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ADAPT OR DIE: Brokers and the value of advice
MR STEADFAST: Robert Kelly still tells it like it is
LATEST REPORTS: Brokers face battle for SME market
KIDS, COWS AND CLIENTS: How Belinda Scott started a little brokerage that grew and grew
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Contents 6 Newsmakers» 10 Brokers’starkchallenge:Adaptordie» New trends show it’s vital for intermediaries to demonstrate the value of what they do.
lawNEWS 64 Thecostofbehavingbadly» Lawsuits in the US and underhand bank practices elsewhere are presenting D&O insurers with new challenges.
14 MrSteadfast» …and steadfast by nature, too. Robert Kelly recalls the long and bumpy road to the public listing of the company he founded.
companyNEWS 66 Capturingnewmarkets»
Internet enthusiasm is fuelling competition, especially in personal lines. Brokers should proceed with caution.
28 Caughtinthespotlight» General insurance will face much more scrutiny in the Murray inquiry than it has in previous government reviews.
Traditional kidnap and ransom insurance has evolved to become relevant to many more Australian businesses.
70 Smarterclaims » Vero has an app for brokers to offer motor fleet clients.
70 Recallrisk » AIG launches food and beverage cost estimator.
30 Keepingupstandards» Meet the man who makes it possible for insurers and brokers to communicate in ways they can all understand.
38 ANZIIFlooksforward» The institute has ushered in its 130th year with a new boss who’s planning closer member engagement and further expansion into Asia.
71 Singaporecalling » Arch and Lloyd’s syndicates launch consortium.
71 Underattack » Allianz warns SMEs about cybercrime.
71 Berkleydriveson » A new heavy motor and commercial fleet offering heads a list of changes.
48 Thewinningcombination» Scooping a top industry accolade is the latest in a long line of achievements for broker and mum-of-four Belinda Scott.
peopleNEWS 73 RememberingKym»
The direct channel continues to chip away at brokers’ market share, but some business-owners are finding that buying direct has pitfalls.
58 Challengingtimesforbrokers» Macquarie Bank’s latest examination of the broking business finds competition is heating up, the bigger players are flexing their muscles and the focus is switching to greater efficiency.
Whether working as part of the Pacific Premium Funding team or helping others in her community, Kym Burley was always authentic.
74 76 82 85 86 88
CGUconferencedelegatesgetthepicture» ThumbsupforrevisedSteadfastprogram» RubbingshoulderswithVero » Centrepointcelebratessuccess » BrokersteeoffwithAugustaintheirsights» SydneyExpodrawsacrowd»
Cover: Belinda Scott, BJS Insurance Brokers Image: Alan Foon
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IAG gets the all-clear to buy Wesfarmers’ insurers: IAG has moved closer to completing its $1.845 billion acquisition of Wesfarmers’ underwriting business after the Australian Competition and Consumer Commission (ACCC) ruled it would not oppose the deal. The companies have welcomed the decision as they look to complete the transaction by June 30. “This represents an important step in the sale process, which we believe is in the best interests of our shareholders while offering the customers of our underwriting businesses the opportunity to become part of an established, leading insurance organisation,” Wesfarmers Managing Director Richard Goyder said. The ACCC says it considered submissions from a number of sectors and focused on markets in which both companies underwrite products, including home and contents, domestic motor, rural insurance and commercial insurance products such as heavy vehicle.
It also examined how the deal could affect competition for the acquisition of key inputs, particularly smash repair and windscreen replacement services. “Given the relative sizes of IAG and Wesfarmers in the rural insurance market, the ACCC’s enquiries particularly focused on the likely competitive impact of the proposed acquisition in this market.” The regulator says that while the proposed acquisition would reduce the number of key underwriters from six to five for packaged farm insurance and crop insurance in Australia, “the level of existing and potential competition in this market would be expected to constrain the merged firm”. It says no farmer or grower representative associations expressed concerns to the ACCC in market enquiries. For the home insurance and domestic motor insurance markets, the ACCC considered whether the proposed acquisition would
remove a vigorous and effective competitor. Wesfarmers’ underwriting of such personal insurance products sold via Coles is small but growing. The regulator says other competitors including banks and “challenger” brands such as Woolworths are likely to have a similar ability to provide strong, price-based competition for home and motor insurance. It also examined the agreement for IAG to underwrite Coles’ insurance products under a 10-year distribution agreement and decided that, while the proposed acquisition removes an independent underwriter from the market, “at the retail level [it] is unlikely to materially change competitive dynamics”. New Zealand’s competition regulator, the Commerce Commission, will announce its decision on IAG’s takeover of Wesfarmersowned Lumley on April 30. IAG, Wesfarmers welcome ACCC green light, 31 March 2014
“Alarm bells ring when you are paying $200 million in claims for a region yet collecting only $2 million in premiums.” – Insurance Council President and Suncorp Personal Insurance Chief Executive Mark Milliner tells an urban development conference
Hutcheon steps up: Ansvar Insurance has appointed Warren Hutcheon (above) as Chief Executive. Mr Hutcheon is currently Chief Executive of the Victorian Managed Insurance Authority, where he has led a turnaround in the business. “Ansvar has been on a similar journey and we’re now at a level where someone of Warren’s considerable leadership and calibre can take [us] to the next level,” Ansvar Chairman Nicholas Barnett said. Mr Hutcheon will take over from Deirdre Blythe, who took the role on an interim basis after Andrew Moon resigned in December to recover from major surgery. Mr Moon joined Ansvar in 2010 and led it through a tumultuous period, starting with a restructure in which the specialist insurer quit household and motor cover – about 80% of its policies – to concentrate on churches, community, care, education and heritage. Ms Blythe has become an executive director and will resume her former chief financial officer role. Ansvar recruits new, 17 March 2014
A lack of communication between the Federal Government and the insurance industry is raising concerns that Canberra is making decisions without a clear understanding of the sector’s issues. Industry executives have told insuranceNEWS.com.au they are being stymied in their efforts to exchange views with ministers, with calls not being returned and persistent difficulties in communicating with the office of Assistant Treasurer Arthur Sinodinos. “There are claims the industry won’t talk to the Government, but it’s because the Government won’t take our phone calls,” one industry insider told insuranceNEWS.com.au. “It’s setting the industry and Government up on a collision course.” Some industry leaders discussed access problems with Senator Sinodinos before he stood down from his frontbench position earlier this month while the NSW Independent Commission Against Corruption investigates a company he chaired. Mathias Cormann has taken over Senator Sinodinos’ portfolio, but there are concerns he will be preoccupied with the Future of Financial Advice reforms and the sale of Medibank. “We don’t expect to be able to get through to [Senator Cormann] easily, but we have a lot happening, particularly around affordability, and the message is not getting through,” one source said. A communications blockage is all the more surprising given the expertise that should be available to Senator Sinodinos. His Chief of Staff is Paul Giles, a former Insurance Council of Australia general manager government and stakeholder relations. A senior industry executive who is closely connected to the government negotiations says there are “undercurrents” and “friction” at some levels of the relationship but the real problem for insurers is “politicians playing the game hard”. Insurers stymied over government access, executives say, 31 March 2014
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A bridge too far: a lone walker on the Williamsburg Bridge in New York in February
Cold catastrophes: Deadly snowstorms in Japan have caused insured losses of about $US585 million, according to Impact Forecasting’s Global Catastrophe Recap for last month. The storms, which killed 37 people and injured more than 2750, took worldwide insurance payouts to more than $US1 billion for the period, the Aon Benfield subsidiary says. In the US a mid-month winter storm killed at least 25 people and damaged more than 50,000 structures. Insurers estimated losses at more than $US250 million. Earlier, a separate storm killed at least nine people across the eastern US states, generating insured losses of more than $US150 million. Severe winter weather also hit China, while windstorms struck vast areas of Europe. Windstorm Tini caused extensive damage across Ireland and the UK, and flooding across England, Wales and Ireland, causing insured losses of $US685 million. Japanese snowstorms drive February payouts, 10 March 2014
When the monitor’s men come calling: An underwriting agency has had some of its Melbourne office staff counselled by a trauma specialist after an officer from the Victorian Fire Services Levy (FSL) Monitor threatened to have a receptionist arrested for obstruction. The agency’s Sydney-based chief executive, who has asked that he not be identified, says the incident should serve as a warning to Victorian insurance operations to brief their staff on how to handle similar intrusions. “I am furious about this,” he told insuranceNEWS.com.au. “There was absolutely no reason for this type of behaviour. We’re not criminals. The monitor’s office is free to examine our files at any time.” Staff from the office of FSL Monitor Allan Fels have entered a number of brokers’ offices seeking information after receiving complaints last year that the levy was still being charged following its abolition on July 1. A spokesman for the monitor told insuranceNEWS.com.au that officers have had to execute a search warrant in only one instance. Ausure’s Echuca office Director Tim Dale avoided having a warrant served, but told insuranceNEWS.com.au his staff nevertheless felt intimidated. He says there had been no contact with the monitor’s office before four officers
arrived wanting access to client records, tax invoices and policy schedules. He agreed to the request to avoid being served with a search warrant, and allocated three staff to help with the task over the next three-and-a-half hours. “I didn’t feel intimidated myself, but I did feel it wasn’t right,” Mr Dale said. “No-one told me if they thought we had breached anything and I’ve had no feedback.” He is not aware of any complaint against the company. The monitor’s office told insuranceNEWS.com.au it has not received complaints from any insurers or brokers about visits from its representatives. The spokesman says the staff involved are “experienced investigators who have considerable experience in the proper execution of warrants”. “They did not ‘raid’ the brokers’ offices.” An investigation is continuing into the activities of one broker who refused entry to investigators. “The monitor’s staff therefore entered under a search warrant,” the spokesman said. “[They] behaved at all times in an appropriate manner in the face of continuing resistance to the quiet execution of the warrant.” The Sydney chief executive says an officer whose business card identifies him as an
“enforcer”, arrived with three others at the company’s Melbourne office demanding to examine the company’s files. Levy monitor’s enforcer ‘traumatised office staff’, 10 March 2014
New boss at Ace: John French (left) will return to Australia, where he began his insurance career with Ace, to become the company’s Country President of Australia and New Zealand. He replaces Giles Ward, who has been appointed to run a newly formed business region for the company called Eurasia and Africa. Mr French is currently Country President of Hong Kong, Taiwan and
Macau and takes up his new Sydneybased posting on April 15. He joined Ace as a business development manager in the late 1990s and went to Singapore as Country President in 2003, moving to Thailand in 2005 and taking up the Hong Kong role in 2007. Mr Ward will operate from a new regional headquarters, based initially in London.
The new region includes Ace’s existing operations in Russia, Turkey, Bahrain, Egypt, Saudi Arabia, the United Arab Emirates, Pakistan, Tunisia and South Africa, and “will encompass future expansion in a broad swathe of territory that stretches from the Black Sea to the Middle East to the African continent”, according to the company. French comes home as Ace AustraliaNZ chief, 3 March 2014
Poole to quit:
The walls go up, premiums go down:
Bucket brigade: residents leave their homes in 2012 as floodwaters rise in Roma, Queensland. Now its levee is nearly complete Insurers are to cut some property premiums in Queensland by up to 70% following the completion of flood mitigation works. Last week the town of St George, 390km west of Brisbane, opened a levee, leading Suncorp to cut average premiums by 15% and RACQ Insurance to go even further. “With the completion of these flood mitigation works, RACQ Insurance expects those properties previously flood-affected will now achieve, on average, premium savings of up to 32%,” Chief Executive Bradley Heath said. “RACQ Insurance applauds any measures designed to protect homes and critical community infrastructure from flood perils.” Suncorp will cut renewal premiums in St George from April 10. “In Charleville and St George, where levees have been completed, we’ve dropped the price of premiums significantly,” a spokesman told insuranceNEWS.com.au. Charleville, 760km west of Brisbane, recently completed a levee, house-raising and water diversions. Some properties in Roma, 515km west of Brisbane, may gain larger reductions, the Suncorp spokesman says.
PUBLISHER/EDITOR: TERRY McMULLAN McMullan Conway Communications Pty Ltd Tel: + 61 3 9499 5538 Fax: +61 3 9499 5535 Email: email@example.com ADVERTISING: NAOMI CONWAY McMullan Conway Communications Pty Ltd Tel: +61 3 9499 5538 Fax: +61 3 9499 5535 Email: firstname.lastname@example.org ARTWORK DELIVERY TO: McMullan Conway Communications Pty Ltd PO Box 116, Ivanhoe VIC 3079 Australia or Level 1, 120 Upper Heidelberg Road, Ivanhoe VIC 3079 (COURIERS ONLY) Email: email@example.com
“With the Roma levee almost complete, we’re working with council to get access to detailed flood modelling to determine the new flood risks properties will face, but the initial data we have indicates some properties may see the cost of their premium fall by up to 70%.” In Charleville, had no mitigation work been undertaken, the average cost of a Suncorp home policy would be more than $3000, compared with $990 now. In St George, Suncorp has paid out on almost 170 claims costing more than $5 million since 2008. After extreme weather events in 2010 and 2011, Suncorp stopped writing new home policies in Roma, Charleville and Emerald, which is 270km west of Rockhampton. The embargo remains in Emerald because the insurer is yet to see firm mitigation plans, the Suncorp spokesman says. Queensland Community Recovery and Resilience Minister David Crisafulli has called for insurers to cut premiums by up to 80% in communities such as Roma, as promised when levees were proposed.
Poole announces plan to retire, 21 March 2014
Flood mitigation brings Queensland premium reductions, 17 March 2014
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A McMullan Conway production
Allianz Australia Chief General Manager Sales & Distribution Jonathan Poole (below) has announced his plan to retire from the company at the end of the year. The announcement was made to the company’s staff this morning. Mr Poole is one of the most senior executives at Allianz, managing a large part of the company’s key insurance businesses. Following the appointment of Niran Peiris as Managing Director on January 1 last year, a management reshuffle saw Mr Poole take on the newly created sales and distribution role. He was formerly Chief General Manager Broker & Agency. Mr Poole joined Allianz 14 years ago to develop the company’s e-business capabilities. He also managed the company’s financial institutions division before moving to Broker & Agency. “Jonathan has made a significant contribution to the success of the Allianz business,” Mr Peiris said in a statement. “[His] professionalism, drive and deep understanding of the complexities of the insurance business is widely recognised and respected across the insurance industry.”
Material in insuranceNEWS (the magazine) is protected under the Commonwealth Copyright Act 1968. No material may be reproduced in part or in whole without the consent of the copyright holders. The content of articles appearing in this magazine do not necessarily reflect the views of the Publisher. All statements made are based on information that is believed to be reliable and accurate, but no liability is accepted for any fault or omission. We also accept no responsibility or liability for any matter published in this magazine that reflects personal opinion. Printed on FSC® paper stock using vegetable based inks by a printer with ISO14001 Environmental Management System Certification.
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Brokers’ stark challenge: Adapt or die
New trends show it’s vital for intermediaries to demonstrate the value of what they do By Terry McMullan
THE BATTLE FOR MARKET SHARE IN commercial insurance lines is at its most intense at the lower end of the SME space, with businesses that are the lifeblood of many smaller brokers being wooed away by mass-market advertising campaigns and the ease of the internet. Research by Vero Insurance has shown that the trend for SME insurance-buyers to use the internet is increasing, and overseas research supports the finding. The Vero study, the third annual report of its SME Insurance Index, says the commercial insurance environment in Australia is “complex and dynamic” and warns that the evolving attitudes of SME businessowners and decision-makers “present challenges for an industry that needs to evolve to stay relevant”. The study supports comments by CGU Chief Executive Peter Harmer that brokers must “adapt or die”, and by other industry leaders calling on brokers to “sell” the value they bring to the insurance transaction. Mr Harmer, who has worked as a broker in senior positions in the Australian and UK markets, told the Steadfast Convention in Melbourne in March that brokers must switch from being transaction-driven to advice-driven. He says brokers have a “transactiondriven mindset” focused on maximising their margins and reducing touch points, 10
which can only assist the shift to the commoditisation and standardisation of insurance products. By concentrating on high commissions, volume bonuses, profit shares and marketing fees, brokers are creating unsustainable cost bases that force customers to alternative channels like the internet and other forms of direct insurance. “The biggest threat to broking comes from within,” he said. “The broking profession is actively shrinking its own market.” The trend is not unique to Australia. A report on the UK insurance market compiled by business research group Datamonitor in October last year says consumerisation and the use of multiple channels by insurers “are impacting traditional insurance models and driving long-term change” in the market. Most of the UK commercial insurance market is dominated by brokers, but Datamonitor's 2013 SME Insurance Survey says the direct channel and the banking channel are increasing their penetration of the SME insurance market there. The direct channel has seen a gradual penetration increase from 29.3% in 2011 to 38.6% last year, while banks have boosted their position from 5% in 2012 to 9.6% last year. “The decline of the broker will continue in the SME space as business-owners insuranceNEWS
apply their personal insurance purchasing experience to their business insurance and contact insurers directly, in some cases utilising the same brands,” Datamonitor says. The transition to direct channels is being driven by insurers, who are pushing to build low-cost, high-volume business models that suit the small business market. For insurers, the direct market “provides easy entrance to new players looking to grow their commercial book”. In the US, where use of the internet for buying insurance is at a relatively early stage, a report by Deloitte’s Centre for Financial Services says that as much as half of the small business insurance market “might be quite willing to buy direct from a carrier over the internet, without having an agent or broker to shop for them or advise them, given the proper circumstances”. The report, compiled using focus groups and a large online survey in the middle of last year, admits the result is surprising. “It would be understandable if many are sceptical about the potential for disintermediation in small business lines, if only because it simply hasn’t yet been attempted to any great degree here in the US. “The conventional wisdom is that such consumers probably don’t have time to shop for coverage on their own – and even if they do, their lack of an insurance
The threat to broking comes from within: CGU’s Peter Harmer speaks at the Steadfast Convention
Kevin Chamberlain Photography
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background, the complexity of coverage, as well as their service requirements would likely keep them solidly entrenched in the agency camp for the foreseeable future. “However, our hypothesis is that given the growing proclivity of individuals to live their personal and business lives online, many buyers of small business insurance might indeed be ready, willing and able to conclude a transaction on their own, whether through their desktop, laptop, tablet or perhaps even their smartphone.” In Australia as elsewhere, the challenge for brokers is to raise their profile and clarify their role and the way they are remunerated for an SME market that apparently struggles to understand what they bring to the deal. Nearly half the SME owners and operators interviewed by the Vero researchers expressed doubt about the cost of using a broker. With intermediaries’ commissions high in the public profile at present thanks to the debate over proposed changes to the Future of Financial Advice legislation, it’s an issue that is not going to go away. The research points out that brokers also need to act on the fact that many direct customers don’t use brokers because they don’t see what they add to the process, and because they don’t realise brokers can secure more cost-efficient insurance than the direct channels.
“It should be about proactively understanding a business’ opportunities and risks, not just simply fitting a business into an insurance-shaped hole.”
