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“Life insurance and general insurance are very different products,” he concedes. “The policy issues and the business models are very different. “Because of the nature of regulation of life insurance, we deal with the Federal Government exclusively, whereas general insurance has very heavy dealings with state governments. “But the flipside of this argument is while there aren’t many areas of commonality there are also no areas of conflict. That’s a benefit.” Mr Brogden says he takes no position on merging industry bodies, describing it as a decision for individual groups’ members. But, he adds, it’s a conversation worth having. While the FSC is open to discussing the pros and cons of greater collaboration or even merging, the Insurance Council of Australia (ICA) is standing firm on what it believes is the best way forward. “The financial services sector is extremely diverse,” a spokesman told Insurance News. “Within the sector as a whole it is advantageous to have specialist organisations representing these different areas and providing their expertise. “Life insurance and superannuation are distinctly different to general insurance, in terms of policy, regulation and operation, and each sector requires its own policy focus. “This approach allows ICA and other bodies to focus their specialist capabilities on their core areas of responsibility to the maximum benefit of their respective memberships.” Mr Brogden says internal focus is important, but not at the expense of external relations. “One strong voice is always going to be better than several voices,” he says.
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Premium players Pacific Premium Funding merges with major competitor Macquarie. Is the resulting duopoly the natural order of things? A PANEL DISCUSSION WAS TAKING PLACE AT STEADFAST’S 2007 convention, and Pacific Premium Funding founder and managing director Grant Burley was not happy.The topic for discussion was Steadfast’s decision to form a premium funding joint venture with Macquarie Bank. Mr Burley, a trailblazer in premium funding, was angry at the lack of consultation with parties already providing the service. Obviously the entry of a significant player with a strategic edge made all premium funders edgy. But Steadfast Chairman Robert Kelly was unmoved, asking why the entry of a new premium funder needed to be seen as a threat. The following year GE acquired Mr Burley’s company and he became non-executive chairman. He had already left the company when GE announced in December it is selling the company to the Macquarie/Steadfast joint venture. Macquarie and Pacific are the second and third-largest players in the $5 billion premium funding market, behind only Allianz subsidiary Hunter Premium Funding. The new company will be the biggest in the industry. While the sector has more than a dozen players, the top three (and soon to be two) already control most of it. Contacted by Insurance News for comment, Mr Burley says the deal leaves only a handful of premium funders in the market, and he expects more consolidation to take place. “You’re going to have only two big players in this market,” he says. “Even when I started Pacific Premium Funding in 2001 we had HIH, Opus Capital and Pacific, CGU and GE. Most of those have gone.” Macquarie Premium Funding says the Pacific acquisition “will bring together two of the industry’s market-leading premium funders, providing scope for further product and service innovation for insurance intermediaries, brokers and their clients”. The premium funding market in Australia is estimated to have doubled in size the past 12 years. With premiums rising, their prospects are very positive. While the deal is subject to regulatory approval and was being examined by the Australian Competition and Consumer Commission when this edition went to press, neither company would comment on the substance of the deal, including the impact on staff. One of the few details to be revealed is the decision by Macquarie Premium Funding Chief Executive Gary Seymour to step down in favour of his Pacific Premium Funding counterpart, Stuart White. Mr Burley – who was not involved in the negotiations with Macquarie and says he had been out of the day-to-day business since Pacific was sold to GE – resigned before the deal was on the table. He is now involved in a non-insurance business and says he would have stepped down as chairman even if GE had decided to keep Pacific. His only concern is the welfare of the Pacific staff. “What I can say is that if it was a bad deal, GE wouldn’t have done it,” he told Insurance News. “I don’t know what the industry will end up looking like. It remains to be seen.”
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