Insurance Australia Group Limited (IAG) Earnings Call Transcript & Summary

Good morning, everybody, and welcome to IAG's business update. I'd like to acknowledge that this meeting is being held on the traditional lands of the Gadigal people of the Eora Nation, and I pay my respects to elders past, present and emerging. I'm excited and proud to bring you this update today, 1 year into my role as IAG's Chief Executive. Over the past couple of years, as an industry and particularly as a company, we've had to face some serious challenges. We have appropriately provided for these and restored capital where required to address all the issues from a balance sheet point of view. I've also made some fundamental changes to our strategy and organizational design to ensure these issues are not repeated. We have faced into our problems, and we're now building momentum right across our organization. Today, I want to leave you with clear messages around 5 key points. Firstly, our pace of change is building and our ability to invest time and effort in delivering on our growth agenda is rapidly improving. We're already seeing a turnaround in our intermediated business as we work to deliver at least $250 million of insurance profit in that business by FY '24. Our direct business in Australia has launched its growth plan, taking NRMA National and setting itself up as a serious player in the youth market with ROLLiN. And our New Zealand business continues to deliver -- continues to strengthen its foundations and deliver ongoing strong results. Secondly, we will drive enterprise-wide efficiency outcomes by simplifying the process and technology that supports our business. We are well on the way to establishing an enterprise platform that will simplify our back office, improve our risk processes and importantly, reduce our cost to serve. This will create opportunities to grow and improve our customer experiences. Thirdly, we are fully focused on where our scale provides us with operating or structural advantages that can differentiate our company, particularly in areas of supply chain, claims handling and underwriting. For example, claims optimization and supply chain efficiency are common threads across all our 3 businesses. And given scale, we are driving operational improvements that will deliver real financial benefits. Fourthly, as you know, we're a purpose-led and have a very strong culture here at IAG. I'm determined to build on that, though, and given my natural bias to leverage this to drive strong commercial outcomes across our businesses and improve shareholder returns. And finally, today, you're going to meet members of the team that are promoted internally or recruited externally to lead our company. I want to share my confidence in the new leadership team that I've assembled, I'm already seeing the benefit of having a great balance in the team between new ideas and leadership alongside experience and history. Let me briefly take you through how today's session is going to run. I'm going to recap on our strategy and targets, then you'll hear from the leaders of our 3 operating divisions. After that, Michelle will provide an update on financial matters. But I'll share now that we are reaffirming our FY '22 guidance that we updated in early November of a 10% to 12% insurance margin. That's going to take close to an hour leaving plenty of time for you to ask questions from our panel that will include all of today's speakers together with our Chief Operating Officer, Neil Morgan. Let me start by introducing the team that I've assembled to deliver on our growth. First, the 3 leaders I've appointed to run our operating divisions. In our direct business, we have needed a more proactive strategy around growth, improving our customer experience and broadening the demographic of where those customers come from. That's why I've appointed Julie to head up our Australian direct business. Her deep insurance experience and background of leading our Strategy and Innovation division as well as previously been IAG's Chief Customer Officer, means she brings to the table the understanding and skill set that is ideally suited to what that business needs now. As you know, our intermediated business has been frustrating in terms of its performance and, in my view, required a fresh approach to turning it around. That's why I've appointed Jarrod Hill to lead this division. Jarrod has extensive industry experience, most recently as Country President of Chubb in Australia and New Zealand. And you'll hear from Jarrod his plans to improve the business and make it a source of growth for IAG rather than the drag on the group's earnings that it has been more recently. And finally, I've appointed Amanda Whiting to lead our New Zealand business, given a significant and deep insurance experience, customer focus and strong personal leadership skills gained over many years working across a range of different roles. While our New Zealand business enjoys a wonderful leadership position in the market, boasting a strong earnings profile, you're going to hear from Amanda that she has a plan to not only maintain that strong position, but to further extend our leadership by investing in growth initiatives. I'll round out my introductions with the leadership team members who are also participating today. Michelle was named as our Chief Financial Officer in November and is well known to all of you already. And Neil Morgan took up the expanded role of our Chief Operating Officer in March of this year and leads our technology and operations teams. Those 5 executives will join me on a panel for Q&A later. So today is designed to let IAG's leaders bring our strategy to life and show you how we are realizing our vision. Just let me briefly set the scene. So you'll be familiar with the 4 pillars of our strategy, which we first shared with you in February this year. As I said before, we want to be an organization that grows with our customers. We will build better businesses by investing in pricing, underwriting capability and importantly, driving commercial discipline. We're going to create value through digital by creating connected experiences that seamlessly assist and reward our customers and unlock the true value of our network. And lastly, we will be an organization that actively and capably manages capital and risk. Effective risk management will underpin all that we do here at IAG. These pillars were at the heart of our redesigned operating model and are now embedded in everyday thinking across IAG, providing the right amount of focus and clarity in our organization. When I started as Chief Executive, I was asked what legacy I want to leave for IAG. And my answer was to have built a simpler, stronger and a more resilient company. And of course, to be stronger and more resilient, we need to provide products and services to more people. And that's why customer growth is the heart of what I want to achieve for IAG and for our shareholders over the coming years. I'll share some high-level views on what IAG will be in 5 years' time and how we're going to define success. Our business will be firmly focused on our 2 home markets of Australia and New Zealand. We have considerable strength and scale in our 3 well-defined business units. More than ever before, we'll be delivering on our purpose to make your world a safer place for 30 million Australian and New Zealanders. Our ambition is to add 1 million new customers to the 8.5 million people we already serve across Australia and New Zealand over the next 5 years and meet their needs through greater customer experiences and a common strategic policy and claims platform. We will achieve this by targeting new regions and market segments. It's not a price-led strategy. And more than 80% of our customers' activity will take place through digital channels. We will have automated as many processes as we can and embrace AI to improve customer experience and deliver further efficiencies. Our culture will continue to underpin our aspiration to be a top quartile employer of choice. We're embracing this customer growth ambition from a position of considerable strength. After all, we've been doing it for a long time, more than 160 years across Australia and New Zealand. The establishment of our market-focused operating model and my new leadership team has provided greater clarity on the requirements of our customer, brokers, partners and of course, colleagues. We want and we need to have the simplest, strongest, most resilient combination of core insurance processes, skills and systems in the market. We call this our enterprise platform. It's the enabling infrastructure of our business and our opportunity to create value from the scale of our business and our very unique data assets. Over the last 3 to 5 years, we have been committing $150 million to $200 million a year to prioritizing investments to simplify and upgrade our technology platforms. And we plan to continue to invest with a level of acceleration, which we can manage within our overall cost profile. We've already made significant progress in building delivery capability. Our common enterprise platform is delivering specific outcomes for each business. A simplified core means personal lines policies in Australia and New Zealand are supported by a common policy, pricing and claims operating platform. Our direct personal lines brand, digitally enabled with a data-driven full service web and mobile capability in Australia and New Zealand, including an integrated customer loyalty proposition. Our Australian commercial policies are materially transitioned. From today, we're being a batch platforms, supporting a modern broker integration capability that will make us first choice for commercial brokers. Our partner insurance platforms are open and available through APIs including sophisticated pricing capabilities. Delivering our enterprise platform also allows us to embed our risk control and governance processes and adapt to market and regulatory change faster and importantly, more efficiently. We have a great history and legacy in our brands and our businesses. But highlighting the heritage and history of our brands does not mean that we're ignoring the extraordinary pace of change in technology and our customers' habits. We are continuing to develop and support ancillary businesses that can improve our customer propositions. Repairhub continues to grow and help customers in Australia and New Zealand by improving the consistency and quality of their motor repairs. In Australia, we complemented in our Repairhub network with our acquisition of MotorServe which enables us to repair and service our customers' cars. We have established Home Trades Hub Australia last year to deliver home services for our customers. And we have our IAG Firemark Ventures, which is our corporate venture capital fund, where we recently allocated an additional $75 million in capital to be used over the next 5 years. Around $58 million of the initial $75 million committed to Firemark Ventures has already been deployed in investments so far. While the fund's performance has been strong, its main purpose is to provide IAG access to new and emerging business models, technologies and data sets. To date, IAG's embedded 13 new technology or data capabilities through the fund and as commercial agreements in place with 9 portfolio companies. 2 of our early successes, Arturo and Digital Agricultural Services, are already improving our ability to assess customers' properties. Investments such as these are providing opportunities to better understand, manage and reduce risk for our customers, as well as improve our productivity. We know that climate change and perils costs are areas of interest, especially after the recent storm events in October. I'd like to talk briefly about what IAG is doing in this critical area. As an insurer, we see firsthand the impacts of climate change on our customers and weather-related perils are a large part, of course, of the risks that we insure. Our claims data and research conducted by our specialist natural perils team, is used in 3 key areas. Firstly, we are contributing to the scientific discussion around current and future climate. Secondly, we use our expertise in helping communities prepare for and adapt to the increasing severity and frequency of extreme weather events. Some examples of the project that IAG is involved in are the cyclone testing station, flood mitigation research and a bushfire rating system. And thirdly and importantly, we use our expertise to understand our overall exposure and the integration of our perils allowance with our reinsurance. We will continue to ensure our pricing and economic models reflect our capability in this very critical area. We're also committed to reducing our own emissions to net-zero by 2050, and this will be supported by a 50% reduction by 2030. Our plans are set out in our updated 3-year climate and disaster resilience action plan that we launched last month. I'd like to finish with our value proposition. And this hasn't changed since we presented it to you in February this year. It's what we are aiming to deliver to you, our shareholders, over the medium term. Creating a stronger, more resilient IAG will deliver a cash ROE of 12% to 13% and insurance margin of 15% to 17% and importantly, a growth profile. We delivered a cash ROE of 12% in FY '21, an underlying margin of 14.7%, with some assistance though, from strong investment markets and COVID benefits from lower motor claims. Our aspiration is to deliver these financial goals on a sustainable basis. Michelle will share more on the levers that we're using to deliver on these aspirations. And with that, I'll now hand you over to Julie.

