Newsmakers

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48

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38

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8

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The Broker

128

Daily 2

Breaking News

ICA WELCOMES NEW GOVERNMENT LINE-UP

Prime Minister Anthony Albanese has appointed Stephen Jones as Assistant Treasurer and Financial Services Minister and has given climate change and cyber security portfolios an elevated focus within Cabinet.

Murray Watt has been named Minister for Emergency Management, continuing in an area of responsibility held in a shadow capacity, while Chris Bowen has been appointed Climate Change and Energy Minister and Clare O’Neil becomes Minister for Cyber Security.

Mr Albanese announced the Ministry full line up after some key appointments, including Jim Chalmers as Treasurer, were confirmed before his trip to Japan for the Quadrilateral Security Dialogue meeting.

The Insurance Council of Australia (ICA) says in the main, new ministers will provide continuity from Opposition for the sector, and it looks forward to working with Mr Jones on the implementation of the Northern Australian Reinsurance Pool, among other matters.

“There are no shortage of issues confronting ministers in portfolios that relate to insurance, and the ICA looks forward to continuing our work with those minsters we know well and those new to our areas of interest,” ICA CEO Andrew Hall said.

Labor’s commitment to $200 million a year in mitigation funding, matching spending sought by ICA, was announced in January by Mr Albanese and Mr Watt ahead of the federal election campaign. 0

“There has been a stunning lack of development in [SMEs’] thinking and approach to cyber security.”

Cameron Research Project Director Ross Cameron on SMEs and cyber.

TRIBUTES PAID TO GRAHAM STEVENS

The broking industry has continued to pay tribute to Edgewise Director Graham Stevens, pictured, who died in May following a battle with cancer.

Mr Stevens, most commonly known by his nickname “Bear”, was President of the National Insurance Brokers Association (NIBA) in 2014-15, and also served a two-year term as President of the World Federation of Insurance Intermediaries.

A celebration of his life was held in Melbourne on June 3, and the winner of the NIBA Broker of the Year Award for Victoria/ Tasmania will from now on receive the Graham “Bear” Stevens Trophy.

Steadfast MD Robert Kelly told insuranceNEWS.com.au Mr Stevens had been a business associate and personal friend for almost 40 years.

“We were like brothers,” he said. “Graham was one of the foundation shareholders and board members of Steadfast.

“He was one of the most generous people in terms of the time he would give to younger people. I always found him trustworthy, and honest in his criticism or praise about anything that I asked him.

“He was also the consummate gentleman and a family man, and he had a wide range of friends at all levels.”

Mr Kelly says Mr Stevens was “a great advocate” for small and medium sized brokers in Australia, even though he was doing deals at the highest level.

“He had a drive to make sure that people who needed advice got it in a way they could understand, and that there was transparency on remuneration. If you want an example of what an insurance broker should be, Graham was the epitome of it.

“He got his nickname “Bear” because someone thought he looked like a fuzzy bear and the name stuck. It was a term of great endearment for those who knew him well.”

Mr Stevens is survived by his wife Norma, daughters Rachael and Melinda and two granddaughters. 0

FLOOD LOSSES PASS $4 BILLION

Insured losses from the record flooding in Queensland and NSW earlier this year have climbed to $4.3 billion to be Australia’s fourth costliest disaster, the Insurance Council of Australia (ICA) said.

The estimated losses – nearly double Brisbane’s 2011 flood’s $2.3 billion – are from 216,465 claims across both states.

More than a fifth of claims are already closed and almost $1 billion paid to policyholders so far.

The huge catastrophe bill – which is the highest recorded for an Australian flood event – is only overtaken by the 1999 Sydney hailstorm ($5.57 billion), 1974’s Cyclone Tracy ($5.04 billion), and 1967’s Cyclone Dinah ($4.69 billion).

The 1989 Newcastle earthquake recorded $4.24 billion in insured losses on a normalised loss basis – a way of calculation to give a present-day perspective of historical events.

The jump from the ICA’s previous estimate of $3.4 billion was due to claims progressing, as well as an increase in larger commercial claims.

From February 22 to March 9, intense and sustained rainfall led to flooding from Maryborough in Queensland down to Grafton in NSW. Many areas received more than half their average annual rainfall in just a week. 0

RAIN HERE TO STAY

Climate drivers in the Pacific and Indian oceans are pointing to an increased chance of above-average winter rainfall in eastern Australia, the Bureau of Meteorology says.

The bureau says all the climate models it surveys suggest a negative Indian Ocean Dipole (IOD) may develop in the coming months, while two of seven models say La Nina conditions may continue through the southern winter.

“Even if La Nina eases, the forecast sea surface temperature pattern in the tropical Pacific still favours average to above-average winter rainfall for eastern Australia,” the Climate Driver Update says.

A negative IOD is associated with the chance of above average winter-spring rainfall for much of Australia, as well as warmer days and nights in the north.

“While model outlooks have low accuracy at this time of year and some caution should be taken with IOD outlooks, there is strong forecast consistency across international models,” the bureau says. “Outlook accuracy for the IOD begins to significantly improve during June.”

