 Independent
assurance
statement
To the Board and Stakeholders of Insurance Australia Group New Zealand Limited (IAG NZ):
IAG New Zealand (IAG NZ) commissioned Net Balance Management Group Pty Ltd (Net Balance) to provide independent assurance of this Sustainability Report 2008 (the ‘report’), the organisation’s fourth such report. The report presents IAG NZ’s sustainability performance over the period 1st July 2007 to 30th June 2008. IAG NZ was responsible for the preparation of the report and this statement represents the assurance provider’s independent opinion. Net Balance’s responsibility in performing our assurance activities is to the Board and Management of IAG NZ alone and in accordance with the terms of reference agreed with them. Other stakeholders should perform their own due diligence before taking any action as a result of this statement.
Assurance Standard
The assurance was undertaken in accordance with the AA1000 Assurance Standard, which is based on the following principles:
• Materiality: Does the organisation have in place a process to determine what is material, including an evaluation of relevance and importance? Does the report provide information about the organisation’s sustainability management and performance required by its stakeholders for them to be able to make informed judgements, decisions and actions?
• Completeness: To what extent can the organisation identify and understand the material aspects of its sustainability performance? Is this done in a fair manner (giving consideration to reliability, comparability and understandability of information), and in a balanced way (including both favourable and unfavourable information)?
• Responsiveness: Does the organisation have in place a process to prioritise issues for response? Has the organisation responded appropriately to the concerns and expectations of its stakeholders and adequately communicated those responses within the report? Is this information being provided in a timely manner? Does the organisation allocate adequate resources to enable it to meets its policy and standards commitments?
Assurance Objectives
The objective of the assurance process is to provide stakeholders of IAG NZ with an independent opinion on the quality of the report. This is confirmed through verification of the claims made, and a review of the organisation’s underlying systems, processes and competencies that support the report with respect to the principles of materiality, completeness and responsiveness. Ensuring continuous improvement in data management systems and associated reporting processes is also a complementary objective.
Assurance Process
The assurance engagement was undertaken between June and September 2008, and the process involved:
- A review of the processes used by IAG NZ to engage with its stakeholders and the outcomes of the external and internal stakeholder engagement undertaken during the reporting period. This included independent engagement through telephone interviews with internal/external stakeholders to understand the material issues raised by stakeholders and to assess responsiveness of the organisation to stakeholder concerns.
- A review of IAG NZ’s key sustainability strategies, policies, objectives, management systems, measurement and reporting procedures, background documentation and data collection and reporting procedures.
- Interviews with key staff responsible for the sustainability report to ascertain their views, understanding and response to material sustainable development issues faced by the business.
- A series of interviews with key personnel responsible for collating and writing various parts of the report in order to substantiate the veracity of claims selected for verification.
- An overview of the embeddedness of the key economic, environmental and social policies within the business.
- An independent materiality check using the five-part materiality test, including a comparison of IAG NZ against industry peers, a review of selected external media coverage, and an assessment of compliance performance.
- A review of the report for any significant anomalies, particularly in relation to significant claims as well as trends in data.
- Examination of the aggregation and/or derivation of, and underlying evidence for, over 50 selected data points and statements made in the report.
Assurance Level and Limitations
The level of assurance provided is moderate as defined by the scope and methodology described in this assurance statement. The assurance covered the whole report and focussed on systems and activities of IAG NZ during the reporting period, with the following exceptions:
- The scope of work did not involve verification of financial data, other than that relating to environmental, social or broader economic performance.
- Only the corporate office was visited as part of this assurance engagement. All additional data was reviewed remotely.
Our Independence
Net Balance was not responsible for preparation of any part of the 2008 report and has not undertaken any other work for IAG NZ during the reporting period. Our team’s independence was ensured by selecting an assurance team that had no other involvement with IAG NZ during the reporting period that could impair the team’s independence or objectivity.
Our Capacity
The assurance was carried out by a multi-disciplinary team of sustainability specialists, comprising individuals with expertise in the insurance and finance sector and in environmental and social performance measurement. Net Balance is a global leader in the use of the AA1000 Assurance Standard. The assurance team has collectively undertaken over 80 assurance engagements in Australia over the past 10 years and is led by a Lead Sustainability Assurance Practitioner (Lead CSAP), accredited by the International Register of Certified Auditors UK (IRCA UK).
Our Opinion
Based on the scope of the assurance process, the following represents the assurance provider’s opinion:
- The findings of the assurance engagement provide confidence in the information reported within the report. The level of data accuracy was found to be within acceptable limits, but additional improvements to data management, particularly the reduction of manual aggregation errors and the development of a process for collecting, recording and storing data that is not routinely reported, are recommended to reduce the potential for minor anomalies in data and inaccurate statements. Notwithstanding, data trails selected were easily identifiable and traceable, and the personnel responsible were able to reliably demonstrate the origin(s) and interpretation of data.
- The internal review process established for IAG NZ for data is appropriate and provides quality control around the data derived.