Thanks, Nick, and good morning, everybody. Direct insurance is a business with 100 years of history. It encompasses the insurance brands of NRMA, SGO, SGIC and ROLLiN and has carriage of the relationship with our exceptional Victorian partner, RACV. Today, we help more than 5 million Australians and underwrite $5.7 billion of premium, that protects their personal assets and small businesses. My name is Julie Batch, and I have a deep insurance background. I've spent the last 5 years as part of IAG's executive team, leading customer labs and our strategy and innovation divisions focused on deeply understanding our customers and developing the capabilities it takes to win in a digital world. And last year, I worked really closely with Nick to help develop this strategy across our organization that we are executing against today. It's a great privilege for me to lead the team in direct insurance, recognizing this 100 years of heritage and looking at how we harness those future-focused capabilities to grow over the next 100. And this is how we will build a stronger, more resilient [ IAG ]. We are delivering 4 key things. We are focused absolutely on growing NRMA nationally. We are building a digital business for the younger generation. We are leaning in to capture the small business market, and we are creating a claims experience that is fast and effective for our customers and efficiently manages the cost of claims for the organization and our shareholders. These initiatives will grow our customer numbers by 750,000 over the next 5 years and through claims effectiveness, deliver $400 million gross of value. Our sophisticated pricing and underwriting capability means that we will do this profitably. These 4 areas of focus are specifically shaped to take advantage of the trends that we're observing in our market. Our growth-focused opportunities are based on a population which is retracting now but expected to rebound in 2023. Our small business initiative aims to capture the huge increase in new business registrations, which have doubled over the past year. And our first-class claims operation, which includes our in-house motor repair capability that Nick referred to, is already responding to the supply chain challenges and the claims inflation that we are experiencing. Our business is ready to grow our share of customers across Australia over the next 5 years and to deliver strong returns to our shareholders. So let me now turn to the detail that underpins this plan. On the first of November 2021, we launched NRMA Insurance, one of Australia's most trusted brands nationally. If you are in WA, South Australia and the Northern Territory, you can now buy the interim insurance policy for your car, your home, your boat, your caravan and I hope you get to use it your holiday. NRMA is well recognized in these states, and we're winning new customers already. On the first of November, we also started to transition HBF customers from our partner channel in Jarrod's business to a direct NRMA insurance experience. Today, with our partner RACV in Victoria, we now have a direct-to-customer national brand in Australia for the very first time. As well as this national focus, though, in New South Wales and Victoria, where we've already successfully delivered at scale, there are opportunities to grow. We are actively targeting underrepresented areas using our sophisticated pricing capability and marketing strength to identify and ensure lower volatility segments with strong returns. For example, capturing what we expect to be accelerated immigration as the population rebounds, we're targeting customers with English as a second language through our branches, our call centers, web chat and new digital innovations. Key to every aspect of growth for us is digital. And progressively, over the next 9 months, we will be launching new features through the NRMA Insurance app that allow customers to dynamically manage their consent, receive risk-reducing alerts, pay for their products, access our broader network of adjacencies and be recognized for their loyalty with rewards, offers and incentives. By growing our share across Australia, we will meet our ambition to connect with 400,000 profitable new customers over the next 5 years. That said, we are not attracting as many younger customers as we should, and this is a missed opportunity. It is absolutely critical for our future that we build our customer base now by introducing our brands and creating relationships with Australians at a much earlier age. So we are solving this problem by launching a digital business for the younger generation. Again, a busy day, the 1st of November, we launched our digital business ROLLiN. It's available now in most states, but is being marketed first in New South Wales and Queensland, where we see great opportunity. ROLLiN is a subscription-like product with a very different look and feel. ROLLiN is designed to appeal to customers in their 20s and 30s through a customer-centric, integrated insurance proposition that offers flexibility and control to financially savvy independent younger Australians. Its products are dynamic and include flexible payment options, shorter-term contracts and other engagement points such as pay as you drive. In 2022, we'll expand our offerings under the ROLLiN brand to include usage-based insurance single item and renters insurance as well as cover for other things that matter before you get tied down and look to NRMA insurance for your home and family products. Now while ROLLiN is intentionally cool and attention seeking, it's not the only way that we would target this younger segment. The NRMA Insurance brand has a key role to play to with new opportunities served to our loyal customer base. That is parents like you or me, who provide brand advice and recommendations to their highly dependent children. This pay-it-forward program will enable NRMA Insurance customers to sign up their children and pay for insurance and will support them and you with safety activities and advice that give the parents and children's both peace of mind. Across NRMA Insurance and ROLLiN, we have an ambition to help 250,000 more customers over the next 5 years from this age group. And here's a look at ROLLiN, so you get a sense of its vibe. [Presentation]

Over the last year, more than 87,000 new small businesses have started up. That is simple businesses with turnover of $5 million or less. This means that small business registrations in Australia grew by 4%. Our small business portfolio is growing at double that rate, and this represents a key opportunity for our company. We know that many Australians are making choices around their future and following their passions and dreams in the small business sector. And we are here to help and support them as they do. We are already delivering a differentiated digital proposition for small businesses. We've identified 9 key growth segments that we've seen emerge post COVID including property and business services, retail, IT and communications to name a few. And we think these are critical for our future and really well suited to our products. We are mining our NRMA database to identify our existing customers that are following their small business passions. And with a personal customer base of more than 5 million across Australia and a single customer view built by our data team, that is a whole lot of leads. We are accelerating the delivery of digital expert advice to small businesses using data and our internal AI capability, and we are exploring partnerships with other companies to extend our propositions and offers to reach more SMEs. We will help up to 100,000 more small businesses over the next 5 years. We have identified $400 million of value creation through a faster and more efficient claims experience. And this is how we are going to deliver those efficiencies. Our motor repair model is mature, and it's helping us right now respond to inflationary pressures. You may recall that our adjacency businesses, Repairhub and MotorServe support our claims operations with the repair of smaller motor claims, those less than about $8,000 and are helping keep our repair costs down. Today, we send 30% of old vehicles that are still drivable through our motor repair model. Over the last few years, we've simplified our claims technology platform. That work is finished. And we are now beginning to leverage this to drive efficiency and improve effectiveness. This includes streamlining and automating our processes and bringing artificial intelligence all the way through the value chain to make faster, better, smarter decisions. Let me give you an example of our claims efficiency in action for total losses. We now use AI to predict whether a motor vehicle is a total loss after a car accident and we allow our customers to settle online once that vehicle has been assessed. This digital experience means a customer can settle their own claim in just hours rather than weeks. More than 15,000 customers have now settled their total loss claims online. That's a huge number of customers. And the fastest settlement time we've achieved so far is 40 minutes, but I'll only be happy when this is in real time. So we've got about 40 minutes of efficiency still to go. Then if a customer wants to source a new vehicle, Carbar, our motor vehicle subscription business that came with the vehicle trading platform can acquire it and deliver the vehicle to the customer with early prototypes saving up to $1,500 per vehicle, and I've now greenlit this to scale. Our focus is to deliver better financial outcomes, incredibly effective service but one that maintains the core experience and NRMA proposition of help. Our ambition is to deliver at least $400 million of value that will be available to contribute to the delivery of group financial targets, address affordability and drive the customer growth that I've outlined. So I wanted you to take away the following key points. We have 4 key areas of growth: national, younger, small business and claims effectiveness. That will deliver 750,000 new customers and at least $400 million of value creation over the next 5 years. We are doing this right now. This is not a going to do plan. We're doing this right now. NRMA Insurance is national. ROLLiN has been launched. We are growing customer numbers right now. We are digitizing and rapidly growing small business insurance today, and we have in place a faster, easier claims experience that will deliver increasing value over time. And finally, we have the right people, the energy and the momentum to deliver at pace. So thank you, everyone, and it's now my pleasure to hand over to Jarrod.

