Insights

IAG (ASX:IAG) share price slumps 2% amid earthquake payout concerns

IAG shares have slipped as investors price in new risks from today’s earthquake.
The post IAG (ASX:IAG) share price slumps 2% amid earthquake payout concerns appeared first on The Motley Fool Australia. –

The Insurance Australia Group Ltd (ASX: IAG) share price has slipped into the red during afternoon trade on Wednesday, in line with the broader insurance sector.

IAG’s decline has led to a fall in the broader ASX insurance sector, with the S&P/ASX 200 Insurance Index also sliding 1.3% across the day.

Conversely, the S&P/ASX 200 index (ASX: XJO) has climbed 0.7% into the green today.

What’s up with the IAG share price today?

IAG shares are on the move after the insurance giant braces for an influx of claims from the magnitude 6.0 earthquake that hit the southeast coast of Australia this morning.

The earthquake struck major metropolitan areas in Victoria, NSW, Tasmania and the ACT, and even reached regional areas in Victoria and NSW.

One resident from the regional town of Griffith, NSW said “to be honest, it (the earthquake) was a bit scary. My son didn’t feel it as he was on the massage chair”. Griffith is around 400km north of Melbourne, and 600km south-east of Sydney.

Now IAG is gearing up for a wave of insurance claims to flow in from these regions, as most insurance policies place a 2–7 day window on which a “damage from earthquake” claim can be lodged.

This is to prevent a lengthy tail of even potentially fraudulent claims to be made after the actual earthquake itself.

And it appears that earthquake-related repairs can rumble the bank accounts of insurance companies too.

According to a report from today’s The Australian, a previous earthquake in 1989 that rocked Newcastle and measured 5.8 in magnitude cost insurers $3.2 billion. In today’s values, that figure amounts to over $7 billion.

That kind of widespread damage would ultimately hit the pockets of Australian insurers, especially given the current inflation of manufacturing as well as raw materials’ pricing.

Most analysis points to a strong data backed conclusion that the damage could enter into the billions from today’s event.

Investors appear to be pricing this risk into the IAG share price today, as it sits in negative territory from yesterday’s close.

There will no doubt be more to come from this saga as more data about the extent of the damage is revealed.

IAG share price snapshot

The IAG share price has had an incredibly difficult year to date, marred by controversy and headwinds. It now trades 5% in the green since January 1.

Despite this, it is still up 11% over the past year but has lagged the broad index’s return of around 25% in this time.

The post IAG (ASX:IAG) share price slumps 2% amid earthquake payout concerns appeared first on The Motley Fool Australia.

Should you invest $1,000 in Insurance Australia Group right now?

Before you consider Insurance Australia Group, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Insurance Australia Group wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

5 things to watch on the ASX 200 on Wednesday

IAG (ASX:IAG) share price gains after Chief Risk Officer resignation
Here’s what has been moving the IAG (ASX:IAG) share price in September 2021
Why this broker sees the IAG (ASX:IAG) share price gaining 12%
The next ASX 200 shares that could undertake a big capital return

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Insurance Australia Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!