DEC/JAN 2013/14 - Insurance News (the magazine)

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THE TOP 20: Our annual look at who’s who ROAD RULERS: Insurers move to ‘pay how you drive’ CONVERGENCE: Trying to merge general and life

Brave new world?

Willis Re Global CEO John Cavanagh on the way ahead for world reinsurance

December 2013/January 2014

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Contents 6 Newsmakers » 10 Brave new world? » Willis Re Global Chief Executive John Cavanagh reflects on the past, present and future of the global reinsurance market.

16 JLT spreads its wings »

Global chief Dominic Burke says tailored offerings are at the heart of the broker’s success – and sidecars aren’t in the market’s long-term interest.

22 Slumping fortunes »

A severe drop in investment earnings is testing Australian insurers. Here’s how they see the situation and the way through to the other side.

30 Heartbreak to heroine »

Broker Vicki Warne is being hailed for moving past tragedy and building business success.

34 Telematics hits the road »

The first pay-how-you-drive products have been launched in Australia, in a move that could forever change the way motor underwriters rate risk.

38 United we stand, divided we’re still doing fine »

Convergence of general insurance brokers and financial advisers is possible – but it’s still not common.

42 Faster, more efficient and much more risky »

An expert questions whether insurers and brokers know enough about what they face in a rapidly changing world.

48 The top 20 most influential people in general insurance »

Our annual round-up of the people who change people’s minds, affect the industry and make things happen.

lawNEWS

60 Business or leisure? » A broker has lost a court case after a boat insured for business was used for a private trip.

December 2013/January 2014

companyNEWS

63 A premium investment » Greg Rynenberg has developed a new way for brokers to profit from premium funding.

64 Centrepoint’s Brokerpoint »

The premium funder has upgraded its link to brokers.

64 Ironshore sets sail »

The specialist’s new marine unit enhances its ‘go to’ ambitions.

64 AIG helps build a cultural bridge » American art exhibition opens.

peopleNEWS

66 Packing for a vital purpose » Zurich and Ausure combine to help impoverished children.

68 Demons aplenty as YPs regroup in Brisbane » 70 Weighty perspectives at Zurich marine forums » 71 Austbrokers tips in for armed forces mates » 72 Speedy work and inspiration at AILA dinner » 74 Marsh and partners dress to impress » 75 Lumley rewards safety-first clients » 76 Catlin conference drills down into commercial covers » 78 AILA young professionals say Prost! » 80 Fashions feature at CGU’s Melbourne Cup » 82 Sydney style on show at Vero’s Melbourne Cup Day » 84 Ladies have a big day at Zurich’s Geelong Cup » 86 Allianz spreads the fun of Oktoberfest » 88 IAA backs NSW fire crews » 90 maglog »

Cover: John Cavanagh, Global Chief Executive, Willis Re Image: Kym Thomson

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newsmakers at

Reuters

NSW bushfires claims roll in: Loss estimates from the New South Wales bushfires have passed $183 million, with 1632 claims lodged and 27% of total-loss residential building claims settled, according to the Insurance Council of Australia (ICA).

Insurers have worked hard to prioritise bushfire claims, particularly from policyholders whose properties were destroyed, Chief Executive Rob Whelan says.

“Working through claims with sensitivity, and settling these as quickly as possible to the maximum extent of the purchased policies, has been the focus of the industry over the past three weeks.”

Insurers have received 740 residential building claims, with losses totalling $132 million. Of these, 214 are for total loss.

Home and contents losses total $33 million from 604 claims, with 25% already closed.

Almost half of the 154 domestic motor vehicle claims – worth $3.4 million – have been settled.

Insurers are also processing 114 commercial claims, estimated at $14.6 million.

ICA will hold another closed-door forum for affected policyholders in Springfield, a suburb of the Central Coast city of Gosford.

NSW bushfire losses grow to $183 million, 11 November

“When my Auntie Maureen and my mum were the only two people to buy our last record I realised I should probably focus on my reinsurance career.”

– Willis Re Global Chief Executive John Cavanagh explains his transition from professional musician to reinsurer

‘Low-risk’ risk business:

ANZIIF chief starts work: Prue Willsford has begun work as Chief Executive of the Australian and New Zealand Institute of Insurance and Finance.

She has taken over from Joan Fitzpatrick, who will retire at the end of the year.

Ms Willsford was previously general manager corporate operations at the Victorian Governmentowned State Trustees and has also worked for Macquarie Bank, Colonial Mutual and NAB. She is Deputy Chancellor of Victoria University and a director of environmental and infrastructure company Citywide Service Solutions.

Willsford takes up CEO role at ANZIIF, 28 October

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Standard & Poor’s (S&P) has rated Australia’s general insurance industry “low-risk”.

Credit analyst Caroline Strahan says insurers have taken steps to manage exposure to risks such as floods and earthquakes.

Rate increases have recovered higher claims and reinsurance costs, and product deductibles and cover have been revised.

“We have a positive view on the profitability of the Australian [general insurance] sector,” Ms Strahan told insuranceNEWS.com.au.

S&P does not expect its rating to change in the medium term.

Ms Strahan says the industry’s return on equity has been above 10% for the past five years and is expected to remain at that level.

General insurance growth prospects are rated “neutral”. The industry’s gross written premium as a proportion of GDP has been about 2.6% over the past five years.

A strong underwriting performance has supported return on equity, S&P says.

“For [this financial year], we expect the net underwriting combined ratio for our rated Australian… insurers to be maintained between 90% and 95%.”

The industry’s underwriting expense ratio appears to be trending downward and may fall further.

Australia’s insurance sector low-risk, S&P says, 14 October

Joining the Club: Australia’s largest recreational boat insurer Club Marine has appointed Simon McLean as its new Chief Executive.

He replaces Greg Fisher, who retired in August following a serious cycling accident last year.

“Club Marine has an excellent and well-earned reputation in the marine sector and I hope to make a contribution to its ongoing success,” Mr McLean said.

insuranceNEWS

December 2013/January 2014

He joins the Melbourne-based company after 10 years with its parent, Allianz Australia, where he was manager Victoria and key partners for the financial institutions business.

Mr McLean is “a keen boatie with lifelong experience across a wide range of sail and powered craft”, Club Marine says.

Club Marine appoints ‘keen boatie’ as CEO, 7 October

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Superstorm flattens cities: home and left many inland neighbourhoods inundated with floodwaters”.

AIR Worldwide estimates total damage to residential, commercial, and agricultural properties of $US6.5 billion-$US14.5 billion, with insured losses at $US300 million-$US700 million.

The level of insured losses is due to relatively low insurance penetration in the area, it says.

Haiyan was significantly weaker when it moved on to Vietnam and China, according to Eqecat’s CatWatch report. Initial reports indicated 13 deaths in Vietnam and nine in China, but neither country is expected to suffer significant insured losses.

10,000 feared dead in giant typhoon, 11 November

there is a 53% chance of an above-average cyclone season, according to the bureau. The northern region, including Darwin, has a 52% chance.

The neutral state of the tropical Pacific Ocean reflects the absence of either El Nino or La Nina conditions.

BOM predicts ‘typical’ cyclone season, 14 October

Suncorp warns on Sydney flood risk, 25 November

Grisly view: the Philippines city of Tacloban – where more than 4000 people were killed by Super Typhoon Haiyan – seen through a shattered window

Zurich dethrones QBE:

Pool gets new CEO:

Zurich Australia has been named the NIBA General Insurer of the Year, ending QBE’s 11-year stranglehold on the award.

The company was chosen by members of the National Insurance Brokers Association, who were asked to nominate the general insurer they considered performed best overall on 10 major service and product factors.

The ratings were analysed independently, with Zurich receiving the highest number of nominations from more than 800 votes cast.

NIBA President David Wyner says QBE and Allianz provided “strong competition”.

Former Austbrokers Chief Executive Lach McKeough, who retired from the company at the end of last year, after 27 years’ service, was awarded the Lex McKeown Trophy for services to broking and NIBA.

Chris Wallace will become Australian Reinsurance Pool Corporation Chief Executive from December 9.

Dr Wallace, currently General Manager Benefits Management with health insurer HCF, has more than 25 years’ experience in general insurance, workers’ compensation and health cover.

He has a doctorate in economics, specialising in insurance pricing and strategy, and is a fellow of the Australian and New Zealand Institute of Insurance and Finance.

Dr Wallace replaces David Matcham, who completed a three-year term on October 4.

The Federal Government established the corporation in 2003 following the withdrawal of terrorism cover by insurers.

Zurich wins Insurer of the Year, Breaking News, 14 October

Reinsurance pool names new CEO, 25 November

Cyclones – average expectation: Australia is set for a “nearaverage” cyclone season this year, according to the Bureau of Meteorology’s annual forecast.

Neutral conditions in the tropical Pacific Ocean prevailed from July to last month and are expected to continue through summer, leading to a 57% chance of above-average tropical cyclone activity, the bureau says.

“There is currently nothing in the broad climate drivers to suggest anything but a typical tropical cyclone season for Australia and the sub regions.”

A typical season runs from November 1 to April 30 and averages about 11 cyclones, with some likely to cross the coast.

In the eastern region, including the Queensland coast, insuranceNEWS

Sydney’s giant hazard: The Greater Sydney area faces the greatest flood impact risk in the country and mitigation should be a priority, Suncorp Group Chief Executive Patrick Snowball has warned.

“The risk is highest here because of the growing population concentration on the doorstep of the Hawkesbury and Nepean [river] catchments,” he told a Trans Tasman Business Circle meeting in Sydney.

“These areas are high-risk flood zones, and the Warragamba Dam currently offers little ability to regulate water flow in flood. This has to be high on our agenda for mitigation.”

Mr Snowball says investment in better understanding of risk, potential impact and mitigation options should be a priority.

Increasing natural risk and rising recovery costs have pushed up premiums, which can lead to underinsurance or non-insurance and more costs pushed onto the taxpayer.

“The only way to genuinely and sustainably tackle this issue is through mitigation of natural disasters and sensible planning and development.”

Mr Snowball says Suncorp knew withdrawing cover from Roma and Emerald in Queensland would be unpopular “and we’ve taken a lot of flak”, but it contributed to construction of a levee and premiums will fall when this is completed.

Better building standards and sharing data about risk will mitigate the impact of cyclones, protecting people from harm and reducing insurance costs, he says.

Reuters

Super Typhoon Haiyan caused up to $US14.5 billion total economic damage, of which up to $US700 million was insured, according to catastrophe modeller AIR Worldwide.

Haiyan, one of the most powerful tropical cyclones ever recorded, hit the Philippines early on November 8.

More than 2000 people were killed and 650,000 displaced as villages were swept away.

Peter Sousounis, senior principal scientist at AIR Worldwide, says the islands of Leyte, Samar and northern Cebu suffered most.

Tacloban, the capital and biggest city of Leyte province, was hit particularly hard “as storm surge depths as high as four metres destroyed every coastal

December 2013/January 2014

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newsmakers at

FROM THE PUBLISHER The stereotype of the insurance industry as slow-moving and uninteresting has changed in the past few years, but it’s very difficult to pinpoint exactly what has caused it. Is it the gradual emergence of a new generation of senior executives who grew up in a more liberal education system and are therefore (for the most part) better communicators?

Or is it because people outside the industry have a better understanding of the industry’s role in protecting them and their assets? Perhaps it’s the spate of natural catastrophes that have made people feel less secure about their ability to carry on without insurance.

Whatever the cause, the coverage of everything insurance by this magazine and its sister online publications illustrates all too well just how busy 2013 has been.

Our online editorial team has written more than 2000 articles in the past 12 months about an amazing variety of insurance-specific issues. We have spoken to hundreds of executives and technical experts so we can interpret and explain to our readers

not only what is happening or has happened, but also why.

We published 21 Breaking News bulletins during the year, covering a remarkable range of subjects. Each was opened by a very large number of subscribers, many of whom sent them on to contacts around the world. We continue to only publish breaking news bulletins when the information is judged to be important enough to need immediate attention.

Reporting the insurance industry isn’t always easy and the potential pitfalls are many.

Just as our subscriber list is many times larger than any of our competitors, the Insurance News editorial team is also by far the largest and most experienced.

Maintaining strict standards of accuracy in a fast-changing and dynamic environment like the one we report on wouldn’t be possible without the willingness of so many insurance professionals to spend time talking to us, providing background material and suggesting further information sources.

It’s our role to report what the market should know about, and if we occasionally step

on sensitive corporate toes in the process, we do so with professional detachment. It’s not personal.

Our research tells us that our readers place great value on what we publish, and our results confirm that our publications are continuing on the growth trajectory they have maintained since insuranceNEWS.com.au was established in 2008 and this magazine in 2009.

Of course, the fact that this publication and our weekly bulletins are free is only possible through the terrific support we get from our magazine advertisers and our online premium sponsors. I can only encourage readers to support them in return.

The positive feedback and information we receive from our legion of subscribers is what keeps the Insurance News publications so focused and well-informed. Your continuing interest is greatly appreciated.

The team at Insurance News join me in wishing you and your loved ones a peaceful and prosperous festive season.

Terry McMullan

Reuters

81 tornadoes hit US

Path of destruction: six people died when a tornado fllattened much of the small Illinois town of Washington last month

PUBLISHER/EDITOR: TERRY McMULLAN McMullan Conway Communications Pty Ltd Tel: + 61 3 9499 5538 Fax: +61 3 9499 5535 Email: publisher@insurancenews.com.au ADVERTISING: NAOMI CONWAY McMullan Conway Communications Pty Ltd Tel: +61 3 9499 5538 Fax: +61 3 9499 5535 Email: naomi@mccmedia.com.au ARTWORK DELIVERY TO: McMullan Conway Communications Pty Ltd PO Box 116, Ivanhoe VIC 3079 Australia or Level 1, 120 Upper Heidelberg Road, Ivanhoe VIC 3079 (COURIERS ONLY) Email: naomi@mccmedia.com.au

US windstorm damage could top $1 billion, 25 November

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Storms and tornadoes that killed eight people in the US midwest on November 17 could generate insured losses of more than $US1 billion, risk modeller RMS says.

There were 81 reports of tornadoes, mostly in Indiana and Illinois, plus hail and high winds, with 17 reports of hurricanestrength gusts.

In Michigan, more than 530,000 homes and businesses were left without power.

In Illinois 250 to 500 homes were destroyed, with the town of Washington, near Chicago, particularly badly hit.

Until these storms it had been a relatively quiet year for US tornadoes, with 903 reported, well below the average total to November 18 of 1424, RMS says.

A tornado in Moore, Oklahoma, on May 20 caused $US1.6 billion of insured damage.

insuranceNEWS

December 2013/January 2014

Material in insuranceNEWS (the magazine) is protected under the Commonwealth Copyright Act 1968. No material may be reproduced in part or in whole without the consent of the copyright holders.

The content of articles appearing in this magazine do not necessarily reflect the views of the Publisher. All statements made are based on information that is believed to be reliable and accurate, but no liability is accepted for any fault or omission. We also accept no responsibility or liability for any matter published in this magazine that reflects personal opinion.

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Brave new world?

Willis Re Global Chief Executive John Cavanagh reflects on the past, present and future of the global reinsurance market

By Michelle Hannen

DEPENDING ON WHO YOU TALK TO, THE reinsurance market is either on the verge of a significant structural change or the current oversupply of capacity is nothing we haven’t seen before.

For his part, reinsurance market veteran and Willis Re Global Chief Executive John Cavanagh holds a position somewhere between the two.

He describes today’s wrongly labelled alternate capital as a “material part of the market” but adds that it is not “going to make for a quantum leap change in 2014”.

What Mr Cavanagh does believe has changed is the level of urgency among traditional reinsurers who, he says, “now know that they need to be on their toes and must focus on products that the alternative capital players would find it difficult to compete with”.

But Mr Cavanagh says to fully understand the dynamics at play in the current situation, it is important to reflect on where the industry has come from in recent years.

He describes the global financial crisis in 2008 as a “very relevant moment”.

“The focus on our industry from a regulatory perspective has been quite intense, with regulators looking for two things. Firstly, they looked for strong capital against risk, so proportionately more capital for proportionately less risk; and they also looked for a clearer picture of the tail risk – a better understanding of what was on the books.

“So wind the clock five years forward and we’ve got an abundance of capital for proportionately less risk, aligned with a better understanding of that risk.

“Add the lack of interest rate returns into that, and the result is margins are substantially under pressure.”

He says the response from the primary market in terms of its reinsurance buying has been to try and “squeeze considerably more value out of the same premium with a larger cap10

ital base to serve”, which is leading to more centralisation of purchasing.

This centralisation means less local purchasing by the multinational insurers, and a more capitalefficient approach to their reinsurance programs, a situation Mr Cavanagh says “would automatically create an abundance of capacity whether there’s any new capacity or not”.

He says this situation, coupled with the recent benign catastrophe loss environment, means the industry is “looking at a pretty difficult period for reinsurers in terms of rate pressure”.

