IAG warns of rising premiums

One of Australia's leading insurers has warned real estate programs that property protection rates would be increasing by five to ten per cent by the end of the financial year.

Insurance Australia Group (IAG) has said in its investor reports that these rising insurance margins were the result of costs brought on by recent natural disasters.

The official correspondence states: "Rate increases are predominantly focused on home and property portfolios."

Speaking to reporters on the higher costs of reinsurance, chief executive Mike Wilkins said IAG had helped to protect Queensland and New Zealand through its diverse products, but that reinsurance needed to reflect these costs.

Wilkins asserted: "At the moment we have pushed through five to 10 per cent across the portfolio, we expect that type of increase across the portfolio will continue, but it will obviously vary depending on the risk that is presented to us."

In the last year IAG had insurance claim costs from natural disasters amounting to $610 million - $175 million more than the company had planned for.

While substantial, these losses did not have a massive impact on the firm as a whole, with the corporation registering profits of $660 million, reflecting substantial growth from subsidiary brands including the NRMA and RACV.