The Insurance Australia Group Ltd (ASX: IAG) share price fell in intraday trade today, although still finished the day in the green.
Up around 2.5% in morning trade, IAG shares dipped after the company released an update on its response to recent flooding in Victoria. Shares rebounded slightly across the rest of the day and closed at a price of $5.17 each – up 1.17%.
Let's take a closer look at today's announcement.
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Rising costs after flood devastation
In a statement to the ASX, IAG declared it has received more than 4,300 claims relating to the deadly flooding in Victoria's Gippsland region. IAG says these claims primarily relate to property damage. It also expects the number of claims to rise in coming days as customers are able to assess damage on their properties.
IAG's net costs for natural disasters this financial year, up to and including 31 May 2021, stand at approximately $660 million. By the end of the financial year, IAG expects this figure to increase to somewhere between $720 million and $743 million. IAG budgeted for only $658 million in natural disaster claims at the beginning of the financial year, then upped this to between $660 million to $700 million in a previous market update.
On Monday, the Insurance Council of Australia declared the Victorian flooding a "catastrophe". news.com reports this means insurers will now "escalate and prioritise" policyholders who have been impacted by the disaster.
The IAG share price is still sitting above yesterday's close, however, despite these increased costs to the company.
Management commentary
IAG Executive General Manager Direct Claims Luke Gallagher urged customers to stay safe when inspecting property damage:
Floodwater is extremely dangerous, so please take every precaution. We have assessors and builders on the ground ready to ensure our customers' properties are safe and secure. [IAG] will contact those impacted to book in property assessments, so repairs can begin as soon as possible. We can also arrange emergency accommodation and provide immediate financial assistance for customers in need.
IAG share price snapshot
Over the past 12 months the IAG share price has decreased by more than 12%. Over the past three months, however, IAG shares have seen a 10% increase.
IAG has a current market capitalisation of $12.7 billion.
