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AUTOMATION: The impact on insurance HOUSEKEEPING: Why bushfire-rated homes burned MILLENNIALS: How to hold on to them
LEADING THE WAY: Pat Reganâ&#x20AC;&#x2122;s move into the operations side of QBE comes with an innovative improvement strategy
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Contents 6 Newsmakers » 10 Leading the way » Pat Regan has emerged as one of QBE’s – and the Australian insurance industry’s – leading lights.
18 Disruption hits home » SMEs are shifting away from brokers, going online and getting advice from peers, Vero’s latest report shows.
22 The human factor » Automation promises to reshape the global economy, with major implications for insurers and their staff.
26 Full steam ahead » A new joint venture under the NTI banner shapes as a possible heir to Associated Marine.
32 Keeping up with the Millennials » Many brokers struggle to retain young staff, yet some are reluctant to train them in case they leave.
38 Challenger no more » After more than 15 years, Hollard is well established in the Australian market and ready to embrace the next set of challengers – the fintech innovators.
44 Hot tips » A housekeeping guide for residents in bushfire-prone areas could save lives and property.
52 Big little broker » SMEs are Travis Kemp’s focus as his Marsh Advantage Insurance empire grows.
58 It’s in our DNA » An 18th century judge’s guiding principle for insurance is alive and well in the cut and thrust of 21st century commerce.
62 A race against crime » Hackers are thriving in our increasingly connected world, and insurers must keep pace. The big question is how.
70 NM rises with the tide » The marine insurer’s focus on the broker market is driving growth as it navigates its way into a more diversified future.
76 Pratten loses his biggest case » Appeal judges have extended the notorious broker’s jail term, saying they hold out little hope for his rehabilitation.
companyNEWS 79 Energy saver » CHU muscles into new territory with comparator launch.
79 Crop cover » IAG trials multi-peril insurance.
peopleNEWS 83 UAC sets a Sydney record » 84 Brokers tee off for Allianz golf championship » 86 Helping hands: Guy Carpenter staff do their bit » 88 Gone fishing » 90 Long Lunch doubles as a charity fundraiser » 91 Oracle Group enjoys a big turnout on AR day » 93 Steadfast Re celebrates London office opening » 94 Moving ahead at CGU’s AR summit » 96 Cocktails at Lloyd’s » 98 maglog »
66 Beyond the numbers » Professional director Elaine Collins says actuarial skills are needed more than ever in these uncertain times.
Cover: QBE’s Australia and New Zealand Chief Executive Pat Regan Image: Kym Thomson
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insuranceNEWS.com.au is a free weekly online news service for the general insurance industry. The website has more than 22,000 subscribers. From January through March we published 532 articles online. These were made up as follows:
66 103 LOCAL
Volcanoes: risk without cover A significant proportion of the 1 billion people who live near active volcanoes are uninsured for eruptions, according to Swiss Re. The reinsurer says it has developed the world’s first global volcano model, assessing risks posed by more than 500 volcanoes and enabling insurers to quantify expected losses. The model shows one in seven of the world’s largest urban areas are within 150km of an active volcano, and an eruption could cost a large city up to $US30 billion. Among the top 10 at-risk cities are Tokyo, Naples, Manila, Jakarta and the Nicaraguan city of Managua. Only Iceland has compulsory volcano insurance. Swiss Re Chief Executive Reinsurance Asia Jayne Plunkett says as urbanisation gathers pace, the protection gap for volcanic hazard is widening. “But economic disruption and large-scale economic losses for people and businesses locally are only one part of the picture,” she said. A large-scale eruption would affect supply chains, causing economic and insured losses. Head of Catastrophic Perils Martin Bertogg says the model will allow insurers to calculate premiums for volcanic risk to individuals, businesses and countries. Global volcano model reveals extent of exposure, 27 March
REGULATORY & GOVERNMENT
81 THE PROFESSIONAL
15 BREAKING NEWS More than 24,000 news articles – including 240 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
Hollard gets Progressive
US insurer Progressive Direct has abandoned its foray into the Australian motor market, selling its local business to Hollard. Under the deal announced this morning, Hollard will acquire Ohiobased Progressive’s portfolio of insurance policies in Australia. Progressive Direct, one of the world’s largest vehicle insurers, moved into the highly competitive Australian market in December
2009, saying its “low-cost, pricecompetitive online sales/claims model” would suit the local market. The deal is expected to be completed in the fourth quarter of this year. PD Insurance Agency, a new company created and partly owned by Hollard and Progressive’s Australia Country Manager Simon Lindsay “and others”, will be the authorised
agent servicing Progressive’s Australian policies until the transfer to Hollard, and will start operating on March 31. The agreement allows the parties rights to use the Progressive brand in connection with car insurance in Australia until late 2019. Hollard buys US insurance giant’s local business, Breaking News, 22 March
Although their business model is seen to be different to our other members, iSelect is equally as committed to the key principle of broking, which is to provide the very best solution for the customer.
– IBNA Chairman Gary Gribbin defends the decision to enrol comparator site owner iSelect as a member of the independent brokers’ group
Get moving, says Lloyd’s boss
Insurers must shake off their inertia and make plans to remain relevant in a landscape that is already being reshaped by new technologies, Lloyd’s Chief Executive Inga Beale says. The industry is significantly behind other financial services players that have taken more proactive steps to innovate and adopt digitalisation in operations and product rollouts. Unless insurers start changing their mindset, they face being overtaken by nontraditional competitors such as insurtechs and wider fintech businesses. “New technology is transforming the way we work and is allowing the competition to do it better than we can,” Ms Beale said. “I am concerned that as a sector we are sleepwalking into this new world at a time when we need to be fully aware of what is going on around us. “The greater forces buffeting our shores require us to pull our heads out of the sand and look to the horizon, because it’s the long-term play we make today that will determine the success of our industry in the future.” Beale urges ‘sleepwalking’ insurers to meet tech challenge, 6 March
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Report stays on the shelf More than a year after the final report of the Northern Australia Insurance Premiums Taskforce was published, the Federal Government has still not responded to it. Revenue and Financial Services Minister Kelly O’Dwyer launched the report at the Insurance Council of Australia (ICA) forum in March last year, saying the Government would respond “in the coming months”. But there is still no sign of the response, leaving campaigners “incredibly disappointed”. The taskforce was set up to investigate possible solutions for spiralling insurance premiums in northern Australia. Its report came out strongly against gov-
ernment intervention, recommending cyclone mitigation as the only way to reduce insurance premiums on a sustainable basis. “People up here think they’ve been forgotten again,” campaigner and taskforce advisory panel member Margaret Shaw told insuranceNEWS.com.au. “We are still getting some ridiculous insurance premium quotes, including increases of up to 40%.” A spokesman for Ms O’Dwyer says the Government is “carefully considering” the complex issues within the report. Government response to premiums report still missing, 20 March
Commission cap plan breaks down The Australian Competition and Consumer Commission (ACCC) has rejected a proposal by insurers for a 20% cap on commissions paid to car dealers who sell add-on insurance. The final determination comes as no surprise, following a draft ruling last month. Chairman Rod Sims says the cap would be unlikely to change sales incentives or the quality of products, “and consumers will still be sold products without being given adequate information”.
At last month’s Insurance Council of Australia forum, Australian Securities and Investments Commission (ASIC) Chairman Greg Medcraft warned insurers to raise their game on the poor-value cover. An ASIC report found add-on products have an overall claims ratio of just 9%, with car dealers receiving four times more in commission payments than consumers receive in claims. ACCC rejects car dealer commission cap, 13 March
Fels blasts insurers NSW Emergency Services Levy Insurance Monitor Allan Fels has attracted industry criticism after saying wide price differences for home cover suggest competition is deficient and providers are making it difficult for consumers to compare policies. The Insurance Council of Australia (ICA) says price divergence reflects policy variations in a highly competitive market, while the industry is taking steps to look at comparability options. “Professor Fels would have much stronger grounds to be concerned if all premiums were the same,” ICA Chief Executive Rob Whelan said. The monitor collected pricing data as part of its role ensuring the emergency services levy (ESL) is correctly removed from insurance policies from July 1 in New South Wales. The data reveals an average difference of up to $1100 for basic home and contents policies when comparing quotes for identical properties across 11 suburbs. Professor Fels says insurers are “ignoring calls” to list last year’s policy costs on renewal notices and have been “very quick to oppose” independent home insurance comparison websites. Mr Whelan says policies offer varying inclusions and exclusions, with different limits, while some are for total replacement and others for agreed value. Fels links home policy prices to market failure, 27 March
Wary about home cover reform The Insurance Council of Australia (ICA) has warned against moves to require total replacement policies for home cover as part of wider reforms to protect consumers. “Mandating total replacement policies could have serious implications for insurance affordability,” it says in a submission to Treasury. “Further, it could significantly undermine the economic viability of individual insurers, as well has having broader economic impacts if a large-scale natural disaster were to occur in Australia.” The Federal Government has released a discussion paper on proposed measures to reduce the risk of consumers buying unsuitable financial products. The issue was raised by the 2015 Financial System Inquiry, which recommended new accountability obligations for groups that issue or distribute financial products. “Undermining underwriting integrity could have devastating and destabilising impacts on the insurance industry, the costs of which will ultimately be borne by consumers,” ICA says. ICA rejects mandatory home replacement cover, 20 March
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Questions surround moving north
Palm trees bend in the Queensland town of Ayr on March 28, a few hours before Cyclone Debbie crossed the coast slightly to the south
Do low-income earners who move to cities and towns in cyclone zones understand the risks? And if they do, what level of protection can they afford? These are questions being investigated in a new social study in Cairns by James Cook University sociologist Nick Osbaldiston. The catalyst for the research is the Federal Government-commissioned report last year into insurance affordability in northern Australia, which focused on the cost of insurance cover but recommended greater levels of resilience in buildings as the most effective way to lower premiums. Dr Osbaldiston says one objective of the survey is to examine people’s perceptions of why property insurance costs in the region are so high. “Do people not know why the costs are so high because they don’t understand the risks? “We are interested in the political debate and why insurers are copping it,” he told insuranceNEWS.com.au. He hopes the survey will show if the affordability of cover is being weighed up against the risks involved in living in the area. It will also look at people’s perception of the risks and how they decide whether to insure. He says the final report will be available for all stakeholders, including insurers, although there is no date for its release at this stage. Researcher studies attitudes and understanding in cyclone zones, 13 March
El Nino set to return International modelling and warm sea temperatures suggest an El Nino system will develop this year, according to the Bureau of Meteorology. Six out of eight models surveyed by the bureau indicate El Nino thresholds may be reached by July, but the bureau cautions the models have lower accuracy when forecasting during the autumn months. It says warming sea surface temperatures in the eastern Pacific Ocean and the downward trend of the Southern Oscillation Index are typical indicators El Nino is on its way. However, trade winds and cloudiness have shown no significant shift away from neutral. El Nino is often associated with below average winter-spring rainfall over eastern Australia and warmer than average winter-spring temperatures in the south. The bureau forecasts the neutral Indian Ocean Dipole is likely to remain at least until the end of winter.
From the The cover of our last edition suggested, somewhat coyly, that premium rates might at last be on the rise after a long period in the doldrums. It’s easy enough for journalists to poll the experts, but it still requires us to take a punt on them being right – because you expect us to be right. We won’t know the full story on premiums for a while, but we do continue to rely on experts for the variety of subjects covered in this issue. We’ve certainly needed their insights to help us understand the impacts of the biggest issue facing insurance today – and it isn’t rates, regulation or staffing. It’s technology. The latest Vero report on the state of the SME insurance market (page 18) is telling brokers a story we’ve been reporting on from very many angles over the past few years: more SMEs are taking their insurance business online, and brokers need to crank up their advisory skills. Then we report on page 22 that automation is all about change, and insurance is among the ripest targets. When Bob Dylan wrote his savage classic The Times They are A-Changin’ in 1964, we Baby Boomers were starting to shake up the world. But the social revolution our parents encountered then was nothing compared with the tsunami of change rearing above us today. “You better start swimming or you’ll sink like a stone,” sang Dylan, with lyrics that haven’t lost their bite over 53 years. So what or who will keep insurance swimming? My bet is on the infuriatingly demanding, depressingly smarter, insatiably curious and enormously capable Millennials (page 32), because adaptability is second nature to them. You’d better hope I’m right.
Climate models point to another El Nino, 20 March
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Leading the way Pat Regan has emerged as one of QBE’s – and the Australian insurance industry’s – leading lights By John Deex
Happy to be here: QBE’s Pat Regan
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WHEN PAT REGAN RESIGNED FROM BRITISH INSURER AVIVA in 2014 to become Group Chief Financial Officer at QBE, commentators in London saw this as a very strong indication of the Sydney-based group’s possible future direction. Mr Regan came to QBE with a big reputation. He has been hailed as a major architect of the transformation strategy that saw Aviva recover from a financial black hole, and he left the UK company after just four years with the thanks and best wishes of Chief Executive Mark Wilson and the board. QBE allegedly paid a sign-on fee of $8.5 million to obtain Mr Regan’s services, and by all accounts he’s been worth it. To the outside world his activities within the group over the past few years have been suitably low-profile in the manner of most CFOs – until he took up a temporary role as Chief Executive of QBE’s Australian and New Zealand operations, a key division and profit centre for the global group. He came into the job last year under challenging circumstances. His predecessor, Tim Plant, had left the company after just one year in the position, following a poor set of results. Mr Regan took up the reins in an acting capacity, and was given the Australia and New Zealand role permanently in December. He is still effectively doing both jobs, with the search for a new Group CFO still ongoing. The move into the operational side of the business had analysts and commentators – as well as the local market scuttlebutt – identifying Mr Regan as the person with the inside running to replace Group Chief Executive John Neal in the future. While speculation on succession strategies wasn’t a subject touched on in a wide-ranging interview with Insurance News, Mr Regan’s move into the troubled division had immediate positive results, which wouldn’t have done him any harm in the regard of his boss and the QBE board. Announcing its full-year results in February, QBE reported net profit up 5% to $US844 million, with the combined operating ratio improving to 93.2% from 94.3%. Mr Neal hailed actions taken across underwriting, pricing, and claims management in achieving the turnaround. So what is Mr Regan’s management style, and how has he achieved such a rapid improvement? “I’m very team-based,” he tells Insurance News. “Most people who work for me would say I’m keen on setting a clear direction for what we’re trying to do, but I also like them to do their job, and empower them within the direction that we set. “I think that’s much more enjoyable for them and for me. “[It’s important] to hire people who will be much better at doing their job than I would be.” He summarises his approach in this way: “Create a clear direction, have some fun, create a high-energy environment, get some things done, set ourselves bold challenges, be inclusive, supportive, try some different things.”
Mr Regan’s background is mathematics and accountancy, but he’s much more than a numbers man. In a long and varied career he’s picked up an understanding of broking at Willis, and life insurance at Aviva. “[As Group CFO] at Willis, I came to understand that the important people at any company are not people like me in the corporate office, but the client relationship people. “If I said ‘we need to do this’, people largely would ignore me. “I had to learn to convey messages – why our strategy was important, a whole different set of communication and influencing skills. It was really very good for me to work in that environment.” The secret to his success at QBE appears relatively straightforward, essentially coming down to attention to detail. Not just saying it, but actually doing it. And doing it in a big way. “We set up this structure. I’m smiling because it is infamous now,” Mr Regan says. “We split the business down into just under 50 sub-business units. We called them cells.
“Create a clear direction, have some fun, create a high-energy environment, get some things done, set ourselves bold challenges, be inclusive, supportive, try some different things.”
“The purpose of it was to go through each of those, with each of them having a clear business owner, and in each of them we would review performance. “We would try and grow the really good ones, and then with the ones that weren’t performing as we wanted we would try and set some actions in place. “That might be different underwriting actions, or different claims actions, or it might be about terms and conditions. “I can honestly tell you that out of the hundreds of actions we came up with, not a single one was suggested by me. “But by having this structure and focus it meant the teams came up with some really good plans. “It created a nice bit of momentum for pulling together the right set of actions.” April/May 2017
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“You could easily make the case that for SMEs today the cost of what we do and what the broker does – the collective cost – is higher than it should be and higher than it can be in the future.”
Pat Regan on…
“This is a great market to come into, and many parts of it work much more thoughtfully than the market I am used to in the UK. “There is more involvement of government here in insurance than there is in other places in the world. But generally I think that’s been done quite thoughtfully.”
While he is happy with the result of his sub-business unit strategy, he agrees it was tough for his QBE team to undertake around 50 business reviews. “It worked for us. Whether it’s right forever, I don’t know.” He says staff are pleased with the progress they are making within the units, and that can only be a good thing. And judging by the improvements outlined in the results, the plan is having the desired effect. Mr Regan says there’s no room for complacency, but he takes pleasure in seeing some of the hard work pay off. “We’ve made some progress in the second half compared with the first half, which doesn’t mean we can declare victory,” he says. “But what’s nice about that is the team has done a tremendous amount of work in the second half and it’s just nice to see some runs on the board. “There’s a good feel about the place. There’s a good atmosphere, people are caring about what they do. They feel passionate about it. “Everybody is coming up with new ideas and pulling in the same direction.” So what next for QBE? It sits tidily in third spot overall in the Australian market, behind IAG and Suncorp. But whereas those two market giants are huge in personal lines, QBE focuses more on the intermediated sector. It writes $2 billion in personal lines and $3 billion in commercial lines. Does Mr Regan have ambitions to gain more market share, and if so how? “It’s a good question,” he says. “We’ve made a bit of progress going through these dreaded cell reviews, making some of the nuts and bolts work better. “But you go away at the end of the year and think that’s nice, but it doesn’t exactly create a very exciting vision for the company. “It doesn’t make your customer service better, doesn’t make you a better organisation to deal with for your intermediaries.” Those more visionary targets for the Australia and New Zealand operations are next on his list now that the base work has been done. Work on a future strategy is already underway. “I think what will come out of it is that there isn’t anything we want to stop doing,” he tells Insurance News. “There are a lot of things that we do that we are really good at. “The brief when I came into this job was to make things better, but it’s been amazing [to discover] the strength of the relationships we have with our broker partners, and things like the Elders franchise are awesome.” He sees the SME area as “a natural place for QBE to work with our broker partners”, but concedes he and his team can do it better. “We can make ourselves easier to do business with, and we can make our claims service slicker. We can make the underwriting process more automated, we can make it easier for the broker [and] easier for the customer to understand.
the future of broking “As time goes on you might get to a model where it’s not economical for all brokers to do the full suite of services for SME. “They may decide to move almost to an agency model rather than a fully broked model, and we can provide a different service for them. “That’s not to say you do it without the broker, but you could have a different arrangement with the broker that’s more automated both on their side and on our side. “You could easily make the case that for SMEs today the cost of what we do and what the broker does – the collective cost – is higher than it should be and higher than it can be in the future. “I think there will be a model emerge that does not necessarily exclude the intermediary but is more automated on both sides.”
