Insurance Australia Group has lifted its full-year margin guidance after a review revealed the cost of "long-tail" claims had come in under expectations
IAG said an improved run in compulsory third party, workers compensation and other insurance products allowed the release of unused cash annually put aside for the claims.
The added capital, previously reserved for CTP, liability, workers compensation, and professional risk, meant the insurance giant could raise its margin guidance range by three per cent to between 13.5 per cent and 15.5 per cent.
Long tail claims can include ongoing claims - such as delayed illness or injuries - that have not been received, settled or fully realised.
After calculating conservatively the reserves required to cover a period of up to three years to June 30, a spokesperson for IAG said the release would have a positive effect on full-year underlying profit.
IAG, the owner of major insurance brands including NRMA and Swann, said guidance for the year was otherwise unchanged and included the assumption of a $850 million net loss from natural perils.
Those events include Cyclone Debbie and February's Sydney hailstorm.
IAG shares were 4.7 per cent higher at 1350 AEST, up 30 cents to $6.86.