- The statements made in the report appropriately reflect environmental, social and economic performance achieved during the period, however IAG NZ, whilst being transparent about it, should consider whether the inclusion of certain activities not undertaken within the reporting period is appropriate.
- All errors noted by the assurance provider were satisfactorily addressed by IAG NZ prior to finalising the report
Overall, the assurance provider is satisfied that the report is an appropriate representation of IAG NZ’s sustainability performance during the reporting period.
Conclusions
- Materiality: It was found that IAG NZ has a robust process in place for identifying material issues. During this reporting period IAG NZ undertook informal interviews with key internal stakeholders to determine material issues and conducted monthly media reviews for articles in which IAG NZ and other insurers were mentioned. IAG NZ also commissioned Colmar Brunton, an independent research firm, to carry out customer and general public surveys on an ongoing (monthly) basis to report on perception of IAG NZ’s brands. During the previous reporting period IAG NZ conducted a staff survey (regarding employees’ preferences for content in the 2007 Sustainability Report) and commissioned an external stakeholder review, which was carried out by Colmar Brunton between November and December 2006. The material issues identified through these engagement processes are discussed in the 2008 report. While material issues have been prioritised through these forms of engagement, the process for assessing the relevance and importance of issues, as well as the process for resolving conflicts between the expectations of various stakeholders is not clearly reported. Net Balance recommends that in the future, IAG NZ clearly describes in its report, the process by which material issues have been prioritised. Net Balance also recommends that IAG NZ considers formalising the programme for internal/external stakeholder engagement (e.g. biannual engagement). Notwithstanding, the report appropriately addresses IAG NZ’s environmental, social and economic material issues identified through stakeholder engagement and cross-checked by Net Balance using the AccountAbility five part materiality test.
- Completeness: IAG NZ generally has effective systems to measure, monitor and manage a large number of sustainability issues. In addition, the internal audit function, Group Audit & Assurance, provides verification of a large range data covered within the report. Net Balance found that the team responsible for managing sustainability was competent and had an in-depth understanding of the material aspects of IAG NZ’s sustainability performance. Net Balance identified, however, that for information not routinely collected or subject to internal verification, the reliability of the data varied. Net Balance recommends that IAG NZ further develops robust management systems for collecting and calculating data in order to improve reliability of information presented in the report. Net Balance generally found that the information presented is comparable (in terms of year-on-year performance as well as comparison to the performance of peers) and that the information is presented in a format that is easily understandable by a range of stakeholders. Overall, Net Balance notes that the information presented is a fair representation of IAG NZ’s sustainability performance and that the information is presented in a balanced manner.
- Responsiveness: IAG NZ was found to be responding appropriately to the concerns of its stakeholders and adequately communicating those responses within the report. Through extensive stakeholder engagement undertaken for the 2007 Sustainability Report, and the informal internal stakeholder engagement undertaken for the 2008 report, IAG NZ was able to identify those issues most important to its stakeholders. Net Balance found that these issues were addressed adequately in the 2008 report whilst maintaining a concise format by focussing on stakeholders’ expressed concerns. Results of the internal/external stakeholder engagement undertaken by Net Balance on IAG NZ’s behalf also indicated that stakeholders found the report to be responsive to their needs and interests. Through a review of key policies, targets and indicators and an assessment of the extent to which these are implemented, Net Balance found that IAG NZ is allocating adequate resources to enable it to meet its policy and standards commitments.
The Way Forward
Overall, the report covers information and data that is consistent with peers and is material to stakeholders, with information being presented in a manner that satisfies stakeholders’ needs and interests. Comments and input had been sought from several levels within IAG NZ, and the results of external stakeholder engagement undertaken in the previous reporting period had been drawn upon, ensuring that strong processes were in place for identifying the material sustainability issues facing the business. However, additional processes for determining priority and relevance could be developed.
The assurance provider found that the framework for reporting indicators which outlines the methodology used in calculating reported data (including definitions, calculations and reporting criteria), personnel that are responsible for data management, and the timelines for data preparation, has been well embedded. This contributed to making the task of data collection and calculation more accurate. However, it is recommended that a similar system for checking be developed for the collection and analysis of information that is not routinely collected and disclosed in the report, to decrease the risk of minor anomalies and inaccurate statements in such information.
Last year’s assurance process identified the absence of long-term trend data and key performance targets from the report, which was noted as a finding again this year. However, IAG NZ does have internal targets in place for sustainability indicators. In order to demonstrate improvement in IAG NZ’s performance, it is recommended that long-term trend data and key performance targets are disclosed in future reports. Disclosure of benchmarking against industry peers and sustainability leaders in other sectors would also assist in demonstrating IAG NZ’s leadership position on sustainability within the NZ insurance market and enable stakeholders to make sustainability performance comparisons.
Net Balance has provided suggestions for reporting improvement in a more detailed report presented to IAG NZ Management.
On behalf of the assurance team, 15th September 2008, Melbourne, Australia
Terence Jeyaretnam Director, Net Balance & Lead CSAP (IRCA UK)
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