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Model for the future Insurance Advisernet chief Shaun Standfield says the Winley collapse does not mean the AR model is flawed – but strong infrastructure is vital By John Deex and Michelle Hannen

REPERCUSSIONS FROM THE COLLAPSE of Perth-based authorised representative (AR) group Winley Insurance will be felt for some time. Insurers were left millions of dollars out of pocket when two investors allegedly raided the company’s broker trust fund and left the country. But according to Insurance Advisernet Managing Director Shaun Standfield, the AR model is strong enough not only to withstand any associated damage, but to thrive and grow. “It would be naive to think that there are no flow-on effects [from Winley],” he tells Insurance News. “But it needs to be kept in perspective. “Such losses affect about 0.01% of premiums. “And while there are structural issues within some AR companies, it is not systemic. “It is all about the way that they are set up. “For example, the Winley website had no reference to the managers or the board. Overseas directors apparently had access to the trust account, and that is not necessarily a smart thing. “We have much more stringent measures in place. “Winley was well known for saying ‘we will give you $10,000 to join us’. As the old adage goes, if it seems too good to be true then it probably is. “These models are about hard work over a sustained period of time. The rewards don’t come straight away. “I don’t know how they were able to operate that way – setting up the proper infrastructure is expensive and perhaps costs were cut.” Allianz Australia has announced that it plans to more thoroughly scrutinise the records of Winley ARs who have moved on to other groups. It says it “will not be automatically endorsing” requests to appoint former Winley ARs to other AR groups.

Mr Standfield welcomes this stance, and says the Australian Securities and Investments Commission (ASIC) should push for greater transparency. “You can’t afford to cut corners,” he says. “It is detrimental to the clients, advisers and insurers. “And ultimately it affects the AR’s personal brand. “If you attach yourself to a brand that is not reputable and it goes down, then there will be some impact on you. “Insurers need to decide who they are happy to work with, and I applaud Allianz for the action it has taken. “Otherwise the whole thing gets forgotten too quickly; it becomes yesterday’s

Mr Standfield believes the AR model is crucial to the future of insurance advice. The industry is urgently seeking to attract the next generation, as older brokers approach retirement age, and the fact that a licence is not required for an AR to set up their business makes it easier for younger people. The model also focuses heavily on personal relationships, which Mr Standfield says is absolutely key in the SME market. “The AR model will not replace brokers but complements them,” he says. “There is a lot of talk about disruptors taking out the advice element, but most SME owners want to deal with people, not technology. They want advice.” He says that personal service aspect is why AR models work so well. “ARs have a deep understanding of clients’ businesses, and people are not treated as numbers but individuals. “Technology enhances the relationship but does not replace it and disruptors give us an opportunity to get our message across. “I wouldn’t go head to head with them on home and motor, but in the business environment we have the edge and we need to make that clear.” Mr Standfield says the age of the average AR “is a lot less than that of a broker principal”. “They are both complementary, I wouldn’t put one over the other. But ARs have the edge over the larger brokers in terms of personal relationships.” The value of advice is not the only issue that Mr Standfield believes the industry should be more vocal about. Underinsurance remains a major problem. A recent Insurance Advisernet survey found up to 60% of businesses were underinsured. And building community resilience to increasingly frequent natural disasters is crucial, he says.

“While there are structural issues within some AR companies, it is not systemic. It is all about the way that they are set up.” news and everybody moves on. “Having an Australian financial services licence (AFSL) has to be cherished, and not taken for granted. “Secure insurance companies are a must, but so is the security of advisers and the compliance systems behind them. “I’d welcome the requirement for all AFSLs to show their most recent confirmations, that relevant forms have been returned to ASIC, such as confirmation of external audit reports, confirmation of professional indemnity programs and licence variations and breach-reporting obligations. “These could be added to websites on a regular basis as forms are lodged.” insuranceNEWS

April/May 2016

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Profile for Insurance News (the magazine)

APR/MAY 2016 - Insurance News (the magazine)  

The collapse of Perth-based authorised representative (AR) group Winley Insurance will have repercussions in the industry, but Insurance Adv...

APR/MAY 2016 - Insurance News (the magazine)  

The collapse of Perth-based authorised representative (AR) group Winley Insurance will have repercussions in the industry, but Insurance Adv...