Page 1

“The big difference between this concept and those that have tried and failed in the past is simple enough – it’s the customer who makes the choice.”

“I need people who are actually quite different to me and who are going to come up with different views around the table.”

How Michael Cameron wants to revamp Suncorp

FOUR CEOs, FOUR DIFFERENT MISSIONS:

What Scott Leney is doing to sharpen Marsh

Face-to-face interviews with Insurance News

“I think we’ll reach a point where the insurer will stop paying commission where there’s no evidence of the broker doing something the insurer couldn’t have done itself.”

“As the younger brokers come through it is an ideal time for us to accelerate our growth. They get technology and they get automation.”

Why IAG’s Ben Bessell thinks brokers must join the revolution Where Premium Funding’s Ross Hayward is looking next

PLUS:

Insurance CEOs’ biggest worries

June/July 2016


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Contents 6 Newsmakers »

75 Covering the field » Sportscover targets a more diverse future.

10 The monsters that worry CEOs » A global survey reveals insurers’ top worries range from technology to competition.

75 Paper revolution » Mike Donnelly pioneers standard fact forms for brokers.

18 Now for something completely different » Suncorp’s new chief sees the group’s insurance and banking diversity as the key to a new way forward.

peopleNEWS

26 The mad, bad, incredible and totally weird story of Winley and the great death challenge »

76 Are you sure you’re qualified for this job? »

34 New times call for new understandings »

78 Spick and span: AIG staff spruce up Sydney »

IAG’s business insurance chief wants to take brokers along on the journey into a different sort of future.

42

Seismic shifts » Steadfast and AUB are making some bold moves that may well herald permanent changes to the broking landscape.

46 Our cities in danger »

52

There is an alarming lack of proof of qualifications in the insurance industry.

80 Happy retirement, Heinrich! » 81 Retiring, but Sydney’s still home » Munich Re’s avuncular boss Heinrich Eder is farewelled by industry leaders and friends.

82

Pen golf day raises cash for kids »

84 Fireworks as Steadfast lights up Brisbane »

Australia should learn from Canada, says a bushfire expert. We could lose a city.

89 Golfers get into the swing of Allianz tournament »

Re-imagining Marsh »

90 Made in Germany: HDI Global showcases its focus on the world »

The global broker’s local chief has his sights fixed on a future that looks quite different to the past.

58 Out of sight, out of mind » NIBA’s city focus leaves country brokers wondering about the bang they’re getting for their membership buck.

64 Premium innovator » Premium Funding’s Ross Hayward explains his attitude to innovation, growth, competition, the future for brokers and why having new ideas will never get old.

70 The new, old problem » As fresh threats emerge, it’s clear Australia’s war on asbestos is far from over.

91 AILA’s social outing a hit with young professionals » 92

Lloyd’s celebrates opening of Sydney hub »

94 Austbrokers Countrywide settles in to new home » 95 CGU fun run celebrates diversity » 96 Business booms at Melbourne expo » 97 Vero takes brokers inside the Lions’ den » 98 maglog »

companyNEWS 74 New structure, wider services » Centrepoint Alliance makes some big changes to benefit brokers.

“The big difference between this concept and those that have tried and failed in the past is simple enough – it’s the customer who makes the choice.”

74 Trucksure becomes Fleetsure »

“I need people who are actually quite different to me and who are going to come up with different views around the table.”

How Michael Cameron wants to revamp Suncorp

But the blue glitter vests will remain…

FOUR CEOs, FOUR DIFFERENT MISSIONS:

What Scott Leney is doing to sharpen Marsh

Face-to-face interviews with Insurance News

“I think we’ll reach a point where the insurer will stop paying commission where there’s no evidence of the broker doing something the insurer couldn’t have done itself.”

June/July 2016

Cover illustration by Krisztina Strzebonski

“As the younger brokers come through it is an ideal time for us to accelerate our growth. They get technology and they get automation.”

Why IAG’s Ben Bessell thinks brokers must join the revolution Where Premium Funding’s Ross Hayward is looking next

PLUS:

Insurance CEOs’ biggest worries


INMAG JUN 16_page layouts 9/06/2016 2:27 pm Page 6

newsmakers at

insuranceNEWS.com.au is a free weekly online news service for the general insurance industry. The website has more than 22,000 subscribers. In April/May we published 484 articles online. These were made up as follows:

64 85 LOCAL

CORPORATE

REGULATORY & GOVERNMENT

89 FINANCIAL SERVICES

71 THE PROFESSIONAL

104 INTERNATIONAL

9 ANALYSIS

3 BREAKING NEWS More than 22,000 news articles – including 210 breaking news bulletins – have been published since we started in 2001. All articles can be accessed through our archives. Access to news articles and other services provided by insuranceNEWS.com.au is free.

6

Here comes La Nina El Nino is officially over, with the Bureau of Meteorology confirming tropical Pacific Ocean temperatures and trade winds have returned to a neutral state. The weather phenomenon usually brings high temperatures and low rainfall to large areas of Australia, and the latest event was one of the strongest on record. The bureau says there is little chance of a comeback for this El Nino, and six out of eight international climate models suggest the opposite phenomenon, La Nina, is likely to form between now and August. La Nina is associated with above-average winter/spring rainfall over northern, central and eastern Australia, and tends to have a greater impact on insurers due to the prevalence of flooding. Climate models also suggest a negative Indian

59

Ocean Dipole event is likely this winter, which typically brings increased rainfall to southern Australia. The El Nino had dramatic effects in Australia and across the world, including an early start to the fire season, which led to devastating blazes in Victoria, South Australia, Western Australia and Tasmania. Large areas of the Tasmanian Wilderness World Heritage Area, which had not seen fire for centuries, were severely damaged. In Queensland, fewer clouds and less tropical rain helped create conditions for the most severe Great Barrier Reef coral-bleaching event on record. However, El Nino also contributed to a record low number of tropical cyclones during the northern wet season. Just three were recorded, with the previous record being five in 1987/88 and 2006/07 – both El Nino years. Monster El Nino finally over, 30 May

“Without climate change you would see warmer-thanaverage temperatures during an El Nino, but we’re getting temperatures we’ve never seen before.”

– Bureau of Meteorology Climate Monitoring Manager Karl Braganza says autumn 2016 was the hottest on record, and climate change is the cause

Munich Re gets a new boss

Ralph Ronnenberg (left) will succeed Heinrich Eder as Munich Re Australasia Managing Director on July 1. Mr Ronnenberg will be responsible for all non-life reinsurance operations in Australia and New Zealand, and for Great Lakes Australia. Andrew Linfoot, currently Head of Life at Munich Re in Sydney, will become chief executive of life reinsurance operations in Australia and New Zealand. Mr Ronnenberg has worked at Munich Re since 1987, holding senior roles in casualty underwriting, customised portfolio solutions and risk management. He is currently responsible for the planning and performance monitoring of the reinsurance business in Europe, Latin America, Africa, Asia and Australasia. Mr Eder, who has been Managing Director of the local operation since 2005, will retire on June 30 after 36 years with Munich Re. Munich Re names new Australasia managing director, 9 May

insuranceNEWS

June/July 2016


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Storms batter eastern states calls for help had been received by [Monday] morning, 3890 homes have been evacuated and 284 flood rescues carried out. She says the SES has rescued people as far inland as Dubbo, as well as in Lismore to the north, and south to Nowra, Wollongong and Picton. The storms have led to four deaths, according to reports. The huge low pressure system combined with a king tide caused erosion at the northern Sydney beachside centres of Collaroy and Narrabeen, with some beachfront homes losing five metres of front yard and having their foundations damaged. ICA spokesman Campbell Fuller told insuranceNEWS.com.au home insurance policies do not normally cover that kind of erosion damage. “Home insurance policies typically do not cover damage caused by actions of the sea, such as coastal erosion, king tides or storm surges,” he said. “Some 93% of all new home insurance policies purchased in Australia now include cover for flooding under the standard definition, but neither actions of the sea nor the effects of gradual East Coast storm will cost insurers tens of millions, 6 June (updated 7 June) News Ltd

Storms that hit Queensland on June 3 and moved down the New South Wales coast to hit Tasmania will cost insurers tens of millions of dollars based on claims so far received, the Insurance Council of Australia (ICA) says. The council has declared the storms a catastrophe in Queensland, NSW, the Victorian east coast and the northern and eastern coastlines of Tasmania. As of 9am AEST on June 7, insurers had received 14,500 claims from across the four states, with estimated insured losses of $56 million. The total is expected to increase. The east coast low formed in Queensland late on Friday, June 3 and moved down the coast, hitting Sydney on Sunday. It left around 30,000 NSW homes in the Sydney region temporarily without power. ICA Acting Chief Executive Karl Sullivan says most claims relate to typical storm damage, such as roof and gutter damage and falling trees. “There are also reports of cars being flooded in some locations,” he said. NSW State Emergency Services (SES) spokesman Stephanie Sullivan told insuranceNEWS.com.au more than 9600

Ruined: a supermarket empties its shelves after the June storm led to flooding

Zurich’s Martin Senn mourned Insurance industry consultant Daniel Fogarty says Martin Senn, the former global chief executive of Zurich Insurance who died on May 27, should be remembered as “a fine man with a passion for people and a commitment to values-based leadership”. Mr Fogarty served in a range of senior positions at Zurich Australia from 2009 to September last year, when he stepped down as chief executive, and got to know Mr Senn personally as well as professionally. A Swiss national, Mr Senn killed himself in his holiday home in the Swiss town of Klosters. He joined Zurich in 2006 as chief investment officer and became group chief executive in 2010. He resigned from the position last December after the group’s third-quarter net profit fell 79%, forcing it to withdraw from the acquisition of UK insurer RSA and prompting restructures and retrenchments in Australia, the UK, the US and Switzerland. “Martin loved coming to Australia,” Mr Fogarty said. “He had a soft spot for the Zurich staff Down Under and for the great relationships that Zurich has in insurance and the wider community. “Martin’s son married an Australian and was living in Australia, so he also felt very personally connected.” “No one could easily understand what was going on in Martin’s mind in the last days of his life,” Mr Fogarty said. “He still had so much to live for, and so much to continue to give the world. “His untimely death shines a light on suicide and depression.” People in Australia seeking support can contact Lifelife on 13 11 14 (www.lifeline.org.au). Martin Senn’s passion for people, values remembered, 6 June

insuranceNEWS

June/July 2016

I’m going, says Nelson Lloyd’s Chairman John Nelson (above) has confirmed he will step down at next year’s May annual general meeting as planned, and has warned the UK has much to lose if it leaves the European Union. He has “some confidence” the June 23 referendum will produce a vote to remain in the EU, but says Lloyd’s has made plans should “Brexit” occur. “The good news is that… it feels to me as if the Brexit debate taking place in the UK at the moment is thorough and it does give me some confidence there is a reasonable chance the British population will reach the right conclusion,” Mr Nelson said. “This may be a brave statement that I live to regret, but that’s the way it feels to me.” Lloyd’s says exiting the EU will hurt London’s position as the biggest commercial and specialty underwriting hub. Being in the EU means London enjoys unparalleled access to the market of more than 500 million consumers and enhances the British capital’s attraction to non-EU investors. “Lloyd’s believes strongly that continued membership would be the best outcome and we will continue to make the case for staying in Europe in the run-up to the referendum,” Mr Nelson said. “And for those who say we would have less regulation if we came out of the [EU], I say there will be no regulatory nirvana. “If we wanted to maintain our trade with the EU, we would have to comply with EU regulation in any event, and I see no sign that UK regulators themselves want to deregulate.” Nelson confirms exit plan, warns over Brexit, 16 May

7


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newsmakers at

From the

Wildfire leaves record damage bill The Fort McMurray wildfire in Canada’s Alberta province is the costliest natural catastrophe yet recorded in the country, with estimated insured losses of $C4.4-$C9 billion. Analysis by catastrophe modeller AIR Worldwide indicates claims will be dominated by residential losses, with several neighbourhoods experiencing catastrophic loss. “AIR’s estimates explicitly capture residential, commercial, and automobile losses, as well as business interruption losses, except those related to the oil industry,” it says. “According to AIR’s loss estimates, the Fort McMurray wildfire is the costliest natural disaster in Canada’s history.” The insured loss estimates reflect insured physical damage to property and direct business interruption losses, excluding the oil industry. Almost 58% of the wildfire has been contained, although extreme burning conditions still remain in some areas, the Alberta Government says. The wildfire broke out on May 1 and destroyed about 581,695 hectares of land and more than 2400 structures, mainly homes. Wildfire is Canada’s costliest natural disaster, 6 June

Reuters

See Our cities in danger, page 46

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 Address: McMullan Conway Communications Pty Ltd PO Box 116, Ivanhoe VIC 3079 Australia or Level 1, 120 Upper Heidelberg Road Ivanhoe VIC 3079

Terry McMullan

subscriPtion enquiries: www.insurancenews.com.au/subscribe Email: admin@insurancenews.com.au contributions: We welcome all material that is relevant to the Australasian and regional risk insurance industry, including all aspects of risk management. Please contact the Editor, +61 3 9499 5538. Printing: Printgraphics, 14 Hardner Road, Mt Waverley VIC 3149, Australia www.insurancenews.com.au/magazine

A McMullan Conway production

ISSN 1837-4972

8

Our magazine’s cover points to four interviews with four industry leaders who have leapt on the innovation bandwagon. Michael Cameron is the man running Suncorp, a company building new approaches that take advantage of its diversity. Ben Bessell manages IAG’s commercial insurance division, which is heading in some revolutionary directions that promise to transform mindsets we’ve taken for granted. Scott Leney at Marsh is the very model of a modern business leader, embracing diversity and challenging stereotypes. And Ross Hayward is a premium funder who wants to collaborate with brokers to fund more than premiums. The quotes on our somewhat wordy cover make the point that these four interviews have been conducted face-to-face. You may ask, so what? Journalists routinely use the phone for short-form interviews for our online bulletins and comments in articles. But for long-form Insurance News magazine interviews such as the four listed above, face-to-face is by far the best way to go. We see an increasing number of companies – mostly foreignowned – insisting on journalists sending them questions that they then answer by email. The answers are often composed in their entirety – or at the very least heavily edited – by the company’s media and/or legal advisers. It’s not an interview, it’s a dry and dull piece of internal censorship that strips the subject of any personality or insight. People don’t actually speak in cautious sentences replete with sub-clauses. We’ve long noted that our competitors are happy to publish interviews according to these rules, but we won’t. Over the years we have declined a number of high-profile interviews where the controls imposed have been too onerous. Face-to-face interviews encourage conversation and even debate between subject and interviewer. They allow the subject to express concepts and explain actions in their own way. In the hands of a good journalist, the interviewee’s personality shines through. We’ve found through hundreds of interviews that the best subjects are people so senior they know what they want to say and have the confidence to say it; and self-made leaders who want to share their enthusiasm and vision. As the great 19th century writer Oliver Wendell Holmes noted, “it is the province of knowledge to speak and it is the privilege of wisdom to listen”. Or, in this case, read. You’ll find the four interviewees listed above can give you valuable insights into the many intriguing directions general insurance is heading.

insuranceNEWS

June/July 2016

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. Printed on FSC paper stock using vegetable based inks by a printer with ISO14001 Environmental Management System Certification.


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The monsters that worry CEOs

A global survey reveals insurers’ top worries range from technology to competition

10

THE ONLY BUSINESS SECTOR UNDERgoing a greater level of disruption than the global insurance industry is entertainment and media. Everywhere you look in insurance – regulation, technology, consumer preferences and market competition – change is happening at an accelerating rate. One might scoff at the comparison with entertainment and media, but PricewaterhouseCoopers (PWC) Partner Rod Balding is deadly serious. Technology has already torn the heart out of newspapers, and it’s forcing massive change on the entertainment industry. Mr Balding says the disruption facing entertainment and media “should act as a warning to insurers to proactively review their future strategy and seek to clearly differentiate themselves from the competition”. It’s not a challenge Australian insurers are facing in isolation. Insights from 101 insurance company chief executives around the world, including Australia, highlighted insuranceNEWS

June/July 2016

in PWC’s 19th Annual Global CEO Survey, shows the scale of the upheaval. The survey was based on interviews with 1409 chief executives in 83 countries late last year and early this year. PWC has separated out the issues of particular relevance to the insurance industry to provide the material for this report. About 66% of the 101 insurance industry chief executives, which include 15 from the Asia-Pacific region, are “extremely concerned” about the impact of greater regulatory supervision. The findings come as governments and prudential watchdogs, particularly in Europe and the United States, seek to introduce tighter capital requirements on insurers even as their businesses comes under greater scrutiny. “The insurance industry is grappling with rapid technological change, changing consumer preferences and growing competition from new market entrants looking to disrupt the status quo,” Mr Balding says.


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“It’s also an industry under intense scrutiny by regulators, policymakers and the broader community. Insurers need to embrace new ways of working, rethink their approach to consumer engagement and explore innovative approaches to new products and services. “It’s a challenging and exciting time to be an insurer.” Some insurance leaders might disagree with that bit about excitement. Because the PWC report offers little to get too up about. “Insurers have been directly impacted by significant regulatory developments that have played out overseas, not only in prudential regulation, but also conduct and data protection regulation,” it says. “This global experience, along with the recent media attention and regulator scrutiny over the life insurance and financial advice industries, will play an important role in how the industry will evolve in an Australian and international context.

“Pivotal to this is recognising the shift in social and regulatory expectations, from caveat emptor to financial institutions taking responsibility for the products they sell.” The speed of technological change is ranked by insurers as the second biggest threat (39%), followed by changing consumer spending and behaviour (24%) and new market entrants (22%). The sluggish state of the global economy is fuelling those concerns further, with just 28% of insurance chief executives of the view that the economic landscape will improve in the coming year, down from 40% in last year’s survey. Only 38% of them are “very confident” when asked to grade their ability to increase revenues, compared with 44% last year. Consequently, 70% of insurance chief executives are planning some form of costcutting over the next 12 months to manage the potential impact on price and margin pressures. insuranceNEWS

June/July 2016

“Cost is a key part of the global CEO agenda because of things like long-term low interest rates and a low growth environment,” PWC Australian Insurance Leader Scott Fergusson tells Insurance News. “Consequently every chief executive needs to be conscious of their costs, but we are seeing that cost focus being executed in conjunction with a productivity focus – because the simple cost reduction program has already taken the lower-hanging fruit.” The chief executives say technology is most likely to transform stakeholder expectations over the next five years. Telematic sensors, data analytics and other sources of digital insight and connectivity are paving the way for real-time risk evaluation and pricing, and continuous customer engagement. The new generation of analytics can not only enable businesses to anticipate what will happen (predictive analytics), but also shape outcomes such as reduced accident rates or 11


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Q: How concerned are you about the potential threat to your growth prospects from the following? CEOs stating “extremely concerned” Entertainment and media

43%

Insurance

66%

Banking and capital markets

57%

Healthcare

54%

Asset management

50%

47%

42% 39%

24%

36%

25%

31% 24%

22%

17% 20%

22% 19%

20% 14%

Combined “significantly” and “somewhat concerned” ratings for insurance are: Over-regulation 94%, speed of technology change 69%, shift in consumer spending and behaviour 64%, new market entrants 65% Over-regulation Speed of technological change Shift in consumer spending and behaviour New market entrants

The struggle to find top talent

The availability of suitable talent – and the battle to recruit the best possible people – remains an insurance industry preoccupation.