“Brokers need to find ways to demonstrate the value of their expertise in order to curb this decline,” the report says. Another disquieting finding of the Vero research is an emerging trend for older SME business-owners to have gained experience on using the internet so they now feel more confident about their ability to find the best insurance deals online. In his speech to the Steadfast Convention Mr Harmer advised brokers to demonstrate their value through advice and round-theclock service through multiple channels. “Customers will increasingly value advice on identifying and managing changing and new risks, creating an opportunity for brokers to reclaim their profession,” he said. “How often have we heard of a broker in a renewal review start with a comparison of year-on-year changes in asset values or turnover, as though they constitute a review of the real change in a client's risk profile? “It should be about proactively understanding a business’ opportunities and risks, not just simply fitting a business into an insurance-shaped hole.” He believes that technology gives clients unlimited information about products and services so that they “come to the table as an instant expert”. “Customers won’t simply look to other brokers or other providers in the insurance insuranceNEWS
sector to set the benchmark. They will know more and expect more. “They will expect brokers to provide solutions that will reflect them and will adapt to their changing circumstances.” For Steadfast Chief Executive and Managing Director Robert Kelly, Mr Harmer’s message emphasises what brokers already know: brokers have to provide real value to the client’s business. Mr Kelly points out that Steadfast was established in 1996 under the shadow of the notorious “buckets” – facilities provided by insurers to some brokers, often under amazingly liberal terms the insurers came to regret. “They were dropping 30% off market prices,” Mr Kelly says. “If we’d gone on price, we would have been like the buckets – completely disappeared. “Instead we said if we can give the best advice, have best-in-class policies and have systems that allow us to look as good as everybody else in the market, we should survive because we have personal relationships. “Advice over-rides price – I think that is the DNA of insurance broking. “If people only bought every product they looked at on price we’d all be driving Hyundai Excels.” He says some insurers never seem to understand the value of advice, or even what it is. 11
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“We have to convince people that our relationship is very good for them and that our advice is appropriate.”
“They understand actuarial triangulation of claims to produce a pricing structure which you put into the market and you hope sells. We are the complete reverse. “We have to convince people that our relationship is very good for them and that our advice is appropriate. “So advice is crucial for what we do. If it’s just price, we’ll die.” The challenge for brokers will be to assimilate the messages coming from the research and decide on collective and individual action. The greatest risk will be doing nothing. While some brokers have found success by embracing the internet and assimilating it into their service, Macquarie Bank’s latest Insurance Broking Benchmarking Report warns there are risks in pushing business online. “By prioritising the online channel, you risk diminishing the value of the broker relationship and commoditising your service offering,” it says. “It’s important to ensure your increased online presence compliments your role as a trusted personal adviser, rather than detracting from it.” Suncorp Commercial Insurance Executive General Manager Andrew Mair, says that “despite – or perhaps because of 12
– the plethora of information available on the internet about insurance, there are still plenty of opportunities in this digital world for brokers”. “The main factor limiting broker use is that some SMEs simply do not understand the benefits a broker can bring.” He says brokers can demonstrate their capability when a business makes a claim. The index shows that brokers’ clients are more likely to be satisfied with their claims experience and less likely to be dissatisfied than direct clients. That finding backs up the conclusion of a report by US insurer Hanover last year, which says 60% of customers “who are lured away from independent agents by direct insurers promising lower prices will ultimately return to an independent agent because they want more value”. The challenge for Australian brokers – as it is for brokers in the small business field anywhere – is in breaking through consumer ignorance and prejudice to * highlight the value of what they do.
See also: Brokers gain from horror claims, page 54 Challenging times for brokers, page 58
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With over 1500 points of view on your business, the Vero SME Insurance Index 2014 uncovers significant opportunities for Brokers.
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Mr Steadfast …and steadfast by nature, too. Robert Kelly recalls the long and bumpy road to the public listing of the company he founded By Terry McMullan
THE COLLINS ENGLISH DICTIONARY DESCRIBES “STEADFAST” as “fixed in intensity or direction; steady; firmly loyal or constant; unswerving”. It’s a word that suits Robert Kelly, the Steadfast Group founder who never stopped dreaming about making his organisation bigger and its members richer. For those who’ve been around the industry for more than 10 years, the relaxed and affable Robert Kelly of 2014 is a long way removed from the outspoken, tough-talking “tell it like it is” founder and unchallenged boss of the very tribal Steadfast broker group. Today the Big Bloke is the Managing Director and Chief Executive of a sharemarket success story. The public float of Steadfast in August went off without a hitch, with the company’s share price nearly 40% above the initial sale price of $1.15. The members who invested are indeed richer. The rough and tough exterior – which disguised a considerable intelligence and shrewdness lurking beneath – is long gone. Today he’s slimmer and perhaps slightly more cautious in what he says, as befits the chief executive of a listed company. But while he might talk softer, he’s still a tad pugnacious. Like, how does he react to the statement that Robert Kelly is Steadfast? “Look, I’d accept some responsibility that the strategy of the model broker, the forming of the allegiances and, for better or for worse, my relationships in the market, had a lot to do with this company. “But Steadfast’s made up of lots of individuals who have stood with me and supported me and advised me and helped me grow this company. “Yeah, there’s a lot of me in this company, but I know I can leave it eventually knowing that the people around me are very successfully able to go forward with the business. “I think any time there’s a transition in the business – and this is not a transitional statement, Terry, so don’t get too excited – the true test of whether the person who’s helped build the business has succeeded is that it endures and in fact goes better when you leave.” Steadfast’s transition into a public listed company was so free of drama that outsiders might have been tempted to believe it was easy. But it’s been a long haul. Just over seven years ago Mr Kelly was taking the first cautious steps towards a listing, telling members in a closed-door meeting before the March 2007 Steadfast Convention in Brisbane that he insuranceNEWS
was planning to form a public company – a process he expected to take two to three years. Good idea, unfortunate timing: it was the year before the global financial crisis. The float plan, which was approved by 76% of the 278 members attending the meeting, came just two years after rival broker group Austbrokers had gone public. 2007 was an exciting year for the industry. Suncorp had just completed its $7.9 billion takeover of Promina, and Steadfast had just completed the formation of a joint venture premium funding company with Macquarie Bank. It all seems so long ago. Mr Kelly agrees the float process took a lot longer than he originally envisaged. From those early days the company bulked up with specialists capable of planning a complex structure accommodating the varying needs of broker members. In contrast, Mr Kelly realised that he was going to have to lose his own bulk if he was to be fit enough to last the listing marathon.
On underwriting agencies… I think underwriting agencies perform a good role when they’re niche and specialised and can be agile in how they go about doing their business. The biggest problem you’ve got with underwriting agencies is, you’re only as good as your loss ratios and capital will move in and out of them because of that. We have over $200 million going through underwriting agencies at the moment. Eventually Steadfast would like to have somewhere between $400 million and $500 million going through them. Our sales last year were $5 billion so it’s not exactly a huge slice. I often get told, “If you buy an underwriting agency, other networks won’t deal with you.” But look at it this way. Austagencies is good for us. When our guys need something they sell, we’d encourage them to buy Austagencies.” Our Steadfast conference this year had three strategic underwriting agency partners exhibiting that are owned by Austagencies, so in my view, let the market decide where it goes, and not by somebody saying, “Don’t do business with these people because they’re owned by those people.” I mean, do you think SRS has stopped doing business with us because they are owned by Gallaghers? The people running it are still there and the products are still there. Underwriting agencies have got a real future, and I guess we have to forget about who owns them and worry about the product, the service that’s provided by the agency and their appropriate pricing structure in the Australian market.
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“It was hard, but you’ve got to be able to keep up a pretty fast pace flying to meetings and talking to so many different parties and always being on the move,” he told Insurance News. “You have to be sharp, always.” Has Steadfast changed post-listing? He doesn’t think it’s all that different. “We’ve aimed to make sure that the listed entity didn’t change anything we did for the network brokers. There aren’t two classes of people in Steadfast – equity and non-equity – there’s only network brokers. And the only difference is that we make more revenue out of some and less revenue out of others. “Everything we do is the same for everybody, regardless of the size and regardless of the equity, and that’ll never change. “For me, on a personal basis, I’ve been able to have some terrific people come into the C-suite and I’ve been able to pass on jobs that I used to do to people like our new general counsel, chief risk officer, human resources manager and of course the person who works tirelessly next to me, our Chief Financial Officer Stephen Humphrys.” He says Mr Humphrys “has been a longstanding supporter of Steadfast since it started. In fact he was involved in the setting-up of the company originally. He has been outstanding in his knowledge of what we had to do and over the past 12 months building a team of people that could deliver what we need.” Mr Kelly says he has “great confidence in our numbers and our ability to perform to the expectations that the market has”. However, the days of regularly flitting around the country to meet individual brokers and talk to them about their businesses and what Steadfast can do for them has had to be curtailed or passed on to others. He says he’s spending more time these days talking to investors. “If somebody’s put $20 million into our company I expect that they can ring up and talk to me. They’re entitled to have some of my time, although we’re not going to say anything we wouldn’t inform the market on.” It’s 20 years since Mr Kelly – then a partner in a Sydney brokerage – wrote to industry mergers expert Ted Hogg saying he saw potential in bringing smaller brokers together. “I feared for smaller brokers. So we spent 1995 talking about it and formed the company in about April 1996.”
On broker commissions... Vero’s decision late last year to cut brokers’ commissions on personal lines products by 7.5% was strongly criticised by Mr Kelly at the time. He tells Insurance News Steadfast’s loss ratio for personal lines was in the 40s when the decision was made. To him the decision was illogical. “They didn’t reduce our commission level when our loss ratio was at 110% because of the floods, so five years later when our loss ratio is pretty good, they decide to cut our remuneration. “Now I think Vero is in a very difficult situation because they’re owned by Suncorp and Suncorp and IAG dominate home and individual car in the Australian market. I think they’ve got 82% between them. “So you’d have to say to yourself, if you’re going to sell your product into intermediaries is your return on capital the same as what it is for your direct business? And I guess you do an extrapolation of that and if it’s not the same then you reduce your cost of production, and I guess reducing commission reduces the cost of production. “I thought it was ill-informed and I thought it was poorly executed, and I explained that directly to our people at Vero and they accepted that was our view, and I accepted their view that it had to come down, and luckily none of their competitors agreed with them.”
The early years of Steadfast were intense, with steady growth the result of Mr Kelly’s strong and occasionally outspoken stewardship. His determination to provide his members not only with an efficient buying group but also a support system that puts expert guidance at the end of the phone is a big contrast to his own early years as an intermediary, when his insurance agency failed. That was 1974, when support systems didn’t exist. He spent seven years paying off his creditors – an ordeal that he says taught him to always keep his options open. It may also explain why he is passionate about such things as professionalism and industry education. As passionate as his advocacy for broking is, Mr Kelly’s views on the rights and wrongs of industry issues has sometimes rubbed people up the wrong way. In 2007 he told this writer: “I’m not unopinionated and you’ll either like me or hate me.” His old habit of being massively dismissive and scathingly sarcastic, often without really meaning to be, is well under control these days. He’s too relaxed to get testy. Did he set Steadfast up with a vision of building it into the broking behemoth it has become? “No, no, I’ll admit the concept was mine, but I never thought we’d have people pulling together. I didn’t think brokers could work in a collegial way and go forward together. I thought they were too competitive towards each other. “But I believed if we didn’t try and see if we could pull them together I would die wondering.” He says the idea for Steadfast was framed around the understanding that brokers had “reached a fairly strategic point in distribution in Australia”. “I’d spent a lot of time – and still do – looking at overseas markets and distribution in those markets, and it became obvious that succession would be an issue for brokers long-term. “There were ways to go forward by keeping the current model and having succession within the group. We’d had great success in that, but we began to see that perhaps if we didn’t provide more than being able to sell within the group we would be putting the overall product at risk and we may lose people. “So the logic was that we could raise capital to buy people’s brokerages. We were offered capital to do that, but I felt that wasn’t the way to go. “I believed that the true test of whether we had produced something together that has great value would be to have a public offering where people could still put some capital in their back pocket and still have an investment in a public entity that they worked within; and their efforts would be rewarded by the success of the business that they would own a share of. “As somebody said to me. ‘I’m not selling you part of my business, I’m actually investing in 285 businesses, so my spread of risk is quite wide’.” The end game plan was never that, but when you start something in your 40s and it runs for 10 to 15 years, you start to look at the options. And one of those options was to look at the stockmarket. So we got some good advice and spoke to all our shareholders. They said go forward, but the GFC hit and we put the thing on hold completely. “When we came back into the market Steadfast was a few years older, the numbers were good and people were probably 15, 16 years older than they were when they first came along for the ride. So it was timed appropriately.” Mr Kelly says the decision to go public was a slow and careful process. There was to be no guessing about numbers or results. Everything would have to be based on solid evidence and careful statements. “The way we approached it was to look at exactly what the business was and what it could do, and then we transferred that over into what it would look like in a public environment. April/May 2014
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Helping small brokers survive: Robert Kelly on stage at last month’s Steadfast Convention. Image courtesy of Kevin Chamberlain Photography
The SVU: sticking points... Steadfast has spent time and a lot of money building services that assist members. They include facilities to handle legal, organisational and financial issues for members. Now the company is intent on building up its underwriting agency services to ensure members have access to niche products and alternative products. But the most ambitious service of all is the Steadfast Virtual Underwriter (SVU), an in-house transaction exchange platform that links insurers and brokers and cost many millions of dollars to build. The intention is that it will allow member brokers and insurers to transact business at minimal cost. Its potential is massive, but for now two issues prevent it coming into full operation. The first is the fact that the industry’s major broking technology systems are owned by Ebix Australia, which operates the dominant Sunrise Exchange platform. Despite years of on-off negotiations, Ebix and Steadfast have still to agree on a price to allow the Ebix-owned broker systems to operate on the SVU. The most recent talks last month broke down and Mr Kelly has made it clear he’s not interested in negotiating on the terms offered by Ebix. For its part, Ebix says it remains willing to develop the software the SVU needs, but there has to be negotiation on the costs. The other issue is the reluctance of major insurers QBE and Allianz Australia to allow their products to be accessed through the SVU. The sticking point is apparently the aggregator attached to the SVU that allows brokers to instantly scan other insurers’ prices for similar products. Mr Kelly says both insurers have issues with the aggregator model because they are concerned brokers will always choose the cheapest price for their clients. “That’s a view I don’t share,” he tells Insurance News. “It’s an information base, and I think by the end of this year QBE and Allianz will be the only two major players in the Australian market that aren’t on the SVU. “Since Zurich came on to the SVU their numbers have gone through the roof, and I do notice that in some sectors we have data for some of the non-SVU participants who are not growing at the same rate as the SVU participants are. “I think it will just become a matter of when they start to lose business or business flattens and they make a decision on whether they should or shouldn’t be on it.”
“I must say the diligence that was put upon us by all of our advisers – and we had plenty of them – was a pain in the butt. “Most people who know me would know we’ve not built anything on bullshit. We’ve done it on facts, reliability and working with people. That’s been demonstrated by the way our first six months’ results have met the prospectus. They’ve absolutely demonstrated that what we said we’d do we’ve run true to.” The listing has also highlighted the fact that Steadfast and Austbrokers are very actively and sometimes aggressively competing for key brokerages. But Mr Kelly denies that the competition has led to inflation in the value of brokerages on the market. “The basic valuation of brokers in days gone by started at 1.25 times fee and commission income which had no relevance to bottom line profit. During the ’80s it surpassed two times as brokers merged together and economies of scale reduced expenses and increased bottom line. Nowadays, we look at an EBITA multiple. That is the basis upon which we went forward in the IPO acquisition. “We didn’t look at what the status quo was, we didn’t look at the multiples – we looked at what we could do in a sustainable public environment with the acquisition price. “For the most part those prices were acceptable and sometimes they were slightly over or under what the seller had hoped to achieve. But the benchmark allowed us to purchase 62 very sustainable businesses.” Confusion over the term “lifestyle brokers” and the need to merge smaller Steadfast brokerages – a process known as hubbing – remains a sore point with Mr Kelly. He believes critics simply don’t understand what Steadfast is trying to achieve. “The hubbing thing was blown out of all proportion. Some people didn’t understand the intimate knowledge we had of our business and the way we could blend our businesses together. I mean, we’ve been extracting data on their turnover, their sales by product and their remuneration for the last 12 years. “So the bringing together of all of that… we had the game plan for it, we knew how to do it and we knew a lot about our market. We weren’t just a new investor coming in and deciding to do a roll-up – we were an intimately involved partner with all of these people we are bringing together.” He says some of the smaller brokers that did not sell to Steadfast were struggling to make an EBITA multiple that fitted into the acquisition strategy of the listed company. “We’ve helped some of those get through that area. We’ve still got a lot of work to do, but we’ve got a whole lot of our brokers who I think over the next few years we will be able to show pathways which will be accretive to lifestyle and to their bottom-line profit. “That’s what we’ll work on – these brokers, commonly referred to as ‘lifestyle brokers’. “We’ll show them a pathway to succession and indeed we’ll give them a deal that will allow them to sustain their lifestyles and realise some profit, as well as make sure that what they do in the public company is accretive to our bottom line.” Nevertheless, Mr Kelly holds fast to the belief that a small broker can survive outside the cluster group structure, working solo. “As long as they’re delivering service to their clients, giving honest advice and not overstepping what they can and can’t do, they’ll always be able to survive. “Is it better under the umbrella of a cluster? Well of course it is, because so many things they have to spend days and weeks on and sometimes weekends and nights fixing we have systems and solutions for. “Sometimes when people come and see what we offer they say, ‘Why have I been bashing my head against the wall?’ “I think broking businesses are advice businesses, and they’re relationship businesses, so people will tend to overcome a lot of external forces if they rely upon the advice and relationship that they’ve had for many years. * “If they stick to that they will always endure.” April/May 2014
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Internet enthusiasm is fuelling competition, especially in personal lines. Brokers should proceed with caution By Wendy Pugh
TRAVEL, BOOK SALES, NEWSPAPERS AND insurance have something in common – they are among the industries jolted by the rise of the internet and increasingly empowered consumers. Competition has increased between direct market sellers in personal lines and indications are that the internet may erode intermediated business volumes handled on behalf of small to medium-sized enterprises, particularly at the less complex end of the scale. Boundaries between direct and intermediated insurance business have blurred and brokers know they must be on their toes to ensure clients seek their advice amid a myriad of information sources and product promotions in a changed world. The latest Macquarie Bank Insurance Broking Benchmarking Report saw online insurers nominated as a significant competitive threat by 59% of brokers surveyed, with the figure rising to 73% in Queensland, where the number of people in rural and regional areas may make internet channels more effective than elsewhere.
Vero’s latest SME Insurance Index survey found more SMEs have moved to online purchasing, with 50% exclusively buying direct and 40% using a broker only. This compares with 45% buying direct last year and 42% using a broker. The rest used a mix of direct and intermediated. For brokers, it’s a case of bad news mixed with good. The pie is growing larger, but their share of it is diminishing. Data from the Australian Prudential Regulation Authority says intermediated business accounted for 43.1% of gross written premium in the six months to June last year compared to 45.8% in the last half of 2011. “There is a place for both the direct and intermediated channels and I believe that to some extent they complement each other,” Hollard Australia Managing Director Richard Enthoven tells Insurance News. “What is clear to me is that in order to prosper all industry participants will need to ensure that their products and services are relevant to a changing consumer.”
