Platform move lifts IAG's NZ costs

Fallback system migration clocks up $15.9 million in costs

IAG's New Zealand business clocked up A$13 million (NZ$15.9 million) in costs in 2007-08 as part of a migration to new core information systems that the company has been wrestling with since 2002.

The news came as IAG announced a disastrous result for the year to June, in which it saw the net profit of A$552 million in 2006-07 turn into a A$261 million loss.

In the company's New Zealand business, underwriting expenses increased by A$13 million in 2007-08 as IAG completed a move of its direct insurance business onto the Huon/Bonus technology platform used in its Australian operations.

The new technology would "improve the business' underwriting capability and at the same time provide access to significantly improved data, which can be used to better target customers and develop tailored marketing campaigns that match customer needs", IAG executives wrote in a statement to the Australian Securities Exchange.

The Huon/Bonus system was installed in the company's renewals business in May last year.

IAG's last tilt at an information technology overhaul in its New Zealand business ended in disaster. The company scuttled its Project Endeavour initiative and the Sirius systems it sought to implement in 2004 after spending at least $30 million on the project.

The ill-fated project was thought at the time to have been one of the most complex ever undertaken in the New Zealand financial services sector.

A decision to implement the Huon system, already in use in IAG's Australian operations, was taken after Endeavour was killed off. In 2004, the company predicted that implantation of the Huon system would take 12 to 18 months.

— MIS Australia

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