Some 71% of the 101 insurance chief executives interviewed for the PWC survey see the limited availability of key skills as a threat to growth. That’s the same number as last year, suggesting progress in this area remains challenging. Nevertheless, the report’s compilers are surprised by the “muted” response, “given the scale of the skills shortages and the ageing of much of the insurance workforce”. Less than a quarter of the insurance chief executives surveyed say they are changing the way they manage talent to ensure they have the skills and adaptability they need. “It is becoming increasingly important for employers to ensure their organisational values and objectives match the expectations of the younger generation entering the workforce,” PWC says. Nearly 60% of insurance chief executives say top recruits “prefer to work for organisations with social values aligned to their own”, while 36% say this is much more important than competitive compensation.

12

“The continuing rise of social media has also played a role in making it easier for consumers to compare and contrast providers of similar services...” improved health and well-being (prescriptive analytics). “This more proactive and preventative approach marks a change in purpose for insurers, which will deliver considerable social as well as financial value,” the report says. “In fact, 25% of insurance chief executives say they have changed their organisational purpose in the past three years to take account of their broader impact on society.” Technology is also creating new benchmarks for customer experience, response and cost, and making it easier for customers to judge and compare one business against another within and outside of the insurance industry. “The continuing rise of social media has also played a role in making it easier for consumers to compare and contrast providers of similar services and share their experiences in real time and en masse.” And it highlights a problem that’s uniinsuranceNEWS

June/July 2016

versal in many long-established insurance companies – slow and unwieldy legacy systems, products and traditional, inflexible ways of working. The report warns that keeping pace with developments in technology can be hampered by such factors. Many new competitive benchmarks are being set by so-called fintech entrants, which are constantly probing the business model of established players for gaps in their offering and weak points in the marketplace. “The success of many of these disruptors is based on applying digital insights to sharpen their understanding of the needs of the consumer, and utilising cost-efficient digital distribution to undercut incumbent competitors,” PWC says. “Market changes can and do happen quickly. Insurers are all too aware that a business that has taken 50 years to build can today become undone in as many weeks.”


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Cyber: a risk and an opportunity

The PWC report says insurers are in many ways “at the frontline of the more volatile world we are currently living in, with uncertainty making it harder to manage exposure to risk”. “This instability also opens up new opportunities as businesses will look to the industry to provide the risk analysis, advice and protective coverage they need to navigate through this difficult landscape.” Nearly 80% of insurance chief executives see cyber threats as a barrier to growth, more than their counterparts in banking and capital markets. This potential risk has an even heightened level of focus in Australia, with cyber risk being the number one threat (number four globally) identified by Australian respondents to the 2015 PWC Insurance Banana Skins survey. Insurers hold considerable amounts of sensitive client data, so effective safeguards are essential in maintaining trust in the industry. This is also an area of heightened focus by the corporate regulators. Cyber risk could expose insurers to significant losses, both through specific cyber coverage and their technology, errors and omissions, and other existing business lines. It also brings with it significant reputational risk. On the flipside, PWC says cyber risk also offers a huge potential growth market – even if, in the absence of actuarial data many insurers are forced to rely on blanket policy restrictions to control exposures. But this approach typically reduces the value of coverage and impedes market growth. PWC says the key to market development is a more active partnership between insurers and clients, with a more effective and regularly updated threat assessment at its heart. “The most competitive insurers will make sure that their own cyber safeguards are in line with market leading practice, as well as developing the expertise they need to advise clients.”

14

“Market changes can and do happen quickly. Insurers are all too aware that a business that has taken 50 years to build can today become undone in as many weeks.” The insurance leaders say keeping customers satisfied is becoming difficult, with 31% listing client unwillingness to pay as a barrier to meeting expectations. “Businesses must balance both the interests of policyholders and the market’s expectations around price,” the report says. About 48% cite additional business cost as the biggest obstacle in responding to wider stakeholder expectations, followed closely by unclear or inconsistent standards or regulations (46%). In Australia at least, the problem of inconsistent regulations, official inquiries, ever-changing legislation and an avalanche of critical reports over the past few years has caused massive problems for the life insurance industry – a curse the general insurance industry has generally been successful in staying detached from. A PWC survey of more than 2000 Australians in April revealed only 48% insuranceNEWS

June/July 2016

believe life insurance would be there for them in their “time of need”, although 78% viewed having cover as important. “Based on the results... it is clear that the seeds of customer dissatisfaction with the life insurance industry are sown well before an actual claim is made,” PWC says. “Consumers are looking for simplicity in insurance policy terms and benefits, with increased transparency particularly in the claims process.” For general insurers, the survey of chief executives provides a less confusing and more positive outlook, saying that overall there are opportunities ahead for insurers who adopt the right mindset to adapt to the changing landscape. The survey report says insurers should consider prioritising customer-centricity while embracing disruption and broadening the talent base. “Customers have ever greater capacity to compare and switch providers, and regulators


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T S I L T A I H C G I E S P S IN R U P

P U G N I E, V R AG ITY E S ER IL S I V IAB Y O T L I C L D T A N S T I I A L P IA SR S O EC R I H A , SP FO R SU UILT ING R B E E AT S C PO

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ENTERTAINERS/PERFORMERS EIS TEDDFODS EISTEDDFODS LEISURE AND TTOURISM OURISM BOUTIQUE BREWERIES/BREWERIES WINERIES SHORT TERM ACCOMMODATION TTOUR OUR OPERAT ORS OPERATORS SHORT PERIOD EVENTS BRO THELS BROTHELS BED & BREAKFAS BREAKFASTT

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Q: Which of the following barriers, if any, is your organisation encountering when responding to wider stakeholder expectations? Additional costs to doing business

48%

Unclear or inconsistent standards or regulations

46%

Customers’ unwillingness to pay

31%

Conflict between stakeholder interests and financial performance expectations

30%

Lack of the right capabilities

27%

Insufficient information about wider stakeholder expectations Inability to effectively execute on our strategy

27%

Misalignment between stakeholder interests and business strategy

18%

Misaligned performance incentives

18%

Misaligned between stakeholder expectations and employee values No barriers

17%

50% Only

of insurance CEOs cite personal data sercurity as a priority for strengthening engagement, even though customers and other stakeholders will only share data if they trust the recipient to use it safely and responsibly 16

23%

3%

“To drive true customer engagement and loyalty, insurers will need to look beyond products, underwriting and rates.” are focusing more closely on the appropriateness of products, the value they deliver and the scope of coverage provided,” PWC says. “To drive true customer engagement and loyalty, insurers will need to look beyond products, underwriting and rates. An outside-in view allows insurers to examine a need from the customer’s point of view and then determine how to address it in order to help ensure both parties achieve the outcomes they want.” As to the feared market disruptors like fintech companies, the report points out the barriers to market entry have been reduced, but the disruptor could just as easily be “a brand new… business model that takes the insurance industry by surprise” as a new operator. The report points out that the drive to capture much greater levels of data is vital, because it increases the speed of servicing and lowers the cost to market. “It also opens the way for improved decision-making, greater insuranceNEWS

June/July 2016

precision, customisation and adaptation. “The insurers out in front are making better use of the information that is already available by rationalising data feeds, improving reliability, and speeding up communication, as well as capturing new types of data and supplementing it with appropriate partner and external data sources. “Partnering with banks, retailers or affinity groups to gain information on behaviour, interests and spending patterns could open the way to the development of more tailored products and features.” PWC says there are clear challenges ahead for the insurance industry, “but with challenge [comes] great opportunity”. “To seize the future, insurers must look beyond the traditional boundaries of insurance business to embrace new ways of working, new ways of interacting with customers and whole new possibilities in what * business can deliver.”


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Now for something completely different Suncorp’s new chief sees the group’s insurance and banking diversity as the key to a new way forward By Terry McMullan

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THE SPEED OF CHANGE sweeping through the insurance industry doesn’t give chief executives the luxury of sitting back and slowly restructuring their companies. The pace Suncorp’s Michael Cameron has set since moving into the top executive seat in October last year illustrates that fact all too clearly. Mr Cameron had been on the Suncorp board for four years when he was appointed Managing Director and Group Chief Executive to replace the enigmatic Patrick Snowball, an Englishman with an impeccable background in insurance management. Just four months after taking over, Mr Cameron, whose professional background embraces many areas of financial services, announced a complete restructure of Suncorp, introducing a sharper focus for his new leadership team. [See panel page 22] Suncorp is unique in the Australian market. It has a wide financial services base, embracing general insurance, life insurance, superannuation and banking. Compared with its arch-rival IAG, which deals only in general insurance, Suncorp is a complex financial services conglomerate. While Mr Snowball was content to grow within the confines of the “one company, many brands” culture, Mr Cameron is intent on breaking down the barriers between each of the brands and building a more unified approach to the customer. “I think everyone’s familiar with the brand strategy, and being on the board I was very comfortable with it,” Mr Cameron tells Insurance News. “We have had a lot of success and created a lot of value

looking at ‘one company, many brands’ from the perspective of the culture, and the costs, and the capital. “But from a customer perspective to date we’ve still been operating as many companies. So if you’ve got a relationship with the organisation you tend to have multiple relationships. “This latest change in the operating model has really been about working towards achieving ‘one company, many brands’ from a customer perspective as well. It’s a way of thinking of our customers as group customers, as opposed to life insurance customers or bank customers or general insurance customers.” It’s a bold move, and one that’s very different from last December’s IAG restructure. While both strategies are based on the need to get closer to the customer – and retain them for longer – Suncorp isn’t emphasising the advantages that technology provides in selling to 21st century customers. Far from being hamstrung by the complexities of dealing in a wide variety of financial services, Mr Cameron is intent on taking advantage of it. In a nutshell, the restructure is focused on providing value that over-rides the consideration of price. The company will also open up new avenues for selling Suncorp’s services, with bank branches becoming the equivalent of a one-stop shop. And no matter how a customer accesses a Suncorp service, they will be able to move across the whole range of services it offers. “[Customers] should be able to interact with us and have a single relationship with us as an organisation,” Mr Cameron tells Insurance News. He says the restructure insuranceNEWS

eliminates the closed focus of the former strategy under which there were “five different strands of activity, all trying to provide a better service to the same customer”. “So a single customer function made a lot of sense. We now have a single responsibility for all our relationship around distribution and platforms. “Think about insurance brokers, for instance, who are very important to our business. This is an opportunity to really try to consolidate that relationship [through] a single platform, and for our intermediaries that interact with us in the future to work with one area as opposed to four or five different functions. “And, of course, the customer is a winner as well.” The concept of steering customers and intermediaries into more specialised channels has caused some confusion for Suncorp employees and investment analysts. At first sight Mr Cameron’s strategy hints at allfinanz or bancassurance, unsuccessful banking concepts that flared briefly in the late 1980s and early 1990s, taking some distinguished business careers with them. Mr Cameron is careful to emphasise this restructure isn’t about going back in time. “I think the biggest mistake is to think about what we’re doing as either bancassurance or allfinanz. That is all about cross-selling, where you might walk into a bank branch to get a bank cheque and someone walks up and says, can I talk to you about life insurance. “It just doesn’t work. I think both bancassurance and allfinanz, which is slightly different, haven’t worked here and haven’t worked anywhere else in the world. That’s because the June/July 2016

Michael Cameron has more than 30 years' experience in finance and business. A chartered accountant, he was most recently Chief Executive and Managing Director of the GPT Group. His past experience also includes roles at Barclays Bank and 10 years with Lend Lease, where he held a number of senior positions including group chief accountant and chief financial officer for MLC. Following the acquisition of MLC by the National Australia Bank, Mr Cameron rose to become chief operating officer of the bank’s wealth management division. He joined the Commonwealth Bank in 2002, became group chief financial officer the following year and group executive of the retail bank division in 2006. In 2007 he joined St George Bank as chief financial officer, before moving to GPT in 2008.

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“What we want to provide is a situation where our customers can interact with us, either through our stores, online, via the telephone, or through a broker, and get access to all our brands, all of our products and all of our services.” concept of cross-sell is really driven forward by the company, not by meeting the customer’s needs. “We are definitely not going down the path of trying to re-establish the model of crossselling.” Instead, Suncorp is trying to create “a platform or marketplace” where customers can access all of the group’s products and services – “and even products and services from other organisations”. “The big difference between this concept and those that have tried and failed in the past is simple enough – it’s the customer who makes the choice.” It’s an important distinction. Mr Cameron has the advantage of technologies that didn’t exist 10 years ago, and that’s bolstered by a solid focus on the customer rather than just the bottom line. He gives two examples of this more subtle strategic thinking. He says most iPhone users have an average of 27 apps on their device. “How did those apps get on there? Did you buy them, did someone sell them to you, was it part of some sort of cross-sell? Of course, the answer’s no. “Typically you get those because you’re exploring the internet or your friends say there’s a good app for fitness, 20

insuranceNEWS

or losing weight, or whatever. “What happens is you sort of discover apps and you buy them. So it’s more like crossbuying than cross-selling. “I live just near a little supermarket, and my wife always goes in to buy milk and she comes out with bread, juice and newspapers as well. Now, no-one sells her those things. She just walks in there and she’s got a bunch of needs and they’re met. “So for us, what we want to provide is a situation where our customers can interact with us, either through our stores, online, via the telephone, or through a broker, and get access to all our brands, all of our products and all of our services. “That’s a real step forward for making what the brokers have to offer to the ultimate customer significantly better than what we do today and what the industry does today.” He says the new approach is advantageous because Suncorp sells many different types of “commodity products”. “Think about home loans or car insurance. People shop around and they get the cheapest price, so we reduce what’s called ‘price value’. “The opportunity is to provide something that I think of as ‘non-price value’, which is something other than price.” June/July 2016

Mr Cameron gives the example of specialty car insurer Shannons, one of Suncorp’s “many brands”. “Shannons has one of the highest satisfaction and customer retention levels, but it’s not the cheapest product. People think of themselves as members of a Shannons ‘club’ – they get all of these other things like access to auctions for free. “They can talk to other people with classic car interest, and so on. “So when someone comes along and says, look, we can provide cheaper insurance for you, typically the Shannons customer will say ‘no I’m not interested in moving [insurers] – I’m happy’. That’s what’s called non-price value. “Now we aim to do that right across the board.” He says Suncorp bank branches will over time become Suncorp stores, providing access to all the group’s products and services. “So it will be a major step forward from where we are today, and different to what I think anyone else in the industry is doing.” The timetable for making the transition to a different approach is “a continuous process of upgrades, new versions and improvement”. “Typically what we’ve done in the past is to have a big


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Too many brands?

Mr Cameron is reluctant to discuss whether Suncorp might be better off having fewer brands under the new strategy, but agrees that having 14 different brands with some inevitable overlaps is “quite expensive”. “There needs to be differentiation. With things like Apia and Shannons, people know clearly what they are. “Some of the other brands we have are very similar and they almost compete against [each other]. But our brands are very valuable as well.” To an Insurance News comment that market rumour suggests the GIO brand “may have had its day”, Mr Cameron says GIO is “still a very viable brand, highly recognised, has a lot of goodwill attached to it and it’s a valuable asset”. “But it’s a work in progress at the moment. It would be a bold step to just close a brand down tomorrow, given the value.”

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“For an organisation like Suncorp it’s not so much coming up with the latest technology or the best invention, it’s really about taking the things that are out there and making them work for you.” investment program with a couple of hundred million dollars to deliver benefits down the track in many years’ time. “This is a program of activity that really starts immediately and we’ll continue to invest, but it’s more business as usual. Each month, each week, each quarter, each year, you’ll see components of this being rolled out and a steady improvement on the sorts of things that we can do, rather than a big launch on a particular day.” He agrees such a dramatic change in structure and strategy is only possible because technology is providing big opportunities. “But my philosophy is about creating value for our customers – and I think of our brokers as customers as well. If we can create value for their customers, then the rest of it takes cares of itself. “So all of the concerns that are bubbling-up around misselling, about culture… if you’re actually creating value for the customer the rest of it sort of takes care of itself. “It does improve retention, it does improve the breadth and depth of the relationship you have with your broker or with your ultimate customer. If you’re creating value, it overcomes a whole bunch of concerns. insuranceNEWS

“So our philosophy is really to create a situation where we can create value for our customers, and that’s where the focus will be. As for the opportunities of new technological developments, Mr Cameron foresees Suncorp providing tools and processes at no cost to brokers and customers, “and that will really just mesh the relationship that you have with the various parties”. “And technology also allows us to provide products and services from other organisations as well as our own through our platforms.” Mr Cameron admits to be being an early adopter of technology – “I had a 3D printer five or six years ago, and I’m on to my second drone, and so I do like technology” – but his emphasis in this program is about how technology is used. “The example I always give is McDonald’s. There’s nothing exciting or revolutionary about a children’s playground [and] there’s nothing exciting about a hamburger. But they put the two together and created billions of dollars of value around the world. “So for an organisation like Suncorp it’s not so much coming up with the latest technology or the best invention, it’s really about taking the things that are out there and making them work for you.” June/July 2016

He points to the introduction in May of Trov, a mobile app aimed at tackling contents underinsurance, as a good example. Trov – pronounced trove – was developed by a US-based technology company. It allows users to create and store a digital record of their purchases, tracking the value of their possessions and keeping their insurance up to date. “It’s something that’s going to be of benefit to our customers,” he tells Insurance News. “People, particularly younger people out there, are not insured. People that are renting think, well it’s not worth it to insure all of my assets, or all of my contents in my home for all of the year. “But the ability to be able to turn it on or off, and to only insure certain items, will open up a whole new set of needs that will be met. It’s very exciting.” He says being able to insure only certain items may seem like “some revolutionary idea” in insurance, “but it’s just taking ordinary concepts and applying them on a daily basis. “It doesn’t have to be anything that’s going to revolutionise things, it’s just going to simply be us thinking about things from the customer’s perspective.” Suncorp continues to invest a couple of hundred million


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“We absolutely do worry about competition, but I’m less worried about what others are doing and I’m more worried about achieving our objective of creating that value for our customers.” dollars a year in programs of activity, and Mr Cameron sees that as an ongoing requirement. “I think for any organisation that wants to remain relevant it’s just an ongoing cost that you have to spend money on. “It’s really about prioritisation and choice, making sure that you’re investing in the right areas. That’s no different to any other business.” He says the $US5 million investment in Trov “wasn’t made to double or triple our investment. We invested in that to participate in the development of further products, and to work on our relationship with the Trov people, which is fantastic. “There’s people out there that like to invest in fintech in the hope of buying into a bit of a get-rich scheme, but it’s a one-in-a-thousand sort of opportunity. Being able to pick the one that’s going to make all the money is pretty rare. “And that’s not our business. We’re not a fintech investor from that perspective.” Nevertheless, with technological developments and easy access to capital attracting new levels of competition into the Australian market, Suncorp has little option to be anything other than nimble and focused on continuous development within its new structure. And 24

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Suncorp won't be taking its eyes off the competition – wherever it comes from. “If we didn’t worry about competition we’d be the only company in the world that didn’t,” Mr Cameron says. “We absolutely do worry about competition, but I’m less worried about what others are doing and I’m more worried about achieving our objective of creating that value for our customers. “I think if we’re able to do that and have deeper broader relationships, then we’ll be in good shape.” Growth will come organically, he says. While he won’t say never, he believes the new strategy is the key to Suncorp’s future prosperity. “We’re really well placed, and we don’t have to do any M&A to achieve our strategy. “We don’t need any more capability because we’ve already got a broad range of skills, so that’s a good position to be in,” he says. “A lot of M&A activity happens because strategically a company has nowhere to go. We definitely have somewhere to go, we’ve got a great strategy and great growth and the right trajectory going forward.” Despite calls over the past five or so years from investment analysts for Suncorp to sell off its bank, Mr Cameron sees the company’s multi-line position June/July 2016

as a plus. “No other organisation has the same structure, so we do have the best chance of being a kind of one-stop shop for a customer or a broker. “We can offer a wide range of products and services, where if I think about it from an insurance perspective, we tend to compete with monoline insurance businesses, and in other parts of our group, we compete with businesses that focus on life insurance and banking. “So we are very uniquely placed being able to provide a wide range of products and services with brands that are already highly regarded and respected both by our brokers and our ultimate customer. “I spent ten years working for Lend Lease, and I was a huge advocate of the Dick Dusseldorp approach of creating shared value. It’s possible to have a model where your customers win, your staff win, and your shareholders win as well. “I think without that situation, if you’re not communityfocused in the way that you do things, you’ll have a volatile business that comes and goes. “Those businesses that have been around for a long time really focus on creating value and sharing that value and getting that formula right. That’s where Suncorp needs to be.” *


