Revealed – divisions to be hit by job cuts at IAG

Revealed – divisions to be hit by job cuts at IAG | Insurance Business New Zealand

Insurance News

Revealed – divisions to be hit by job cuts at IAG

Trans-Tasman insurer says move aimed at reducing complexity

Insurance News

By
Terry Gangcuangco

Trans-Tasman general insurance giant IAG, the businesses of which underwrite more than AU$13 billion of premium per annum, is planning to axe over 50 jobs from four divisions as part of simplifying the operations of the group.

According to the Finance Sector Union in Australia, the proposed job cuts consist of 35 roles in finance; nine in group people, performance, and reputation; seven, risk; and three, technology and operations.

In a statement sent to Insurance Business, an IAG spokesperson said: “Over the past few years, we’ve made a number of changes to the company to focus on our core insurance business and provide the best possible service and support for our customers.

“As part of this, we’re taking further steps to reduce complexity and to simplify our business operations. We’re consolidating certain corporate functions and moving some support services into our customer-facing divisions.”

It was not clarified where the roles are based, i.e. whether or not the redundancies are concentrated in Australia and what effect, if any, they will have on colleagues in New Zealand.

An Insurance Business source, who works at IAG in Sydney, cited the planned ‘repointing’, adding that those whose jobs are affected are being notified directly. Meanwhile the spokesperson confirmed that the firm is currently consulting on the changes with impacted IAG staff.

“We understand this is a difficult time for those employees, and supporting them through these changes is our priority,” the spokesperson said.

IAG’s priorities and challenges

Last October, at IAG’s annual general meeting, managing director and chief executive Nick Hawkins (pictured above during the IAG Investor Day in June) highlighted the insurance group’s targets and strategic ambitions over the next four years. These include adding one million new customers and moving to 80% digital transactions by FY26 (financial year ending June 30, 2026).

The projected results are part of IAG’s priorities to grow with its customers, build better businesses, create value through digital, and manage the company’s risks. When these priorities were outlined, there was no mention of planned redundancies within the enterprise.

At this year’s Investor Day, Hawkins stated: “Two and a half years ago, I put together a plan and a team, and really what we were doing was aiming to focus on our core insurance business, to simplify what we do within the business, and resolving some of the legacy issues that we had.

“Of course, since then, us in the industry have faced what many talk about as an unprecedented sequence of events that have impacted us, and so, in a way, we’ve had to slightly course-correct… As we’re progressing these strategic initiatives, some of the outcomes have been masked by the challenges of the environment we’ve been running our business in.

“We’ve experienced a sudden increase in inflation, which had an immediate impact on our claims costs. We’ve had three years of La Niña weather system – it’s pretty much rained up and down the East Coast in New Zealand – that’s impacted our perils, amplified by climate change. And then we’ve had some real challenges with global reinsurance markets, with a significant repricing on what it costs for us to place those programmes.”

In a reinsurance update this month, IAG said it purchased aggregate and third/fourth event reinsurance covers for FY24.

The job cuts, meanwhile, were not attributed to the abovementioned challenges. “[The move] will lead to more efficient decision-making and allow us to continue to meet customer expectations,” the IAG spokesperson told Insurance Business.

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