IAG notes moderate rate increases on new A$10m programme

Insurance Australia Group (IAG) has maintained its gross reinsurance protection cover at up to A$10 billion for its 2021 catastrophe reinsurance programme. It noted it experienced a “modest” increase in rates in the renewals, driven by market conditions, that was in line with its expectations.

IAG will retain the first A$250 million of each loss, the same as it did in 2020. The company also secured three prepaid reinstatements for the lower layer of the main programme that covers A$250 million in excess of A$250 million, which is also the same as it did in the previous year.

The catastrophe reinsurance program also includes an aggregate sideways cover that provides A$350 million of protection in excess of A$400 million for the 12 months ending June 30, 2021. The sideways cover has a cap of A$200 million in excess of A$50 million per qualifying event.

IAG placed the programme to the extent of 67.5% to reflect the company's cumulative whole-of-account quota share arrangements. The combination of all catastrophe covers resulted in IAG having maximum event retentions of A$169 million each in the first event and second events and A$34 million in the third event for Australia, as well as NZ$169 million each in the first and second events and NZ$34 million in the third event for New Zealand.

The company also has stop-loss protection for retained natural perils that provides A$100 million of protection in excess of A$1.1 billion for the 12 months ending June 30, 2021.