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INMAG JUN 16_page layouts 9/06/2016 2:19 pm Page 26

THE MAD, BAD, TOTALLY WEIRD AND THE GREAT

WINLEY INSURANCE, THE PERTH-BASED authorised representative company whose investors emptied its broker trust fund and skipped town with the proceeds, is dead. But like smoke after a bushfire, the smell lingers. For those who came in late, let’s recap the Winley story to date. You will find this tale weaving all over the place, from Perth to Los Angeles. Its central figures are a reclusive American couple who invested in building a company and then stole millions of dollars from it. But it’s the denouement of this saga, which you’ll find in part two of this article, that you’re going to have a tough time believing. It involves what was either an altruistic scheme for a worthy cause that went wrong or a shameless global scam intended to raise billions of dollars. Winley was the name of an authorised representative (AR) group that operated in Perth from about 2010. 26

It’s one of many such companies operating in Australia. AR groups operate under a single financial services licence. They centralise and deal with the regulatory and business complexities for a number of intermediaries (its authorised representatives) who bring in the money through premiums collected from clients. The money can be held in a trust fund for 90 days before being passed on to the insurers. The company charges its ARs fees and generally makes things work. Winley had about 47 intermediaries working for it. Most were in Western Australia and most were quite small operators. The company’s managing director was Jeff Bailey, who operates a broking business north of Perth. He was also a Winley AR. The company was set up in July 2009 using investment capital provided by Chandanie and Steve Godwin, two US citiinsuranceNEWS

June/July 2016

zens who had made their home in Perth. (Winley took its name from the last syllables of the Godwin and Bailey surnames.) Chandanie and Steve Godwin are, by any measure, a remarkable couple. In an era when practically every person in the developed world is online in some form or other, they’re impossible to find. There are a couple of small and unprintable pictures of Ms Godwin in groups at Perth insurance events. But of her husband there is no sign. Online, Steve Godwin does not exist. Despite his obvious determination to maintain a low profile, Steve Godwin’s unusual appearance and manner in the closely knit Perth insurance community could hardly have failed to attract attention. His normal garb for business meetings was jeans, a hoodie and a baseball cap. He sometimes sported several mobile phones. People


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INCREDIBLE AND STORY OF WINLEY DEATH CHALLENGE By Terry McMullan

who met him have described him to Insurance News as silent to the point of reticence. He is portrayed by Perth insurance people and Californians alike as skinny, pale and withdrawn. “Shut off”, one Perth source tells Insurance News. “He walked around most of the time with a hoodie on and talking to no-one,” a Los Angeles source says. Unless, it seems, Mr Godwin was talking about himself. In that he was positively voluble, according to some Perth-based insurance professionals. He was proud of his achievements, which he said included owning several multi-million dollar companies in the US. But he preferred to leave the talking to his wife, who is described by sources who met the couple as warm, engaging and friendly. A little more is known about Ms Godwin, who is believed to be of Sri Lankan origin. She worked at Aon in Perth for some

time before setting up a company in 2009 called Insurance Premium Reduction Specialists. She was its only employee. At the same time she and Steve Godwin were setting up Winley Insurance from a twostorey home in the suburb of Lake Munger, closer to the central business district. Ms Godwin is listed as an AR of Winley. Insurance News does not know if the capital used to set up Winley was obtained from business loans or from the Godwins’ own finances. Jeff Bailey was their partner in the enterprise, and Winley’s managing director. He was listed as the company’s sole director. Perhaps surprisingly, neither of the Godwins was listed as a director, although they obviously had access to Winley’s broker trust fund. Mr Bailey declined or ignored Insurance News’ requests to speak to him. During its short existence Winley’s only distinguishing insuranceNEWS

June/July 2016

feature seems to have been that its management fees were far lower than those of its counterparts. It offered many of its facilities free of charge to its ARs. Its advertising and its website never used names, just phone numbers. It had no discernible management structure and carried no information about its directors. Yet insurers seemed happy enough with Winley and did considerable business with it. The first real sign that something was going wrong at Winley would have been obvious only to the regulator, the Australian Securities and Investments Commission (ASIC). ASIC says Winley failed to lodge financial statements, auditor reports and auditor opinions over consecutive years, “in breach of its legal obligations and licence conditions and despite repeated demands to comply”. 27


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The company continued to operate through the period of the breaches – understood to be the past two years – with insurers and ARs passing millions of dollars through its accounts apparently unaware that anything was wrong. Then, at some stage in the months before the collapse, Mr Bailey allegedly became aware the Godwins were taking funds from the broker trust account. A former Winley AR, who provided information to Insurance News on condition his name was not used, says he had a tense discussion with Mr Bailey shortly after the company collapsed. He says Mr Bailey told him he had confronted the Godwins about the withdrawal of funds. “They had advised that new investors were coming in and monies would be replaced.” The informant says a shortfall in funds “caused an issue for non-payment of insurers in early 2016”. However, he alleges Winley continued to pay commission to its ARs at that time, “therefore avoiding suspicion from the majority of us”. Apparently no insurer dug deeper to see why Winley was unable to pay its bills. Another informant says he and others were told sometime in early April that the company was going to have to shut up shop and that it had a serious shortfall in funds. It’s not known if the reason was spelled out. By that time, Chandanie and Steve 28

Godwin had left Perth, apparently bound for the United States. An email dated April 14 from Mr Bailey to all Winley ARs warns them to stop processing business on Winley systems and to expedite moving their businesses to other AR groups. “There are no funds to pay insurers and the ones that have paid in the last few days we can not allocate commissions to you as these funds will be returned to the clients. “I understand that some of you are very pissed off and you have every right to be, I’m not the person responsible for misappropriating the funds I’m simply trying to mop up the best way I can given the situation that has been left behind from the other partners at Winley. “I to [sic] personally have commission owed to me that I will not see also, so I’m in the same position as you guys are.” One informant says he was not aware of the reason for the need to find a new AR group until he heard the details “from other parties… on April 4.” This was the date insuranceNEWS.com.au revealed the Winley collapse – more than a week after we first became aware it was in serious trouble. Quite a lot happened fairly quickly after that. It became obvious within hours of publishing that most insurers and underwriting agencies owed large amounts by Winley had not been not aware of the collapse. We know of only one insurer having the insuranceNEWS

  

information in advance of our publication, and that was only by three days. Not only were the insurers in the dark, so was the regulator. It eventually investigated, but it had missed all the red flags Winley had been flying for two years. Mr Bailey informed ASIC on April 18 he had resigned as a director of Winley, and on May 12 the regulator cancelled the company’s licence. In a statement attributed to ASIC Deputy Chairman Peter Kell but undoubtedly written by someone down the corridor, the regulator managed to sound like someone who’d misread the invitation and turned up at the party a month late. “Be clear, ASIC will act on failures to lodge financial statements, resulting in the suspension or cancellation of the AFS licence.” It all too obviously hadn’t acted in time to avert Winley’s collapse. By the time ASIC got around to issuing threats, the company was little more than a shell. Its ARs, including Mr Bailey, had found other groups to work with, and insurers and underwriting agencies were getting used to the knowledge that their money – estimated to be more than $7 million – was gone. Chandanie and Steve Godwin, of course, were nowhere to be seen, leaving no trail. And there the Winley story unhappily ended. Until, that is, Insurance News started receiving some intriguing emails from California.


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PART TWO DEATH DIVE: THE PLOT THICKENS A FEW WEEKS AFTER INSURANCE NEWS announced the collapse of Winley Insurance and the disappearance of its mysterious investors with the proceeds of the broker trust fund, an email arrived from a person in Los Angeles. This person had been employed in the US for much of 2015 on a top secret project being organised by a mysterious couple named… you guessed it, Steve and Chandanie Godwin. Searching the internet for any information on his former employers, he had found nothing at all until Google started pulling up articles from insuranceNEWS.com.au. Amazed and a bit appalled at his former employers’ activities in faraway Perth, he and (eventually) others opened up with what they knew about the Godwins. Through seven months of last year they had been working on a project so breathtakingly bold in its scope, originality and sheer audacity you couldn’t at first take it all in. They had come up with a death-defying stunt that would attract a global online audience and had the potential to raise billions of dollars. Called Death Dive, the stunt involved an unnamed person jumping out of an aircraft 30

in the stratosphere without oxygen or a parachute and landing in shark-infested waters. Death Challenge Inc, “a new business venture that practises commercially sustainable philanthropy”, was registered in the US in February last year. In a media release published globally on December 15, Death Challenge announced March 25, 2016 – Good Friday – as “the official date of the most spectacular and perilous event ever to be broadcast live”. The event was timed to take place in the same week as World Water Day. The intention was to “stop death by dirty water”. More than 2 million children die each year from not having access to clean water. So shortly before Winley ARs in Perth would learn all was not good with their company, their erstwhile investors would be overseeing a stunt involving a super-athlete who would jump out of an aircraft 15.3km high without the aid of a pressure suit, oxygen or parachute. If he survived – which seemed highly unlikely – he would end his descent in sharkfilled waters. Known only as “The Challenger”, the anonymous superhero would wear a mask and would not be identified. The clean water cause is “a cause close to The Challenger’s heart”, according to the publicity blurb. “He suffered from a nearfatal illness after drinking dirty water during his travels.” Ending the curse of dirty water globally insuranceNEWS

  

would cost lots of money, of course, but it’s certainly a worthy and appealing cause. The jump was to be streamed live to a global pay-per-view audience, with all viewers eligible to vote whether or not to “save the Challenger” by offering so-called lifelines. The online audience and others who would see the dive from the aircraft and ships at the dive site would buy votes before and during the jump, saying yes or no to three possible “lifelines”. If you haven’t suspended belief so far, it might be a good idea to let it go now. Think Batman or something. The first “lifeline” would be offered at about 7000 metres, when a circling aircraft was to toss out a parachute, which The Challenger would “try to chase down and put on under near-impossible conditions”. The second “lifeline” would be offered at about 6000 metres, when a so-called rescue skydiver would pursue The Challenger “through the sky in an attempt to complete the first-ever mid-air hook-up without any safety equipment”. At 4500 metres an aircraft flying across the line of the by-now rapidly descending and increasingly worried diver would let out a towrope. That’s right, a towrope. The Challenger would “try to grab and use [the rope] to sky-surf into the water”. This scenario was written by an international public relations firm based in Ireland, by the way. If he failed to grab the towrope, The Challenger would then have the waiting


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sharks to deal with, although how much would be left of a human hitting water at terminal velocity was not mentioned. The promotional blurb, written in an excited-but-deadpan tone, says The Challenger is “one of the world's most experienced extreme athletes, having completed just under 20,000 skydives, more than 5000 high dives and thousands of hours of cagefree dives with great white sharks over the past 30 years”. The Challenger – who was tipped to be able to use “multiple extreme disciplines in an attempt to survive a dive more than 260 times higher than the current world record” – is no fool, however. Before he jumped he wanted the financial arrangements lined up. The publicity says no lifelines would be accepted by The Challenger “unless 1 billion votes are purchased globally”. All else having failed, our intrepid birdman would still refuse to grab the towrope for an aerial surf to the water “unless 7.125 billion votes are first secured”. In 2014 Austrian Felix Baumgartner gathered a massive online audience – 8 million on YouTube alone – when he fell 39km to earth from a balloon, albeit in a full spacesuit and with a parachute strapped on. Take a similarly spectacular event, add some real craziness like near-certain extinction and the attraction of “voting” whether The Challenger gets to live or die, and you might be onto something. A stunt of such remarkable originality, 32

bravery and silliness could attract an audience of hundreds of millions, perhaps billions. And as we can assume a vote would have to cost at least a dollar, with people encouraged to spend up big, there’s potentially a lot of money at stake – maybe $7 billion or more. Presumably all that money would have to be delivered upfront and online before the stunt began. And The Challenger’s identity is never revealed. Hey, wait a minute… It all sounds so fanciful, except for the fact the Godwins sank serious money into preparing for the event. As many as 70 people on a daily pay rate of $US250-$US300 were employed for seven months on the project. Working – and in some cases living – in two mansions in California (one is a ninebedroom, seven bathroom monster with an equally huge guesthouse) owned by the Godwins, the staff contracted to build the pre-publicity system say they were concerned about the motives behind the work they were doing. “We thought it might be a money-laundering operation,” one source said. “Maybe the stuff about being altruistic was just an alibi.” Or perhaps not. People in Perth who met the Godwins remarked on their desire to make the world a better place. “They said they wanted to dedicate profits from their businesses to finance worthy causes,” one source said. insuranceNEWS

  

Back in California, a source told Insurance News: “Chandanie and Steve were very, very secretive. Taking pictures of them was absolutely banned. “She was really no-nonsense. She did all the talking. It was a real command and control situation. “Steve would walk around wearing a hoodie. He never talked to anyone. We began to wonder if he was The Challenger.” The source says the Godwins would disappear for long periods during the seven months of his employment. “They’d be back for two months and then they’d be gone again. They lived in one of the houses when they were around.” Models were employed to work on videos promoting the event, and 500 interviews with celebrities were compiled on video. These were to be used to intensify interest. One of those celebrities was Hollywood star Billy Bob Thornton, but “most of them were B-listers”. “The whole thing was crazy. Money was being thrown around like it didn’t matter. We even had personal chefs at each house. “But no one really knew what they were doing. The people at the top were clueless. “This was the most disorganised thing I’ve seen in my life. It was indulgent and senseless.” Part of the California team’s work was to raise interest in the Death Challenge project and attract support money, but our sources say that avenue failed to fire.


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           On December 23 â&#x20AC;&#x201C; shortly after the publicity machine cranked into life â&#x20AC;&#x201C; the Godwins called a halt and disbanded most of the operation. The website disappeared on January 10. Itâ&#x20AC;&#x2122;s still on the net, listed as â&#x20AC;&#x153;under constructionâ&#x20AC;?. Of course, there are a lot of questions surrounding the Godwinsâ&#x20AC;&#x2122; activities in Perth and California. Like, where are they now? Insurance News has told several insurance companies we know the Godwinsâ&#x20AC;&#x2122; address in California. So far only one company has asked us for it. Most seem to think recovering their lost money would just be another loss-maker. Ignoring obvious questions like the existence of the anonymous Challenger, how many millions or billions of dollars could be skimmed off and how gullible people are, there are also questions related to the Godwinsâ&#x20AC;&#x2122; Perth activities

that are more relevant to an insurance industry audience. For example, how a company in a tightly regulated industry like general insurance could fail to submit its annual accounts for two years running without being pinged by the regulator. Or why the Godwins werenâ&#x20AC;&#x2122;t reported to the authorities when they were allegedly detected helping themselves to the trust fund. And how Insurance News, based in the eastern states, could know Perth-based Winley was in deep trouble more than a week before the insurers who lost millions of dollars. The Godwins are long gone. They may never be held to account over the lost millions. And The Challenger, the impossibly brave publicity-shy superman with the bad water experience and amazingly physical  lifestyle? Weâ&#x20AC;&#x2122;ll probably never know. insuranceNEWS

  

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New times call for new understandings IAG’s business insurance chief wants to take brokers along on the journey into a different sort of future By Terry McMullan

BEN BESSELL DOESN’T BEAT ABOUT THE BUSH. LIKE HIS boss Peter Harmer, the Chief Executive of IAG’s new Australian Business Division is very clear on the way the insurance world is changing, and how relationships with partners, particularly brokers, need to change with it. He’s excited by the opportunities presented by the sharp change in direction IAG is taking as it embraces new technologies and new ways of thinking about the customer relationship – new ways that will inevitably lead to upheavals. The Australian Business Division earns gross written premium of more than $3 billion. Mr Bessell is responsible for IAG’s direct and intermediated business insurance channels, which include CGU, WFI and NRMA Business Insurance, as well as the group’s underwriting agencies and authorised representative intermediary group NAS. Mr Bessell describes his new division as “a broad church”. “We’re selling product into the market under 12 different brands,” he tells Insurance News. “We also still distribute personal lines products through our channels, so while we’re called the ‘commercial insurance’ division, we still distribute home and motor through those channels. “The business is quite different from what was CGU, which was pretty much an intermediated business. And CGU is a big company on its own.” Planning for the future of the various commercial arms is a complex business, and Mr Bessell says each channel will be constantly evolving as market sectors change and the group’s aspirations develop. “The CGU brand is the largest brand in my division, but it’s not the only one. All these businesses, including WFI and the agencies, will have to continue to evolve over the next few years – and much more dynamically than they have in the past.” He says the changing dynamics and needs of customers and partners will guide how his various business arms develop, and he’s focused on making the division overall much more agile. “We’re setting ourselves up this way at a group level. Under Peter [Harmer]’s guidance, we want [IAG] to be a more agile business. To do that we need to change some of the structures and the way we’ve set things up.

“We don’t want to be a big slow monolith. We can be more agile. And that’s the same for my division. “So I don’t think things are going to settle down for long periods of time. We’ve got to continue to tweak things, based on the feedback we’re getting from customers.” When IAG acquired the underwriting assets of Wesfarmers in December 2013, few could have envisaged just how complex and time-consuming the integration exercise would be. With that three-year exercise behind him, the 23-year IAG veteran is focused on new challenges. When he came aboard in Hobart in 1993 as a workers’ compensation officer, IAG didn’t exist. The company was little more than a collection of insurance companies united behind a long-time mutual insurance company owned by the Sydney-based National Roads and Motorists’ Association (NRMA). Through boardroom tumult and court actions, demutualisation in 2000 and the float of IAG in 2002, then the acquisition of CGU in 2003 and the string of smaller additions that followed, Mr Bessell has seen the group grow from a ragtag collection of companies into the monolith we know today. The $1.84 billion Wesfarmers underwriting acquisition, which was formalised in February 2014, gave IAG Lumley Insurance, rural specialist WFI and a 10-year underwriting deal with supermarket giant Coles. Working with then-chief executive commercial insurance Peter Harmer, Mr Bessell as chief commercial officer was a key figure in the three-year integration process. IAG switched Mr Harmer into developing the group’s digital strategy in March last year, and Mr Bessell was appointed to act in his place leading the commercial insurance division. When Mr Harmer took over from Mike Wilkins as Group Chief Executive, Mr Bessell’s position was made permanent. Mr Bessell sees a business world that’s changing many of its priorities at a rapid pace, alongside innovations that were simply not on the horizon a few years ago. Cyber insurance, for example. Or the sharing economy and the controversial rise of the Uber ridesharing service.

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Evolving dynamically is vital: IAG Australian Business Division Chief Executive Ben Bessell

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“Let’s look at a niche or at a particular risk, and generate a product. Don’t back the farm on it, but actually see and act on it. I think that’s something that we’re more open to.”