Thank you, Julie. Good morning. I'm Jarrod Hill, Group Executive for our Australian Intermediated Insurance business. I've worked in insurance for over 30 years. And returning to IAG sees my path come in full circle after I began my career with Commercial Union in 1990. I joined IAG to lead the business back to being the leading, market-leading intermediated insurer in Australia. My assessment of the business today is consistent with my expectations coming into the role. We have unacceptable loss ratios in certain portfolios and unsustainable expense ratio across the division, both of which I will address. I've been given a clear remit by Nick and the Board to quickly improve margin and ensure Intermediated Australia delivers consistent profitability year-on-year. The path forward is very clear to me, even at this early stage. I will leverage my industry and leadership experience, particularly around underwriting, to strengthen our fundamental insurance capabilities and drive a relentless focus on execution, so that we, one, consistently deliver on our profit targets; two, establish a competitive cost base; and three, position the business to grow. Today, I am reaffirming our insurance profit target of at least $250 million by FY '24. At the same time, we must also deliver consistent financial performance year-on-year on a path to achieving the group cash ROE target as soon as possible. To do this, I will build a great underwriting business, one capable of managing in a dynamic risk environment and become a growth engine for the group. Over the past 18 months, we have taken steps to improve performance and the benefits are now beginning to flow through to profitability. The specific underwriting actions taken include exiting our IAL personal lines business, which will deliver margin improvement by FY '23 and improving risk selection and pricing across our personal lines and Agri portfolios. Work is already underway to consolidate our product set, and we are continuing to improve our pricing and portfolio management capability. I am establishing a dedicated underwriting office for Intermediated Australia, which will drive a step change in our underwriting. I will appoint a senior leader to this role in the very near future. Horizon 1 is about executing on the fundamentals extremely well. I'm now focused on simplification. This will enable a more streamlined operating model and better controls, helping to address expense challenges within a short period. Simplification will also improve scalability and make it easier for customers to do business with us. With enhanced pricing capability backed by better technology and data, we will improve our core underwriting decision-making. This will create a dynamic and forward-looking capability. The continuous portfolio management approach we are building will help us identify and react to changes in risk profile in a more timely manner. Technology, including access to data and insights is a key foundational step to achieving our Horizon 2 and 3 ambitions. For example, combining digital front-end engagement with real-time data-driven underwriting and claims decisions will reduce frictional costs for our partners and further improve customer experiences. As a direct result of underwriting actions, we are currently – we are seeing retention levels in the low 80s. We are comfortable with this rate of lost business, which is partly driven by actively removing underperforming risks. As we complete the rebalance of our portfolio, we intend to target a through-cycle retention rate of 85% to 88%. We will continually adjust the portfolio through selective removal and addition of risk with our primary focus to align with group risk appetite. We are operating in a market environment with continued favorable rate movement. And this year, rate will be the primary driver of premium growth. We expect these market conditions to continue into FY '23. And our recent underwriting actions have positioned us to take advantage of this environment. The market continues to see claims cost challenges. You'll be aware of the high number of natural perils events since July 1 this year, especially in late October, elevated inflation from supply chain disruption and some ongoing modest pressure on long-tail classes. The most successful insurers will be those that adapt quickly to change in loss cost trends, the evolving regulatory and legal environment and advances in technology. Our plan sets us up to be a dynamic and agile in the way we work with the capability to quickly manage shifts in risk exposure and rapidly respond to the changing needs of our customers and partners. Horizon 1 will deliver a number of outcomes, pricing sophistication, product simplification and enhanced connectivity to partners. Once we have our platform operating effectively, this will enable us to accelerate growth in Horizon 2. My plan is to grow across our 3 customer segments, and this will be achieved as follows. In intermediated personal lines by simplifying our product set and enhancing delivery capability to our partners. In SME, by enhancing our product offering and driving efficiency through digital solutions and in corporate, by deploying capacity in a focused manner in selected lines of business. We have a portfolio of trusted brands, sound relationships and one of the largest broker and partner networks in the country to drive growth. Our brokers and partners have told me, we need to be easier to deal with. I'm developing a program that will uplift our digital engagement with intermediaries and reduce their cost of trading with us. And we are already trialing potential technology solutions. This will free up capacity on their side, so they can focus on business development, leading to mutual growth. Our intermediaries will see a more responsive Intermediated Australia that offers certainty around the risks we will and will not ride. We will also be more consistent around pricing and risk selection so that brokers and partners can confidently promote our products to their customers. To wrap up, I'm very clear on the expected financial outcomes. This is to, one, consistently deliver on our profit targets; two, establish a competitive cost base; and three, position the business to grow. I have a strong track record in commercial intermediated insurance, and I'm clear what is needed to deliver on our goals. I am confident we will deliver our targets and support IAG to achieve its strategic growth ambition. I will now hand over to Amanda.

Thank you, Jarrod, and tena koutou katoa. I'm Amanda Whiting, and I've been leading the New Zealand business since the 1st of July this year. I've had a long career in the insurance business, I've had many customer-facing roles. And while I've spent time in almost all parts of the insurance business, I pride myself on delivering growth, and I have a real passion for keeping customers top of mind in the business. While this is a really solid business, there are many options to simplify it, to reinvest in growth and to deliver a higher return from the same level of investment. And I'm really keen to share my insights and our plans for New Zealand. As far as my insights go, it's fair to say that IAG New Zealand has an enviable leadership position. We are the largest general insurer in New Zealand with GWP of $3 billion and just over 2 million customers. That gives us a relationship with 1 in every 2 households in New Zealand. And that scale provides us with a sustainable competitive advantage. Our expense ratio is around 500 basis points lower than our competitors. Our capital strength is best-in-class and IAG New Zealand will be one of the first enterers to launch climate risk reporting ahead of the mandate by the New Zealand government. Our team works closely across government and regulators so that when key policy issues arise, we have a seat at the table with other stakeholders. My plan will build further on these already great attributes. I'll transform the customer journey and deliver new propositions to drive growth across the consumer business of 250,000 customers over the next 5 years. I'll build an even stronger digitally connected broker business and will take costs out through automation and process optimization. In doing all of this, I'll grow GWP and also significantly transform IAG New Zealand's operating efficiency. For over 150 years, our brands have been there for New Zealanders, giving them faith and confidence that we'll be there for the next 150 years. There are 2 businesses that make up the New Zealand division. The Consumer division, which houses our direct brands of AMI and state and the bank partner relationships; and secondly, our business division under the NZI brand, which is our intermediate service for brokers. We're the clear market leader in New Zealand with a 50% share in personal lines, and 29% share in commercial lines. IAG is also the trusted partner for 3 of the 4 largest banks in New Zealand. We underwrite their general insurance products, and we have deep relationships extending over 20 years with each of those partners. Our focus and investment is on strengthening the core brands of AMI, State and NZI, and we'll invest strategically in the right places to support the growth of these brands. As I look forward, I see an opportunity to consolidate some of our smaller brands. Our strategy will enable us to maintain and extend that position. So despite the COVID-19 lockdown, we're still seeing positive momentum in system growth. There's more residential building, consents are up about 25% from same period last year, and we're seeing record levels of new car registrations. The rating environment remains positive and supportive. We experienced mid-single-digit rate increases in personal loans and low to mid-single-digit rate increases across commercial lines, as well as strong sum in short uplift in property classes. There's no doubt that we too are filling upward inflationary pressure in our claims supply chain, but we do have some insulation from this. 80% of our motor and home repair work goes through contracted suppliers who operate on agreed rates. And we have the opportunity to raise our premiums to cover broader inflationary pressures should we need to. We're also seeing some longer-term structural factors. Customer preferences are shifting to utilization of digital channels, and we're moving with them. We'll deliver a more personalized and streamlined customer experience. And we expect an emerging market around embedded insurance. I believe this opens up a new segment of the market and IAG will be ready as a partner of choice to operate in that. So I've reviewed our strategy and developed a new 5-year plan, which is split into 2 phases. The first is really about strengthening our foundational capabilities with a focus on technology systems, business processes and our culture. And as we move into Phase 2, we'll accelerate investment in growth opportunities. As far as the foundational capabilities go, my first action is to simplify the business we have today. Decommissioning old legacy technology systems will enable us to reduce complexity, streamline processes and automate a lot of the manual controls we have across the business. And I'm accelerating this activity. The second area is claims optimization. There is considerable headroom for us to drive more efficiencies from our claims process and our supply chain. As an example, we recently implemented our first auto verification process for accepting claims. And initiatives like this really allow us to remove steps to the customer and drive efficiency in the business. And third, as we work through these changes, I'm also paying close attention to our culture. We are already a very customer-focused business, but I want us to be truly customer-led and for our people to be empowered to deliver on that. The customer needs to be at the front of every person's mind no matter where they work in our organization. And for growth, to be clear, well, of course, we're always looking for growth opportunities in New Zealand, even with the more complex base that we have today. Once we have in place the foundational capabilities I've just outlined, we'll generate a much higher return from the same level of investment. It will cost less to implement, and the end result will be substantially better. This allows us to really propel our growth opportunities to drive both GWP and customer numbers. Digital connectivity will support growth in our broker business. New propositions will enable us to grow our consumer business by 250,000 customers, and I intend to build out our adjacency businesses in sectors that we've earned the right to play in and to improve customer experience and therefore, retention. So let's just focus now on one of the foundational capabilities. Our claims experience is undergoing a transformation to improve the customer experience and reduce our cost to serve. There are 3 key elements to this. First, we're striving to provide customers with a one-touch claims experience. And that means the customer should only really need to contact us once, and we take care of the rest. We're automating processes to achieve that, and we're using AI in selected areas. As I mentioned earlier, we've already begun to auto verify some claims, and we just switched to automate our supplier payments. There's much more we can do here to drive efficiency. Second, in our supply chain, I want to drive greater cost advantage, so we will consolidate suppliers and will deepen those supplier relationships. And third, I'm also evaluating opportunities to extend down into the value chain where appropriate. Repairhub is a fantastic example of this. Over 50% of IAG New Zealand claims are motor related, and most of those are from collisions. We launched Repairhub in New Zealand 2 years ago, to bring in-house some of those smash repairs. The cost to repair is 20% lower than external market providers, and more importantly, it's delivering a first-class customer experience with the customer NPS scores sitting at plus 84. There are opportunities for us to do more of this and move into other adjacent services that complement our core. Our business division under the NZI brand serves our broker partners and makes up 44% of our GWP. Over the last 5 years, we've had a focus on pricing and underwriting discipline. And that's really transformed the business from loss-making in FY '17 to a healthy return in FY '21. NZI's partner advocacy scores are 36 points higher than its key competitors. And that's really due to strong relationships that the team have with the brokers and the high-quality service level that we deliver at sales and claims time. Looking forward, though, I can see customer needs are evolving differently and we're responding to that. For those customers who have simpler needs and they choose to use a broker, brokers are looking for straightforward digital connectivity and competitive pricing. B2B connectivity for personal lines has been rolled out to 34 AON branches, delivering more sophisticated risk-based pricing to them and their customers. And we've seen a really strong take-up rate. So we'll be rolling this out to a second partner, AUB from early 2022. For those SME and corporate accounts with more complex needs, we'll continue to deliver a high-touch service and more customized offerings, including value-added services. Like our fleet risk management, which helps reduce the likelihood of a claim in the first place and has delivered a 96% retention rate on participating accounts. And that's a win-win all around. Our consumer business focuses mainly on direct personal brands and makes up 56% of GWP. Our core focus right now is on strengthening the foundations and accelerating the transformation of the customer journey. This will unlock opportunities for us to launch a range of new customer value propositions to simplify the customer experience, to personalize more effectively and to price more dynamically. And going forward, I want us to be much more aggressive in our pursuit of growth here, and I believe there are several opportunities for us to implement now. One example of that is the SME sector. 97% of New Zealand businesses are small businesses. And we want to be there to help those New Zealand businesses wherever they are in their journey. We've developed bundled trade propositions which are seeing some really strong take-up, and we'll extend that over the next 12 months. In addition, we've identified opportunities around landlords and young drivers, and we'll launch propositions to attract those segments in the near term. So while we're investing heavily in our foundations, we will still look to deliver growth from now. In conclusion, IAG has a unique leadership position in New Zealand. The business continues to perform with solid GWP growth and strong margins, and we have the numerous advantages that our scale brings. I'm going to deliver a transformation of the customer journey new propositions to drive growth across the consumer business with a target of 250,000 customers and even stronger digitally connected broker business and cost out through automation and process optimization. We have a well-defined strategy. And together with the leadership team, I'm really excited to execute and deliver on these outcomes, and I look forward to providing you with further updates in the future. Thank you. I'll now hand to Michelle.