Peer-to-peer insurance “It’s a ‘back to the future’ moment, because via a slightly different route we’re are back to the concept of mutuals, which is sort of where insurance started. It’s the Lloyd’s coffee shop, really. “It’s not very far from that original concept where people pulled together and literally did peer-to-peer insurance. “I think it’s great and all power to them. If people can make it work for certain pools of insurance then that’s great, and it’s our job to do it a little bit better.”
Market consolidation “Compared to most markets in the world, [the Australian market] is reasonably consolidated today. The top four underwrite a large proportion of the business. “Do I see massive scope for it? Probably not. Could we see some of it? Yes. “Worldwide we probably will see more consolidation over the next few years. Whether that involves Australia or not, I’m not sure.”
qbe in new Zealand “I think we have a nice opportunity in New Zealand to be bigger than we are. We are a commercial lines business there; we don't do personal lines. “We have a great team in New Zealand, who have been preoccupied at the back end of last year working with their clients through losses from the earthquake. “We have great partnerships with our New Zealand brokers, and we do some really cool things for our customers there.”
qbe in Australia
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INMAG APR 17_page layouts 30/03/2017 1:10 pm Page 14
“We can make our policy terms and conditions easier to understand as well. While QBE is number three in the market, Mr Regan says it’s number one with many of its broker partners, which puts it in a strong position. “Our instincts are for intermediated business and we have got very good skills at working with our broker partners. It’s the DNA of the business and we do it pretty well. “But QBE has no divine right to grow in the market. We have to do things better to win market share. “The trick is, how do we do things better? How do we modernise our processes to make them slicker, easier? How do we use the next generation of technology? “Are we strategically disadvantaged? On most of what we do, no. Actually we’ve got a very good strategic position, but there are things we can do to make it better. “And if we do those things well, that will allow us to grow, both in commercial lines and certainly in personal lines.” Of course, QBE has been helped along in recent months by a slight uptick in the commercial lines market. After years of soft market conditions, rates are finally rising. Mr Regan says Australia is one of the few economies in the world where there is still some natural inflation. As a result, insurers need price rises just to keep up. “The Australian market has been through a couple of years where it actually had price declines while the claims costs were going up,” he says. “We have a little bit of price increase now that is just offsetting that natural claims inflation that we’ve got in the system. “The market – more broadly than just QBE – did need a little bit of price offset.” Insurtech and innovation are clearly here to stay – the industry is changing fast and nobody, including QBE, wants to be left behind. At February’s results Mr Neal announced a $50 million insurtech fund, to enable innovative partnerships across the globe. Mr Regan says insurers “never innovate as fast as we need to”, but is determined to put that right. “You can see that we need to [innovate], there is a real zeal to do that. “We have committees, we have structures, we have policies – things that don’t encourage really fast innovation in the way that is happening in the outside world. “But we have to try to do more of that internally, inside the ‘mother ship’.” Not that all innovative solutions are going to be generated from within QBE. Mr Regan says it’s important to recognise that partnerships and joint ventures are important because “we are not going to come up with all of the ideas”. “We are trying to put a lot of work into finding creative ideas that are happening out there, particularly in data analytics. 14
“Because if data analytics applies anywhere, it applies to what we do. It is almost the essence of insurance – you have massive pools of data to try and make smart risk decisions. “People will be inventing stuff every day about how we can do that better. We’ve just got to try and find them and partner with them. “What our share [of the $50 million] will be, we don’t know, but it’s what we want to do. “The team has carried out some field trips to [places like] London and Silicon Valley, and they are coming up with companies that they think are really exciting. “We haven’t made the investment in any of them yet – that’s the next stage.”
“The Australian market has been through a couple of years where it actually had price declines while the claims costs were going up. We have a little bit of price increase now that is just offsetting that natural claims inflation that we’ve got in the system.”
Mr Regan says most insurance innovation to date has focused on personal lines, but that may not always be the case. “In the stuff we are looking at now there is clear applicability to commercial lines as well,” he says. “There has been less innovation so far in commercial lines and I’m actually quite excited about that.” While insurtech could revolutionise the industry, he warns it is important that everyone comes along for the ride. Precise data analytics could work very nicely for good risks, but could exacerbate affordability issues for others. “One of the things we want to be is a socially inclusive company,” he says. “We don’t want to do any of this so there are uninsurable people. April/May 2017
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Additional cover for rental upgrades
Increased cover for costs of break ins, glass and theft
CGU C GU Insur Insurance ance Limit Limited ed ABN 2 27 7 004 4 478 78 3 371 71 AFSL 238291
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“If you go with the aggregator site model, we would argue that what you end up with is a very price-led product.”
Norfolk to NSW Pat Regan was Raised in noRfolk, one of the Uk’s more peaceful and picturesque counties. it’s home to his beloved Canaries (norwich City football Club), and possesses sandy beaches to rival almost anything in australia (if only they had the weather to match). there’s plenty to miss, but three years after moving to sydney, he has no regrets. “i was really attracted to the opportunity here. Coming to australia was an adventure in itself,” he tells Insurance News. “i have lived abroad a couple of times before, so that eases the transition, and my children are grown up so i didn’t have to worry about schools or anything like that. “sydney is such a wonderful place to live. there are so many things to do here that are different to what you would do at home. i’ve loved every minute of it. “You can go for a swim before you go to work. how good is that!” Mr Regan started his career as an accountant in london, before joining general electric in leeds. working for ge was a formative experience, he says. “to this day there are things i do consciously or subconsciously that i learned in that period.” he was transferred to the United states before returning to Britain to work for axa. he was then hired as chief financial officer for willis, which gave him an insight into broking. “You imagine that it’s insurance, so how different can it be? it’s incredibly different.” then it was on to aviva. “i had to get my head around life insurance, which was a real challenge. it’s one of those industries that is almost too complex.” Mr Regan felt a real connection to norwich-based aviva, and it “was a hard decision to leave”. But he’s happy in australia and looking forward to a bright future with QBe. “i was just with my team on Monday in watson’s Bay, looking at a beach and a bit of ocean and behind it a city with big businesses,” he says. “i don’t think there is anywhere else in the world that has got all of those things.”
“I don’t want this to end up by saying, those people are so high risk we are not going to insure them.” Mr Regan’s rise at QBE has been reflected within the wider industry – he was recently appointed a director on the board of the Insurance Council of Australia. He has strong views on industry issues, including the ongoing Senate inquiry into general insurance. The inquiry has been tasked with investigating the possibility of a government-run comparison website for home and motor cover. Mr Regan is not keen on aggregator sites such as those in the UK, but accepts that some form of comparison or information website might be beneficial. “If you go with the aggregator site model, we would argue that what you end up with is a very price-led product,” he says. “There is a lot of evidence to say that if you are not in the lowest three price-wise, people just don’t pick you. “What you end up with is extremely stripped-out products on the aggregator site that is price-led rather than value-led, because that’s really the only way the aggregator site can measure them. It’s questionable as to whether that has led to better consumer outcomes.” However, he says, anything that gives more insight to customers on what they are buying has to be a good thing. “If it is not a full aggregator model then some form of product or price comparison may aid consumers. “There was an example in north Queensland and one or two others around the world, where there are information-sharing sites, versus actual transacting aggregator sites that end up being a stripped-down price version.” The complexity of insurance and the need to understand more than just the price makes things difficult. But Mr Regan believes there are areas the industry can improve on to make it clearer to people what they are paying for. He also believes the industry could do more to explain and educate insurance-buyers. “There is a big element of customer service [in insurance], and when you spend time at QBE or other companies, the people who deal with customers want to get good outcomes for them. “That’s what they get out of bed to do, that’s what they enjoy. “Do I feel that we could do a better job of conveying that? Yes. Do I feel that we could do a better job of explaining terms and conditions, what people are covered for and what they are not covered for? Absolutely.” Mr Regan has come a long way within QBE since arriving from the UK three years ago, but says he’s not done yet – far from it. “I have really enjoyed this job and I feel very lucky to have inherited it,” he tells Insurance News. “There are tonnes of things we can do better, and working towards that is really exciting. * “I am excited about what we can do in this market.” April/May 2017
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Disruption hits home sMes are shifting away from brokers, going online and getting advice from peers, Vero’s latest report shows By Wendy Pugh THERE IS NO HIDING FROM TOUGH truths in the latest Vero report on brokers and SMEs, with a brief respite from the impact of digital change coming to an end. A slide in the proportion of businesses buying cover through brokers has resumed in this year’s Vero SME Insurance Index, after the previous edition indicated buyers might be inching back toward the advisory path. “Digital disruption has been a hot topic in insurance, and in many other circles, for years now, but this data shows that it is becoming a tangible and impactful reality,” Vero says. The survey shows 31% of respondents exclusively used brokers last year compared to 40% in 2013, while the number who bought their latest policy online rose to 27% from 20% over the same period. The decline has not been in a straight line, with broker usage 18
slumping to 34% in 2014 and then ticking up to 36% in 2015 before the latest drop. Brokers are not alone in finding internet-enabled access to a plethora of information and services can be a benefit and curse. “Almost every sector of the Australian economy is experiencing significant change as internet use continues to increase exponentially and people search for new, more efficient ways of meeting their needs,” Vero says. The sixth edition of the index report is based on a nationwide online survey of 1541 business owners conducted in October, as well as a series of interviews with eight diverse SME respondents. It also considers use of other service providers, such as accountants, lawyers, business advisors and industry bodies. Disruption from internet-accessible advice is being felt across insuranceNEWS
professions once seen as sole providers of inviolable expertise. Brokers are operating in an environment marked by a rise in peer-to-peer services and individual research and purchasing. The Vero report found 79% of SMEs sought guidance from professionals last year, down from 84% in 2015. The proportion getting at least some advice from peers, such as friends, family, colleagues and other business owners increased to 52% from 46%. Of these, 19% are seeking advice from peers only. “It’s concerning that a growing number of SMEs are seeking advice from peers, meaning they are making complex insurance and risk management decisions with no trained, professional input to guide them,” Vero Head of Commercial Intermediaries Anthony Pagano says. The SME Insurance Index shows many businesses increasingly prefer to
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do the purchasing legwork themselves, with 60% of respondents saying they personally research their own insurance, up from 52% in the previous survey. With SMEs more proactive, brokers “may need to evolve the way they deliver advice to be more collaborative and less prescriptive,” the report says. Businesses that obtain risk advice from a broker as well as simply purchasing cover are found to be the more satisfied with the service provided, but many clients don’t take advantage of the expertise on offer. Vero suggests some SMEs may not see brokers as a credible source of business risk or holistic advice. “The implications of the decline in broker advice being sought and the decline of perceptions of broker expertise are particularly important given the rise of digital disruption,” the Suncorp-owned insurer says. insuranceNEWS
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Broker usage trends 2016
10% Mix of both
“Transactional relationships are relatively easy to replace with automated and online solutions, while tailored advice is a clear demonstration of personalised understanding and individual expertise which is far harder to replace in a digital environment.” Vero suggests two key routes for brokerages to consider as they face the future: embrace and integrate digital capabilities, and reinforce the unique benefits brokers bring to customers. The second route includes delivering services based on a deep understanding of an individual customer’s needs and also marketing what’s on offer to ensure brokerages are well-known and understood by target audiences. The pace of the slide in demand for broker services has been similar across two broad age groups in the past four years. 20
In the 40 years plus category, broker usage fell to 43% last year from 53% in 2013, the index shows, while in the 18-39 group, usage slipped to 34% from 40%. Younger women are the only demographic to record a less consistent slump. The same 36% proportion used brokers in 2016 as in 2013. The latest figure also marked a rise from 32% in 2015, offering a ray of hope that the habits of tech-savvy younger women may indicate the overall downward trajectory may have reached a nadir. “One hypothesis for this demographic group’s lower rate of decline in broker usage is that they moved to digital purchasing earlier, with other demographics now catching up,” Vero says. “Therefore, could we consider this group to be the ‘canary in the coalmine’ and does this represent the insuranceNEWS
25% Direct phone
new normal for broker use amongst SMEs?” Few would likely relax and bank on that possibility as technological innovation keeps evolving at a rapid pace. A Deloitte report cited by Vero says 65% of the Australian economy is likely to experience significant impact from digital disruption, with professional services and financial services amongst the most-affected industries. “Online channels are having a significant impact on the way that Australian small businesses buy insurance, with more than one in four businesses buying their policies online,” Mr Pagano says. “There is no silver bullet solution, but current best practice suggests brokers who develop proactive strategies to embrace change will be the ones best equipped to grow and thrive.” *
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Leighton Hawkes Principal
Foreseeability and the risk of psychological harm The Court of Appeal’s decision in Optus Administration Pty Limited v Glenn Wright by his tutor James Stuart Wright  NSWCA 21 reinforces the stringent application of the requirement of section 32 of the Civil Liability Act 2002 (NSW) (CLA) in establishing whether a duty is owed to prevent mental harm, and the importance of identifying with particularity the risk in question. The Assault Glenn Wright, a labour-hire company employee who supplies services to Optus Administration Services (Optus), attended a course for call operators held by Optus at their premises. During the course, another attendee who was also a labour-hire employee, Nathanial George, was found by the course leader (who was employed by Optus), Natalie Hedges, in an unauthorised place on the roof balcony of the premises. Ms Hedges reported the incident to her superior, Trevor Williams, who attended the roof balcony with Paul Dee, another Optus employee. Mr George was observed to be unresponsive, in a trancelike state, repeatedly asking for Mr Wright while pacing up and down the roof balcony. Mr Wright reluctantly attended the roof balcony at the request of the Optus employees. Mr Wright approached Mr George, close to the balcony railing, while the Optus employees observed. Mr George attempted to lift Mr Wright off his feet and throw him from the balcony, while also punching and hitting him. Mr Dee intervened and restrained Mr George, allowing Mr Wright to escape. The physical injuries Mr Wright suffered were minor however he subsequently developed a serious form of posttraumatic stress disorder. Mr Wright commenced proceedings in the Supreme Court of NSW against Optus, seeking damages for psychological injury.
Decision at First Instance Mr Wright asserted that Optus owed him a duty of care analogous to that owed by an employer to an employee. Optus argued the only duty it owed, was that of an occupier to a lawful entrant and as such it was not liable for any injury caused by the criminal acts of Mr George. His Honour Justice Campbell found in favour of Mr Wright, awarding him over $3.9 million in damages. Justice Campbell applying principles from Modbury Triangle Shopping Centre Pty Ltd v Anzil1 (Modbury), held that Optus owed Mr Wright a general duty of care analogous to that of employer and employee, which extended to taking reasonable care to protect Mr Wright from the criminal acts of others.
Decision on Appeal This decision was overturned on Appeal, with Justice Basten and Justice Hoeben concluding that Optus did not owe Mr Wright a duty to take care not to cause mental harm. Justice Gleeson disagreed. The decision considered the circumstances in which a person will be held to owe a duty of care to prevent mental harm arising from the criminal conduct of third parties. In
doing so, the Court of Appeal considered the interaction between the Modbury principles and section 32 of the CLA. Application of Modbury principles In Modbury, the High Court held that a shopping centre owner owed no duty to take reasonable care to prevent the criminal conduct of a third party who assaulted an employee of a tenant in the car park. Justice Basten and Justice Hoeben disagreed with the trial judge’s application of Modbury to establish a “general” duty of care. The nature of the injury, being purely mental harm, required that the terms of section 32 of the CLA, be applied before making any finding as to a general duty. In dissent, Justice Gleeson distinguished the Modbury case on the basis that Optus had exerted control over “Mr George’s contact with other employees on the roof balcony of its premises”. Application of section 32 of the CLA Justice Basten and Justice Hoeben determined that “the critical question in identifying the scope or content of the duty owed by Optus to Mr Wright was to identify the risk which might give rise to mental harm.” The majority held that the trial judge erred in identifying the risk that ought to have been foreseen as the risk that Mr George “may assault” Mr Wright. A duty would only have existed if Optus had foreseen that the risk that George’s conduct in “seeking to kill” Mr Wright, which “put his life in peril”, might cause a person of normal fortitude to suffer a psychiatric illness. Without a finding as to the foreseeability of such conduct, Optus was under no duty to take reasonable care to prevent such conduct. Vicarious Liability In relation to the issue of vicarious liability, the Court of Appeal held that the trial judge had “impermissibly aggregated the knowledge” of the Optus employees and attributed such knowledge to Optus. The foresight of an employer cannot be established by attributing to it knowledge that arose in the course of events giving rise to a breach of such duty. The finding of vicarious liability requires first, a standalone finding of negligence on the part of an individual employee. Whilst this decision will be welcomed by most readers, it will be interesting to see whether Mr Wright will seek to appeal given the magnitude of the damages that were at stake and the fact the decision of the Court was not unanimous.