“Cyber’s been something that a lot of people talk about often, and it’s also one of the current challenges. In cyber, people aren’t quite sure what it is they’re wanting insurance for, or what the products actually cover. I think the industry needs to be very clear on things like that. “Other aspects are the impacts of things like the sharing economy, and whether traditional policies respond to renting out your house to someone. Or the Uber example – do normal motor policies respond? “There are those core policies that I think will need to be modified, or even completely new policies devised. That creates an opportunity where the market is generating business through different use of assets. It’s an opportunity for product design as well.” He agrees “to a degree” that the industry has been slow to react to new challenges, mainly because it requires vast amounts of data before it can accurately understand new types of risk. “I think historically we’ve managed change in a fairly incremental way, and that’s probably just been as a result of the market we’ve been in. “We’ve had relatively stable capital markets, and then relatively stable product innovation. So we actually haven’t had to be too dynamic. “As an industry we’ve also created environments and teams that have been somewhat resistant to change or product innovation. But on the flip side, stability and consistency have also been very important for the insurance market, and for our shareholders. “So it’s a case of balancing that stability and security with the need to adapt to the needs of our customers. “We’ve also got to be conscious of not generating products where we might not quite understand what it is we’re insuring.” Nevertheless, Mr Bessell believes the industry can no longer “just sit back and wait for four years of data and then decide to roll out a product”. “I think we do need to be more innovative, and I think there’s opportunity to work with partners in that as well,” he tells Insurance News. “Let’s look at a niche or at a particular risk, and generate a product. Don’t back the farm on it, but actually see and act on it. I think that’s something that we’re more open to.”

The issue of bringing in third parties – sometimes called disruptive innovators – to develop new products is still controversial in the insurance industry. But Mr Bessell says insurers “need to be much more open to partnering with outside organisations, seeing where we might partner with someone, identify what our strengths are, what their strengths are, and merge those benefits together”. “There may also be an example where we could use data and robotics and computer learning to assist with rating algorithms that apply to pricing, or even underwriting decisions. “What we’re seeing generally now is us being more open to sharing information, collaborating more, and designing a product and getting an outcome that isn’t completely built from the ground up. “We’ve got to be conscious of providing value to the end customer in a way that’s most efficient, which doesn’t always mean designing and building everything yourself.” Mr Bessell says owning everything isn’t the aim of the game for IAG. “It’s about identifying your strengths and continuing to learn – but also not forgetting that partnerships, security, relationships, underwriting are still the core of what we do. “That will be the differentiator. But I think there are aspects where we can tap into different markets and learn from them.” He agrees that Big Data – the collection and analysis of information that allows companies to form new understandings about many things, including individual customers, products and risks – is a game-changer for insurers. It’s a technological development that will allow insurers to form new relationships with policyholders, and potentially lead to changes in the way advice and new products are offered. This is being seen by many as a challenge to the insurance broker’s traditional role as the primary source of advice and information to clients. But Mr Bessell says it’s also a challenge for insurers, who will want to use the information they have amassed in the most effective ways. “I look at a sort of complexity spectrum. Low complex business, generally speaking, which is commoditised and high volume, is ripe for automation, using Big Data to push out information to customers to help underwriting decisions and so on. That’s a great area to start.

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Ben Bessell timeline 1993 w Joined CGU in Hobart

2005 w NSW Claims Manager Workers’ Compensation

2007 w NSW State Manager Workers’ Compensation

2009 w General Manager Claims, based in Melbourne 2011 w General Manager Workers’ Compensation

2012 w General Manager Broker and Agency

2014 w Chief Commercial Officer, IAG

2014 w Acting Chief Executive Commercial Insurance 2015 w Chief Executive Australian Business Division

“I don’t necessarily think there needs to be too many people involved in those sorts of transactions. It’s automated, low touch, low complexity. “But as you go up the value chain, there’s a role for collaboration with more parties. So we could, for example, present data that would be observations around certain characteristics of a business, that might actually call out also some areas that require clarification that we can’t obtain. “That’s what we could package up to our partners and say, ‘Look, we’ve observed this, there’s a few things here to do, how about you take that to your customer?’ “That would [mean] the customer would be getting a proposition I think would make sense to them.” Research has shown a trend for younger insurance-buyers to be more comfortable dealing directly with the end supplier rather than using intermediaries, and Mr Bessell acknowledges there has been “a bit of tension around this issue in the market”. But while his division does deal with direct insurance products, he says there is no drive towards disintermediation. “I’m not doing that; I’m responding to the needs of our customers. “Over time, consumers will work out where they’re going to get the best value, and they’ll make that decision for themselves. “So yes, we might test some things and generate some ideas, but to suggest that we’re deliberately doing things to disintermediate the market isn’t the right way to look at it. We’re responding to what we see are the needs and demands of customers. “A new competitor might come out of left field and challenge our whole business model. I’m not going to ring them up and say, ‘Hey, you’re wrecking our business model’. They’ve designed something that’s based on customer need. “It gets back to that point around being flexible around business models. I think we need to look at them and adapt.” He says many traditional business models will continue to work. “I think the difference is we’re seeing this exponential change in customer demand, such that the changes required of us are a lot different and more frequent than they were 10 years ago. And that’s driven by data, customer needs and general information.” Much of the movement in commercial customer sentiment is

coming through the crucial SME sector, which Mr Bessell believes needs to be better understood. He says lumping all SMEs into one generic sector isn’t practical. “SME is often a descriptor for a premium size as well as an industry type. Where brokers and insurers will win is if you break that down into the complexity of the business model of the SME itself. We shouldn’t just look at turnover and an occupation description to understand the business.” He says IAG has customers with relatively low turnovers and few employees which are nevertheless quite complex. He offers the example of a small import-export business. “Then we have another business that employs 25 and has a higher turnover. It’s a family-owned construction business, it’s been operating for a long time and its insurance needs aren’t as complex. “Yet we’re used to a view where the importance of the customer is linked to turnover rather than the nature and complexity of the business. “That’s where I think the SME market is still ripe for genuine intervention to provide great advice,” he tells Insurance News. “Understanding the complexity of the individual business is important. Don’t just heap them all into a bucket and call them SMEs.” He says brokers and insurers should be doing more to provide information that’s relevant to individual businesses – “things like risk mitigation”. “Pushing out information from the market that’s relevant to the business means we’re all helping them and at the same time reminding them you’re there. If the customer isn’t getting any value they’ll look somewhere else.” He agrees there are customers who don’t want extra information and only want an annual phone call, “which is fair enough. But we should know what level of information the customer wants.” But he says there are many examples of smaller customers which are being under-serviced. “In our data we see numbers of SME and mid-market customers who don’t have changes in sums insured over long periods of time. I don’t think that is an accurate reflection of any business. “There’s a huge opportunity to address underinsurance in things like property covers. I understand cost is sometimes a major

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“I think we’ll reach a point where the insurer will stop paying commission where there’s no evidence of the broker doing something the insurer couldn’t have done itself.”

factor [for the broker], but there should be more engagement. And engagement adds value. “If that’s not being done, the customer will in the long term decide to go somewhere else.” The question of customer engagement leads to a discussion on broker commissions. Does a broker deserve commission when the service provided is low or even non-existent? “I think we’ll reach a point where the insurer will stop paying commission where there’s no evidence of the broker doing something the insurer couldn’t have done itself,” he says. “There needs to be open conversation on this sort of issue.” And he sees commissions possibly working in the future as both a carrot and a stick. Commission, he believes, should be commensurate with the value of the service rendered. “Are people spending the right time and having the greatest impact where the value is? If people are playing in the micro-SME space, perhaps they should be playing more in other aspects of insurance products where there is greater impact.” It’s an interesting point. Insurers could be prepared to pay more commission for brokers for selling insurance products where the insurer gets greater value. “The net result might be exactly the same, but maybe we could be achieving it in a different way.” He gives as an example the fact that an average home policy can be much higher in premium value than a simple commercial product for a micro-SME. Reminded that personal lines insurance has generally become a direct and commoditised play, Mr Bessell suggests that in time the micro-SME market will go the same way, anyway. Which leads to the inevitable question. Some major broker groups are at present asking for higher fees, including commissions. Insurers are facing many of the same challenges, so are brokers risking pricing themselves out of the market? He agrees there is indeed a “tipping point”. “Take the example of a portfolio which is running at a retention rate of 85%, yet commission is being paid on the entire book. The problem that I have in a commercial sense is, what’s the return that I’m getting? What is the overall value of that entire distribution expense? 40

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“That’s becoming more topical as we [experience] soft market pressures. “I think there’s a real danger in squeezing as much revenue out of one particular portfolio without looking to grow it at the same time. “With the current market conditions I think that’s a real challenge for us to work through. It’s not sustainable to get more and more juice from the one lemon. “That’s one of those important discussions we should have with our partners. I understand they want to drive revenue, but I have to drive an appropriate rate of return for my shareholders.” It’s unusual for an insurer to be so publicly blunt about the tensions between brokers’ fees and the drag that has on the insurers’ costs. Mr Bessell says insurers should be “much more open about these sorts of issues”. “In the past everyone’s been a bit hesitant to talk about issues like this, staying away from discussing things like profitability and providing more granular information on a particular book of business and profitability. “To be fair, people often make assumptions on certain things and often when the facts are put on the table they take a different view.” He wants greater levels of openness between insurers and brokers to lead to “a more sustainable intermediated model”. While Mr Bessell doesn’t say it, there’s no doubt that insurers see technology providing them with greater opportunities in the future to build commercial market share through direct sales. What he does say is that insurers and brokers should work together to find ways to capitalise on each other’s strengths. “There’s always going to be a direct model there,” he tells Insurance News. “Let’s actually call out where we’re best spending our time and money. “If we were to have these sort of discussions [with intermediaries] we would find there are ways to leverage our strengths in different ways to avoid duplication. “We’ve always been protective of our own patch, but I think there’s an opportunity to talk about sharing and pooling our resources in ways that enable us to take some cost out, which would ultimately get fed into price and would hopefully flow through into value. “If things aren’t sustainable, something’s going to give at some * point.” June/July 2016


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Seismic shifts Steadfast and AUB are making some bold moves that may well herald permanent changes to the broking landscape By Bernice Han

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“I owe it to the network and the people who made their career in this business to see it out for a few more years. It certainly gives the company and the investors some peace of mind.” – Robert Kelly IT’S NOT QUITE MUHAMMAD ALI versus Joe Frazier, but the ongoing battle between Steadfast Group and AUB Group for industry dominance is perhaps as close as can be to the most famous bout in boxing history. Leaving aside the international broking behemoths, AUB and Steadfast are the heavyweights of Australian insurance broking. Both have undertaken bold but certainly pricey moves in recent years to sow the seeds for tomorrow’s success, leaving smaller rivals in their wake. Millions of dollars in investments of various types have been splashed out by the two in what they hope will give them an edge. These range across outright acquisitions, joint ventures and equity investments. While the rivalry between the two groups is warmly competitive, at least on the surface, the two companies’ growth strategies are so different they might sometimes be in a different arena. There will never be an outright winner in the contest, because while they are both primarily broker groups seeking customers (and brokerages) in the same markets, measuring success is a subjective exercise at best. When it comes to such key considerations as strategy and performance, these two groups aren’t peas in a pod. In many ways they’re increasingly chalk and cheese. There are some common factors as well, of course. One example is the ruthless efficiency both have displayed to survive what has possibly been the toughest period suffered by the industry in recent years. So the half-time score is just about even, with the two listed broker cluster groups producing highly respectable earnings that are almost certainly the envy of their peers. It should come as no surprise, then, that Robert Kelly and Mark Searles, the two men credited with steering Steadfast and AUB respectively through the stormy waters, have been rewarded with contract extensions to continue charting the fate of their companies. Mr Kelly will now stay with Steadfast until the end of 2020, while Mr Searles is to

lead AUB for another three years starting from January this year. For Mr Kelly, the extension gives him the time needed to finish building a “selfsustaining biosphere” designed to insulate Steadfast from external risks. “We are in our own biosphere [and] we want to be self-sustaining within that biosphere,” Mr Kelly tells Insurance News. “A biosphere is a sustainable unit that is not dependent on anything outside the sphere, but is completely fulfilling for the people within it.” The company’s recent acquisition of the UnderwriterCentral technology system for an undisclosed price, and the launch of the independent Insight broking management platform, take Steadfast a step closer to completing its biosphere concept. “The self-reliance of the expertise contained within our group [allows] the sustainability of being flexible. We can move quickly as trends occur in our industry that affect the operations of how we do things,” Mr Kelly says. “We have all of that in place now, and the completion of Insight and acquisition of UnderwriterCentral complete the risk management of IT services to the group completely. “The thing that the group is missing at the moment is the full implementation of the SVU (Steadfast Virtual Underwriter) across all our major insurers and across all our products. “They are not going to be missing for much longer. We are very close to getting the remaining insurers on the SVU.” It’s understood that Allianz Australia is the latest major insurer to agree to make its products available through the SVU. Retirement, as far as Mr Kelly is concerned, does not exist in his dictionary – yet. His motivation to run the business is as strong as the first day when he co-founded Steadfast two decades ago. “I owe it to the network and the people who made their career in this business to see it out for a few more years,” Mr Kelly says. “It certainly gives the company and the investors some peace of mind that the insuranceNEWS

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direction we have taken this business, which the board supports, will continue. “Some of our initiatives have a few more years’ lifespan to take to completion. I’m not sitting around waiting to retire.” The Insight broking platform is the latest such initiative rolled out by Mr Kelly and his tactical team from their Bathurst Street headquarters in central Sydney. Launched in April at its annual convention, the broking management system is a declaration of independence of sorts that allows Steadfast to break free from what the company perceives as over-reliance on third-party software specialists. For which read Ebix Australia and its Sunrise Exchange platform. “Our biggest job at the moment is to schedule the 121 brokers who want to change their systems over to Insight over the next three years,” Mr Kelly says. “We have the resources to do this.” He insists it is imperative that Steadfast, with its sprawling network of more than 300 fully owned, partly owned or aligned but independent brokers and 22 underwriting agencies, has a broking system to call its own. “There is nothing wrong with the incumbent systems in the market. They have, and still do, provide very efficient processes,” Mr Kelly says. “But Steadfast as a listed entity with substantial investments in its network does not wish to be beholden to any third party. “It’s fundamental in any financial services firm that the IT back-office systems are efficient and able to be expanded and be up to date with modern trends.” While self-sufficiency is the mantra for Steadfast, Mr Kelly insists he will not expand his agenda to include running an insurance [manufacturing] business. “I think it would be a conflict of interest. We want to stay where we have expertise which is in relationships and distribution,” he says. “The last thing we need to do is complicate things by pretending we know how to manage insurance companies’ capital.” 43


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“The challenge will be for those businesses who do not adapt to the changing environment and do not embrace technology to become more efficient and relevant to the client.” – Mark Searles

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changing environment and do not embrace technology to become more efficient and relevant to the client.” Mr Searles has also sought to extend AUB’s offering of risk services solutions, which he says ties in with the broker cluster group’s philosophy. Changing its name from Austbrokers Holdings last November, AUB’s Austbrokers and NZBrokers arms comprise 75 equity businesses, while the partnership with independent brokers IBNA through the AIMS partnership provides additional heft. Its underwriting agency business, now named Sura, has 23 agencies, while the risk services business begun in 2014 now has four business partners giving it a nationwide footprint. “From AUB group’s perspective, everything we do has to accord with our group strategy… to be the leading provider of total risk solutions to clients,” Mr Searles tells Insurance News. “That is, ensuring the provision of physical, people, financial risk assessment and solutions,” he says. “The risk services area is predominantly focused around workers’ compensation and associated services, making it highly relevant to people risk. “We’re experiencing good growth in that area and we continue to see that growth. It accords with our overall business strategy.” AUB’s expansion into risk servicesrelated outfits is paying dividends, with the net profit from the division up 382% to $5.6 million in the half-year to December 31. Its overall underlying net profit grew 3.5% to $12.9 million and was up 72% to $23.8 million when measured on a statutory basis. “The underlying growth coming through is very pleasing, despite the challenging market in the last couple of years as a result of negative premium and interest rates,” Mr Searles says. “The key headwinds have been premium rate decline and interest rate decline. We are now seeing premium starting to stabilise, so the premium rate decline trend is easing. insuranceNEWS

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“While (premium) rates are still negative, it’s in the low single digits. We are heading towards a flat market, which is certainly better than the previous years of rate decline.” AUB’s succesful foray across the Tasman is futher evidence that the right tactical moves are being made. AUB has had “spectacular growth” in a very short period, with its NZBrokers a major player in the New Zealand market. “We weren’t in the market 18 months ago and we are now the largest broking management group and the third largest broking entity by [gross written premium], and it’s continuing to grow,” he says. If you’re prepared to measure success on such factors as percentage growth and share price movements and ignore equally significant measures such as long-term performance and effectiveness, the full-time score will be coming out soon. Any punters * out there?

The groups:

steadfast: • 340 brokerages across Australia and New Zealand, operating 1000 offices. • 22 underwriting agencies. • 50% of Macquarie Pacific Premium Funding Aub: • 50+ broking groups across Australia and New Zealand, operating more than 140 offices • AIMS joint venture with IBNA • 21 underwriting agencies • 4 risk services consultancies Market capitalisation: • Steadfast $1.43 billion • AUB $593.1 million gross written premium: • Steadfast $6.16 billion • AUB $4.5 billion share price (January 1 and May 17, 2016): • Steadfast $1.56 to $1.91 • AUB $9.04 to $9.40

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Instead, beefing up Steadfast’s IT capabilities appears to dominate Mr Kelly’s priority list. “For us, it is the consolidation of an area of our business where we have to derisk the possibility that a third party fails us,” Mr Kelly says. “We are de-risking the cost that seems to be inherent in IT operations.” AUB’s Mark Searles is equally focused on taking the broker cluster group to new heights, but he has opted for a different route from Steadfast. There are no plans for a self-sustaining biosphere or even plans to build a proprietary broker management system from scratch. Instead, Mr Searles’ action plan revolves mostly around what he describes as “embracing the notion of providing a total risk capability”. He believes this is the formula to become a successful broking player. “Our group strategy is all about the provision of total risk solutions to clients via a qualified, professional trusted adviser – the insurance broker,” Mr Searles tells Insurance News. “Our belief is that the role of the professional insurance broker as a trusted adviser in the risk space will continue to get stronger. “Everything that we do is about how we help our partners to maximise their risk advice and the support they provide to their clients.” Technology’s invasive presence in the industry has led some doomsayers to predict brokers will eventually be consigned to the dustbin of history, but Mr Searles believes otherwise. He sees big opportunities emerging from leveraging on technologies. “What we see is that technology will further enable the provision of advice and improve the level of service,” Mr Searles says. “Critcally, our propositon is all about how we put the risk consultants at the front and centre of the client relationships. “Furthermore, the challenge will be for those businesses who do not adapt to the


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Our cities in danger Australia should learn from Canada, says a bushfire expert. We could lose a city By John Wilkinson

Fleeing Fort McMurray: 88,000 people were evacuated from the stricken town as the fire destroyed 2400 homes and other buildings

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thin covering of snow, which melted quickly in the spring. Weather on the day of the fire outbreak was 32.8 degrees Celsius with humidity down to 12%. Combined with a 72kmh wind, the perfect conditions were formed for an explosive wildfire. The boreal forest surrounding Fort McMurray requires fire as part of its regeneration, the same as Australian eucalypts. The forests, covering 60% of Canada’s landmass, are made up of coniferous trees, mainly spruce, interspersed with vast wetlands.