Thanks, Amanda, and good morning, everyone. While the primary goal of today is to introduce our new divisional heads and hear them outline their plans, I thought it would be useful to provide more color on the financial implications of our strategy. My intent today is to reaffirm our FY '22 guidance last updated on 2nd of November, take you through a closer look at perils costs following the numerous weather events over the current half to date, to communicate that we plan to hold our expenses broadly flat, reflecting a combination of the benefits of operational efficiencies being in part utilized to underpin delivery of our strategy to meet our stated targets, to share our plans in respect of our capital platform and our confidence in the upcoming renewals of our whole of account quota shares. I will also touch on some of the legacy issues and how these might affect capital into the future. Building from the divisional presentations, I would like to reaffirm our guidance for the current year. Today, we are reiterating the guidance that was updated on to November, low single-digit GWP growth and a reported insurance margin of 10% to 12%. It would be remiss of me not to comment here on some of the inflationary pressures that we are observing. At our AGM in October, we noted reduced motor claims frequency experienced through the lockdowns and acknowledge the likely benefit. However, as an offset, we continue to observe elevated inflationary pressure on claims costs in our motor and home portfolios, along with some minor further deterioration in long-tail portfolios. Our COVID-19 experience from the past 2 financial years has enabled us to develop a fuller understanding of the lag effect between favorable short-term motor frequency benefits and the flow on impact to heightened levels of inflation. As we may see a similar dynamic in the current financial year due to broader supply chain and labor market disruption, we have maintained a conservative approach to reserving. While it is too early to accurately quantify the net COVID-19 benefit, we believe this will still flow through as margin positive in FY '22. We will provide a fuller update at our half year results in February. I would now like to address natural perils costs. The storms in late October have heightened interest in this topic after we updated our expected FY '22 perils cost. Nick spoke earlier about how IAG is approaching climate risk and highlighted the importance of our natural perils expertise that has been built up over many years. While this expertise allows us to contribute in many areas, we have a clear objective to understand and quantify perils risk and price our products appropriately so we can deliver acceptable returns to our shareholders. One of the many tools we use to understand perils is catastrophe modeling. These internally developed models, along with externally licensed models simulate the full range of potential peril events to measure the financial consequences. Our natural perils team ensures they are calibrated to IAG's portfolio in both current and future climate scenarios. Catastrophe models are complex and we are continually improving the way we pass all the granular risk signals through into pricing. As you can see, we continue to invest in having leading capability in this area and are working constantly to refine our approach. Understanding and pricing for natural perils is clearly a significant area of focus at IAG, and a lot of work goes into this P&L driver to optimize our forecasting. As is evident from our recent announcement, we are currently anticipating that we will exceed our perils allowance in FY '22, which saw us reduce our FY '22 reported margin guidance by 350 basis points. On average, IAG has exceeded its perils allowance by 0.8% of net earned premium over the past decade. In response to experience, we have made significant increases in the perils allowance in recent years relative to NEP. The perils allowance of $765 million for FY '22 represents approximately 10% of NEP, well up on recent years. It is too early to provide guidance on the perils allowance for FY '23. However, we are factoring further increases over future years into our planning and most importantly, into our pricing. We regularly assess the economics of our aggregate and volatility cover reinsurance arrangements to assist in managing volatility. As Julie, Jarrod and Amanda highlighted earlier, we're confident about our underwriting and pricing capabilities that mitigate the risk. We've achieved mid-single-digit rate increases across short-tail personal lines in Australia and New Zealand in the first quarter of FY '22. And we continue to raise home and property rates to cover underlying claims inflation as well as other rising costs associated with natural perils. Given the importance of expenses in achieving our medium-term financial objectives, this slide is designed to share more detail on how we think about and manage our expenses. My intent is to share this type of analysis as part of each half year reporting to provide transparency on the progress we are making. In targeting a broadly flat expense base and declining expense ratios, we adopted dynamic approach that considers a range of important trade-offs. We've provided some granularity behind these trade-offs on this slide. These trade-offs may lead to some volatility between our 6 monthly reporting days. However, over the next couple of years, we have a clear plan and expect our total expense base of around $2.5 billion to be flat to slightly down. Within that, expenses to maintain IAG's operating capacity are being managed tightly with a focus on automation, efficiency and effectiveness. At the same time, we have chosen to increase investment in a number of areas that will transform IAG to meet the needs of customers and drive operational excellence. These transform investments are largely technology investments, but also includes some specific investment related to risk and regulatory functions, simplification and efficiency initiatives for our intermediated operations in Australia and also growth in our direct Australian franchise. The profile shown for transform reflects the P&L impact taking into consideration capitalization and amortization of some of the expenditure. The enterprise platform Nick outlined earlier will facilitate increased deployment of automation and artificial intelligence across IAG and to improve customer experience and unlock efficiencies central to reducing expenses. Our approach to automation is multifaceted and employs tools to streamline processes, enhance service delivery and digitize customer interactions. As evidenced from Julie, Jarrod and Amanda's presentation there's close collaboration with our Chief Operating Officer, Neil and his team in driving these improvements through technology and operations. And Neil will join us on our panel later to answer any questions you may have in this area. Moving to our capital platform. This has 3 distinct elements that most on the call are familiar with equity, debt and hybrids and reinsurance, including the whole of account quota shares. We view the quota shares as an important and sustainable part of the platform and don't expect any significant changes to the high-level structure and overall quantum in the near future. The quota shares provide capital diversification and reduced P&L volatility. For the reinsurers, they offer diversification to uncorrelated risks relative to other peak catastrophe zones. In short, we view these as win-win commercial arrangements for the long term. As we look to renew these structures as maturity dates draw closer, our reinsurance partners have indicated ongoing interest. The term structure has always been an important factor and will be taken into account in the upcoming renewals. To our current level of capital, a few comments on core equity. Our primary lens for capital adequacy -- You will recall that we reported a CET1 ratio of 1.06x at 30 June this year. We also advised that, that would reduce to around 1x PCA after payment of the final dividend combined with an allowance with the $150 million anticipated benefit from the proposed sale of our Malaysian business. The most significant development for our CET1 over the medium term will be the court's finalization of the second test case for business interruption. A positive outcome would clearly have implications for IAG's core equity. You will remember that establishing the provision saw us have a drag of around 50 points on our CET1 ratio. Claims lodged for BI remained low at less than 1,000 claims so far. As you are aware, our current level of provisioning for BI assumes an influx of claims once there is clear resolution from the courts. We will, of course, provide an update on BI as soon as it's practical to do so. Combined with the unwind of tax losses in both Australia and New Zealand, it is fair to say that a positive BI outcome could see us in a position where we have considerable surplus CET1 capital. Our track record demonstrates that we have been active and prudent in our overall approach to capital and managing our CET1 around the upper end of our target range. Once there is clarity on BI, we will look to outline firmer capital management plans with timing likely to be in the first half of calendar 2022. A few final comments on IAG's 3- to 5-year medium-term targets have reported margin of 15% to 17% and cash ROE of 12% to 13%, which align to the financial period from FY '23 to FY '25. Our confidence in achieving and sustaining this level of profitability reflects a number of important influences. First, the strong rate environment, particularly for our intermediated business. Average rate increases across this business were 8% in FY '21 and as flagged by Jarrod, these have averaged 9% in the first quarter of FY '22. This is now flowing through to margins. We remain confident of delivering the initial $250 million target in our intermediated business by FY '24. We also continue to believe that the new operating model has brought greater accountability and a focus on the delivery of financial goals that support delivery of the medium-term targets. I trust that the additional information we have provided on expenses today helps you understand the dynamic approach we adopt to influence the outcomes. Finally, we believe we can manage the risks presented around perils cost increases. In combination with improved profitability from investing in our growth, prudent management of our capital platform and targets, we will -- these things will continue to underpin delivery of our cash ROE target. With that, I'll now hand you back to Nick.

Thanks, Michelle. I'm now joined by all our 4 executives who presented this morning for a Q&A panel. Neil Morgan, our Chief Operating Officer, has also joined us, and we welcome any questions. I think we'll start with the phone.

[Operator Instructions] Your first question comes from Andrew Buncombe of Macquarie.