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Hollard is one of the companies at the centre of the changing market, providing underwriting expertise for Woolworths' insurance products while also promoting their own brands, such as the online Real Insurance. “The lines between direct and intermediated are becoming less clear as the market evolves and adapts to the digital and mobile ages,” Mr Enthoven says. “For example, is a broker advertising directly to SMEs competing with other brokers or with direct underwriters?” Macquarie Bank’s Head of Insurance Broking Rachael Lavars says the level of broker concern about the internet is surprising, given the direct market's dominant positioning in the retail domestic segment, where advisers are less involved. “To date, insurers selling online have largely focused on personal lines and, in that sense, discussions with brokers suggest they don’t see this as a material threat,” she says. “However, we could see more homogenised, lower-cost commercial products being sold direct online more readily in the future.” Ms Lavars believes those products would still only account for a small percentage of the commercial premium market, and would not cause brokers much concern. Insurers and brokers say consumers are increasingly researching and buying lowerpriced domestic products such as car and home and contents cover online, but businesses are likely to continue turning to
intermediaries when they need expert advice for more complex requirements. Steadfast Managing Director and Chief Executive Robert Kelly says the owners of SMEs seeking information and advice are generally not going to rely on web-based research when it comes to final decisions on taking out insurance. “People who search the web like that will actually come back for advice when they are in a confused state about why there is such a variation in product and price,” he tells Insurance News. “In some ways it is actually helpful rather than taking business away from us. “I think that people who want to insure business want to talk to people with vast experience in the class of business they want to insure in.” BJS Insurance Brokers Managing Director Bill de Vos says he is concerned by insurers competing against brokers with similar products sold directly, but says he has never lost an SME business to the online channel. “My experience is that when you do SME business, clients have more questions they want answered and every business is different. I'm not sure there is a ‘one product fits all’ solution.” Research by Deloitte’s Centre for Financial Services in the United States last year found an increasing willingness by small businesses to purchase insurance online. It found about one in five respondents were eager to take the plunge and purchase insuranceNEWS
direct, and another third were open to the idea. Smaller-revenue businesses were more likely to be interested, while age-based responses varied widely. In the 26-34 age group 62% said they were somewhat likely or very likely to buy over the internet, compared to 57% in the 55-64 category. “The direct sale of commercial insurance to small businesses, without a personal agent or broker to help buyers shop or to advise them, is no longer just a theoretical concept,” the report says. “Opportunities to buy such coverage direct over the web may be limited today but that is likely to change as more carriers experiment with the concept.” In Australia, QBE says there is undoubtedly a shift in the way people and businesses are buying insurance, especially with the increased presence and capability of online channels. “It’s important to keep this in perspective, though: there will always be a wide variety of customers, each with different personal and insurance needs,” Executive General Manager Intermediary Distribution Tony MacRae said. “Due to the complexity of many customers’ requirements and the products available, there will always be a need for some Australians to seek professional assistance on their insurance needs. Not to mention the significant proportion of the market who specifically want professional advice. “A small segment of the market in commercial lines is direct, and we’re sure 21
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Likelihood of buying one or more business insurance policies over online, direct from an insurer 5% 16%
Somewhat likely Not very likely
Likelihood of buying business insurance online directly from insurer
65 or over
Source: Voice of the Small Commercial Insurance Consumer Survey, Deloitte Centre for Financial Services, March 2013
brokers will continue to add value and stay relevant to their customers.” Suncorp Commercial Insurance Executive General Manager Distribution Andrew Mair says it’s all a case of market dynamics. Commercial insurers need to supply their products through a range of channels and have the flexibility to meet changing demand. “With the shifting preferences of the customer, no commercial insurer can afford to have blinkered vision about their distribution strategy,” he tells Insurance News. “They need to have the broadest distribution strategy they can sustain. “We are seeing mainly the ‘micro’ end of SMEs preferring to self-service, but Suncorp’s main focus in commercial insurance is our partnering with brokers, who still remain the most significant distributor in the commercial insurance industry.” IAG’s intermediated business CGU says there has been a marked shift towards direct purchasing in the past five years, particularly in that micro-SME segment. But even then, only a third of micro-businesses are buying direct. CGU started piloting a micro-SME digital direct offering, targeting trades and professional services in December. It is focused solely on customers who are already looking to buy online. “We have absolutely no intention of shifting existing customers who currently are using brokers to a direct model,” General Manager Broker & Agency Ben Bessell says. 22
“We believe there is an opportunity to make the micro-SME product available to brokers. “Indeed, as we gather insights from the pilot digital direct offering for micro-SME customers, we expect to be able to offer a white-labelled SME digital platform to our partners.” “We have to recognise the changing needs and purchasing behaviour of customers. I believe there is a good opportunity to meet the needs in addition to sharing our experiences with our partners to help them grow their business. There is also an opportunity to focus on efficiency that technology can bring to this market, coupled with advice or options tailored to customer needs.” Deloitte Touche Tohmatsu Actuaries and Consultants Director Gavin Pearce says the complexity of business-focused lines such as professional indemnity, directors’ and officers’ cover and public liability has prevented any significant shift to the direct market in the commercial area in Australia. In contrast, brokers typically handle less than 10% of the direct-dominated Australian personal lines market, according to Deloitte estimates, and they are largely standing back from an increasingly heated competitive fray as the “mum and dad” sector changes. “In the past insurers were selling [personal lines products] directly, either online or through call centres. Where we are seeing a shift is into retailing, where the likes of Coles are selling on behalf of Wesfarmers,” Mr Pearce says. “There is certainly a shift in that direction.” insuranceNEWS
The role of retailers and comparison websites highlights broader concepts of the intermediated market in personal lines. The internet continues to help facilitate competition from newer brands, particularly driven by companies originating in South Africa. Such “challenger” brands are increasingly competitive with established insurers like IAG, Suncorp and Allianz. Youi, part of the Rand Merchant Insurance Holdings empire, posted a 70% increase in gross written premium for the six months ended December, according to earnings reported in the South African currency by subsidiary OUTsurance, and the group has flagged expansion in Australia and a move into New Zealand. “The Australian business is expected to continue to penetrate the Australian market and show strong top-line growth together with enhanced economies of scale,” the company says. Other rivals that have built a higher profile include the South African-owned Budget Direct brand and Hollard’s Real Insurance. “New market entrants are beginning to threaten the dominance of Australia’s historical market leaders,” a report by consultants Accenture says. “It remains to be seen which challenger brands will reach significant scale, but their collective impact on the market is undeniable.” The report finds 64% of those surveyed use the internet to learn about companies or products, and more than 50% of motor insurance customers research quotes online
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Consumer perceptions: which insurer is cheaper? A newer insurer A major retailer An online insurer An established Australian insurance company Your main financial institution (MFI) A credit union, building society or mutual bank An established international insurance company A company such as Australia Post A large bank A financial institution that is not your MFI
A specialist insurer
A regional bank
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Source: RFi / Accenture
before making a purchase, most often by telephone. Still, it says that consumers shop on perceived value as well as simply price, and that assessment can be influenced by factors including brand, reputation and service. Roy Morgan Research last year estimated Youi, Budget Direct, Real Insurance, Suncorp’s online Bingle product and retailer Coles were the fastest-growing brands in the general insurance market. Nevertheless, they represented only a 4% share in terms of the overall number of policies. Mr Enthoven says the Australian market is already one of the most “direct” in the world, but the information gap between financial institutions and consumers is closing and buyers have benefitted from the success of newer brands. “The so-called challenger brands have been attracted to Australia because it is the western world’s most consolidated and highmargin market,” he tells Insurance News. “It is also a well-regulated, transparent market which allows investors to take a longterm view.” There’s little enthusiasm among brokers for redirecting domestic business through an intermediated advice model, although consumers do often find themselves in trouble after catastrophes, when they turn out to be underinsured or not covered. But Steadfast’s Robert Kelly sees advantages in taking a more active role in non-advisory personal insurance and 24
claiming back some of the territory. He says Steadfast is planning its own online sales venture in the already crowded market. “People come to brokers at present and we turn them away,” Mr Kelly says. “It is just putting an oar into an area that we basically turn our back on at the moment.” The planned Steadfast Direct site will aim to capture some of the business that gets diverted elsewhere. The project is expected to be launched before October, after it announces an underwriter. The site will offer brokers greater flexibility in dealing with people who ring up seeking home contents and car insurance quotes, with consumers having the option of paying for personal advice or alternatively using the company’s non-advisory product. Mr Kelly says it will be price-competitive, “broad and all-encompassing”. Most brokers offering personal lines policies do so as part of wider cover for commercial clients who take the opportunity to arrange cover for the boat, house and car alongside their business needs. But few brokers see value in chasing a cut-price retail market where the product is often treated as a commodity. Mr de Vos says non-aligned domestic business that comes through the door is handled out of the BJS Adelaide office. But it isn't a class of insurance that is actively pursued, given the focus on cost rather than policy features and claims-handling. “A lot of clients simply go on price, and the direct insurers spend a lot of money on advertising, especially on TV,” he says. “No-one sits insuranceNEWS
there reading product disclosure statements.” Suncorp’s Vero has also come under fire from brokers for cutting its commissions on personal insurance home cover from 22.5% to 15% effective from February 1, to ensure the home portfolio “remains sustainable in the long-term”. It’s following QBE, which last year cut its personal lines broker commission rate from 22.5% to 20%. Indications are that insurance providers will face continuing cut-throat competition in the personal lines direct area, while brokers will need to highlight their knowledge and expertise to defend their turf in the commercial world, particularly at the small end of the market. Insurers can’t afford to ignore the direct channel, while experiences in a range of industries have shown that companies and businesses offering good personal advice and which meet consumer needs will win customers. A&I Member Services (AIMS), a joint venture between Austbrokers and independent group IBNA, notes that insurance remains a complex product and the value of the broker advice and relationship role should be continually reinforced. “I stand by the skill and relationships of brokers in all this,” AIMS General Manager Martin McAvenna says. “We live now in a society that educates itself in part online, but sometimes in the education process you need a facilitator and a translator. “That’s what brokers do – they facilitate * and translate.”
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FOR THE NEW ERA OF LOSS ADJUSTING n May 2013 the new era of loss adjusting in Australia was born with the successful launch of ASTA Group, a network of independent loss adjusters hand-picked for their experience, skills and strategic location. As the group approaches its first birthday we have taken the time to reflect on a very busy year and to look forward to the future. So why is ASTA so different? Chief Executive Dave Bazen explains: “Only a person who strives to perform with integrity, respect and competence in each and every task will ever achieve the ultimate level of personalised service delivery for their clients. “Rare exceptions aside, very few employees of major companies can maintain this level of service delivery on a dedicated and constant basis. However, to a small business-owner this is the key to survival in a highly competitive service-driven market. “ASTA uses this principle to combine the dedication of independent small business-owners with nationally consistent infrastructure to provide the highest level of service to our clients, wherever we are needed across Australia.” The ASTA system engages independent loss adjusting firms as network members, who have all been approved by each client and the group to undertake assignments. There is no sub-contract arrangement; each network member reports directly to the client once appointed, thus maintaining complete transparency. Unlike some of its competitors, ASTA does not use pseudo-offices, the misleading practice of listing a service location but servicing it remotely. Every advertised ASTA location has loss adjusters in residence. Where remote areas make onsite assessment costs prohibitive, desktop management is available using our vast panel of regional services. The claim lodgement process is simple for the client. The state manager serves as a single contact point, co-ordinating the appointment of a network member based on the client’s requirements, location, skills and personal attributes, providing a bespoke and cost-effective solution every time. This system provides enormous flexibility, meaning ASTA can provide services from a one-off claim through to interstate resource management for catastrophe events.
ASTA can handle property and liability claims through all network offices, as well as provide highly specialised claim services such as business interruption, engineering and motor. Engineering claims are managed nationally through the WA office, where a team of highly experienced machinery breakdown specialists conduct desktop and onsite assessments of domestic, SME and corporate/major loss machinery claims, as well as technical consulting and forensic engineering. Motor claims are managed nationally through the Queensland office using an established network of experienced motor and machinery assessors in more than 18 centrally located offices. This extensive national footprint extends to the majority of the country for onsite physical assessments, while most remote areas are managed by digital desktop. As everyone in business knows, teamwork is the key to success, and ASTA is no different. Chief Executive Dave Bazen says “there is no doubt that the experience, dedication and loyalty of the state managers was instrumental in the success of ASTA Group during the launch in 2013, and it is these attributes within the group that keeps ASTA moving from strength to strength”. The management team has recently undergone some change in Victoria, with Ian Mathieson stepping down from the state manager role. ASTA was pleased to announce that Alex Lang of McCracken Lang stepped up to take on the role from 1 March 2014. As Alex Lang explains: “The ASTA model is progressive and makes effective use of the diverse range of skills and experience within our vast resources, consistent with our own business philosophy. Our firm has a long association with the ASTA management team and we look forward to building on the solid foundation Ian has laid in Victoria.” With a diverse and experienced management team, ASTA Group is now well established. We’re here for the long term, ready to assist specialist clients needing high quality personalised service for their unique clientele.
NSW (02) 9144 4844 email@example.com
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Our symbol is the Federal Star, which we proudly display as testament to our name and commitment to provide consistent high quality service around Australia
All States and Territories Adjusters Group
Dave Bazen, Director, CEO State Manager WA, SA & NT Dave comes from an extensive trade engineering, medical and aviation background, entering the industry in 2002 as a consultant and progressing to Chartered Loss Adjuster. In 2009 Dave acquired Jarm Adjusting as a specialist engineering and property loss adjusting practice.
Laurie Starkey, Director State Manager NSW & ACT Laurie entered the insurance industry in 1979 in general insurance, commencing loss adjusting in 1982. In 1991 Laurie became a Partner of a Sydney based property and liability loss adjusting practice, now trading as ASTA NSW.
Vivienne English, Director State Manager QLD Vivienne has over 30 years experience in the insurance industry, including 22 years as a Chartered Loss Adjuster. Vivienne is a Partner of Campbells Assessing (est. c1959) as a specialist property and motor loss adjusting firm.
Alex Lang State Manager VIC Alex entered the Loss Adjusting industry in 1988 from a background in education and progressing to AICLA Affiliate. Alex is now the Principal of McCracken Lang, as a renowned property and liability loss adjusting practice in Victoria.
George Rosevear, Director State Manager TAS George entered the insurance industry in 1967 in general insurance, commencing loss adjusting in 1998. George is the Principal of Van Diemen Loss Advisor, as a property and liability loss adjusting practice, now trading as ASTA TAS.
David McNamara National Motor Manager Dave comes from an extensive trade background in the automotive industry, entering the insurance industry in 2005 and progressing to AICLA Affiliate. Dave is a Partner of Campbells Assessing (est. c1959) as a specialist Property and Motor loss adjusting practice.
Ian Mathieson, Director Ian entered the insurance industry in 1981 working for the major loos adjusting firms before starting his own property and liability practice. Ian is one of the co-founders of the RVLA Group, as a specialist rural property loss adjusting network across Victoria.
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Caught in the spotlight
General insurance will face much more scrutiny in the Murray inquiry than it has in previous government reviews By Wendy Pugh
INSURANCE LARGELY SLIPPED UNDER THE RADAR LAST time Australia held an inquiry into the financial system, but it’s set to have a higher profile this time around. A lot has happened in the industry since Stan Wallis handed down his groundbreaking report in 1997 – including the collapse of HIH in 2001, the global financial crisis and rising concern over access to affordable cover for people in areas prone to natural catastrophes. Australian Centre for Financial Studies Executive Director Deborah Ralston says insurance public policy implications have gained in profile after the sector was “a bit of a sleeper” during Wallis. 28
“Over time we have all developed a growing awareness with the climate change issue and the increased number of extreme weather events that insurance is very important,” Ms Ralston told an Insurance Council of Australia (ICA) regulatory seminar. “This particular inquiry happens to come in a very timely fashion with respect to the whole discussion about riskbased pricing and how we protect those who find themselves in the short-term in a very difficult position.” Deloitte Access Economics Partner Professor Ian Harper, a member of the Wallis panel, says catastrophe and lifespan longevity risks are high profile matters for this review – and both involve insurance. “When you think about financial inquiries like this, it is always important to think about what issues are the barbecue-stoppers – what people in the street are complaining about,” he told the ICA seminar. “This time I think there are two of them and, bluntly, they are both in your camp.” Unlike Wallis, where insurance was barely mentioned, this time insurance is specifically listed in the Financial System Inquiry terms of reference released by Treasurer Joe Hockey. As a former financial services minister who initiated the challenging Financial Services Reform Act in 2001, Mr Hockey knows the insurance industry well. Insurance is front and centre alongside banks, super funds and other financial institutions. The remit allows the inquiry to look at issues ranging across the role of government, regulation, domestic competition, international competitiveness, consumer preferences and protection, new technologies and financial arrangements. Former Australian Government Future Fund chairman and Commonwealth Bank chief executive David Murray heads the panel. Other members are Craig Dunn, who was chief executive of AMP until the end of last year, University of Melbourne Professor of Finance Kevin Davis, corporate board member and former investment banker Carolyn Hewson, and Brian McNamee, the highly regarded former chief executive of biotech company CSL from 1990 to June last year. The Government set a March 31 deadline for submissions, and will receive a draft report mid-year. The final report is expected by November. ICA President Mark Milliner says the Government’s brief to Mr Murray centres on deregulation and how it could benefit competition, efficiency, market stability and consumer protection. “In this current climate, reconnecting with the underlying social and economic purpose of insurance has never been more important,” says Mr Milliner, who is also Chief Executive Personal Insurance at Suncorp. The stakes from the Murray review could be high, with previous inquiries having far-reaching ramifications. The Campbell Report in 1981 led to the floating of the Australian dollar. Wallis paved the way for the “twin peaks” regula-
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tory approach of the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC). It also led to a licensing and oversight regime that changed the landscape for insurance brokers, who were forced to comply with a new licensing regime that included formal standards of professional education and professionalism. National Insurance Brokers Association Chief Executive Dallas Booth says this time around, it’s critical a “one size fits all” approach isn’t used across financial regulation. “Proposals for one sector of financial services do not necessarily work for insurance broking,” he told Insurance News. “We need to be a lot more sophisticated in the way in which we do regulatory policy in Australia.” He says the role of general insurance in funding the risk protection that underpins Australian economic growth and prosperity should also be recognised by the inquiry. “We have to make sure the insurance process is operating in a viable and successful way.” That includes shining a spotlight on the role of government and the industry in ensuring insurance availability in high-risk natural catastrophe areas such as north Queensland. Professor Harper says the regulatory arrangements covering APRA and ASIC could do with a “scrub up” after some mission creep over 16 years. He also sees a need to change the present regulation of the private health insurance companies, which are overseen not by APRA but by the Private Health Insurance Administration Council, an independent organisation that administers private health insurance policy set down by the Federal Department of Health and Ageing. Professor Harper believes a key change that should be pursued would involve bringing health and insurance under the same prudential regulation umbrella, particularly as the market searches for more innovative products to meet people's needs across longer lifespans. For general insurers, there’s a concern that the level of regulatory oversight in Australia might be forcing individual companies to all walk on the same safe path. Swiss Re Australia and New Zealand Managing Director Mark Senkevics says finding the balance on regulation and stability is key. “It has been over-stepped a little bit here in terms of capital and prudential regulation, and perhaps that is dampening the opportunity to innovate and to provide greater competition for the consumer,” he says. The Actuaries Institute is also examining longevity issues, resilience and responses to natural perils in its submission and has made an early call for better availability of financial sector information. “Currently there is very limited data released on the insurance and banking industries and almost non-existent data on housing/mortgage markets and the broader changes in the accumulation, distribution and use of wealth that will define the financial services landscape over the coming decades,” it says. The Wallis inquiry received 268 initial submissions and a further 155 discussion paper responses as contributions flooded in from across the financial sector, governments, industry bodies and consumer groups. A similar inundation is expected for the Murray inquiry, and many papers will highlight the role and importance of insurance while also ensuring various barriers and problems are put under the microscope. “It won’t be overlooked this time,” Financial Counselling Australia Executive Director Fiona Guthrie told the ICA seminar. “If insurance is supposed to provide the safety net, with accessible, affordable, fair products, is that what we actually have in the * Australian marketplace?”