Fort McMurray is situated next to the lower slopes of the Rocky Mountain range. When the fire started in the hills north of Fort McMurray, it was soon driven by strong winds into the suburbs of the town, which has a population of 88,000. The entire town was evacuated and while not all of Fort McMurray was destroyed, the full extent of the damage is still being evaluated. Latest estimates of the insured damage are around $C9 billion. By the end of May, the fire had consumed 580,000 hectares and was still burning on many fronts. According to research by Gen Re, the US

“We have an equivalent problem. Canada is the cold version of Australia.” insuranceNEWS

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AFP

PARTS OF AUSTRALIAN CITIES COULD easily be wiped out by the same type of wildfires that devastated the Canadian town of Fort McMurray. In fact, an out-of-control bushfire in Australia could be far worse, says University of Tasmania Professor of Environmental Change Biology David Bowman. “Canada has high-intensity forest fires, with so much of that stemming from climate change,” he told Insurance News. “We have an equivalent problem. Canada is the cold version of Australia.” The Fort McMurray fires started at the beginning of May after a dry winter with a


Reuters

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The Canadian experience

The Canadian insurance industry’s reaction to the Fort McMurray disaster is similar to the call being made by Professor Bowman. However, while Insurance Bureau of Canada Chief Executive Don Forgeron acknowledges the rising risks brought on by climate change, he wants a national strategy to address the financial impacts of natural disasters. He says for a developed country, Canada’s approach to natural disasters such as fires, floods and earthquakes is “undeveloped”. “While there is a need to reduce greenhouse gases and take a look at the long-term picture, I think it would be irresponsible if we didn’t try and adapt and adjust to this new reality. “The fire in Fort McMurray… tells us again that there’s so much more we need to do as a country.”

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wildfire season is starting earlier each year and today it is 78 days longer than it was in the 1970s. “We are coming off a record-breaking wildfire season in 2015 that saw 4 million hectares burn in the US, the highest number burned in a single year,” Gen Re Property Senior Consulting Underwriter Chris Beston says. “That is more than the total area burned during 2013 and 2014 combined, and a larger land area than the states of Maryland, Delaware and the District of Columbia combined. “As we saw during 2015, and will continue to see in the years ahead, most geographic areas in the US face increased wildfire exposure.” Professor Bowman says wildfires – bushfires in Australian parlance – are not new. Hobart was almost destroyed in 1967, but we are not learning from this sort of experience. “We have a complex collection of interests when looking at fire prevention,” he said. “We have allowed urban development in dangerous areas for bushfires and we are not doing enough planned burning in those areas.” Professor Bowman says changing demographics in Australia are seeing policies and actions altered to favour the reduction of short-term fire risk at the expense of longterm risk to the forest landscape. As the fires become larger, people want the authorities to suppress them, rather than using fire as a tool, which is how nature intends. “There is a debate to have about managing forests,” he said. “It is not just about climate change, it is about the mismanagement of fire prevention. We should thin the bush to reduce the risks.” Professor Bowman says fire management is still a “discovery science” that includes both social and ecological conditions. insuranceNEWS

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He agrees it is a contentious issue in Australia, with trade-offs between a reduction in the fire hazard versus the impact on the bush, smoke pollution and the cost of making older houses compliant with the latest building codes. Adding to the complexity is the fact that climate change is reducing the window of opportunity for safe burns, which adds to the growing risk of bushfires. It’s obvious Australia’s politicians, the various authorities involved in urban planning and forest management and industries need to discuss the issues associated with bushfires and climate change. Professor Bowman says the insurance industry “is an important stakeholder in that discussion”. “In the past the insurance industry has never made contact with me, but now I am talking to the industry. But [it] is reluctant to look at how to map risk by using geographical rules to make cities and their suburbs safe.” Gen Re’s Mr Beston says the unpredictable nature of when or where a wildfire will occur is a complication for insurers relying on property risk assessment. “Continually monitoring variables – such as fuel load, clearance, slope/aspect, construction, access and defensibility – will ensure insurers make the most informed underwriting decisions possible,” he says. For Australia, a catastrophic bushfire may be closer than many people think. Professor Bowman says Australia has no integrated plan to “fireproof” cities. “We like living like pioneers in the bush, but it is not going to work if we don’t tackle the issue of bushfires,” he tells Insurance News. “A catastrophic fire could take out the centre of one of our cities unless we act to overcome the big sociological barriers. “If we leave it too much longer, we will * incinerate.”


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Scott Leney: challenging the status quo at Marsh

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Re-imagining Marsh The global broker’s local chief has his sights fixed on a future that looks quite different to the past By Michelle Hannen SCOTT LENEY SEEMS MORE LIKE A NEWCOMER TO Marsh than a 29-year veteran of the global broker. But his familiarity with the way the company works isn’t preventing him putting it under the microscope. Since becoming Australia Chief Executive in January last year, a “business as usual” approach has proved to be far from his mind. He has restructured the local operations to such an extent that the organisation is now aligned around business segments rather than on geographic lines. And more change is on the way. “We’ve done a lot of work over the past couple of years on operational excellence, so this restructure was the next logical step to make sure that the shape of the organisation was aligned with the way that we want to engage and deliver value to clients,” Mr Leney tells Insurance News. The transition to “a more client-led structure” was not something he was thinking about as he rose through the company’s ranks. Anyone who has spent most of their career at the same company might be expected to have some well-developed ideas on the sort of management approach they would like to take, but Mr Leney is way past that. While he may know Marsh inside-out, he says that in itself poses a challenge. “The challenge is to be broad-minded enough about the business and not to be confined by the limits of your own experience.” So when it came to looking at his management structure, he recognised he needed people who would challenge him.

“It was more an intellectual realisation than an emotional one that I need the team that I have around me, who I’ve worked with for many years, but I also need people who aren’t like me, and aren’t like my existing team,” he says. “I need people who are actually quite different to me and who are going to come up with different views around the table, who are going to play a really important role in challenging the status quo. “I recognise that we need that sort of diversity and contribution in such a dynamic environment, where we’re constantly recalibrating.” The changes, announced last December, have already been implemented locally. Mr Leney now oversees the entire Pacific region for Marsh – adding Pacific Chief Executive to his title in January 2016 after the retirement of John Clayton. He says the new structure will be rolled out through the Pacific (New Zealand, Papua New Guinea and Fiji) “where it makes sense”. The restructure divides the client base into four segments – risk management (big businesses), corporate (mid-market), commercial (SME) and consumer – in recognition of the fact that that each has different needs. A series of specialist practices, including Marsh Risk Consulting, Mercer Marsh Benefits, the Insurer Consulting Group, sales and placement, all intersect with each of the client groupings. There are also two newly formed practices – specialties and industries. “The new developments are really in line with what clients tell us is really important to them, in terms of organisational capabilities and expertise,” Mr Leney says. The specialties practice, under national leadership, includes sub-practices such as energy, construction, marine and aviation, private equity, mergers and acquisitions, surety, trade credit, finpro and political risk. Each sub-practice consists of industry specialists, product specialists and other people with technical capabilities, with a value proposition for each of the client segments. Mr Leney says the industries practice includes segments such as mining, power and real estate. This is not

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“Marsh has always put the client at the centre of everything that we do, and I think this restructure is really another step in being a truly client-led organisation.”

new for Marsh, which has specialised by industry for many years, but these areas now sit under a national leader. In essence, Mr Leney says the changes represent “a new client-centred model as to how we deliver the whole of Marsh seamlessly to our client base”. He describes the new structure as “trying to look more outward rather than inward”. “Marsh has always put the client at the centre of everything that we do, and I think this restructure is really another step in being a truly client-led organisation. “The other thing that the restructure did is reduce the number of management profit and loss accounts by over 50%, so the way that we see the organisation is like a triangle that’s actually pointed in the right direction with a different top. “So you’ve got the whole organisation sitting behind our client executives. They’re the most important people, and not the other way round.” The changes should also create more opportunities for co-operation and collaboration between different business areas within the organisation. As Mr Leney puts it, “knocking down the internal hurdles in a company can really do a lot to enable what you can do for your clients”. The structure was previously based around Marsh’s local trading companies, Marsh Pty Ltd, Marsh Advantage Insurance, and Marsh McLennan Agencies. Mr Leney says those companies, and brands, still exist, with the Marsh brand used for risk management and corporate clients and the Marsh Advantage Insurance brand for commercial and consumer clients – an area the business continues to target for growth. He says that while the aim is that clients will not notice the changed structure, they will notice improved service and easier access to all that Marsh can offer. The ultimate aim of this work is, of course, finding growth in what many describe as the most challenging insurance market they have seen. While talk of market rates bottoming out continues, the surplus of industry capital and persistently low interest rates make such talk seem more like wishful thinking than reality. 54

Marsh, man and boy

There’s no denying Scott Leney has come a long way from the young man who joined Sedgwick (which was subsequently acquired by Marsh) straight out of school in December 1986. After completing a rigorous four-year cadetship, which involved rotating around different parts of the business, studying insurance and being sent to London on an exchange program, he returned to Sydney and worked in a variety of roles while completing a Bachelor of Commerce. “I haven’t really stayed in any particular role longer than three to five years during the course of my career,” he says, adding that the breadth of his experience across all parts of the company is a certain advantage now that he is leading it. But it also forces him to look farther afield to ensure his managerial skills have breadth as well as inhouse depth. So he reads widely – both business texts and more generally about the world. “I relish the opportunity to learn about things that I don’t understand enough about,” he says, adding that what many senior executives see as a downside of the job – lots of travel – affords him the time to do this. Mr Leney adds that the executive talent development program at Marsh has also been of enormous help by “teaching you self-awareness, to understand your strengths but also your own blind spots, and to teach you about what it is to be a leader versus what it is to be a practitioner”. “For a large part of your career it’s about your personal performance, being the best you possibly can, and making sure that there are visible demonstrations of what you’ve been able to contribute. “In a leadership position it’s different – it’s not about that any more. It’s about getting the best out of the people around you and that means that you have to tap into parts of your personality and character. It can be a little uncomfortable. You don’t get to just play to your strengths.” No doubt some of these topics come into focus while he is “out the back” indulging his passion for surfing. Among a garage that he admits is full of little-used boy toys, it is his surfboard which gets a regular workout. Mr Leney blocks out his diary every Friday before 9am to meet up with friends on Sydney’s northern beaches for an early surf. Coupled with a game of soccer on the weekend, spending time with his family – which includes two teenage daughters and a three-year-old son – rounds out his schedule.

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June/July 2016


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“If you look at places like Gladstone, like Newcastle and various others, there are strategically important places where Marsh would like to have a greater presence.”

Mr Leney acknowledges the challenges posed by market conditions. “Vanilla insurance broking is a difficult place to be at this particular point in time. [But] there are opportunities to grow if you know where to find them. “There’s always an opportunity to grow if you can provide material value to clients. “The challenge should be less about market forces and more about what value you are providing. And that value these days has to be a balance between price, product, service, advice and innovation.” Aside from trying to increase its bottom line by improving cross-selling to each of its existing clients, Mr Leney says Marsh has pursued a strategy of targeting growing niches. An example? “If you look at what’s going on in the economy, health and aged care is an area that’s growing.” Marsh has developed an aged care practice, with a Marsh-branded product covering a basket of exposures that those clients have. “We’ve managed to come up with a very competitive insurance product that’s been really successful. We’ve had a series of wins so far this year, on top of a bunch last year. “So it’s really getting specific about an area where you know there is growth, and aligning your organisational capability with the expertise, and then a smart marketing campaign.” The rise in corporate merger and acquisition activity has presented another growth opportunity. “We have advised on over 200 transactions in the past two years, been involved in dozens of high profile deals, and have helped to transfer exposures for corporations and for investors to the tune of nearly $1 billion to insurance markets. “So that’s another example of somewhere there’s activity in the marketplace.” Mr Leney tells Insurance News that corporate health cover, an area of the market Marsh has access to through employee benefits provider Mercer Marsh Benefits – its joint venture with sister firm Mercer – is another avenue for growth. “Everyone talks about the insurance market being 56

really soft at the moment, but in the health space it’s not. “Our clients really need advice, so we’re finding that that is an area where we can find growth as well.” A strategy of attracting new talent over the past year to open up new networks and business opportunities – especially in the mid-market and SME end of the business – is also proving a winner. “We are very well represented at the big end of town, but you head down into the middle market and the commercial space, and also the consumer space, and Marsh has relatively low market share. “For us that is very fertile ground, and we can see loads of opportunity to grow in those particular spaces.” He says the value proposition for Marsh Advantage Insurance – aimed at SME and consumer clients – is personalised service which is locally delivered but backed by the powerful organisational capabilities of Marsh. Marsh Advantage Insurance added nine new SME business producers to its ranks in 2015, and, Mr Leney says it’s “on track to do more than that this year”. In the middle market, for larger firms but those that don’t have their own risk and insurance team, it is about good quality advice, broad, industry-specific, standardised policy wording, and a highly efficient – but still personalised – way of interacting with the insurance community. “There’s a good opportunity to grow, but to capture that you need salespeople on the ground who can access potential customers and talk about what we can do for them,” Mr Leney says. “So we’ve been investing in that area. We’ve employed a number of salespeople dedicated to the middle-market segment over the past two years.” Though its research reveals the majority of midmarket and SME business is in the metropolitan areas of the major cities, Mr Leney says opening new regional hub offices could also be on the agenda to expand its reach beyond the corporate world. “If you look at places like Gladstone, like Newcastle and various others, there are strategically important places where Marsh would like to have a greater presence. “We have, for a very long time, been a big city broker, * and that’s what we need to change.”

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June/July 2016


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Out of sight, out of mind NIBA’s city focus leaves country brokers wondering about the bang they’re getting for their membership buck By Michelle Hannen PEOPLE WHO CHOOSE TO live in regional Australia accept that with the country lifestyle comes some disadvantages – higher costs for many goods, less comprehensive medical services and limited public transport among them. It’s a fact that Wagga Waggabased broker Peter Brown readily acknowledges. But there is a tipping point at which inequalities between the city and the bush can no longer be worn, and Mr Brown, the Director of Peter Brown & Associates, is at that point with the National Insurance Brokers Association (NIBA). NIBA, he says, “is failing to recognise a significant portion of its membership because of location”. Mr Brown, who served as regional representative on NIBA’s New South Wales committee for 18 years and was awarded the prestigious Lex McKeown Trophy for services to the education of regional mem58

bers, says he is now considering relinquishing his NIBA membership. “The question I now ask is, would our business be disadvantaged if we were not a member?” While he describes himself as reluctant to take such a step, Mr Brown also adds that “regional members pay the same membership fee as their city and urban counterparts but receive virtually nothing from NIBA in terms of face-to-face contact or services”. It has not always been the case. “I was a strong supporter of NIBA and its direction, and I was totally comfortable with whatever cost was imposed as a membership fee because NIBA was providing support to, and actually taking the time to be involved with, regional members,” he tells Insurance News. Visits from the association’s chief executive and president, regional seminars and social functions are examples he cites insuranceNEWS

of this involvement. But he adds that such events have not been held in the bush for at least 10 years. Broker numbers in regional areas have contracted over that time, due to mergers and the growth of both cluster groups and the authorised representative model, while NIBA membership has also declined. The association’s parlous financial state – it posted a $591,000 loss last financial year – is well known, and it is against this backdrop that Chief Executive Dallas Booth says NIBA is “very, very conscious of the need to do our very best to engage with our members”. But “Australia is a very large country and NIBA head office is a very small team”. Mr Booth says that when he was first appointed to manage NIBA in 2011, he undertook a series of presentations in regional centres around the country, at a cost of considerable time and money, and June/July 2016

attendance at the events in a number of locations was low. “They voted with their feet,” Mr Booth tells Insurance News. As a result, NIBA “had to carefully evaluate the cost/benefit” of such presentations. He points to NIBA’s divisional committees as evidence of its commitment to brokers no matter where in Australia they are located. NIBA has five divisional committees, one each in New South Wales, Queensland, Victoria, Western Australia and South Australia. Previous divisional committees in Tasmania and the Northern Territory were scrapped in the mid-2000s and while Mr Booth says NIBA has “taken steps in the past few years to try to be more inclusive” by re-establishing representation in those states, rather than reforming the divisional committees they have been replaced by sub-committees, with Tasmania under the auspices of the


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Victorian divisional committee and the Northern Territory group overseen by South Australia. Comprised of volunteer broker representatives from each state, the committees are charged with identifying issues affecting brokers in that state and organising local events. But a glance at the NIBA calendar of events shows these are overwhelmingly held in the state capitals. It is no surprise then that the composition of the committees is skewed towards the larger broking groups and city-based brokers, a point not lost on one regional broker who agreed to speak to Insurance News on the condition of anonymity. “NIBA is disproportionately representative of large brokers, which filters down through its policies,” the regional broker says. While he cites some improvement under Mr Booth, he adds that there is a way to go, as “a number of things are highly inequitable”. Mr Booth argues the committees are regionally diverse, pointing to two representatives from Far North Queensland out of 11 members on the Queensland committee, and a Newcastle-based and an ACTbased representative among the 11-strong NSW committee. The committee positions are not elected, with the com-

mittees themselves determining their composition, Mr Booth says. Each committee constantly reviews its representative capacity, aiming for a “broad representation of brokers in its region”. But the regional broker questions the effectiveness of this self-regulation. “I have

service to its members is its annual convention, which has historically been rotated around major cities Australia-wide. But with last year’s convention, as well as this year’s, being held in Melbourne and next year’s being slated for Sydney, Mr Booth acknowledges there has been a shift to Australia’s two

“I wouldn’t imagine I’ve just been left off the mailing list as I still get NIBA’s invoices.” never, ever, ever once been asked to vote for our regional representative, something which astounds me – it astonishes me. “I wouldn’t imagine I’ve just been left off the mailing list as I still get NIBA’s membership invoices.” Mr Booth says discussions at NIBA board meetings this year have included ways to empower these committees to do more to engage with local members. He says a good example of this is an initiative of the South Australian committee, in which each member is charged with keeping touch with a small number of firms. The centrepiece of NIBA’s insuranceNEWS

largest cities. “I think for the time being we will maintain convention where the large population centres are,” he tells Insurance News. “The reality is the convention only works when you’ve got serious numbers of brokers attending.” That news is bound to disappoint Nathan Hadlow, Director of Albany-based South Coast Insurance Brokers. The last time the convention was held in his nearest capital city, Perth, was 11 years ago, in 2005. Mr Hadlow says he generally sends staff to the convention but is beginning to question why. “I am paying full tote for my staff [in registration fees] plus June/July 2016

accommodation and airfares, and any locals can lob up on the day,” he tells Insurance News. “I’m not necessarily wanting to see a reduction, just some more equality.” He says that while “neither NIBA nor ANZIIF [the Australian and New Zealand Institute of Insurance and Finance] have many seminars in Perth, let alone regionally” he is accepting of the need for staff to travel to events, providing they are worthwhile. “Sometimes NIBA holds an hour-long breakfast function in Perth, which just isn’t long enough to make it worth attending,” Mr Hadlow says. “But I’m happy to send staff to Perth for the day or for a halfday of training.” He suggests that a discount to attend events for those located more than 100km from capital cities could be a good initiative – a view that is supported by Mr Brown, who agrees that events held in the capital cities are too expensive for many regional brokers to justify attending. “With the course costs plus plane fares, taxi fares and accommodation, the cost will simply be prohibitive for any regional broker,” he says. Mr Booth says discounts for event attendance is something that NIBA is “happy to have a look at”, adding that it has already “slashed” the price of 59


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NIBA Chief Executive: webinars are one way to deal with the problem

convention attendance as part of a reformatting of the event in 2013, which also made it shorter in a bid to attract more delegates. But some brokers believe NIBA should go further, and consider membership discounts for rural and regional brokers – unless it can improve the services it offers them. Mr Booth says membership fees are reviewed and set by the board each year and have only been subject to “very minor indexation in the past couple of years”. But Mr Hadlow suggests a discount system, where regional brokers only pay 85% of the membership fee charged to their city counterparts, could help to address the inequalities. Mr Brown says NIBA is “failing” its regional membership – and it is a charge he also levels at ANZIIF – by “charging memberships which do not differentiate between businesses in the capital cities and their access to all kinds of training and events, as opposed to those in the country who have to rely totally on personal study and online training”. “They do not get the benefit which always comes with being able to attend face-to-face training, nor enjoy occasionally the industry camaraderie created by an industry-based 60

function pulled together by a representative industry body.” Mr Brown says that despite raising his concerns with ANZIIF in the past, the situation has not improved – an issue that he sees as more crucial than ever after the decision by NIBA last year to cede responsibility for broker training to the institute.

