Insurance Australia’s Share Price Continues to Dip Another 1% Today

After spiralling downwards by over 4% yesterday, the descent continues for Insurance Australia Group Ltd [ASX:IAG] shares. Its price has reached a low of $8.07 in morning trade today.

The insurance giant’s poor performance for the past week is likely due to the ongoing Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

The entire financial services sector has been feeling the spotlight lately, as the investigation rolls onwards to report and revile the most shocking missteps.

Scandal threatens the insurance sector…

Investigators found a customer who’d paid funeral cover premiums for over 20 years, had been refused a pay-out after his daughter passed from suicide. After contacting the company, he was informed that he ‘should have read the fine print.

Other investigations have been focused on how insurers, particularly in the funeral and life insurance specialty, are targeting the most vulnerable people in indigenous communities.

On the back of these findings, the media’s telling a grim story about our financial service providers. It wouldn’t be a surprise if the market was not only losing confidence in the financial efficacy of such investments, but also the ethical implications.

Are Insurance Australia in the Clear?

There’s still no news coming out of the investigations that particularly pertain to Insurance Australia. However, overall confidence will be low in light of the findings on other companies.

IAG isn’t set to face the royal commission in September, but a report from the Australian Financial Review (AFR) on Tuesday has already hinted at malpractice. The group general counsel Chris Bertuch has taken a mysterious leave of absence, which he is reported as unlikely to return from.

However, over the last 12 months, IAG have shown a relatively impressive performance. The insurance company entered into a $525 million sale agreement only last month with two Asian companies, and logged a positive half-year result earlier with a dividend increase of 7.7%.

Considering the current volatility, it could pay to remain patient while the media frenzy calms down. However, it’s also probable that some risk-takers are seeking to lock in gains now before a possible negative impact to the share price.

Vigilant investors will keep abreast of any findings on IAG later in the year.


Ryan Dinse,

Editor, Markets & Money

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Ryan Dinse is an analyst at Markets and Money. He has two decades of experience in financial planning, equity analysis and credit markets. Ryan combines fundamental, technical and economic analysis to identify and invest in good ideas at the appropriate stage of the economic cycle. He has a strong interest in technology, economic history and disruptive business models. His focus at the moment is as lead analyst on two of our most recent and innovative investor services, Crash Market Investor and Sam Volkering’s Secret Crypto Network. He will write about the exciting opportunities for investors to benefit from significant changes in world markets. He is a member of Fintech Australia, a former member of the Digital Currency Council, and is a fully accredited financial adviser.

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