IAG CEO Nick Hawkins: Put tax reform on the agenda

Insurance boss Nick Hawkins says there is plenty of potential ahead in making Australia’s tax system fit for a modern economy.

Insurance Australia Group chief executive Nick Hawkins in Sydney. Picture: NewsWire / Nikki Short

CEO SURVEY 2025: FULL COVERAGE

Economy

How would you rate the momentum of the Australian economy as we head into 2025? Official forecasts have Australia trimming interest rates from the first half of calendar 2025, is that consistent with your view? What are you seeing around inflation in your own business?

As we head into 2025, there is some cautious optimism around the Australian economy.

While the labour market remains strong, inflationary pressures persist, particularly in housing, energy, and food. Following the US election, there is some uncertainty as the new administration establishes itself and the impact of its policies becomes clearer.

The outlook for interest rates is uncertain, however recent data suggests the RBA may begin the easing cycle mid-2025. In our business, we see inflation easing in some areas including motor policies, but raw materials and logistics costs remain elevated. We’re closely monitoring these factors while balancing price adjustments with customer retention and efficiency.

Reform

As we move into an election year, in your mind, what’s the single biggest lever that can/should be used to lift Australia’s competitiveness or productivity? This could be across any area from labour market, tax reform, training or other areas to encourage investment.

Australia urgently needs tax reform to stay competitive. Our current corporate tax rate of 30 per cent is increasingly out of step with global standards. If left unaddressed, there is a real risk this will deter business investment and stifle economic growth.

Alongside tax reform, we must also reassess the regulatory landscape. While we excel at introducing new regulations, we often fail to evaluate the effectiveness of existing rules, creating unnecessary barriers to innovation and growth.

Addressing labour and skills shortages would help lift Australia’s productivity. While recent immigration changes have provided some relief, a more targeted and efficient migration system is essential to fill skill gaps, particularly in industries like motor and building repairs.

This will boost productivity and support critical sectors like insurance.

We’d welcome greater investment in vocational training to equip both current and future workers with the skills needed for emerging roles. This is particularly important as we transition to electric vehicles, where ensuring the availability of skilled technicians to repair EVs safely will be crucial.

Geopolitics

Will a Donald Trump presidency have a potential impact on your business or sector (tariffs or streamlined regulation)? Does geopolitics drive a bigger part of your decision-making?

There is a lot of speculation around what the Trump presidency will look like, and while the early signs indicate the new administration will be quick to implement their election promises around migration and trade, we need to wait and see how that plays out.

For the insurance sector, the most immediate impact could be on capital markets. While equity markets responded positively to Trump’s win, there are concerns about the outlook for government debt. It’s difficult to predict how this will unfold in the long term, especially with the proposed significant tax cuts.

Like many businesses, IAG’s supply chains are global, and we rely on open trade to source the materials necessary for repairing our customers; vehicles, homes, and businesses.

Any geopolitical tensions that impact these trade flows can lead to increased costs and delays particularly in East Asia, where a significant portion of our products are sourced.

People

Has your organisation’s approach to flexible working - including working from home - evolved during the year.  Is this likely to change further into 2025?

IAG has a long history of providing flexible workplace arrangements for our employees. In fact, we had already invested in the technology that enabled many of our customer contact teams to work from home well before the pandemic. This proactive approach allowed us to adapt quickly when the need for remote work became more widespread.

Today, the situation is no different. We recognise every employee has unique circumstances, and responsibilities, so it’s essential that our workplace policies reflect this flexibility. We are committed to supporting our employees, including those who need to work remotely, and don’t anticipate significant changes to this approach moving into 2025.

At IAG, our people are key to achieving our goals, and supporting their needs will always be a top priority for us.

Technology

Where is your organisation along the AI journey – is it in the developmental stage, or are you now using the technology at scale across your business? If so, are benefits matching the promise?

At IAG, we’ve been embracing AI for over a decade, and in 2018, we proudly co-founded the Gradient Institute to promote the ethical use of artificial intelligence.

Today, AI is embedded across the company, driving impact throughout the business. It has enabled us to automate numerous manual processes, improve efficiency, and deliver a superior customer experience.

We recognise the value of AI and its potential to bring about transformational shifts, not only in the experiences we provide to our customers but also in the tools and resources available to support our people to perform their role.

For example, Ravin AI scans vehicles to detect damage, identifies the most suitable repairer, or even declares a total loss, reducing claim processing times by an average of 11 days.

This allows us to accelerate the claims process, helping customers get back on the road faster. Additionally, our AI-powered chatbot, CASI, helps our claims assistants determine accurate policy coverage, which improves our customer service and has helped speed up onboarding for new employees, improving our operational efficiency.

AI is not only improving our internal processes but also creating more personalised and efficient experiences for our customers. The ongoing advancements in AI technology continue to unlock new possibilities for IAG, and we’re excited about its role in shaping the future of our business.