The elephant in the room is, of course, the abundance of new capital from non-traditional sources that has piled into the industry in the past few years, with Willis Re forecasting that capital will now total around $US50 billion.

“Some people call it new capacity, but that’s a bit of a misnomer”, Mr Cavanagh says, pointing out that insurance-linked security funds have been operating since the late 1980s.

“These phenomena are hardly new. What’s happened is that the situation has now hit a critical mass and a certain size, and so it’s now got an identity and a nametag if you like.

“But it has in fact been a gradual creep of increasing capacity. It’s not something that’s just come upon us all of a sudden.”

Unlike in the past when hedge fund and private equity capital would pour in to take advantage of high premiums after an event – and exit just as quickly – today’s pension fund investors are expected to be a more permanent fixture.

“Pension funds don’t take their investment portfolios lightly, they’re not opportunistic, and they’re very stable in the manner in which they invest,” Mr Cavanagh says.

He says that a substantial drop in severity in casualty lines since 2001, “coupled with frequency that is better managed than it’s ever been”, has led to a great run of results.

insuranceNEWS

December 2013/January 2014

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John Cavanagh career timeline A former professional musician, Mr Cavanagh combined his early career in reinsurance with his band commitments (he was a drummer) before settling for reinsurance full-time in 1982.

“When my Auntie Maureen and my mum were the only two people to buy our last record I realised I should probably focus on my reinsurance career,” he reflects.

1975-1976 Claims Broker, Alexander Howden and Swann

1976-1977 Facultative Placing Broker, Frank Bradford & Co

1977-1984 Divisional Director, Willis, Faber and Dumas

1984-1988 Deputy Managing Director, Minet Re

1988-2005 Various Senior Positions, RK Carvill & Co

2005-2009 Joint Chief Executive, RK Carvill & Co

2009-2012 Managing Director/Executive Vice President, Willis Re

2012-current Global Chief Executive, Willis Re

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The short-term impact of all this for reinsurers is a challenging market with rates across most lines to come under further pressure at the January 1 renewals.

“We think that risk-adjusted rates will be down anything between 5% and 15% on US catastrophe businesses this year, and we’ve recently very publicly stated that European rates with no losses will be down 5% to 10%,” he tells Insurance News.

“We think there’s going to be pressure on casualty rates depending on the loss position.

“We’re encouraging our customers to push quite hard for positive change and I don’t think that’s out of kilter with expectations.”

He says clients are largely open to the range of options they now have, drawing a parallel with the new wave of Bermudian reinsurers that entered the market after Hurricane Andrew in 1992.

“We’ve walked our clients through the scenario before. There was equal scepticism about the new capital in those days. The firms that survived are all part of the firmament now, but we had to get our customers comfortable with that then, and that’s what we’re doing now.”

The response from the established reinsurance players is evolving from competing on price to beginning to taking on more non-modelled risks with the view that the new capital won’t want to compete with them there.

“They’re looking to blend that non-modelled risk with modelled risk. I think that they feel that there’s more of a chance of holding the business if they throw stuff into the pot that the new markets can’t touch.”

But Mr Cavanagh believes that in time the market will settle down, with the different players finding their own niches.

“Where I think the new vanguard of alternative capital players will likely find to be appealing and attractive is at the very extreme tail-end of the risk

“It’s very common for us to have a client advocate in America for an Australian account that we place in London and it’s modelled out of Philadelphia. We use the best resources we’ve got in the group, regardless of geography.” where they’re more comfortable and their return profile is lower than the conventional market,” he says, adding that “there are a number of classes that the traditional market is comfortable with that the new market might not be”.

For reinsurance brokers, Mr Cavanagh says the range of options now available in the market has seen the value of their advice increase substantially. “[Clients are] leaning a lot more heavily on us for our opinion. They’re leaning a lot more heavily on us to identify alternative capital players that we consider to have some permanence attached to them, in comparison to those that we consider might not.

“And we’ve seen a few that we didn’t like the look of, and therefore haven’t supported them.

So there is a differentiation between quality and capacity.” insuranceNEWS

December 2013/January 2014

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Local market conditions Comments by Willis Re Australia Head of Broking Glen Riddell.

“Australia is a mature market, and so is New Zealand. We’ve had a fairly benign local environment of natural catastrophes in the last two years now. So what effect is that having on local rates?

At the moment we’re seeing a softening of rates.

It’s been softening in the casualty side locally for about the past four to five years, but we’re now seeing that move to property as well.

“There’s been an adjustment of technical rates because the New Zealand earthquakes demonstrated that there were a couple of fault lines that probably surprised some of the reinsurers and they’re re-adjusting their models. The models are the best that we’ve got; they’re not perfect, though.

“There’s a market adjustment going on. You’re seeing more capacity out there at the moment, so you could see some adjustment in those areas, but it’s early days at this stage.”

He says Willis Re’s global approach has served it well in this changing environment.

“It’s no coincidence that we’ve got a very large position on most of the global accounts because of our collegiate team approach.

“It’s very common for us to have a client advocate in America for an Australian account that we place in London and it’s modelled out of Philadelphia. We use the best resources we’ve got in the group, regardless of geography.”

Sitting third behind the global big boys in the reinsurance broking field – Aon Benfield and Marsh’s Guy Carpenter – Mr Cavanagh says Willis Re has an organic rather than acquisitive growth model.

“We’ve built our business organically and we play like a team. We wear the Willis badge with pride; it’s a one-flag approach and I think that’s what differentiates us.

“We offer a more bespoke product and I think we connect the dots very well. I think we’ve got all of the scale and none of the baggage.”

And he welcomes the competitive environment in which they operate.

“We’re very happy that there’s sometimes challenges and disruption in the market because over the past 10 years we’ve been the net gainer from that disruption,” he says. “That plays to our strengths and keeps us on our toes, and we’re not worried about defending our position, either”.

In order to be able to fulfil their increasing role as key adviser and not just reinsurance buyer, in recent years the larger reinsurance broking firms have spent up big on in-house analytics, actuarial, research, technology and modelling capabilities.

But Mr Cavanagh shrugs that off, saying such tools are just that, and dismisses suggestions of an over-reliance on modelling in the industry.

“Our markets have been taking on non-modelled risk forever,” he tells Insurance News. “It’s something that they are accustomed to and familiar with.

“If you look at the broader scope of perils, there are very few that are modellable,” he adds, pointing to marine, political risk and casualty business in particular.

“There’s nothing on the casualty side that is meaningful; you have the ability to utilise actuaries to make projections on rating, reserves and 14

tail, but in terms of severity and systemic risk on the casualty side, there is no model.”

He says when risks are modelled, the Willis Re approach is to take “a good healthy sense check of aggregate liability and take an old school view as well as a modelled look at everything”.

“We then consolidate all of those components to make up our advice to clients. It is both an art and a science.”

Back to the future, and Mr Cavanagh points to what he calls “seismic shifts in distribution” as another key trend to watch.

He says what the larger brokers – Willis included – are now doing is “looking at why we place certain things with certain markets and whether we can find better markets for our customers”.

“You can’t underestimate the value of data that some of the bigger brokers are collecting, which gives them a lot more insight into how and where they place business.

“We are market-matching much better than we’ve ever done. Often there’ll be a scenario where business is placed locally because it’s convenient, whereas actually within our group and within our carrier base we’ve got a better solution than that.

“I think that that’s going to result in seismic distribution shifts, and that will undoubtedly have a knock-on effect on what it means for us as a reinsurance broker.”

In a veiled reference to recent developments

by Aon with its Berkshire Hathaway sidecar and Willis’ own Global 360 vehicle, Mr Cavanagh says that while the industry has been “parcelling up risk over the past 10 years a lot more frequently than ever before”, the latest developments are “big stuff”, but should not be regarded as unexpected.

“It’s happened in every other financial community in the world, and we’re the last, as always, to modernise.”

He predicts the fallout will see fewer but stronger and more powerful carriers, with “those that grasp the essence of distribution that will win the game”.

“Those companies that… are part of the action rather than passive observers will be the winners.”

insuranceNEWS

Models aren’t perfect: Willis Re Australia Head of Broking Glen Riddell with Mr Cavanagh

December 2013/January 2014

6

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insuranceNEWS

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JLT spreads its wings Global chief Dominic Burke says tailored offerings are at the heart of the broker’s success – and sidecars aren’t in the market’s long-term interest

By Jan McCallum

THESE ARE EXCITING TIMES, say Jardine Lloyd Thompson (JLT) Chief Executive Dominic Burke. Eight years after taking up the top job at the global specialty broker, he’s now seeing much of the hard work of building a stronger JLT coming to fruition.

And for someone who once said the company didn’t want to have a flag planted in every part of the world, Mr Burke has been remarkably acquisitive in recent times.

In September the group announced the $US250 million cash acquisition of Towers Watson Re. It has made a series of purchases in Asia this year and Mr Burke says he’s optimistic about growth in the Australian market, too.

“I am very bullish about some of our Australian businesses,” he tells Insurance News, saying he believes JLT Australia now has “the best talent in the marketplace”. He points to the success of internal staff develop-

insuranceNEWS

ment, the company’s growth rate in the market and its allround success in securing new clients and retaining others.

Interviewed during a visit to Sydney, London-based Mr Burke tells Insurance News how the international specialty broker has begun absorbing Towers Watson, forming JLT Towers Re for a transitional period, as Towers Watson’s North American and London market reinsurance broking business is meshed with JLT Re’s international operations.

Mr Burke has described the acquisition as “a steal”, and says JLT actually paid substantially less than competitors were offering.

He says Towers Watson is more aligned to JLT than to any of the rival bidders and will bring skills in risk modelling, analytics and software tools that will benefit the group.

“It will enable us to enhance our bespoke offering to clients.”

Tailored offerings and innovation are at the heart of much

December 2013/January 2014

of Mr Burke’s vision for JLT, and he says it will always push the boundaries of coverage.

“We do that by working with insurers around the world to continue to push and drive new products and coverage to the benefits of our clients.”

As he looks at emerging risks and the new products that are being developed to deal with them, cyber risks leap to mind.

“Think of the strength of the public sector business here in Australia and how cyberspace is now being bought by local councils and mutuals because they recognise that space and the importance of those risk exposures they have,” he says.

Mr Burke joined JLT in 2000 when it acquired his own company. He became chief executive at the end of 2005. Under his watch the company has made about 40 mostly bolt-on acquisitions, and increased staff numbers by two-thirds.

As the group gets bigger, he says it continues to compete

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“When you start to commoditise your product you are in danger of losing sight of what the client wants.”

through client service, building the proposition and specialty capabilities and proactively managing clients.

He stresses the importance of avoiding the commoditisation of products – keeping the offering bespoke and making the client feel that they are part of the organisation and that they matter.

“JLT has always had the reputation of being a highly innovative organisation and that is particularly at our core.

“We have a loathing for bureaucracy. We are an entrepreneurial business, ensuring we don’t inhibit our people from thinking. We want people to think, because it has enabled us to be innovative.”

But there’s one innovation in the insurance market that JLT believes is not needed, and which Mr Burke has previously criticised.

He tells Insurance News that the quota share arrangements entered into by Aon with Berkshire Hathaway and being launched by Willis risk commoditising insurance and removing the client from being at the heart of the transaction.

But don’t they give clients more choice and a better price?

“The world is full of capacity,” he retorts. “Look at premium rates. Let clients choose, but don’t dictate to them. I don’t think signing markets down is in the long-term interests of the market.”

He also questions Berkshire 18

Hathaway’s commitment to quota share. The co-insurance, or sidecar, arrangement with Aon enables Berkshire to provide capital for 7.5% of Aon-brokered retail business placed at Lloyd’s.

And Berkshire is also participating in Willis’ Global 360 sidecar, along with Hiscox and the People’s Insurance Company of China.

“Berkshire Hathaway have always been insurers of last resort,” says Mr Burke. “Is this a new model? How sustainable is it? Will it be there in all eventualities? I question that.”

He says clients should understand and have a relationship with markets and build long-term relationships so when the need arises and relationships matter, the knowledge and trust are there.

“When you start to commoditise your product you are in danger of losing sight of what the client wants.”

He says JLT has yet to lose any client because of a quota share arrangement, but has won some of the largest risks in Australia and globally because clients understand their needs should come first.

And Mr Burke is not reluctant to challenge competitors to match JLT’s success, saying they are worried about JLT’s focus and growth – “and they are right to be”.

“We will continue to take market share, that is a given. JLT people are the best in the insuranceNEWS

market, with deep-seated technical skills, and are the best transactional brokers in the market.”

JLT’s global workforce of 8500 (prior to the Towers Watson Re acquisition) includes 1000 staff in Australia, who contributed 27% of group trading profit in the six months to June 30.

Two years ago, Mr Burke told Insurance News that the company, led here by Chief Executive Leo Demer, had suffered through intense competition on the corporate side.

He says it is much stronger in Australia now and the business is growing quickly.

There may be debate in Australia about the mining bubble bursting but the economy remains solid, with a good balance of trade and a stable currency.

Mr Burke says JLT Group has built its reputation with clients, staff, shareholders and insurance markets through being “an organisation that makes our decisions based upon what is fair for these stakeholders. We do realise the value of our stakeholders and we do respect them in our decisionmaking.”

He says the message is resonating and the company’s ability to hire and retain talent today is significantly enhanced.

“It takes a while to get your message to be embedded in any organisation. But today, wherever you travel, our people

understand what we represent, what our mission statement is and what our values are. And that’s not just with our people, that is also with clients.”

He says market share continues to increase, and JLT’s organic growth rate is double that of competitors, irrespective of gross domestic product globally or in countries where it operates.

Earlier this month, the listed group told investors its organic revenue growth in the July-November period was similar to the first half’s 7% increase.

Mr Burke says being clientdriven prevents conflicts of interest, and this is another reason why he questions quota share arrangements.

“Dictating to clients, dictating to their people – we don’t believe that’s a way to run an organisation.”

Now JLT is looking for growth from abroad, and its risk operations in Latin America and Asia are becoming more significant to the group, with Asia contributing 7% of trading profit in the first half on a 16% increase in revenue. Latin America contributed 8% of profit on revenue growth of 13%.

The group has made a series of acquisitions in Asia this year, most recently two in Indonesian healthcare and a specialty broker in Taiwan, where its business is focused on construction and aviation. It opened in Malaysia at the beginning of

December 2013/January 2014

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“We want to lead the market and we will do that by holding true to our values and beliefs.”

October after acquiring a broker there earlier in the year.

The group employs 2500 people in China, Taiwan and Hong Kong and 1000 in its Mumbai “knowledge centre”, which provides research and input to the group globally.

“What’s our plan in Asia? To dominate the market, [to be] the best specialty broker, best at employee benefits, the best reinsurance broker.

“We want to lead the market and we will do that by holding true to our values and beliefs.”

JLT is now evaluating where it will base its Latin America operations, and will probably make a decision on this in the first quarter of next year.

Argentina is the most likely candidate, with the group already having offices in Colombia, Brazil, Chile and Peru.

“I think we are still seeing strong growth in many economies in the world,” Mr Burke tells Insurance News.

“Asia is still seeing strong growth, and while Brazil may technically be in recession there’s still an absolute opportunity around infrastructure spend, around healthcare, around the enfranchisement of the middle class. I think it's a very entrepreneurial economy.

We continue to see huge opportunity and growth there.”

Having run business transformation programs through the mature businesses that cost £22 million to deliver annual savings of £27 million, he instituted a 20

insuranceNEWS

December 2013/January 2014

second round in March which aims to remove duplication and improve back-office activities in Asia and Latin America.

He believes this will help to build the specialty focus and provide seamless servicing of global clients in the more mature businesses. It is likely to cost £12 million this year but provide a recurring benefit of the same amount from 2014.

Mr Burke has seen premium rates become very soft globally since the beginning of July, and says there are very few markets where firmness is the trend.

“Perhaps there’s a little in North American casualty. Latin American rates are very soft and the same goes for Asia, Europe and London, and I think increasingly they are very soft down here”.

But he says JLT’s growth is much more aligned to that of individual markets’ gross domestic product.

“The aggregate volume of risk is really what drives our opportunity. What we have done as an organisation is align our skills and our model to be with our specialty.

“Our vertical strengths are aligned to the requirements of those growing economies: infrastructure, oil and gas, aviation, transportation, marine. These are all core requirements for an emerging economy as it grows.

“For us there is no let-up. We still see the market offering a huge opportunity and we intend to take that opportunity.”

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Slumping fortunes A severe drop in investment earnings is testing Australian insurers. Here’s how they see the situation and the way through to the other side

By Wendy Pugh

RIGHT NOW, INSURERS CAN ONLY DREAM of the halcyon days when buoyant investment returns helped fill their coffers. Measly interest rates are proving a drag on earnings, and a quick rebound is unlikely.

To make matters worse, insurers are not only facing challenges when it comes to boosting their returns, they have also received a regulatory warning shot across the bows on the issue.

