Insurance Australia Group, the largest car and home insurer in Australia, announced today that the group has lowered its earning guidance for the year. The company lowered its outlook for insurance margin following the expected impact of excess claims from the recent severe storms in Victoria.

IAG said that now the company expects 2010 insurance margin outlook to between 10.5% and 12%. The company had to cut the outlook as it is getting more insurance claims than expected because of the severe hail storms and flooding in Victoria. IAG said it had received in excess of 24000 claims between March 6 and March 9. Earlier IAG was expecting an insurance margin between 11.5 percent and 13 percent.

"While this event will take almost 2% off our reported full year margin, for FY10 we are confident we can achieve an insurance margin between 10.5% and 12% given the continued improvement in the underlying performance of the business," said Mike Wilkins, chief executive of IAG, in a statement.

IAG also expects the estimated costs of these claims to exceed its budgeted allowance of $135 million. The company said that after reaching the budgeted allowance of $135 million its reinsurance cover would assist it to cover the rest.