IAG Boosts Catastrophe Cover to $10 Billion, Covers 35% of Business
IAG has integrated RACQ Insurance into its core reinsurance programs, expanding catastrophe coverage and boosting downside protection through to 2029. This move aims to stabilise earnings and unlock synergies following RACQ’s acquisition.
- RACQ Insurance fully integrated into IAG’s 2026 catastrophe reinsurance program
- Whole of account quota share (WAQS) expanded to cover 35% of consolidated business
- Catastrophe cover now protects two events up to $10 billion with $500 million attachment
- Multi-year aggregate stop-loss protection extended through FY29 with $1 billion annual downside cover
- Improved reinsurance market conditions enabled favourable renewal terms and reduced earnings volatility
Integration of RACQ Insurance into IAG’s Reinsurance Framework
Insurance Australia Group (IAG) has announced the successful integration of RACQ Insurance into its main catastrophe reinsurance programs for the 2026 calendar year. This follows IAG’s acquisition of RACQ Insurance on 1 September 2025, which initially maintained RACQ’s standalone reinsurance arrangements. The consolidation now sees RACQ’s business fully protected under IAG’s broader reinsurance umbrella, marking a significant step in streamlining risk management across the group.
Expanded Coverage and Enhanced Protection
The integration has expanded IAG’s whole of account quota share (WAQS) arrangements to cover 35% of the consolidated business, up 2.5% from previous levels. The 2026 catastrophe reinsurance program now provides coverage for two major events with protection up to $10 billion, triggered after losses exceed $500 million. This robust structure is designed to shield IAG from severe natural peril events, which are a growing concern in the Australian and New Zealand insurance markets.
Additionally, RACQ’s business has been folded into IAG’s multi-year aggregate stop-loss protection, originally announced in June 2024. This program offers approximately $1 billion in downside protection annually through to the end of the 2029 financial year, providing a critical buffer against cumulative natural disaster losses.
Market Conditions and Strategic Benefits
IAG’s Chief Financial Officer, William McDonnell, highlighted that global reinsurance markets have improved during 2025, allowing the company to renew its protection on favourable terms. The expanded program has garnered strong support from reinsurance partners, which is expected to reduce earnings volatility and deliver targeted synergies from the RACQ acquisition. This integration not only optimises capital efficiency but also strengthens IAG’s resilience against catastrophic losses.
As IAG prepares to release its half-year financial results on 12 February 2026, investors will be keen to assess how these reinsurance enhancements translate into financial performance and risk mitigation. The move underscores IAG’s strategic focus on consolidating its insurance portfolio while managing exposure to natural disasters in a volatile climate environment.
Bottom Line?
IAG’s reinsurance integration with RACQ sets a new benchmark for risk management, but the true test will come with the next major natural event.
Questions in the middle?
- How will the expanded WAQS coverage impact IAG’s capital requirements and profitability?
- What are the specific cost implications of the enhanced catastrophe and stop-loss protections?
- Could further reinsurance program adjustments be expected as climate risks evolve?