As Commonwealth Bank Senior Analyst Ross Curran sees it, insurers looking to keep their margins up in an environment of lower rates only have two choices. “One is to risk-up your asset base; two is to charge more for your premiums.”

That’s a stark choice that is raising precautionary alarm bells at the Australian Prudential Regulation Authority (APRA), which is worried about possible temptations in the financial services sector.

“Low interest rates can test even the most restrained of risk appetites,” APRA Chairman John Laker says in the regulator’s annual report.

“A low interest rate environment may tempt general insurers to pursue higher returns by increasing their appetite for risk in their investment strategy or assuming more risk in other areas of their operations.”

APRA is making the issue a priority in its engagement with institutions across the sectors it oversees, but insurers say they are taking a cautious approach.

In the past, strong returns from invested premiums often made up for insurance underwriting losses. But rising premiums and a relatively calm perils environment last financial year offset collapsing financial returns.

QBE says it is using three levers to counter the weaker investment environment – its overall com-

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December 2013/January 2014

pany efficiency program, pricing gains and other adjustments to improve underwriting performance and a modest shift towards risk assets.

“Subject to the Australian interest rate outlook not deteriorating significantly further, and in light of the foreshadowed modest asset allocation revisions, our investment yields should reach a nadir in the current calendar year,” Group Chief Financial Officer Neil Drabsch tells Insurance News.

QBE anticipates exposure to risk assets such as equities, infrastructure debt and propertyrelated debt securities will increase to around 10% of the portfolio by the end of 2014, and potentially up to 15% over the medium term.

“At this level, QBE’s exposure to risk assets would still be conservative by global peer standards,” Mr Drabsch says.

It’s an issue that’s not going away in a hurry, with any rapid increase in central bank interest rates not on the cards.

While racing fans cheered Melbourne Cup favourite Fiorente to victory in November, others with their eyes on more important form guides correctly bet the Reserve Bank of Australia would that day keep its cash rate at an all-time low of 2.5%.

The rate has moved downward since late 2011 when the Reserve Bank cut it from 4.75% to 4.5%, and has dropped from 7.25% in early 2008 as the global financial crisis shook markets.

Australian Government three-year and fiveyear bonds traded at near record lows last financial year, while the 10-year bond rate reached 2.7%, which is close to the lowest yield since Federation, according to the Australian Reinsurance Pool Corporation.

It says the moves are a pointer to lower future yield returns.

Insurers don’t plan to frighten the horses

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“QBE’s exposure to risk assets would still be conservative by global peer standards.”

– QBE Group Chief Financial Officer Neil Drabsch

“To generate a return profile that we want, we need to reflect some of the lower investment returns in the form of pricing of our products.”

– IAG Chief Financial Officer Nick Hawkins

Insurance result build-up for 2011-2013 30 11%

25

7%

Net earned premium Insurance result

Inv on tec

20 $ billion

Investment income on assets backing technical liabilities

17%

11%

Net

15

Ins

10

Und

Underwriting expenses 5

Net

Net claims incurred 0

Source: RBA

2011

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10-year Government Bond Yield

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Source 23

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when it comes to investing funds backed by their insurance liabilities.

“We risk the money once selling insurance, so we’re pretty conservative in the way in which we invest,” QBE Global Chief Executive John Neal told a media conference.

Good conditions on the underwriting side have eased pressure from lower investment returns.

IAG Chief Financial Officer Nick Hawkins says it’s unlikely interest rates will go down much further and the company has managed the situation through premium gains.

“We have taken a view that we didn’t want to take on additional investment risk and that we are in the business of being an insurance company taking on insurance risk,” he tells Insurance News.

“Therefore, to generate a return profile that we want, we need to reflect some of the lower investment returns in the form of pricing of our products.”

Catastrophes in the past four years helped drive premiums higher, with the 2009 Black Saturday bushfires in Victoria followed by a string of storms, floods and cyclones. The impact of the natural disasters and higher reinsurance costs overshadowed any component of the gains driven by insurers offsetting declining investment incomes.

“In relation to pricing generally in this market in the last couple of years, investment returns have been only a small factor of what’s been happening,” Mr Hawkins says.

“We are not anticipating materially lower investment returns, so I would say the pricing that exists at the moment is already factoring in the low returns.”

Analysts forecast it will become more difficult to drive increased returns from higher premiums as the market tapers.

“You have seen a couple of years of pretty strong rate improvement on the back of the flooding in Queensland and the earthquakes in Christchurch,” Commonwealth Bank’s Ross Curran says. “We are probably reaching the end of that rate-hardening cycle, and from here it is more of a consolidation, rather than softening, cycle that we are going to be entering.”

APRA says the challenges for general insurers are greatest in areas where claims are settled after long delays, and if strong competition limits the ability to raise prices.

“The price increases needed in some long-tail business, particularly professional indemnity and public and product liability classes, may be difficult to achieve because of competitive pressures,” Dr Laker says. “Insurers may be led to underwrite new business of poor profitability.”

Last financial year was “a cracker” overall for the Australian general insurance industry, actuarial consultancy firm Finity says.

The insurance margin rose to 17% from 11%, net earned premiums grew by 10% and the net combined operating ratio improved to 89% from 101% in 2012, it says in a review of APRA statistics.

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December 2013/January 2014

The only thumbs-down went to investment returns, which dropped in 2013 and are likely to be low again in the 2014 financial year, according to Finity.

In 2011 and 2012, technical investment returns on insurance funds made up almost all the insurance profit. The return was significantly lower in the past year, when the improved combined ratio drove a larger profit, Finity says.

IAG had total investments of $13.6 billion as of June 30, with $9.4 billion supporting insurance liabilities and the remainder comprising shareholder funds.

Investment income from the conservatively managed insurance funds fell 70% to $270 million while earnings on the shareholder funds rose to $347 million from $89 million.

QBE’s total net investment income fell 42% to $US394 million from $US683 million for the halfyear to June 30, with returns on policyholder funds down to $US260 million from $US436 million.

“The decline in interest rates since the global financial crisis has seen the yield on our investment assets decline from approximately 6% to 2%,” Mr Drabsch says. “As a consequence, the investment income contribution to our insurance margin has fallen from around 9% to 3%.”

Suncorp’s total investment income fell 32.6% to $621 million last financial year, representing a total return of 5% for the year compared to 7.9% for the prior year.

The result included a 54% drop in income on insurance funds to $333 million and a 41.9% gain in shareholder investment returns to $288 million.

But Suncorp remains relatively comfortable with the current asset allocation and investment approach, Group Head of Capital and Investments John O’Farrell tells Insurance News. “We do have inbuilt flexibility to make active judgements as required.

“We take a conservative approach to managing our assets relative to our liabilities. Interest bearing securities have a major role to play in our portfolios.”

Suncorp’s insurance funds investment focus is on cash and short-term deposits and interestbearing securities, while the shareholder funds portfolio includes equities and property.

IAG invests its insurance funds in cash, federal and state government bonds and the commercial paper of the four Australian trading banks.

“We have taken a view on that portfolio that we want to maintain a very high counterparty quality,” Mr Hawkins says.

The company’s shareholder funds portfolio includes growth assets, such as Australian equities and convertible bonds.

It’s not as if Australian insurers are doing it tough all on their own. The tougher investment environment has tested insurers around the world.

Lloyd’s first-half earnings dropped 10% despite higher gross written premium and a relatively benign period for catastrophes.

“All large investors, including major insurers,

A

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“One of our drivers was on a narrow, rough stretch of road that had received a massive downpour not long before he got there”, relates Steve. “He dropped a wheel off the bitumen; the ground was so soft, the next thing he knew he was over and in the table drain.” The driver was OK – that was the main thing.

9.35pm. Steve makes one call to NTI and the Accident Assist team swing into action. A nurse calls the driver for a long-range double check and a comforting chat. While this is happening a tow truck and recovery crew are dispatched to the site and the local authorities are notified.

“My driver wanted to stay with the truck until it was removed, so the tow truck driver sat with him all night”, recalls Steve. “You can’t get much better than that.”

11.00pm. In the coming days NTI will keep Steve informed of every step of the repair process, but for now, it’s back to bed for an early Monday start. “I could relax and go to sleep because I knew NTI had everything covered.”

Steve’s been with NTI since the first day he started his business over 14 years (5,130 nights) ago. Perhaps that’s why he gets the kind of sleep that most transport operators only dream of.

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“We take a conservative approach to managing our assets relative to our liabilities.”

– Suncorp 11% Group Head of17%Capital and 11% Investment income Investments John O’Farrell on assets backing

Insurance result build-up for 2011-2013 30 25

$ billion

20

Net earned premium

15 30

Insurance result

10 25

11%

11%

5 20 $ billion

technical liabilities

Insurance result build-up for 2011-2013

0 15

2011

17%

expenses “If you don’t have the investment yield,Underwriting you income Investment on assets backing Net claimsliabilities incurred technical have to improve your underwriting profits.”

Source: RBA premium Net earned 2012 2013 – Swiss Re Chief Economist Kurt Karl Insurance result

10 5

Underwriting expenses

10-year Government Bond Yield

%

%

07

2011

2012

2013

7

6

6

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5

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4

10-year Government Bond Yield

2001

2004

2007

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%

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3

Real cash rate*

0

0 % -3 20139 6 3

December 2013/January 2014

0

-3 1993

1998

2003

2008

-3 2013

Net claims incurred Source: RBA

have found it hard to secure meaningful returns Investment income on assets in the continuing low-interest-rate environment,” backing technical liabilities Chairman John Nelson says.

“Yields at longer maturities have begun to rise Net earned premium in anticipation of tighter monetary policy, but short-term interest rates are likely to remain very Insurance result low in the near term.”

Swiss Re Chief Economist Kurt Karl says global insurer investment returns may remain Underwriting expenses subdued for another two or three years as large Investment income on assets fixed-income blocks of assets are rolled over at Net claims incurred lower levels. backing technical liabilities Pressures related to more onerous Solvency II Netlimiting earned premium capital requirements are European insurer interest in seeking more attractive earnings from a greater diversityInsurance of assets, heresult tells Insurance News.

“As a consequence there has been no huge Underwriting expenses change. It has all remained very conservative. The issue over here in Europe is that you end up getNet claims incurred ting pushed into risky sovereign assets.”

These could include Italian and Spanish bonds in preference to lower-yielding French or German investments.

“As long as you are willing to take on the default risk, many analysts feel that these assets are relatively safe. If Italy defaulted it would be a catastrophe for Europe, so it is unlikely to happen.”

European insurers’ combined ratios have improved in response to the challenge, Dr Karl says. “That is what you would hope for and expect.

“If you don’t have the investment yield, you have to improve your underwriting profits.”

Nomura Insurance Analyst Toby Langley says

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Australian insurers have dealt quite well with the weaker investment environment through premium pricing gains.

“Certainly, if you look at the personal lines space a lot of the momentum the industry has had over the past few years should be very beneficial,” he says. “They have been able to keep earning resilient returns at a time when yields are on the decline.”

Companies will also benefit from a declining reinsurance market globally and in Australia, while premiums are still likely to edge higher, he says.

In the United States, some positive economic data has buoyed expectations for an improving investment environment, potentially helping QBE, which has a large North American business.

The company says its short-duration investment portfolio, which includes a large proportion of floating rate notes, will help it to more quickly take advantage of improving conditions.

“Our portfolio turns over to spot interest rates on a quarterly basis and therefore our interest yield closely mirrors current, rather than historical, market interest rates,” Mr Drabsch says.

QBE had $US31.5 billion in investment assets at the end of calendar 2012, with equities included for the first time in its pool of funds held for policyholders.

“In line with our conservative investment approach, our equity strategy is characterised by a bias towards low beta, high dividend stocks which favour capital stability and recurring income,” Mr Drabsch said in this year’s first-half report.

Economists generally expect interest rates to rise more slowly than they have come down. But their forecasts are clouded by concerns that rate gains may propel the Australian dollar upward, undermining efforts by the Reserve Bank to talk down its value.

Governor Glenn Stevens says the dollar is still “uncomfortably high”, even after slipping from above-parity levels versus its US counterpart earlier this year. He says a lower exchange level may be needed for balanced economic growth.

IAG’s Mr Hawkins says a weaker currency could increase the cost of imported parts and paint for motor vehicle repairs, but it’s not a material issue.

More generally, there could be a positive effect flowing from a boost to Australian businesses exposed to the export sector.

“A lower Aussie dollar generally is good for the economy and what’s good for economic activity tends to be good for the insurers,” Commonwealth Bank’s Ross Curran says.

The Reserve Bank’s quarterly statement released in November says rate reductions have helped support economic activity, and benefits from the cuts still have “further to run”. But it hasn’t closed off the possibility of another reduction, if necessary.

Either way, insurers facing continuing low investment returns are likely hoping for a benign Australian summer and another good underwriting year. insuranceNEWS

December 2013/January 2014

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Heartbreak to heroine Broker Vicki Warne is being hailed for moving past tragedy and building business success

By Shelley Dempsey

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SOMETIMES WHEN A PERSON IS HIT with great personal loss, they can find strength they did not know they possessed.

So it was with Queensland broker Vicki Warne, who nearly lost her company at a time of considerable grief – when her partner in life and business was killed in a plane crash.

Ms Warne lost Glenn “Skippy” Skipworth, the love of her life for nearly 30 years, when the aircraft he was piloting crashed on approach to an airstrip on Bathurst Island in the Northern Territory in 2006. The founder and managing director of major Sunshine Coast brokerage AIB Insurance Brokers had been on a routine flight to visit clients.

“When I rang my bankers to tell them he’d been killed, their first words were that they were going to freeze my funds,” Ms Warne, who succeeded him as managing director of AIB, told Insurance News. “The next lot of words from me are unprintable. I said to them no you won’t, because I have an enduring power of attorney.”

The bank backed off and Ms Warne, in true forthright style, now uses another bank.

The rest is a story of courage and survival against all the odds. Swinging straight into action on the day he died and taking over the business they shared, Ms Warne has turned its fortunes around, wiping out a mountain of debt and steering AIB to become one of Australia’s largest independently owned brokerages.

“I think most people do find strength when they really need to,” Ms Warne says.

“When you’re faced with absolute adversity, you do find strength that you did not know you had. Until you’re really tested, I don’t think you ever really know what you’re capable of.”

The Queensland born and bred Ms Warne may be characteristically matter of fact about her capabilities, but they are starting to attract attention. After celebrating 30 years at AIB Insurance Brokers last year, she won the Business Owner Award for 2013 in the Telstra Queensland Business Women's Awards in September.

“I was absolutely thrilled about the award,” she says. “Yes, it will make a difference to my profile, because this will follow me around for the rest of my days.

“And of course it looks good on the CV if I ever want board positions. So it’s lovely and wonderful.

“But at the end of the day, I still have to pick up the rubbish and put out the bins. I still have my job to do and I still have to keep my feet on the ground.”

Ms Warne and Mr Skipworth launched AIB “on their kitchen table” in 1982 in Alice Springs. They had met at a Darwin sailing club in the late 1970s, when he was working for NZI in Adelaide, where he grew up.

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Skipworth was just 21 and she was only 18 and travelling. “He was a young man who was sent to Darwin after Cyclone Tracy,” says Ms Warne.

“For me, being with him was probably an instant thing, but it probably took a little bit longer for him.”

Offered a transfer to Alice Springs, he asked Ms Warne to go with him, and that’s where they started their own business.

AIB grew fast, expanding to Western Australia, Darwin, Queensland and later nationally. The head office was set up in Maroochydore on Queensland’s Sunshine Coast in order to gain long-term stability.

“I grew up on the Sunshine Coast and we came back because I love the coast. I did love the Territory, and you get great people there, but for us the difficulty was consistent staffing.”

All that stability changed in an instant when the light plane which Glenn was flying alone crashed, and Ms Warne nearly sold the business.

“It was, do I keep going or don’t I?” she says. “I’d been through an awful lot by that stage, and I thought I could bow out. But when it came to the crunch, I wasn’t ready to do it.

“So I made the decision I did, and it was the right decision, I’m very happy about it. I just knew I had more to do.”

She made it clear to staff that she had “an absolute crisis” to deal with, because the company was carrying a lot of debt.

“We had a $3.5 million building project going on for our Maroochydore head office.

I had nervous insurers, bankers and staff. I had to make very clear to people that I was going to continue, that we would be fine and that I had a plan.”

Driving her company forward with passion, vision, innovation and uncompromising determination, Ms Warne has not only kept the business fiercely independent, but has imposed her own personal style on it.

As a leader, she says she is “demanding, rational and professional. I have high standards and high expectations and I make no apology for it.”

One inspirational motivating force has been her membership of The Executive Connection, where she meets monthly with chief executives from non-competing industries.

“It really helps anyone who wants to take their business to another level. I’m still a member of the same group I was 10 years ago,” she says. “It was really to address things that are important in the business. And it’s one of reasons I’m still here.”