1  HCA 61 at ; -.
)? 7)?/ 650) 9636@ mccabes.com.au
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The human factor
automation promises to reshape the global economy, with major implications for insurers and their staff By Andy Swales WHEN SILICON VALLEY’S CHIEF IDEAS guy Elon Musk pondered the future of automation at a conference in Dubai earlier this year, he took a typically blue-sky view of things. To continue playing a role in the global economy, the Tesla chief says, humans must effectively become cyborgs, merging our biological brains and brawn with machines. The alternative: become “house cats” to artificial intelligence. Putting aside the fact many people might find the latter characterisation rather tempting, his point is that the world faces another industrial revolution (the fourth, by most counts), driven by artificial intelligence, the Internet of Things, Big Data and a host of other tech trends. Robots are taking over our jobs – and a white collar is no protection. Mr Musk, as ever, is taking the long view. One solution, he reckons, is the “neural lace” – an injectable device that will give the human brain digital computing capability. We can probably file that one under “wait and see”. Back in the here and now, automation is already gathering pace, and governments, industries and workers are grappling with its immediate implications. The insurance industry is not immune. There are implications across underwriting, 22
distribution, point of sale, claims handling, and everyday business functions. A report published in January by global management consultant McKinsey & Company predicts that over the next decade up to 25% of full-time positions in the insurance industry may be consolidated or lost to automation, with administration and “operations” roles bearing the brunt of cuts. However, it notes “other roles... will experience a net gain in numbers, especially those concentrating on tasks with a higher value added. The broader corporate functions including these roles will lose jobs overall. “But some positions will be engines of job creation – these include marketing and sales support for digital channels and newly created analytics teams tasked with detecting fraud, creating ‘next best’ offers, and smart claims avoidance.” McKinsey & Company warns insurers to begin “rethinking their priorities right now. These should include retraining and redeploying the talent they currently have, identifying critical new skills to insource, and retuning value propositions in the war for new talent and capabilities. “That competition will almost certainly increase as the digital transformation takes hold. The first waves are already hitting the beach.” Warren Burns, founder of Australian business innovation agency BurnsRED, says the industry in Australia should brace for a “value chain shuffle” driven by robo-advice – automated sales platforms that utilise “technology, data science and design to solve complex problems in ways that still feel simple and intuitive to the end user”. More sophisticated models potentially means online direct buying will spread from commoditised personal lines such as motor insuranceNEWS
and home contents to segments such as SME commercial. Mr Burns, whose clients include a number of insurance groups, says it spells bad news for some brokers. “Every insurance company is right now putting a robo-advice strategy together,” he tells Insurance News. “It should be no surprise to anyone that brokers are in a position where the only card they have left is their relationships. “Where they have good, solid, personal relationships with their clients, and their advice has always been in the best interests of their clients, then they’ll hold onto that relationship, because no robot can replace that, but the brokers… who only ever call you on renewal day, they’re not going to win the game. “They can’t make a career out of obfuscating complexity that will disappear as soon as the advice tool is able to do [the job] better.” And while brokers can compete on the human factor, a robo-advice model has an obvious cost advantage, he says. “Once it’s built, its cost to serve is practically zero. Let’s say it cost me $500,000 to build one. I can push 25 million people through that tool for no difference [in cost] than I can push five people through.” Mr Burns sees a chance for intermediaries to join – and win – the race to create a suitably sophisticated robo-advice tool. “Brokers could be the ones to drive the change,” he says. “Certainly some of the dealer groups are trying. If they can coerce the insurers to contribute products to the roboadvice tools [owned by the broker groups], then the value chain would be shuffled again, this time with the brokers attracting more value at the expense of the insurers.” But he warns such a model could result in the kind of “race to the bottom” on price
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and coverage that arose in the UK when comparators came to dominate personal lines. While Mr Burns sees opportunities for the best and boldest brokers, he warns of severe disruption ahead. “The same amount of money will continue to flow through insurance. This isn’t going to make extra money flow through insurance. “But what it will do is juggle the value chain. The pie will be carved differently. At the moment the pie is carved into value for consumer, value for insurer, and value for brokers and ancillaries. “The biggest threat will be to brokers, because every other market that is brokerbased is going through that disruption. Why would insurance be any different?” Suncorp Executive General Manager, Consumer and Commercial Portfolio and Products Darren O’Connell takes a more upbeat view on brokers’ future. “Our more recent Vero SME index [surveys] have said customers are more researched now than in the past,” he tells Insurance News. That will continue, I think, with the ease of finding information online. “But customers will still make decisions about whether they need an advice model – a personal advice model or a general advice model. “If they think they’ve got enough information they may choose a general advice model, and that means they’ll look to source the information themselves and make pricing decisions and risk coverage decisions themselves, but there will always be the [case] that customers will do some research and then establish pretty quickly that their risk profile is more complex and they want to take the route of a personal advice model.” In 2015 Mr O’Connell wrote a white
“The biggest threat will be to brokers, because every other market that is brokerbased is going through that disruption. Why would insurance be any different?” paper on the future of automation at the “back end” – underwriting – and its implications for insurers and their staff. He dismissed the fear that human underwriters face extinction, concluding they will instead shift to higher-value risk and pricing roles while computers handle the basics. “My view on that hasn’t changed,” he tells Insurance News now. “What the paper is trying to say is automation will give a lot more sophistication and precision than we’ve had before. “That’s more true in 2017 than in 2015, but my view is that human judgement is always going to be required, and if we can get human capital focusing on higher-value tasks, let automation run the lower end, then the industry will be better for it. “Customer needs will be better met by organisations that can have human interaction on higher-value activities.” Mr O’Connell says automated underwriting in personal lines continues to evolve, while in commercial “we’re certainly looking at some of our lower-level functions that we can automate. It’s something we’re looking at. “We haven’t made massive decisions around it at this stage, but we’re certainly right in the midst of exploring what we can insuranceNEWS
do with it in certain areas, mainly around the SME area.” His 2015 white paper flagged the issue of career pathways: how does the industry continue to engage and nurture underwriting talent when low-level entry points are automated? “Insurers must develop new ways to teach recruits the basics of risk selection,” he wrote then. “If they don’t, it will [only] be a matter of time before novice underwriters are thrown into the deep end to work on complex risks before they fully grasp them. “Without the benefit of experienced judgement, they will have to rely on data alone. This could lead to missed opportunities or, worse, crippling errors.” He says insurers must “look beyond their traditional training regimes and career pathways to develop their underwriting talent”, including moving “talent through different roles, such as claims and distribution, so they are exposed to the principles of risk selection and pricing”. Suncorp, he says, is practising what he preached two years ago. “We’ve had our graduate intake come in early February. We rotate them through underwriting, claims, distribution disciplines. “We have regular conversations at a very senior level around strategic workforce 23
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the first industrial Revolution used steam power to mechanise production. the second used electric power to create mass production. the third used electronics and information technology to automate production. now a fourth industrial Revolution is building on the third. it is characterised by a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres. – Professor klaus schwab, founder and Chairman of the world economic forum
planning, and that conversation is very much saying, ‘What is the capability that we’re going to require to run the place in the future and grow it profitably?’.” Away from underwriting, Steven Girvan, a director of consultants EY, says “thousands of jobs” will go in Australian insurers’ small claims management departments as they switch to automated processes. He predicts personal lines insurers may reduce their employee bases by up to 50%, with less severe cuts in commercial lines. “A lot of claims come from low-cost events and this is what will be automated,” he told an Actuaries Institute seminar late last year. However, Mr Burns says insurers’ aged IT systems are stalling the shift to automation. “They have technology, and are used to technology, that is 15 years old, and it’s just not up to scratch. They have lots of the right data, but it’s sprayed all over their business, and not in a way that a computer scientist would need to design an algorithm. “Their ability to put their finger on the right data that would be used at the right time just isn’t really good enough for them to compete yet. They’re just too slow and working from a low base from a technology point of view.” 24
What insurers do have is big budgets. He expects the major players will pick up new technologies by acquiring more nimble insurtech start-ups. In March Lloyd’s Chief Executive Inga Beale warned insurers against “sleepwalking” into the digital age. She says the industry is aware of the pressing need to have a technology DNA, but is somehow still reluctant to push through necessary changes. “Driverless cars, Big Data and the use of artificial intelligence to assess catastrophes are some of the obvious factors reshaping the way the industry works,” Ms Beale says. She says the industry is acting, but not fast enough. “The strange thing is we know the urgency, and yet there is inertia.” Automation and its implications for the world increasingly dominate headlines, from Tesla (again) and its driverless cars to drone deliverymen and smart factories. Swiss Re’s most recent Sonar report on emerging risks warns the “pessimistic” view on automation “depicts a grim scenario, with mass unemployment and a frustrated workforce sharing a shrinking amount of paid labour”. It warns this may hit demand for insurinsuranceNEWS
ance, particularly personal lines and employers’ liability products. “While the fourth industrial revolution will create new jobs and transform work qualitatively, a high portion of paid labour jobs is also expected to vanish. “This will affect the middle classes, and ultimately the insurance customer base. If people have no jobs, they cannot buy insurance – at least not unless they have an income independent of employment or entrepreneurism.” Easing the transition and avoiding social and economic meltdown will be largely down to governments – a prospect that may not inspire much confidence given the world’s track record tackling existential threats. There is some cause for optimism, though. Finland recently began testing a universal basic income – a guaranteed, no-strings wage for citizens – and other European nations are considering the concept. Mr Burns suggests such innovations could free people from the grind of “chasing a dollar” and allow them to create new industries, which in turn could utilise the excess labour left by automation. “If you take the shackles off a person or group of people and give them the ability to invent – not all of them, only 1% is going to do anything, but that’s still enough to create new industries,” he tells Insurance News. Similarly, Swiss Re suggests that if the transition is well managed, it could “entail opportunities if a new informal economy of voluntary work becomes more prominent”. “This could, for instance, help to bridge the generation gap by enabling more people to spend part of their time engaging with and caring for elderly family members, friends or neighbours.” And insurers might find new opportunities in this new informal economy, it says. *
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Full steam ahead a new joint venture under the nti banner shapes as a possible heir to associated Marine By Wendy Pugh
MARINE COVER IS SET FOR A RENEWED focus within a joint venture company, four years after a once high-profile Australian name in the oldest area of insurance slipped from sight. CGU and Vero, equal owners and underwriters of National Transport Insurance (NTI), are transferring their marine operations into the joint venture, aiming to create a stronger market force in the sector. The combined Marine Protect business will be easily the largest Australian marine industry specialist, and contribute about a quarter of NTI’s gross written premium (GWP). Having been minnow operations within the IAG and Suncorp groups, the combined portfolios will be a key part of NTI as it expands further beyond an original focus on truck insurance. “Having portfolios of their size in major organisations makes it very difficult to get airtime within those organisations,” NTI Chief Executive Tony Clark tells Insurance News. “Coming into us, it is going to be 25% of our business, so it is going to get attention.” Mr Clark says the combined operation will effectively be double the size of its nearest rival in the Australian market. The new project comes several years after the once-dominant Associated Marine Insurers Agents’ demise left a hole in the market, particularly for those who had warmed to its way of doing business. Associated Marine opened at the start of 1983 as a joint venture between GRE Insurance and Commercial Union Insurance. The company was allocated a staff of 60, drawn mostly from the parents’ marine departments, and prepared to carve out a key role in the market. Early on it fought a successful battle to abolish marine insurance stamp duty, which disadvantaged local suppliers of cover compared to overseas rivals. In following years it expanded product lines, supported research and education and became a leading light in the local marine community. It also developed a unique professional culture that was widely admired in the industry. 26
“Marinos”, it was conceded, are a bit different, with specialised skills and knowledge. Various corporate moves saw Associated Marine become a joint venture of CGU and Zurich, until the arrangement unravelled following IAG’s acquisition of CGU. The Swiss company viewed the IAG takeover as voiding the joint venture deal, and it acquired CGU’s 50% share of the business in 2004. Associated Marine continued as a one-owner insurer, while maintaining its brand, before it was swallowed into Zurich’s mainstream business in 2013. Marine Protect could be seen as a descendant of that venture, with new partners and a revived corporate focus that aims to build on value separately built by the NTI shareholders. “The one thing we are not going to do is allow it to become a general part of what we do,” Mr Clark tells Insurance News. “It will absolutely retain its specialisation. “Associated Marine was rewarded in the past as that specialist, and we have some of the people that were part of Associated Marine, so I think they will be excited about what they can create.” About 60 staff will move across to Brisbane-based NTI, with those working from Sydney, Melbourne, Adelaide and Perth remaining in their cities. “We are bringing experts across from both our shareholders, which is part of the key to making this successful, and then allowing them to really focus on developing an enhanced marine product suite that is based on the best covers from both CGU and Vero,” Mr Clark says. “They are fairly complementary in the way they will work together, when they come together.” The Insurance Council of Australia (ICA) estimates annual marine GWP for members is about insuranceNEWS
“Th to ge
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“The one thing we are not going to do is allow it to become a general part of what we do.”
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days gone by: ships docked in the Port of Montreal
A voyage through history MaRine insURanCe in aUstRalia has its roots in european history, and a famed london coffee house, and has experienced its share of turbulent times. Rhodian sea law, dating from the Byzantine era, grappled with shared cargo loss well before shipping risks became a key issue for traders across europe’s seafaring nations. the Venetians, greeks and Romans used marine loans as a form of protection during the Middle ages, while the lombards may have developed the first premium-based insurance policy in italy in medieval times. in the 1600s various london meeting places acted as hubs for entrepreneurs and merchants. edward lloyd’s Coffee house specialised in shipping information, setting the scene for the expansion of insurance in Britain and its farreaching impact. according to various histories, someone seeking insurance for a voyage would pass around a paper outlining details of the ship, cargo and crew. those providing cover would write their names underneath and indicate the amount they were willing to pay, leading to the term “underwriters”. By the 18th century london had become the central market for marine insurance, and in 1769 a society of underwriters with fixed rules was formed. in 1779 members agreed on a standard-form “lloyd’s policy”. lord Mansfield became lord Chief Justice of the Queen’s Bench division in 1756 and brought consistency to the area, and the law of marine insurance became increasingly stabilised. in australia demand for cover surged as the colonies found their feet, trade increased and ships foundered on treacherous coastlines. British-owned Royal insurance – which counts among its descendants suncorp’s Vero insurance – opened its first australian branch in 1833. it was followed by a number of other companies. the Merchant shipping and Underwriters association became the first insurance industry association in the colonies, opening in Melbourne in 1869, with similar organisations opening up in later years. By 1879 the australasian insurance and Banking Record listed 65 insurance companies
operating in the australian colonies, with 27 covering marine business only and 13 handling marine and fire insurance. on the legislation side, the australian Marine insurance act was enacted in 1909, a few years after federation in 1901, using the Uk Marine insurance act 1906 as the template. Maritime cover offered by insurers extended its scope with the development of railways, road transport and aviation. as the country developed, demand for fire and accident cover increased rapidly and became more dominant, with many marine insurance providers taken over as it became more of a niche business. By 1980 a significant amount of marine cover was imported from the london market, and those scrambling locally for business were having a tough time in a fiercely price-driven environment. British-owned Commercial Union (CU) decided it was time to pool two or more portfolios to gain critical mass. an approach to Royal insurance was rejected, but gRe insurance came on board in 1982. the combined associated Marine business opened early the following year, holding the largest share of the australian market in terms of premium written by locally registered insurers, and becoming a high-profile campaigner of various industry issues. in 1992 gRe’s Uk parent sold the australian business to Zurich, including the marine stake, while other corporate activity led to CU becoming CgU. associated Marine continued to sail along amid the deals until iag’s acquisition of CgU in 2003 proved the end for the partnership. Zurich acquired the CgU share in associated Marine in 2004 after asserting the CgU takeover voided the joint venture, and the two companies went their separate ways. associated Marine was finally scuttled in 2013 when it was absorbed into Zurich’s mainstream business, and recent years have seen the marine market become more splintered and highly competitive. the creation this year of Marine Protect marks something of a circling back towards a familiar starting point. CgU is once again in a marine joint venture and Vero, which can trace its roots to Royal insurance, is this time on the team.
$600 million. These days it’s a specialist area that accounts for less than 2% of ICA member GWP, but it was once the dominant class of business in Australia, before other areas burgeoned. Dating back to the shipping eras of centuries ago, marine is considered the oldest form of global insurance. Australian insurers continue to compete against overseas-based underwriters that cover the transport of goods around the world and a range of related maritime and freight activities. Mr Clark says while an insurance sub-niche can be created from any part of the economy, marine’s international nature brings its own specific complexity. “Once you do get to dealing overseas and with marine contract law, there is a level of specialisation in understanding that and making sure the covers in place are appropriate,” Mr Clark says. “It is high volume and it has that expertise in contracts and law.” Current issues facing the industry include the need to update the Marine Insurance Act 1909, after the UK last year amended the 1906 legislation on which it was based. Broadly, like the transport industry in general, demand for marine cover can be a good indicator of what is happening in the Australian economy. Melbourne and Sydney currently lead the way, while Western Australia is still struggling. Mr Clark tells Insurance News synergies with existing transport packages and advantages on the
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May 2017 marks 60 years of operation in Australia for AIG. The first Australian office opened in Collins Street, Melbourne in 1957. A second office was established in Sydney two years later. Today, AIG is focused on what it has been known for since the beginning: the willingness and ability to provide insurance coverage to meet the diverse needs of its clients. None of that would have been possible without the partnership, dedication and resilience of our brokers. Thank you for 60 years of partnership.
In Australia insurance is issued by AIG Australia Limited ABN 93 004 727 753 AFSL 381686.
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Ready to roll: Chief executive tony Clark says nti will give the marine sector the attention it deserves
technology side will provide cost advantages as the business grows, but the main driving force will be the expertise, products and innovations the expanded workforce can bring. “Really this is about bringing in people who live and breathe marine insurance, like we have people here who live and breathe plant and machinery and truck insurance. We want them to take a lead.” Marine Protect will write cover for cargo, including inland and on-water transportation within Australia and internationally, as well as some hull cover. CGU, for example, has been offering hull insurance for charter vessels, tug boats, barges and small work boats, excluding commercial fishing vessels, operating within 200 nautical miles of the Australian coastline. Personal pleasurecraft insurance remains with Suncorp and IAG. The marine move marks a further diversification by NTI, which built its business as a truck insurer. It added to that with the roadside help Truck Assist program, which began operating in 2006. It introduced Yellow Cover in 2015 after the Lumley heavy motor and mobile plant and equipment portfolios were transferred to NTI following IAG’s acquisition of the former Wesfarmers-owned Lumley business. “Our experience with NTI has shown that the joint venture provides an opportunity to create superior value to customers and partners in niche areas,” IAG Australian Business Division Chief Executive Ben Bessell says. Marine Protect will be led by Andrew Kidd, who has helmed Suncorp’s marine practice, with support from CGU National Underwriting Manager Marine Chris Kelsey and National Manager Marine Claims Mike Sullivan. Suncorp Insurance Chief Executive Anthony Day says NTI is a natural home for the marine business and fits with the joint venture’s “DNA”. “NTI is already a leader in delivering insurance solutions for the heavy motor and logistics industries, and will now become the truly defin30
itive holistic freight logistics insurer in Australia,” he says. Challenges and risks always exist in uniting separate operations, but NTI has experience in integrating businesses and is placing high importance on ensuring a smooth transition for all staff.
“Really this is about bringing in people who live and breathe marine insurance, like we have people here who live and breathe plant and machinery and truck insurance.” The venture can also point to a strong track record as a place to work. Two years ago NTI was named best employer by human resources company Aon Hewitt, which judged 120 organisations across Australia and New Zealand. The group is taking the opportunity to rebrand NTI, highlighting its various operations following the addition of Marine Protect. “It is not just about new people joining us,” Mr Clark says. “It’s also about a new, refreshing start for all of NTI under the new brand with the new product offering, so that is really exciting * for us.” insuranceNEWS
Summarising the new NTI national tRansPoRt insurance (nti) has opted for simplicity in choosing its new corporate logo: just the company’s initials in lower case with a line underneath in four coloured squares to represent its business areas. Chief executive tony Clark says the timing is ripe for the branding makeover as nti ushers in a new era with its expansion into the marine market, following earlier launches of mobile plant and equipment cover, and roadside assistance for heavy vehicles. he says the new logo “reinforces nti’s position as a specialist insurer in transport and logistics”. “nti’s brand has always played a key role in telling our story, and the new look reflects our dna as a specialist, expert, innovator and service differentiator in our chosen markets.”