The first question is either for Nick or Michelle. Just on Slide 40, makes a comment about a $2.5 billion gross expense base. Apologies if I'm missing something obvious here, but is there an easy way to reconcile that to the FY '21 disclosures?

Andrew, it's Nick. I mean I'll let Michelle sort of step through that. But -- we -- I mean, that's roughly the run rate of the company right now. Michelle, I don't know if you want to just provide some -- an easy way to reconcile that.

I can try. Thanks, Andrew. Lovely to hear from you. What we're trying to do is provide greater transparency of our overall cost base. So it reflects the $1,650 million gross underwriting expenses that you would see disclosed in our FY '21 accounts plus our claims handling expenses, which you don't see separately and also our expenses included within fee-based businesses. So we're looking to provide greater transparency of the overall cost base that we're managing as we move forward to achieving our targets.

Got it. That makes sense, Michelle. My other couple of questions are actually for Jarrod. Welcome aboard Jarrod. The first question is in relation to just some color on what you're changing in the long-tail claims handling processes. And also, if you can give us some color on the case load trends for long tail in the last couple of months, that would be great as well, please.

Okay. In regards to the case handling of long-tail business, initially, there's no major shift in the way we're going to -- we're looking to handle caseloads in long tail. What we are doing in the claims space is looking to maximize the benefit of the systems implementation that we've made in the core operating claim system to create efficiency at the front end there. So that's the first aspect. In regards to caseloads, we haven't seen a significant shift in caseload recently in the long-tail classes. Does that answer your question?

Yes, it does. The second one is again to you, Jarrod. Does it make sense for IAG to be white labeling personal lines for so many partners while not leveraging the core knowledge and data in the blue brands? Just some color around your thoughts on that would be interesting.

Yes. We're looking at the partner business, and we're going to be very purposeful in what we do with partners and the selected partners. With our largest partner, we are utilizing the rating and the pricing engine that we do across our broader business. And that would be the perspective of how we step forward with our partner business that we do utilize the broader group capability and knowledge in personal lines.

Andrew, if I can just add to that. I mean I see a role with partners within our personal lines business across Australia and New Zealand. And we have some wonderful relationships with some of our bank partners in New Zealand and within Jarrod's business as well. I think what you're just going to see from us is that we're careful about that. I mean we've exited a reasonably material one over the last 12 months. So we are going to be focused on ensuring that it makes sense for IAG and recognizing that we also have these direct businesses. So I don't -- so I think there's a role there. I think we're just going to be careful and selective about how that -- how those partner relationships are part of the overall strategy.

Yes. That makes sense. And then just the final 1 for Jarrod, please. So IAG is once again flagging its intention to ramp up the sale of SME policies in the Direct channel. How does IAG plan to address the concerns of insurance brokers about moving their business away from them?

In my view, customers will make a decision where they purchase their insurance from. And remember, as Julie pointed out, these are for very small, simple businesses. As they get more complex and businesses need advice from insurance brokers, we believe businesses will seek the advice of professional insurance brokers. So there is a capability to deploy capacity and service the needs of Australian SMEs through both channels. And we're comfortable with that. It's important for us to make sure that we're delivering the best service and the best product for our broking customers through Intermediated.

Your next question comes from Kieren Chidgey of Jarden.

I've got a number of questions. Maybe just first starting back on expenses. Michelle, I appreciate the clarity around sort of the definition of the $2.5 billion. But given we can't easily track that at the moment, is your intention to start disclosing the building blocks of that moving forward?

Definitely. And it's one of the things that we think is really important as we move forward, so that you can track our progress in terms of delivery against the targets that we've set out.

Okay. And related to that, given sort of that $2.5 billion cost base includes claims handling expense, is there any overlap sort of the net target with the $400 million gross claim saving target within Direct?

So within the targets that both Julie and Jarrod have particularly called out in their businesses, there are cost elements to those. And so part of what we've tried to do is demonstrate the total size of the cost base that will be holding flat to slightly down, but there are elements within delivery of the $250 million and the $400 million that will come through the cost base.

All right. And just also related to expenses, perhaps a question for Julie. I'm just wondering if you can unpack some more of the drivers within the $400 million target and just sort of clarify whether or not it sounds like that will largely be reinvested into growth and pricing rather margins across Direct Insurance Australia.

Sure. So maybe just to touch a little bit on the $400 million. We've got our motor repair model, as we've talked through, that is growing and has more to grow in terms of reaching scale. And that's delivering us with benefits right now that we will make the choices around where we invest going forward to help us achieve those growth targets. We've also -- as I mentioned, we've just deployed our technology stack right the way through our claims business. That's live and active. And I think we can be much more aggressive now on rethinking our processes, revising our approaches, bringing automation and AI through to create more efficiency in the claims handling and the expense spaces. So yes, some of it will be reinvested. At the end of the day, all of it will go to shareholders. And that's sort of why we've put that target out there, and it's reflected in the numbers that Michelle just talked you through.

And just a second sort of the other question. A number of the presentations touched on inflationary pressures across both short tail and long tail. I'm just wondering if we could get some sense of numbers in terms of the level of inflation you're seeing across, say, home, motor and commercial and also just a clarification around some of the deterioration you're talking long tail -- whether or not you are flagging prior year reserve top-ups as a result of that?

Yes, Kieren, maybe I'll -- I mean, at a high level, what we're doing is those inflation -- any sort of inflation that we're seeing across the various classes where reflecting within pricing. But it might make sense actually to ask Amanda, Julie and Jarrod, just to make comment on what they're seeing in different parts of the business as sometimes hard to generalize. So maybe I'll start with you, Amanda, in New Zealand and then Julie and then Jarrod. And then as part of that also, just comment on what we're seeing around those long tail.

Yes. So in New Zealand as far as we can see, there's not a lot of impact on motor. And that's mainly at this stage because of the age of the fleet in New Zealand, the average motor vehicle is about 14 years old. So we're not seeing a lot of sort of new parts entering the market for [ carapace ], and we're continuing to monitor that. And the other thing is, of course, we have rolled out our third repair hub. So we're looking to drive efficiencies through both the use of that and our supplier relationships. And as far as home goes again, very minimal at this stage, but we're monitoring it, and we do believe that we can manage that with that supplier arrangement and any rate increases if they're needed.

And Julie in Direct?

Sure. So a little bit different in Australia. We see 2 quite different trends in property and in motor. Property has been impacted in a couple of ways. Interestingly, we're feeling the effects of the bushfires from a couple of years ago, now impacting our ability to source wood as an example. So it's an onshore challenge or local challenge and one that will alleviate quickly through the portfolio. That is causing us, however, to go offshore to purchase more materials, and we've seen an increase in the cost to repair as a result of more dependency than we would normally do on a global supply chain in property. So we've seen a bit of an uptick there. In terms of motor in Australia, it has been a bit more challenging than New Zealand. We've obviously had, I guess, the benefits in a way of frequency, but that's flowed through very differently in terms of inflation costs. We're really grateful that we've had our in-house motor repair model that's helped us manage those claims and manage the cost of repairs. And so while we expect to see an uptick in terms of motor repair costs, we think we're really well positioned to put that through prices going forward. And this year, well protected in terms of some conservative positions we've adopted on reserving.

And then, Jarrod, maybe just on the commercial property and then the sort of comment on long tail.

Yes. On commercial property, it's not as clear as what we see in personal lines in Australia. There is inflation, but there has been for -- we continue to manage that. But there's not the uplift that we potentially see in personal lines. On long-tail, similarly, I mean, long-tail, we've seen claims inflation coming through long-tail for a number of years. So it's always something we keep a very close eye of. We're confident in how we're pricing our business moving forward. And it's obviously something we look at very closely as we go through the reserve review process on a regular basis.

It's hard to -- I mean sort of the rolled up version of that is we're definitely seeing some inflation through the book. Probably a slight sense is motor, we've seen a little bit, particularly in Australia, that might slow down a little bit, I think, property classes. There's a number of supply issues that might make that sort of stay around for a bit longer and particularly any sort of post perils inflation that we might have across particularly Australia. And then on the long tail, we're seeing a little bit. But as we mentioned in the presentations, only modest.

Okay. And just one final point of clarification on the '22 margin guidance. Michelle, on Slide 37, you've now added this box with a positive contribution from net COVID benefits. So just to be clear, is that something that is required to get you into the range? Or is it something that influences where you land in that range?

Thanks, Kieren. As I called out, it's too early to have a firm position on the full year net COVID impact and it's quite modest at the moment as we look at the combination of the frequency benefits from motor, but offset by some conservative assumptions around how we think the inflation will flow through. And then Julie referenced that a little while ago. So the 10% to 12% doesn't have a material impact associated with that at this point in time. We'll see how the inflation plays out over the remainder of the year.

Your next question comes from Matt Dunger of BAML.

First question, if I could, please, for Julie Batch. I'm just wondering how you rate IAG direct offering versus some of the peers and where you're at, at the moment on that 80% target for digital uptake. Wondering if you could give us a bit more detail there.

Sure. So if we look at our digital uptake at the moment, it's probably slightly below that in terms of sales. We're at the moment in the process of reviewing all of those channels. And in particular, as we grow out into the West, our new technology stack is actually already deployed there. And so that's a really good opportunity for us to accelerate it. We're actually aiming for not just initiated, but closed in digital channels. So we want to complete that transaction, making sure we still bring that core value of help. That's really important to us. On claims, we've seen and we've done a lot of work in the -- in the digital claims space over the last few years. We see claims really elevating. In times of events, I think consistent with peers, in fact, we're getting sort of 50%, 60% of lodgements coming through digital channels now, which is really pleasing because that's often the moment when customers need the help. I would say the competitive landscape right now depends on 3 things. So it's your ability to access the customer, market to them, reach them, personalize their experience. It's delivering great digital outcomes. And it's doing that at a price point that is appropriate for the proposition that you're putting out there. And that's really our focus right now and making that absolutely best-in-class.