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Keeping up standards Meet the man who makes it possible for insurers and brokers to communicate in ways they can all understand By Terry McMullan
Gregory Maciag (left) with local representative Steve Tuften and Director, Global Development Alan Stitzer (right) and broker Cara Donnelly, who won a prize from ACORD at the Steadfast Convention in Melbourne in March
GREGORY MACIAG HAS SPENT MOST of his career making the insurance industry work better. As President and Chief Executive of the New York-based Association for Co-operative Operations Research and Development, better known as ACORD, he’s a visionary on a mission. When it comes to electronic commerce between different sectors of the insurance industry, ACORD is the global insurance industry’s United Nations, where different languages and cultures are interpreted and understanding made possible. Mr Maciag (the Polish surname is pronounced “macy-ag”) prefers to define ACORD as a universal organisation – “a church, a temple, a mosque or a synagogue, it’s all the same to us – we work for everyone”. ACORD has been around since the 1970s, but it’s only in the past 10-15 years that its influence has become global. The not-for-profit organisation develops the standards that allow electronic commerce to flow easily through the insurance industry. Based in New York and London, ACORD publishes and maintains a huge library of standardised forms for the industry. It also has “massive amounts” of standards for the electronic exchange of insurance data between trading partners. Most of the forms and electronic data staninsuranceNEWS
dards now used in the US and a growing list of other countries, which include Australia, have been developed by ACORD. So logical is the organisation’s reason for existing that it’s difficult to believe ACORD has had to work hard for the past 40 years to have the value of its services recognised. “Insurance suppliers are a unique breed, always looking for the competitive advantage,” Mr Maciag tells Insurance News. “We learned long ago that it’s better to start with brokers, who can always see the value in collaborating with different trading partners.” That’s how ACORD arrived in Australia. Steadfast Managing Director Robert Kelly met Mr Maciag in New York in the early 2000s to learn more about ACORD, and recognised its potential for the Australian industry. “Getting ACORD standards into a market needs leadership, and that’s what Robert Kelly provided. “Robert understands the value of cooperation and collaboration, how to get brokers together. You need that kind of leadership to move forward, and that’s what he provided for us. “When he came to see me Steadfast was just growing, and he said, ‘One day there will be a right time to launch this. It’s not a matter of if, it’s a matter of when’.
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“We started from ground zero here, and the market has been very committed to the development of the standard and the forms.”
Currently ACORD has 16 forms available for use in Australia. The lines of business available are personal and commercial motor, business pack, industrial special risks (ISR), professional indemnity (PI) and home. The other ACORD forms in use in Australia are schedules for additional drivers, vehicles, situations, remarks, interested parties, certificates of currency for personal motor, commercial motor, home and PI. Each is available in standard PDF, fillable PDF and eforms. ACORD has also developed messages for numerous lines of business including commercial and personal motor, ISR, business package, liability, personal accident and sickness, and commercial property, with all its subsets such as fire, business interruption, buildings, contents, fidelity, etc. Claims registration and claims enquiry forms are also available. The messages can process quote, bind and close, and can handle cancellations, changes, reissuance and reinstatements. This year ACORD is focusing on implementation on general insurance and life insurance. It is also working with companies on implementations of the framework, and is looking at premium funding, remittance advice and Lloyd’s binding authority bordereaux.
“When” was about six years ago, when ACORD first set up an office in Sydney. “We assigned some staff to [the Australian opportunity] and worked with our members who do business globally.” Why not start with the local insurers? Mr Maciag is candid. “Domestic carriers are always a little more difficult. The first thing they want to know is, what’s my competitive advantage? “We started from ground zero here, and the market has been very committed to the development of the standard and the forms. “We are getting traction now with the forms from the brokers. As for the XML [extensible markup language, which defines a set of rules for encoding documents in a format that is readable both by people and machines], we are now getting implementation commitments from numerous software vendors and insurance companies. “This year should be a year of implementations with many of our member organisations here.” (See panel) Mr Maciag’s career has spanned the development of information technology from the early clumsy processing machines of the 1960s through to the internetenabled world of the 21st century. He joined ACORD in 1977, just seven years after it was formed by some forwardthinking insurers and brokers who wanted to build efficiencies in the US property and casualty market using the emerging opportunities of what was at that stage a complex process called information technology. ACORD’s initial focus was the standardisation of the many proprietary forms being used by insurers for new business and claims submission. As technology developed through the late 1970s, ACORD developed with it, developing electronic standards to complement the form standards. Later it expanded its forms and electronic data standards beyond property and casualty insurance to encompass life insurance, surety and reinsurance. insuranceNEWS
Moving to ACORD in the late 1970s, when it had just four staff, was the ideal career move for Mr Maciag. He had already worked on information systems at the National Council on Compensation Insurance and at Chubb Insurance. But if he expected that everyone else in the industry could see the coming technological revolution and what it could do for insurance, he was quickly reminded of the task ahead in his first week, when he attended an industry conference in Florida. “I’m sitting in the front row when an agent stands up and asks the senior executive on stage, ‘When are we going to have standard insurance forms in this place?’. “And the guy replies, ‘Never. Impossible. It’ll never happen.’ And I’m sitting there thinking, isn’t this what my job is?” Much has changed, and the ignorance has long gone – from the industry’s most senior levels, at least. Mr Maciag says that even today he comes across chief information officers who don't understand the value of standard forms and systems. “In the old days exchanging data electronically, what we called EDI, was a big company/big mainframe thing. The little guys found EDI too expensive. “Then along came the PC, which worked with XML, and the little guy was able to move information around a lot easier. “When the internet came in and we could all connect outside the private networks, the whole thing exploded. Now we can connect with anyone, but how can we do anything if we don’t have standards? “You reduce quality when it takes too much time exchanging information. But even today new CIOs still ask me what our value proposition is.” Mr Maciag is philosophical about this. He says the problem is never the chairmen or the chief executives, who understand the
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“A CIO has a lifecycle of 20-24 months, and they’re project-focused. If you make it easier for him, you get things done.”
Gregory Maciag has worked at ACORD for 37 years and has served as President and Chief Executive since 1994. He is a recognised expert and columnist who has authored hundreds of columns on business standards and technology. See www.acordceo.org. He is the author of two books – The Real Time World and The Business Information Revolution.
need for standard forms and systems that can communicate with each other. “They get it. It’s the guys in the middle tier who have to make it happen, who have projects to run and budgets to maintain, who have staff changes… you’ve got internal politics involved, and they’ve got to spend political capital to get things done. “A CIO has a lifecycle of 20-24 months, and they’re project-focused. If you make it easier for him, you get things done.” ACORD’s expansion over the past 15 years has been dramatic. In 2000 it took over the development of the London market’s WISE standards development process for the reinsurance and large commercial insurance sectors, setting up a new office in a city that Mr Maciag describes as “the crossroads of insurance”. That brought the organisation into contact with a range of insurer organisations, and through that it now has operations in markets that include Australia, South Africa, India and China. The number of ACORD staff has grown from the four Mr Maciag started with in 1977 to 65 today. And its role is subtly changing to accommodate new industry needs. “Our role is to develop and publish standards,” he says. “Now a priority is to develop tools and utilities and software in some cases so we enter this plug-and-play environment. “We want to make it easy so [insurers’ software developers] can push a few buttons, get some stuff from us and incorporate it into their systems. “One of the big carriers told me he’s got 4000 different software applications in his organisation, and another says he has 27 different data centres and wants to squeeze them together. “So it’s obvious a lot of our members are living through a new challenge of putting together all the things they’ve developed in the last decade or two. “Now is a good time for us to add something that will help them.” insuranceNEWS
That something is programs that fit into the architecture of a member’s new IT system without the need for excessive program rewriting to fit it in. Mr Maciag says that the more ACORD does to package its products to fit easily into systems, the less chance there is of errors having to be dealt with later. “The easier we can make it for everybody – suppliers, carriers and brokers – the more standards are accepted and the better we’re doing our job.” For the future, he believes the demand for information flows between disparate systems is only going to grow. “The way I see it, 99% of machines and gadgets are not connected to the internet, but they ultimately will be. Everything that does something will have an IP address of some kind. “When I see a smart TV or a smart dishwasher, that word ‘smart’ tells they have information there – and if they have information they’re going to need to send it someplace, and to do that they’re going to need standards. “If they don’t, no one’s going to know what it is. “There’s a whole lot of standards consortiums throughout the electronics space that are going to change everything.” He points out that his new E-class Mercedes-Benz “very nearly drives itself”, with electronics keeping it in the freeway lane, a safe distance from the car in front and capable of automatically stopping if the car in front does. “All these electronics mean there’s less accidents. Get enough of these cars with these features and you’re going to change the whole view of auto insurance. “If there’s less risk of an accident the insurance will cost less, and how can the insurance company make up the loss? “That’s just one thing will have a big impact on insurance, and there are so many examples like that. When everything talks * to everything, it’s a whole new world.”
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ANZIIF looks forward The institute has ushered in its 130th year with a new boss who’s planning closer member engagement and further expansion into Asia By Jan McCallum
PRUE WILLSFORD BRINGS AN ARRAY OF experience to the role of chief executive of the Australian and New Zealand Institute of Insurance and Finance (ANZIIF), perhaps best demonstrated by friends’ and colleagues’ reactions when she told them about her new job. “The education sector felt really pleased I was continuing my career in education, my mentor group was pleased I was taking a leadership role and my friends in financial services of course ‘get’ insurance,” she told Insurance News. Ms Willsford joined ANZIIF from Victoria’s government-owned trust and financial administrator State Trustees, where she was general manager corporate operations with oversight of finance, technology, legal, compliance and investments. A 25-year career in financial services has included time at Macquarie Bank, National Australia Bank and policy development at the Investment Funds and Superannuation Association (the forerunner to the Financial Services Council). She has an education background as Deputy Chancellor of Victoria University. Ms Willsford says she is proof of the transformative power of education and how it can change people’s lives and benefit companies. “I like learning, it keeps you fresh and engaged. We all know from research that you can teach an old dog new tricks and I enjoy problem-solving.” As someone who believes education is a life-long commitment, she is about to complete a graduate diploma in governance with the Governance Institute and will then enrol in ANZIIF’s insurance law and regulation course, even though she has a law degree. (She will sign up under another name to avoid unnerving the markers.) “I want my knowledge to be current and I also think it is really important that I understand the experience of our students,” she says. Ms Willsford started work at ANZIIF’s Melbourne headquarters in October, taking over from longserving chief executive Joan Fitzpatrick. Her day begins when she and her seven-year-old daughter take their dog for an early morning walk. She is a keen ballet-goer and relaxes by visiting Melbourne’s markets. Ms Willsford grew up in on the edge of Brisbane and gained her law degree at Queensland University of Technology, but describes herself these days as a “Melbournian by choice”. “I did lots of research on ANZIIF before accepted the role,” she says. “And what I learned was that
ANZIIF is an incredibly industry-engaged organisation with award-winning products and punches above its weight in terms of its impact as an organisation.” ANZIIF’s focus this year will be on its core business of insurance and risk, and the institute is working on new ways of engaging with members here and in the Asia-Pacific region. “We have excellent competencies in that area and I believe that we have the opportunity to deepen our partnerships across the region, in a range of ways.” On home ground, a new website to be launched mid-year will increase opportunities for community building, engagement and professional development. “That will enable us to grow that conversation with the industry and grow the professionalism and professional capacities of the industry.” Ms Willsford wants to see greater interaction between the seven faculties that began operations 18 months ago. They are grouped by discipline, made up of insurance broking, risk management, claims, financial planning, general insurance, reinsurance, and life, health and retirement income. “I sometimes see them as having seven personalities,” she says. “They have quarterly meetings and when you go into each meeting you can almost sense the personality of that sector of the industry – they are very, very different.” She says the institute’s governance structure, with a board, three councils and the faculties, enables it to be entwined with the industry and each sector’s specific needs. Expect to see new courses but also clearer pathways for people to align their education with their career as it progresses, so students can understand how to update and acquire skills as the industry changes. Not everything with the institute has been positive in the past few years. Last year’s “In the Room” thought leadership conference was criticised for being irrelevant to industry education. Ms Willsford says it won’t be repeated this year, but in the drive to remain relevant “we will always continue to change and adapt”. A current project involves considerable work on professional standards in the industry, to map different learning to the standards. “This is a very significant undertaking. Through doing that we will be able to identify more precisely where the pieces of learning are required and the kinds of learning that will really support life-long education and engagement of people within the industry.”
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Ms Willsford says the work will dictate the structure and nature of ANZIIF’s activities. It will involve industry collaboration so it will take time, but she is aiming for the research to be completed this year. ANZIIF itself is facing more competition, with universities launching courses related to insurance, but Ms Willsford sees this as presenting opportunities to complement rather than fight off universities. The transformation of the university sector has led to courses being consolidated, and many institutions now have a common first year. “The reduction in the number of electives has made courses like ours more important,” she says. “We provide the technical skilling that is required to top-up the general learning and problem-solving that has been developed through a university course.” ANZIIF is working with several universities to ensure they have relevant insurance content in their programs and that there are pathways between university and ANZIIF courses. As for other industry courses, “there is a very, very big difference between accreditation and qualification. We believe very strongly in qualification.” She says this is borne out by her own experience. Having spent the past 10 years in compliance, she took a course in risk and compliance with the Governance Institute. Unsurprisingly, she did well. “But what’s really interesting for me has been how much confidence it’s given me about my body of knowledge and how that body of knowledge sits within the broader framework. “I’ve gone from being a fairly competent practitioner to someone who actually knows that I know how to go about designing, running and leading those parts of the business. Qualification gives you confidence across a whole range of knowledge.” The institute is examining how to encourage people to consider a career in insurance, rather than the more common scenario of “falling into” the industry. It is discussing with other industry organisations a careers expo-type strategy to raise awareness and demonstrate the range of opportunities on offer. Ms Willsford wants to see an insurance career promoted so people understand the variety of work and opportunities to travel. She says an expo could attract career-changers as well as graduates. “People fall into insurance and we would love to see them jump,” she says. “I don’t think people have a sense... of the incredible diversity that the industry offers and how even within one industry you can have five careers.” She says work has begun on developing an approach and seeking funding from the industry after leading executives approached ANZIIF to discuss how to tackle the issue. “That is part of the joy of being in an organisation like ANZIIF – we are a hub and have very broad contacts across every sector of the industry, and are very well placed to engage broadly for support for initiatives such as this.” Ms Willsford is also continuing ANZIIF’s collaboration with the region. She has already made two visits to China, which have highlighted for her the hunger there for education and knowledge. “They are busy learning very quickly from other countries about what has been done well, as well as
mistakes that have been made, and that gives them second-mover advantage,” she tells Insurance News. “They will move very quickly to a genuinely international market.” ANZIIF has just launched its first product developed for China, the diploma of risk surveying, which will be offered in Australia later. The diploma will attract people in insurance and insurance-related industries who need a systematic way of assessing risks. “We have developed it with very close industry engagement, but what is unique about this one is that we have done it with engagement between China and Australia. So it’s very much a regional, collaborative development.” Ms Willsford says the regional focus makes sense in the globalised insurance world, where workforces are increasingly mobile and employers operating regionally want to know staff have a consistent standard of education and the competencies they need. ANZIIF can meet the growing call for insurance and risk education in Asian countries where insurance penetration is growing and where it can partner with insurance companies to support development of the industry and career growth. She jokes that “we will spend 15 years to be an overnight success”, but says the effort put into building trust and long-standing partnerships means the institute can produce education relevant to markets. Ms Willsford has also travelled twice to New Zealand since joining ANZIIF, and says that although ANZIIF has very strong relationships “across the ditch” she wants to see them deepen this year. She has been impressed by the innovation demonstrated by the New Zealand industry and would like to see that knowledge, such as expertise in business interruption insurance, transferred to Australia. This may lead to events such as seminars and workshops. The industry has developed “massive competencies in staffing up and staffing down” following the Canterbury earthquakes, and has expertise in accessing global capital and bringing it quickly and effectively to a small country. The “NZ” part of ANZIIF came under strain in 2011 when ANZIIF split its insurance industry awards into Australian and New Zealand events. Ms Willsford has met Insurance Brokers Association of New Zealand Chief Executive Gary Young on her visits and have had a “productive conversation”. “Both our organisations are there to support our members and the New Zealand insurance industry, and given our mutual mandates it seems natural that we will find opportunities to work together in future.” ANZIIF’s 130th anniversary is a perfect time to reflect on the organisation’s rich history and its reach today across 50 countries. It’s also an opportunity to understand how these factors bear on the institute’s future. “We will be using a whole range of events throughout the year to bring that conversation about our purpose and our relevance to the industry alive,” Ms Willsford says. “We will continue to innovate, and the form it will take will be based on industry engage* ment and feedback.”
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The challenge for ANZIIF The industry’s educational body needs to refocus on its core business Comment by Terry McMullan
PRUE WILLSFORD’S OUTLOOK ON THE AUSTRALIAN and New Zealand Institute of Insurance and Finance (see preceding article) is focused on moving forward and taking its members with it. That’s positive news, because inclusion hasn’t always been the ANZIIF way. An organisation that is central to the industry’s education – and a major foundation of its culture – should be open and communicative, but ANZIIF isn’t, or at least hasn’t been. It has always controlled its message, whatever that particular message is, with far more gritty determination than many of the listed companies Insurance News deals with. It’s big on selling itself and its reach into a large number of Asian countries, but vague about the details of what it has actually achieved. How effective is it? We don’t know. The friction between ANZIIF and some key sectors of the industry can’t be ignored. Insurance News has also had a remarkably uneven relationship with the institute, partly because this writer criticised the institute 10 years ago in print for setting up an annual awards event that the major trade associations said they didn’t want. It’s hard to be critical of an institution that lies at the heart of the industry’s professional self-image, and partly because of that we have refrained from questioning some of the more dubious arrangements surrounding some awards over the years. The event is now an established highlight on the industry calendar, and we hope its processes become more transparent. Probably ANZIIF’s biggest failing in recent years has been its inability to articulate exactly what it stands for. Despite its gung-ho marketing about being an organisation pulling in $1 million a year profits – a far cry from the dusty old not-for-profit institutes that honed the industry’s culture – the institute’s strategic direction remains a bit of a mystery to us. Some former ANZIIF managers that Insurance News has spoken to have been scathing in their assessment of the institute’s direction. Most of the senior managers have left the organisation in the past two years – not all of them happily, and not all of them replaced. ANZIIF faces competition from several sources. Larger financial services training institutes, like Finsia, which dominates in the lucrative financial services markets, are mentioned occasionally as a potential merger partner. The institute competes in Asia with local training institutes as well as the London-based Chartered Insurance Institute (CII), with which it negotiated a merger in 2008. The CII pulled out, ending a dream of global domination. There is also competition from the broker associations in Australia and New Zealand, which both set up independent colleges when they decided ANZIIF’s offerings didn’t match what their members needed.