Now AIB has 35 staff, provides retail cover as well as wholesale packages in specialist areas for tourism operators, childcare providers, Aboriginal and Torres Trait insuranceNEWS

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Timeline 1970s

Broker’s Assistant, Alice Springs

1982

Establishes AIB Insurance Brokers in Alice Springs with partner Glenn Skipworth

1982-2006

Financial Director, AIB

1980s, 1990s AIB expands to Darwin, then Western Australia, then nationally 2003

Joins The Executive Connection (coaching and mentoring). Still a member in 2013

2006-2007

AIB opens national head office in Maroochydore, with a Brisbane office

2003-2009

AIB recognised in Queensland Top 400 Business Awards

2006

Ms Warne becomes AIB owner/MD after Mr Skipworth’s sudden death

2013

Wins Business Owner Award for 2013 in Telstra Queensland Business Women's Awards

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Community focus AIB’s wholesale business continues to thrive The wholesale arm of AIB Insurance, servicing brokers all over Australia, contributes around one-third of the company’s annual revenue, Ms Warne says.

The biggest area is packages for Aboriginal and Torres Strait Islander (ATSI) groups such as community councils and community stores, arts and crafts and tourism operators.

“We are one of Australia’s foremost providers of this type of insurance,” Ms Warne says. “We have a lot of the market because we have been offering ATSI products for 30 years.”

Driven by Mr Skipworth’s passion for Aboriginal communities, and the geographical location of where the business started in Alice Springs and Darwin, AIB Insurance pioneered this type of insurance.

“This was what Glenn spent a lot of his time on,” Ms Warne says. “He really developed all of this in the early days.

“He was very passionate about it. It was probably the single biggest interest in the business for him. He was very actively involved in that, and art collecting as well.”

His plane crashed on Bathurst Island in 2006 when he was arriving to service a community on the island.

Another area which is selling well is cover for childcare centres, she says. “Childcare is running red hot. It’s due to need, and it’s our inclusions such as flood cover and molestation on our liability, which we believe a lot of our opposition do not offer.”

The number of childcare centres covered by AIB probably numbers “in the thousands” now, she says.

“We’re getting a fabulous response, because we meet and exceed client needs and we make sure for brokers that we have all the bases covered. Brokers know they can come to us with confidence.”

Major wholesale partners are QBE and Ansvar Insurance, and to a lesser degree Lumley and CGU. QBE also partners with AIB on ATSI products and on tourism.

“QBE has looked after us for more than 30 years,” says Ms Warne. “It’s been a very strong partner and supporter.”

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Islander organisations, dentists, hairdressers and beauty therapists.

The brokerage’s wholesale arm contributes around one-third of revenue and is dominated by packages for Aboriginal and Torres Strait Islander (ATSI) groups (see panel at left).

The company is at last debt-free and profitable, after Ms Warne tackled her first hurdle – to pay back millions in debt and complete a buyback of AIB shares after thenequity partner Austbrokers floated.

“We’d paid them the money and were negotiating how to fund it when Glenn was killed,” she says.

Diligence in managing company finances is one reason why the company has prospered, Ms Warne believes. “I’m not an accountant, but I still keep absolute control over cashflow. I spend a day a week with my accountant.”

The company has grown through acquisition. “We’re the product of about 13 acquisitions, but all those were completed a number of years ago.”

She says success has also come from continually working on the business, paying attention to detail and to client needs on the wholesale and retail fronts to deliver excellent client service.

That’s one of the things she loves about insurance. “It’s a good thing to be able to tell a client that everything is going to be absolutely fine and they will be back in the position they were before.”

Major recent challenges have included the Queensland disasters. AIB this year recorded a “total loss” of a childcare centre in Bundaberg. “It was flooded up to the roof,” Ms Warne says. “We spoke to that client on day one and told them they had nothing to worry about and they were adequately covered.

“So that client is now grateful and happy and the insurance has done the job it was designed to, because they listened and got adequate cover and did it all properly.”

After the 2011 Queensland floods which inundated Brisbane, AIB not only had to deal with disaster-struck clients but with its own disaster.

AIB’s office in Spring Hill in Brisbane wasn’t flooded, its power stayed on and its servers did not go down – but the roads were cut. Luckily, Ms Warne had a disaster readiness plan in place.

“We immediately contacted Telstra,” she says. “Our computer people had everything flicked up here to Maroochydore.

“We took calls and assisted clients in Brisbane straight away. They were surprised, amazed and thrilled.” insuranceNEWS

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Premiums have risen sharply in Queensland after the disasters and Ms Warne says this is a concern, with some clients probably electing to be uninsured and others having inadequate insurance or going to lesser insurers.

“It’s a concern, let’s put it that way,” she says. “But there’s very little we can do about it, other than to try and educate people to improve their risk and risk management.”

She says clients in a lot of remote areas “need to take a good hard look” at what they are putting up as the risk.

“I say this to my staff all the time. If you have a shitty, crappy risk, don’t expect the insurer to bend over backwards.”

She’d also like to see more community education from the industry around what brokers actually do. “I think that is still very misunderstood, and that’s frustrating.”

Over 30 or so years she’s seen the insurance business change, with the rise of broker cluster groups such as Austbrokers and Steadfast, and competition has never been tougher.

“Intense competition is the new normal. I think it’s because people are better educated, they are always after better insurance coverage and service, and they now research online.”

At the end of the day, she says the insurance business is “difficult” because “we sell a product you can’t touch, taste, see, hear, smell or anything else”.

“All you’re selling is a promise that you’ll help people if and when the worst thing happens to them.”

Building on that client trust, AIB has come a long way from that simple bush brokerage started in a home kitchen in the Outback.

Last year, AIB managers and staff celebrated Christmas with a weekend away, as they do each year, but this time it was at the plush Palazzo Versace on the Gold Coast.

And it was special because it marked 30 years of AIB. “It was very swish and very upmarket,” she says. “It was my thank you to my staff and my long-suffering partners.”

Thanks to Vicki Warne, AIB has stayed true to “Skippy’s” vision and it’s always been a business with heart. She says he was “very passionate” about serving Aboriginal communities and the business has continued doing that since he died.

“He loved flying and was also a huge fisherman – he just loved travel and the Outback,” Ms Warne says. “He’d rather be out bush somewhere than stuck in the office.”

She agrees quietly that “Skippy” would be proud of what she’s achieved.

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Telematics hits the road The first pay-how-you-drive products have been launched in Australia, in a move that could forever change the way motor underwriters rate risk

Reuters

By Andy Swales

IN-CAR TELEMATICS HAS LONG BEEN HAILED as a potential game-changer for insurers and a major breakthrough in efforts to improve road safety, but its rollout here has been slow to begin compared with other markets worldwide.

Now, after several years of tests and trials, the pay-how-you-drive technology has finally made its debut in the Australian motor insurance sector.

In October QBE and NIA Underwriting unveiled their Insurance Box private motor offering, which was due to be closely followed by a launch from AI Insurance, which is connected to diversified insurer Hollard.

NIA Underwriting is working on the Insurance Box project in a joint venture with QBE, which acts as the underwriter and distributor of the product.

The new business was set up in October after NIA raised equity capital from QBE and private investors.

NIA is best known as the parent company of health market newcomer health.com.au.

The new year is expected to bring a flurry of other newcomers into the market.

Martin Burgess, director of Insurance Telematics Australia, says the number of telematics-enabled policies “is expected to grow exponentially next year and beyond”.

His company supplies Octo smartboxes and data-processing software for AI’s offering.

It has also been working with two “medium-size” companies that are trialling pay-how-you-drive and hope to go live early next year.

He says another “large insurer” was expected to start tests in November, with a view to rolling out in the first quarter.

Market leaders such as IAG and Suncorp are keeping a watching brief for now, Mr Burgess says.

“They’re all interested, but some of the bigger companies are waiting for others to go first.”

He says Australia has “quite a few years to catch up on Europe and the US, South Africa and even Russia”.

One big fan of the technology and its insurance advantages is Hollard. Managing Director Richard Enthoven says the company has been “underwriting motor insurance using telematics internationally for 34

more than seven years”.

“We are actively considering the merits of deploying the intellectual property we have developed into the Australian market,” he said.

Like other telematics offerings, QBE and NIA’s Insurance Box uses a plug-in smartbox that monitors vehicle speed, braking, cornering and other driver trends. The data is then used to calculate a DriveScore safety rating, which influences the customer’s premium.

Drivers can view their data through a secure online portal and via SMS, and will receive tips to improve their performance.

Smartboxes can also provide a more accurate account of what happened in a collision, and their GPS function can be used to track and locate stolen vehicles.

While QBE will not reveal early take-up numbers, EGM Corporate Partners and Specialty Tim Plant says the venture partners have been “extremely pleased with the significant interest Insurance Box has received since we launched”.

“Up to 60 million vehicles in the United States could be insured with telematics by 2019, while take-up has become the norm for new drivers in the United Kingdom.”

He says drivers will “begin to see the impact of their DriveScore on their premium at the first policy renewal”.

Insurance Box, which uses smartboxes provided

by British company Wunelli, has initially rolled out in the private motor vehicle market only, but “introducing [commercial] fleet telematics is something QBE may explore in the future”.

Up to 60 million vehicles in the United States could be insured with telematics by 2019, according to a recent study, while take-up has become the norm for new drivers in the United Kingdom, Wunelli says.

insuranceNEWS

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Reuters

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Early adopters here hope the technology has a similar impact.

AI Insurance Chief Executive Roland Lange expects more insurers to launch pay-how-you-drive offerings in the near future.

“It’s not a one-day game – it’s a process that will gain traction,” he said. “But every time another insurer comes out with a telematics offering, it accelerates the

process.”

Under AI’s offering, a typical premium reduction for a young customer demonstrating good driver behaviour would be about 20%, Mr Lange says.

New customers will be given a choice of quotes – for policies with and without telematics – and upfront reductions will be offered for use of the technology.

Mr Burgess says the delay in Australian adoption means underwriters have learned from the mistakes of their counterparts overseas, with the main message being “to pick the target market – if you have someone on a low premium, putting telematics in their car is not going to save them a lot of money”.

However, drivers traditionally considered high-risk – particularly younger males – can “show their behaviour, and their premium can be adjusted. It does actually change driving behaviour.

“That’s good for the whole community and it’s good for insurers – it’s a win-win.”

Insurance Box founder Frank Peppard agrees that “young drivers and their parents will be particularly interested... these drivers stand to save significant dollars through this new ‘skills-tested’ approach”.

Mr Burgess says Australian brokers have also shown an interest in telematics. His company has been working with one group that “saw an opportunity for some of its motor fleet clients”.

Brokers can facilitate installation of smartboxes across commercial fleets, then “engage with fleet managers and underwriters... thereby improving the risk profile of the fleet, reducing fleet running costs and improving fleet productivity”.

“This can only be good news for brokers who spend a lot of their time trying to convince underwriters the fleet they are trying to place is a good risk,” he said.

The early telematics launches have attracted the attention of the mainstream media, with lurid newspaper headlines raising fears of “Big Brother insurance” and “voyeurism”.

But Mr Burgess says drivers are easily reassured.

“In the trials we’ve been running, [privacy is] a regular question. But it’s their data – it belongs to the driver.

As long as they know the insurance company has permission to use it, there’s no problem.”

He says the only time the data will be released to a third party is if there is a criminal case in which the police require evidence.

And he thinks it unlikely that insurers will make telematics compulsory for clients.

“I can’t see it happening. There’s a company in South Africa that won’t sell [cover] without a smartbox, but that’s more to do with car-jackings, which are a problem there.”

QBE has also taken steps to ease privacy concerns. UK policies impose curfews and include journey data as part of monitoring and reporting services, but QBE has not included these.

AI’s Mr Lange says the experience in the US and South Africa is that about 40% of drivers “immediately take a dislike” to telematics, based on privacy fears. But he argues this is “a nonsense” given the prevalence of smartphones that track users’ every move.

In the US, Europe and other advanced telematics markets, insurers have now started to combine the basic 36

smartbox offering with other technology, aiming to add further value for customers.

Some encourage younger drivers to install in-car cameras for incident recording and ongoing driver training purposes, while US telco Sprint recently launched a dashboard tool that blocks drivers’ phone texts and web-surfing while in the vehicle.

“Because Australia is four or five years behind, we are focused on the [basic] insurance applications, but the possibilities are endless,” Mr Burgess said.

“One development that will happen in about five years is car manufacturers putting the [driver-monitoring] technology in their vehicles when they make them. Our service will be the same but we won’t install the boxes.”

Mr Lange expects Australia to follow other markets in adding complementary devices to the telematics mix.

“The rate of deaths on our roads in unacceptable and what technology does, in all forms, is provide a mechanism to improve safety,” he said.

“Because Australia is four or five years behind, we are focused on the [basic] insurance applications, but the possibilities are endless.”

In the commercial fleet and heavy truck sector, Zurich Australia is piloting telematics with a small number of clients before rolling out its Zurich Fleet Intelligence (ZFI) system, which it describes as a “complete solution, combining vehicle telematics technology, insightful reporting, driver development tools and support from our risk engineering and underwriting experts”.

ZFI has already proved successful overseas, winning the “best use of technology in risk management” category at last year’s Risk Management Awards in London.

Senior Risk Engineer Peter Johansson says Zurich can work with fleets’ own telematics data if it provides readings for speed, G-force, fuel usage and has driver ID. The insurer also makes use of dashboard cameras, although Mr Johansson concedes there is “a resistance to cameras” among many companies.

He says he has been impressed by DriveCam, a ZFI partner system used in heavy truck fleets and private cars in the US and UK. DriveCam records both the road ahead and the driver in his or her cab, and can offer real-time feedback, plus footage of near-misses and accidents for use in later training sessions.

Mr Johansson says Zurich’s telematics model feeds back to fleet managers and individual vehicle users alike.

“It’s really a driver portal. Our approach is to empower the driver with the information.”

In heavy trucking, the introduction of telematics is also being driven by the industry itself.

In October the National Transport Commission hosted a meeting of industry, government and police figures to discuss drawing up a compliance and enforcement framework for industry-wide heavy vehicle telematics.

The workshop will inform a forthcoming discussion paper on the issue.

For the freight industry, lower premiums are just one of the potential benefits identified. It is hoped telematics will also save lives and reduce costs from repairs, maintenance and fines.

insuranceNEWS

December 2013/January 2014

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United we stand, divided we’re still doing fine Convergence of general insurance brokers and financial advisers is possible – but it’s still not common

By John Wilkinson Editor, Life+Health insuranceNEWS.com.au

TALK OF CONVERGENCE BETWEEN brokers and financial advisers has been a subject of debate for many years. While the two sectors have moved well past the implacable viewpoint that they are completely foreign to each other and “never the twain shall meet”, the emergence of the one-stop shop for life and general insurance products isn’t common.

Will that situation change as regulatory changes enable intermediaries – and accountants – to break down the barriers?

The opinions among practitioners are mixed.

Association of Financial Advisers President Michael Nowak says bluntly that the expectation of impending convergence is “overcooked”. He says the new Future of Financial Advice regulations, such as the best interest duty, have made it more difficult for intermediaries to become masters of all trades.

“Specialisation is becoming more prominent because of the new compliance measures and to meet that demand, advisers will need to form alliances,” he tells Insurance News.

“The links between advisers and brokers have always been there, but now they will have to be more formal.”

As Mr Nowak points out, such links between brokers and financial advisers are 38

not new. In fact, they have been going on discreetly for years.

That is confirmed by the National Insurance Brokers Association’s (NIBA) Needabroker online guide, which lists the specialities of its members.

Outside of the major global brokers and some of the larger Australian brokerages with national footprints, few brokers have inhouse life insurance facilities, and even fewer offer financial planning.

Only 35 of its member companies list life insurance as one of their services.

In New South Wales – which has more brokerages than any other state – the guide lists only seven mid-sized broking houses offering life insurance services on top of general insurance. Those offering financial planning don’t indicate if it is an in-house service or operates on referral.

General insurance brokers who do offer in-house life insurance services tell Insurance News it’s not always easy, with different compliance regulations and product offerings requiring distinct skillsets and a mass of extra paperwork.

“It can be a nightmare,” one says. “Life people do things differently.”

Melbourne suburban broker Graham Hiscock agrees. He previously maintained a life insurance business in-house using an authorised representative working under an insuranceNEWS

December 2013/January 2014

external licence, but gave it up when he found the two sides of the business weren’t particularly compatible.

“We had difficulty finding and retaining suitable people,” he tells Insurance News.

“The life side has a different way of going about business.

“The general insurance side is about building and maintaining relationships with clients. Some [life insurance specialists] understand the need for relationships, but they are hard to find.

“My gut feel is that we will see convergence in the future. It’s odd that it isn’t more common now.”

NIBA Chief Executive Dallas Booth says members who have chosen to operate a life insurance business often hold two specialist licences, “usually with separate people doing different roles with the expertise in both roles”.