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Keeping up with the Millennials Many brokers struggle to retain young staff, yet some are reluctant to train them in case they leave By Kate Hanley
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MILLENNIALS ARE IN A HURRY: THAT’S THE MESSAGE coming from brokers large and small. Consequently, if organisations want to keep them as staff for even a few years, they need to learn what makes them tick and how to get the most out of them in a short time. Latest figures from the Department of Employment show the average tenure for workers aged 25-35 is two years and eight months. It is four years for those aged 35-44. Glenn Arnold, a director of recruitment company Arnold Group, says the insurance industry lags behind other industries in understanding the new ways people like to work. “Look around to see how Millennials work,” he says. “They are always on their mobile phones. “As organisations, we’re not providing the level of mobility and flexibility that is needed – and we’re not educating clients on the new way of working.” Mr Arnold says employers must provide for two different kinds of workers: those seeking more flexibility (usually Millennials) and those seeking stability. He says some employees may work best outside the traditional workday hours, while others may want to work from the beach. “A desk can be boring as hell,” he says. “People expect more these days. What is the measure of a successful delivery? Do you measure them on their activities or their outputs?” He says some staff want the stability of 9-to-5 office work, while others like a mix. But ultimately it’s about measuring output and developing a culture of trust, rather than checking employees are at their desks. “We’re trying to mould people into one way of working, and the world is changing,” Mr Arnold says. “You can’t do this any more.” It’s not only a lack of loyalty from job-hopping Millennials that keeps brokers up at night. Inadequate training, an absence of entrylevel positions, the ever-increasing allure of the independence promised by the authorised representative model and big brokers poaching trained staff are also issues. The latest JP Morgan Taylor Fry General Insurance Barometer quantifies this collective anxiety, with 83% of brokers worried about staff training, retention and experience – almost double last year’s figure of 43%. Mr Arnold agrees brokers are not investing enough time and money into training.
“They’re worried that if they train [their staff] too much, they’ll get poached,” he says. JLT Australia Chief Executive Leo Demer says his company’s graduate program often sees young staff leave once they are qualified as other groups step in offering $30,000-$40,000 more. “A lot of the bigger brokers don’t want to spend the time and money training them up, so when they get to a certain level, they pinch them,” he tells Insurance News. Mr Arnold says employers must accept Millennials will only stay about two years. They should think about how they can get an immediate return on their investment, and providing cutting-edge training is crucial. The Canary Wharf Executive Development Centre posted an article on LinkedIn in 2015 addressing this issue. “You need to ensure that training is producing knowledge and skills your employees can use immediately to have a bottom-line impact – and, therefore, create a tangible return on investment as soon as the training ends,” it says. Kaplan Professional entered the insurance training sector in Australia two years ago, with plans to revolutionise the way training is provided in Australia. Earlier this year it acquired Sydney technology company Red Marker and plans to use its artificial intelligence engine to help students learn in realtime. Kaplan Chief Executive Brian Knight says the future of learning is not long courses but “direct learning on the job, in real time, as people need to know”. He says peer learning has evolved to use platforms such as Google and YouTube, and insurers are crying out for more tailored solutions to their education needs. Kaplan has introduced an online diploma of insurance broking and a diploma of general insurance, both of which feature online coaching, recorded lectures, webinars and hard-copy notes, allowing for flexible study. Its courses have been developed in close collaboration with around 10 insurance industry employers. Arthur J Gallagher Head of Learning and Development Jason Grieve says training is an important issue for brokers, because professional standards and compliance are “hot topics” in the industry. “There is more awareness of potential error and omission claims being made against brokers, which can be extremely expensive from a cost perspective but also from a reputational view,” Mr Grieve says. “Businesses today just want to maximise productivity and efficiency,
“A desk can be boring as hell. People expect more these days. What is the measure of a successful delivery? Do you measure them on their activities or their outputs?”
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so the days of taking a broker out of a business for a long period to watched the ebbs and flows of the insurance industry since 1998. She spend time on training have gone.” says the days of junior roles are gone and a degree is now needed to He says a lack of quality, cost-effective insurance training for broget in the door. kers led Gallagher to partner with broker training and professional The prolonged soft market has brought with it redundancies, development provider Gold Seal to develop relevant courses and fill consolidation and offshoring, which can make younger staff feel the gap after the National Insurance Brokers Association (NIBA) insecure, she says. closed its training arm last year and entered into a training agree“People are becoming more nervous in their jobs. They need ment with the Australian and New Zealand Institute of Insurance the training so they are indispensable.” and Finance. In the past six years Ms As he sees it, broker courses Limbourn has noticed an influx developed today must reflect of university graduates into the the changing way people learn industry. through iPads, laptops and “People who don’t have ReCRUiteR Jo liMBoURn’s adViCe to BRokeRs staRting other technology. degrees are watching people out on their career: Mr Demer says the way with degrees get promoted, so • Become indispensable • Companies will generally hire on skills, attitude and culture people enter and navigate their they think they need to do it fit, and fire on attitude and wrong culture fit career paths has changed subtoo,” she says. “I say to them, • at interview, ask about culture and team dynamics, staff stantially in recent years. ‘Do your insurance studies, get retention rate, training programs, study assistance, scope to “In our day, you could start your fellowship, and that counts progress and company growth trends as a clerk and end up running towards a degree’. Then they • Make a commitment to your own insurance studies. Pay for the company, but young people are tertiary-qualified.” them yourself if the company won’t fund them these days are in a bit of hurry.” Many companies would • Join the various mentoring programs such as those run by Adroit Insurance Group rather employ graduates so they the niBa or anZiif, or others like QBe’s eQuip training and General Manager Hamish can do more with them more development program MacLean says when he started quickly. But recruits shouldn’t • seek out your own credible and experienced mentors inside broking in Christchurch in 2001, wait for their employers to and outside your organisation. insurers had many back-office organise professional training. • Continually seek mentors. Choose someone who inspires workers processing policies. “Individuals must go and seek you and has knowledge that will help you. “By the time a staff member their own training,” Ms had served a reasonable Limbourn says. “Don’t wait to amount of time in this type of be tapped on the shoulder.” role, they emerged as a relatively well-rounded insurance specialist Losing staff to the authorised representative model is an issue with a level of understanding of commercial or domestic policies, for some brokers. The head of a Brisbane brokerage, who declined depending on which division they were in,” he tells Insurance News. to have his name used, blames a “sense of entitlement” common in “Inevitably, this is where brokers stepped in to snap up the Millennials. already qualified staff and turn them into brokers.” “It’s a real issue that a lot of people are leaving because they see These back-office processes have now been either reduced due that the authorised representative model is going to support them, to technology efficiencies or sent offshore, meaning recruits must which is very disappointing when you are running a staff of 24 create their own pathways. people and trying to keep 24 families protected,” he says. Jo Limbourn, director of recruitment company JL Exec, has Adroit’s Mr MacLean says whether it is a Millennial issue or not,
Advice for young brokers
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staff are increasingly seeking opportunities to move through the ranks quickly. If they can’t get it at their present company, they’ll find another that will let them. “A staff member of my former employer told me prior to leaving for another international that he felt because he had been with us for eight months, he had done his time and was ready to move on,” Mr MacLean says. Ms Limbourn says brokers who leave to become authorised representatives are the ones who can develop a business. Companies need to incentivise them, giving them equity that will work for the individual, not just the employer. Despite JLT losing trained valued graduates to other brokers, Mr Demer remains positive. “I think you can put strategies in to retain people you want to retain,” he says. “Nine times out of 10, people leave because they are bored. So if you can offer something fresh and new in the organisation, why would they leave?” Mr Arnold says employers also need to consider how they can create a happier environment, by providing facilities such as creches. Some companies even map out eight-year career plans for employees they want to retain. Ms Limbourn says the most common reasons for staff leaving are: little scope to progress, poor culture, lack of staff benefits, no flexibility, poor communication, salary, lack of recognition, little diversity in the role, poor management, or no company vision for growth. She says multinational brokerages find it easier to retain staff because there are opportunities to move around the company, choose a specialty and work overseas. So, what about broker concerns over experience, or lack thereof, in the industry? “One of the reasons is some of the most experienced brokers are reaching retirement age or have retired already, and often the expe-
rience leaves with them rather than being passed down,” Mr Grieve says. “Insurance is an incredibly complex area and no one knows everything. This can leave brokers and clients exposed.” Mr Arnold says insurers and brokers need to look hard at how they transition their older staff to retirement, so this experience is not lost. “A senior broker may want to work part-time, but doesn’t want to do the menial work,” he says. “They still want to do interesting work, but don’t want to do the boring paperwork. “How does that person transfer their knowledge? How do you transition his or her clients to the next generation?” Mr Grieve says that previously experienced brokers would mentor new and inexperienced colleagues with on-the-job training that mixed challenge and support. Ms Limbourn agrees, but warns that today’s individuals must seek out their own mentors, both inside and outside their company. At Adroit, senior brokers run technical workshops with real-life examples, partially driven by the difficulty in recruiting brokers with experience, Mr MacLean says. “We are fortunate that our training programs can bring inexperienced staff quickly up to a strong level of technical expertise,” he says. “But I am a strong believer that a good broker needs some good war stories to tell their clients, and that can only come with experience. “It is a cut-throat market in broker recruitment and I think most of us potential employers put a high emphasis on experience.” In a soft market, brokers may worry about training, retention and experience, but there is plenty they can do to adapt. For their part, employees need to ensure they fit in with the culture of a business, or leave. And where training isn't provided they must pay for their own, or they risk being overlooked. Because, as Ms Limbourn says: “You can’t put experience on * young shoulders.”
“It is a cut-throat market in broker recruitment and I think most of us potential employers put a high emphasis on experience.”
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growing influence: hollard australia Chief executive Richard enthoven
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Challenger no more after more than 15 years, hollard is well established in the australian market and ready to embrace the next set of challengers – the fintech innovators By John Deex
SOUTH AFRICAN INSURER HOLLARD was licensed in Australia in 2002, and has been a thorn in the side of the major players ever since. Innovating, investing and taking market share – it has been so successful that Hollard’s often-stated soubriquet as a “challenger brand” is under threat. For the year to June 30 Hollard Australia will write about $660 million in premium, and make profits of around $16 million. It has more than a million policyholders, employs 500 staff and settles more than 50,000 claims a month. “Effectively, we have doubled in size over the past three years,” Chief Executive Richard Enthoven, who set up Hollard Australia, tells Insurance News. “I think we have the mindset of a challenger, in that we view ourselves as taking market share. “But we have been here for more than 15 years, we are A-rated, we have more than a million customers – I think we are now well and truly established players.” Hollard is now in the business of acquiring challenger brands – as proven by the purchase of US insurer Progressive Direct’s Australian motor portfolio in March. It is a significant step, adding $40 million in annual premium and marking the first acquisition of another insurer by Hollard. “We have done a number of deals of this nature over the years,” says Mr Enthoven. “The difference is that normally we are not doing these deals with other insurers.” Mr Enthoven also has increasing influence. In March he was appointed Deputy President of the Insurance Council of Australia. Hollard has its own personal lines brands, such as Real Insurance, but also works with dozens of brokers and underwriting agency partners.
“We have been here for more than 15 years, we are A-rated, we have more than a million customers – I think we are now well and truly established players.” For some, Hollard provides underwriting capital. For others it’s an investor in their businesses as well. “We have made a number of strategic investments in insurance-related initiatives that can either feed off our core business or feed our core business,” Mr Enthoven says. “That said, as our business has matured and grown the vast majority of our business now is direct-to-the-consumer personal lines.” In the current financial year underwriting agencies and brokers will generate less than one-third of Hollard premiums. The insurer’s success is thanks to a focused strategy that reduces reliance on the insurance cycle, Mr Enthoven says. “We’ve had a particular interest in niche areas, a particular interest in areas where we can control distribution, and we have a big focus on understanding why we win every piece of business that we do. “Pet insurance is a good example, where we effectively created a market that we now dominate. We have a willingness to try things and back entrepreneurs who have an idea, and work with them to create what now are sizeable businesses. “This is something we have done a number of times with different entrepreneurs, but certainly the pet insurance business is the flagship success story. Our insuranceNEWS
sister company Greenstone had similar, if not more, success in the direct life market as well.” Mr Enthoven singles out the partnership with Woolworths (Hollard underwrites the giant retailer’s general insurance products) as “the biggest insurance opportunity” in the market. “The combination of a large, loyal customer base with a very strong brand, with extremely good customer analytics, is an opportunity that just doesn’t exist elsewhere,” he says. He also sees huge potential in the New Zealand market, which Hollard entered in February last year through its investment in Ando Insurance Group – a company set up by former Lumley NZ chief executive John Lyon and other senior managers. “We think the market in New Zealand is unusually consolidated and we think as a result the broker community is being underserviced,” Mr Enthoven says. “We think we have the A-team on the ground there and the Ando strategy is to create a meaningful option in that market. The signs so far are very promising. It is a rapidly growing and very exciting part of our business. “We think the fresh ideas and fresh voice we bring is adding to the market and we 39
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“I think comparison websites are a good customer experience and, ultimately, my view is that good customer experiences will always win.”
Hollard’s history hollaRd’s Roots go BaCk to 1960s south africa, when broker Robert enthoven realised insurance companies were not meeting their corporate customers’ needs. in 1980 hollard insurance group was formed by Robert’s son Patrick, rapidly rising to become south africa’s largest privately owned insurance group. the enthoven family holds the majority share in hollard, through the enthoven family trust in south africa and internationally through Capricorn Ventures international. in 1999 Patrick’s son Richard moved to sydney to set up the group’s australian operations. hollard now has operations in several african countries, australia and new Zealand, europe, india, China and the Us.
think that explains the positive response the Ando initiative has had with brokers.” So if Hollard is no longer a challenger, could it be challenged by the next set of innovators looming on the horizon? Absolutely, Mr Enthoven says. “The whole industry is going to have to innovate, work with entrepreneurs and continue to develop customer-friendly products and processes, otherwise customers will vote with their feet.” The good news for Hollard is that its past has left it well placed to deal with future threats and opportunities. “It is in our DNA to embrace change,” Mr Enthoven says. “And we are an organisation that has a deep spirit for entrepreneurialism, so I think those two traits are going to serve us well in the emerging digital economy.” Last year fintech start-up Huddle Money went live, thanks to Hollard backing. Much like other peer-to-peer insurers, Huddle Money creates clusters, or “huddles”, of people with a common interest, and returns unused premiums to fund good causes. Mr Enthoven believes the initiative will continue to evolve, but he is “particularly optimistic” about its chances of success. “We think Huddle Money is a really exciting opportunity run by some extremely talented and passionate individuals to come up with a viable model for insurance in the peer-to-peer space, which is no simple task. “We expect to keep investing in insurance technology and insurance initiatives and our track record of backing entrepreneurs in that space serves us well. “The beautiful thing about start-ups is they are able to experiment live and test consumers’ appetites for products and services in real time. It is a wonderful opportunity for us to learn and improve our ability to respond to customers on the go.” insuranceNEWS
There is still a fair amount of industry scepticism about peer-to-peer insurance, but Mr Enthoven believes it has a big future. “I am absolutely convinced that somebody, somewhere, some time will find a peer-to-peer insurance model that is highly effective. It will be effective because it will allow the acquisition of customers at a costeffective rate. It also allows the management of moral risk, and in combination those two things are not insignificant. “Do I think it’s going to be easy? No, I certainly don’t, otherwise everybody would be doing it. But the pace of change is accelerating and the idea that somehow the insurance industry is going to be immune from the numerous revolutions that are taking place in our society doesn’t carry water for me.” Hollard has taken an interest in the emerging cyber insurance market, investing and providing underwriting support for Emergence in 2015. This Sydney-based agency is focused on emerging risks, starting with cyber cover for SME clients. “We continue to believe that the risks associated with the loss of data represent a significant threat to many businesses, and the insurance market will develop a product to meet customers’ needs, of that I am absolutely certain,” Mr Enthoven says. “Whether the successful [cyber] products of the future look like the products we have today, that remains to be seen. But there is a latent need for the product. Where that exists, markets tend to work and solutions tend to get generated.” The online comparison website Choosi is part of Hollard’s Greenstone group, and Mr Enthoven believes comparators will play a big role in future insurance distribution, no matter how much established market players oppose them.
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“We are investing significant resources in our intermediated business both here and in New Zealand because we believe, in no uncertain terms, that there will be a very important place for brokers in the market of the future.”
“I think comparison websites are a good customer experience and, ultimately, my view is that good customer experiences will always win. “I don’t think this victory will be quick. It will be a hard-fought battle, but ultimately making life easy for customers to compare their options has to be a good thing. “I am of the view that there is a place for comparison websites in the market and that they serve a useful function. And I do not believe for one second that they are a race to the bottom, because they don’t set the price. The insurers always set the price. “Insurers constantly talk about how sophisticated their pricing is, and if that is the case – and I think it is – then there should be no concern about mispricing. My preference is that it would be done by the market, as opposed to [being imposed] by government.” Mr Enthoven says concerns about comparators encouraging a focus on price are not necessarily well founded. “Price is an important part of any value equation, but it is certainly not the only part. Good comparison sites will make it clear what they are and aren’t comparing, and I believe that will happen over time. “There is no reason why comparison sites cannot demonstrate more than price.” Woolworths teamed up with One Big Switch as part of the consumer champion’s latest insurance campaign, offering discounted home and contents and motor premiums to the 26,000 people who signed up. One Big Switch has been strongly criticised by parts of the established insurance industry, once more for encouraging consumers to focus on price over policy suitability, but Mr Enthoven defends the model. “It’s a very competitive market and I would expect people who are not involved to 42
criticise it. That’s their right, and rational behaviour. But I think it has a place, like all models of distribution have a place, and I think we need to allow customers to select the engagement that works for them, and ultimately a good customer experience will win. “The campaign is a scaled discount. If we can get enough people to do it collectively then everyone can save some money. “That is pretty common in most industries where the more you buy, the less you pay.” Despite his staunch defence of comparators and innovative new distribution models, Mr Enthoven still believes brokers have a major role to play. “I think as the market evolves and new and different models are invented, it will serve to crystallise a segment of the market that is best served by brokers,” he says. “We are investing significant resources in our intermediated business both here and in New Zealand because we believe, in no uncertain terms, that there will be a very important place for brokers in the market of the future. “Technology could serve to make their value proposition more explicit, and those brokers who can find a way to harness the benefits of technology might actually create the ultimate customer experience.” In Financial Ombudsman Service figures released last year, Hollard was found to have a relatively high likelihood of consumer disputes. For home building, home contents and travel insurance, Hollard had the most disputes, but Mr Enthoven warns against reading too much into the figures. “I think all insurers would agree that there are more likely to be disputes in earlytenure policies than in mature portfolios,” he says. insuranceNEWS
“Therefore, I think faster-growing insurers, which by definition have more early-tenure customers, are more likely to have disputes statistically. “To compare rapidly growing businesses with slow-growth businesses is methodologically unsound in our view. That said, we are constantly reviewing areas where we have disputes and developing either documentation or product or process to reduce those. “We now settle more than 500,000 claims in Australia every year. That is what we do, that is our core business, and we will continue to invest and innovate to make that process more customer-friendly.” Mr Enthoven says he’s especially proud of Hollard’s work on diversity. He says there are targets at all levels of the business, which are yielding “demonstrable results”. “We will continue on that very important journey,” he says. “From our point of view it is a business imperative. “We need the best talent, and we are only going to get that if we are the best place to work for all talented people, regardless of gender, ethnicity, sexual orientation or race.” So what is next for Hollard? Innovation across the diversified business. Investment in new initiatives (watch this space). And building on the fundamental principles that have taken it so far already. “Our priorities are to continue to build on the footprint that we have, to continue to evolve our business in the direction of the customer and to build the best team in the market,” Mr Enthoven says. “If we are able to do those things we are going to be very successful. “And with $660 million in premium, doubling every three years, settling 500,000 claims a year – I think those numbers speak * for themselves.”
