Australian Insurance

Research evidence excerpt

Australian Insurance

across the organisation with limited visibility on ROI; #2) corporates Recommendation Underperform

are using AI for spot fixes rather than end to end organisation redesign, PriceTarget(CLOSE,Price 23 Jun '26) $6.91$6.10

constricting ROI; #3) most insurers are talking about using AI in the call Valuation methodology DCF

centre, but very few have deployed the tools as yet; and #4) even if cost WACC (Beta 1.15x, ERP 5.2%, RFR 4.7%, TGR 4.7%) 10.6%

savings are achieved, these savings will likely be reinvested in growth. Source: FactSet, Macquarie Research, June 2026

Here comes the night: ASIC released an AI "call to action" on 8 May, while

APRA circulated a letter to the industry on 30 April, presenting findings Impact of AI on Insurer Divisions

Claims +

of its review of deployment and governance of AI. We see it as inevitable OPEX +

that Australian regulators will impose additional capital restrictions on Pricing +

Australian financial services firms, citing CPS234. Further, we are already Distribution -

hearing industry feedback that probabilistic AI engines do not align with Competition -

deterministic nature of the Australian regulatory environment. We suspect Source: Macquarie Research, June 2026

this will receive more airtime, with the potential for class actions on pricing

models and claims-handling practices.

EPS changes

To build a home: Model Context Protocol (MCP) is the open standard • IAG downgraded to Neutral (from Outperform):

Anthropic, OpenAI, Microsoft and many others have all adopted to let LLMs FY26E: -7.1%; FY27E: -0.5%; and +0% to -8%

thereafter. TP $8.50 (from $9.00) reflecting

call external tools and surface data and app experiences directly inside the lower terminal margin. IAG's starting point on

conversation.