But he adds that while life insurance is a “discrete part” of many brokers’ businesses, it is a “fundamental part” of financial advisers’ work.

Asteron Life Executive Manager National Sales Mark Vilo says referral arrangements between advisers and brokers are far more common.

“A lot of advisers refer general insurance business to brokers, and it’s a two-way street,” he says.

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“Most clients don’t really see a differentiation between life and general insurance – to them insurance should just be insurance.”

“In a country town, you will find both broker and adviser understand each other’s business and they refer clients.”

But Mr Nowak says that while many of his advisers have mutually beneficial relationships with general insurance brokers, that is as far as convergence between the two sectors tends to go at present.

“Most advisers have a relationship with a broker, but I haven’t seen any joint ventures,” he adds.

Life insurance is usually more entrenched than general insurance in financial advice firms.

Matthew Rowe, the President of the Financial Planning Association and Managing Director of professional services firm Hood Sweeney, says his company has a specialist life insurance adviser in-house, but outsources general insurance business.

“The life insurance adviser is part of the team advising clients, but we refer general insurance to an outside firm,” he told Insurance News. “They, in turn, refer people who are looking for financial planning work to us.”

Major broker group Austbrokers has taken the outsourcing approach, through an arrangement with financial services dealer group Millennium3.

Chief Executive Mark Searles says some of Austbrokers member brokers use

Millennium3 to provide advice on life insurance, but they are by no means required to.

“It is dealt with on a case-by-case basis,” he says. “But there is lots of opportunity to cross-sell and we expect this to expand.”

Associated broker group IBNA, whose members are all independent, has no formal links with a life insurance provider.

Recently listed broker group Steadfast, however, says life insurance is a growth area for the company. Managing Director Robert Kelly says more of Steadfast’s brokers have begun selling life cover since it introduced a new sales model in April on the back of interest generated by advertising.

Today more than 60 of Steadfast’s 280 brokers have entered formal arrangements with Steadfast Life and are starting to sell life insurance as an add-on product.

A development that may fuel further referrals to general insurance brokers from other sectors of the financial services industry is the upswing in investors adding property to their self-managed superannuation funds (SMSFs).

Property has been a part of SMSFs for a while, but early rules stated that no borrowing was allowed on property assets.

The relaxation of those rules in 2007 didn’t start a rush to add property to SMSFs as the global financial crisis saw trustees put their cash in the bank. But with lower insuranceNEWS

December 2013/January 2014

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OneOffice, many possibilities Ebix is breathing new life into a local product with global potential

By John Deex LEON D’APICE, THE MANAGING Director of leading insurance technology company Ebix Australia, sees convergence between general and life intermediaries increasing, and he’s keeping his company abreast of the trend.

Last year the local arm of the global company enhanced its own life offering by acquiring Australian firm Fintechnix, which began operations as Esprit IT in 1992.

The first Fintechnix release was a product called BackOffice, which was installed in 1993. The original site was the life and wealth division of NRMA Financial Services, and while that business has changed hands a number of times over the years to become ClearView Wealth Ltd, it remained a client.

The depth of functionality was enhanced over the next decade to support the requirements of businesses in life insurance and wealth management.

Fintechnix OneOffice came into being when a range of front-office functions were introduced, leveraging off existing BackOffice functions.

Ebix acquired Fintechnix in June 2012 with the resulting name change to Ebix OneOffice.

“Being part of Ebix has provided a significant lift to the profile of what was already a market-leading software solution,” Mr d’Apice tells Insurance News.

“Internationally, solutions for the life insurance market have been an important part of our product offering. But one of the missing components was a backoffice system for life companies.

“OneOffice fills that gap. It has a successful track record in supporting both adviser and direct channels.”

Mr d’Apice says Ebix has continued to invest in OneOffice.

“Firstly we have continued the technology refresh program that was in place. Ebix recognises that it’s important to maintain both a technology and functional product roadmap.

“Secondly, we have extended the life insurance products supported by OneOffice to include many of those currently marketed in the US and Asia.”

The move for Fintechnix was complemented by the acquisition of PlanetSoft in the same month.

PlanetSoft, which powers data exchanges that streamline core insurance

40

operations in the areas of client acquisition, underwriting and distribution management, serviced many of the top 20 life insurance companies in the US and India.

“Coupled with PlanetSoft, the OneOffice product provides an important component of our offering to the life market,” Mr d’Apice says. “OneOffice integrates front and back-office sales and administration for the life insurance and wealth management sectors.

“It is a proven solution with a significant installed base in Australia of long-term customers, and the acquisition has already opened new local and international opportunities.”

Freedom Insurance, a new entrant to the Australian life market, has selected OneOffice, and Mr d’Apice says the product also has international potential.

“The implementation of OneOffice to support the launch of two new life insurance products has been delivered in four months and is due to go live in the coming weeks.

“And internationally OneOffice is being evaluated by life operations in the US and Asia. We see particularly strong opportunities in Asia.”

Mr d’Apice says there are “undoubtedly” rising numbers of intermediaries offering advice in both the life and general insurance sectors.

“The trend started over 10 years ago and has steadily increased,” he says.

“OneOffice, along with our other product offerings for the life sector such as SmartOffice CRM, places Ebix in a strong position in both insurance segments.”

The single source of insurance advice is an attractive model to consumers, Mr d’Apice says, and as a result it will prosper.

Wealth creation is one area of increased interest, and health insurance and employee benefits are also potential opportunities.

“Clients shouldn't be faced with having to deal with multiple intermediaries when making insurance choices,” he says.

“Most clients don't really see a differentiation between life and general insurance – to them insurance should just be insurance.

“The trend to offer advice and manage all types of insurance cover for clients will only increase.”

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interest rates and strengthened investor confidence, that is beginning to change.

Mr Rowe says property in super is an emerging issue, and warns it is an area to be careful about when advising.

Mr Vilo echoes that warning. “The advisers need to understand what the client is doing when investing in property,” he says.

“This can lead to referrals to general insurance brokers.”

Mr Searles says Austbrokers hasn’t yet looked at the potential for general insurance involvement in SMSFs. But he says the group is “starting to talk about it as an opportunity”.

“We see it as a related cross-sell, but will consider each case on its merits.”

Mr Booth says there is a role for general insurance brokers in SMSFs. “People face the need for protection, and insurance is a system to sustain a loss,” he says.

“To do that effectively they need a broker who will understand the potential of the loss.”

Teaming up with accountants offers another potential revenue stream for brokers.

Under new rules, accountants will have the ability to become licensees and provide advice on areas such as SMSFs. They have done this in the past, but legally it has always been a grey area. While Asteron’s Mr Vilo sees an opportunity emerging for general insurance brokers to work with accountants following the change to licencing requirements, he says not every accountant will move into the area of advice.

He believes brokers will face competition in this area from financial advisers, many of whom already have formal links with accounting practices.

Mr Nowak adds that the marriage between advisers and accountants is a natural one, because “most advisers I know work with accountants and provide advice when needed”.

As for the future, Hood Sweeney’s Mr Rowe predicts a time when there won’t be a distinction between general and life insurance.

“I can see a morphing of the general insurance community into the advice model,” he says. “But this won’t happen until after the advice industry forms firmer relationships with the accountants.”

The wildcard in the mix is the newly elected Abbott Government and its planned review of the financial services sector, which it has indicated will be similar in scope to the Wallis Inquiry conducted in the 1990s.

That inquiry created, among many other things, the Australian financial services licence, so how the mooted “son of Wallis” will affect general insurance and life insurance distribution, financial advisers and accountants – and the interplay between them all – remains a big, unanswered question.

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Reuters

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Floods of trouble: the 2011 floods in Thailand had an unexpected impact on global supply chains as seven major industrial estates went underwater, halting regional vehicle production and causing a global shortage of hard disk drives which lasted throughout 2012

Faster, more efficient and much more risky An expert questions whether insurers and brokers know enough about what they face in a rapidly changing world

By Jan McCallum THE INTERNET, THE CLOUD, and electronic payment systems have all made it easier to get information and to source product from anywhere. But the enormous benefits from technological advances have come with increased risks to business – and insurers.

Companies can buy components made cheaply in Thailand, but then find operations at home halted when Bangkok goes under water, as occurred in 2011. A problem at a Chinese factory, that would be hard for an Australian buyer of the product to identify and prevent, draws the ire of Chinese regulators and gets spread around the world via social media, trashing the name of the Australian company.

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These are the new risks of the 21st century. They may have existed previously, but not in the same quantum. Nor did they occur at the rapid speed at which events unfold today.

It’s the insurance industry’s role to identify emerging risks and develop products that give clients protection; but although the consequence of the risk may be foreseeable, pinpointing where it is likely to occur is not so easy.

For Zurich Corporate Business Chief Executive Thomas Hurlimann, global interconnectivity is challenging how insurance has been conducted for the past 400 years.

He questions whether the industry should continue to look at the customer by product

December 2013/January 2014

lines, suggesting a more holistic view is needed.

Rather than focus on merely selling insurance products to customers, he believes “we first have to understand their needs, then provide a holistic risk solution”.

Mr Hurlimann says this approach ensures a customer’s risk does not “fall through the cracks”, and he sees it as the future answer to covering clients’ needs.

“This world is becoming more complex and more risky, and the risks on this planet are growing faster than world gross domestic product,” Zurichbased Mr Hurlimann tells Insurance News.

“Over 50% of the world population lives in cities today, and

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“We see a huge emergence of potential regulatory risk for customers that do business outside their home markets, because they don’t understand the risks.”

– Zurich’s Thomas Hurlimann

this is going to grow to 70% or 80% within the next 20-30 years.”

The insurance industry has long recognised the extra losses that will follow from people moving to live in coastal regions, and Mr Hurlimann says huge assets and wealth are accumulating on shorelines and fault lines.

“There is a second trend of increasing natural catastrophe frequency and severity. In the past 30 years frequency has been going up by over 3.5% every year.”

He says much of this activity is occurring in regions where new megacities are located, and is also linked to another trend – global interconnectedness. It is this that is creating many of the new risks such as cyber-risks, reputation damage and supply chain disruption.

Mr Hurlimann says the message to the insurance industry is clear. “We need to be at the forefront of what this means for our customers. How can we support risk managers so that they can differentiate their company?”

The regulatory onslaught from government agencies working to prevent another global financial crisis means increased regulation is certainly on the radar for the insurance industry, and Zurich has identified regulatory risk as a growing issue for corporations.

“We see a huge emergence of potential regulatory risk for 44

insuranceNEWS

customers that do business outside their home markets, because they don’t understand the risks, such as from fines or losing their good reputation,” says Mr Hurlimann. “We need to work hard at understanding all these regulatory environments.”

Zurich has 150 lawyers around the world on retainer, providing advice on 40 lines of business in 160 countries, with a process that can be audited and is traceable, and which is provided free to brokers and customers.

As brokers’ clients move abroad, company executives may start to question whether their local insurance broker can ensure the business is protected in a foreign jurisdiction.

Mr Hurlimann says brokers will need a global network behind them that supports risk management and claims when their clients cross borders.

Some foreign jurisdictions require the policy to be written in that country, and he says it is critical for brokers to have access to the right advice. “If you do it wrong, you have a regulatory issue. It is a minefield if you are not experienced in it.”

There may be issues around paying premium taxes and when they are due, how to assess risk, either locally or by flying in an expert, where a policy can be issued and how a claim will be managed.

He says the approach to claims may also have to differ

December 2013/January 2014

when the trigger is difficult to identify and prove. Examples are when a factory burns down in a foreign country, or the eruption of the Eyjafjallajökull volcano, which disrupted air travel across Europe in 2010.

It is vital to have a deep understanding of the customer’s supply chain risk and the impact if key supplies are halted. Rather than require the identification of a “trigger” event that led to a supply disruption, Zurich now has a product that insures for loss of goods that simply don’t arrive.

“Everything is agreed beforehand, so there is no argument about what is covered,” he says.

While surveys of chief executives raise reputational damage as one of their top concerns, Mr Hurlimann says there has been little interest in cover for a defined financial loss that results from the damage.

Zurich’s clients are more interested in products that help them prevent damage and that pay for advice to help them protect and recover their reputation.

As the world and its risks become ever more complex, Mr Hurlimann says brokers and insurers will have to work together to help protect clients against emerging risks. Global interconnectivity may also challenge how the industry has traditionally written risk and how willing it is to innovate.

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Our annual round-up of the people who change people’s minds, affect the industry and make things happen

2 3 4

5 6 This is the fifth annual list of the 20 most influential people in the Australian general insurance industry, which was conceived as a one-off but has been repeated four more times because our readers tell us they want to see it.

Our measure of an influential person is purely subjective, and no scientific measures or marketing techniques are applied in the drawing up of this assemblage of industry leaders.

Influence comes from respect, a willingness to lead, a deep understanding of the issues and the ability to foster and communicate solutions. It sounds easy, but it’s not.

What you see on the following pages is the result of a lot of internal discussion, suggestions from friends and acquaintances in the industry, the occasional unsolicited approach from someone’s hopelessly misguided PR consultant, and finally a lot of phone calls to ask trusted contacts what they think of particular individuals. Which, come to think of it, is more scientific than some industry awards we can think of.

With the easy stuff done, we draw up a draft list, ask why individuals are regarded as more influential than others, argue, make alterations and argue some more until we reach some form of rough consensus.

We don't expect everyone to agree with our conclusions, and we don't have any graphs or references to back up our findings. But we can say we have experienced the individuals in our Top 20 in situations where the issues are difficult and the answers aren’t easy to find, and they shine.

And if you think that our list must be a tad static from year to year, consider this: Only four people on this year’s list – Mike Wilkins, Robert Kelly, Heinrich Eder and Leon d’Apice – have featured on all five lists.

The main reasons for falling off the list seem to be retirement and moving on to new roles where a profile is harder to attain and less essential.

These are the professionals who understand their own companies and how they fit into the industry. They have extensive inside and outside the industry, and they’re the sort of people Insurance News goes to when we want an opinion on an industry issue. They lead from the front and they aren’t afraid to say what they think.

Looking at this collection of “go-to” people, we can’t help but be assured the industry is in capable hands.

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7 8 9 10

There have been times in its recent history when it wasn’t. What we do regret is that this collection of talented and confident people contains so few who bother to communicate more widely on issues that impact on Australia. Climate change, for example, is an issue that sharply affects the insurance industry, but we have done so little to become involved in the debate.

The usual line – that the industry sees climate change as a fact and is focused on mitigation – also conveniently allows us to pretend we are above the debate. We should not be. The insurance industry has so much collective knowledge on this issue alone that it should be working on mitigation issues at the same time as it is fully engaged in the debate.

And it has the people with the talent and the profile and the sheer chutzpah. Yet this list doesn’t contain a single insurance trade association executive. That is disappointing, because we believe that people like Mike Wilkins, Robert Kelly and Allan Manning amply demonstrate how the industry has so much to say that is important.

And once again we regretfully report that the Top 20 list is an all-male affair. In five years there has been one woman on the list – one-time Insurance Council chief executive Kerrie Kelly. To all those primed to send your annual angry emails, don’t bother – we’re as bemused as you are.

All we can say is that there are women moving up through the ranks who will make it into the Top 20. When we consider the amount of change this list has been through in the past five years, we can see that change at the top is rapid. And if you’re talented, passionate and professional enough, you’ll get there.

– Terry McMullan December 2013/January 2014

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0 11 12 13 14 15

most influential people in general insurance

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Mike Wilkins Managing Director and Chief Executive, IAG

Mike Wilkins has been in the top five of our annual “Top 20” since 2009 – the only person to feature so consistently. It’s easy to see why. When someone wants to speak to an insurance leader who can make things happen, Wilkins is the man they’re most likely to contact.

He has kept IAG performing well above where it was when he took over the top job in 2008, building a strong executive team with plenty of choice when succession issues eventually arise. He sees growth in Asia as a priority for a group that’s too big to easily grow here, but he’s not out there going wild with the money of his shareholders, most of whom are mum and dad investors. Most important for the local industry, however, is Wilkins’ willingness to build understanding on industry issues through business speaking gigs, highlighting the essential contribution of insurance to the economy and the community.

3

Mark Milliner President, Insurance Council of Australia, Chief Executive Personal Insurance, Suncorp

Robert Kelly Managing Director and Chief Executive, Steadfast

Robert Kelly has always been strongly identified in the insurance industry with Steadfast, the organisation he co-founded in 1996. His call-a-spade-a-spade personality has made him a popular and outspoken figure in the industry, and it’s mainly his drive and determination that brought Steadfast to a sharemarket listing in August.

Along the way he has built Australia’s largest broker cluster group, equipped with all the mod cons, including its online transaction platform, underwriting agencies and even a business improvement company.

For a manager as gregarious as Kelly, the Steadfast float was a frustratingly difficult process, requiring enormous discipline and the ability to carry with him a range of institutional investors. He was ably assisted by former QBE Chief Executive Frank O’Halloran as Steadfast Chairman – a heady mix indeed.

