CUSTOMER

As we reported in last year's business sustainability report, entering the Indian market presents a unique opportunity for IAG, due to low insurance penetration and increasing consumer demand. In the year ending 31 March 2009, the Indian general insurance market recorded 9.1% growth, with Health insurance being the highest growth segment at 30%.

Last year we entered into negotiations and in November 2008 we signed a joint venture agreement to establish a general insurance business in India with the country's largest bank, the State Bank of India. IAG will initially have a 26% stake in the venture, with the agreement allowing IAG to increase its shareholding to 49% subject to a number of conditions, including change in the Indian foreign direct investment limit in the future.

The joint venture company, called SBI General Insurance Company Ltd ("SBIGIC"), will allow us to combine our core capabilities with the local knowledge and distribution network of one the most recognised financial services organisations in India. SBI is the largest commercial bank in India and traces its roots back over 200 years. It has 6 associate banks where SBI's equity interest is in excess of 85% and SBI and its associate banks have over 15,000 branches across India.

Ensuring that our products remain relevant and meet the demands of our customers and the communities in which we operate means that we not only remain viable as a business, but also enhance and assist our customers in recovering from and adapting to different situations that they might find themselves in.

Our businesses have continued to innovate and develop new products. This year we have launched a flood insurance product in NSW, the ACT and Tasmania through our NRMA Insurance business which will better assist our customers in the event of flooding. We are also currently working towards offering a flexible and transparent flood solution under the Direct Insurance brands in other states.

This business together with NRMA Insurance Queensland and the SGIC and SGIO brands have also introduced "Renters" Insurance, making it easier and more affordable for our customers in rental properties to protect their belongings. This product makes great community and business sense because it may reduce the incidence of underinsurance by keeping insurance premiums more affordable.

CGU Insurance offers "Rightcover"—a service designed to reduce the levels of under-insurance. The low cost service helps the policyholder determine their sum insured, and offers additional benefits if the recommendation is followed. Our Swann Insurance brand recently introduced two new innovative products: "Your FeeSecure" and "Your Bill protection". Your FeeSecure helps customers cover the cost of their children's school fees in the event they are unable to pay them. If customers suffer a serious injury or suffer from a disabling illness, or if they lose their job, Your Bill Protection will cover nominated bills, such as electricity, internet, mobile phone, or child care fees, up to the sum insured.

These innovative and sustainable insurance products respond to the current economic climate and are designed to make our customers' lives easier in times of hardship.

Following the hailstorms in Brisbane, NRMA Insurance quickly mobilised, with innovative solutions to help customers settle claims quickly. NRMA deployed their Major Event Rapid Response Infrastructure to the worst affected area. IAG system connectivity was provided through the Toyota Landcruiser with a roof mounted satellite (MERRV) and NRMA branded mobile office.

Following the hailstorms in Brisbane, NRMA Insurance quickly mobilised, with innovative solutions to help customers settle claims quickly. NRMA deployed their Major Event Rapid Response Infrastructure to the worst affected area. IAG system connectivity was provided through the Toyota Landcruiser with a roof mounted satellite (MERRV) and NRMA branded mobile office.

Our claims staff were able to assist customers by lodging and processing claims, preparing payments including emergency EFT payments and distributing store credit vouchers e.g. Coles Myer cards on site.

Claims were prioritised based on severity of damage and impact to the customer. Claims staff carried out initial claim reviews within 24–48 hours of lodgment and prioritised home assessments on critical claims. Customers were provided with temporary accommodation where required.

Additional resources such as assessors and claims consultants from unaffected areas were arranged to boost the Brisbane claims team. Specialised Roofing Repairers were engaged in conjunction with our preferred supplier network, and additional Preferred Builders and Carpet Restorers were arranged to work in the affected region. This enabled NRMA to reduce claims process time as well as reducing the average cost of claims by carrying out repairs before further damage could be incurred. Most importantly, boosting our teams in this way helped our customers get back into their homes as quickly as possible.

And to those of us who did not witness first hand the devastation caused by the Victorian bushfires, we will never be able to grasp the horror of the event, nor the physical, emotional and financial toll that it has, and will continue to have, on so many in the years ahead. As an insurer, CGU Insurance is proud to have been able to play a part in helping many of those affected to start again.