Great. And then a follow-up, please, Julie. On the risks, what risks are you looking to underwrite with that 250,000 younger customer target? And how can you drive growth when you're getting an increased cap load by the sounds of things. How can you -- with the prices increase and how can you drive growth through your portfolio?

Sure. So I mean when we look at customer proposition, the younger customer proposition, it's really focused on motor actually in the beginning because sadly, home affordability is getting more difficult. It's lighter in time. So we're really trying to position this younger group around products that younger customers are attracted to, as I said, before they become an NRMA customer of the future. So it's really motor -- low cap loads on motor, as you would know. So we're trying to find low cap intensive products and really reach that group with different experiences. I think cap loads are important that we understand. We've got amazing in-house natural perils capability. That's been in our organization for more than 20 years. They're flowing through now very sophisticated pricing techniques into our original rating, and we're able to risk select in a very different way than we have ever done before. So I'm excited about what that actually brings to our business as we continue to leverage that while we grow across Australia.

Great. And then just a final question, if I may, for Jarrod on the intermediated line. I think you mentioned an 85% to 88% retention target. What was the time frame for this? And are you flagging some moderation in pricing to keep those retentions up there?

I wouldn't be flagging a moderation in pricing as the driver to get retention. I mentioned that we've been taking a number of corrective actions on our portfolio over the past 18 months, and that's driven retention ratios towards the low 80s. So there's that -- as we move through the progression of finalizing those actions, that will automatically elevate our retention rate with any shift -- without any shift in our pricing appetite. I also mentioned we've got IAL, our personal lines runoff. So that will commence or that's commenced at the beginning of this month. So that will flow into next year. So we'll still see retention rates at the lower end of the range leading through next year. So it will be the full year following. So the full year '24, we'll start seeing retention rates in that range as we complete the rectification, if you like, actions of portfolios.

Your next question is from Siddharth Parameswaran of JPMorgan.

I have 2 questions on my part as well, if I can. Maybe I could start with Michelle. Just -- and also Nick actually. Just a question on the targets that are backing this strategy. Nick, maybe if you could just talk about whether some of these targets you know 1 million -- to reach to the 1 million customers, improvement in intermediated with insurance profits. Just are they actually embedded in management targets? And if so, how?

Sid, I mean, sort of, yes, they are. And so what -- I mean we've been pretty clear that we're very focused on our businesses here in Australia and New Zealand. We've sort of been very clear on sort of the 4 parts to the strategy around the 4 pillars sort of growing, building better businesses, digitally enabled, managing our risks. We've then put in place a pretty clear operating model, where we've been very focused on accountabilities within that. And I hope you've heard that today from each of the team around really being crisp on what sort of my expectations are from each of the executives -- I mean the broader executives, but you've heard from a subset today. And then within that, plans being developed within each of the businesses and within Neil's team around how we're going to deliver that over the next 3 to 5 years. And there's obviously a rolled-up financial outcome. And so Michelle and I are confident on the 15% to 17% insurance margin. We're confidently delivering on that 12% to 13% and really ensuring that we have multiple initiatives around growth, which is what you've heard from the teams today. And of course, no doubt they'll be supplemented by additional initiatives over the next couple of years as we continue to build this out, and the organization really creates that growth mindset and growth outcomes that we've been missing a little bit over the last number of years. So Sid, sort of coming back to your question, yes, I mean, we are. This is just not at a high level. We are the way we're running the company. It's very clear on accountabilities. And within that, the plans and processes in place to deliver against that, which then gives us the roll-up outcomes that we've talked about today.

Sorry. But just on the growth, I mean, it sounds like you're very confident on the margin targets, but on the growth, is that 1 million customers aspirational? Or is that actually -- is that sort of -- I mean is that a clear target sort of to check if we can how people will be...

I mean we want to -- I mean, maybe I'll make that simpler, Sid. We want our business to grow by 1 million customers over the next 5 years, sort of aspirational target. I mean sort of the slightly different words aren't they? I want to be judged on the success of our company over that time by growing the number of customers we have as an organization. And what you're seeing from each of the plans, this is just not an idea that we've actually -- we're in play now. We've launched in around May nationally already. We've got ROLLiN'. We've got a different focus within our Australian Intermediated, which you can see there's potential growth coming out of that, which we haven't highlighted. We haven't talked about too much today over the next couple of years. And Amanda is working through the opportunities that we have within New Zealand to build out 250,000 new relationships from that business. So this is not just an idea. This is what we're going to deliver over the next 3 to 5 years. And we're going to start -- we've already started on this.

Okay. If I could just move -- actually just another high-level question, just around business interruption. Just -- I mean some of the observations that you might have seen as to exactly why that occurred and the steps that you've taken to ensure that won't happen again. And also related to that, whether there's been any discussion with APRA because it seems like -- I mean, I don't know if it's -- you're also being the largest provision in the industry. I don't know if that's because you're being much more conservative or if it is actually that there were more issues that were found in your book. If you could just comment on what steps you're taking to ensure issues like this don't happen again and also just your discussion to that pro, on it?

Sure. I mean, Sid, maybe I might comment on the -- what we've done to strengthen the organization. I'll ask Michelle to just come in on the balance sheet provision. So on the -- I mean, we've gone to a lot of trouble over the last year or 2 to significantly -- we've changed the way we run the company and the way we've changed the operating model, the way we've been crystal clear on accountabilities and the capability that's been deployed within each of the businesses to ensure that we are operating within our chosen risk profile. The example that you provided around business interruption, I think, was partly driven by lack of some of that accountability and some of the complexity in actually how we were set up as a company, added to by complexity of the systems and processes that are behind that. So we have strengthened that. And to be fair, not just in the last 12 months, we've been working on that for a little while with the program of work, which we've called rQ. But that -- if I look at IAG today versus 3 or 4 years ago, there's been a material shift in the risk environment, risk culture within our organization. And we talk about that pretty much every day, and we understand the importance to have some of those basics right within our company. And we're confident on the settings we now have on that to ensure that things like -- the issues around business interruption do not happen again. On the sort of specifics then on -- sorry, and Sid, I just didn't quite hear the question of APRA.

Sorry, just -- I mean, just whether there has been discussion with APRA about the -- because it seems the impact on IAG at least with the provision that you took seem to be so much larger than everyone else, APRA has signaled that there are -- I suppose they're concerned about this as an industry-wide issue. I'm just wondering what they've specifically said in terms of the fact that you've taken a large provision, is that out of line what others have seen. Maybe if you could just give us some comments...

Sure. I'll comment on and then I'll hand to Michelle on the actual provision. I mean, yes, we've obviously been talking -- communicating with APRA all throughout this and any challenges or issues we have. I'm not aware of any particular IAG issues around this topic. I mean what we've been -- we've just been making sure we're communicating with APRA on exactly where we are, the provisions we've taken, as you know, we've taken a conservative view on this and addressed it straight away. And the -- I'm not aware of anything that indicates that, that's not the position that we still don't have today, which is a conservative view in relation to this issue around wordings for coverage of business interruption. Michelle, maybe I'll just bring you in as well now on just on comments on the balance sheet provision now.

Yes. So I mean, to just add a little bit to what Nick said. I think the key focus that we draw out very, very clearly back in November 2020 was that we assume 0 probability of success in any of the legal cases. So following the findings from The New South Wales Court of Appeal that were unexpected. We felt that it was important based upon our best available knowledge at that point in time to say assuming nothing goes our way. This would be the provision. Now as I touched on in the presentation, we've had less than 1,000 claims today. The provision appears to be conservative depending upon how the outcome of the second test case goes. But we have to wait and see whether we get the influx of claims. But right now, I think what's important is we use the best available information that we had, and we assume 0 probability of legal success.

Okay. Great. And just maybe one quick question for Julie and 1 for Jarrod. Julie, just your diagnosis of why you've been losing share in personal lines over the years. Could you just give us an idea of that and how that is shaping your strategy? And related to that, I mean, it seems like a big part of your growth strategy is about NRMA expanding it nationally. Maybe you could just give us some thoughts on how -- what's your experience in expanding in NRMA in Queensland? How long does it take to get some growth in market share and how profitable was that? So just 2 questions on...

Yes. No, good question. So I think the -- and I think the answer to your question actually is in our strategy. So if you have a look at our book, NRMA insurances, New South Wales, ACT and a small representation in Queensland, that's sort of been holding over a period of time, not really growing, not really shrinking, super high retention, lots of challenge around attracting new business. Victoria has been growing through our RACV brand over a long period of time. And if we look to the West, so South Australia, Northern Territory and WA, they've actually been shrinking in terms of market share. And so a big part of our strategy with those economies that are really burgeoning is around leaning into that and leveraging the presence that we've already got. We've already got great people in those states and really starting to drive the growth back through there. So when you look at our total numbers, a lot of that comes through perhaps less focus on that part of Australia than perhaps we should have been paying. So that's really key. To the younger strategy, again, homeownerships later, multiple asset ownership even later than that. We've got a super loyal customer base. We absolutely have to build strong connections with a younger customer group earlier. And we are underrepresented for a market share in that segment. It's often fairly price focused. So we're looking very much at that, and that's sort of key to our strategy. Queensland as a market is a super interesting market to me. If we have a look at how it's been positioned over the last few years, pre COVID, it was the fastest-growing population in Australia. I know there's lots of people waiting to get back in there next week. So we see that as a really big opportunity. There's some shifts around the way capital might be deployed in Queensland through the work that the Australian government is doing, trying to improve affordability. That's potentially an option for us. And there are other product lines where we've got a great deal of experience, where we see that at the right time, there might be something else for us to add in that state. So that's kind of how we're thinking about the growth equation.