from ANZIIF who contacted me and said that they would be putting all my ideas on regional issues on their next agenda for consideration, and [asked] would I be prepared to be involved in any review from a regional perspective. “Nearly two years later no further contact has been made nor has the situation for

“Nearly two years later no further contact has been made [by ANZIIF] nor has the situation for regional members changed.” After attending an ANZIIF masterclass in Sydney in 2014, Mr Brown mentioned to the institute’s staff that while the content was useful, he would have liked to have more staff attend, something that was “cost prohibitive”. “I made the point that costs to attend these capital city-only events should be discounted to regional members to help offset the cost to attend, or alternatively start holding some in the regions,” he tells Insurance News. “I was lauded by two people insuranceNEWS

regional members changed.” An ANZIIF spokesman tells Insurance News the institute does offer a 30% discount to its members “to support them to attend professional development events as well as hosting some regional events, such as the Victorian regional conference”. “We have often looked at the possibility of running professional development in regional Tasmania, South Australia and other areas. However, we have found that given Australia’s size, even travJune/July 2016

elling to a regional centre or to the closest capital city can be prohibitive for regional and rural insurance professionals.” Instead, it is looking to the internet to solve the problem posed by the tyranny of distance, the spokesman says. “Our members tell us that access to online education, training and professional development is hugely beneficial to them. In response, we have developed a comprehensive online offering that is available anytime, anywhere. “Our professional development events, which cover all sectors of insurance, are filmed and uploaded to our members’ centre so that location is not a barrier to learning and professional growth.” The online members’ centre offers 30 interactive activities and almost 1000 articles and videos. Mr Hadlow is an advocate of the online delivery of training and events – but only if these are live, where regional brokers can participate in real time. He says webinars run by some insurers, which allow those viewing online to participate in question and answer sessions, are particularly helpful. Mr Booth admits that NIBA could make better use of webinars, describing it as “an area we’re not doing very well in”,


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“Costs to attend these capital city-only events should be discounted to regional members.” – Peter Brown but something the organisation intends to address. While there are grumblings about the value it provides, ultimately these brokers acknowledge it would be a big step to actually walk away from their membership of NIBA. Not so, Cairns-based broker Bill Owen Insurance Brokers, which has had no affiliation with NIBA for a number of years. Broking Operations Manager Angela Downs tells Insurance News the company took the decision not to renew its NIBA membership as “we didn’t feel that for the amount of money they charged for membership they had a lot to offer”. Likewise, she says beyond utilising some of ANZIIF’s training services, its staff are not ANZIIF members. “Apart from some news bulletins [membership] didn’t seem to add a whole lot of value.” Bill Owen Insurance Brokers is a member of Steadfast and the Council of Queensland Insurance Brokers (CQIB), which Ms Downs says leaves them “spoiled for choice when it comes to training opportunities”. A state-based member organisation, CQIB fills in some of the gaps created by NIBA. It runs networking events, an annual conference, roadshows and training seminars at locations around Queensland. 62

insuranceNEWS

June/July 2016

CQIB General Manager David Duncalfe says its training seminars, which are held three times a year in eight different regional Queensland locations, focus on CPD training, and are in direct response to demand from members. Members can attend these events free of charge, while nonmember Queensland brokers are also welcome to attend for a fee. Queensland’s regional brokers may be better off than those in other states, with Mr Booth singling out northern Queensland as receiving special attention from NIBA, especially on the back of the issues surrounding strata insurance and the Northern Australia Insurance Premiums Taskforce. As a result, Queensland’s regional brokers may feel that “the quality and scope of services offered far exceeds the membership fee”, as claimed on the NIBA website. But in the eyes of a growing number of bush brokers around Australia, they are simply not getting enough bang for their membership buck. Mr Booth concludes with a summary that NIBA does “the best we can with the resources we have available”. Only time will tell if this is deemed good enough by the brokers who serve in Australia’s * regional areas.


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Premium innovator Premium Funding’s Ross Hayward explains his attitude to innovation, growth, competition, the future for brokers and why having new ideas will never get old By John Deex

“I DON’T SEE IT AS A JOB – FOR ME IT’S fun,” says Brisbane-based Premium Funding director Ross Hayward. It may not be everyone’s idea of entertainment, but for him it’s the freedom to innovate that adds the pizzazz. Funding is undoubtedly a crucial cog in the insurance wheel, allowing the monthly repayment of commercial premiums. Much simpler than a bank loan, it can usually be approved instantly. Mr Hayward put his career as an accountant on hold more than 12 years ago to assist the family business, and he has never looked back. Premium Funding has grown from four staff to about 30, and from a purely Queensland focus to a genuinely national presence. It wrote 40,000 contracts last year and is among the three biggest funders in the country. But Mr Hayward never wants to stand still, and a series of initiatives unveiled this year have stirred up the sector. First came a partnership with St George Bank to launch the Acquisition Finance product in February, enabling brokers to borrow more for acquisitions, succession planning and refinancing. Then in April a pre-approved business loan product to be sold via brokers was introduced. Premium Funding Advance provides loans of up to $20,000, but there are already plans to raise the limit. And later that month the Pay By The Month (PBTM) initiative went live. Available to brokers with the Ebix-owned WinBEAT broking system, it eliminates the need for manual contract preparation and allows the inclusion of a funding payment option in every client invoice or statement. Premium Funding sees relationships with brokers as absolutely crucial and PBTM, 64

which saves both time and money, is winning lots of new friends. “It really has taken away any work required to do premium funding,” Mr Hayward tells Insurance News. “You just print an invoice and the payment option is on the bottom. It’s an enormous time-saver. “And brokers are on commission for premium funding, so the more opportunities they present to fund their clients the more chance they have of earning that revenue. “In the past a lot of brokers didn’t bother offering it because of the time it took to prepare a funding contract.”

Many brokers recognised the benefits straight away, he says. “On a $2000 insurance premium the broker will earn 15% on that, so that’s $300. If they were to fund that $2000 they would earn another $60. It doesn’t seem like that much but the funding commission is close to 20% [of the broker’s commission]. All for doing nothing. “It’s like anything with technology, there are early adopters, and I think we’ve found most of them. All the ones that have recognised the enormity of it have jumped on the phone and requested it.” Innovative technology has always been a

“It’s the way of the future. I can’t see in three or four years a broker preparing a contract the old-fashioned way. That whole process will go.” Mr Hayward says brokers using PBTM have doubled the number of contracts they fund, and Premium Funding’s competitors will now be scrambling to catch up. “It’s the way of the future. I can’t see in three or four years a broker preparing a contract the old-fashioned way. That whole process will go. “It’s been something that’s been done before for the big end of town, but it’s never been available for the majority of brokers in Australia. “I’m sure that all funders at some stage will be offering this product. “The aggressiveness of how quickly we’ve rolled this out will probably mean that they’ll push hard to get into it as quickly as they can.” insuranceNEWS

June/July 2016

crucial plank of Premium Funding’s culture. Mr Hayward says 10 years ago the company was the first to allow brokers to submit contracts online without a signature. It was also the first with an iPhone app, five or six years ago. “We’ve always been working on technology plays and looking at ways of being ahead of the other funders,” he says. Increasingly the company will look for opportunities outside the premium funding core product, with Premium Funding Advance a classic example. “We have all these clients paying large bills on a monthly basis, and I thought to myself, maybe they want additional working capital,” Mr Hayward says.


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“It’s very unsecured lending, unlike the premium funding which is backed by the ‘cancelability’ of insurance premiums. This one really is a punt. You hope they pay it back. “We did a trial run with two or three brokers about nine months ago and wrote about $2 million business to 100 clients. We have watched that book run, and it’s run really well, so we thought, let’s go live. “We called all the clients and asked what they wanted the money for. “The majority said they had applications with the bank and it was all too hard, with all the financial statements they have to give. “All we are saying is you’ve been a premium funding client before, you’ve been a good payer, here’s some cash. The ease was just sensational. “And it’s more commission for brokers. It’s money for nothing again. It’s been really well received.” The acquisition loans for brokers were sparked by increasing consolidation in the marketplace. Mr Hayward says previously Macquarie Bank was the only option, but many brokers wanted an alternative. “We’ve been working with St George for a while now. They get this space. With current interest rates where they are it’s really affordable to borrow money to buy a business. The payback time is really quick. “We’ve had a hell of a lot of enquiries.” Diversification was made all the more logical by the current soft market, Mr Hayward admits, which has had a clear impact on growth. The last 12 years have been “an easy ride”, with annual growth of 20-30%, but this year has been tough.

Premium Funding’s Ross Hayward: the soft market makes diversification all the more logical

insuranceNEWS

June/July 2016

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“We will grow slightly, but not at the previous pace. “I would have liked premiums to go up this year, but it hasn’t happened. It has got us off our backsides to come up with more product.” And, Mr Hayward tells Insurance News, premium rates still haven’t hit the bottom. “We are all hoping there is a turnaround, but at this stage I am still seeing numbers going backwards.” There has been a very deliberate shift to make sure the business is not so exposed to the vagaries of the insurance cycle. “We felt that for a long time our eggs were all in one basket. We have morphed our business into being more than just a premium funder. “The more of these innovations that I can give, then the more chance there is of other brokers using us.” He believes this side of the business can only grow in the future. “I’ve got a feeling that in the next two to three years this unsecured lending that we are doing will make up 20-40% of our business,” Mr Hayward says. “It’s got that feel about it. There’s a demand for easy access to capital.” And there’s no real future in just being a premium funder, he says. “You’ve got to do more, or you’ll get left behind. Premium funding is the core business, but we are pushing hard into other financial services sectors. “We are competing with some of the fintechs out there. What we are doing is essentially what they’re doing – it’s just that we’ve got the distribution already.” Mr Hayward sees technology continuing to have a major impact on the insurance industry, but believes reports predicting brokers’ demise are way off the mark. He says Premium Funding is “absolutely committed” to working with its key partners. 66

“The reason brokers exist is because they are actually giving a service,” he tells Insurance News. “They are using a skillset to help find clients the best insurance. “So I think you are always going to need a broker to assess each individual client’s requirements. “I think the technology plays are just going to make that easier for them. Things like PBTM, which will mean that work is more automatic and the knock-on effect will be cheaper costs to the client. “There is no question that the tools the providers to the industry will give brokers will make their lives much easier. There is

“Certain cluster groups or AR networks are restricting the products that their members can use,” he says. “It makes no sense to me. Some brokers cannot access our PBTM product for example. Why would you force your network to do more work? It infuriates me.” While Premium Funding is focused on diversifying at home, it has no current plans to expand abroad. Rival funder Centrepoint Alliance recently confirmed that a move into the New Zealand market had not been successful, something Mr Hayward says could have been foreseen.

“Certain cluster groups or AR networks are restricting the products that their members can use. It makes no sense to me.” always going to be a need for insurance brokers.” Mr Hayward says Premium Funding “will never go direct. We do get a lot of phone calls from clients, but we just call a broker and leave it with them. “We can’t cut the broker out of the commission. They are not our clients, they are the broker’s clients. We are just a service provider. “The moment we do anything to interfere with the client/broker relationship, we’re costing them their core income, so we have to be so careful.” Mr Hayward remains deeply frustrated that some brokers are not free to choose which funders to work with. insuranceNEWS

June/July 2016

“New Zealand is a tough market. Unless you are doing something different I don’t understand how you can just walk into a new area and assume you are going to pick up business. They have got so many options over there.” He says options in Asia have been considered, but it is not a priority right now. “It would be silly for us to take our eye off our growth in Australia. To move across borders is difficult. Other funders have tried and failed, but who knows, maybe one day. In five or ten years, possibly.” Mr Hayward believes family-run businesses are ideally suited to working with brokers, and Premium Funding’s flexibility and stability sets it apart from the competition.


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“We are family-owned, just like the majority of brokers out there. “We don’t report to anyone, so we can do whatever we want. We are always going to be here – we have no interest in selling the business. I’d like to see my kids run the business one day. “We are accountable to ourselves only. We literally turn up at work and give something a go – if it works it works, if it doesn’t it doesn’t. That flexibility gives us an enormous competitive edge.” He says he isn’t interested in what the competition thinks of Premium Funding, but that’s not the case when it comes to the views of brokers.

“I’m sure we have been a thorn in the side of most of our competitors. But at the end of the day all I’m doing is trying to give brokers a better product. The competition can either sit back and get frustrated by us or they can react and build a product themselves. “It is not going to stop any time soon.” His enjoyment of his role is obvious, as he looks toward what he considers a very bright future for the business. “Every day I get in the office and think, ‘what can we do today?’ As opposed to just sitting there and waiting. That’s what we’re all about. “We turn up and just try to create the

best product. The fact that you have a licence to do that is very motivating. “I love hearing that brokers like our products. I love it when a manager from another premium funder calls us and asks for a job, which has happened a lot lately. It shows that we’re doing the right thing. “As the younger brokers come through it is an ideal time for us to accelerate our growth. They get technology and they get automation, and old-school loyalties will be a thing of the past. “Everything we are doing now sets us up perfectly for the future.” Who knew premium funding could be so  much fun?

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The new, old problem As fresh threats emerge, it’s clear Australia’s war on asbestos is far from over By Andy Swales

IF COOKING IS KING WHEN IT comes to reality TV, then amateur property renovation must run a very close second. But rarely has the phrase “don’t try this at home” seemed more appropriate. While would-be Masterchefs run the risk of collapsed soufflés and bruised egos, budding Blockheads may face a hidden horror that could make them rue the day they ever wielded a sledgehammer. In April a report by the Asbestos Safety and Eradication Agency (ASEA) and actuaries Finity warned there could be about 9400 new cases of the deadly asbestos-linked lung cancer mesothelioma in Australia by the end of the century. Finity’s modelling suggests a gradual decline in annual cases from about 2020 (it says there were 712 last year, after holding relatively flat since 2011). But it shows a slight uptick to 2020 in “third-wave” victims – people made ill outside work and industrial settings. And it says by 2050 the pro70

portion of third-wave victims will outstrip the first and second waves made sick by occupational exposure. That puts the spotlight on home renovators, among others. “The proportion of cases not related to occupational exposure is increasing over time,” report co-author and Finity Principal Brett Riley says. “These mesotheliomas are generally associated with relatively low doses of asbestos exposure and include some individuals who will be unaware they have even been exposed to asbestos. Third-wave mesotheliomas represent about one in every three mesotheliomas diagnosed at present.” ASEA Chief Executive Peter Tighe says the forecast calls for a new approach to mitigation. “The people who are working with asbestos have changed. We were talking about people in construction, installation and aspects of service work, but what we’ve [also] got is nonoccupational work – this third-wave group,” he tells Insurance News. insuranceNEWS

“We have regulations that apply under work health and safety legislation for commercial and industrial [work]. The problem is in home renovation – there’s a hell of lot of asbestos in the domestic built environment.” Asbestos products such as insulation, sheet material and tiles have been banned in home construction since 2003, but Mr Tighe says the durable mineral fibre was “de rigueur” in Australia’s post-war building boom. Chris Dardaneliotis, the Chief Executive of specialist underwriting agency Sterling, tells Insurance News the thirdwave risk presents a major challenge for asbestos liability insurers. “From an underwriting perspective, how do we make sure we understand what the full exposure to that individual is, and allocate liabilities accordingly? “You can pick up an asbestosrelated disease with simply one exposure, or you can pick it up over many years with many expoJune/July 2016

sure points, so it’s a real challenge to identify all those exposure points and allocate the liability proportionately.” Mr Dardaneliotis expects the peak in asbestos-related disease diagnoses to come in the next decade. But he warns that “even then it’s going to be a bit questionable as we get better at diagnosing illnesses”. Asbestos liability insurance is largely the preserve of specialists such as Sterling. Mr Dardaneliotis says more mainstream insurers may enter the market once a very clear downward trend in cases is apparent. But the situation will be far from straightforward. “That third wave, they’re going to be looking for someone to blame,” he tells Insurance News. “If someone is walking down the street and they trip over, they look for a party to blame... they don’t care if there has been a crack in the ground for many years. It’s going to be a council issue or a contractor issue.


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Removing asbestos roof sheets: “there’s a hell of a lot in the domestic built environment”

“Asbestos-related disease is not a simple matter like a broken arm or leg. It’s largely a death sentence, and it’s a painful one. So they’ll be looking for someone to blame. “We’ve already had scenarios where people have alleged recent exposure is an issue for them, yet clearly throughout their lives they have been exposed to asbestos given the trade they’ve been in. That’s what we’re very mindful of moving forward. “As insurers we need to be very careful. Otherwise you get caught up [in litigation] and [cover is] going to be underpriced. It’s not going to be correctly reserved.” When ASEA and Finity released their report, Mr Tighe called for “measures now to reduce the risks of asbestos exposure”. “This should include proper identification, removal and disposal of asbestos in homes and buildings across the country before it leads to asbestos exposure.” There is a national strategic plan for asbestos management,

and regulations in place covering aspects such as removal, transportation and disposal. But there are gaps in some of the regulatory requirements, Mr Tighe says. “We think there should be a much more professional approach to grading and identifying

and building owners – doesn’t really touch on the domestic area. Your own home is not a place of business.” Mr Dardaneliotis also sees problems. “There is a general level of awareness [of asbestos dangers],

“Asbestos-related disease is... largely a death sentence, and it’s a painful one. So they’ll be looking for someone to blame.” and assessing in the first instance. You need to have people who know what they’re doing. “General work and health and safety practices are not too bad, but you always need to continue to review them based on changes in technology. “The problem is, the regulated environment in relation to work health and safety – which is for employers and employees insuranceNEWS

but we’ve seen instances we’re there is complacency – of the individual, of the organisation and sometimes even at a local government level.” He gives the example of cleaning up illegally dumped asbestos. “What some councils do is send out the council workers. The workers will have done an asbestos awareness course – in June/July 2016

some instances, not all. They’re given the face mask and told to pack it into bags and take it away to the local waste facility. “They’re not prepared to get a properly licensed contractor with the full body suit to go down and do the job. Why did they get the council worker to do it? Because it’s cheaper than paying a few thousand dollars to get an asbestos contractor to do it.” And there is another looming threat that goes beyond the legacy issue: illegal imports of asbestos-based building materials from countries such as China and India. “This is going to be an ongoing problem for decades to come,” Mr Dardaneliotis says. “Getting rid of all the stuff that’s out there now is going to take a long, long time [but] stopping the new products is going to be a bigger challenge, especially given the free trade agreement we’ve entered into with China.” He says materials containing asbestos are freely available, and are relatively easy to get into the country. 71


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“These products are illegal, but the reality is the authorities are just so stretched [that] this is only a very small blip on their radar. “In Russia and Asian countries use of asbestos products is actually growing. Importation of asbestos products is going be an ongoing threat to Australia for many years.” Mr Tighe says some end users may not even be aware their imported products contain asbestos. “A company in Adelaide brought in high-density cement board that was used for flooring, and it had installed it in 64 different sites before it realised the product contained asbestos. “It has breached the customs regulations and is up for a significant fine. Not only that, it has now got to remove the product – which is going to be quite expensive – and replace it. “The individuals who were cutting [holes] for cables... have done that on the understanding that the product they were working with had no asbestos in it.” 72

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A recent Senate inquiry into non-compliant building materials addressed illegal imports, and in the first quarter of this year the Australian Border Force initiated an independent review of asbestos controls. In May Border Force Commissioner Roman Quaedvlieg addressed a Senate estimates hearing on the matter, telling senators he had received an insuranceNEWS

interim report in the first week of May. “There are some recommendations that, in the broad, go towards the way we manage our information on asbestos monitoring and detection, and how we interact with other Commonwealth and state departments and agencies,” he said. “The third broad area of 4512/45+.3,*0-

recommendation relates to how we engage with industry, in partnership with industry, against the importation of asbestos. We will consider those recommendations.” He said when the recommendations are acted upon “we will obviously build an implementation plan”. “At some point or other before we commence the implementation, we will certainly be engaging not just with industry in relation to the outcomes of the review; we will also make public some components of the review. “I have not yet determined how much of that I am prepared to make public.” He told senators the Border Force has stepped up its asbestos controls since the middle of last year, resulting in a doubling of positive detections. “In the past nine months or so we have had eight positive detections of asbestos products at the border. Our efforts in that respect have certainly increased, not just in terms of effort but in  terms of outcomes.”