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Hot tips a housekeeping guide for residents in bushfire-prone areas could save lives and property By Bernice Han
SMALL BUT IMPORTANT DETAILS, sometimes inadvertently overlooked in the wider scheme of things, can be the missing piece of a puzzle. A housekeeping guide could help complete Australia’s approach to containing potentially fatal damage to homes during bushfire outbreaks. Really? That’s Justin Leonard’s theory, and it shouldn’t be dismissed. He is the CSIRO’s Research Leader for Bushfire Urban Design and has spent more than 20 years engaged in fieldwork and study in this area. His most recent investigation was into houses damaged in the 2015 Christmas Day blaze along Victoria’s Great Ocean Road. Homes built to withstand bushfires in accordance with standards introduced in 2010 after the deadly Black Saturday bush44
fires were among those gutted in the Wye River and Separation Creek fires. To be clear, a housekeeping guide isn’t the only answer, but the proposal is certainly worth some serious thought. No lives were lost in the Wye River and Separation Creek fires, but the question remains: why did properties built at considerable cost to meet regulations for bushfire-prone areas still burn down? Mr Leonard’s theory is simple enough: there are aspects of fire preparation that building regulations do not cover, and this is where a guidebook would fit in, by advising owners how to cover these gaps. For example, there is nothing to tell homeowners how to properly store flammable materials under or near a home, or to tell how a timber retaining wall or fence insuranceNEWS
could generate too much heat and flame for a regulation-compliant house. As the co-author of CSIRO’s Victorian Country Fire Authority-commissioned review of the Christmas Day fire, Mr Leonard knows where the hazards exist. Building laws, it turns out, are not the final word in enhancing homes’ survival chances. Follow-through efforts are required to keep homeowners informed on bushfire dos and don’ts. “When you get the keys to your new home and walk through the door, an instruction manual explaining how your house is built and how you should use and maintain your house so it performs as it is intended [in a bushfire] would be helpful,” Mr Leonard tells Insurance News. More than 100 homes featured in the review, which sought to identify why some
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left: damaged and gutted houses at wye River, Victoria. Bushfire-resistant homes were among those destroyed
Pictures by Justin leonard, CsiRo
aBoVe: CsiRo researcher Justin leonard (right) compares notes with a Country fire authority officer
properties survived the blaze and others did not. It determined that ignition of heavy fuel elements adjacent to or under buildings was a major contributor to the impact on houses – including homes built to withstand bushfires. “It is clear that buildings built to the bushfire regulatory standards, as well as buildings that were not built to the bushfire regulatory standards, were subject to these heavy [domestic] fuels, and many were not capable of withstanding the radiant heat or flame contact from these fuels,” the review says. “This appears to be a key reason why such a large house loss rate was experienced.” Of the seven houses built to Australian Standard (AS) 3959-2009 four were destroyed and three survived.
Fourteen other houses built before the revised building code fared somewhat better, with just three lost to the blaze. “If you don’t maintain your property – for instance, if you store combustible things under your house… it can compromise your house even if it’s built to the new standards,” Mr Leonard says. “It’s fair to say the new standards make the assumption that nothing significant will be stored under the house. “The AS 3959 standards limit some materials that the house is made of, but don’t rule out the possibility of combustible materials at or near ground level.” People’s understanding of bushfire risks is a critical but often overlooked element when discussing ways to better respond to fires. It’s a discussion that arises every summer when images of houses charred by insuranceNEWS
flames play out on television news bulletins and social media. “The cycle will keep repeating until there is a universal acceptance of fire in the landscape and that we move to a philosophy where we completely adapt and embrace the inevitability of fire in the landscape,” Mr Leonard says. “The key thing for defining life safety for an individual is the bushfire knowledge of the individual. “This will influence the way they prepare and make informed choices before and during the fire event.” Since the release of the CSIRO report in May last year, a set of voluntary guidelines developed by Emergency Management Victoria and CSIRO have been produced to aid the rebuilding of Wye River and Separation Creek communities. The guidelines, co-authored by Mr 45
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fire regulations don’t cover everything: a burned-out retaining wall under a wye River house
“It is showing up in our research... things like removing flammable materials near the house, not having flammable vegetation around the house...” Leonard and published last October, include a list of measures to enhance the prospect of building survival and provide safer passage through townships during fires. For example, they recommend using non-combustible water tanks and placing large, fuel-heavy items such as boats and cars at least six metres from houses. “A key driver in the recovery after the fires is to increase the resilience of the communities and to provide a better bushfire protection outcome than existed prior to the fires,” the guidelines say. “This guideline introduces bushfire protection measures in combination with existing planning and building requirements to provide a better outcome for the site than regulations will provide on their own.” 46
Richard Thornton, Chief Executive of the Bushfire and Natural Hazards Co-operative Research Centre, believes more work is required to raise residents’ awareness in atrisk areas. “I am not convinced the community understands these risks, and how people can compromise the building standards by their own actions, or the ways they are undermining the house with their actions,” he tells Insurance News. “It is showing up in our research… things like removing flammable materials near the house, not having flammable vegetation around the house, all of those types of things are relatively simple things that households can do to reduce risk.” There is a widely held misconception that houses built to AS 3959-2009 standards are immune from bushfire risk. insuranceNEWS
“We will always see house losses unless you make houses completely non-combustible,” Dr Thornton says. “It comes back to making people more resilient and understanding more of the maintenance issues, but I think it would be very difficult politically to regulate that owners or occupants must clean up or there will be some penalties. “A lot comes back to whether residents understand the risk themselves, and our own research shows that many who live in bushfire-prone areas don’t see themselves as at risk. It also means they don’t have plans on how they will behave in a fire, and many make unrealistic assumptions about how the fire will impact them, and the actions they can take.” An approach involving all levels of government is required to help Australians
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fuel load: a wye River house with combustible materials stored underneath
“There is nothing we can do to prevent the weather, but what we can do is try to change people’s behaviour and where people live in the long term.” grasp not just bushfire risks but threats from other natural hazards. Ignorance cannot go unchecked – not with all scientific evidence pointing to the same conclusion: climate change will in all probability lift the frequency of bushfires and other natural hazards. “Black Saturday or the fire conditions in New South Wales in February this year, conditions such as these are predicted to be more prominent due to climate change,” Dr Thornton says. “So we are going to have more of those really bad fire days like Black Saturday. There is nothing we can do to prevent the weather, but what we can do is try to change people’s behaviour and where people live in the long term. “This can then become a huge political and social challenge.” 48
Australia has made enormous strides in increasing its resilience against bushfires and other hazards. But success cannot be taken for granted, nor can the country afford to lower its guard and be lulled into complacency. “There is a need to keep the momentum going,” Dr Thornton says. “Governments have no choice because the events are happening. It’s not just about dollars. “We will always see Category 5 cyclones in northern Australia. We know we will have fire days as bad as Black Saturday. “There is an inevitability of that occurring, so we need to be building resilience in the community and what the community can do about increasing the resilience.” The Insurance Council of Australia (ICA), which contributed to building standards for bushfire-prone areas, has insuranceNEWS
reiterated its long-standing call for greater mitigation efforts. Both the industry and the Government are key players in this. “It is the role of governments to protect communities from the impact of known and predicted natural disasters,” ICA spokesman Campbell Fuller says. “It is the role of insurers to assist policyholders to recover and rebuild as quickly as possible. ICA also has a role in guiding governments on st eps they can take to mitigate against natural disasters. “This includes encouraging governments to strengthen building standards and improve land-use planning, and create a central disaster information portal to better allow households and businesses to assess the extent of the hazards they face at their * address, and take protective action.”
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the expectations of sMe clients are like any other Marsh clientâ&#x20AC;&#x2122;s: Mai executive director travis kemp
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sMes are travis kemp’s focus as his Marsh advantage insurance empire grows By Terry McMullan
THINK OF MARSH AND YOU THINK OF a very large corporation with its eyes on the top end of the market where sophistication, global expertise and big money are dominant. All true, but in Australia at least the giant brokerage is also performing very well at the lower end of the local market. Marsh in Australia has been taking authorised representatives (ARs) under its wing since 2002. But it wasn’t until August 2013 that the company revealed a strategy designed to make its Marsh Advantage Insurance unit into a full-scale business aimed at the SME market. By that stage it had 60 ARs and was already showing some very encouraging results, even if its market share was relatively small. The objective Marsh set out in 2013 was for the operation to double the number of its ARs and significantly grow its presence in the SME, mid-market and affinity markets. It was to be achieved by such strategies as adding complementary business models, expanding geographically and opening “greenfield” start-up sites, according to insuranceNEWS.com.au at the time. The prime SME market was companies with more than 20 employees requiring what then-chief executive John Clayton described as “a fair amount of advisory”. A 20-year Marsh veteran, Travis Kemp, has managed MAI from the start. It’s understood his operation now provides around one-third of the company’s revenue. It has certainly provided some surprise achievements along the way. In 2013 Mr Kemp told Insurance News he hoped to double MAI’s stand-alone AR force to around 120. Today it’s actually 133. Speaking to Insurance News in March, he says the ambition to achieve a national footprint is “slowly but surely” being achieved, but it hasn’t been easy. “There is certainly an awfully competitive landscape with some really worthy competitors in terms of their proposition to market.” Waiting to achieve growth and expansion through the slow and steady approach insuranceNEWS
by recruiting brokers who could meet Marsh’s strict requirements as ARs was never going to be enough, so the announcement in February that rural and financial services provider Landmark would become an AR of MAI wasn’t too surprising. Landmark’s 80 insurance brokers will offer MAI services to 65,000 clients in more than 250 rural and regional locations across New South Wales, Victoria, Queensland, Tasmania and South Australia. For Mr Kemp, such opportunities are few and far between. “To come across an opportunity of this size, with such a strong brand, and in a segment where we did not see channel conflict within Marsh, was very exciting.” Landmark followed the 2014 deal to recruit Melbourne-based Gain Insurance Group, which specialised in food services, construction, civil contracting, transport and logistics, warehousing and commercial property. A 15-year member of Insurance Advisernet, Gain Managing Principal Tamer Avsar told Insurance News at the time that Marsh offered “a new lease of life”. Nor did Melbourne-based Landmark resist joining forces with MAI. The agribusiness has previously formed joint operations with niche specialists who can add to the company’s own effectiveness. “Landmark and Gain were around the Marsh value proposition more than an acquisition per se,” Mr Kemp tells Insurance News. “They have picked up their business and brought it to Marsh because they feel that’s the right home for it, and a home where they think they can thrive.” Landmark will retain its own brand under the arrangement, which comes into effect in May. Marsh is also relaxed about the regional specialist retaining its underwriting arrangement with CGU. “There is certainly a lot of respect for the CGU relationship coming from both Landmark and Marsh, and we see this very much as a tripartite agreement.” He says. “But Landmark’s view is a customer-first 53
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“Buyers want choice, as we know. It’s the role of the intermediary to provide clients with choice and to work within their best interests.”
approach, and that will most certainly stem into developing relationships with underwriters broader than just the CGU offering. “The AR model helps us there. Under our strategy we look inward to what we do well and we think what we do well is product provision and effectively managing the broking aspects into the insurance marketplace. “What the AR network brings for us is the distribution and the relationships that are essential to growing an SME or a commercial portfolio, and attaching that distribution and relationship to what I call the engine of Marsh. “I think it certainly provides us with significant growth opportunities, both for Marsh and the AR network.” But the broker space is not infinite in size and opportunities, and there are only so many brokerages and individuals who meet Marsh’s criteria. Mr Kemp says it’s becoming tougher and tougher to find suitable opportunities, and acknowledges that others, most notably Steadfast and Austbrokers, “have done very well” in building their networks. But he says there are “most certainly still opportunities, whether it’s ARs or independent insurance brokers looking for an ability to provide greater value to their customer base, or to grow their customer base. “There are certainly a number of conversations we still have today of interest in joining the Marsh family.” Mr Kemp notes that insurers have also invested heavily in building their own AR forces – a development he’s not entirely sure reflects the true spirit of broking. “They have broadened their AR networks to open broader markets for their agent base. But I think there is more to it when it comes to providing a true insurance broking response, and that’s where Marsh comes into play in regards to supporting the ambitions of ARs. “If you look at our industry specialities it aligns perfectly – whether you are talking insuranceNEWS
the top 250 [client companies] right down to that SME. The principles of broking still apply, absolutely. “I’ve actually been surprised at the amount of direct carrier-agent business there is, and as such I think justified by the emergence of NAS and the acquisition of Westcourt [by CGU], and Resilium [by Suncorp]. “They are all carrier-owned AR networks, and where I see that as an issue in that market is this: brokers are no longer comfortable with single-insurer dependency.” As to challenges to broking from the direct market, Mr Kemp is equally forthright. “Buyers want choice, as we know. Buyers want somebody that will be working within their interest. It’s the role of the intermediary to provide clients with choice and to work within their best interests. “That’s a challenge for a direct carrier to execute upon.” While small brokers may find it next to impossible to survive without a supporting organisation to assist with compliance and other essential distractions, Mr Kemp says he remains very respectful of the way small brokers manage their client relationships. “I think that is still the most powerful ingredient in regards to any business relationship. However, I think it becomes more and more difficult to provide as a standalone independent.” The AR approach – and its focus on the SME market – are not exactly commonplace within the Marsh empire. Mr Kemp says while the MAI unit has probably led the way in the Marsh global business, “the SME opportunity is absolutely front and centre from our global strategy perspective as well”. I wouldn’t say [the MAI model] has been copied. I think there are iterations of SME growth and development around the world, but most certainly it has been studied in terms of why it is a success and how that potentially could work depending on the jurisdiction that it may reside in.”
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“I don’t believe there will be as many brokers in the next five years as there are today. There will be an element of rationalisation.”
He says Marsh avoids some of the possible pitfalls by being “very selective at the front end in terms of their capabilities; the foundation is important to us”. “Marsh isn’t the home for anyone saying, ‘Hey, I’d like to become an AR, how do I become tier-1 [compliant], I want to become an insurance broker and I need a licence to do it’. Marsh is not the home for them. “We are identifying talent in the marketplace that has some sort of track record performance, or alternatively has demonstrated capability and a plan to grow a substantial portfolio.” The negative argument surrounding ARs from the establishment end of the broking sector – mostly disproved – is that ARs put broker standards at risk and that some ARs are of questionable quality. Mr Kemp agrees the attitude exists, but says where there has been a shift in standards “it’s been a shift for the positive”. “I think the emergence of authorised representatives, where you’ve got individuals with true skin in the game and ownership of the client relationships, has in fact enhanced the value and the quality to clients.” He says the challenge of growing business in the SME end of the market isn’t necessarily easier for Marsh just because it’s Marsh. “Certainly one thing I have noticed in terms of our development and involvement is that we need to be really on top of our value proposition to market to continue growth. It is certainly not gifted to us, and we certainly have to work hard for it. He says SME clients are like any other Marsh client. “They expect the right advice.” As to fresh challenges facing brokers and broking, Mr Kemp sees technological innovation as a game-changer – but one that hasn’t arrived yet. “I’m yet to see the absolute silver bullet globally in regards to innovation, and the broker or broker fraternity that rests on their laurels are certainly at risk of insuranceNEWS
becoming undone if they don’t continue to evolve. They have to provide customer value and a reason to be involved in the customer purchase cycle. “From the Marsh perspective we are very attuned to it. I think the cornerstone to the development of innovation isn’t technology. The cornerstone to innovation will be the development of a product or products that align to technology. “If you look globally where success has been achieved in a digital environment, it’s been achieved predominantly on product that is easy to transact online. As soon as there is some form of complexity to the transaction, that online execution becomes very difficult. “So the less complex you can make the product offering, the more likely that it can be translated into a digital environment.” So what lies ahead for brokers? Mr Kemp says the next five years particularly will be interesting. “I think we’ve got a broking fraternity that has seen a soft market for a considerable amount of time, and adjusting to a changing market environment – should it ever be fully executed upon – will be a real challenge for us all in terms of advising clients and giving them a clear view of market performance.” For MAI in particular, he says the goal remains to keeping it growing. “There is still a lot of work to be done, and we will continue to try and evolve and tailor product solutions to meet the needs of that growing distribution network. “I don’t believe there will be as many brokers in the next five years as there are today. I think at a point in time there will be an element of rationalisation. “And I will watch with interest the ongoing investment from direct insurers in these networks and the future viability of these networks. “As for the market cycle in five years, I suggest there could be the potential of fewer insurer carrier solutions at the other * end of it.”
