IAG increases catastrophe cover January 2, 2014 - 12:35PM Insurance Australia Group (IAG) has increased its protection against major disasters in 2014 to $5.6 billion. The owner of brands such as NRMA and CGU said it was taking advantage of a cheaper reinsurance marker to bump up its protection against catastrophe, from $5 billion in 2013. "Our catastrophe reinsurance programme remains an intrinsic part of our capital management strategy," chief financial officer Nick Hawkins said in a statement. Reinsurance is purchased by insurers to minimise risk and share the cost of insurance claims with other insurers. Under the terms of its 2014 agreements, IAG is covered for losses from disasters up to $5.5 billion, and an additional $100 million in cover for earthquake in Australia and New Zealand. The company will take the first $175 million in costs from the first disaster event in Australia, and less for subsequent events. IAG also has operations in New Zealand, Thailand, Malaysia and Vietnam, which are also covered by the new reinsurance agreements. The company's shares were up two cents at $5.84 at 1221 AEDT.