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THE LEGAL VIEW

The Consensual Claims exclusion Wotton + Kearney partner Raisa Conchin and General Counsel - Underwriting of DUAL Australia Pty Ltd Jaydon Burke-Douglas discuss the history and evolution of the Consensual Claims exclusion and the professional indemnity implications of claims solicitation

Rewind the clock a decade and you would be harrd pre essed to find a D&O policy which didn’t contain an Insure ed v Insurre ed exclusion exclusion. The exclusion excludes claims bro ought by the company co against its own dire o officers, or ectors or by one dirre ector or officer against anotherr. This insulates the insure er fro om claims which have been concocted by the dir dire ectors and officers, to be bro o ought against them by the company, in n or ord der to re ecover business losses allegedly arising from poor management. fro manage The market has seen a shift away from the Insured v Insured exclusion, towards the more favourable Consensual Claims exclusion, which often contains final adjudication language. The latter only excludes claims which have been invited or solicited by the insured (as opposed to claims which are brought by other insureds). The focus is on whether collusion has in fact occurred, as opposed to the identity of the parties. This shift has been primarily driven by commercial considerations and increased competition between insurers. Newer D&O policies which are marketed as premium products don’t contain either of the exclusions. However, insurers generally have an exclusion in their endorsement library, to apply if there is a history of in-fighting between insureds which the insurer does not want to insure. Another space in which the Consensual Claims exclusion is prevalent is Management Liability. These policies typically respond to claims arising

Jaydon Burke-Douglas General Counsel | Underwriting of DUAL Australia Pty Ltd

from Wrongful Acts of the insured. Management Liability policies are generally more competitively priced than standalone D&O policies and cover many of the same exposures. They are sold largely through online platforms. The Consensual Claims exclusion is generally absent from professional indemnity policies. That accords with the nature of the cover, which is designed to protect the insured’s clients from any professional negligence. Accordingly, the prospect of collusion between the parties to the claim is limited. Nevertheless, there arise situations where the insured can fall into the uncomfortable position of having arguably invited or solicited the claim for which it seeks indemnity under the professional indemnity policy. An example is where ASIC takes the proactive approach of requiring an AFSL-holder to compensate a client for a liability, regardless of whether or not the client has made a claim. The distinction with this scenario, as opposed to a collusion scenario, is that the liability is likely to be “real”, as opposed to the manufactured result of collusion. An AFSL-holder who compensates, or proposes to compensate, a would-be claimant at ASIC’s request may run into trouble when seeking indemnity under its professional indemnity policy. It is uncontroversial that professional indemnity policies respond to claims made against the insured (as opposed to liabilities incurred by the insured). Even in the absence of a Consensual Claims exclusion, the insurer may

Raisa Conchin Partner | Wotton + Kearney

point to conditions on the cover which effffectively prohibit the solicitation of claims. An example is the standard condition requiring the insured to take all reasonable steps to avoid or diminish any liability under the policy. If the claim would not have been made but for the solicitation, section 54 is unlikely to assist the insured. Further, the insurer may allege a breach of the obligation of utmost good faith. Where insureds are concerned about whether a professional indemnity policy will respond in the event of the fraudulent misappropriation of funds, a crime protection policy may be more suitable. This type of policy responds where a client’s funds have been dishonestly siphoned into ventures without his or her authority, even in the absence of a claim. AFSL-holders may only be required by the regulator to purchase professional indemnity insurance. However a robust approach to risk mitigation would see buyers of professional indemnity policies looking to purchase the full suite of specialty products, such as D&O, Employment Practices Liability, Tax a Audit Insurance, S Statutory Liability & Supplementary Legal Expenses and Commercial Crime Insurance to ensure that they have adequate protection – for not only their own balance sheet, but also for their clients, who may find themselves on the wrong end of a dishonest employee or authorised representative. For more e legal upda ates re elevant to the insurance industry dustry y, visit: www www.wottonkearney.com.au .wottonkearney ey y..com.au


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companyNEWS

New structure, wider services: Centrepoint Alliance makes some big changes to benefit brokers

LISTED FINANCIAL SERVICES GROUP Centrepoint Alliance has restructured its operations into four new business units to provide brokers with more expansive client services. The restructure includes the new brand of Centrepoint Alliance Lending Solutions (CALS), which is made up of the former Centrepoint Alliance Premium Funding and Centrepoint Alliance Lending businesses. CALS has three lending arms: premium funding, consumer and commercial mortgage lending and asset finance. Chief Executive Bob Dodd – who was previously Chief Executive Premium Funding & Lending Solutions – says premium funding “remains our primary product”. The other business units in the revamped group are Centrepoint Alliance

Financial Advice (previously Professional Investment Services and Alliance Wealth); Centrepoint Alliance Licensee Solutions (Associated Advisory Practices); and Centrepoint Alliance Investment Solutions (Ventura Investment Management). Mr Dodd tells Insurance News the structure simplifies the branding of the group’s businesses and how they relate to each other. It also creates a “referral hub” for CALS’ 450 supporting general insurance brokers. “One of the things we’re really excited about is that general insurance brokers want to retain their expertise as brokers but welcome the opportunity to extend their client relationships by adding value to those relationships.” Mr Dodd believes the restructure will encourage brokers to refer their clients to other parts of Centrepoint Alliance, but emphasises that brokers are not compelled to. “This is not about us. We’re saying to our general insurance intermediaries, we have other products available should your customers be interested. “We’re not cutting across their own relationships. This is about giving general insurance brokers a viable addition to their current business that can create extra value for their customers who may have an interest in other financial products.” He says the new model provides brokers

with an “income opportunity” as well as the ability to add value to client relationships. Future announcements will make clear CALS’ plans for growth, but Mr Dodd confirms the release of new premium funding products and “tremendous opportunities to increase our presence in mortgage and asset finance lending”. There will also be other new opportunities, because “we’ve got some ambitions there”. The current leadership at CALS remains, including General Manager Sales and Marketing Kevin Frost and Chief Operating Officer Katrina Hickson. The restructure does not include New Zealand. Centrepoint Alliance Premium Funding pulled out of that market in May, just one year after announcing its expansion there. “We reviewed our strategy and after analysing the long-term perspective in New Zealand we decided to focus instead on investing in new technologies and opportunities in Australia,” Mr Dodd said. Centrepoint Alliance started as insurance premium funding and equipment finance specialist Alliance Finance Corporation in 1991 and listed on the Australian Securities Exchange in 2002. Centrepoint Alliance was formed when Alliance Finance merged with Centrepoint * Finance in 2005.

Trucksure becomes Fleetsure: But the blue glitter vests will remain… SPECIALIST UNDERWRITING AGENCY Commercial and Trucksure has changed its trading name to Fleetsure. Trucksure was formed in 2001 and specialises in the fleet and heavy motor sector, and Director Sean Rafferty says the name change aligns the business with the areas it provides cover for. “The Fleetsure name better reflects the market sector we operate in, being much more than just the transport sector, but the broader motor fleet market,” he said. “We want brokers to identify the insurance, risk management and training solutions we offer as relevant and of value to clients across many industry types.” Mr Rafferty says by specialising in this particular segment of the market, the company is able to offer cover that matches an operator’s particular needs. “Any client who runs a motor fleet has many of the same issues as the transport sector, but often these needs are not addressed by the general market,” he tells Insurance News. “The general insurance market is commoditising the insurance of large fleets, 74

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which means these accounts need the benefit of the bespoke solutions we are able to offer.” Mr Rafferty says brokers have embraced the rebranding since it was launched at the Underwriting Agencies Council/National Insurance Brokers Association Expo in Melbourne last month. “Brokers told us they knew what Trucksure did, but the Fleetsure name encompasses much more,” he said. “They also said the rebranding made it easier for them to recommend the product to their mainstream fleet clients.” Mr Rafferty says there have been no changes to the existing Trucksure staff but the underwriter has recruited Steven Hamilton as its new Business Development Manager. And another thing that won’t be changing – the glitter vests seen at many industry events. “The glitter vests worn by the Trucksure team at expos and conferences will continue,” Mr Rafferty said. “We will be making the new Fleetsure brand just as visible as Trucksure was.” *


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companyNEWS On the ball: Sportscover’s TV joint venture will stream events like the Hockey Victoria Premier League

Paper revolution: Mike Donnelly pioneers standard fact forms for brokers

Covering the field: Sportscover targets a more diverse future SPECIALIST SPORTS AND LEISURE INSURER SPORTSCOVER SAYS ITS FUTURE lies in offering a diverse range of services above and beyond its core insurance product. Last month it announced the purchase of a 50% equity share in live streaming company My Sport Live, and launched a new risk management and communication app for sports teams. Those initiatives are just the beginning of a broad diversification strategy, with more announcements to come. “We see this as the future for Sportscover,” Managing Director Chris Nash says. “We have the knowledge, expertise and relationships to provide a range of services in sport that will add real value in addition to our core insurance products.” Sportscover Australia Chief Executive David Lamb told Insurance News the company has been working on the diversification strategy for two years. “In some senses we are a sports business that provides insurance,” he said. “Our value proposition is our experience and knowledge of sport. “Insurance is essentially a commodity and, although it will always be our core offering, we are looking at increasing the value proposition to the client. “It will help retain clients and also generate independent revenue. “We have modest expectations early on, but would expect significant non-insurance revenue within five years.” An independent division is being established to provide the new sports services. My Sport Live streams events not considered high profile enough for mainstream TV, like the Hockey Victoria Premier League, while the Sportscover Vital app contains updated medical and emergency details for sports clubs and associations. This crucial information is instantly available to coaches, managers and trainers on mobile devices so they will know who to call in an emergency, and have access to the medical history of any injured player. The app also enables instant communication with team members when arranging training and other activities. Mr Lamb says response to the app so far from sports organisations has been “phenomenal”. “It is clear from the conversations they had with us in the development stage that they feel that this will bring tremendous benefits in the management of teams at all levels and will greatly assist them to administer their duty of care to their members,” he said. Mr Nash says he was “blown away” by the app’s effectiveness and simplicity. “Recognising our core value proposition was an un-paralleled knowledge of sport we set out to diversify our business a couple of years ago and to provide additional noninsurance services that sports need,” he said. * “The successful delivery of this unique tool is a giant step down that path.” insuranceNEWS

June/July 2016

ADELAIDE-BASED INSURANCE BROKER Mike Donnelly has introduced a new service that promises to make mundane paperwork easier to manage for the Australian broking community. Broker Forms (www.brokerforms.com.au) provides electronic insurance fact find forms to record underwriting data from clients in a standard format for each class of insurance. They are compatible with the various broker management systems used by the industry. The service, to be launched in mid-July, provides a universal system to electronically store and retrieve client instructions from the broker’s document management system. A similar service is available to brokers in the United States who have benefitted enormously from using standardised fact forms with a list of commonly used underwriting questions posed to clients. Mr Donnelly, the Managing Director of Donnelly Insurance Brokers and a long-time innovator in the field of broking and technology, says it’s now time for Australia to “catch up and do it better”. “We have a system that improves brokers’ working lives and doesn’t interfere with what they’ve already got. It fills the gaps,” he tells Insurance News. The service charges a monthly subscription fee of $15, which Mr Donnelly says is money worth spending. “Broker Forms make it easy to obtain confirmation of the underwriting information recorded in the client conversation by emailing a copy of the completed broker form along with the recommended insurer quotation and legal notices. “In the event of a legal dispute around a client’s claim being denied by an insurer, a broker will be asked to produce a written record as primary evidence of the client’s instructions. “Broker Forms can protect the broker and confirm the intention of the coverage placed to help minimise their professional liability risk exposure.” Mr Donnelly says brokers who trialled the service recently have given Broker Forms “mostly positive” feedback. There are plans to market the service to * Asia and the US in the next few months. 75


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peopleNEWS

Are you sure you’re qualified for this job? There is an alarming lack of proof of qualifications in the insurance industry By Sheila Baker, Managing Director, Gold Seal Practice Management

RECENTLY GOLD SEAL HAS COME across a number of situations where clients have found that its team members are unable to prove they are as qualified as they claim. That’s not just hopeful job applicants. It includes long-term employees and authorised representatives (ARs). They simply have no evidence of their claimed qualifications. Some say they “think” they are appropriately qualified, but if you care to check, you’ll all too often find there’s no record to be found. Gold Seal provides services supporting the business practices of Australia’s insurance intermediaries as a registered training organisation (RTO) and a provider of business practice support services. We’re required to check previously undertaken studies and/or advise on necessary qualifications to fit a person’s occupation – for example, advising for retail clients/products requires Tier 2. As providers of business practice support services Gold Seal might be helping a client to apply for an Australian financial services (AFS) licence or providing generalised compliance support. It’s in the provision of these services that we have encountered both mistaken and misrepresented claims of qualifications. Our exposure to a large number of intermediary businesses every year puts us in a good position to give this free advice to the managers of brokerages and authorised representative organisations: make sure the people you rely on are appropriately qualified for the job they do. Don’t take it on trust: sight that piece of paper. Having appropriately qualified people is clearly a quality of service issue, but it can also mean companies are in breach of the law, with all the consequences associated with that, including a negative impact on professional indemnity premiums and coverage. 76

Many organisations take what they are told about qualifications at face value. This applies to new hires, authorised representative agreements, and employees who’ve been part of the team forever but whose qualifications have never been checked. It can especially be the case with people who have been an AR for someone else and where they simply claim they have the qualifications. Surely they wouldn’t have lied? Sorry, but there’s every chance they did. This isn’t cynicism and it isn’t just anecdotal. Vicky Phillips operates The Diploma Mill Police, a free service that protects consumers from claims about fake colleges or degree and diplomas.

Advice for individuals:

Take pride in the work you have done to underpin your professionalism. Put those certificates in a frame and hang them on the wall – that way you’ll always know where they are. Treat them with the respect they deserve and don’t just throw them in a drawer. At the very least, put them all together in a file and always provide them as part of an application for a job or when joining new licensees.

Advice for businesses:

Always ask for evidence of qualifications when hiring or appointing new ARs. Preferably hold up the process if they can’t be found because you are the one who will be held responsible if ARs or employees can’t evidence their qualifications. There are many benefits in having a trained and qualified workforce, but regardless, if your employees and/or ARs don’t have appropriate qualifications, you could be in breach of the law.

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“Our studies of consumer and employer behaviour on the issue of falsifying education documents and credentials show that the practice of listing inaccurate or fake educational backgrounds is fairly common,” she says. “One survey we did in 2009 with site users resulted in 80% stating they would lie about their educational backgrounds if it meant they were being held back from a job they personally believed they were qualified for.” We have also seen cases of people who genuinely thought they were properly qualified to advise clients but were mistaken, or rested on the laurels of outdated qualifications. Here are some examples we’ve seen in the past few months (and there are many more): • “ASIC told me I’m qualified to give Tier 1 advice to general insurance clients.” We can state without fear of contradiction that ASIC does not tell people that. If anybody tells you that, be assured they are very much mistaken – or telling a big fat fib. • “I hired Bruce back in 2012. He needed to finish his Tier 1 and said he’d do it straight away after I gave him a job. He hasn’t done it yet. But he’s got years of experience, and I heard somewhere that counts towards a qualification.” Experience does not replace a qualification. It will facilitate a recognition of prior learning exercise, but won’t replace the process involved in issuing the statement of attainment he needs. • “ABC Broking Group had me as an AR for nine years and they never asked to see my qualifications. I probably threw them out. I don’t remember where they are now. I thought I did them at XYZ Institute but they’ve told me they can’t find them. But I’m sure I did them.” Here’s a law that impacts all RTOs: we are required to be able to supply you with statements of attainment for qualifications for 30 years. So it’s not okay for an RTO to tell you they can’t find your qualification.


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peopleNEWS

Liability • “I’m applying for my own AFS licence. It’s a new business and I will be the responsible manager. I did my diploma back in 2004, but I don’t have the papers; I’ve lost them. I can still put my application in though, can’t I?” Err, no. You have a problem. At Gold Seal we feel compelled to remind people of these requirements, as it appears that quite a number of AFS licensees haven’t fulfilled their legal obligation to ensure that employees whose job roles include the provision of financial product advice are adequately trained and competent to provide the service covered by their licence. For the specific legal references, RG146 addresses qualifications for employees of licensees, including ARs who provide advice. And RG105 addresses organisational competence, requiring AFS licensees to ensure the skill levels of their representatives and responsible managers through a qualifications framework; and also to maintain documentation in relation to the training of their representatives. So yes, it’s the law. Perhaps you need some help in this. You might look at the evidence supplied by your employees to prove they are appropriately trained and it looks like gobbledygook. It’s not easy to figure out some of those statements of attainment, or maybe it’s old and the training packages have changed and you don’t recognise the codes. Or maybe you think that life and broking qualifications are the same (they’re not). We can tell you everything you never wanted to know about your team’s qualifications. We won’t even charge you for the service. We just want the people in our community to stay out of trouble, and to keep going for what they want to achieve without being hampered by staff or representatives * who lack the proper qualifications.

ShieldCover Liability products have been designed to provide FVSOIVWERHXLIMVGPMIRXW[MXLE¾I\MFPIERHMRRSZEXMZIWSPYXMSR that is tailored for their individual needs. Our underwriting team LEWI\XIRWMZII\TIVMIRGIMRXLIPMEFMPMX]QEVOIX[LMGLGSQFMRIH [MXLSYVFVSEHGETEGMX]I\GIPPIRXTSPMG]GSZIVEKIERHXLI security of certain underwriters at Lloyd’s makes ShieldCover the perfect choice for your clients’ liability insurance. Our range of liability products include: General Liability Scaffolders Transport & Logistics Welders & Boilermakers Events & Markets

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For more information contact Nathan Sommer 1300 850 188 | nathans@shieldcover.com.au shieldcover.com.au ShieldCover is a division of East West Insurance Brokers Pty Ltd. ABN 83 010 630 092. Australian Financial Services Licence No. 230041 acts under a binding authority agreement on behalf of certain Underwriters at Lloyd’s. Please refer to the Product Disclosure Statement or call us on 1300 850 188.

