement offers, pay their excess, upload documents, and discuss their claims with IAG representatives over webchat.
IAG said it now -also uses AI to predict whether a motor vehicle is a total loss after an accident, allowing its customers to promptly settle claims online after their vehicle has been assessed. According to the insurer, more than 45,000 customers have taken advantage of this claims experience.
The DIA is the largest single division of IAG, accounting for around 45 per cent of the group’s gross written premiums. The division also represents the largest share – at 29 per cent – of Australia’s general insurance market.
The DIA plays a lead role in advancing IAG’s ‘digital to the core’ objectives, with the goals of accelerating the group’s digital capabilities for customers and partners, modernising its policy administration systems, and deploying intelligent automation “to unlock the next wave of efficiency in our business”. This objective operates as part of the group’s ‘Grow with our customers’ strategy, aimed, IAG says, at increasing the group’s customer reach and delivering personalised, digitally enabled services.
Despite a more than 100,000 growth in customer numbers, the DIA reported an insurance profit drop of $22 million year-on-year ($167m in 1H23, compared to $189m in 1H22), representing an 8.9 per cent drop in its insurance margin.
IAG said the lower reported margin “reflects an earnings lag from rate increases implemented to offset higher claims inflation and reinsurance costs, modest reserve strengthening, offset by higher investment returns”.
Hawkins added that the wider group’s digital transformation objectives are “progressing well”, including the deployment of the group’s enterprise platform – a single, core insurance platform, first unveiled in late 2021, built to support the group’s digital growth objectives – now deployed in parts of the DIA and intermediated business units. IAG’s New Zealand business is set to commence deployment of the platform in the second half of FY23.
IAG reports that more than 80 per cent of its customer interactions are now delivered through digital channels, largely as a result of the progressive deployment of the platform.
The insurer attributed a 4.5 per cent reduction in gross operating costs over the 1H23 period partly to its “ongoing technology and system investment” in the enterprise platform, including investments in automation and artificial intelligence “to unlock efficiencies central to reducing expenses”.
IAG’s New Zealand arm also recorded a steady jump in digital policy sales, with a year-on-year increase of more than 22 per cent, with gross written premiums growing by 3.9 per cent across the group.
Further, home and motor digital claims lodgement for IAG’s NZ arm totalled 31 per cent this year, off the back of the recent launch of an in-app claims tracking functionality, available through its AMI and State apps, that enables claimants for single vehicle accidents to lodge and track their claim.
“The relaunch and continued uplift of the AMI and State apps [has allowed] our customers to fully interact with their policies in a mobile app for the first time,” the report read.
“Since the launch in late June 2022, over 150,000 of our customers have downloaded, and over 20 per cent who have the app, have used it in the last month.”
Hawkins revealed during his presentation that half-year profits for the group had risen to $468 million, up from $173 million in the previous corresponding period.
This was propped up by $252 million in provisions remaining from Covid-19 business claims that did not eventuate.