Many of its members wonder if ANZIIF’s focus on Asia has been to the detriment of the Australian and New Zealand insurance industries. They wonder when it was that they actually agreed Asia was a good thing for professional education in Australia and New Zealand, which is, after all, what ANZIIF was set up to do. Is ANZIIF making a difference in the 30 markets it says it operates in? Why is it there? Are the profits – if there are profits – being brought back to enrich professional education in Australia and New Zealand? Or is it the other way around? A considerable amount of money has been spent on two recent ANZIIF projects that have nothing to do with professional education for the insurance sector. The first was a seminar called In The Room, a two-day event held last year that featured thought leaders brought in from around the world, with former New York mayor Rudi Giuliani as the main attraction. Its relevance to the insurance industry or the wider financial services sector was never clear. It was apparently intended to be a standard-bearer event for ANZIIF. Ms Willsford says it won’t be coming back this year. The second is Know Risk, a website offering information about the industry and the way it works. Intended for a public audience, it was on the surface a worthy project, but it failed to kindle the enthusiasm of industry leaders who were approached to pay for it. Looking past the heavy marketing, Know Risk has failed mostly because the industry’s leading organisations weren’t involved in its development and like the awards they didn’t want it anyway. Again, the issue is relevance – why did a body whose emphasis should be on training industry professionals set up an expensive public relations exercise without bringing the industry it serves along before the start? Surely such exercises should be the concern of the Insurance Council, which was simultaneously building a site intended to do much the same thing, minus some of the expensive videos and add-ons. It’s understood funding for the continuing development of Know Risk has now been put on the back burner. But there is an industry need that Ms Willsford has identified for which she has every chance of gaining industry backing: building awareness of industry careers and getting actively involved in supporting recruitment. ANZIIF has been involved in the past in providing educational materials on insurance, but the efforts have been low-key. Co-ordination of an industry-wide recruitment effort as outlined by Ms Willsford in the previous article is not only relevant to the industry’s future, it’s very necessary. It’s a job we hope ANZIIF will embrace with gusto and one that we believe the industry should support with enthusiasm and money.
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An office for 2 HOT DESKING, COLLABORATIVE AREAS, ACTIVATED SPACES… the modern office is now a place where flexibility and openness rule. Executive offices claiming all the natural light and views while everyone else sits in the interior gloom are gone. Suncorp’s new Melbourne offices illustrate how the modern office can be – a pleasant place where people can work undisturbed or interact with larger workgroups, move freely from space to space and even take a break with a quick game of pool. If it all sounds a bit too good to be true, it’s worth remembering that the modern office is designed to allow greater efficiency and productivity. Suncorp has been working for several years on building a more flexible workforce by making itself more flexible. Technology is the key. Staff don’t always need to go to the office to be productive. Some work primarily from home, calling into the office only when it’s necessary. The hours they work and exactly when they work are no longer dictated by when the office door opens and closes. This means parents can mix their work routines with, for example, taking the kids to school. By recognising 21st century workers’ desire to make work part of their daily activities rather than the sole activity, Suncorp gets a happier, more stable workforce. It also doesn’t need so much space for desks. The Melbourne office uses hot desking; no one has a permanent desk they can call their own. Lockers are available for their personal equipment, if they need it. When there’s a project underway that requires their presence at the office to work with other specialists, the staff involved don’t have to traipse around the 12 floors of their new Collins Street premises looking for each other – they’re likely to take over a space where they can all be seated close to each other. The airy open spaces that Suncorp staff occupy make their Collins Street office a very friendly place. When the company decided to bring together its Melbourne workforce from three different sites in the city, it set itself a tough timetable. Wendy Geitz, who worked on the integration project as Executive Manager Melbourne Consolidation Project – she has now moved on to a role working in the company’s business intelligence transformation area – says the team only had 14 months between signing the deal on the office space to moving in. “We moved into the building in four phases, from September to October last year,” she tells Insurance News. “The impact of time on the 42
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r 21st century workers
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project meant we were designing as we constructed, and even commissioning as we constructed. “Usually designers and consultants work in a more demarcated ‘waterfall’ approach, with lots of handoffs. This just couldn’t happen in this project. We needed to make decisions together, and quickly.” Suncorp in Melbourne has about 1600 staff. The new office space has more than 1250 fixed workpoints and 150 more “drop-down points” – additional work surfaces. “It provides a range of spaces and alternatives for people,” Ms Geitz says. “Not only do people sit at traditional desks, we also have a range of other workpoints such as the drop-down benches, focus rooms and hub spaces supported by borrowable laptops.” Every meeting room has video capability and more than 80% of the workpoints are height-adjustable, with some allowing people to work sitting or standing. “And all our people have wireless headsets enabling them to move about freely.” Staff arriving in the new space for the first time were able to begin work within 30 minutes of arriving. And their reaction has been enthusiastic. An in-house poll found 89% of staff would recommend the new workplace to a friend; 79% say the Suncorp culture is reflected in the workplace; and 77% feel it has a positive influence on overall productivity. “Workgroups sit as part of a neighbourhood on their floor,” Ms Geitz says. “They choose how they occupy and utilise their neighbourhood, which includes their seating arrangements.” And when staff take a break, they can get right away from the pressures of work. “Every floor has a large hub which includes a kitchen and breakout spaces. Some of these floors have recreation facilities like a pool table, table tennis and foosball; and some have full-screen projectors, which are great for presentations and watching the cricket!” Many of the walls around the spaces use whiteboard paint, which Ms Geitz says “enables collaboration and creativity through writing and sticking items to the walls”. The stairs which connect each floor also add to the openness and ease of movement. “Stairs connect our entire tenancy and give us great vertical transparency,” she says. “In some places you can see seven floors.” Bright colours, airy spaces, natural light to bring the outside in, room to work together and room to relax. Today’s office reflects the tastes and preferences of the people who work there, and according to the experts the payoff is greater efficiency and a happier workforce. * April/May 2014
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Gumboots and broking: Belinda Scott, husband Allister and their four children at home
Scooping a top industry accolade is the latest in a long line of achievements for broker and mum-offour Belinda Scott By John Deex A SUCCESSFUL NATIONAL BROKING business, four kids, an idyllic home on a dairy farm – and now the honour of winning the inaugural Valerie Baker Memorial Award. At 39, Belinda Scott has it all. And does it all too, apparently. However, contrary to recent reports that “do everything” approach doesn’t stretch to milking the cows. That she leaves to her husband Allister. In many ways the award, named after pioneering female broker Valerie Baker – who died last year of mesothelioma at the age of 65 – is no surprise. Like Ms Baker, Ms Scott is a believer in hard work, total professionalism and a determination to succeed. Her company, BJS Insurance Brokers, has grown from a start-up to one of the country’s larger privately owned brokerages. But her responsibilities don’t stop with home and work. She also plays an active role as an insurance industry ambassador in her local community. It all stemmed from humble beginnings, when she would work as a teenager doing the filing at her father Ron Smith’s Melbourne-based business, Concord Underwriting Agencies. “I grew up with all these underwriters, insurers and brokers around me.” But like so many others, she got into the industry through luck rather than design. At the age of 16 she decided she wanted to be a vet, but that required nearperfect exam results. The course she eventually selected was a Bachelor of Commerce with a double major in insurance and management at Deakin University. “I fell into it a little bit – but I really got hooked,” she tells Insurance News. And it was at Deakin that she met her future husband Allister Scott, who grew up on a dairy farm at Inverloch, near Phillip Island. And when Ms Scott moved there following a cadetship at Mercantile Mutual, she decided to set up her own brokerage. “I had less than 24 hours to choose a name, so I went for my initials. A lot of country people use their names for their businesses. “Then dad sold his business and said, let’s have some fun with this. That’s how the growth pattern started.” Alongside her professional achievements, Ms Scott has also raised a family of four, but insuranceNEWS
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Belinda Scott is the winner of the inaugural Valerie Baker Memorial Award, which recognises excellence in professional practice in the general insurance intermediary sector. It will be awarded annually, and is sponsored jointly by Gold Seal and the Steadfast Group, but is not limited to Steadfast member companies. The inaugural award was presented at the Steadfast Convention in Melbourne last month, where the shortlist was made up of Ms Scott; Sharon Fox-Slater of EBM Insurance Brokers, Ben Goodall of Griffiths Goodall Insurance Brokers, Ben Johnston-Bradford of Specialist Underwriting Agencies and Julie Pernecker of All Parks Insurance. Ms Scott received a trip to London including business class fares and accommodation plus attendance at an appropriate industry short course and a tour of Lloyd’s. She is pictured left receiving the award from Gold Seal Managing Director Sheila Baker.
“It’s a big balancing act, but it’s something I wouldn’t change for the world. My husband and I are addicted to the busyness and, at times, the chaos.”
says she’s never needed to take more than a couple of months away from work. She says the flexibility broking offers is something that should be highlighted to attract others to the industry. “I don’t think anyone dreams of being an insurance broker, but I can’t say enough how wonderful it is for working mums. “The hours are flexible. All you need is to be contactable and there for your clients. “I don’t think I ever stop working. I always have my mobile with me. I have stepped back from time to time, but there’s never been a period when I haven’t been involved.” Living this hectic family/work life has its challenges. “A couple of times I’ve had to lock myself in the pantry to take work calls. And I’ve had clients ring me when I was about to go into hospital for a caesarian. “It’s a big balancing act, but it’s something I wouldn’t change for the world. My husband and I are addicted to the busyness and, at times, the chaos. Sometimes I do have to adjust the balance.” She says the flexibility that insurance broking can offer people juggling family and work is good for businesses and the industry, “because good people aren’t lost”. “I’ve seen some of my friends almost forced to have eight or 10 years off to raise their kids.” When she started BJS at Phillip Island in 1998 it had one office, one employee and gross written premium of $350,000. Now it’s a national business with seven offices around the country, more than 80 staff and a GWP of close to $80 million. So what’s the secret? Ms Scott says she was able to build the business from the ground up, creating the ideal business culture focused on key principles of professionalism, transparency and education. She says the “dodgy car salesman” approach was common when she first entered the industry. “There were still agents going door to door selling policies but knowing nothing about the cover. People promised the world, calling themselves the biggest broker without any justification.” She has watched with pride as the industry cleaned up its act with measures such as the disclosure of commissions and insuranceNEWS
fees, uniform flood wordings, a range of improved industry standards and better professional education. “The bad days are gone, thank goodness. At BJS we have never taken the approach of making promises we can’t keep – we stand by what we promise. If we say we will get something covered, we will get it covered.” She also takes great pride in educating her clients about the need for insurance. “I accept that not everyone reads policy wordings, but it’s our job to educate and inform. I am quite proud when clients that initially didn’t show any interest start asking me tricky questions.” And it’s not just clients that Ms Scott helps in this way. She regularly gives presentations to community and industry groups, as well as assisting with local organisations’ risk management. For example, she helped a local school arrange additional cover for an indoor basketball court that was funded by donations and therefore not covered by the school’s policy. “I don’t want to hear bad stories about the industry, I want to hear good stories,” she says. “I like to pass on the knowledge.” Ms Scott believes most problems in the industry now surround the direct sector. She says covers are limited and people don’t know how to compare them. “I understand that ‘going direct’ can save money, but it is very difficult to arrange the right cover asking just 15 questions. “Claims are denied and people then come to brokers. We pick up the business, but [the initial claim experience] isn’t good for the industry.” Buying direct is now the norm for personal lines policies, and younger business-owners and start-ups usually buy online, so Ms Scott accepts there is a place for it. She believes the industry should pay more attention to the advantages of online sales. “It’s about the industry working out how to get online effectively while making sure they are understanding the risk.” Despite the occasional warnings that broking faces increased competition from the direct sales channel, Ms Scott doesn’t fear the future for brokers or BJS – she’s relishing it. “I’m really excited about the future, and we’re looking at expanding further.”
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A big balancing act: Belinda Scott with, from left, Bethany, 11, Harry, 9, Max, 6, and Lily, 12
“Kids can see right through you if you’re not totally honest with them, and so can clients.”
Her “great team of management staff” includes her father, brother-in-law Simon Fanning and broking veteran Bill de Vos, “who is practically family”. Her mother Coralie, an experienced bookkeeper, has also played her part. “We are very hopeful our children can work in this business, but it’s not just about our children – it’s also about our staff. We want to give them a secure future too.” Despite having received several attractive offers, BJS is definitely not for sale. “We are not going anywhere.” Staff are treated like family at BJS and Ms Scott has built a reputation in the company as a mentor to young staff. “It can be as simple as taking younger staff out with you when you visit clients,” she says. “They hear conversations and see how clients work. It’s one of the best ways to learn. The early experiences of running her own business obviously made a lasting impression. “I had to learn on the run when I started the Phillip Island office on my own. Most of my clients were older men used to dealing with older men. “I found the best thing was just to hit the ground running. Some people need that push. But it can be daunting at first.” There are many roundtable discussions at BJS, and the firm takes the views of employees on board. It helps that the firm concentrates on trying to match employees’ roles to their interests and abilities. It works, she says because “sometimes people can underestimate their own abilities”. Ms Scott is sometimes mentioned as a standard-bearer for women in insurance and their battle to be treated as equals, but she says frankly that she doesn’t believe there’s a battle to be won. “Some women take the view that ‘you guys don’t understand what women have to offer’. I don’t see it like that. I have been given so much help from both males and females in the industry. “Could there be more women in larger roles? Yes, but do they want them, or would they prefer the flexibility of being an account manager or something like that? “Maybe I’m naive, but I don’t feel less valued or that my opinion is less respected in this industry because I am a woman. “People respect you if you know what you are doing and you work hard.” insuranceNEWS
There are obvious parallels between Ms Scott’s approach to business and that of the late Val Baker, who had a stellar career as a broker before founding Gold Seal Practice Management in 1995. “I met Valerie a couple of times,” says Ms Scott. “I saw her when I had just started out in insurance. She was a really knowledgeable woman, able to have very robust discussions with men. They all respected her and her opinions. “She was right on the money with the way she saw our industry going, and she’s a really key example of how the industry does accept women. “I have a lot of respect for her and what she achieved. She did it because she cared for the industry.” Ms Scott says she was honoured to win the inaugural Val Baker Memorial Award, and found the whole selection process humbling. “I didn’t even have a resume,” she says. “I don’t usually stop to think about what we’ve done. Some people wrote some beautiful references for me. “While I’m away we’re hoping to run a blog on my experiences and what I’m learning from the London industry. I want to honour Valerie’s legacy as best I can.” Ms Scott has travelled to London before – but not since she was 16. “Dad used to go over for work, and now it’s my turn. I’m very excited. My youngest is now six years old, so I feel I can go that far away.” She doesn’t believe her children have ever been a hindrance to her career. If anything, being a parent has helped, because she applies many of the same principles to parenting as she does to business. It’s a winning combination. “I live for my kids, and I stay awake worrying about whether I’ve done the right thing by them. I bring the same approach to work. I think about my clients a lot. “I constantly analyse myself as a parent. You are never going to be perfect, but it’s how you deal with your mistakes that matters. “It’s the same with clients. I hate to think that we make mistakes, but sometimes you just need to pick up the phone. “Kids can see right through you if you’re not totally honest with them, and so * can clients.”
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Brokers gain from horror claims The direct channel continues to chip away at brokers’ market share, but some business-owners are finding that buying direct has pitfalls By Jan McCallum
THERE ARE BUSINESS-OWNERS WHO WANT TO thoroughly research their insurance needs and buy online, and there are others who want to outsource the entire decision so they can concentrate on their business. The message of the latest Vero SME Insurance Index is that there are opportunities for insurance brokers in catering to both of these groups. And in between the “value hunters” and “outsourcers” are other business-owners whose attitudes and differing needs are waiting to be met by brokers with the smarts to understand how to help them. The index, in its third year, shows that while more business-owners are buying online, many of them feel let down when they make a claim. That won’t surprise brokers, but the researchers who surveyed over 1500 owners of small and medium-sized businesses have corroborated the belief that many “do-it-yourselfers” who had to make a claim were dissatisfied with the response, and that the experience has made them more open to using a broker. Suncorp Commercial Insurance Executive General Manager Distribution Andrew Mair says relatively few owners who buy their insurance direct reject the idea of using a broker. “Almost a third claim to be actively considering brokers, suggesting a significant opportunity to attract new clients,” he told Insurance News. “There are opportunities for brokers to continue to demonstrate their value and relevance. “The main factor limiting broker use is that some SMEs simply do not understand the benefits a broker can bring.” Mr Mair says claims can make or break broking relationships, and broker clients who suffer a loss particularly value their broker’s efforts to resolve the claim. That, he says, is “the moment of truth in the relationship”. About 20% of all respondents to the Vero survey had made a claim in the past five years. While 63% of 54
“The experience of making a claim makes direct clients more aware of the potential risks of buying insurance without expert advice.” broker clients report being satisfied with their claims experience, only 56% of business-owners who have bought direct have the same view. Supporting the widely held view that successfully handling a claim can bind a client tighter to a broker is the survey finding that 35% of all direct clients say they may consider using a broker in future, but 45% who have had to work their own way through the complexity of a commercial claim are open to using a broker. “Asked what benefits of using a broker are most appealing to them, direct clients that have made a claim are more likely to be impressed by a broker’s expertise, access to better policy wording, service and support rather than any specific benefits around claims being resolved faster or with less hassle,” the report says. “This suggests that the experience of making a claim makes direct clients more aware of the potential risks of buying insurance without expert advice and therefore more open to hearing about what a broker can deliver in terms of guidance and support.” Vero will launch tools and hold workshops this year to help brokers spread the message of their value proposition. insuranceNEWS
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The Vero SME Insurance Index identifies four groups of business-owners by their attitude to buying insurance:
Outsourcers want to get the right insurance, will not buy online and are happy to pay a bit more to get better advice, service and claims.
About 76% of them use a broker
Thoughtful buyers personally research their insurance needs and want to see all the options. They consider themselves quite knowledgeable and would manage their cover online if they could.