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peopleNEWS

Cleaning up: AIG’s (from left to right) Jane Pochon, Scott Bunting, Jeannet Florussen and Joe Vaccarella pick up Sydney’s rubbish

All for a good cause: Faaizah Banu stretches after filling a bag

Spick and span: AIG staff spruce up Sydney IT’S NOT ALL ABOUT PROFITS AND sales targets for the folk who run giant US insurer AIG. A group of nine employees from its Australian operations – armed with thick gloves, garbage bags and sunscreen – cleaned up the streets of Sydney in April as part of the company’s annual Global Volunteer Month event. The group, which included General Manager NSW & ACT Scott Bunting, started the clean-up exercise at Park Street and made their way down to Elizabeth Street toward busy Central Station before combing Belmore Park, bustling Chinatown and George Street. “Not only was the occasion successful in terms of how much rubbish we collected, but it was a great opportunity to ‘give a little bit back’ to the community while catching up with colleagues at the same time,” Mr Bunting tells Insurance News. 78

Cigarette butts, coffee cups, water bottles and takeaway containers were some of the most common litter picked up by the group. Other AIG executives who took part in the corporate social initiative tell Insurance News they drew positive feelings from the experience. “It was fantastic to make use of AIG’s global volunteering time off policy and make such a quick and positive impact to the environment,” National Corporate Communications Manager Lisa Rose said. Accident & Health Underwriter for Consumer Insurance Joe Vaccarella says he “feels great to have done something so positive for the local community”. The voluntary work was not just restricted to Sydney. AIG staff in Brisbane helped to raise more than $2000 in a donation drive at inner city train stations for Youngcare, a charity devoted to helping young people insuranceNEWS

June/July 2016

with special needs who have been forced to live in aged care facilities. “This charity supports young people with complex and high care needs, and endeavours to keep them out of aged care homes by providing shared living accommodation,” AIG says. “Their aim is to offer choice, dignity and respect to all young Australians with high care needs.” Permanent employees of AIG are entitled to two paid volunteer days annually. “Every day, we work together to make a difference around the world,” AIG says on its website. “Our women and men volunteer thousands of hours to non-profits in the communities where we work, live, and serve our customers.” Last year, AIG staff volunteered nearly 70,000 hours to help various non-profit organisations around the world, including in Mexico City, Karachi, Buenos Aires, * Boston and Beijing.


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peopleNEWS

Happy retirement, Heinrich! The cocktail function to farewell retiring Munich Re Australasia Managing Director Heinrich Eder provided a colourful and memorable send off for one of the industry’s most popular leaders. Munich Re management, staff and friends gathered at the Cruise Bar of the Overseas Passenger Terminal in Sydney’s historic Rocks precinct. As well as providing an opportunity for Mr Eder’s Munich Re colleagues to bid their thanks and farewell, the evening was well attended by fellow insurance leaders, reinforcing the depth of Mr Eder’s contribution to the Australian insurance industry. As one participant remarked, “It was like a who’s who of the insurance industry. Chief executives everywhere!”

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Retiring, but Sydney’s still home Munich Re’s avuncular boss Heinrich Eder is farewelled by industry leaders and friends

Lederhosen leader: Mr Eder’s social events at Munich Re are legendary

RETIREMENT HAS CLAIMED ONE OF THE MOST POPULAR figures in Australian insurance, but he’s unlikely to be completely lost to the industry. Heinrich Eder, Managing Director of Munich Re Australasia, was guest of honour at a function in May that brought together the industry’s movers and shakers in unprecedented numbers to wish him well in retirement. It was a remarkable turnout, and testament to the esteem in which he is held in the industry and within his company. The urbane German (and now also an Australian – he has no intention of leaving town) has been an Insurance News Top 20 alumnus since the feature began in 2009. The close professional and personal links he holds across the regional industry are legendary. Munich Re Australasia Chairman Gayle Tollifson told the gathering at the Overseas Passenger Terminal that the size and seniority of the crowd of well-wishers was “testament to the strength and longevity of the bonds he forms with people”. Mr Eder joined the reinsurer as a casualty underwriter in June 1980, immediately after graduating from university with an economics degree. His first role in the company involved casualty treaty underwriting for Australia and New Zealand, but his first real connection with this part of the world began in 1987 when he was sent to Sydney to train a local manager. “Heinrich did, of course, train him in the technicalities of casualty underwriting, but I understand he also delivered client management training at the same time,” Ms Tollifson said. “In those days, this was known as business entertainment. “Clearly Heinrich started honing his skills in this art form at the beginning of his career, and I'm sure you'll agree it remains one of his strong suits.” In 1995, Mr Eder was appointed manager of Munich Re's Tokyo office. His fluency in Japanese, developed after meeting Nagako,

his future wife, proved useful in the tough negotiating environment of Japan. He returned to Australia in 2003 as general manager for the company’s general insurance business, and became managing director in 2005. Ms Tollifson said from the moment he arrived in Australia Mr Eder anticipated changes that would in time affect the reinsurance market. “He foresaw that the industry would consolidate and that the buying needs of clients would change. He knew Munich Re would need to adapt its operating model to become a true solution partner, not just a capital provider.” In 2008, Mr Eder’s responsibilities expanded again to include the primary insurance business through Great Lakes Australia. “Heinrich has steered Munich Re through many difficult challenges, including the tough market conditions facing the life insurance industry, the soft premium rate environment in the non-life reinsurance and primary markets, and the increasing prevalence of natural catastrophes,” Ms Tollifson said. “Managing significant loss events is one of the most characterbuilding times in our industry, and Heinrich has had the dubious good fortune to lead Munich Re through the Christchurch earthquakes. “These are three of the 10 highest earthquake-related insurance losses ever. They have also been the most complex catastrophe losses the market has ever had to manage. “They cost the industry more than $US25 billion, with reinsurers including Munich Re bearing a significant amount of the loss. “Leading Munich Re through these difficult times required great calm and resilience – essential qualities that Heinrich possesses in abundance.” Mr Eder and his wife are now Australian citizens and intend to continue living in Sydney in retirement. He will, as Ms Tollifson noted, undoubtedly appear in the boardrooms of important compa* nies in due course.

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peopleNEWS Golf day raises cash for kids Pen Underwriting held its inaugural charity golf day at Sydney’s St Michael’s Golf Club in ideal playing conditions. The May event raised $10,625 for Variety Australia, which will go towards disadvantaged and disabled children throughout New South Wales and Queensland. Brian McGuigan from McGuigan’s Wines supplied participants with copious opportunities to sample his fine produce including a “Guess the Vintage” wine tasting competition. Former rugby league player and Channel 9 commentator Brett Finch was guest speaker and treated players to humorous and enlightening stories from his 15-year career.

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peopleNEWS

Fireworks as Steadfast lights up Brisbane Steadfast celebrated its 20th anniversary in style when members and industry representatives gathered in April for the group’s annual convention. More than 2300 people attended this year’s event, making it by far the largest insurance conference in Australia. Following closed Steadfast-only events at the Brisbane Convention and Exhibition Centre, the convention kicked off with a dazzling riverside fireworks display by the picturesque South Bank precinct. Adding to the occasion

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was Voice Australia runner-up Joe Moore, who took to the stage to entertain guests. It was a big milestone for Managing Director and Chief Executive Robert Kelly, who founded the company with (now retired) broker Ian Frith in 1986. Mr Kelly opened the formal convention program by cutting a giant five-tier birthday cake. Delegates did more than just listen to speakers who inspired and informed. They also dug deep to raise more than $177,000 for Parkinson’s Australia, this year’s choice of charity.

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The convention concluded with the traditional grand finale dinner, followed by a high-octane performance from 2015 X Factor winner Cyrus Villanueva, who got the guests on their feet and dancing. It was a long and funfilled night, and a great way to finish four days of learning, discussing, meeting, networking and partying. The Steadfast convention wagon rolls on to Sydney next year with the insurance industry biggest pow-wow set to rock the Harbour City. Images courtesy of Kevin Chamberlain


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Our specialist underwriters have simplified Business Interruption Insurance. IUA Business Interruption Insurance is made up of just 3 parts offering flexibility for your client: 1 Insured Gross Profit (Policy Item 1)

3

2 After Loss Costs (Policy Item 2)

Additional Benefits

The IUA Business Interruption product is comprehensive: • • • •

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No average / co-insurance clause No deductions from the claims payment for saving in business expenses No deductible, saving your client time and money in the event of a claim Generous sub-limits for the Additional Benefits e.g. Customers & Suppliers – 50% of Sum Insured or $1,000,000, whichever is the lesser and Public Utilities - 50% of Sum Insured or $1,000,000, whichever is the lesser Expert underwriters who can tailor policies to the needs of your clients After Loss Costs: Accounts Receivable; Additional Increased Cost of Working; Claims Preparation Costs; Expediting Expenses; Increased Cost of Working; Relocation Expenses; Rewriting of Records; Severance Pay and Wages and Salaries.

Contact our underwriters for a quote

1800 223 623

www.iua.com.au

This document is intended for insurance intermediaries only. The information contained in this document is not intended to be financial product advice and is descriptive only. The precise coverage provided is subject to the terms and conditions of the Policy when issued. Miramar Underwriting Agency trading as Interruption Underwriting Agencies (ABN 97 111 534 797, AFSL 314176) (‘IUA’) arranges the contract of insurance as agent for and on behalf of QBE Insurance (Australia) Limited (ABN 78 003 191 035, AFSL 239545), the insurer of the Policy.


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Golfers get into the swing of Allianz tournament Golfing legend Jack Newton joined 70 key partners at the Allianz signature event at the Steadfast conference in April. On a balmy night in Brisbane, Jack addressed the guests and swapped tour stories and tips as players practised their swings on the driving range. A mini-golf championship was held, with participants competing for the prize of a Scotty Cameron putter. Perhaps appropriately, Belinda Scott from BJS Insurance brokers won the women’s category, defeating Karli Roderick from Roderick Insurance Brokers by one point. Notably, both are from Victoria. Glenn Cooper of Coopers Brewery – whose family’s business has been insured with Allianz and its predecessor companies for more than 100 years – claimed first prize for the men. He was two points clear of his nearest competitors, Wade Knight from Knightcorp and Gavin Statham of Centrewest, who tied for second place. The golf theme was also reflected at the Allianz stand, with a golf simulator enabling delegates to test their skill and land the ball “nearest to the pin”. The winner, Aaron MacDonald of Business Insurance Cover Services, won a return flight to Sydney and a ticket to the Emirates Australian Open at the Royal Sydney Golf Club.

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Made in Germany: HDI Global showcases its focus on the world The Audi showroom in Sydney provided the perfect setting for HDI Global to host its official rebranding function in April. After all, Audi has been a long-time client of the industrial lines insurer and the two companies share the success of corporate Germany around the world. Board member and guest speaker Jens Wohlthat flew in specially from Germany for the ocassion, where he was joined by Australian operations Managing Director Stefan Feldmann and about 120 guests. Both Mr Wohlthat and Mr Feldmann used the ocassion to emphasise the name change from HDI Gerling. Parent company Talanx Group has said the rebranding marks an important chapter in the insurerâ&#x20AC;&#x2122;s history of more than 100 years. About 60% of the companyâ&#x20AC;&#x2122;s premium volume is from foreign markets, with the trend expected to accelerate in the coming years. Guests enjoyed canapes and music by renowned local performer Armondo Hurley, who has toured with rock legends such as Tina Turner and opened for the Rolling Stones.

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AILAâ&#x20AC;&#x2122;s social outing a hit with young professionals The Australian Insurance Law Association (AILA) Young Professionalsâ&#x20AC;&#x2122; latest social outing in New South Wales has proved a hit, with almost 400 people taking up the opportunity to meet and mingle with their peers. Tickets for the networking affair, held at the heritage-listed Crystal Palace in Luna Park, sold out well before the April 21 event. AILA NSW Young Professionals committee member Dan Robinson gave a brief welcome speech to guests who included loss adjusters, brokers, underwriting agents and reinsurers, as well as legal propfessionals. The famous ferris wheel at Luna Park was reserved for the evening exclusively for guests who wanted a break from the dance floor. AILA Young Professionals has plans in the pipeline to hold more networking events as well as educational opportunities this year.

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Lloyd’s celebrates opening of Sydney hub More than 100 guests from around the market gathered in Lloyd’s new co-tenancy hub in Sydney in late April to witness its official opening by British Consul-General Nick McInnes. The new offices provide Lloyd’s and the increasing number of associated underwriting companies with a defined centre in Sydney that is expected to over time become a business and social hub for agencies and the wider industry. The evening, hosted by Lloyd’s General Representative for Australasia Chris Mackinnon, attracted VIPs from all over, including New South Wales Treasurer Gladys Berejiklian. Industry guests included Insurance Council of Australia Chief Executive Rob Whelan, Lloyd’s Australia Chairman Mark Doepel and Underwriting Agencies Council Chairman Lyndon Turner, with General Manager William Legge. Lloyd’s shares the ninth-floor office in one of the city’s most sought-after business addresses with Talbot, Ironshore and Argenta. The office features shared facilities such as a rooftop terrace, coffee lounge and meeting rooms, and the tenants enjoy a panoramic view of the iconic Harbour Bridge. The common meeting areas are designed to be flexible to cater to various needs, and can be easily opened up to resemble a “town hall” to accommodate up to 75 people or operate as two separate formal meeting rooms.

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Austbrokers Countrywide settles in to new home Melbourne brokerage Austbrokers Countrywide has moved offices to the “suburban heartland” of Scoresby, after 16 years in inner-suburban Surry Hills. Managing Director Tim Considine describes the move as a “recruitment strategy” as it will offer staff a better work/life balance living closer to their homes. The move will save some staff 90 minutes of commuting a day. Mr Considine says for the first time all 75 employees will be on the same floor enabling better collaboration. The new office has all the mod cons, including an open plan layout, Bluetooth, big TV screens, meeting rooms and a café downstairs with beer on tap. Mr Considine says while it was a difficult decision going from High Street broker to a suburban business park on Eastlink the advantages outweigh the negatives.

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peopleNEWS CGU fun run celebrates diversity CGU’s inaugural Move In May fun run celebrated lesbian, gay, bisexual, transgender, intersex and queer (LGBTIQ) equality in sport. The 4km or 8km run or walk around Melbourne’s Botanical Gardens, held on May 22nd, coincided with International Day against Homophobia and Transphobia. The event was organised by Stand Up Events and ambassadors included former Carlton captain Chris Judd, Richmond captain Trent Cotchin, Essendon captain Brendon Goddard, model and actress Olympia Valance, and Molly Meldrum. Funds raised from ticket sales went to support positive educational and equality programs in community clubs. Organiser Angie Greene says the event was all about inclusion for the LGBTIQ community. “When we put our runners on for CGU’s Move In May we are saying there is zero room for discrimination,” said Ms Greene. “Sport is the backbone of our national identity and events such as CGU’s Move in May will help the LGBTIQ community gain greater acceptance and inclusion.”

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peopleNEWS Business booms at Melbourne expo The joint Underwriting Agencies Council (UAC) and National Insurance Brokers Association (NIBA) Melbourne expo held last month was a huge success, according to organisers. The event, on May 27 at Crown Towers, opened with a breakfast seminar for young professionals, followed by an industry lunch. More than 70 underwriter exhibitors attended, along with several hundred brokers. NIBA Chief Executive Dallas Booth told Insurance News “a lot of good business was done” on the day. “We were delighted that the exhibition space was sold out, with a waiting list,” he said. “We had great support from underwriters and UAC, and we were very pleased with the number of brokers too. It was very busy, very crowded, and there was a lot of buzz. “The breakfast for young professionals was also very well received.” JLT Sport MD David Kelly was named NIBA’s Victoria/Tasmania Broker of the Year at the lunch. He will now compete for the inaugural national Stephen Ball Memorial Award, sponsored by QBE, which offers a prize worth $20,000. Todd Arnold of Roderick Insurance Brokers was picked as the young broker winner for Victoria/Tasmania. His win puts him in the running for the national Vero-sponsored Warren Tickle Memorial Award that comes with a prize valued at $10,000. The winners of the national awards will be announced at the NIBA Convention in September.

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Vero takes brokers inside the Lions’ den The Brisbane Lions AFL team prizes Vero as a major sponsor, and it repaid the company’s commitment in full when it threw open its doors at the iconic Gabba ground in Brisbane in April for a fun-filled night involving 60 Steadfast brokers. Suncorp Chief Executive Insurance Anthony Day and Chief Executive Customer Platforms Gary Dransfield hosted the evening, which started with cocktails on the hallowed Gabba turf and a tour of the club’s facilities. Lions’ coach Justin Leppitsch and team members acted as guides. The guests were then treated to a dinner in the exclusive private members’ area while being entertained by former Sherbet frontman and now solo performer Darryl Braithwaite. Not surprisingly, his number 1 hit Horses – a song used in TV advertising by Suncorp brand Bingle – had the guests singing along. The evening was organised as a special event based around the Steadfast Convention, which was held at the Brisbane Convention Centre.

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maglog »

THE DYNAMICS OF A STEADFAST CONVENTION Gold Panel session are always interesting, and thanks to this picture taken at the convention in Brisbane in March we’re able to share some insights. The Gold Panel session was the curtain-raiser at this year’s gathering, and was moderated by our very own Terry McMullan. The panel is always made up of the chief executives of partner companies who have donated much gold sponsorship to Steadfast and have as a result earned a place on the panel. Many years ago the questions were asked by Robert Kelly, but now that he’s Managing Director and Chief Executive of the whole Steadfast juggernaut, he has been elevated to the panel. While Robert is famous for his rambunctious statements and tell-it-like-it-is directness, the weight of responsibility has somewhat tempered his output of challenges, zingers and scintillating observations. Nevertheless he’s still a fearsome person to put in the middle of a bunch of suppliers. Like a hand grenade at a children’s show and tell session, you’re not sure what is going to happen. Although Robert’s observations are invariably humorous, it has resulted from time to time in senior members of the industry looking a little lost for words, asking themselves why they’re there. But next year there they will be, because the Gold Panel is a great place to put out new concepts and make some valuable points. In this picture we don’t know what has been said to cause the amusement at the left side of the panel, but like all Steadfast Gold Panels there’s always laughter and good cheer. Perhaps it was the moderator’s observation at the end of a long outpouring of love by Robert for Steadfast’s new broker IT system that “it’s always good to have an ad break”. From left are Allianz’s Denis Morrissey (General Manager Commercial) and chief executives Ben Bessell (IAG Commercial Insurance), Raj Nanra (Zurich Australia) Anthony Day (Suncorp Insurance), Robert Kelly (Steadfast), Tim Plant (QBE), Rachael Lavars (Macquarie Premium Funding) and John French (Chubb). 98

sam Pentecost Contributor

There’s a couple of articles in this issue of Insurance News marking the retirement from local insurance ranks of one of the industry’s most highly regarded individuals, Munich Re chief Heinrich Eder. Elsewhere in this magazine you’ll find an alarming picture of the German reinsurer’s local bloke in lederhosen, leading a knees-up. And on this page an even more unexpected picture of Heinrich trying to revive the spirit of the 1970s – a pursuit he thankfully failed in. For years Heinrich has been spotted slipping in and out of insurers’ head offices in a conservative dark suit and immaculate tie, not a hair out of place. But Munich Re Australia and New Zealand Chairman Gayle Tollifson made it clear to guests at his farewell party in May that when the lights go on Heinrich is anything but the respected buttoned-down reinsurer we have all come to know. Gayle described a man who “has kept us all entertained and made us laugh on a regular basis”. “Munich Re’s Oktoberfest is one of the highlights of the insurance industry’s social calendar. Heinrich has always been there, from beginning to end, dressed in his trademark lederhosen, greeting guests, making speeches, drinking beer and of course singing ‘Ein Prosit’. “Heinrich’s costumes for Munich Re’s staff Christmas party are both legendary and entertaining,” Gayle says. “I think my outright favourite is the inflatable sumo wrestler costume from last year, but he has also appeared as an emu and in other rather flamboyant insuranceNEWS

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attire, including baubles and Christmas tree earrings. “Heinrich has been known to walk the city streets in these costumes, much to the amusement and sometimes puzzlement of passers-by.” So welcome aboard, Ralph Ronnenberg, who will succeed Heinrich on July 1. Professionally and socially you obviously have big shoes to fill. We can * only hope they’re not blue suede.


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Profile for Insurance News (the magazine)

JUN/JUL 2016 - Insurance News (the magazine)  

The people taking insurance forward to a less predictable future speak out in the latest edition of Insurance News (the magazine). In face-...

JUN/JUL 2016 - Insurance News (the magazine)  

The people taking insurance forward to a less predictable future speak out in the latest edition of Insurance News (the magazine). In face-...