Okay. And maybe one final one just to Jarrod. Just quickly. Just the $250 million, how should we think about that in terms of whether it's linear or back-ended? And just the steps that you've taken to date, should we -- are we already seeing signs of those initial steps that we've taken last year? Are they already helping profitability?

Yes, Sid, we are. We're starting to see the rate we're taking through the business flow through to margin. Also, the corrective action in portfolios. We'll see that flow through. I mentioned IAL. Overall, that's around $170 million of premium that was loss-making for us. So taking that decision to step away from that large personal lines portfolio, that will start delivering margin in FY '23. So we've taken some really good steps to deliver margin. Now it's about proactively reshaping and shaping our portfolio to ensure that we deliver the margins we hit. So yes, we'll start seeing that now, and we'll accelerate that towards the FY '24 as we have -- we implement our pricing actions. We start seeing growth in the segments and sectors we want at the prices we want.

And so the linearity, is it linear? That was the first part of the question.

It will be. We will start seeing the benefit of rate come through. How that is a direct linear, I won't predict that Sid, but we will accelerate the growth, the business and the actions -- and the underwriting actions to bring that margin as forward as quick as possible.

Your next question comes from Nigel Pittaway of Citi.

Just first of all, just this comment that you feel that you're now appropriately provided for the recent challenges that you've been facing. Does that comment include things such as workers' comp, professional risk, general liability issues? Or is that still sort of some uncertainty surrounding those?

I mean, Nigel, I'll make some high-level comments, and Michelle, you come in. I mean we -- of all the -- some of those challenges, I mean we're not aware of any further issues within those that would cause us to reflect on the appropriateness of our balance sheet provisions. If anything, I think we had a conversation around business interruption where our view is we've got a pretty conservative provision set up there. I think in relation to then our day-to-day business and the examples you provided around workers' comp liability, pay ID, and I mean, Jarrod made a comment that we are seeing -- we have seen -- continue to see some claims inflation there. And so never. I think your question, Nigel, was around, is there any risk of any sort of reserve strengthening around that? I mean there's some still there, I think. We see that as quite modest, that sort of risk at the moment. But I'd almost put that in a separate bucket than those large provisions that are the ones that have really caused us those problems where we're not -- as I said, I'm not aware of any further issues there. I mean, Michelle, you want to add to that.

No, I think you've covered it nicely.

I mean, where we sit on that.

Okay. And just while we're sort of on those -- sort of areas, I mean wage inflation didn't really get much coverage in that sort of as you run through those inflationary impacts? Is there any sort of concern there about wage inflation and workers comp, et cetera?

I think across the whole company, I mean, obviously, a lot of our repair costs where we talk about parts and Julie mentioned timber, but wages are part of that, too. So we're seeing that flow through on claims costs. We're seeing that flow through in the running of our company, and we're seeing that flow through to your example on workers. So I think that's -- we're seeing that in many parts of our organization, and we're needing to reflect that in pricing. And so that's what we're doing now. So I wouldn't sort of say it's within workers. I'd say it's actually pretty much everywhere. We're seeing it, which I know we're not the only company to have that challenge as well. That's just another input into how we're thinking around pricing and running of the company going forward?

Okay. Just quickly on -- you obviously mentioned about the quota share reinsurance, but the CTP one is due up June '22. You got any sort of insight as to how you're thinking about that renewal at this point in time?

And Michelle, you might comment on the portfolio?

Yes. I mean, as flagged and we've talked largely about whole of accounts quota shares, but we're comfortable with the role quota shares play in our capital platform. We engage with our reinsurance partners regularly. And we're still assessing the overall form of what that looks like, but nothing to suggest that you'd expect any change would have a material impact.

I mean, I'll make an overall comment here. When we when we put in place the CTP quota share before we put the whole of accounts in a way that was sort of learning. From any discussions I've had with any of our partners, everybody wants to continue to participate. So I sort of hear that there is some concern around that topic. I mean that's not what I'm -- any of the discussions I've had with any of our partners. So if we -- in the CTP example, if we wanted to continue with that, there's plenty of appetite to -- It's -- for us, it's really thinking through the overall capital strategy and how the various elements come together on that. I mean as Michelle indicated, we're not seeing any material changes being planned around how we fund our company going forward.

Okay. Maybe couple of questions to Jarrod. I mean, just first of all, I mean, Jarrod, what's your insight as to why the sort of the affinity and financial partnership business that's been sort of unprofitable over recent times?

Look, there are certainly some pricing issues in that partner business. That's largely been corrected now, and we're moving forward. But that's why you would have seen a shrinking of that business. So it's a combination of pricing and also expense. We've got to create some efficiencies in that partner business to reduce the expense load on that business. Both those plans are in way. The pricing portfolio shaping is significant way through completion. And on some of our largest partners, we have completed that. And now it's about to step into how to create efficiency in that business, particularly around the digital connectivity with our partners. So that we're moving from a number of sort of human interventions through the process to get these policies booked and completed as well as on the claims side to get that to really efficient, and we can reduce the expense. Then we've got a really value proposition to take forward.

Okay. And maybe just finally, also on the sort of intermediated business. I mean you talked about that being a growth engine moving forward and sort of targeting stability in results. I mean how do you think of the sort of cycle on that sort of -- in that sort of complex? Are you basically saying that with the mix of business, the cycle will be less important or sort of how are you going to sort of address -- you've obviously commented that the rate environment is pretty supportive at this point in time, but obviously, that won't always be the case. So can you make some comments on how we should think about that?

Yes. I mean, traditionally, we look -- we see the favorable pricing cycle continuing in the short term and then potentially a period of stability. But that's where we really build out that capability and discipline around portfolio optimization and be very clear about what price is driving margin in business on every policy that sits within our portfolio. So we're very clear about what's the segments that are driving margin and those that aren't, and we take corrective action on those that aren't and grow the areas that are driving margin in business. Building a lot of detail and getting very granular on our pricing, building out the use of third-party data on how we price. So we can outprice the competition. And we're very selective and very clear about price we want for risk we except into our portfolio. That's why it's about building into a growth edge and we'll build those capabilities as quick as possible, and we're looking to do that in that horizon when I indicated. And then we look to confidently grow the business and deliver margin off that growth.

And Nigel, if -- I mean, we're going to be super careful here. And you can tell by the way, Jarrod, just talked through. We're very focused on capability uplift, making sure we've really got our arms around this business, significantly improving the return profile of it, which in a way gives us optionality, I think, that we don't currently have. And so we're going to be very careful about this, I think to the point you're raising around growth for growth's sake. So that's what we're going to step through over the next couple of years as we sort of reposition this part of our company to be a much stronger part of IAG.

Your next question comes from Evan Johnson of Wafra.

Just referring to Slide 39, and the perils overrun in recent years. How should investors be thinking about kind of medium-term perils allowance when you talk about that 15% to 17% in insurance margin. It appears that you should probably see a rate increase ahead of inflation in the near term to really kind of make up for this elevated perils that you're seeing in FY '22, but what you've seen over your team meetings over the last 10 years. So any comments on that?

Michelle, I might have to strike that to you around how we sort of see without giving specifics on outlook, just how we most likely we're going to see higher perils as part of our pricing going forward. I think that's the environment that we're seeing, that's likely to be the outcome. Would you make a comment?

Yes. I've been -- as I tried to touch on during the presentation, thanks for the question, Evan, we are factoring in some further increases. We did make a recent step change given the combination of expectation around experience, and we had some benefit from our reinsurance program in FY '21 that saw the step-up to our allowance of $765 million in FY '22. It's one of the reasons we invest so heavily in this area in terms of the skill and capability. Forecasting is not a perfect science, but applying and Julie touched on this earlier, the deep skill and expertise that we have layering in the granularity into our models and forecasts allow us to make sure that Julie, Jarrod and Amanda have the right signals in terms of the pricing decisions. And so we're confident that we can price for that appropriately and deliver the margin that we've talked about. It's also one of the reasons why we work with key stakeholders, government, communities, et cetera, to build disaster resilience in the face of climate change. And it's not just an experience that we have. Obviously, it's an issue facing global reinsurers. So I can't give you exact numbers for what they look like at the moment. It would be too early for me to do that. But we're confident in the targets that we've set for reported margin in the 3- to 5-year horizon that we can manage that through the combination of high-quality forecasting and appropriate pricing in that environment.

Your next question comes from Andrei Stadnik of Morgan Stanley.

I wanted to ask 3 questions, if that's okay. Firstly, in terms of the balance of the portfolio, so the portfolio has tilted over the last decade to what short-tail lines and then now about 85% of the gross written premium. The short-tail lines do tend to be more catastrophe exposed. So are you happy with the balance of the portfolio? Could you see a scenario where you could benefit from having more long-tail and more reserving optionality?

Andrei, I mean, sort of at a high level, I mean there's been some factors that have contributed to that as well. We've seen CT -- we've exited CTP in Queensland. We've exited -- we somehow exited. The scheme has changed within New South Wales, as you're aware, that's the sort of the premium pool there has come down as we've changed the arrangements around how claims work in that scheme. So I think that mix is sort of where it has been caused by that. I mean, it's -- at the moment, we are comfortable with sort of that overall blend. I mean, I think it's a challenge and potentially an opportunity within Jarrod's business. As you're aware, our New Zealand business has no long tail. So it's really a question for Australia. And within that, I think it's really within Jarrod and what we might see is opportunities there. At the moment, we're comfortable. But Jarrod, I don't know if you want to make a comment about sort of long-tail and opportunities looking out sort of next 12 months, but sort of 3 to 5 years.