About 20% use a broker
“There is a lot of information in the survey and we want to present brokers with more detail around some of the findings and give them tools and solutions for how to better understand clients and manage the relationships,” Mr Mair says. The survey was conducted last September, just after the federal election. While turnover was flat at that time, business confidence had increased strongly from the previous year. Vero surveyed around twice the number of business-owners and insurance decision-makers as it did for the 2012 index, and Mr Mair says the scale of the research increases each year and will soon enable the company to draw out a greater depth of information and gain insights into trends. The study finds 40% of clients use a broker only, compared with 42% in 2012, and 50% buy direct only, compared with 45% in 2012. The remainder uses a mix of direct and brokered business. Business-owners say they are busier than ever, often having had to take on more work themselves after cutting staff to maintain costs and margins. Mr Mair says the message from this is that brokers have an opportunity to show they can ease the load by helping make the insurance process simpler and more efficient. “A lot of business-owners feel overwhelmed by the information that’s out there,” he told Insurance News. Managers who search online have to sift through hundreds of websites and can readily see the value of a broker giving them two pages of information relevant to their business. The good news for brokers is that 70% of their clients are satisfied with their broker, which is up four percentage points on the last survey. They identify four key advantages of using a broker: it saves time, brokers provide expert knowledge and advice, they understand their clients’ business; and they resolve claims more quickly and easily.
Uninvolved buyers only buy insurance because it is required by law or their clients. They buy the minimum cover, think all insurers are the same and wouldn’t buy online because they prefer to have personal advice.
About 42% use a broker
Value hunters need to see all the options and research and would manage their cover online if they could. They consider price their most important concern and don’t trust insurers or brokers.
About 30% of them use a broker
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Purchase channels 13%
Satisfaction with claims experiences 15% 7% 22%
Mixed Direct only Broker only
Businesspeople value having a relationship with their broker, with several telling the researchers they know their broker deals with businesses similar to their own and can advise them of new risks or any other issues likely to affect their insurance coverage. “I’d want him to offer me other things that I’m not aware of that may be useful to me and that I should really be covered for, rather than just going ‘here’s your options’,” one small business owner said. “Businesspeople are hungry for information they cannot find elsewhere, particularly if it is specific to their business or industry,” the report says. But there is a red flag that brokers would be foolish to ignore. Clients place great value on regular contact with their brokers. About 50% report being contacted by their broker two to three times a year, but 63% say they want that level of contact. “I’d like a phone call once a quarter or half-year to say ‘Hey, how are you going? This is what we’ve got, this is what’s happening, this is my recommendation’,” the owner of a medium-sized business told a Vero researcher. Clients say they want their broker to focus on their needs and to take time to listen to their plans, objectives and concerns. About 14% of clients report hearing from their broker less than once a year “or never”, and more of these clients are dissatisfied with the relationship and more likely to use a mix of broker and direct channels. “Everyone is looking for efficiencies in how they manage their portfolios of clients but they have to be cautious about taking relationships for granted,” Mr Mair says. “Just because you have someone as a client doesn’t mean they are going to stay.” The challenge for brokers will be to tailor contact across the client spectrum, from those who want a personal visit to people who are happy to get an email or electronic communication. Mr Mair says medium-sized businesses, those 56
10% 8% 19%
Dissatisfied Neither Somewhat satisfied Satisfied
“[Brokers] have to be cautious about taking relationships for granted. Just because you have someone as a client doesn’t mean they are going to stay.” employing 20-200 people, are brokers’ natural target, with about 59% using a broker to buy their most recent policy. But even the loyalty of this traditional broker heartland appears to be weakening. More business-owners are increasingly taking an active part in their insurance-buying and more male owners and people aged over 40 appear to be experimenting with buying their insurance directly. Mr Mair says brokers need to change the way they deal with these owners, as the index shows this most typical type of client “is not rusted-on”. The group most likely to be considering using a broker is small and medium-sized owners and younger owners. Many of them report their business is growing and becoming increasingly complex and they are looking for guidance on insurance issues as well as expert knowledge and advice. He says although the research shows that broker business has fallen when compared with the previous year’s study, it also highlights the fact that there are opportunities for brokers to demonstrate their value and relevance. “The challenge is how to get that message out to * all the small businesses.”
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AND A SCENE
ONLY WE’D TOUCH
aturday morning, 8.15am. What do you do when one of your longest serving customers has a rolled B-double spilling 40 tonnes of liquid tallow into a creek that runs into the Brisbane River? When you’re Rob Wass, Manager of NTI Accident Assist, you go out and buy an inflatable boat. “Having worked at NTI for over 27 years, I’d thought I’d seen everything”, Rob said, “but I was wrong. This was a real disaster. With the driver unharmed the focus was on cleaning up the site, and fast.” “The young woman at NTI Accident Assist who took the call was exceptional”, explained Julie Russell from Russell Transport. “Before we knew it, all the necessary emergency services and environmental protection people were on site, along with NTI themselves.” Rob explains further. “We had disposable oil booms in place to stop the tallow spreading into the Brisbane River, but because the tallow had solidified and was breaking up, we needed to find a way to direct it towards the vacuum sucker trucks.” Ken Russell, Julie’s brother and fellow company director, was keen to get in on the action – he too went out and bought a boat. “They were out on the water with poles pulling the solidified tallow towards the sucker trucks”, says Julie. “I guess I shouldn’t have been surprised about the hands-on role NTI took. They’ve always been great, but it was above and beyond what I expected. They managed everything – the clean up, the police, the media – they even arranged for part of the road to be resurfaced.” It’s certainly an event no one will soon forget. And that’s exactly why R.B. Russell Transport has been with NTI for longer than they can remember. Visit truestories.nti.com.au
Insurance products are provided by National Transport Insurance. NTI Limited (ABN 84 000 746 109) (AFSL 237246) is the Manager for National Transport Insurance, an equal-partner joint venture of CGU Insurance Limited (ABN 27 004 478 371) (AFSL 238291) and AAI Limited trading as Vero Insurance (ABN 48 005 297 807) (AFSL 230859). Each insurer is only responsible for its 50% share of the policy.
AUSTRALIA’S NO 1 TRUCK INSURER
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Challenging times for brokers Macquarie Bank’s latest examination of the broking business finds competition is heating up, the bigger players are flexing their muscles and the focus is switching to greater efficiency By Andy Swales
STRONG CLIENT RELATIONSHIPS, COST-CUTTING drives and an increased focus on business development have allowed brokers to outpace a sluggish economy, according Macquarie Bank’s latest Insurance Broking Benchmarking Report. But companies expect future growth to be slow amid pressures including competition from direct insurers, international brokers such as Marsh and Aon moving into the SME market and an increased prevalence of authorised representatives (ARs), typically operating on a lower cost base. And the study also reveals a growing gap between large and small brokerages, showing scale to be a key factor in current profitability and future expectations. “Overall, the picture is one of gradual organic growth in an economy that is itself expanding below trend rates,” Macquarie says. “For many businesses, profit growth has come from efficiency gains and reduced costs as much as business growth.” The trend towards industry consolidation is expected to continue, with about 20% of businesses surveyed acquiring another brokerage in the past two years. Some 22% of respondents to the 2013/14 study consider themselves a willing buyer or seller, up from 14% in 2010/11. Macquarie says this is likely a reflection of the changed acquisition environment, with a greater range of structural options and attractive price multiples now on offer. Not surprisingly, Steadfast, Austbrokers and other groups are dictating the mood around mergers and acquisitions. “There have been some key influential events across the industry since our last report,” Macquarie says. “One of the most significant has been the transformation of Steadfast from a network services provider to an acquirer of equity in a number of insurance broking and ancillary businesses, together with a successful listing on the Australian Securities Exchange. “Similarly, we have seen continued strength in the trading of Austbrokers, and our observations
highlight a current marketplace where aggregators and other larger-sized firms are the key drivers of acquisition activity.” However, attitudes to buying and selling vary depending on profitability. Many high-profit (30% of revenue) businesses now appear content to reap the rewards of success without “diluting” their businesses, the report says. Only 39% of these companies are willing buyers, down from 59% in 2010/11. Industry revenue figures are encouraging, with 83% of respondents reporting growth and median growth increasing 16% to $2.13 million in the study period, outstripping gross written premium gains. About 43% of businesses increased revenue by 1-9%, 25% made 10-19% gains and 15% topped 20%. Only 8% say revenue has fallen, with most attributing this to external factors, consistent with the 2010/11 results. The main driver of revenue gains is marketing and sales activity (cited by 58% of respondents), with successful businesses continuing to build stronger client relationships.
Dictating the M&A mood: Steadfast brokers at the group’s convention last month. Image courtesy of Kevin Chamberlain Photography
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REPUTATIONS AREN’T RENEWED EVERY 12 MONTHS. THEY’RE BUILT OVER 40 YEARS.
With over 40 years in the transport insurance industry, it’s no wonder NTI has achieved a reputation as the specialist you and your clients can rely on. In fact, as Australia’s longest serving transport insurance specialist, we’ve been first with many firsts. We’ve been a proud Foundation Sponsor of the Australian Trucking Association for the past 20 years. We established the National Truck Accident Research Centre to help improve safety on the roads, and since 1998 we’ve published one of the leading industry reports into major accident trends and causes. It’s these kinds of initiatives that have led to breakthrough products like NTI Accident Assist, where our specialist team takes control from the scene of the accident right through to the day the truck’s back on the road. So when it comes to your transport clients, protect your reputation by relying on ours.
Talk to National Transport Insurance – the transport insurance specialists.
National Office (07) 3292 9800 | Adelaide (08) 8271 1166 | Brisbane (07) 3292 9800 | Launceston (03) 6331 6769 | Melbourne (03) 9860 5688 Newcastle (02) 4965 4700 | Perth (08) 9421 1190 | Sydney (02) 9233 3433 NTI Limited (ABN 84 000 746 109) (AFSL 237246) is the Manager for National Transport Insurance, an equal-partner joint venture of CGU Insurance Limited (ABN 27 004 478 371) (AFSL 238291) and AAI Limited trading as Vero Insurance (ABN 48 005 297 807) (AFSL 230859).
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Factors expected to positively impact profit
31% 19% 10%
Business/ Negotiating Hardening of client base improved terms premiums acquisitions with insurers
Smaller groups are making greater use of ARs, with 14% of low-profit (10% of revenue) companies attributing revenue rises to AR growth, compared with 7% across all groups. Expenses continue to be dominated by salaries, while revenue invested in IT (4% on average) and marketing (3%) has remained largely static. “The most marked change is the proportion of revenue devoted to principal remuneration, which has fallen to an average of 16%, down from 19% two years ago,” the report says. “We view this as a reflection of a growing focus on profit, especially as a [business] valuation measure, with principals dialling down their own remuneration to enhance profit at a time of intensive merger and acquisition activity across the industry.” This push for earnings is paying off, according to the report. About 94% of brokerages generated a profit last financial year, with median earnings before interest, tax, depreciation and amortisation (EBITDA) rising to 25% of revenue from 20% in 2010/11. Almost two-thirds of brokerages now have EBITDA margins of 20% or more. However, when it comes to profitability, size increasingly matters. Bigger companies are “significantly more successful in generating higher profits”, the report says. About 76% of high-revenue ($4 million-plus a year) businesses have net profit margins of 20% or more, up from 48% in 2010/11. Only 31% of low-revenue (less than $1 million) brokerages achieve this, similar to two years ago. Likewise, almost half of high-revenue businesses grew profits by 10% or more last financial year, compared with 30% of medium-revenue ($1-4 million) businesses. “Together, these figures suggest smaller firms are finding it increasingly more difficult to achieve significant profit growth than their larger peers,” the report says. 60
Increased Improved premium economic funding revenue conditions
“Smaller firms are finding it increasingly more difficult to achieve significant profit growth than their larger peers.” Cost-cutting also comes easier to larger companies, with 20% of high-profit businesses axing workers, compared with 13% across all brokerages. While staffing levels have remained largely steady across the industry, it is the staffing mix that has changed at many companies, with the drive for lasting client relationships prompting a greater focus on business development roles – apparently at the expense of support staff and junior brokers. The average number of business development managers (BDMs) employed across the industry grew to 1.4 per company from 1.27 in 2010/11, and the proportion of businesses employing them grew to 52% from 46%. About one-quarter intend to recruit more BDMs. In contrast, client servicing brokers fell to 5.5 per company from 6.1, while administration staff dropped to 1.1 from 1.4 per brokerage in 2010/11. These shifts look to have paid off, with median revenue per staff member rising more than 5% to $166,710. However, the skills shortage shows no signs of abating: 69% of respondents say it is “very difficult” or “relatively difficult” to hire staff with the right attributes. Regional brokerages are struggling more than ever, with 53% facing recruitment problems because of their location, up from 35%. Looking ahead, high-revenue brokerages are the most optimistic, with 45% expecting revenue growth of 10% or more. insuranceNEWS
New client growth
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Capacity to grow.
Property insurance solutions on a new global scale. Our commitment to clients is now even larger with market-leading property insurance capacity of up to $1.5 billion. Our expanded limits reduce the need for multiple co-insurance markets and negotiations, and minimize gaps between layers of coverage. When coupled with expert loss prevention engineering, claims excellence, multinational and local expertise, and consistent, seamless service, you can count on AIGâ€™s total commitment to support your risk management goals at your facilities around the world. AIG is a full service partner that can respond to all of your Property Casualty insurance needs. To learn more, visit www.AIG.com/globalproperty
Insurance and services provided by member companies of American International Group, Inc. and in Australia by AIG Australia Limited, ABN 93 004 727 753 AFSL 381686. Coverage may not be available in all jurisdictions and is subject to actual policy language. For additional information, please visit our website at www.AIG.com.
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Biggest threats to business
Direct online sales from insurance companies
Losing key staff to competitors
“Meanwhile, some smaller firms appear to be struggling to gain traction; 30% of low-revenue businesses either say they expect profits to remain unchanged or decline, or can’t say whether they will rise or fall,” the report says. About 47% of all brokerages forecast revenue growth of just 1-9%. Optimism around new client growth has picked up, with 80% of businesses expecting it to drive profits, compared with 58% in 2010/11. “But with increasing competition and pressure to differentiate, some brokerages may struggle to maintain, let alone increase, their client base,” Macquarie warns. Efficiency gains are also cited as a potential profit driver, while 32% of respondents now expect improved economic conditions, up from 10%. However, only 23% hold out hope for premium rises, down from 68%. Potential drags on profit include client hardship (55%), drops in investment income (42%) and increased competition (38%). By far the biggest competitive threat is direct sales by insurers, cited by 59% of brokerages – rising to 73% in Queensland, where a dispersed population may make online channels more effective. In response, brokerages rate the internet as their number one priority for future capital investment. Attitudes to technology in general are positive, with 96% of businesses agreeing or strongly agreeing that new technology is critical to improving efficiency. But few brokerages have enjoyed significant returns from online sales so far, with many lacking the data they need to analyse their digital performance. About 82% use websites to generate leads and 42% accept online quote requests, but 41% are “not sure” whether they are satisfied with website performance and 31% are “neutral”. Digital marketing is popular, with 28% using Facebook and the same proportion on LinkedIn, while 15% use digital media in general. 62
“With increasing competition and pressure to differentiate, some brokerages may struggle to maintain, let alone increase, their client base.” Other priorities for future investment include customer relationship management systems (33%) and more efficient software integration (30%, rising to 39% in high-revenue businesses). The report predicts that as the insurance industry becomes more specialised, “brokers will increasingly seek to focus on a particular client segment or risk type”. It forecasts growth in new risk types, including cyber-risks and “other digital intangibles such as data protection, privacy and reputation risk, and datarelated business interruptions”. “Structural change in the Australian and global economies will also see specialist industries emerge and grow, potentially including green energy, digital finance and significantly enlarged aged care and healthcare sectors,” it says. The report is based on a survey of 201 broking businesses of all sizes nationwide. Macquarie Head of Insurance Broking Rachael Lavars says it shows the insurance broking industry “has performed favourably compared with many professional service sectors” in terms of revenue growth. “Looking forward, I think there’s further scope for technology to play a role in streamlining processes and, with some adjustment by firms to their focus and staffing mix, with increased levels of business development staff, we would expect to see * continued growth.”
TAKING ORDERS IN MAY
SURA HOSPITALITY IS A NEW UNDERWRITING AGENCY CREATED BY THE AMALGAMATION OF THE FOLLOWING UNDERWRITING AGENCY BUSINESSES (“MGA”).
SPECIALIST INSIGHT. COMPLETE SECURITY
Guardian Specialist MGA focusing on hotels, pubs, white linen restaurants.
Sura Hospitality will focus on the following sectors
Celestial Specialist MGA focusing on licensed sporting clubs. Dolphin Specialist MGA focusing on leisure, entertainment and tourism.
Sura Hospitality will build on these existing brands to establish a leading tailored insurance business for the hospitality, leisure and entertainment sectors with significant increases in capacity.
Alpine Specialist MGA focusing on alpine region properties.