Through all the media hype and heavyweight meetings Kelly has remained very much his own person – affable, approachable and always prepared to speak his mind.

His profile inside the industry has always been high, but the successful float of Steadfast and its suddenly prominent position in the industry means he’s now a familiar figure in the wider business world.

As the competitive heat grows and the acquisitions get tighter, expect Kelly to be in there fighting, and enjoying every minute of it. He’s a one-off.

Last year was a quiet one for Mark Milliner as President of the Insurance Council, although his next year is likely to be more lively as he leads the industry into a new major review of Australia’s financial services system. General insurance is never top-of-mind in these reviews (the last one, Wallis in 1997, mentioned the industry twice), but they tend to end up with the industry being forced to undertake major overhauls for very little gain or purpose.

In his role at Suncorp, Milliner continues to burnish his reputation for change management, as well as for saying what he means. The decision to withdraw flood cover from floodstricken Queensland towns until they cleaned up their act was brave and ultimately successful.

New approaches to vehicle repairs are beginning to cause bubbles of anger in the auto industry, and Milliner has shown in the past that he’s adept at negotiating a way through. He’s going to be busy.

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4

Arthur Sinodinos Assistant Treasurer An experienced Liberal Party in-fighter, Arthur Sinodinos stood at John Howard’s side during much of his long reign as prime minister. This former Treasury bureaucrat will have a great deal to do with the shape and role of the upcoming financial system review to be chaired by former Commonwealth Bank chief executive David Murray.

The "root and branch examination of the nation's

5

Richard Goyder Managing Director, Wesfarmers

Richard Goyder has never featured in our Top 20 before, and probably won’t be here next year if he sells his insurance division. But the Wesfarmers Managing Director has earned a spot this year because right now he has more potential than anyone else to influence change in the competitive structure of the Australian general insurance market mix.

His company owns the No 6 commercial insurer, Lumley, two other insurance companies and extensive broking interests in Australia and New Zealand. And now is a very good time to look at selling some or all of them.

And why not? One of Goyder’s core business credos is that growth comes through “entrepreneurial initiative” and value-added transactions. But in the super-heated competitive rush of the insurance industry, it’s not easy being entrepreneurial without loading up on new and possibly little-understood risks. And growth through acquisition is difficult to manage when the opportunities are so few and so very expensive.

In 2010 Goyder told Insurance News that Wesfarmers is “very results-focused – we measure things like return on equity and return on capital”. The insurance division is more than paying its way, but it’s unlikely to do much better than it already is.

So if you’re Goyder, standing pat isn’t an option and it’s probably better at this point to be a seller than a buyer. After all, selling into a sellers’ market can be a very successful “entrepreneurial initiative”.

The Australian Financial Review stirred sale speculation in late October with a sketchy article that nevertheless carried just enough facts to be credible. It said Wesfarmers was considering selling its insurance division to Zurich.

There’s been a fair bit of conjecture about whether the article came from someone (not Wesfarmers) who was flying a kite to raise interest. insuranceNEWS.com.au reported that if Wesfarmers was indeed selling anything to Zurich, it would be Lumley Insurance, not the whole division.

The Australian Financial Review may have been well off the mark with its original story. Zurich’s head office mandarins haven’t been interested in developing in the mature Australian market in the past 10 years or so, but new people at the top of the global general insurance division could now be playing a different tune.

While responsible companies never comment on speculation, silence is what tends to keep the rumour mill churning. One of Insurance News’ competitors which struggles to comprehend the industry’s inner workings tied itself in knots by stating that Zurich and Lumley were unsuited for a merger (rubbish), that Zurich’s refusal to comment on speculation was really a denial that anything was going on (in this case possibly correct, but for all the wrong reasons), and that Wesfarmers had started it all to see what interest was out there in the market. Not surprisingly, Wesfarmers reacted strongly to that suggestion, forcing a hasty retraction on the same day.

But a source we regard as very reliable has told Insurance News that Wesfarmers Insurance is indeed for sale – for the right price – because even if Zurich wasn’t seriously running the ruler

52

financial system" could see the general insurance industry – and brokers in particular – foisted with even more rules that are more applicable to the life insurance and investment sectors.

Sinodinos is also well placed to understand the industry’s continuing concerns with the prudential regulator, which is introducing a range of new global controls that many insurers believe could disadvantage them. At the same time, the new Abbott Government is dedicated to cutting unnecessary regulation.

The balance between greater efficiency and a competitive and flexible financial system is a fine one, and insurers and brokers will be seeking to build a positive relationship with Sinodinos.

insuranceNEWS

over Lumley, other insurers – believed to be Allianz and QBE – have since indicated interest in the division’s insurance operations, and at the time this edition was going to press were deep in discussion with the Perth company.

The merger of market No 5 Zurich with market No 6 Lumley is a scenario that’s been touted for years, and would revitalise the middle of the insurer market. QBE and Allianz would be looking to add a bit of bulk and extract sufficient synergies to foster more rapid growth.

The Coles insurance operation could be easily underwritten by the purchaser, with Wesfarmers turning a useful dollar supplying the distribution and brand and carrying none of the risk.

At the same time, the OAMPS broking operation and Crombie Lockwood in New Zealand could be fed into a local market that is voracious in its appetite for acquisitions, or be retained.

There have been some subtle pointers to Wesfarmers’ inclination to sell since the transfer of Rob Scott from the insurance operation to Coles in February. Unlike Scott, new Managing Director Anthony Gianotti (who was an internal appointment after a six-month leadership hiatus) does not answer directly to Goyder. At some stage during the year Wesfarmers seemed to abandon its original plan for an external appointment to replace Scott.

There is no particular compulsion to sell OAMPS and Crombie Lockwood immediately, although by now Goyder and his team know there are more interested cashed-up parties than just Austbrokers and Steadfast.

So as this edition goes to press there are plenty of signs that something is happening – which is not the same as saying that something will happen.

But if Wesfarmers does decide to capitalise on a buoyant insurance market, now is the time.

Which is why Richard Goyder could well influence the shape and competitive structure of the Australian general insurance market more than anyone else in the next 12 months.

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Mark Searles Chief Executive, Austbrokers Holdings

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After just under a year in the top job at sharemarket hero Austbrokers, Mark Searles has established himself as a sharp strategic thinker. He has kept Austbrokers growing strongly through 2013 with some astute acquisitions, while moving away from the lean corporate structure he inherited at the start of the year from Lach McKeough. He is building a stronger layer of senior managers and taking the time to ensure Austbrokers shines for the right reasons in the face of the attention being paid to Robert Kelly’s newly listed Steadfast. There are plenty of potential acquisitions out there, he says, but he’s aware Kelly has his eye on the same prize catches – many of which are Steadfast companies. Expect Searles to show some canny moves through 2014 as he seeks to not only grow Austbrokers more quickly, but also diversify the group’s interests. He’s cashed-up and confident.

Anthony Day Chief Executive Commercial Insurance, Suncorp

8

The personable man at the top of the Vero operation – he’s also Chairman of the group’s Resilium agency arm – Anthony Day uses his marketing background to good effect to get across diverse messages about the business and its issues. In the recent past he has focused strongly on the complex and sometimes troublesome statutory classes, pushing for more participation for the private sector.

10

Colin Fagen Chief Executive Australian and New Zealand Operations, QBE

7

QBE is engaging in a global turnaround, and Colin Fagen’s arm of the business is no different from any other. It’s been a tough period in Australia for the company as it reconfigures its approach, imposes new economies and undertakes such unpopular activities as sending back-office jobs overseas.

Fagen has been unwavering in his resolve to get the job done, and despite losing the coveted NIBA Insurer of the Year trophy in October after 11 consecutive years – a case of the opposition catching up more than QBE falling behind – he’s confident the road ahead is going to be a less stony one. Just a few more corners to turn…

Niran Peiris Managing Director, Allianz Australia

9

Unlike many of his industry peers, this is one managing director who stepped into the top job with a great deal of knowledge about the company, thanks to working alongside his predecessor, Terry Towell, for more than 10 years.

As Niran Peiris pointed out in an interview with Insurance News earlier this year, he’s refining the strategy at Allianz, not changing it. That hasn’t stopped him rejigging some of the team, including bringing Mark Bradley back into the fold this year as General Manager Direct and Life Insurance. With the M&A market opportunities looking sparse, expect Peiris to focus on strategies that enhance efficiencies at Allanz – like data enhancement and a sharper focus on customers.

Richard Enthoven Chairman, Hollard Financial Services, Managing Director, Hollard Insurance

Hollard keeps growing in Australia, and Richard Enthoven’s increasingly influential role in the market has been recognised with the invitation in May to join the board of the Insurance Council of Australia.

Apart from its diverse personal lines offerings through supermarket giant Woolworths, Hollard owns Real Insurance and has continued to grow its partnerships with underwriting agencies and brokerages.

At latest count Enthoven is working with 13 underwriting agencies and 24 brokerages, including such familiar names as IC Frith, Cowden and McLardy McShane. Much admired, personable and focused, the South African born Australian citizen’s progress is well worth watching.

insuranceNEWS

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Adrian Humphreys General Representative for Australia, Lloyd’s

Like his countryman Mark Searles, Adrian Humphreys is a new addition to the Top 20. What makes his role significant is the continually growing market Lloyd’s is building in Australia – so much so that Australia is now the market’s third-largest customer country after the United States and United Kingdom.

In the past year Humphreys gained something none of his predecessors has ever managed – a board seat on the Insurance Council of Australia.

Despite paying more than any other organisation to belong to the council, until this year Lloyd’s has always been denied a seat at the top table. He is also a valued associate member on the board of the Underwriting Agencies Council – a unique double that gives him a considerable edge on influencing market directions.

Since arriving in Australia in 2010 to replace the highly regarded Keith Stern, Humphreys has worked hard to ensure the market pays attention to Lloyd’s and its increasingly signiifcant role in the Asia-Pacific.

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Allan Manning Managing Director, LMI Group

The peripatetic loss management expert from Melbourne continues to spread knowledge, with his latest innovation being an online analysis of companies’ claims so brokers and consumers can judge the best performers. For anyone else it would be a money-spinner, but Allan Manning says it’s more effective if it’s free. (Insurance News is the new service’s media partner, helping to spread the message at no expense to users.)

A passionate advocate for the industry and for the concept of insurance, Manning maintains a hectic schedule giving technical presentations to industry groups large and small all over the country.

This university academic (among his qualifications are a doctorate in business administration, an MBA and a B.Com) also travels widely overseas visiting clients who use his company’s products. He is also International President of the International Institute of Claims Preparers, a constant blogger of all things insurance, and still finds time to set up new businesses (the latest is a legal firm), comment widely on industry issues and handle queries from individual brokers. As we said last year, the industry’s living treasure.

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December 2013/January 2014

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Peter Harmer Chief Executive, CGU Two years in, and Peter Harmer is beginning to see some serious results from his wideranging program to rebuild the IAG-owned intermediated insurer. He’s done the hard yards, he says, and now it’s a case of pulling everything together.

While the company is still only halfway through the OneCGU program, which includes shedding 600 jobs, Harmer has vowed he won’t send any jobs offshore – a brave call that differentiates CGU from most of its top-line competitors.

Harmer has also demonstrated a willingness to innovate, setting up a joint venture with Austbrokers-owned Austagencies in July to form a surety bonds underwriting agency.

We said last year CGU was giving the impression they had turned a credibility corner. Brokers are back to saying nice things about the company, and its financial results are looking a lot more encouraging.

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Managing Director, Ebix Australia

14

This is one person whose influence across the industry causes frustration to some who would like to work around him. Others value the level of service Ebix offers brokers using its systems and the insurers using its Sunrise Exchange platform. While some broker groups are developing (or in the case of Steadfast have developed) alternative transaction platforms, d’Apice and Ebix remain unmoved. You can’t ignore Ebix and its dominance of its niche, and if you want to succeed in this business without shedding millions of dollars trying to climb over a brick wall, you have to deal with d’Apice.

16

John Neal Group Chief Executive, QBE We put QBE’s then-brand new chief at No 10 last year, predicting that he would take a year to “climb out from under as QBE’s woes pass and he assumes a more varied local profile”.

Well, they haven’t and he hasn’t.

The international Australian’s boss is continuing the mammoth task of turning the group’s fortunes around, shedding under-performing businesses and bringing order and organisation to some chaotic situations. As one of our contributors to this list put it, Neal’s focus is on QBE’s trouble spots and that’s not Australia.

But the local media still hangs on every (rare) word he says, and QBE is still a very respected brand. So he’s influential without needing to do much about it.

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Leon d’Apice

insuranceNEWS

Steve Nevett Chairman, Pacifc region, Aon

Until we sort out the new leadership hierarchy in Aon Australia, Steve Nevett is our “go to” person in the company. In September the diverse risk services company announced that on January 1 Nevett will pass on the title of chief executive Aon Australia to Lambros Lambrou, while he will remain Chairman Pacific.

Nevett has served Aon well in the dual role, and is a respected figure in the local market. But Aon says Lambrou’s appointment will let Nevett focus on the company’s broader strategy across the Pacific region and “work to further build a number of key client and market relationships”.

Lambrou is already well known in the local market, where he worked from 16 years until 1998. He moves back to Australia after serving in Chicage and as as chief executive of Aon’s London global broking centre and Chief Broking Officer for Europe, the Middle East and Africa.

December 2013/January 2014

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18

John Clayton

Managing Director and Head of Australia and New Zealand, Swiss Re

Pacific Region Head and Chief Executive Australia, Marsh

An Australian with a reinsurer’s very keen eye on what’s happening in other markets, Mark Senkevics has distinguished himself since taking up Swiss Re’s local top job by speaking out in issues – including on Twitter.

Nothing too out there, but enough to encourage people to think about some of the nation’s big issues.

Erudite communicators in persuasive insurance industry roles may well become more important in the not-toodistant future when issues like climate change and catastrophe resilience refuse to slink off government agendas, no matter how hard they might try. Apart from running a very successful and diverse operation in Australia and New Zealand, Senkevics fits the communicator role well, and you can’t easily ignore the views of a company with the profile of Swiss Re.

John Clayton runs a very efficient operation, and while it’s holding its own in competition with the brokerages that focus on the corporates and middle-market players, the fact is there’s not much growth to be had up there.

That’s why, like Aon, Marsh Australia is getting more serious about its prospects in the SME area. The company is expanding its Marsh Advantage Insurance (MAI) to handle this growth market, with around 120 authorised representatives.

The avuncular Clayton was closely involved in the setting up of MAI more than 10 years ago, and is no stranger to innovation, having also managed the introduction of Australia’s first online placement vehicle.

Clayton runs an organisation that’s at ease in the top echelons of industry and government. It has plenty of expertise available here and overseas to keep it right on growing.

Heinrich Eder

19

Managing Director, Munich Reinsurance Australasia Heinrich Eder is one of the most familiar faces in the industry these days, but the Munich Re operation he runs out of Sydney has diversified into underwriting on a grand scale through wholly owned Great Lakes. Companies like Calliden, Cover-More and even Australia Post have extensive partnerships with Great Lakes.

Like its Zurich-based rival Swiss Re, Munich Re is a big player in both the general and life insurance sectors.

Central to everything insurance is reinsurance, and it’s here that Eder’s regional and local experience is so valuable.

He knows reinsurance inside-out and the local market backwards. Eder’s opinions and advice (almost always uttered behind closed doors) is highly valued.

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Mark Senkevics

insuranceNEWS

Ian Laughlin Deputy Chairman, Australian Prudential Regulation Authority

20

As we said last year, APRA’s job isn’t all that exciting, but you ignore it at your peril. As the authority’s top insurance man, the former senior manager in financial services is juggling a lot of stuff. Some of it – like its program to overhaul insurers’ capital standards – is being transferred to Australia via the powerful International Association Of Insurance Supervisors, on which Laughlin sits as an executive committee member.

Other stuff APRA is concentrating on involves the financial performance of Australian insurers in a low-interest rate/high catastrophe risk environment. The solutions to these and many other issues being handled by APRA are unlikely to help insurers increase their profits.

December 2013/January 2014

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Bill Shorten

Mathias Cormann

No 1 last year and 2011, and No 3 in 2010 That comment about rooster to feather duster would be apt but unfair when describing the former Federal Minister for Financial Services. Following the election he’s now Leader of the Opposition and no longer involved with the financial services sector. But there’s no doubting that without Shorten, the industry would still be dithering around the benefits or otherwise of standard flood cover.

No 5 last year The former Shadow Assistant Treasurer and Shadow Minister for Financial Services and Superannuation is now Finance Minister in the Abbott Coalition Government, disappointing everyone in the financial services field who had hoped we might be able to hang on to him.

Patrick Snowball No 9 last year He’s done a great job providing leadership and unifying the diverse Suncorp operation. Despite occasional speeches that get to the heart of industry issues, he has kept his distance and let his deputies get on with the day-to-day stuff. He was brought in from London to do the job and he’s done it.