I think in the 3 to 5 years, we do see options to grow our long tail business. But the reality is it's not going to be a significant shift in the overall portfolio balance of the group when you consider the size of our personal lines business. So yes, we do see opportunity. How big an impact and how much that will move from the 85%, 15% now, it's not going to be a significant shift in that balance with commercial lines, long-tail only.

I wanted to ask around the capital management. So you flag that if there was clarity in business interruption, you will look to review the capital position in the June half of calendar 2022. And in that slide, you mentioned that some of the other considerations, we will be managing rental claims. But can you talk about some of the other considerations you will take into account thinking about capital management? Because the reason [indiscernible] action at the moment. So what are some -- and APRA reviewing risk management across the industry. So what are some of the other considerations you'll take into account?

Michelle might provide -- ask you to make a comment.

Yes, Andrei, thanks for the question. We work really hard to ensure that we have target capital ranges for our CET1, that is 0.9 to 1.1, that takes into consideration a risk appetite, which is a holistic view at all of that. So you've touched on a few matters that have -- we have talked about a little bit of some of our legacy issues. We've talked earlier around BI and potential element of conservatism depending upon the final outcomes of the second test case. So we've taken APRA on the whole journey with us there when we talked about the legacy pricing issues and the provisioning for that. What we indicated as part of our full year results announcement is that we had included an allowance of about $100 million for uncertainty as we look to finalize that program. We've completed the find phase and investigate phase, and we remain appropriately provided in that environment. It's inappropriate for me to make comments around the ASIC proceeding other than to note that it's related to a small component of the overall program. And I think that reflects the ongoing work that we've done to take our regulators on the journey with us. You touched on the insurance self-assessment. So a number of insurers are doing. We've completed that process and all those things factor into our thinking around risk appetite. I'm not sure that I can add too much more at the moment, but we're comfortable as we look at how we set risk appetite, set our capital targets, manage our balance sheet against that.

And can I ask around consumer data right and how IAG is going to be using consumer data right because from the outside, it looks like it's an opportunity in the sense that you can now get your hands on banking transactional data, understand and engage our customers much better. But on the flip side, also it seems that something like a price comparison website or I think they're trying to do the same something similar could be in a position to streamline price comparison going forward. So how are you thinking about the consumer data right journey?

Yes, sure. I mean maybe I'll divide that into 2. I'll just ask Julie to make a comment on the competitive landscape, which I think is one of the questions. But Neil, I might ask you to come in also on just the asset that we have within our organization around data and some of the value that we see around that . So Julie...

Sure. So I mean, we've been looking at the consumer data right for a number of years now. Through our NRMA app that I referred to in my presentation, we've got the ability now to dynamically manage consent, identify our customer, allow them to change their preferences, and that's a big part of positioning us well for the consumer data right when it comes in. We've been working really closely actually with some of the advisers that've advised the banks on how to establish and set up these processes and practices. So we feel we're really well positioned. And I don't really see it so much as a threat as a really big opportunity for our business to bring another cohort of customers to us with better insight than we've already got and combine that with what I think are pretty world-class insights that already exist within our company that much of Neil's team has helped us unlock over the last couple of years. So Neil, do you want to add to that?

Yes. Thanks, Julie. And I think we've invested heavily over the last many years to establish the data asset for the company. And as you heard from Julie and Amanda, in particular, the breadth of the relationships we have with customers in both Australia and New Zealand, we have some really interesting and quite unique insight. And the plan really from here is the enterprise platform work we're doing is to make sure that we can expose that data to our internal customers and directly to our external customers in an appropriate way with the right governance mechanisms and the right level of control. And that's some of the capability that Julie described in terms of the loyalty platform, our consent capability to make sure we do that in an appropriate way. But I agree with Julie, this is an opportunity space for us, and we need to make sure that we use the governance and control we've got in the company to do that appropriately.

There are no further telephone questions at this time.

Okay. We have 2 questions on the web from Dougal. Thanks, Michelle, on the reassuring words regarding various quota shares given some recent debate. Can you please remind me on the status of the Berkshire Standstill agreement? Will the new quota share also include a standstill? Michelle?

Yes. So it wouldn't be appropriate for me to talk about go-forward terms. But I think what I would call out is we don't envisage any material change to the terms of the quota share agreements that need to be renewed over the period. And the standstill remains in place, but I can't talk to the specifics. I don't think, I'm not sure if we're publicly...

I think -- yes, I think we have. So the original -- I think Dougal's question is around the original deal in 2015, part of that arrangement was there was a cap in relation to ownership capped at 14.9%. And actually, Berkshire have ownerships only moved a little bit since 2015, which was during the capital raising in November. And whether or not we -- I mean, we haven't sort of started working through how that works with any sort of renewal. But I think you can assume it would be the same, would be the logic. And the second question from Dougal is around various quota shares need to be renewed over the period of your margin guidance. So what assumptions have you made in your margin guidance? I mean I'll answer that quickly that we've just assumed, as I think we've talked about today, that those quota shares are just part of our capital platform. They're part of our company going forward. And so the economics are part of that 15%, 17%. So essentially unchanged and like-for-like with how we're funding the company today. I think I've got no more questions online, but I've got 2 more questions on phone. Is that right?

Your next question comes from Kieren Chidgey of Jarden.

Just sort of a follow-up question for Julie in regards to the new ROLLiN' brand. We last saw sort of IAG introduced an online brand a bit over 10 years ago in the Buzz and the business was closed down, I think, at the end of FY '12. Just wondering what's going to be different in this and what lessons were learned across the organization last time that enable this uptake to be more successful in your mind?

Sure. I mean, actually, I mean, I had a look of involvement in the buzz in the early days. And I think there's a lot of capability in that business that you see spread actually around our organization today, in particular, some of the digital assets that were built and some of the way that the product was constructed. ROLLiN' is a little bit different. So we're really positioning ROLLiN' in a very different digital world at a digitally astute customer base being the younger generation. So we're really, really targeting on a very specific demographic. We're also not trying to build a completely independent business here. It's very important that ROLLiN' works with NRMA. We're not trying to build a competitor to ourselves. We're trying to build a complementary business, so that we can take a ROLLiN' motor customer and introduce them to an NRMA home product at an appropriate time. And what we're doing is leveraging all the smarts and capabilities of the IAG group. So we're using the claims technology that Neil's team has built over the last number of years. So we're using our in-house technology. It would be crazy for us not to leverage that what we think are better, more sustainable repair costs. And where we're really focusing our energy, and I hope you can see that in some of the branding is on that experience in capturing the attention with subscription-like products that we know younger people love. So we see it as a really different proposition. And the learnings from the buzz is how we've actually taken that across the company.

Your next question comes from Siddharth Parameswaran of JPMorgan.

Hello, can you hear me Sorry, sorry, sorry. Can you hear me?

Sid, we can hear you now.

Sorry, sorry, apologies. Just 2 quick questions. Just cyclone risk reinsurance program, if you could just comment on what that might mean for your business and your strategy over the next couple of years?

Yes, sure. I mean I'll make some comments and maybe ask Julie as well. I mean what the government is doing is introducing some sort of funding mechanism for the reinsurance aspect of cyclone risk across Australia. We're still going through the detail of the design of that and how that's really going to play out in premiums. But the aim is that for domestic property and for small business, that there is the element of reinsurance that we buy at the moment externally comes from the Australian government and the theory being that, that would be at a more affordable price to IAG than what we can purchase reinsurance externally from the global markets. And therefore, we reflect that reduction in cost of reinsurance into the -- into pricing for cyclone affected risk across Australia, but there are certain regions, obviously, that are higher than others. In relation to, I think, Sid, your question around market disruption, is that advantage, disadvantage? What does that mean for IAG? Julie, any comment on your business?

Sure. I mean just to probably build a couple of extra comments. I think if you look at the cost of the way that we end up having to price cyclone insurance across Australia, a lot of that is predicated on the cost of capital. So the input costs, not necessarily perils costs to start with, and they're quite volatile. So they tend to be quite reactive post event. Unfortunately, we haven't had one for a while. They tend to be quite reactive post event because that business is being ceded through reinsurance all around the world. So a big part of what the government is looking to achieve here are longer-term stable prices that allow the market to be more competitive. And if the market is more competitive, so will we be. And so we see that as an opportunity to potentially bring our brands to regions that we haven't been as highly represented in the past.

Okay. Great. Okay. And just one final question, just on New Zealand. Just Amanda just adjacencies that you're considering? What are they, are they related to GI?

Yes. Yes, definitely. So we're looking at mainly how do we actually help manage our repair costs, but also how do we continue to build relationships with customers and retain them as loyal customers for us. So they are the kind of 2 key areas we're looking at. And at this point, our repair hub is the key one. And we've just finalized the third opening of our pay hub site. So that's going well.

There are no further questions.

Okay. So thank you, everyone, who has joined us on the call this morning. Before we conclude, I'd just like to make some closing remarks. So what you've heard from Jarrod on how we're going to achieve a $250 million upside within our intermediated business here in Australia. What you know that now within our direct business here in Australia has launched its growth plans. We've taken NRMA Insurance National and launching ROLLiN' to become a serious player in that youth market. And what Amanda has reminded us about the quality and stability of our New Zealand business and the opportunities that we have here. Our enterprise platform simplification is progressing and with results already achieved in channel shift automation and digital and there's more to come. We know that claims optimization and supply chain efficiency are a common thread across all our businesses. You heard from everyone talk about that today. And we have the scale to use these to bring around some real financial benefits for IAG. I'm super proud of the team that I've assembled to make all of this happen, of which you've seen some of them today, but the whole team, I'm proud of. And of course, I look forward to sharing more of our progress with you when we bring our results to the market in February. Thanks again, everyone, for your time today.