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It’s in our DNA an 18th century judge’s guiding principle for insurance is alive and well in the cut and thrust of 21st century commerce By Terry McMullan
HAVING BUILT HIS CAREER on the practice of insurance law, it should come as no surprise that Mark Doepel is deeply ensconced in a subject directly related to a principle he sees as existing “in the very DNA of the industry”. That principle is uberrima fides, the concept of “utmost good faith” introduced to insurance by William Murray, Lord Mansfield, 251 years ago. Mr Doepel, a partner at law firm Sparke Helmore in Sydney and the non-executive Chairman of the Lloyd’s Australia board, is working towards a PhD in law and philosophy based on the remarkable life and times of Lord Mansfield. Raised in the New South Wales town of Lismore, Mr Doepel counts himself fortunate to have developed his deep interest in insurance while working in the London market for five years in the 1990s. “I worked for a very large insurance law firm which handled all sorts of risk,” he says. “Towards the end of my time there I was involved in a very large piece of litigation which essentially revolved around the response or otherwise of a particularly exotic insurance policy.” That litigation involved meetings with nearly 60 underwriters to interpret the terms of the policy. “It gave me an incredible exposure to the market and I developed a real interest in how the market was pieced together.” Returning to Australia, he developed an insurance client list that included London-based underwriters from Lloyd’s and the companies market. That led to a relationship with Lloyd’s Australian representative office, and eventually an invitation to join the market’s local board. “It came as a complete surprise, but I seized the opport58
insurance is extraordinary and much misunderstood: lawyer Mark doepel
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unity. [In 2010] the corporation decided it would be good for the Australian business to have an independent non-executive chairman, and they chose me. It’s a role I still perform.” He says his role has given him a close-up view of the market’s recent developments in Australia under Lloyd’s Australia General Representative Chris Mackinnon. When Mr Doepel admits wryly that insurance is a personal passion, he’s not exaggerating. He lectures in insurance law at the Singapore College of Insurance, is an adjunct associate professor at the University of Notre Dame and counts among his academic achievements a masters degree in insurance and risk management. “I think insurance is extraordinary,” he tells Insurance News. “It’s a much misunderstood industry.” Being misunderstood has meant the industry has traditionally found itself well down the list of favoured careers for graduates, but Mr Doepel thinks that will change, especially after a conversation with Lloyd’s Chief Executive Inga Beale during her visit to Australia late last year. “She agreed with me that in many ways there’s no industry better suited to the interests and expectations, demands and challenges of the fresh generations of professionals than insurance. “When I started my career I was very focused on the long term. You applied for a job at a law firm straight from law school and the message you had to get across to the people who were interviewing you was, ‘I’m in for the long haul and I want to be a partner’. “Now the issue that we have, certainly in law firms around Australia, is that the younger
generation wants variety in their work. I think if you look at our industry, young people are saying they want to work as an insurance lawyer, but they’re also interested in working for a broker or for an underwriter, while loss assessing and claims support also looks interesting. “The point is that insurance is a fantastic industry full of opportunities and incredibly resilient.” Mr Doepel keeps up with emerging risks and the way the industry is moving to handle them, and is relaxed about the wave of mergers and acquisitions that has swept through the industry in the past 10 years. After all, he’s seen much the same thing happen in the legal industry as it adapts to new challenges. While the early moves to merge legal and accounting practices didn’t work as well as many had expected, he sees the present ongoing wave of linkages between local legal firms and foreign legal organisations as a natural development driven by the globalisation of business. “That was something that was more driven from the corporate departments in those firms, because they were dealing with large multinationals. “By the late 2000s the business of law had become more sophisticated. Instead of partners just working away in a silo dealing with their own clients, we now have very sophisticated managing partners and international managing partners. “For some that has been incredibly successful, and for some it hasn’t.” Locally, he can see considerable change in the overall culture that gave Australia a reputation as one of the three most litigious nations. Or perhaps it’s just that the approach
“In many ways there’s no industry better suited to the interests and expectations, demands and challenges of the fresh generations of professionals than insurance.”
to litigation has become more sophisticated. “I think it’s fair to say we have seen a degree of success with tort reform. Personal injury claims do seem to be down, awards seem to have stabilised and also from a jurisprudential/philosophical point of view, we don’t seem to be quite as litigious as we were. “My personal view is that one of the real benefits for the whole community, not just insurance, is a change in attitude on the part of the community in the bringing of proceedings. “In terms of the line of country that I play in – financial lines, professional indemnity and directors’ and officers’ insurance – it’s fair to say there has been a change, which is certainly related to litigation lending and class actions.” Litigation has also become “incredibly sophisticated”, Mr Doepel says. “I am at the moment involved in a number of large class actions, and the way in which the court and the parties deal with these matters is impressive. “I think we really should April/May 2017
applaud the judiciary around Australia for the incredible way they now deal with case management. Some pieces of litigation are just so huge that there have been instances in the past where they have almost fallen over due to their own weight. “Australia has become a much more sophisticated place for litigation, and I think it would be interesting to see how that translates from class actions to things like international arbitration. “Because international arbitration is, in many ways, a good example of a sophisticated way to deal with a dispute. It usually calls for a high-tech, high-touch approach, so it’s become a specialisation.” Mr Doepel says alternative approaches to the normal court system have affected the way he practices, especially in professional indemnity-related cases. “We certainly have seen a noticeable reduction in the number of civil litigation claims, whether it be in the district, supreme or the federal court, but what we have never previously appreciated is this huge upswing in consumer-framed complaints. 59
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Backing the Mansfields icare joins the drive to promote the importance of claims in insurance new south wales insurance giant icare has signed on as a sponsor of the inaugural Mansfield awards, which recognise excellence in claims. the government-owned but independently run organisation works with insurers across a number of statutory classes of insurance, and says the awards parallel icare management’s own beliefs regarding excellent claims service. the inaugural ceremony for the annual awards will be held in sydney on July 13. apart from the overall Mansfield award, winning insurers will also be presented with awards in personal lines, sMe property and casualty, corporate property and casualty. “the Mansfields” are being organised by Insurance News in collaboration with loss management services group lMi. the two companies launched the awards after their principals – lMi Managing director allan Manning and Insurance News Publisher terry McMullan – agreed on the need to raise the industry’s awareness of the need for good claims performance. lMi has devised a system to gauge all insurers’ claims performance, which will be backed up by a survey of brokers. the results will be weighted to ensure all insurers, no matter what size, have an equal chance of winning. the Mansfield awards logo (above) is a contemporary rendition of the profile of lord Mansfield, the British chief justice who introduced the principle of utmost good faith to insurance 251 years ago. details on the awards can be obtained online from mansfieldawards.com.au
“Former clients who feel aggrieved with the services provided by a professional are using the consumer tribunals to bring complaints, which can be somewhat challenging and problematic for insurance companies.” The problem for lawyers is that a “somewhat informal tribunal” still requires a complete defence of the professionals being complained against. “You can often run a consumer tribunal matter almost exactly the same as you can run a district court matter. “The other thing that is very interesting is not just an upswing in the number of clients using consumer tribunals to air their grievances, but also in complaints to professional bodies – the peer groups and the regulatory groups that often provide an avenue for the referring of disputes. “It’s often challenging. You’ve got to be very mindful to balance the interest and the expectation of the professional as well as the insurer. If you’re up before a professional disciplinary board for only a couple of hours, it still requires considerable work to prepare for it. “Ultimately, the worst thing that can happen is that a professional can lose their registration, and hence their livelihood. And you’re often faced with limited rights of appeal. You get the decision and that’s it, so you have to play your best cards at the first and only opportunity you get.” Such changes in the way insurance law is practised brings the discussion back to Lord Chief Justice Mansfield, who Mr Doepel says did far more for the development of modern commercial law and practice than just introduce the concept of utmost good faith in insurance contracts 251 years ago. “He brought about so many important changes that we don’t
“You can often run a consumer tribunal matter almost exactly the same as you can run a district court matter.”
really fully appreciate today. He was the first judge to allow expert evidence in court, the first ever to talk about arbitration rules and the use of expert evidence and expert juries. “He was probably, to my mind, the first judicial officer who fully understood or appreciated the concepts of copyright and what it meant to be an author, and even what property meant in terms of the status of women. An initial decision of his also gave rise to the end of slavery within the United Kingdom. “The man was just extraordinary, and he had a phenomenally interesting career both as a solicitor and barrister and as a judge. He was also a member of the House of Lords, so he was quite involved in some of the most important political decisions of the day.” Mr Doepel says he has always found the practice of insurance law “phenomenally interesting”. “One of the amazing things about insurance law is something I think the public tends to lose sight of. That is, the fact that the concept of utmost good faith is in the DNA of the legislation governing insurance, and I think it’s in the DNA of the industry. “I get very angry when I hear radio shock jocks talking about April/May 2017
how badly behaved insurers are and so on. I have never in my career come across an insurer who has not said words akin to ‘we are in the business of paying claims’. “If the policy responds, the policy responds. Insurers take that very, very seriously. I have spent a fair amount of time studying ethics and moral philosophy, and I have always been of the view that the duty of utmost good faith must have a moral content.” But 251 years later much has changed about insurance legislation and the way the law interprets and enforces it. Has a concept as philosophical as the duty of utmost good faith any real chance of surviving in the cut and thrust of 21st century commerce? Absolutely, Mr Doepel says. “Yes, utmost good faith still dictates, without a shadow of a doubt. The case of Carter v Boehm [see the December issue of Insurance News for a summary of the case] is phenomenally important. “Mansfield was the first judge to recognise that strong commerce within society requires strong institutions. So the courts needed to be strong and certain, and laws needed to be clear and uncluttered. Nothing has * changed in that regard.”
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A race against crime hackers are thriving in our increasingly connected world, and insurers must keep pace. the big question is how By Andy Swales WHEN HILLARY CLINTON’S CAMPAIGN chairman John Podesta clicked on an apparently legitimate email some time last year, he could hardly have imagined the virtual can of worms he was opening. The hacking of US Democratic Party emails, and the leaked contents’ role in the subsequent election of President Donald Trump, are perhaps the most stunning example we have of cyber security’s importance in the digital age. Now, the new Swiss Re Institute has published an overview of the threats facing public and private organisations worldwide, and the challenges and opportunities these present for insurers. The numbers are startling: in the business world, Swiss Re’s Sigma report says research last year estimated the median cost of surveyed data breaches from 2005-14 was about $US200,000 per company, although it notes the “losses resulting from some incidents can be many multiples of that, pushing up the overall average costs”. The maximum cost in the sample was $US750 million – arising from a privacy violation case. The more data-reliant businesses become, the more these costs could spiral. “Worries about the costs of a cyber attack… are no longer confined to coping 62
with lost, stolen or corrupted data, but increasingly include potential damage to a business’ property and reputation, and the costs associated with business interruption or severe disruption to critical infrastructure,” the report says. “Losses may arise from a malicious attack either from inside an organisation or externally. Equally, they can be linked to accidental machine or human error.” Overall, Lloyd’s estimates cyber attacks cost business as much as $US400 billion a year, including damage and subsequent business disruption. Swiss Re warns cyber is a “rapidly morphing risk” due to several factors: • Digital technology is permeating companies’ processes and customer interactions, meaning “security protocols to protect legacy systems are often ill-equipped to deal with the disruptive change created by new digital applications” • There is a growing number of weak spots as more devices become connected, driven by trends such as automation and the Internet of Things • Attacker profiles are evolving, from amateurs using cheap hacker kits to national governments meddling in each other’s affairs and economies, and sophisticated criminal gangs raking in vast sums through ransomware. The latter trend is of particular interest for insurers. The report cites data from AIG Europe showing that ransomware and extortion account for most claims on cyber-insurance policies in the region, more than data breaches. The FBI says there were 2400 ransomware incidents in the US in 2015 – up from 1800 the previous year – leading to losses of $US24 million. Swiss Re also notes that attackers “are becoming more sophisticated, targeting a insuranceNEWS
business’ employees with novel manipulative methods”. “Company employees are often instrumental in propagating attacks, either maliciously or by accident. Over time, users may become aware of well-known phishing frauds and learn to recognise dubious emails, but it is hard to keep up with the new ways of tricking people into breaking normal security procedures. It’s no surprise, therefore, that cyber protection is “rising up the corporate agenda, at both large and small companies”. A recent Swiss Re/IBM survey found 40% of companies were affected by a cyber incident in the past three years, and 60% expect the risk to increase. The reinsurer says its research also shows growing awareness of the risk among SMEs. “The terms of agreement that small and mid-sized vendors sign with larger business partners sometimes make the former responsible for unlimited losses in case of a cyber event. “Should a serious cyber-security breach occur, small companies can find it hard to recover, and many go out of business within six months of an incident.” However, increased awareness has not necessarily translated into effective action. “Consistent with other recent studies, [last year’s] Swiss Re/IBM survey found relatively few businesses have institutionalised cyber-risk management, even among those that see cyber as a significant threat. “Relatively few have a formal cyber-risk management strategy outlining their overall risk appetite and detailed procedures to monitor vulnerabilities.” As the attacks continue, and with regulators around the world pushing to enact or tighten laws around data protection and breach reporting, this must surely change.
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And while the first line of defence is investment in security technology and risk management practices, insurance has a vital role. The cyber-cover market is growing rapidly. “Estimates from different insurance institutions vary, but suggest annualised cyber insurance premium growth of at least 15% over the next 5-10 years,” Swiss Re says. The report puts most global premium estimates for 2015 near the $US2.5 billion mark, rising as high as $US10 billion in 2020, and $US20 billion by 2025. And Swiss Re expects a growing number of insurers to join what is currently a fairly concentrated market. There are certainly coverage gaps that need plugging. “Dedicated cyber insurance typically provides core protection against data and network security breaches and associated losses, with capacity limits ranging from about $US5 million to $US100 million,” Swiss Re says. “Most policies are written on a claims made and reported basis, meaning claims must be notified to the insurer during the policy period, or at most within 30 to 60 days of policy expiration.” It says cyber insurance, which dates back to the 1990s, has expanded in terms of risks covered, but its research shows there is some way to go. “Many insurers offer business interruption cover in their cyber policies, but some companies say the limits are too low to cover the potentially very large losses that a cyber event could trigger, although the situation is improving as limits have progressively increased.” Physical damage is another gap. “Few insurers include bodily injury and property protection in their standalone cyber insurance, though some related losses might be covered under traditional property and liability insurance.”
Swiss Re says cyber policies typically have war exclusions and even those covering cyber terror will exclude damages not covered in traditional cyber policies, such as loss of property and damage to physical assets. “Similarly, reputational risk is seldom covered by cyber insurance. Insurers also tend to offer minimal cover for intellectual property theft and damage from industrial espionage. And where it is offered, some businesses consider the limits for intellectual property insurance to be too low.” The report says the lack of standardised language in cyber policies can complicate the purchasing process, and pricing is also an issue for buyers. “Low cyber insurance penetration and the associated limited amount of loss data means that many insurers adopt a flat pricing structure, whereby businesses are charged broadly similar rates regardless of their underlying risk.” Swiss Re says to broaden and deepen insuranceNEWS
the market, “close co-operation between insured and insurers will likely be necessary. “On the business side, demand is high and growing for cyber risk transfer, but for insurers, improved understanding and better quantification of the potential for significant cyber losses remains a challenge.” This issue of quantification is key: there are obvious barriers to the traditional actuarial approach to measuring risk. “The frequency and severity of cyber events, as well as their co-dependence, are not easy to establish, making it difficult to assess potential aggregate losses,” Swiss Re says. There is a lack of historical data on cyber incidents from which to extrapolate information about future losses, with extreme losses still relatively rare and businesses often either unaware or unwilling to share information on incidents. And the rapidly evolving nature of the risk and responses to it means “past events may not necessarily be a good guide to the future”. 63
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Another challenge is the potential for accumulated losses, stemming from multiple claims under different policies – for example, reputation risk, property damage and professional indemnity – or multiple claims from different clients, all simultaneously affected. “Attacks involving user interaction such as phishing or spyware and malware, can lead to correlated vulnerabilities across businesses if a few employees in many different businesses are targeted.” The report says that while probabilistic models are still in their infancy, “the experience of other perils offers hope that better, richer cyber-risk models will eventually emerge as understanding of the fundamental risk drivers develops and more data about cyber losses become available”. In the meantime, “product and process innovation” is required to make cyber risks more insurable and extend available cover. “This includes common standards for 64
capturing, sharing and reporting data about cyber incidents, and greater use of smart analytics to improve threat detection and risk assessment.” Swiss Re says modellers such as AIR and RMS have built “data schema” that provide a standardised approach to identify, quantify and report cyber exposures, and the Chief Risk Officers Forum is promoting a common language and framework to capture information on incidents and vulnerabilities. It says governments must promote cyber resilience, improve information capture and diffusion, and set laws and regulations on the use of cyberspace. It flags a number of programs around the world that are already making a difference, such as the Cyber Security Information Sharing Partnership in the UK. “Another way to increase overall lossabsorbing capacity for cyber risk is by developing investment vehicles that enable insuranceNEWS
capital market investors to take some of the exposures,” Swiss Re says. “There are currently some initiatives to develop insurance-linked securities (ILS) that cover operational-type risks such as cyber. The ILS market for cyber risks remains nascent but could possibly grow.” Online fraud and scams make up 49% of reports received by the Australian Cybercrime Online Reporting Network. That’s 19,232 incidences of cybercrime, with many more suspected to be concealed by companies and individuals who simply pay up. Email, social networking and website advertising are the top three online channels used by cybercriminals to target their victims. As the Swiss Re report notes, the insurance industry’s experience in covering the risks more thoroughly is growing. Hopefully that experience can be used by agencies to develop new ways of countering the threat * in the future.
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Beyond the numbers Professional director elaine Collins says actuarial skills are needed more than ever in these uncertain times By Wendy Pugh
FINDING CAREER AND PERSONAL LIFE balance and rewarding opportunities leads to many varied paths. For Elaine Collins the journey has included starting her own business, corporate life with KPMG and Deloitte, and a new career as a professional director. She currently sits on the boards of Zurich Australia Insurance, the Australian Reinsurance Pool Corporation and Tasmania’s Motor Accidents Insurance Board, and brings her actuarial expertise to the three organisations’ audit committees. Actuaries may have a low profile with the general public, but the profession has gained more prominence as boards face greater scrutiny in uncertain and fast-changing times, and regulators seek to minimise risks in the wider financial system. “The skillset that actuaries have is so important because in today’s world, in all industries, there is more interest in analysing unpredictable outcomes,” Ms Collins tells Insurance News. “There are so many challenges for boards and companies going forward, with a great deal of uncertainty. “Actuaries are so apposite for that because their whole background is around looking at uncertainty and valuing it and comparing actual to expected, attributing variations to source, introducing a new level of sophistication, and the cycle continues.” Insurance company boards must consider the central issue of planning for unknown future catastrophes and events, and assessing risk appetites, while they are also grappling with earnings pressures from rising competition, weak premiums in key lines and low interest rates. At the same time, new challenges are coming to the boil. An Australian Institute of Company Directors (AICD) conference in Melbourne recently highlighted technological transformations. The changes are being felt as insurers are also often dealing with costly legacy systems that lack the flexibility of more
modern platforms, and amid a changing regulatory environment. “Over the past few years there are topics coming up to board level that are very much around the new information age,” Ms Collins says. “In the early years of information technology, having back-ups in the event of a system failure was the most important thing. Now cyber security is really important, as data itself and insights from Big Data analytics have become so valuable.” Preparation for life as a professional director effectively started for Ms Collins when she joined actuarial group Trowbridge Tillinghast after studying maths and statistics at the University of Sydney. The actuarial role introduced a strategic element, which involves looking beyond the numbers to the implications. A decision to seek further qualifications, while also starting a family, led to the creation of her own business. Actuarial Overload provided short-term help for companies needing assistance to fill a gap in resources, while also allowing Ms Collins the work flexibility required at the time. “It gave me a really good background for life as a professional director now, because I wasn’t only working in general insurance, I was working in life insurance, investment, superannuation and banking,” she says. “It gave me a good overview of the different industries, and I think you form linkages between them and you carry skillsets from one to the other.” That led to positions with KPMG and Deloitte, providing appointed actuary services and gaining other areas of expertise. The Australian Prudential Regulation Authority (APRA) requires insurance company boards to have an appointed actuary who provides expert and impartial advice. The role has expanded as regulators have honed their risk focus. The responsibilities currently include preparing a financial condition report that summarises a valuation of insurance liabilities, and assessing pricing,
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actuaries understand uncertainty: professional director elaine Collins
reinsurance, capital adequacy, investment strategy and the risk management framework. In other roles at Deloitte, Ms Collins was involved in corporate deals, such as the merger of Victorian and New South Wales medical insurers to create Avant, and provided expert comment on insurance for the media amid the string of devastating natural catastrophes in early 2011. At that time the industry faced a challenging period, with Queensland flooding, the Christchurch earthquakes and the Japanese tsunami hitting in quick succession. Ms Collins’ widening appointed actuary experience and involvement with other projects covering a range of topics paved the way for a fresh career move. “After six years as a partner of Deloitte, it was time to move my career in a different direction and
I decided to focus on changing from one side of the boardroom table to the other.” Ms Collins completed an AICD course and later participated in a mentoring program that gives female directors support from experienced leaders of listed companies for at least 12-18 months. The AICD program aims to address the gender imbalance on Australian boards, as companies also face growing pressure to improve female representation among senior executive ranks. A recent Workplace Gender Equality Agency report found women who work full-time in insurance and financial services earn on average about 26% less base salary than their male counterparts – the biggest gap of any industry in Australia. The AICD says women account for 25% of ASX 200 board positions, up from 8.3% in 2009 when insuranceNEWS
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“When there is more diverse thinking around the boardroom table, it can take longer to reach a decision, but they are usually better decisions.”