– Hotel/pub freeholds, leaseholds and property owners – Bars and lounges – Sports clubs – Motel owners and operators – Alpine risk owners and operators – Caravan park owners and operators – White linen restaurants
UNDERWRITING DIRECTOR ALAN MACKAY
NATIONAL MANAGER DEAN FIDDES
NSW STATE MANAGER BRUCE GIBBS
WA STATE MANAGER STEVE BRADMORE
TELEPHONE. 03 8823 9461 MOBILE. 0412 969 064 EMAIL. ALAN.MACKAY@SURA.COM.AU
TELEPHONE. 03 8823 9402 MOBILE. 0467 059 599 EMAIL. DEAN.FIDDES@SURA.COM.AU
TELEPHONE. 02 9930 9547 EMAIL. BRUCE.GIBBS@SURA.COM.AU
TELEPHONE. 08 6380 6602 MOBILE. 0467 642 477 EMAIL. STEVE.BRADMORE@SURA.COM.AU
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The cost of behaving badly Lawsuits in the US and underhand bank practices elsewhere are presenting D&O insurers with new challenges By Shelley Dempsey
Going up: US court actions against directors and officers are at record levels
AUSTRALIAN BUSINESSES TODAY FACE more shareholder class actions than ever before, but the number and size of such actions in the United States are rising much faster. While the number of listed companies in the US has fallen by 46% in the past 16 years, the number of lawsuits being filed against companies has stayed steady. Payouts for securities class actions have also reached record highs. The average settlement reached $US55 million in 2013, up 9% on 2012 levels, a Sydney seminar on directors’ and officers’ liability (D&O) insurance was told last month. There were 234 securities class action filings last year, up from 213 in 2012. Heightened activity in D&O in the US has not gone unnoticed by insurers. Lloyd’s syndicates Beazley and Hiscox joined forces early this year to form a D&O consortium to provide higher limits of insurance to US clients faced with litigation risks. “The consortium arrangement puts Lloyd’s on a level playing field with the biggest D&O insurers in the US and in Bermuda,” according to Neal Wilkinson, the Head of Beazley's global management liability team. 64
With new whistleblower rewards now enacted in the US, rising cyber-cover claims and the biggest fines being levied against foreign banks, the payouts are at the highest level ever recorded, according to Edward J Kirk, a partner at Clyde & Co New York. “There are 46% fewer public companies in the US compared to 1998, yet there are now still a similar number of lawsuits being filed,” he told the seminar, which was organised by Clyde & Co in Australia. “Therefore it’s much more likely now – about twice as likely – for public companies trading out of US to be sued than it was 15 years ago.” New “bounties” or rewards for whistleblowers in the US are having an effect, with $US14.8 million already paid out by the Securities and Exchange Commission (SEC) from its whistleblower fund of $US439 million. “The SEC has received over 6500 tips in the two years the program has been in place”, Mr Kirk says. “As it takes two to four years for these types of investigations to actually turn into action, we may see a burst of regulatory activity in the next year or two as the SEC works through all these tips.” A report by Advisen says the average setinsuranceNEWS
tlement last year for all types of lawsuits impacting management liability in the US was $US51.5 million – the highest for five years and nearly four times higher than that of 2012. The report says securities-related lawsuits and enforcement actions, which are the most common source of D&O claims in the US, have been running at a high level since the global financial crisis in 2008. It says 24% of new D&O events last year involved companies in financial services, with information technology second at 15%, then the consumer discretionary and industrial sectors, both at 13%. Elsewhere in the world, regulators are continuing to toughen penalties and also requiring directors and officers to meet new standards of behaviour. Last month China passed amendments to listing rules under the Companies Ordinance Rewrite, which impose much more stringent requirements on Hong Kong directors’ conduct and disclosure. Under the new rules, directors are required to apply a reasonable level of skill and diligence and to act honestly, in good faith, for proper purpose, avoid conflicts of
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interest and disclose fully their interests in contracts. “It is a large piece of rewriting of the companies law,” Clyde & Co Hong Kong partner Mun Yeow told the seminar. “The objective of the new changes is to lift the corporate governance of Hong Kong companies to international standards.” The new rules also require companies to arrange appropriate insurance cover for their directors. “So the insurance market in Hong Kong is very happy,” Ms Yeow told the seminar. Last year China also passed regulations under the Securities and Futures Ordinance that require the disclosure by listed companies of inside information that can affect share prices. The penalty for non-disclosure is $HK8 million. Ms Yeow says insider trading featured in two recent major cases handled by the Securities and Futures Commission (SFC) in China, and will play an increasingly important role in regulation. US hedge fund Tiger Asia was ordered to pay $US6.41 million to investors after the SFC found evidence of market manipulation, and former Morgan Stanley Asia managing director Du Jun was ordered to pay $US3.4 million to
investors after improper dealing in shares. In Europe and the UK, the Libor (London interbank offered rate) scandal also challenges D&O insurers, with five British banks now prosecuted. Clyde & Co London partner James Cooper says the most recent prosecution was against Rabobank, which late last year was ordered to pay £105 million pounds in the UK and $US445 million in the US. [Libor is leading London banks’ daily estimate of the average interest rate they would be charged if they were borrowing from other banks. It is the primary benchmark for short-term interest rates around the world, with the rates calculated for 10 currencies and 15 borrowing periods ranging from overnight to one year.] At least $US350 trillion in derivatives and other financial products are tied to the Libor. In June 2012, a number of actions against Barclays Bank revealed significant fraud and collusion by member banks connected to the rate submissions, leading to the so-called Libor scandal. The British Bankers’ Association is now in the final stages of transferring oversight of Libor to government regulators. insuranceNEWS
But while the UK interbank rate system is now regarded as being under credible control, that’s not the case in other financial centres. In Singapore, a Monetary Authority of Singapore (MAS) inquiry into the Singapore interbank offered rate (Sibor) named 20 banks as being deficient. “Rather worryingly, they found evidence of 133 traders at 20 different banks that had attempted to inappropriately influence the benchmark between 2007 and 2011,” Clyde & Co Singapore partner Ian Roberts said. “For 16 out of the 20 banks, this was the first time they had been the subject of adverse findings in connection with the benchmark-fixing scandal,” he said. Singapore took a different approach to punishment to that used by regulators in Europe and the US, requiring banks to deposit additional statutory reserves of up to $S1.2 billion, rather than pay large fines. There was no conclusive finding that any criminal law had been breached, but 75% of the 133 traders have resigned or been dismissed. “The number of banks implicated in Singapore – 20 of them – raises questions about how far the Libor scandal still has to run in Europe and the US,” Mr Roberts said. * 65
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Capturing new markets Traditional kidnap and ransom insurance has evolved to become relevant to many more Australian businesses By John Deex
KIDNAP AND RANSOM (K&R) INSURANCE is no longer niche. In fact, it’s a product that all Australian businesses should seriously consider. That’s the opinion of AIG’s Head of Kidnap and Ransom Jon Gregory, who flew to Australia from London in February to give tips to brokers on the ways in which K&R cover is developing a much wider following. He says the K&R product was “born out of South America” in the 1970s, and if you weren’t in Columbia, Mexico or Venezuela then you didn’t need it. But this is no longer the case, says Mr Gregory. Increasing investment in Africa, the Middle East emerging from conflict and problematic areas of southeast Asia are bringing the issue closer to home. “As Australian businesses look away 66
from domestic investment and go overseas, that carries with it inherent risk,” he tells Insurance News. “Nobody can dispute that.” But it’s not just the geography that’s changing. The AIG product, now called Crisis Solution, covers a great deal more than traditional kidnap scenarios. It now includes product extortion, cyber extortion, assault in the workplace, stalking and hostage situations. As a result, there is significant exposure in Australia and other first world countries. In fact, about 18% of cases responded to last year occurred in Australia, New Zealand, the US, Canada and the UK. “People think that this is a high-risk environment product, and it used to be,” says Mr Gregory. “But what we have done now is address extortion scenarios. If you look at things like property and product insuranceNEWS
extortion, it has always operated in first world environments. “We have developed certain covers that address things like shorter forms of abduction, detention, tiger kidnap scenarios, even stalking.” (Tiger kidnaps, for the uninitiated, are situations where a person is kidnapped and the “ransom” is shaped around the committing of a crime. An example is a situation where a bank manager may have his family held to ransom until he robs his own bank.) The list, Mr Gregory says, is almost endless – and that’s good for business. “We have been absolutely at pains to outline some of the innovations in the coverage because we want people to understand that if you are held at knifepoint at an ATM in Melbourne or Sydney,
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Ransomed and rescued: Frenchman Daniel Larribe is welcomed by his wife and daughters as he arrives in Paris after being held hostage by gunmen in Niger for three years. He and three other construction company workers were freed last October after “secret negotiations”. The French Government denied involvement in the talks. Image: Reuters
and you’re robbed and then beaten up, there is recourse to this policy now. “I think once people perceive that and they almost localise the threat, that’s when you start to have realistic conversations. “It’s very easy to sell this to a business that has considerable overseas interests, but if you focus on things like the product extortions or property extortions, and we talk about bomb threats or computer viruses, then all of a sudden clients are interested. “If I was an insurance broker selling this I would be saying, if you have any aspect of threat externally I think this is a policy that you can have recourse to. “I think in this modern age it’s pretty persuasive.” There is another aspect to the coverage offered by AIG – the risk management consultants that work with the company. insuranceNEWS
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companyNEWS AIG Crisis Solution case studies Extortion: A large US-based multinational corporation received a letter at their corporate headquarters demanding a payment of $US2 million within five days or bombs would be detonated at its corporate headquarters and various retail outlets. The company contacted the AIG crisis centre hotline. AIG confirmed cover and NYA deployed the same day to the insured’s headquarters. It provided a full risk assessment and co-ordinated its efforts with local police and the FBI. After several followup calls with the extortionist, the FBI was able to arrest a disgruntled former employee without any further incident. AIG’s policy reimbursed the insured more than $US550,000 for public relations, media and additional security costs, including thirdparty security providers. Kidnap: Two employees of a French construction company working in Nigeria were returning to their work camp with a police escort when their vehicles were attacked and disabled. The police returned fire, killing one kidnapper and wounding two others. However, during the firefight the victims were abducted. The kidnappers contacted the client and demanded $US623,000 in ransom. The AIG crisis centre hotline was contacted, and NYA deployed immediately to both Nigeria and the client’s headquarters in Paris. Specialists from NYA assisted the client in the negotiation process and 20 days later the victims were released safe and well after a payment of $US125,000. AIG ultimately reimbursed the company for $US195,000 which included the ransom payment, the victims’ medical and rehabilitation costs, payments to local officials to assist in delivery of the ransom and additional costs incurred by the insured to secure the victims’ release. Piracy: About 12 Somali pirates boarded a ship belonging to an international shipping company off the coast of Yemen and held the crew of 15 at gunpoint. The pirates demanded $US50 million to release the vessel. The insured contacted the AIG crisis centre hotline and NYA deployed immediately to the company’s corporate offices. After months of negotiations, the pirates agreed to release the vessel in exchange for a $US9.5 million ransom payment. The insured’s AIG policy had a $US5 million ransom limit, which was paid to the insured. AIG also reimbursed the client for an additional $US2.75 million in additional covered expenses, which included travel costs, interest on loans raised for payment of the ransom by the insured, the crew’s wages, medical and rehabilitation costs, the costs of conveying the ransom and the insured’s legal counsel. Evacuation: The insured operates throughout the Middle East. Following an attempted coup by the military, the US State Department issued a travel advisory recommending the evacuation of all nonessential foreign nationals. The insured contacted the AIG crisis centre hotline. AIG assisted them in securing travel arrangements for six employees and their families. It reimbursed the company for these evacuation costs for a total reimbursement of $US22,000.
Crisis response and management specialist NYA International provides crucial advice, and also assists with risk mitigation in an attempt to avoid disaster in the first place. “They are specialists in risk management – executive travel, site survey, due diligence, forensics – all of that risk management piece that is fundamental to a client when they are considering who they are doing business with or where they are sending people,” Mr Gregory tells Insurance News. “[This] is beneficial to numerous other insurance policies the client may be buying. While we may pay for that service under a kidnap and ransom policy, it may be other insurers that get the benefit of that risk mitigation. We accept that – it’s a value added.” The growing expectation that businesses have a duty of care to their workers has also helped drive sales. It’s not just senior executives travelling overseas that need to be covered but all employees and consultants – anyone working on the site, as well as their families. “The past perception was that it was only the largest corporations that bought this coverage. The reality now is that because the risk geography is so global, it is bringing this type of insurance into the boardrooms of companies that hadn’t previously purchased it. “And actually the relative cost is pretty economic.” Aside from the recent innovations, it should not be forgotten that the traditional kidnap threat is still there – and rising. Only Columbia has seen a fall in recent years – a by-product of massive US investment in the Columbian military. In Venezuela there are 16 kidnaps a day and in Mexico about 10. The northern states of Mexico are particularly violent. Juarez and Caracas are now the murder capitals of the world. Nigeria – hugely relevant to the oil and gas industry – was AIG’s highest single country location for losses last year. “It’s easy to paint that picture of an increase in concern,” Mr Gregory says. Kidnap tends to be under-reported because in some jurisdictions people fear local authorities are involved in the process. Statistics are hard to come by, but Mr Gregory says any figures put forward are the tip of the iceberg. “We talk about 40,000 kidnaps a year, but the reality is that it’s much, much more than that.” AIG says only about 3% of kidnaps and extortions are insured. “That’s not that they are excluded for any reason – it’s just that the majority of people are not buying this kind of insurance,” Mr Gregory says. “For us that’s a great opportunity.” “Piracy has been a concern. Australian business will export their goods, they will charter vessels and with that export comes responsibility not only to protect that asset but the crew as well. insuranceNEWS
“This is all an interesting illustration of how this whole threat dynamic is changing and involving businesses that a few years ago would not have thought about it.” The negotiation of ransom amounts is one of the most complicated aspects of a kidnap situation. “In the end it is driven by the group holding the victim,” he says. “They would always have a figure in mind and it comes down to what industry and circumstances, and where you are in the world. “That dictates the level of ransom that is paid. It comes down to what the expectation of that group is and then how skillfully a communicator handles that process.” There are many cases of paying too quickly and too much, and suffering separate demands. In some countries where kidnap is more prevalent you can almost predict the ransom. “In an environment like Caracas I’m afraid to say it is an industry.” A crucial point to remember is that the Crisis Solution product is an insurance of reimbursement, says Mr Gregory. As a result the ransom amount depends largely on how much the family or the company can actually afford to pay, and what money they can raise from their assets. If insurers pay directly, the ransoms are much higher. In some of the more violent jurisdictions, even the payment of a ransom does not guarantee a favourable outcome. But a good consultancy will never guarantee the money until they have had “proof of life”, Mr Gregory explains. “Over the 24 years they’ve operated, our consultants have not lost someone once a proof of life has occurred. “Admittedly, people get abducted, they struggle, they get killed. I’ve seen that happen many times. The first 24 hours is absolutely critical. It’s how the victim reacts and how the commercial business responds that then drives the negotiation thereafter.” But by assisting in the payment of ransoms, isn’t the insurance industry helping perpetuate the crime? No, says Mr Gregory, citing Italy and Singapore, where the payment of ransoms is illegal. “The reality is that in those jurisdictions, despite that legislation, the statistics have continued to rise. Regardless of whether this insurance policy exists or not, people will continue to be abducted, extortion will happen and people will continue to pay ransoms – because that is often the only way of securing a release. “The individual human life and the right to protect it prevail. That will never change. There is always a place for this type of product.” The concept is certainly nothing new. More than 1000 years ago the British were paying the Danish Vikings Danegeld – a sort of extortion payment. “This sort of crime has been around for a long, long time, and unfortunately it * will always exist.”
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Smarter claims: Vero has an app for brokers to offer motor fleet clients IT’S EASY FOR DRIVERS TO FORGET key questions they should ask at the scene of an accident, and that can cause a headache later for company fleet managers who have to make a claim. Vero has designed a smartphone app for both Apple and Android users that gives drivers the questions they should ask and the details to collect. Suncorp Commercial Insurance Executive General Manager Claims Matt Pearson says brokers can offer motor fleet clients the Vero Drive Claims App as a better way to manage claims. “The app provides brokers with an additional benefit when recommending Vero motor insurance to their commercial clients,” he says. “This makes life so much easier when they have to make a claim because the app records all the key details – the sort of things you can easily forget in the heat of the moment.” The driver’s details are entered when the app is downloaded, including the fleet manager’s email and the company name. When the app is used to make a claim, an email is automatically generated to the fleet manager and Vero claims, with all the details, Mr Pearson says. “A priority line is also provided to arrange a tow if necessary.” He says Vero developed the app after feedback provided from a claims research program called Motor Journey Mapping. The app is free and can be downloaded via iTunes, Google and Samsung * stores.
Recall risk: AIG launches food and beverage cost estimator CONCERN OVER THE FREQUENCY AND financial impact of food and beverage product recalls has prompted AIG to develop a tool to help manufacturers estimate potential costs. The Novi web-based service can calculate a company’s probable maximum recall loss in the event of an accidental contamination, boiling down the potential risk exposure to a single number. Expenses from a recall can mount quickly and include replacement and destruction costs, lost profit from plant shutdowns, government intervention and brand and reputational damage, AIG says. “Novi helps food and beverage manufacturers understand their exposure to a recall event, and make more informed decisions about how to manage their risk,” says Nicky Alexandru, AIG’s Vice President for Crisis Management, Global Casualty. “While most companies are generally aware of the frequency of product recalls, they are unsure of the potential magnitude of the cost of a recall event.” Five product recalls are reported every month in the Australasian food and beverage industry, on average, including two or three in Australia. “Maintaining food safety standards and managing recall risk are two pressing issues for Australian companies,” AIG Manager of Crisis Management Claire Stock says. The Novi estimation process uses more than 80 data points and a methodology
Singapore calling: Arch and Lloyd’s syndicates launch consortium AUSTRALIAN BUSINESS features strongly in the Lloyd’s empire as its thirdlargest market, so it makes sense when local underwriters link up with counterparts in the growing insurance hub of Singapore. Lloyd’s global underwriter Arch has joined forces with four of the market’s Singapore-based syndicates to launch a consortium for Australian commercial property cover. The “Climb” (commercial and light industrial medium-sized business) consortium was unveiled at the Steadfast Convention in March, where delegates welcomed the innovative move, saying Climb would bring new capacity to the Australian market and draw the Lloyd’s market closer. Arch is the lead under-
based on AIG experience in contaminated product insurance, analysis of thousands of recall incidents and input from food safety consultant NSF International. AIG began providing contaminated product insurance in 1986. The free, confidential service can be accessed from mid-April at * www.aig.com.au/novi.
writer working through its Australian operation, and will issue paper locally in a single transaction. Regional Director Adam Matteson told Insurance News his convention team had plenty of enquiries from Steadfast members who wanted to avoid channel conflict or had risks that were difficult to place. “Some agencies are looking to develop new products and not getting a lot of joy from the London brokers,” he says. “Some of the regional brokers who have limited access to markets were also coming to see us.” The Singaporean partners were attracted to the venture because Australia is Lloyd’s largest market in the region. Climb has $15 million
capacity to write wholesale and retail commercial property business and the two or three-hour time difference between the eastern states and Singapore means business can be done in a time zone suitable to both ends. Mr Matteson says the venture shows the Singapore and Australian markets are working together “and we are showing brokers we can provide local-region support.” But he says it is not about London versus Singapore, or business that would normally go to London moving closer to home. “London is the unchallenged capital for innovation and creativity. All this is doing is widening the distribution point to enable more business into the Lloyd’s * platform.”
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Berkley drives on: A new heavy motor and commercial fleet offering heads a list of changes WR BERKLEY INSURANCE AUSTRALIA has launched a series of initiatives aimed at improving support to brokers, including a new heavy motor and commercial fleet product, capacity expansion and a new website and mobile phone app. National Underwriting Manager Motor John Bottomley, supported by a team of statebased underwriters, will focus on heavy motor, sedan light commercial and mobile plant business. Risk management will be a key feature of the product, and claims will initially be managed by Gallagher Bassett. “The opportunity came up to bring someone on board with the expertise,” Chief Executive Tony Wheatley told Insurance News. “That’s the way WR Berkley likes to work. “When we investigated we found there was an opportunity, and there have been some beneficial developments in the market since, so the timing has been perfect.” In general liability, WR Berkley has increased its maximum capacity from $20 million to $50 million, to be available on a range of target industries. Mr Wheatley says the company entered the market in 2009 and has developed a strong portfolio, but is being regularly asked for higher limits as a result of customers’ own contractual requirements. “It seems like a big increase but it’s almost what you need to be competitive in the market,” he says. “You need to be able to offer the larger limits even if the clients don’t eventually take them. “It is becoming more and more common to be asked for quotes for $20 million, $30 million and $50 million. It seems that $20 million is the minimum these days.
Under attack: Allianz warns SMEs about cybercrime
“Our ability to compete in the market was being restricted and we wanted to give our brokers the option of higher limit quotes.” The company has developed a new website to give access to all information brochures, wordings, appetite statements and contact details – and a smartphone app to make it all available on the move. “It’s a completely new website,” Mr Wheatley told Insurance News. “The previous site had been aligned to the UK website, and it was outdated. “We decided to develop our own locally, to a more professional level. There’s some great information on there and it’s a good move forward for us. “The app is the next phase. I want to have most of the information on the website available on people’s phones. “It makes it a little easier for people to do business with us and we will develop it further * as we come up with future ideas.”
