There’s a quiet rule in businessleadership that’s easy to forget and even easier to ignore when profits areflowing: the long-term health of any company rests on its ability to balancethree critical constituencies — shareholders, customers, and employees.Paul Scurrah, the former CEO ofVirgin Australia, understood this deeply. He once said that sustainable successlies in keeping these three groups in equilibrium. When one is favoured at theexpense of the others, cracks inevitably form — sometimes fatally. Scurrahtried to uphold that balance during his tenure, but his approach clashed with largeshareholder interests focused on the bottom line. We all know how that ended.
Now, the warning lights areflashing again — this time at Insurance Australia Group (IAG) under theleadership of Nick Hawkins.
A Dangerous Tilt Toward Shareholders
Hawkins, who took over as CEO in2020, appears to be falling into a now-familiar pattern in Australian corporateleadership: short-term shareholder gain at the expense of customer and employeevalue.
The most glaring signal is IAG’s insurancemargin, which hovers close to 18%. That’s well above what would bejustified by inflation or increased claims costs, particularly when grosswritten premium (GWP) is growing at around 5%. The math doesn’t lie —the margin has been propped up by aggressive premium increases, notoperational excellence.
Customers are noticing, andthey’re not happy.
A Canary in the Coal Mine: The Coles Exodus
In a move that should send achill down IAG’s spine, Coles recently shifted its insurance portfolio of250,000 policyholders to Auto & General — a significant chunk ofbusiness lost to a competitor with a growing appetite. While the public reasonmay be “strategic realignment,” anyone in the industry knows this kind ofportfolio shift doesn’t happen without serious concerns over pricing, service,or both.
It’s an early sign that customersare fed up. With insurance increasingly viewed as a commodity, brand loyaltydoesn’t carry the weight it once did. If customers feel gouged, they leave —and they’re leaving.
Employee Culture: The Silent Casualty
There’s also the quiet cost thatnever shows up in quarterly earnings — employee morale. When managementover-indexes on financial returns, internal pressures rise. Cost-cutting,restructuring, and a laser focus on margins often result in disengaged staffand higher turnover. In the insurance industry, where customer experience stillhinges on human service and empathy, disengaged employees lead directly to lostcustomers.
You don’t have to look far to seewhere this road ends. Qantas under Alan Joyce is a prime example: a companythat, for a time, became a shareholder darling while alienating both staff andpassengers. The backlash eventually caught up.
Competitors Are Circling
As IAG continues to raisepremiums and harden margins, competitors — including insurtech startups andmore agile players like Auto & General, Youi, and Suncorp— are licking their lips. These firms have already proven their ability to win onprice, digital experience, and customer satisfaction.
They're not just cherry-pickingpolicies. They're building trust, something IAG risks losing entirely if thistrajectory continues.
It Will Come Home to Roost
Nick Hawkins may believe he’sacting in the best interest of shareholders, but short-term sugar hitsrarely lead to sustainable growth. As Paul Scurrah tried to warn during histime at Virgin Australia, without balance, a company becomes brittle.
The real value of any insurerisn’t found in the share price alone — it’s in customer retention, employeeloyalty, and reputational strength. Right now, IAG is weakening on all threefronts.
The storm is coming. WhetherHawkins sees it or not, others certainly do.