the group began reporting on gender diversity. The AICD is aiming for 30% by the end of 2018 and says the latest figures put that goal within reach. “The work the AICD is doing around increasing the number of women on boards is very valuable,” Ms Collins says. “I can see around the boardroom table how a gender balance seems to create more diversity of thought. “My understanding from research is that when there is more diverse thinking around the boardroom table, it can take longer to reach a decision, but they are usually better decisions.” As a professional director and member of audit and reinsurance committees, Ms Collins has an active meetings schedule, including regular trips to Launceston for the Motor Accidents Insurance Board. Strategy days and ad hoc meetings add to a busy calendar. Board papers are sent out one week to 10 days before meetings for consideration, but an advantage of the role is it offers flexibility in managing the time required to assess material. That has been particularly important for Ms Collins and her two children following her husband’s death in 2008. Ms Collins’ son is aged 20 and studying third-year engineering at UNSW, while also aiming to represent Australia in hurdling at the Commonwealth Games next year. Her 17-year-old daughter is in year 12 and planning to study medicine. The challenge of juggling personal and professional roles remains a wider societal issue, as companies and groups such as the AICD seek ways to increase representation of women at senior levels. “I think you have to be high energy,” Ms Collins says. “One sometimes needs to switch between work mode and family mode quite quickly and it takes energy to switch from one to the other. It is challenging to be thoughtful and use a lot of brain power in your thinking about the strategic implications for business, and then switch over to the values you have in your home.” For professional directors, taking on additional 68
roles across a range of boards can have perspective benefits that lead to better decision-making. “One sees a number of different companies and you can get a vey good overview of the issues. You can see through the noise of any particular company to see things from a broader point of view.” Committees are an important part of the process because they deal with the more detailed aspects of financials and risk culture, freeing boards to spend time on strategic thinking. Ms Collins is a strong advocate of the effective use of risk appetite statements, which APRA requires from the companies it regulates. The statement outlines the types of risk an organisation is willing to accept or aims to avoid. Ideally, it should be usable and consistent with day-to-day decision-making on issues such as what business to write, pricing and reinsurance cover. “It is at the high level and it may be only two or three pages, but it needs to cascade down to the front-line people,” Ms Collins says. “The other important factor is that monitoring comes back from the front line to the board. That gives the feedback loop that the company is doing what is intended.” Ms Collins has focused on the insurance sector in her board roles, but she is open to looking at other industries. She is also a member of the Actuaries Institute Professional Standards Committee and a sessional lecturer at UNSW, schooling fourth-year actuarial students in risk management, extreme events and stress testing. “I’ve had students say to me, ‘What career path should I follow?’ and my best advice to them is to work with great people,” she says. “If you work with people who are passionate and are interested in what they do, you will learn so much. And that is what has happened, and is still * happening to me.”
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NM rises with the tide The marine insurer’s focus on the broker market is driving growth as it navigates its way into a more diversified future By Terry McMullan NM INSURANCE HAS COME QUITE A long way in 12 years. Born in controversial circumstances in 2005 as Nautilus Marine, it has matured into an underwriting agency with a diversified offering encompassing most of the marine insurance sector’s specialties. These days, Nautilus is a division of NM, and focused solely on the pleasurecraft market, while newcomer Proteus Marine is doing the heavy lifting in areas such as marine cargo, liabilities and commercial hull. NM operates in Australia and New Zealand with a strong focus on the broker market. It also works in leisure asset insurance and motorcycle lines, including property and liability lines for suppliers that work in its markets. And the company is continuing to expand, most notably in the past few weeks as an insurer in the expansive caravan market (see panel page 72). To Chief Executive Lyndon Turner, it has been a challenging journey so far, but one he admits has brought out the best of his team. Mr Turner is also Chairman of the Underwriting Agencies Council, a group 70
that has experienced phenomenal growth over the past five years as brokers have turned more and more to specialist underwriters. Describing himself as a “Sydney boy through and through”, he is well suited to the role as a career-long insurance professional who grew up around boats and revels in growing the business. It has taken the company a long time to shake off the negative experiences of its early years, which began when several senior executives at Club Marine abruptly quit the Allianz-owned company and set up Nautilus Marine as a competitor. That resulted in a long and distracting period of legal actions, which eventually saw former Club Marine chief executive Paul Wilson forced to agree to a number of conditions and pay his former employer $375,000 in damages. That might have spelled the end of Nautilus had Steadfast co-founder and industry heavyweight Ian Frith and insurer/investor Hollard not been prepared to stand behind the company. With assistance from IC Frith and Hollard, Nautilus had a financial lifeline. When Mr Frith went looking for a new chief executive for Nautilus, he already knew Mr Turner had the right credentials: experience working in several key areas of underwriting, several years as a broker at IC Frith and a stint at marine insurance market leader Club Marine. Mr Turner had been headhunted into broking at IC Frith from Club Marine four and a half years earlier. The brokerage had strong links with the boating industry, and Mr Turner had run Club Marine’s precious insuranceNEWS
Upbeat: NM Chief Executive Lyndon Turner
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relationships with dealers. He was the logical choice. Speaking to Insurance News in March at his North Sydney headquarters, Mr Turner says his strategy for growing Nautilus was weighted from the start with an awareness that Club Marine was the “300-pound beast in the corner” when it came to the direct pleasure-craft market. “We realised that taking on a very big group like Club Marine was something we wouldn’t have as our primary focus, because we weren’t going to succeed. “But insurance brokers were looking for choice, and Club Marine was and still is very much the leader in the direct market. It has strong dealer engagement and keeps that very close. That’s their model, and it works for them.” The formula that worked for Nautilus was to open its doors to the broker market. “We enabled brokers to keep their clients very close to them. We told them, we will give you something that will help you to stay close to your client, which is what brokers were trying to achieve. “It was and is a value proposition that allows the broker to steer clear of the direct market and keep the business in-house, which is really important to them.” It’s a strategy NM Insurance adheres to today. It’s new caravan product doesn’t carry large premiums, but neither does it come loaded with complexity. The same sort of thinking goes into the pleasure-craft market. Nautilus insures large boats and small, with many of the entrants in this year’s Sydney-Hobart ocean race covered by the insurer. It is more competitive in the yacht and large boat market than it has been for insuranceNEWS
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from boats to caravans: nM insurance is expanding its market
Happy campers the entRY BY nM into the CaRaVan insurance market is a logical progression from its positive foray into the motorcycle market. the new nM caravan product was introduced to brokers at the steadfast Convention in sydney early in april. Brokers are looking for a “friendly insurer” in that space, Mr turner says, and his company has a simple and efficient way to serve the market. “it’s a no-touch environment for brokers,” he tells Insurance News. “Computer says yes or computer says no, according to the underwriting guidelines. “it’s an easy transaction and the brokers are happy with that. there are some complexities in certain risks that will be referred through, but we are pretty comfortable with the online solution. it’s very quick to quote and bind.” the caravan product has been teased around the market for some time, and Mr turner says it’s another step in giving more brokers exposure to a market he refers to as “discretionary retail assets”. “Brokers are looking for an underwriter with a level of expertise in these areas, and we’ve got the system and scale. “it’s average premium and it’s potentially a nuisance for some big insurers, and we can be broker-friendly.” the Caravan industry association says the demand for caravans is growing, and it’s not fuelled just by the “grey nomads”. instability overseas is prompting younger families to take their holidays in australia.
some years, but Nautilus has the underwriting expertise and the systems to stay ahead of the claims curve. Small trailer boats and jet-skis are often most efficiently handled through the direct market, unless a broker is aligned to a client who owns one, Mr Turner says. More positively, there is no pricing benefit gained by going direct. “There are no deals around higher commissions for boat dealers, so it’s a fair playing field that the broker can play in when he needs to bolster a client relationship. “There’s a high average sum insured, with repair infrastructure nuances that need to be considered, but we do a lot of trade and property and casualty as well. That means we know at a waterfront level who the good, bad and indifferent repairers are, so we partner with the good ones pretty closely. “Not only can we get the right rate for the repair cost, but we can turn boats around pretty quickly to the owners.” One outstanding relationship for NM Insurance over the past eight years has been with Yamaha, a major player in the marine power market. The Japanese company, which is also a major global motorcycle manufacturer, was seeking a white-label insurance provider for its marine engines, and found it at Nautilus. “Their dealer network would sell a Yamaha-powered asset attached to Yamaha finance, and we were the administrator of the insurance under a white-label commercial arrangement,” Mr Turner says. “Then, about four years ago, Yamaha asked us to extend our partnership, and that led to us opening up our New Zealand business. We did Yamaha marine and motorcycle insuranceNEWS
insurance in New Zealand for the factory, and then they asked us to tender for the motorcycle insurance account in Australia. “The evolution of those discussions was that we went into an equity joint venture with the factory. “So a handshake white-label agreement led to a full joint venture.” Yamaha still sits as an authorised representative under NM’s licence, although it’s now in the process of obtaining its own licence. Mr Turner says NM continues to be supportive. “Earlier last year Yamaha talked to us about controlling their own destiny. In November last year they bought back the insurance portfolio for motorcycles and they are now getting their own licence and will adopt their own model in time. “They are still an authorised rep under our licence and we’re working very closely with them to assist them on their journey. We are a willing seller. We are still a key business partner with Yamaha at a very high level, and we will continue to support them through the licensing process. “We are certainly very proud of the relationship we’ve built with them. Just like brokers, our relationship with the client has always been friendly. It’s been a great opportunity for our business to grow too, widening out and getting some other assets in.” Mr Turner’s first exposure to the marine industry came in his years with Club Marine. Today he sits on the New South Wales board of the Boating Industry Association, while National Marketing Manager Mark Crockford was recently elected President of the association’s Victorian chapter.
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ÂŠ2016 FFleetsure leetsure A Allll rrights ights rreserved. eserved. FFleetsure leetsure P Pty ty LLtd td ABN: 78 078 661 220 AFSL: 238151 Allll policies ar A are e under underwritten written by by APR APRA A licensed licensed insurers insurers
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It’s all about energy UAC is growing in numbers and market influence the Underwriting agencies Council (UaC) has grown significantly over the past five years, and now boasts 108 voting members, and Mr turner says he has a swag of applications in the pipeline. while one of its primary purposes is to act as an advocate for its members, he says the council “hasn’t had a huge amount of advocacy work to do”. “we’ve worked on a couple of things recently in consultation with [the national insurance Brokers association] niBa, where we both have similar issues where we are not necessarily taking the risk, but have an influence around the risk, or at least around the process. “in the main our relationship with niBa is built around the expos we hold around the countries, which continue to grow in size.” he points to the success of the sydney expo in March, where a record 435 brokers and 86 UaC exhibitors crowded the sydney hilton for a morning of networking. “for the investment in the expos, the amount of opportunity to hand out a brochure and create a relationship is the key.” the growth is coming through a really strong approach to having something unique to offer brokers, who are always looking for opportunities and specialised insurance products for their clients. “the major insurers have got the scale to readily knock on the door to brokers. what UaC has got is a different level of energy. “the energy our members have got is extraordinary, because they control the ownership around the business and get to see its growth as it’s going through, so brokers get to see the whites of the eyes of the underwriting decision-makers. i love that.” he says the UaC board is “really strong”, and there’s competition among members to join it. “You can contrast that with the number of industry associations that struggle a bit to get members to put their hands up to be on their boards. we don’t have that struggle. “My role in the UaC strategy is to enhance the value proposition to our strategic partners. i’m working with lloyd’s and now also QBe, which came on board this year, to ensure they get growth out of their investment with us. it’s easy to take their money, but you’ve got to deliver on their expectations, too.” UaC previously had three organisations as strategic partners – lloyd’s, Vero and hollard – and Mr turner is relaxed about the decision by the two insurers to move on from the strategic relationship. “we understand their reasons. “lloyd’s has been involved since day one as a strategic honorary partner, and [australia general Representative] Chris Mackinnon is an associate director. they have a high level of engagement, and QBe came on board and really have certainly gained a little more momentum with underwriting agencies as a result of the partnership.”
the relationship is the key: brokers and UaC members broke attendance records at the sydney expo in March
The relationships they have built within the industry can only be helpful in the growth of NM’s industry infrastructure lines, which were developed about six years ago. Mr Turner says the boating industry could usefully develop a business relationship with a specialist insurer such as NM. Because the insurer is a significant user of waterfront repair facilities for pleasure-craft, for example, there are possibilities for what he calls “a full-circle client approach”. Then there is Proteus Marine, formed in February 2015 to allow NM to focus on the commercial marine market while Nautilus concentrates on pleasure-craft. “The time [to develop Proteus] was right and it follows a similar development in New Zealand that has been very successful for us,” Mr Turner told Insurance News when the new division was launched. “It was always a key strategy to come into this side of the market in Australia. The opportunities are there and we have the support of our Lloyd’s syndicate.” Speaking in his Sydney office last month, Mr Turner says the business case around Proteus was based on the fact that while Nautilus Marine was getting bigger and had more scale, “we needed more opportunity as a business to service our partners”. “As a marine brand we were getting opportunities to pick up non-pleasure-craft risks that we had to say we couldn’t accommodate,” he says. “Therefore, the brokers were going back out into the market where, of course, our competitors were saying, ‘Yeah, we can do that, of course – and we can potentially help you with your pleasure-craft too…’ So we set out to take that business opportunity, while insuranceNEWS
not diluting Nautilus as a brand, and Proteus was born. “It’s growing, and we’re going through some consideration about what its next phase will be.” Mr Turner agrees the decision by CGU and Vero to tip their marine business into their NTI joint venture is significant for the market. “I think it’s important for that specialist marine environment to continue working and being competitive, and Proteus is going through some nice organic growth. Brokers are certainly voting with their feet when it comes to supporting the Proteus brand. “It just needs a bit more scale, so we are looking at the best way to scale it up around the country – the best way to market it, what decision-makers we need on the ground, that sort of thing.” Mr Turner is satisfied NM is on the right track, and that growth will remain steady. He’s excited about the new caravan product, and sees it as complementary to the continuing push by Nautilus into the pleasure-craft sector and allied leisure areas. He says an increasingly unstable and dangerous world makes people think twice about spending their money on overseas travel. “You say, ‘Do I really want to take the family away into that?’ So consumers are thinking more about buying a boat or a caravan and spending more time with the family that way. That trend has been coming through in the caravan industry for a while. Boating is back, too, but not as much. “So that is why we think caravanning is a good opportunity, and boating is a business where we’re in a great position. All in all, * things are looking good.”
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Pratten loses his biggest case appeal judges have extended the notorious broker’s jail term, saying they hold out little hope for his rehabilitation
By John Wilkinson
disentitled to any leniency: Charles Pratten arrives at court in sydney
TIMOTHY CHARLES PRATTEN has been no stranger to Australian courts over the past 20 years, and now, in his latest brush with the law, the convicted fraudster has been given an extended jail term. Pratten is a familiar figure in recent Australian insurance history. The founder of Rural & General Insurance – it became a brokerage after the 2001 reforms imposed new prudential controls forcing a number of small insurers out of the market – has been a regular visitor to various courts fighting a bewildering variety of legal cases. But it was his most recent court battle, over unpaid taxes, which has been his greatest legal struggle. It took several years to reach a conclusion as it weaved through a series of countercharges and retrials. Last year he was finally convicted of failing to declare more than $5 million in income and sentenced to five years’ jail, with a two-year non-parole period. But the Commonwealth Director of Public Prosecutions appealed to the New South Wales Court of Criminal Appeal, arguing the sentence handed down to Pratten last year was inadequate. In March three judges agreed, extending his sentence to May 2022, although Pratten could be back on the streets from October 2019 if he is granted parole. The judgement by Justice John Basten, supported by justices Stephen Campbell and Michael Adams, found the original ruling – sentencing Pratten for seven counts of obtaining financial advantage by deception and one count of breaching
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a restraining order – was manifestly inadequate. The tax deception charges date back to 2000, when Pratten was an insurance broker acting through Rural & General Insurance Broking. Between 2000 and 2009, more than $19 million of premium income was sent to two trust companies in Vanuatu. Pratten charged a fee of 33% of net premium received, which amounted to about $5 million. According to the latest judgement, this was paid to Pratten for his own use, but not declared as income. “The offender’s evidence… disclosed that the offender set upon a deliberate course of conduct in the expectation that, by returning the monies and calling them loans, he could escape a considerable amount of income tax,” the judgement said. “This course was neither accidental nor lacking dishonesty.” There were various grounds for appealing the original sentence: procedural delays in the case, the focus on how Pratten’s daughters would be affected by the jail term, prior convictions and settlement of the outstanding tax. Pratten was arrested in September 2010 and released on bail. His first trial started in March 2012, and the jury handed down its verdict that June. Pratten was sentenced in March 2014. The sentence was appealed as inadequate by the Commonwealth Director of Public Prosecutions, but this was dismissed and Pratten was released from custody after 93 days.
