IAG sets hefty AI budget for next financial year

Nick Hawkins, IAG
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Insurance Australia Group (IAG) has budgeted for around $200 million for “AI and AI enablement” over the next financial year.

The insurer outlined its groupwide AI budget during its FY26 results presentation, which came just weeks after it signed on to use a new agentic AI platform built by OpenAI.

IAG said earlier this year that it is embedding AI deeply into its operations, ranging from its engineering function through to the triage and assessment of claims.

“We’ll continue to invest in FY27 with a focus on AI and tech modernisation, improving productivity and customer outcomes and the long-term scalability of our business,” chief financial officer William McDonnell said.

“[Additionally], we continue to anticipate … cost reductions in our business, allowing us to accelerate our investments including in AI in order to grow and transform.”

Managing director and chief executive Nick Hawkins said that more than 60 per cent of IAG staff use AI “regularly”.

“We have more than 600 ‘activators’ who have published more than 90 AI agents to improve workflows in areas like customer service, operations and within our corporate functions”.

He also said that IAG has “over 2000 employees using AI in claims, fraud and service”.

Hawkins added that the “significant benefits to our claims costs” delivered via AI is being reinvested “for growth”.

He added that the OpenAI partnership will focus “initially on where the need is greatest: scaling our claims handling capabilities during natural disasters and severe weather events”.

“This initiative represents the next step in our AI journey, reinforcing our commitment to responsible, customer-led innovation.”