Rob Scott

Peter Kell

No 11 last year

No 15 last year

The Wesfarmers Insurance managing director left in February to take up a new position as Finance Director at Coles Supermarkets. He ran the insurance division for four years and served two years as President of the Insurance Council of Australia.

The well-known Deputy Chairman from the Australian Securities and Investments Commission is very busy dealing with the vast number of shonks that seem to permeate Australian business, which highlights the fact that the insurance industry is well regulated and isn’t really on the ASIC hit list.

insuranceNEWS

December 2013/January 2014

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lawNEWS

Business or leisure?

A broker has lost a court case after a boat insured for business was used for a private trip

A NEW SOUTH WALES COURT HAS found a broker negligent for failing to make clear to a business owner that if he used his company’s boat for leisure, his policy did not provide cover.

Horsell International has lost an appeal against a ruling of negligence after the client’s claim was rejected by the insurer.

The NSW Court of Appeal says insurance brokers have a duty to ensure the client’s policy is suitable for the purpose for which it is bought and – even if the client gives ambiguous instructions – it is the broker’s duty to clarify the instructions and alert the client of any pitfalls.

It ordered Horsell to pay the costs of Dive Two, William Todd and Liberty Mutual.

Mr Todd, the sole director of scuba diving business Dive Two, was navigating a 7.5-metre aluminium dive vessel owned by the company in July 2006 when he collided with a fishing boat driven by Rian Lane.

Mr Lane was seriously injured and Mr Todd later pleaded guilty in court to dangerous navigation causing grievous bodily harm.

Mr Lane sued Dive Two and Mr Todd for negligence, and Mr Todd cross-claimed against his policy with Liberty Mutual and, in the event that the policy did not respond, against Horsell, which arranged the policy.

Mr Lane’s claim was settled and then the cross-claims litigated.

The Supreme Court dismissed the claim against Liberty on the basis that the policy did not respond, but upheld the claim against Horsell for damages for negligence and breach of contract.

Horsell appealed, saying the policy did apply and that it did not act negligently or in breach of any retainer.

The Court of Appeal notes the policy covers liability for claims arising “in connec60

tion with the insured’s business”, and says Mr Todd was taking his wife and four friends on a pleasure trip on the Myall River north of Newcastle when the incident occurred. It was not a business trip.

Dive Two had bought the Professional Association of Diving Instructors (PADI) Asia Pacific Watertight Liability Insurance Program developed by Horsell. Liberty was the underwriter.

Mr Todd testified he had been told the policy would cover him for all public liability issues and he would not need to buy any other insurance. He did not renew a hull insurance policy with Associated Marine that included public liability cover because he understood he had complete coverage under the new policy. insuranceNEWS

He said he was told the policy also covered activities associated with sightseeing, diving, swimming and fishing.

But Liberty would not pay the claim because it did not arise in connection with the Dive Two business, and also because it involved a criminal act, as Mr Todd had pleaded guilty to dangerous navigation.

His legal costs were not covered because he was not acting in the course of his duties at the time of the accident.

The insurer said the policy was for members of a commercial organisation, PADI. Liability policies for recreational watercraft are available and are known to be different to commercial or business liability covers.

Liberty said insurers have a legitimate commercial interest in distinguishing between business and private risks.

Recreational use may “more readily involve distractions and inadvertence while business use is more likely to be subject to regulation and to be taken more seriously by an operator conscious of business reputation”.

When the case was first heard in the NSW Supreme Court, Justice Christine Adamson ruled the policy applied to business use and the Myall River trip was for private purposes.

She ruled it is incumbent on a reasonably competent broker, in circumstances where the broker has earlier advised a client that it did not need public liability insurance for its boat, to advise the client of the limitation of the policy.

PADI had engaged Horsell to advise it and its members on appropriate insurance cover and, by implication, to warn where cover was inadequate or doubtful.

Horsell should have advised that insurance was available to cover risks not covered by the PADI policy, so it was negligent in failing to warn Dive Two of a potential deficiency in the policy.

December 2013/January 2014

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companyNEWS

A premium investment Greg Rynenberg has developed a new way for brokers to profit from premium funding

By Jan McCallum

BROKERS PRIMARILY SEE PREMIUM FUNDING AS A TOOL TO assist commercial clients, but Brisbane broker Greg Rynenberg has developed a system that enables them to use it to increase their own business.

Mr Rynenberg, the Managing Director of East West Insurance Brokers in Brisbane, started on the road that has led to the Flexifundit Finance Management System 25 years ago, when he saw how premium funding could be developed as another business channel.

He realised he could invest spare cash in his business in a way that helped clients and provided a return that beat what was on offer from the banks.

But as he researched premium funding, Mr Rynenberg found there was no software he could buy to manage the financing system that would be essential to its success. That led him to develop a program to operate Flexifundit.

Over the years he refined and redesigned the system, and started to receive requests from other brokers wanting to buy it for their businesses.

Flexifundit is essentially a product for brokers to set up an in-house premium financing arm.

“Most brokers have excess cash in the business and it’s probably sitting in the bank,” Mr Rynenberg told Insurance News. “I saw this as a way to invest in something that all brokers know and understand.

“The owner of the business is creating an income stream that gives them a better return than the banks and also increases their revenue per client.”

He says facilitating small and medium loans to existing clients means brokers can increase client income by 20-30%.

The program can be fine-tuned to suit the client’s cashflow, he says. The key to the system is its automation, which drives its effectiveness in helping brokers collect instalments, quote and issue contracts.

Flexifundit works by using insurers’ credit terms and the power of compound interest.

Brokers receive clients’ instalment payments and earn interest on the money until it is payable to the underwriter. They can reinvest the profit “and the power of compounding interest will grow your business”.

Mr Rynenberg says about 10 brokers are using the system so far. It is also being offered to solicitors, accountants and other professionals operating in areas where clients can pay for the service in instalments over a specified time period.

Users make an upfront payment and then pay a monthly licence fee.

They have to set up a new company structure, with a dedicated bank account, and as financier they are responsible for credit decisions and ensuring repayments are made.

A funder always takes some risk, Mr Rynenberg concedes, but in the years he has been operating premium funding, he has had a very low incidence of bad debts.

Brokers have to be on top of collection and act quickly if a client misses an instalment, although they have minimal risk because repayments are collected 90 days in advance. If the policy is cancelled, the premiums paid are refunded.

Mr Rynenberg says Flexifundit will enable brokers to increase income from new and existing clients and “open the door to increasing your bottom line without finding new clients”.

He is not competing with the major premium funders that dominate the space, and says Flexifundit is not designed to replace brokers’ existing relationships with them, either.

“You have to think about your investment of your own money, your own building of wealth and start investing small amounts of money into premium funding and getting good returns,” he says. “ It can become a nice little profit centre in your business and is fulfilling a client need.” insuranceNEWS

December 2013/January 2014

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companyNEWS

Centrepoint’s Brokerpoint: The premium funder has upgraded its link to brokers CENTREPOINT ALLIANCE PREMIUM FUNDING HAS LAUNCHED an upgraded system to simplify connections with brokers.

About $300,000 was invested in the company’s Brokerpoint system in the past year, with Chief Executive Bob Dodd saying it has resulted in major enhancements to productivity and reliability.

The system now operates in real time, making data immediately available to brokers, and facilitating the management of their customer base.

“This gives confidence that things are being dealt with in a prompt manner and reduces the need for follow-up calls, allowing brokers to spend more time on their customers,” Mr Dodd told Insurance News.

Brokerpoint is browser-based so can be accessed “anywhere, anytime”, and is linked to all broker systems across the industry.

There is an enhanced reporting experience for brokers, making

AIG helps build a cultural bridge:

Ironshore sets sail: The specialist’s new marine unit enhances its ‘go to’ ambitions

American art exhibition opens

BERMUDA-BASED SPECIALTY INSURER IRONSHORE HAS continued its expansion in the Australian marketplace with the creation of a marine unit.

Led by Senior Underwriter Ian Rouse, the new unit will enable the firm to enter the fine art, specie and cargo sectors.

Caroline Jones has been recruited from London-based Pembroke Managing Agency, where she was an underwriter for fine art and specie risks.

Ironshore will focus on underwriting both static and transit fine art risks for Australian-based companies and high net worth individuals, providing coverage for collections of private owners, museums and art galleries.

“We can cover a broad range of risks including numismatics, philatelics and classic cars,” Ms Jones tells Insurance News. “We can also do a stand-alone fine art policy. We can separate it out and offer stand-alone coverage.

“Some other insurers do this, but brokers have told us it is not something that is offered widely.”

The marine unit will also underwrite specie business in the mining, energy and infrastructure sectors, including precious metals transit.

And Ironshore will be seeking participation on syndicated project cargo programs and lead positions on bespoke cargo placements.

Mr Rouse says the firm had noticed good take-up on these lines in London, where Ms Jones had been underwriting risks.

“We saw an opportunity to take it to the next stage and bring her out here,” he says.

“Fine art, mining-related specie and project cargo insurance have emerged as growth opportunities within the region with companies and their brokers increasingly seeking highly tailored coverage solutions from the Australian marketplace.

“Caroline’s Lloyd’s experience further bolsters Ironshore Australia’s depth of expertise in these highly technical lines of business.”

Mr Rouse tells Insurance News Ironshore aims to be the “go-to market” for bespoke insurance solutions.

“It fits in with what we are already doing in mergers and acquisitions and political risk. “It is about bringing Lloyd’s expertise into the local market.”

Cover can be underwritten for limits of up to $40 million, and will complement the services Ironshore already offers in the Australian market via its London-based operations.

Ironshore Australia will target opportunities in partnership with multinational broking houses, smaller regional intermediaries, and industry groups and associations.

“We really want to work very much in tandem with our colleagues in London and support brokers wherever they want to place the business,” says Mr Rouse.

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it easier for them to proactively manage their customer base at renewal time.

And it simplifies the process of adding mid-term endorsements.

Previously this had to done by phone, but now it is entirely automated.

Mr Dodd says Centrepoint Alliance sought the views of brokers during the development phase.

“We asked for their opinions and got them involved, and this stood us in good stead. We put in what people wanted, not what we thought they wanted.”

He says a successful system does not have to come with “all the fancy stuff”. It was about “consistency, reliability and quality service”.

Brokerpoint was originally rolled out in March but enhancements are still ongoing.

“The project will never be finished,” Mr Dodd says. “The customer has a choice so you have to keep delivering.”

NEW YORK-BASED AIG IS HELPING TO BUILD AWARENESS in Australia of American culture and art as Principal Partner of a landmark exhibition at the Art Gallery of New South Wales.

The America: Painting a Nation exhibition will be on show at the gallery until February 9.

Noel Condon (left), AIG’s Chief Executive Australia and Head of Country Operations AIG Australasia, is pictured at the official launch of the exhibition on November 7 with AIG Australia board member Naseema Sparks, Annelies Farquharson and Chief Financial Officer Stuart Farquharson.

America: Painting a Nation is the most expansive survey of American painting to be presented in Australia. It covers more than 200 years of American art and history, with about 80 works ranging from 1750 to 1966.

Mr Condon says the exhibition will help to give Australians a greater cultural understanding of America, “which is important to AIG as a leader in high net worth home and contents insurance, including art collections, and as an American organisation”.

The exhibition is expected to be seen by more than 120,000 visitors and has featured in an extensive marketing campaign across Australia.

AIG’s Private Client Group is running exclusive tours for brokers in the gallery’s Conservation Suite during the exhibition. The company says the tours will provide brokers with insights into the gallery’s “secrets of art conservation”.

December 2013/January 2014

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peopleNEWS

They were so excited and grateful: Zurich’s Nick Cook at Lynedoch Primary School in South Africa

Packing for a vital purpose Zurich and Ausure combine to help impoverished children

By Shelley Dempsey

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IN SOUTH AFRICA, SAVING TO BUY supplies for a child starting school can be a punishing mountain to climb. The effort can take up to two years for poor parents, who only earn about $US100 a month.

That’s why Zurich Australia and broker group Ausure decided to help.

When 100 Australians descended on a locale outside Cape Town in South Africa for Ausure’s annual conference in September, their suitcases were bulging with more than 200kg of items for disadvantaged local children at two primary schools.

“There wasn’t a dry eye in the house during our school visits to deliver the supplies,” says South African Graeme Lilley, Executive Manager of Operations at Ausure.

“The reaction of the children to receiving these packs to enable them to start school was incredible. They were so excited and so grateful. It was a very humbling experience.”

The Pack-for-a-Purpose joint initiative of Ausure and Zurich was clearly a winner.

The 100 packs contained uniforms, socks, pencils, glue and other school items.

They were delivered by delegates during a visit to two schools – Lynedoch Primary School and Vlottenburg Primary, both outside Stellenbosch, near Cape Town.

“It was a small contribution for each of insuranceNEWS

December 2013/January 2014

us, but the packs really made a big difference to those kids,” Mr Lilley says. “It would probably have taken these local parents a year to two years of saving to be able to afford a pack like that.

“The wages are incredibly low in some of these communities.”

Also delivered were 50 soccer balls and 50 rugby balls, courtesy of Lumley Insurance.

“It was nice to see another underwriter getting involved to do something for the community,” says Nick Cook, Head of Customer and Product Proposition at Zurich Australia and the relationship manager with Ausure.

Ausure Chairman Wayne Brown and family members also contributed to the schools.

The reaction at one school was so positive that Ausure and Zurich decided to go one step further. They have launched a sports foundation, the David Paul Foundation, which will help Lynedoch School financially on an ongoing basis.

The school will use the money to buy jerseys and sporting supplies and pay for children to travel to nearby schools to play soccer, rugby and other sports.

“Australians and South Africans love their sport,” Mr Lilley says. “I guess it’s an ideal opportunity for kids, where they can

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peopleNEWS

Delegates and teachers at the Lynedoch Primary School ceremony establishing the David Paul Foundation: from left, Jeff Hayden (Ausure), Assistant Principal Charmaine Abrahamse, Wayne Brown (Ausure), Principal Grantham Jensen, Amy Stead (Lumley), Geoff Henderson (Lumley) and Nick Cook (Zurich)

e just be kids and have fun with each other.

“The headmaster at Lynedoch School told us that sometimes sport can be the only opportunity where kids get to enjoy themselves on a weekend and get away from the poverty and stressful situations they face at home.”

The foundation was named in honour of Moree broker David Paul, who helped to launch Ausure in 1996 and is an authorised representative. He was to attend the South African conference, but had to stay in Australia to receive medical treatment.

“David is really happy for the kids in South Africa that they are getting this foundation,” Mr Lilley says. “He’s really passionate about disadvantaged communities being able to play sport. He’s been involved with rugby union clubs in Australia and other countries for many years and helps out with sport in the big Aboriginal community in Moree.”

Mr Cook, who was the only Zurich representative to attend the Ausure conference in South Africa, came up with the idea of Pack-for-a-Purpose after contacting the Spiers Resort in Stellenbosch, which hosted the conference.

Pack-for-a-Purpose is a worldwide charity which encourages travellers to pack into their suitcase supplies for disadvantaged communities in emerging countries.

“One of the most humbling things was seeing the passion and love these teachers have for these students.”

Mr Cook was part of the small delegation which visited the two schools. “It was a very emotional thing,” he told Insurance News. “They have razor wire round the schools, and razor wire round the vegetable patches that they are learning about.

“Some 15-year-old children have a 30year-old mother.

“But a big part of it – one of most impressive and humbling things – was seeing the passion and the love the teachers have for these students, knowing that they only have them for a small part of their lives, but devoting themselves to making the kids of that next generation better than the last.”

He says donating the packs was tremendously uplifting for all involved and made the trip very meaningful.

The strength of character of the teachers and the positive attitude of the children were particularly striking. “I constantly thought of it for days after.” insuranceNEWS

December 2013/January 2014

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peopleNEWS

Demons aplenty as YPs regroup in Brisbane

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December 2013/January 2014

AIB 6248

There was a group dressed as Where’s Wally as well as the man in the orange top hat, alongside plenty of witches and devils at the inaugural Halloween party held by National Insurance Brokers Association (NIBA) Queensland Young Professionals in Brisbane.

NIBA has reinstated its Young Professionals committee in Queensland, and the Halloween party kicked off its social program with the event at the Hotel Orient on October 31.

It was also an opportunity to tell everyone about the group’s new Facebook page – NIBAQld Young Professionals – which will feature details of events currently being finalised for next year.

About 100 YPs attended, although some of them might not have recognised each other behind Hannibal Lecter masks and bat glasses, or under nurses’ wigs and devils’ horns.

Despite the pumpkin lanterns and spiders it was more a night of networking than haunting. The event was sponsored by Specialist Underwriting Agencies and High Street Underwriting Agency.