After further legal moves, a retrial was ordered, starting in July 2015. The sentence later handed down by Justice Stephen Rothman prompted this latest appeal. During this saga, Pratten launched various court actions to stop the trials, and changed lawyers several times. The appeal judgement says the time taken to conclude the trial should not have been considered when sentencing, nor should hardship to Pratten’s daughters. “The trial judge was in error in taking into account, as a factor mitigating the length of the sentence, the effect of the sentence on the respondent’s family. “This was not merely a failure to state a finding of fact, but was wrong because the evidence, while establishing that each of the respondent’s daughters had serious problems, did not establish that the offender’s imprisonment would significantly and deleteriously affect their lives.” The judge in the second trial, Justice Rothman, assumed Pratten had paid the outstanding tax, but the appeal judgement says this was wrong, and should not have been considered when deciding the sentence. It says Pratten provided no evidence he had paid the outstanding tax, despite claiming there was an appeal under way with the Administrative Appeals Tribunal. Justice Rothman had also treated Pratten as a first-time offender, but as the appeal judgement reveals, nothing could be further from the truth. insuranceNEWS
He had numerous court appearances for failing to lodge tax returns, and a conviction in 1997 for the same offence. “Quite apart from the convictions for failing to lodge tax returns, the fact the convictions involved repeated offences of dishonesty over seven years disentitled the respondent to any leniency in respect of the later offences,” the judgement says. Another aspect of the case against Pratten relates to the failed removal of a fishing boat – called Los Lobos – to Vanuatu. In November 2011, under the Proceeds of Crime Act, a restraining order was served on Pratten stating he could not dispose of the boat. The appeal judgement says Pratten hired a professional vessel delivery agent to take the boat to Vanuatu. He also paid for work, including fitting a life raft and extra fuel tank, to make the boat seaworthy for its trip to the South Pacific nation. Pratten took the boat from Point Piper, on Sydney Harbour, to Newcastle less than a month after being served with the restraining order. The boat was moored in Newcastle from December 2011 to May 2012 while the additional work was undertaken. Despite being on bail, Pratten and the delivery agent then took the boat from Newcastle to Port Stephens. The delivery agent and his assistant continued to Yamba, planning to sail from there to Bundaberg and eventually Vanuatu. Shortly after conviction at the first trial, Pratten was arrested for attempting to contravene the restraining order on the boat. April/May 2017
At trial he argued the activities in which he engaged were merely preparatory to moving the boat from Australia, and did not constitute an attempted removal. He was found guilty and fined $10,000, but the Director of Public Prosecutions appealed against this sentence. At the latest appeal, this sentence was increased to six months in jail, to run concurrent with the other sentences. The appeal judgement offers some insight on the man who must be Australia’s most notorious insurance broker. “It is… clear from his evidence that the offender lacks any remorse and was prepared to dissemble and give explanations that he knew to be incorrect in order to avoid the consequences of his conduct,” the judgement says. “I consider his prospects of rehabilitation poor, because he rationalises his conduct and considers he has done nothing wrong.” Is this the end of the Pratten saga? In August last year the Australian Securities and Investments Commission permanently banned Pratten from providing financial services and engaging in credit activities. Rural & General Insurance Brokers also had its licence suspended until April 5 this year, apparently to enable the company to lodge its accounts. As insuranceNEWS.com.au pointed out in November, that may prove a bit tricky, considering the brokerage’s owner has been banned from being a director. Besides that, he’s also in jail for defrauding the * Commonwealth. 77
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Energy saver: CHU muscles into new territory with comparator launch
Crop cover: IAG trials multi-peril insurance
CHU UNDERWRITING AGENCIES (CHU) HAS LAUNCHED AN ENERGY comparison service as the Steadfast-owned strata specialist boldly moves into new turfs outside of insurance. CHUiSaver Energy aims to help consumers search the best electricity and gas prices on its proprietary platform. It is the first non-insurance product from the CHUServices division, which is on the lookout for strategic opportunities to broaden its offering. “The strata sector is poorly represented when it comes to offering tailored solutions and cost savings via collective purchasing arrangements,” CHU Chief Executive Bobby Lehane says. “We aim to fix this by leveraging our strong reputation and distribution networks within the strata sector.” The comparison site is a joint venture with Melbourne-based 4th Party Australia, which owns the Grouply.co comparison and social buying service for retail energy. Mr Lehane says the company pioneered strata insurance in Australia 39 years ago and is now building on its profile in the sector to provide broader innovative solutions for modern living. “We have a very firm strategy to continue to expand our insurance products to that market, but also to look at what complementary services we can provide using our distribution networks,” he tells Insurance News. An increasing move toward higher density living also offers opportunities to specifically address unique requirements. “There are a lot of people who are starting to look at strata as a segment of the real estate industry that really needs to be paid attention to,” Mr Lehane says. The launch of CHUiSaver Energy comes as insurers and other industry sectors face both disruption and opportunities, with changing technology offering avenues to move outside traditional territories. “There are huge opportunities for insurers to find complementary products,” Mr Lehane says. The CHUiSaver comparator works out a ranking of relevant products in the system, including exclusive offers, based on information provided by the clients. It uses the information to determine the best option for the client by calculating the effective price per kilowatt-hour or what CHU describes as WattPrice. The stylishly named WattPrice is designed to calculate the amount a client will pay for a retail energy product based on their kilowatt-hour consumption and energy usage behaviour. “We designed WattPrice because we wanted a comparison tool for energy that would be just as simple and just as useful as unit pricing is for grocery items in the supermarket,” CHUiSaver Energy website says. “This means that our users can always see which product is the most cost-effective for them, based on their own consumption patterns, household profile, preferences and payment behaviours. “Our comparison service helps you buy energy products better, together.” The service compares all the “generally available” energy products from every provider in Australia, including AGL, Aurora Energy, Alinta Energy, Lumo Energy, * Origin, Tas Gas and Sumo Power.
WHEAT, BARLEY AND CANOLA GROWERS are this year piloting a new multi-peril crop insurance product developed by IAG in partnership with Landmark. Under the pilot program, crop income protection will be offered to identified Landmark customers insured with CGU and WFI who are farming in Victoria, Western Australia, South Australia and New South Wales. IAG says unlike other products in the market, the cover gives farmers a choice around the yield amount they wish to cover as well as the ability to select the price per tonne paid for that shortfall. “As the largest rural insurer in Australia, we have extensive knowledge of rural insurance through both WFI and CGU brands and understand the beneficial impact of multiperil crop in this sector,” Executive General Manager Agribusiness Andrew Beer says. “We’ve been working for some time on developing a product that genuinely helps farmers with multi-peril crops to mitigate against the risk of natural perils.” The standalone product offers protection against yield shortfalls caused by common threats to production such as flood, frost, drought and vermin. Wheat, barley and canola are the three largest winter crops grown in Australia, but yields and total production can vary widely from year to year. In the most recent harvest, farmers gathered a record 35.1 million tonnes of wheat after good rainfall last year. That compares to around 10.8 million tonnes a decade earlier when the country was gripped by drought. “As an organisation we recognise the importance of farm productivity and economic stability in rural communities and the need to help alleviate the many pressures that farmers face, particularly the volatile climatic conditions that impact crop produc* tion,” Mr Beer says.
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LET’S TALK ABOUT VALUE FOR MONEY… Some insurance industry magazines charge less for advertising than insuranceNEWS. That’s fair enough if you believe, as we do, that cost should be based on value. Take a look at these two graphs from a recent insuranceNEWS reader survey:* What print publications do you receive to obtain information about insurance issues?
Which one do you value more in terms of the content of each of these print publications?
Other Other Mainstream newspapers Mainstream newspapers
insuranceNEWS (the magazine)
Insurance Business NIBA’s Insurance Adviser
insuranceNEWS (the magazine)
Insurance Business NIBA’s Insurance Adviser
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Not only do far more insurance professionals read insuranceNEWS than any other industry publication – they also place far greater value on its content. If people are reading a magazine’s articles rather than idly flipping through the pages, your advertisement stands a much greater chance of being seen and acted on. So next time a magazine offers your company an amazingly low ad rate, ask yourself why. You’ll find it’s because they offer little value to the readers you’re trying to reach. And then consider this: insuranceNEWS is the most cost-effective print publication for advertisers to reach the largest possible industry audience. Nothing else comes close.
Insight. Trust. Value.
*The above information was drawn from a reader survey conducted by insuranceNEWS in October and November 2016, with 2534 respondents. insuranceNEWS (the magazine) has a bimonthly print run of nearly 9000, and is circulated free across the industry in Australia. It is seen by more general insurance intermediaries in Australia than any other insurance news publication.
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WHILE WE’RE TALKING ABOUT VALUE… Our recent reader survey* asked respondents which news websites they access for information about the insurance industry, and how much value they place on those sources. The results are in the two graphs below:
What online publications do you read regularly to obtain information about insurance issues?
Which online publications do you value more in terms of the content? Mainstream media Broker Buzz Insurance Business
insuranceNEWS.com.au Insurance Business
98% of the respondents say they read insuranceNEWS.com.au for industry information. And 84% place the most value on the news and information that insuranceNEWS.com.au produces through its weekly and Breaking News bulletins. Compare our 84% value rating with NIBA’s Broker Buzz, which 1.83% of respondents found most valuable, and Insurance Business, which scored 4.21%. Value equals readership. And that equals advertising exposure.
Insight. Trust. Value. *The above information was drawn from a reader survey conducted by insuranceNEWS.com.au in October and November 2016, with 2534 respondents. insuranceNEWS.com.au has nearly 23,000 active subscribers and circulates every Monday in Australia, New Zealand and industry centres around the world. It is accessed by more general insurance intermediaries in Australia than any other online insurance publication.
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UAC sets a Sydney record it was a crowded and hectic marketplace at the Underwriting agencies Council’s annual sydney Underwriting expo on March 10 at the hilton hotel. some 435 brokers attended, setting a new record for the event, which also attracted 86 exhibitors. the 18th annual expo was valuable for brokers, who kept the underwriting agents and their staff busy explaining new insurance products, discussing deals and networking. this was followed by a scintillating lunch featuring high-altitude mountaineer andrew lock. Mr lock inspired with tales of conquering 8000-metre mountains, including Mt everest, and left guests with a quotable quote: “Mountaineering isn’t worth dying for, but it’s worth risking dying for”. lloyd’s director of Performance Management Jon hancock, who was visiting from london, also attended the expo. and austbrokers Businsure national Manager Martin Roberts was all smiles, having won $5000 in travel vouchers. he’s now planning a family holiday to fiji. to be eligible Mr Roberts had to visit a minimum of 25 exhibitors and scan their QR code.
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Brokers tee off for Allianz golf championship spectacular shots were on show as brokers in western australia, Victoria, and south australia overcame sand traps and water hazards to win top state honours at the allianz golf championships in february. one broker in Victoria made a spectacular chip for birdie from 75 metres, drawing strong cheers from the watching crowds. Justin Purslowe and Rick Purslowe from iC frith & associates took out the winner’s trophy in wa, honan insurance Brokers’ Michael fennessy and david welsh won in Victoria, and david Creaser and Brad entwistle of safeguard insurance Brokers were sa champions. they will go on to battle for the national title in sydney in May. there are two spots left with competitions yet to decide the new south wales and Queensland representatives. allianz also introduced a ladies’ competition for the first time. lauren Brazier from lockton won in wa, arthur J gallagher’s Maree Mills was the champion in Victoria and Mga adelaide’s Pat warren in sa.
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Helping hands: Guy Carpenter staff do their bit a team-building exercise for sydney-based guy Carpenter staff saw them building prosthetic hands for landmine victims. about 30 staff joined the team-building event organised by the helping hands Program. each team was given a set of 30 pieces of metal and plastic to build the prosthetic hands. Before they started they were asked to put a red cuff over one of their hands to help them understand what amputees go through on a daily basis. the team members were also shown videos and pictures of people who had received these hands in the past and how they had so positively impacted their lives. guy Carpenterâ&#x20AC;&#x2122;s sydney staff have a history of donating their time and effort to charitable causes. last year they built bikes for a childrenâ&#x20AC;&#x2122;s charity.
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Gone fishing desks and daily life were left behind and it was off to the deep blue waters of northern australia for the Vero nt fishing Charter. about five Vero staff and 15 brokers set off from darwin to test their angling skills about 20km offshore in cloudy conditions that were ideal for fishing. Participants reeled in goldband snapper, jewfish, salmon and a couple of small sharks, but large-size catches proved elusive this year. the charter returned in the early afternoon in time for a long friday afternoon lunch at a restaurant at the Cullen Bay Marina. Bottles of Moet and beach towels were presented to winners of prize categories including biggest fish, most fish, ugliest fish and first one to lose a fish.
Talk to insurance Celebrating as part of your planning. a company We can help you make the most of it. milestone? Holding an event?
Email firstname.lastname@example.org to find out more 88
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Long Lunch doubles as a charity fundraiser the Council of Queensland insurance Brokersâ&#x20AC;&#x2122; (CQiB) long lunch function, a networking event for the broking community, is fast gaining a reputation as a fantastic charity fundraiser. Members and guests led by CQiB Vice-President andrew hinz raised $2100 for the Mater foundation at the lunch on february 24, building on the $2500 raised at the previous lunch. Mater foundation is an iconic Queensland healthcare institution. Comedian Jimmy Poulos was the master of ceremonies at the lunch, which took place at the stamford Plaza hotel. the event was attended by 147 guests. the next lunch will take place some time in the fourth quarter.
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Oracle Group enjoys a big turnout on AR day oracle group Managing director steve Campbell and his team played host to a full house when the Perthbased company held its annual authorised representative (aR) day in sydney. aRs from around the county flew in to attend the gathering in february, taking up the opportunity for some quality networking while learning more about plans to grow the business and providing feedback. the entire assembly later proceeded to the award-winning Redoak brewery to celebrate oracleâ&#x20AC;&#x2122;s success, accompanied by representatives of underwriting agencies and insurers.
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Steadfast Re celebrates London office opening steadfast co-founder and Chief executive Robert kelly led the celebratory toasts to mark the official opening of its reinsurance unitâ&#x20AC;&#x2122;s london office in february. the steadfast Re office also serves as a support base for steadfast brokers and managers from steadfast Underwriting agencies and the steadfast group when they are in the global financial centre on business. Representatives from more than 30 lloydâ&#x20AC;&#x2122;s syndicates joined Mr kelly and other senior steadfast executives including Chief operating officer samantha hollman, steadfast Re Chief executive simon Cloney and steadfast Underwriting agencies Chief executive simon lightbody to mark the occasion.
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Moving ahead at CGUâ&#x20AC;&#x2122;s AR summit
a dinner was the best way to cap off a successful two-day aR summit held by CgU at Crown Melbourne recently. iag national Manager authorised Representatives danny Byrnes and Chief executive australian Business division Ben Bessell were among the senior executives who spoke at the event, which drew 150 delegates from around australia. apart from the serious business of planning for growth and discussing strategies, the summit was also an ideal opportunity for aRs to get together under the CgU banner following the acquisition of Perthbased westcourt last July and moves to bring it alongside the existing nas operation. a dinner was later held at the Cargo hall at Melbourneâ&#x20AC;&#x2122;s south wharf to mark the end of the conference.
Mansions Print Ads_FA_print_170328.pdf 3/28/17 INMAG APR 17_page layouts 30/03/2017 1:15 pm1 Page 95
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*subject to underwriting criteria being met and terms, conditions and limits apply. The information contained in this document is not intended to be financial product advice. The information provided here is general advice only and has been prepared without taking into account your objectives, financial situation or needs. This document is intended for Insurance intermediaries only. Chubb Insurance Australia Limited (ABN 23 001 642 020, AFSL 239687) is the insurer and underwriter of the home and contents insurance available from SGUAS Pty Ltd trading as Mansions of Australia (ABN 15 096 726 895, AFSL 239687) (‘Mansions’). Terms, conditions, limits and exclusions apply to the products referred to above. A Product Disclosure Statement for this product can be obtained by contacting Mansions or visiting www.mansions.com.au. We recommend that your client consider the PDS in deciding whether to acquire, or to continue to hold, the product.
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Cocktails at Lloyd’s delegates at the lloyd’s asia-Pacific Coverholder Conference in sydney had plenty to chat about when they got together for a cocktail party after the annual event. drinks and canapés were enjoyed by about 75 guests, who were hosted by lloyd’s at its australian office in o’Connell street. earlier, the market’s london-based Performance Management director Jon hancock delivered the keynote address at the conference, providing an update on a range of lloyd’s priorities and challenges. topics covered at the event included market modernisation, insurance broking benchmarking, and compliance and regulation. delegates also received an update on data processing and claims oversight projects. about 120 delegates attended the conference at the establishment Ballroom, with some travelling from new Zealand, singapore and hong kong.
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IN THE LAST ISSUE I INTRODUCED you to the mob of pooches who hang around the Insurance News office. There’s only one in here today, and he’s snoozing under my desk. You’ll remember I invited readers to submit pictures and anecdotes of their own dog/office experiences, and I’d like to thank the hundreds of you who didn’t respond. This could mean the Maglog page isn’t as well read as I’ve been told it is, although every industry event I’ve attended in the past few weeks has included people pulling out their mobiles and showing me pictures of their mutts doing cute things like sleeping. Last chance, people: send pictures of your pets at work – goldfish even; I no longer discriminate. A pet is a pet, although flies need not apply. Professional director and actuary Elaine Collins is featured in this issue, and this is my favourite picture from the series photographer Kym Thomson took for us – Elaine with her Labrador Lucky, who is lucky enough to get taken for a walk every day 98
Sam Pentecost Contributor
the boss is around. Which is quite often, because Elaine works from home. As far as I’m concerned, that qualifies Lucky as an office dog. Our Managing Editor, John Deex, interviewed QBE’s Pat Regan in Sydney, and was thrilled to discover the new Chief Executive of Australian and New Zealand Operations comes from Norfolk. John comes from Suffolk, which is next door, and as the picture above shows, they sat for an hour or so speaking in unintelligible accents about earth-shattering things like the relegation of Pat’s beloved Norwich City FC from the Premier League. But we were a bit taken aback at the comment in John’s profile on Pat that Norfolk “possesses sandy beaches to rival almost anything in Australia”. Let me run that by you again. Norfolk – in England – possesses sandy beaches to rival almost anything in Australia. Andy the sub-editor is from Yorkshire, and even he thought that statement was a bit dodgy. The Australians in Editorial just looked confused. Perhaps John was referring to insuranceNEWS
Norfolk Island? Nope. Then we laughed rather a lot. “You’ve never seen Holkham beach,” protested John in his best hurt Suffolkian. “It has miles and miles of golden sand as far as the eye can see, and it’s beautiful and it’s been used in movies like Shakespeare in Love. And it has a kiosk.” We had to admit Gwyneth Paltrow is unlikely to stalk the sands of places like Bondi or Cottesloe, as she did in Shakespeare in Love, which is a small mercy, considering she runs a website called Goop. To give credit where it’s due, there are YouTube clips of Gwyneth striding across Holkham beach, which is indeed, as stated, golden. And, by way of comparison, the big picture above is of Whitehaven Beach in Queensland, one of an estimated 10,685 beaches in Australia. (That is based on a Sydney University study that counted every stretch of sand longer than 20 metres and remaining dry at high tide.) Never mind, John. We don’t have a football team called the Canaries, and most of * our beaches don't have kiosks, either.
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We appreciate the warm welcome we have received since opening our doors in Australia two years ago. We look forward to continuing to serve you with flexible underwriting, unrivalled financial strength, and standout claims expertise for many years to come.
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