ALLIANZ IS CONTINUING THE battle against cybercrime with a new Cyber Protect insurance product with cover of up to $50 million. Allianz Global Corporate & Specialty Pacific General Manager Holger Schaefer says companies are being attacked on a daily basis. “Many cyber criminals are now hacking into the systems of SMEs as a way of piggy-backing access to the systems of the larger companies they partner with,” he says. “All businesses need to review their vulnerability to cyber attack and the financial and reputational damage it may cause.” Allianz has three products to address first and third-party liability from serious cyber attack or data breach. There are different levels of business interruption cover and Cyber Protect clients can get immediate access to a crisis response team which includes a panel of forensic IT experts who will work with clients to manage the incident. The product suite also includes the costs of crisis communication to help safeguard the company’s reputation. Allianz’s 2014 risk barometer found Australian risk consultants, underwriters and claims experts rank cybercrime, IT failures and espionage fifth in terms of risks facing business. It did not even make the top 10 in 2013. Loss of reputation or brand ranked third, up from fifth the previous year. *
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Remembering Kym Whether working as part of the Pacific Premium Funding team or helping others in her community, Kym Burley was always authentic A POPULAR FIGURE AROUND the insurance industry, Kym Burley, died suddenly on March 20 at her home near Port Macquarie. She was 53. Her husband, premium funding pioneer Grant Burley, says Ms Burley died peacefully in her sleep at their property near Port Macquarie. Her death has devastated the small community, where Ms Burley was active in helping people. Mr Burley told Insurance News he has been amazed by the number of sympathy messages he has received from “people all around the country who knew and loved Kym”. The funeral was held at Port Macquarie on March 31, followed by a reception at Laurieton. The then Kym Young met Mr Burley in the mid-1990s when they both worked for Hunter Premium Funding. They were married in March 1999. In 2001 Mr Burley cofounded Pacific Premium Funding, building it into the second-largest premium funder in the Australian market. Co-founder Stuart White, now Chief Executive of Macquarie Pacific Funding, told Insurance News Ms Burley’s personal attributes – “the ability to connect with anyone, her generosity with her time and her interest in people” – should not obscure the fact that she was an accomplished professional. “[Centrepoint Alliance Premium Funding Chief Executive] Bob Dodd referred to Kym the other day as ‘without a doubt the best business development manager the business has seen’, and I totally agree. “In the early days of Pacific in New South Wales Kym trebled the size of the business very quickly. She was competitive, very sharp and street-smart. “Kym and Grant worked really well together; they were a team. Together they were very special. “Even today, people still ask us after Kym. She built some deep bonds in the industry that have stood the test of time. She kept in
touch with a lot of people at all sorts of levels in the industry.” Mr Burley says his wife played a very active part in the company’s development. “Kym made a lasting impact on the industry in her own right. She touched people in the industry with her focus and her competitive spirit, but most of all with her warm and humorous disposition.” Her love of farm life and horses saw her leave Pacific in the mid-2000s to spend more time at the country property they wryly nicknamed “Burleyworld”. A keen pilot like her husband, Ms Burley flew her own single-engine aircraft and often commuted between the property and Sydney. “Even after she stopped working full-time Kym still kept in contact with the many friends she had made in the industry,” Mr Burley says. “We would often attend industry events together. She was never far from my side.” (Pacific Premium Funding was bought by GE in 2008 and Mr Burley became chairman, with Stuart White moving into the chief executive’s role. The business was sold in 2012 and merged with the premium funding business owned by Macquarie Bank and Steadfast. Mr Burley resigned as chairman.) In 2007 Ms Burley suffered a brain injury at the property after falling while checking water tanks. “She was fortunate to survive that,” Mr Burley says. Typically, his wife fought with great determination to overcome the injury, immersing herself in community projects and eventually returning to ride her beloved horses in competition. She also regained her pilot’s licence. “Kym assisted many people who had sustained similar injury to hers,” Mr Burley says. “Not so long ago she spoke at a brain injury seminar, because she was a role model for others who suffered the same kind of accident. “But while she was so well known in the industry through her work with Pacific Premium insuranceNEWS
Funding, you wouldn’t believe the influence she has had on the community here, and how many people she has touched. “Apart from helping people get through brain injury, she helped elderly people in our village and organised raffles to raise money for young people to compete in overseas sports events. “A person she was helping would feel they had her exclusive attention and support, but she always had many of these quests running at the same time. “We were a great team, but * she was the better half.” April/May 2014
A great team: Kym and Grant Burley at the NIBA Convention in 1999, a few months after they married
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CGU conference delegates get the picture About 150 delegates and their partners attended this year’s CGU National Annual Representative Conference in Queenstown, New Zealand. Head of Sales and Distribution Andrew Beer says the event focused on giving authorised representatives “the opportunity to further build some of their key business skills, with the aim of using these to grow their business”. To tie in with the Big Picture conference theme, 15 teams of ARs constructed a painting in one hour made up of 30 panels. Teams were expected to ensure that colours matched, paintbrushes and tools were shared and that participants learned about effective communication and teamwork. A highlight of the conference was the gala awards evening, held at Mount Soho Winery in nearby Arrowtown. Performance artists, including a hula-hoop performer, provided the pre-awards entertainment. Impact’s Chapman Welsh took National AR of the Year, Grant Reid from Toowoomba was awarded the Young AR of the Year and achievement awards were presented to Roger Edwards and Allan Price.
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Workers Compensation Training Calendar 2014 Keep one step ahead â€” plan your training and enrol today The range of courses offered by QBE have been developed specifically to assist employers and intermediaries manage risks associated with Work Health and Safety and Workers Compensation. By keeping one step ahead of your training needs, you help your staff to improve their knowledge of how to reduce risks and contribute to the development of safer workplaces. To view the full calendar, visit our website: www.qbe.com.au/workerscompensation/training Enquires can be made to QBE via: Ph: 1800 198 243 Email: email@example.com
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Thumbs up for revised Steadfast program More than 2500 insurance professionals from all industry sectors attended the Steadfast Convention in Melbourne in March, with the shortened three-day program receiving a big tick of approval from delegates. The first conference for Steadfast as a publicly listed company included a number of new events, and the response has given the organisers a good sense of what members want at next yearâ€™s convention in Adelaide from April 18-21. The breakout sessions trialled this year proved very popular and most of the evening entertainment events were packed, with the organisers being forced a month before to set up a waiting list.
Convention Chairman Greg Stewart says the breakout sessions enabled Steadfast to offer a wide range of subjects in the time available. Day passes allowed many brokers to visit the convention for a day, giving more professionals a chance to attend for professional development and networking opportunities with underwriters. Presentations that set conversations buzzing included CGU Chief Executive Peter Harmer telling brokers they need to switch from being transaction-driven to advice-driven, Veroâ€™s launch of the findings of its SME Insurance Index research and fire and risk expert Jonathan Barnett on lessons learned
from the terrorist attack on the World Trade Centre in 2001. Delegates also heard veteran crime journalist John Silvester outline the international hunt for drug kingpin Tony Mokbel, and Qantas pilot Richard De Crespigny gave a thrilling account of the emergency aboard his Airbus A380 when an engine exploded shortly after takeoff from Singapore. The convention also provides an opportunity to honour the industryâ€™s stars and encourage young professionals. The Catlin Steadfast Award and Steadfast ANZIIF awards were presented, along with the inaugural Valerie Baker Memorial Award. Images courtesy of Kevin Chamberlain
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Allianz is a proud sponsor of the Australian Paralympic Committee. In sport, we support Paralympic athletesâ€™ ability to believe in themselves and their passion to be the best. In business, we support our intermediariesâ€™ ambitions to excel and achieve their goals.
Victoria Pendergast, Paralympian Our team is our difference. We We are committed to being your first choice. Allianz Australia Insurance Limited ABN 15 000 122 850. MKT 56 02/14 INEWS
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peopleNEWS Rubbing shoulders with Vero The Steadfast Convention is always a hectic time for brokers and the many other insurance professionals who crowd in to catch up with colleagues, friends and clients, attend presentations and network in the exhibition hall. Vero’s “recovery breakfast” following the first day gave delegates not only edible refreshment but shoulder massages and dark glasses for anyone wincing at the sight of Melbourne’s bright autumn sunshine. Vero launched its thoughtprovoking SME Insurance Index at the convention, and the breakfast, its welcome function on day one plus a dinner on the third evening, gave brokers a chance to quiz Suncorp Commercial Insurance Executive General Manager Distribution Andrew Mair and his team about the research and what it means for broker-client relationships.
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Centrepoint celebrates success The tall ship Polly Woodside provided an evocative setting when Centrepoint Alliance Premium Funding invited 120 customers to celebrate a successful year for its Victorian operations. Guests entered through the museum celebrating the history of the sailing ship, which was launched in Belfast in 1885 and is now docked at Melbourne’s South Wharf precinct. The Polly Woodside was the last square-rigged deep water commercial sailing ship afloat in Australia, and in 1968 was sold for one cent to the National Trust, which began a long restoration. Bob Dodd, “captain” of the Centrepoint crew, joined East Coast General Manager Janet Rayner welcoming guests up the gangplank. Mr Dodd says it was a great opportunity for Business Development Managers Sue McNeill, Daniela Renda and Viv Turnor and Sales Support Manager Deborah Downes to thank everyone for a terrific year’s support.
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Brokers tee off with Augusta in their sights The annual Allianz Blue Eagle state golf tournaments attracted more than 200 brokers this year as competitors vied for a place in the national event and the chance to win a trip to next yearâ€™s US Masters in Augusta, Georgia. In New South Wales, Troy Garaty and Chris Murnane from Garaty Murnane Insurance Brokers took victory after 48 brokers came to the Manly Golf Club to play in overcast but fine conditions. Queenslandâ€™s Shaun Luck and John Wilding from Sawtell & Salisbury won for a second year as threatening weather almost washed out that event. The tournament started at 7am to avoid summer storms and heat, but heavy showers the night before had drenched the Northlakes Resort Golf Club. In South Australia the weather was perfect, with a slight breeze setting the scene for a fierce competition between 28 brokers at the Kooyonga course in Adelaide. Andrew Zander and Steve Pratt of Webster Hyde Heath won a tense playoff hole to defeat Garth Hannaford and Matthew Hutchinson of MGA. In Victoria a candlelit breakfast of egg and bacon McMuffins started the day after the Huntingdale Golf Club was hit by a power outage. Richard Coloretti and Andrew Shinkfield from Edgewise Insurance Brokers won the event, which was attended by 83 brokers. Power was restored in time for lunch. Phil Hall and Phil Tasker from Unity Insurance Brokers won the Western Australian tournament at Joondalup Golf Course. The teeoff was scheduled early to avoid the heat, and 32 brokers attended. The tournaments were played under the Two Ball Best Ball Stableford rules. The winning teams will vie for the US trip when they meet at the National Blue Eagle Golf Tournament at the Australian Golf Club in Sydney in May.
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At Newline Australia we underwrite the following classes of insurance: Public & Products Liability; Professional Indemnity; Medical Malpractice; Financial Institutions; Directors' & Officers' Liability and Crime
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Underwriting Manager – PI Ph: 03 9999 1907 E: email@example.com
Underwriting Manager – D&O & FI Ph: 03 9999 1905 E: firstname.lastname@example.org
Underwriting Manager Medical Malpractice Ph: 03 9998 1900 E: email@example.com
Newline Australia Insurance Pty Ltd | PO Box 16208, Collins St West, VIC 8007 | Ph: 03 9999 1901 | Fax: 03 9670 0045
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Sydney Expo draws a crowd The Underwriting Agencies Councilâ€™s (UAC) expos around Australia go from strength to strength, with the recent Sydney event pulling in a big crowd at the Sheraton on the Park. A morning of chat and business between the 55 exhibitors and many brokers was followed by a lunch with guest speaker Tim Reid, the founder and host of globally popular podcast The Small Business Big Marketing Show. The day began well before the expo opened its doors with a breakfast for NIBA Young Professional brokers, which was sponsored by Specialist Underwriting Agencies. UAC Chairman Heath Amber says the breakfast was part of the councilâ€™s professional development strategy for members and brokers, with agencies no longer regarded as just a vehicle for hardto-place risks.
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maglog » A VERITABLE DELUGE OF EMAILS GREETED the offer in our last edition for a free copy of the Fondazione Mansutti’s Documents on the History of Insurance. I was a tad concerned that our readers might not have much of an interest in our industry’s ancient beginnings, but the response would suggest that’s not the case. Our winner is James Lording (right), an account manager at EBM Insurance Brokers in Melbourne. He was around the 50th to respond and his submission blew out the “give me two good reasons” rule, but his case was compelling. In five short years since “stumbling across” broking as a career – James has already built a small collection of insurance publications and documents. “I have become passionate about the industry’s history and its people and have been reading a number of texts on the subject,” he says in his submission. “Most recently I have been reading about the history of AIG and how insurance and insurance executives were used by the allies in World War II to help the war effort as the Germans were using their own insurance industry to not only fund the war but assist in locating enemy targets – that weren’t insured by them, one would assume. “Currently I only have a few titles that I can call my own. However, I share them with staff in the office so that we can all benefit from knowing more about the broader insurance industry. “In my previous role, all new staff I hired were lent my copy of Allan Manning’s book What’s Insurance? – a fun and friendly way to give them a brief introduction to a fascinating industry.” I received several submissions from EBM’s Melbourne office, which means they read my occasional ramblings and therefore deserve to win, anyway. There are some serious collectors of insurance history out there, going by the range of interesting emails I received. So I’m happy that Claudia at the fondazione has given me the opportunity to offer a consolation prize of sorts. The fondazione will sell the book to Insurance News readers for €50 – a discount of €20. With postage of about €30, that’s a total price of around $118 in South Seas pesos. The email address is firstname.lastname@example.org. Tell them we sent you. Incidentally, the title of the book in Italian is Quaderni di Sicurtà. Be sure to ask for the English version, which is rather more mundanely titled Documents on the History of Insurance. If you’ve watched Robert Kelly over the past year, you’d have thought that the years of effort getting Steadfast to the point of listing would have been tough. But if it was, he’s not letting on. Mr Publisher interviewed the Steadfast Chief Executive and Managing Director on stage during the group’s convention in Melbourne, and asked the question: what was the toughest day of your past year? Now it may not be well known that Kelly is a very keen sailor, or that he owns a beautiful racing yacht in which he rockets around Sydney Harbour when he has the time. Which isn’t very often. 90
Sam Pentecost Contributor
Step up Mary Kelly, broker, mother, wife of Robert and a pretty good sailor in her own right. She and a crew sailed the family racer to Hamilton Island last winter for the annual races, while Robert got on with Steadfasting. Much to her joy she and her doughty crew started winning their division, and were doing so well they only had to place in the last race to win. Or something like that – all this boat racing stuff makes as much sense to me Mandarin spoken by a Scotsman. But I digress. The final race day is looming, and Robert K flies into Hammo, all fired up and ready to take the helm and charge on to victory. And so they race around, hollering at all the other boats and tacking and all that other stuff until they get to the last leg to the finish line. Robert chooses to ignore the views of his crew who have been racing all week and sails in close to Dent Island, across from Hamilton Harbour, to get a straight line to the finish. They fall in a wind hole and, sails flapping uselessly, watch the rest of the race fleet slip fast. And that, my friends, is the toughest day Robert Kelly had last year. I just thought you’d like to know. Two crackers of Irish jokes I heard recently. As there’s mainly Irish blood flowing in the Pentecost veins, this is not intended to be derogatory. If you’re Irish, change these around and call them Kiwis. An Irishman is driving around and around a shopping mall trying to find a parking spot. Frustrated, he decides to try a prayer. “Lord,” he prays, “If you open a parking spot for me, I swear I'll give up drinking and I promise to go to church every Sunday.” There’s a clap of thunder, the clouds part and a sunbeam shines down on an empty parking spot. “Never mind,” says the Irishman. “I found one.” Two Irishmen, not related to the one in the previous joke, got a job with the public works department. One day people are stopping to watch as one of them digs a hole and the other follows behind him and fills the hole in. They work up one side of the street, then down the other, then move on to the next street, working furiously all day, one man digging a hole, the other filling it in again. An onlooker finally can’t stand it any more, and approaches the hole digger. “I don't get it. You’re both working flat out, but why do you dig a hole, only to have your mate follow behind and fill it up again?” The hole-digger wipes his brow and sighs. “Well, I suppose it probably looks odd because we're normally a three-person team. But today the lad who plants the trees called in sick.” And a big hi to Brett Williams, the National Manager Underwriting Agencies at Allianz, who informed the Insight Conference audience in Melbourne a couple of weeks ago that he’s not that up to speed on social media, and doesn’t even * do Bookface. insuranceNEWS
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in London for the 50th Anniversar Anniversaryy of the IIS Annual Seminar, Seminar, JUNE 22 – 25, 2014!
Over 500 senior insurance executives, regulatory authorities and prominent academics from 50 countries, across industry sectors, will convene in London to examine the issues and opportunities facing the industry.
The IIS Seminar is considered THE must-attend global insurance conference, renowned for an outstanding program and unparalleled networking among global peers. The program will include a powerhouse of 25+ industry leaders, focusing on THE IMPACT OF SCIENCE AND TECHNOLOGY ON THE INDUSTRY.
Time ime of Rapid Technological Technological Change • Life Insurance in a T Alternative e Capital Sources Sources in Reinsurance • Implications of Alternativ • The Digital Insurer •A dvances in Science and Technology: Technology: Implications for the Industry Advances • Cyber Risk – Meeting the Mounting Cyber Threat wer of Big Data • Harnessing the Po Power vation: Can the y coe xist? • Regulation and Inno Innovation: they coexist?
“Top 10 Threats to the Financial Strength & Stability of Insurers” • AM Best’s - “Top
WELCOME ADDRESS ADDRESS:: ALDERMAN ALDERMAN F FIONA IONA W WOOLF OOLF LORD ORD MA AYOR YOR O OFF TTHE HE CITY ITY O OFF LO ONDON NDON
• • • •
Inga Beale Chief Executive, Lloyd’ Lloyd’ss of London, UK Albert Benchimol President and CEO, Axis, Ber Bermuda muda Dominic Casserle Casserley y CEO, W Willis illis Group, UK Jozef De Me Mey y Chair Chairman man of the Board, Ageas, Belgium
• • • • • • • •
man and CEO, ACE Group, USA Ev Evan an G. Greenberg Chair Chairman Yoshihiro Kaw Kawai ai Secretary Secretar y General, IAIS, Switzerland Denis Kessler Chair Chairman man and CEO, SCOR, France Ralph Mucerino SVP, SVP, AIG and CEO, Consumer Insurance, Americas, AIG P&C, USA Barry Sto Stowe we Chief Executive, Prudential Corporation Asia, Hong Kong V Vincent incent Vandendael Vandendael Director Director,, International Lloyd’ss of London, UK International Markets, Lloyd’ Nikolaus Nik olaus v von on Bomhard Chair Chairman Germany man of the Board of Management, Munich Re, Ger many Greig Woodring Woodring President and CEO, Reinsurance Group of America, USA
For 50 years we have inspired productive dialog towards the advancement of the industry and the London 2014 seminar promises to be exceptional!
RE REGISTER GISTER NO NOW: W: w www.IISonline.org/London ww.IISonline.or orgg/London
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They call Robert Kelly Mr Steadfast, and the name suits the man. While the hurly-burly days of the “Steadfast tribe” are past, he still spea...
Published on Apr 1, 2014
They call Robert Kelly Mr Steadfast, and the name suits the man. While the hurly-burly days of the “Steadfast tribe” are past, he still spea...