The Insurance Australia Group Ltd (ASX: IAG) share price has fallen by 3.6% in response to the $169 million damage caused by the Sydney hailstorm.

Insurance Australia Group is Australia’s largest insurance business, its direct heritage dates back to 1920. Its businesses underwrite over $11.4 billion of premium per annum, selling insurance under many brands, including: NRMA Insurance, CGU, SGIO, SGIC, Swann Insurance and WFI (Australia); and NZI, State, AMI and Lumley Insurance (New Zealand).

IAG Sydney Hailstorm damage

IAG said that the scale of anticipated claim volumes and severity of related hail damage already indicate the pre-tax cost of the Sydney storms will be in line with IAG’s maximum first event retention, of $169 million post-quota share.

By 10am on 21 December 2018 IAG had received more than 6,500 claims with a significant rise expected. Most of the claims relate to motor and property damage.

IAG Australia Division CEO Mark Milliner described how IAG is tackling the volume of claims: “Extra employees have been allocated to the claims and repair management teams and our online claim lodgement facility is assisting the rapid assessment of claims.”

In the announcement, IAG estimated that its year-to-date net natural peril claim costs for FY19 currently amounts to $410 million to $430 million pre-tax, post-quota share.

Is the IAG share price a buy?

Despite the claims from this storm being a one-off and part of being an insurer, it does seem that storm damage is becoming bigger over time. For that reason, I’m not sure IAG can generate reliable profit growth in the coming years. It could be better to choose proven profit growth shares such as the ones in the below free report.

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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).