As the largest general insurer in regional and rural Australia, CGU Insurance expected to have a significant number of exposures throughout the bushfire devastated regions. CGU Insurance customers lodged over 1,300 insurance claims relating to this tragedy, representing over 3,000 separate losses (claims often include more than one loss e.g. building and contents).

Our work started immediately after Black Saturday. A priority for CGU Insurance in managing this event was to ensure that we were easily accessible for our customers. From the start, we sought to ensure that we were ready to assist our customers as soon as they made contact, and were in a position to respond to their immediate needs. For example, we offered emergency accommodation to customers whose homes were damaged or destroyed or who were unable to regain access to their homes. We also provided emergency funds for customers to ensure they were able to meet their immediate needs, such as food and clothing.

CGU Insurance has a long history of helping our customers in their times of need, and with paying claims being one of our core purposes, we are acutely aware of the need to demonstrate compassion in managing claims. We adopted a compassionate approach to settling claims by, for example, giving customers a number of settlement options; providing an allowance to cover the cost of removing debris from the property site; and offering funeral benefits where a customer or a member of their family died as a result of the bushfires, irrespective of whether they were in the insured home or motor vehicle at the time.

When we look back at the initial months following the devastating bushfires, the real point of difference for CGU Insurance has been the way that our people, our intermediaries and our service providers (Loss Adjusters and Builders) worked together throughout the claims process to support our customers. The dedication displayed by these groups in their desire to make a difference to each and every customer that they dealt with is something we are all proud of.

Coupled with this desire to make the brands more relevant and compelling to consumers has been a series of enhancements to our internet capability. They make our internet services more user friendly, and help consumers 'Unworry' when interacting with NRMA Insurance online.

Although NRMA Insurance, SGIO and SGIC Insurance have offered online services for many years, this new capability streamlines the online purchasing process, and allows consumers to obtain a quote, and buy Comprehensive Car Insurance more quickly and easily. The service also caters to consumers quoting online, and completing their purchase over the phone or in a branch.

Consumers can now save their quote, and retrieve it to complete their purchase later. It also means customers can buy over the internet in WA and SA (previously consumers could obtain a quote, but not purchase online in those states).

The results speak for themselves. Consumer testing showed the average time taken to complete the quoting and buying process for Comprehensive Car Insurance dropped by more than 40%. The number of people completing the buying process online improved by 21% for NRMA NSW and 35% for NRMA QLD. In the first week alone the average number of new business policies sold online increased by 36% for NSW, and by 55% for NRMA QLD.

For the first time in five years, our intermediated insurance arm, CGU Insurance, embarked on a national television and radio advertising campaign to lift awareness of the CGU brand and make it easier for insurance brokers and CGU Authorised Representatives to sell CGU products.

The $4 million campaign ran from March until the end of June and proved an enormous success, lifting CGU Insurance's total brand awareness among consumers by 12 percentage points to 74 per cent and among small and medium sized enterprises, a key market segment for CGU Insurance and where brand awareness was already high, by 6 percentage points to 92 per cent.

The humorous 'rap style' of the campaign featured Bill the alpaca farmer and Susan the providore and highlighted the lighter side of insurance while illustrating the diverse nature of the businesses CGU insures. It was exceptionally well received by consumers and brokers alike and the adverts were parodied on major sports television and radio shows.

CGU Insurance then cost effectively extended the campaign by launching a national CGU Give Yourself a Rap competition to find the star of its next television advertisement, which will run from March 2010. The competition was also hugely successful, gaining keen community interest as reflected by over 10,000 visits to the competition website and over 100 great entries.

Holden has now approved the repair procedure and we are in the process of negotiating for Holden to make the repair part we have designed an approved replacement part. The IAG research centre will earn a royalty on each part sold to repair Holdens and export versions of the car around the world.

Meanwhile we have this calendar year alone manufactured and supplied some 63 sets to our own repairers for IAG insurance brand claims in Australia and NZ, saving over $67,000. Our repair procedure is carried out at a total cost of approx $150.

Not replacing the boot floor greatly reduces the cost of repair and helps us control insurance premiums for our customers. It also massively reduces the consumption of electricity during the repair, the evaporative emissions that occur during the painting process and prevents a largely non recyclable energy and oil consumptive plastic part from being dumped into landfill; and it prevents the structure of the car being interfered with, reducing the likelihood of corrosion and water leaks to the boot.