IAG’s FY’25 natural peril costs come in below budget at ~$1.1bn

Insurance Australia Group (IAG) has reported estimated natural perils costs for the financial year 2025 of approximately $1.08 billion, which is $200 million lower than its allowance for the period.

Ahead of its FY’25 results, which will be announced on August 13th, 2025, the insurer reported that the costs include over 4,000 claims lodged from the New South Wales (NSW) Mid North Coast and Hunter Floods during May, with an estimated net cost of approximately $100 million.

Based on the natural perils cost favourability, IAG’s FY’25 reported insurance profit guidance range increases to $1.6 billion to $1.8 billion, from the previous $1.4 billion to $1.6 billion.

At the same time, the reported insurance margin guidance range increases to towards the top end of the 15.5% to 17.5% range, from towards the top end of the 13.5% to 15.5% range.

Gross written premium for FY’25 is expected to grow between 4% and 4.5%, which includes the impact of the Coles exit, adverse currency effects and multi-year workers’ compensation premiums, explains IAG.

Around 8% growth is expected in Retail Insurance Australia’s direct business with positive customer and unit momentum.

As stated in the financial update on May 15th, 2025, IAG is delivering solid GWP growth in direct home and motor segments in Australia; however, the New Zealand commercial business is experiencing softer market conditions.

Lastly, IAG New Zealand expects to report broadly flat GWP growth in AUD terms, an increase of around 1% in NZ$.

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