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Weighty perspectives at Zurich marine forums There’s always something new happening in the marine insurance world and Zurich’s marine forums in October and November gave brokers and their customers the opportunity to hear about the latest trends and discuss issues in supply chain logistics.

Zurich’s UK-based Global Supply Chain expert Nick Wildgoose was keynote speaker at the forums in Melbourne, Sydney and Brisbane, alerting guests to the critical links in marine logistics.

Cerno Marine Surveyor John Cupitt, Nicholls Insurance Consulting Average Adjuster Eric Nicholls, Colin Biggers & Paisley partner Stuart Hetherington and Zurich Claims Technical Lead Garry Chalkley also contributed different perspectives on the issues.

Nearly 300 professionals gained an impression of the technical complexities involved with the partial or total loss of cargo onboard, including instructing adjusters, advising customers and first advice to cargo owners.

A panel discussion capped off the event, covering several case studies of actual maritime incidents.

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Austbrokers tips in for armed forces mates Members and guests enjoyed spectacular views of Melbourne at an Austbrokers event while hearing an inspiring speech from Afghanistan veteran Tyson Murray during the National Insurance Brokers Association (NIBA) Convention.

Austbrokers Chief Executive Mark Searles welcomed more than 150 guests to the Eureka Skydeck 88 at the top of Melbourne’s Eureka Tower, the highest building in the country.

It was an evening for brokers, underwriters and VIP guests to network and discuss the day’s events at the NIBA Convention, and to hear a harrowing story of wartime adversity and the peacetime battle to recover.

Corporal Murray told guests about serving in Afghanistan, the post-traumatic stress disorder he suffered and how Mates4 Mates – a new charity being supported by Insurance Advisernet Australia – helped him get his life back on track.

The evening ended with a donation from Austbrokers to Mates4Mates, which provides support to wounded, injured or ill current and former Australian Defence Force personnel and their families.

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Speedy work and inspiration at AILA dinner “Wide Exposure, Safe Harbour” was the theme of this year’s Australian Insurance Law Association (AILA) national conference, so it was fitting that the event was held at Sydney’s Jones Bay Wharf, with stunning views of the harbour.

At the gala dinner held in spectacular new venue Doltone House Hyde Park, insurance lawyers, insurers, reinsurers, regulators and academics applauded as former AILA presidents DLA Piper consultant Michael Gill and CGU Technical Counsel Chris Rodd received lifetime awards.

Around 380 guests watched speed painter Brad Blaze dash off portraits of Sir Donald Bradman, Paul Hogan and Dame Edna Everage. These were then auctioned, with several thousand dollars raised for the Fred Hollows Foundation, which restores sight to people in developing countries.

The AILA conference sponsored James Pittar, who became completely blind in his 20s and now competes in marathon swims to raise money for the Fred Hollows Foundation.

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peopleNEWS Marsh and partners dress to impress The theme was “dress to impress” and Marsh client services consultants from around the country and insurer partners adopted it with gusto when they got together for the annual Marsh commercial conference in Sydney.

There were quirky hats and ties, dressing up and dressing down on show at the Q Station in Manly, with its spectacular views of Sydney Harbour.

Marsh Advantage Insurance Executive Director Travis Kemp hosted the event, and stand-up comedian Dave O’Neil entertained everyone at the gala dinner for 120 guests.

Marsh Australia Chief Executive and Pacific Region Head John Clayton provided a business update and the client services consultants also got a sneak preview of the new Marsh Advantage Insurance branding.

Connect with the right people for trade credit solutions.

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Lumley rewards safety-first clients Nursing, wine and motor wouldn’t seem to have much in common, but they all featured in the presentation of the Lumley Insurance Benchmark Awards for risk management last month.

More than 100 motor fleet and property professionals and their brokers gathered in Sydney to recognise this year’s winners, which included the Royal District Nursing Service in the commercial motor category and WB & SM Doser Freight Forwarding in the heavy motor category.

Rathbone Wine Group/Xanadu Wines won the corporate solutions property site engagement award, and beef producer HW Greenham & Sons the corporate solutions property risk management award.

Lumley Chief Executive John Nagle presented the motor awards, now in their 19th year, congratulating the winners on their commitment to safety, and their brokers Aon and OAMPS. Lumley expanded the awards to corporate solutions only last year, and Regional Manager Corporate Solutions and Victoria Rob Funnell detailed how Xanadu Wines has implemented 14 of 16 improvements recommended by Lumley’s risk engineers.

He says HW Greenham & Sons is at the forefront of risk management and has reviewed all its systems and procedures.

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Catlin conference drills down into commercial covers Queensland brokers took the opportunity to tap into expertise in specific commercial lines at the inaugural Catlin conference at the Sofitel Brisbane.

The sessions on indemnity agreements, contractorsâ&#x20AC;&#x2122; liability, waivers of subrogation and product recall attracted an audience of more than 80 brokers.

Presenters also covered such topical subjects as the changing landscapes around professional indemnity and directorsâ&#x20AC;&#x2122; and officersâ&#x20AC;&#x2122; cover, as well as commercial crime. Participants were given the opportunity to raise issues they have encountered in these rapidly evolving segments.

Lively discussions continued over a working lunch, and brokers and Catlin staff networked over afternoon drinks at the end of the day.

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peopleNEWS AILA young professionals say Prost!

The Australian Insurance Lawyers Association (AILA) Young Professionals night in Sydney has become so popular that this year all tickets were snapped up within two weeks of going on sale.

The Oktoberfest theme brought out lawyers, brokers and claims professionals in lederhosen and dirndls.

More than 550 guests filled the lower ground floor at the GPO and there were actors in costume and a caricaturist to entertain. There was also plenty of sauerkraut and beer available from eight food stations and three bars.

Members invite clients to the event, so there is always a mix of legal and other insurance professionals doing some serious networking.

Planning is already underway for the next AILA Young Professionals event in March.

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AF

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Flexible Innovative Cost Effective Solutions...

Commercial Legal Protection Insurance (CLPI) When you ask for a quote or renew a Public & Products Liability or Labour Force Professional Liability policy, you will also receive a quote for Commercial Legal Protection Insurance which is underwritten by Lloydâ&#x20AC;&#x2122;s of London. The cover automatically includes:

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Fashions feature at CGU’s Melbourne Cup Fabulous weather and high fashion were on display when CGU hosted guests trackside during Melbourne’s Spring Racing Carnival.

It’s a busy week for the Melbourne-based insurer and Chief Executive Peter Harmer welcomed guests to a marquee with a Parisian café theme designed to evoke a sense of relaxing with friends while enjoying wonderful food and wine – and, of course, the spectacle of racehorses pounding down the finishing straight outside.

Guests donned the traditional black and white on Derby Day, which was hosted by Olympic swimmer and world record holder Geoff Huegill.

Legendary basketballer Andrew Gaze added his irrepressible humour to the Melbourne Cup Day event.

Cup Day brought out the most colourful dresses and hats and smartest suits for the highly coveted best-dressed prize. A number of broker guests also beat the bookies, with some significant winnings adding to the happy atmosphere.

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Sydney style on show at Vero’s Melbourne Cup Day Who says you have to go to Melbourne to really get the most out of the Melbourne Cup? Certainly not the Sydney-based brokers who donned their sharpest suits and most glamorous dresses and fascinators for Vero’s Melbourne Cup lunch at the luxurious Ananas restaurant in The Rocks.

Around 135 brokers were entertained by burlesque dancers from Gale & Vallance and MC and singer Blake, otherwise known as Mario Lasagne “the singing chef”.

During the afternoon they enjoyed makeup touch-ups, mini manicures, luxury hand treatments, shoulder massages and even a shoeshine.

Suncorp Commercial Insurance staff who attended to celebrate with brokers included Suncorp Commercial Chief Executive Anthony Day and executive general managers Matt Pearson, Andrew Mair and Chris McHugh, and National Manager Broker Distribution Sam Sanfilippo.

Like the race that stops a nation, the prizes for best-dressed guests were hotly contested. Simon Calabrese from Aon was awarded the prize for best-dressed male, while Melanie Venning from Marsh was named the best-dressed female.

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A simple formula that works Since 1996, IInsurance Since nsurance A Advisernet dvisernet has been pr providing oviding e expert xpert assistanc assistance e to to our clients clients through through a net network work of advisers advisers.. TThrough hrough the e expertise xpertise of our advisers w we e oper operate ate in multiple different different markets differ markets as specialists specialists..

Our business fformula Our ormula is pr pretty etty simple simple.. Head O Office ffice develops develops the systems, systems, supports supports the AR’s AR’s and negotiates negotia tes with insurers. insurers. TThe he AR is then fr free ee tto o run their o own wn business and pr provide ovide local, local, personal service ser vice tto o clien clients. ts. It’s It’s a fformula ormula tha thatt w works orks and it it’s ’s nev never er been mor more e relevant relevant than in today’s today ’s disconnected disc onnected societ society. y.

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Being par Being partt of A Advisernet dvisernet - the #1 AR Net Network work of Choic Choice e - is mor more e than just running your your own o wn adviser business - it truly is like being par partt of one of the biggest families in A Australia. ustralia.

Call C all 1300 366 518 or visit iaa.net iaa.net.au .au to to find out mor more. e.

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Ladies have a big day at Zurich’s Geelong Cup Ladies Day – hosted by Zurich at the historic Geelong Cup – has become one of the company’s most popular events and one of the few women-only social activities in the industry.

This year 64 women from Zurich and its broker partners spent the day enjoying the races at the Geelong Racing Club, having been greeted at the trackside marquee with a glass of champagne when they arrived.

It was a chance for Zurich’s leading ladies, including Head of SME Xpress Underwriting Centre Michelle Hay, broker managers, market-facing underwriters and claims advisers to network with women in broking.

It was Zurich’s seventh year at the Geelong Cup, which was first run in 1872. In recent years the ladies have several times had an early tip for the Melbourne Cup, watching a horse romp home that later went on to win the Melbourne Cup.

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Allianz spreads the fun of Oktoberfest

Photo courtesy of dâ&#x20AC;&#x2122;Albora Marinas Akuna Bay

The time-honoured tradition of the Allianz Oktoberfest was in full swing across the nation in October and (a little oddly) November.

A mixture of daytime and evening events were held in South Australia, Western Australia, Victoria, New South Wales and Queensland.

More than 800 brokers and staff enjoyed German-themed food and beer, and each state did something a little different.

In Adelaide a two-piece band managed to get guests up to sing, while in Sydney the Oompah Pah Band encouraged guests to yodel along.

Brokers could get their shoes shined at the Bavarian Bier CafĂŠ in Brisbane, and in Victoria a trio entertained guests at the evening cocktail function.

In Perth, a jazz quartet played and there was a photo booth from where guests could take home a souvenir picture.

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Insurance is underwritten by Allianz Australia Insurance Limited (Allianz) AFSL No. 234708 ABN 15 000 122 850. Club Marine Limited (Club Marine) AFSL No. 236916 ABN 12 007 588 347 is a related body corporate and an agent of Allianz. Please read the Product Disclosure Statement (PDS) available by phoning 1300 402 040 before deciding if this product is right for you.

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peopleNEWS IAA backs NSW fire crews Insurance Advisernet Australia (IAA) delegates put their hands in their pockets to support New South Wales fire crews as the group’s national conference in the Hunter Valley coincided with the devastating Blue Mountains bushfires. The conference was attended by more than 430 delegates and partners.

A system of fines for minor “sins” raised $4000, while another $50,000 was raised at the conference for charities Mates4Mates, KidsXpress, Reach and beyondblue.

Delegates wore wacky glasses as a reminder of the conference theme, “see how far we’ve come”, and the final night was a fancy dress Halloween celebration.

IAA’s annual awards were also presented at the conference.

The authorised representative of the year award was shared between Bresland Consultants and Macquarie Insurance Services.

Amicus Brokers was named Insurance Advisernet New Zealand broker of the year, and the IAA chairman’s award went to Marni Dittman of Dittman & Associates.

IAA’s Manager Operations New Zealand Paula Mills took the New Zealand chairman’s award.

Manager Compliance Australia and New Zealand Karenne Muston was named employee of the year, while Dale Coombes, Nicole Curkoski, Richard Welch and Lindy Layland were recognised for 15 years’ service.

The northern region was named IAA’s region of the year.

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maglog » WELCOME TO THE INSURANCE NEWS HOLIDAY QUIZ, WITH questions from all corners of the industry. Keep a tally on the points you earn and rate your knowledge at the end. If you get your magazine at the office, run it as a group activity. Be amazed at the knowledge of your peers, or (more likely) bask in the realisation that you didn’t know you knew so much.

We’ve divided the questions into sections denoted as easy, more difficult and you’ve got to be kidding. The answers will be published on the insuranceNEWS.com.au website on Monday, December 16, at www.insurancenews.com.au/quiz-answers.

1 POINT EACH 1. Which company was named NIBA insurer of the year for 2013?

2. This company won the title from QBE. How many years in succession had QBE held the title?

3. Which insurer runs the highly successful “Rhonda and Ketut” advertising campaign?

4. Who is Victoria’s Fire Services Levy Monitor?

5. The fire/emergency services levy on insurance policies is still applied in two states. Name them.

6. Name the following (1 point each): a) The (new) chief executive of the Australian and New Zealand Institute of Insurance and Finance b) The chief executive of Zurich General Insurance (Australia) c) The president of the Insurance Council of Australia d) The federal minister responsible for insurance matters 7. The New South Wales motor vehicle compulsory third party system is commonly referred to as: a) Pink paper? b) Greenslip? c) Red rego? d) CTP bluey?

8. A so-called “superstorm” in October 2012 caused record amounts of damage to cities and towns along the eastern seaboard of the United States. Name the storm.

9. What do the following acronyms stand for? (1 point each) a) FOFA? b) D&O? c) PI? d) PL? e) P&C? 10. Which long-established marine insurer was folded into the Zurich operation in 2013?

11. Insurance and sport have long been linked by sponsorship. Which insurers sponsor the following teams (1 point each): a) All Blacks (rugby)? b) Australian Wallabies (rugby)? c) Sydney Swans (AFL)? d) NSW Swifts (netball)? e) Collingwood (AFL)? f) Manchester United (football/soccer)?

12. UK-based insurer Catlin was involved in a major research project on the Great Barrier Reef this year. What was the project called?

13. For one point each, which city is the global headquarters for: a) AIG? b) Lloyd’s? c) QBE? d) CGU? e) Chubb Insurance?

2 POINTS EACH 14. Suncorp Chief Executive Patrick Snowball recently noted the location of Australia’s greatest flood impact risk. Where is it?

15. What year was the Australian Reinsurance Pool Corporation set up?

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16. What does ILS stand for?

17. What New Zealand court case led Australian D&O insurers to change the wording of their policies?

18. Name the two Queensland towns where Suncorp withdrew cover until flood mitigation programs were initiated?

19. Who was appointed Chairman of JLT Australia in August?

20. IAG has a joint venture in India. Who is its partner?

21. Underwriting agency Dual made headlines earlier this year when it suffered a fraud by an employee. How much money was involved?

22. In April Steadfast acquired a 30% stake in New Zealand’s fourthlargest brokerage. Name it.

23. RIMS set up an Australasian chapter in Melbourne in April. What is RIMS? 24. IAG traces its history in Australia back more than 160 years. What is its oldest constituent part? a) The National Roads and Motorists Association b) NRMA Insurance c) CGU d) Insurance Manufacturers Australia 25. This year we described them as “opportunistic short-term vehicles in the reinsurance market that are run by existing market players but are separately capitalised, often from external sources”. What are they commonly known as?

26. Who are these insurance personalities?

A.

B.

C.

D.

3 POINTS EACH 27. Lloyd’s made its reputation in the Unites States when underwriter Cuthbert Heath ordered his agent to “pay all of our policyholders in full, irrespective of the terms of their policies” after a major disaster.

Name the disaster and the year it occurred.

28. What unusual waterborne “crop” is proposed to be included for crop insurance in the US Farm Act, thanks to some political gamesmanship?

29. Name two insurance/reinsurance companies owned by Berkshire Hathaway (there are eight).

30. What was the value of the insurance policy covering the Titanic, which sank in April 1912: $US500,000, $US5 million, $US50 million?

31. How old is the marine insurance principle of general average? 25, 250 or 2500 years old?

32. The first car insurance policy known was sold in the UK in what year: 1891, 1895, 1901 or 1909?

33. What is LAGIC? 34. The first insurance company in the US was the Philadelphia Contributorship for the Insurance of Houses from Loss by Fire. Who was its founder? a) Jeremiah Chubb b) Benjamin Franklin c) Hank Greenberg d) John Adams If you scored 10 points or less, you’re obviously a new recruit or just passing through. 11-25 pay more attention; 26-45 you’re alert; 4664 you’re up to speed; above 65 you’ve been around a while, you’re amazing... or you cheated!

That’s it from Insurance News for 2013. From all of us on the team – editorial, production, advertising and online administration – have a safe and happy summer break.

December 2013/January 2014

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Out here, commitment is everything.

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