Insurance Australia Group has told its shareholders the hailstorms that pounded Canberra, Melbourne and Sydney this week will hit its earnings.
The insurer has received more than 28,000 claims of home and vehicle damage from the hailstorms and now expects them to result in a pre-tax cost of $169 million.
IAG expects its insurance profit margin to be 14.5 per cent to 16.5 per cent, down from with the previously advised 16 per cent to 18 per cent.
IAG has brands including CGU and NRMA.
The insurer’s first half results are due on February 12.
The business has set aside $80 million to refund customers who did not receive premium discounts in full in recent years.
IAG reported the problem to the Australian Securities and Investments Commission in September.
IAG CEO Peter Harmer said a proactive review of pricing systems uncovered the issue.
“We will put this right as quickly as possible,” he said.
“We have a team in place which is working hard to identify individual customers who have been affected and to arrange refunds.”
These payments will not affect insurance profit.