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IAG chief executive Peter Harmer will retire by the end of 2020 after five years in charge of the insurance giant.

Company chairman Elizabeth Bryan said on Wednesday a flexible nine-month transition period has been agreed with Mr Harmer to ensure a smooth changeover once a successor is found.

Mr Harmer will remain responsible for the overall strategic direction and performance of IAG during the transition period and will directly lead the company’s response to the coronavirus crisis.

“My immediate priority is guiding IAG’s response to, and recovery from, COVID-19 as well as managing our key external stakeholder relationships in what is an increasingly complex and dynamic environment,” Mr Harmer said in a release to the market.

Chief financial officer Nick Hawkins has been named deputy CEO with accountability for the management and performance of IAG’s day-to-day operations during the transition and will start in the role immediately.

IAG left its FY20 guidance unchanged in an update last month as it expects overall year-to-date profitability to absorb higher net natural peril claim costs and investment market fluctuations.

Bushfires knocked the firm’s first-half net profit down 43.4 per cent to $283 million as natural peril claims cost almost $100 million more than its allowance.

Amid the COVID-19 chaos, IAG is deferring premium payments for up to six months for small businesses experiencing financial hardship and is also offering travel insurance refunds without penalty for the unused proportion of premiums.

It is also offering full refunds for small businesses which cancel their insurance, with no administration or cancellation fees.