The IOD is the difference in temperatures between the west and east tropical Indian Ocean, which can shift moisture towards or away from Australia.

Negative phases are more likely to coincide with a La Nina and can have an impact from May to December, the bureau says. Australia had its wettest year on record in 1974 when a negative IOD coincided with a La Nina.

The current La Nina, which has brought heavy rainfall and catastrophic flooding to NSW and Queensland, is the second in two years. Consecutive events were previously seen in 2010-2012. 0

FEARS OVER MOULD OUTBREAKS

A surge in mould outbreaks caused by conducive weather conditions in southeast Queensland is causing chaos for homeowners and could complicate insurance claims in the flood-hit area.

Australian Apartment Advocacy (AAA) says it is receiving hundreds of calls for assistance but warns insurance will only cover those affected if the problem is caused by flood or storm water.

“The reports we are getting is that the incidence of mould in southern Queensland is almost unheard of due to the current conditions of humidity and moisture,” AAA Director Samantha Reece said.

“The bad news is that mould itself is not covered by insurance generally unless it has been caused by an insurable event such as storm damage or flooding.

“We have had hundreds of apartment owners contact us and our message is the same; check your insurance policy but it is highly unlikely you are covered for mould unless you have suffered or experienced an insurable event such as structural damage caused by flooding.”

Repair and remediation services used by insurers, such as Steamatic, have seen an uptick in demand, and they expect it to continue.

“There has been a moderate uplift, but we are expecting this to increase over coming months due to lack of immediate drying due to volumes of claims and available resources,” Steamatic CEO Oliver Threlfall tells insuranceNEWS.com.au.

Suncorp Head of Flood Response and Recovery Cath Stewart says mould presents a key challenge following flooding, especially in areas such as south-east Queensland.

“Mould is a key challenge following any flood, and this is the case in south-east Queensland, especially given the ongoing wet weather.”

RACQ Insurance prompted homeowners to take early action against mould growth.

“If mould issues are picked up early the cost, on a per claim level, isn’t likely to be significant, however if the mould is left to grow for an extended period of time, then this can increase the cost, both in terms of cleaning and replacing contents,” it said.

“If there is a significant increase in the number of properties requiring additional remediation due to mould, then this has the potential to place additional strain on the insurance sector and its supply chain.” 0

INDUSTRY SLUMPS TO NET LOSS

The general insurance industry slumped to a $428 million net loss in the first three months of the year, as the February/March floods drove up gross incurred claims, Australian Prudential Regulation Authority (APRA) statistics show.

The industry made about $100 million in net profit in the prior December quarter.

APRA says gross incurred claims “were significantly higher” in the March quarter, rising 47.6% to $15.4 billion from the October-December period and the gross loss ratio worsened sharply to 99% from 61%.

A 4.7% decline in gross earned premium to $14.9 billion also took a toll on March earnings.

Weaker investment results made another dent, with the industry booking a $1.6 billion investment loss during the quarter, worse than the $300 million deficit recorded in the December quarter.

APRA says the “large investment loss” was driven by a rise in bond yields during the quarter, resulting in unrealised losses on interest bearing investments.

The industry performed better on a yearly basis, with net profit up an annual 16.7% to $1.3 billion for the 12 months to March, the APRA data shows. 0

CHUBB NAMES DISTRIBUTION HEAD

Chubb has appointed Demetra Day as Head of Distribution for Australia and New Zealand, effective from the start of July.

Ms Day has 30 years’ experience in the insurance industry and has held several senior leadership roles since joining Chubb in 2000. Most recently she has been Head of Major Accounts.

“Demetra is a highly respected leader with a solid track record of success at Chubb,” Country President Peter Kelaher said.

“I’ve been impressed by her disciplined approach to building our major accounts proposition and have no doubt this experience will help her succeed in shaping our distribution strategies and managing our broker relationships as the new Head of Distribution.”

Chubb says Ms Day built the major accounts division from scratch and developed a strong and diverse team. The division was established in 2018 to service large and multinational clients and business partners.

Ms Day’s previous roles have also included Financial Institution and Commercial Crime Underwriting manager, Asia Pacific and Head of Financial Lines in Australia and New Zealand.

Chubb Head of Global Broker Unit Australia & New Zealand John French has been acting in the head of distribution role, following the resignation of previous incumbent Jason Hawksworth, who now works as General Manager Distribution for Allianz Australia. 0

From the PUBLISHER

A new federal government and new ministerial line-up brings an opportunity for a new approach on some key insurance issues. And as the fallout from this year’s record-breaking floods demonstrates all too well, some fresh thinking is required.

The insurance industry has said for so many years that we can’t keep rebuilding in the same ways, in the same places, and expect different results.

Deputy Editor Wendy Pugh’s article in this edition of Insurance News magazine outlines a different path, which could lead to a much brighter future for many hard-hit communities. All options need to be considered, including – in the most extreme circumstances – relocation.

It would take a concerted effort from all levels of government, the insurance industry, businesses and homeowners – but with climate change impacts becoming increasingly severe, doing nothing is not an option.

Meanwhile, the economic challenges for the new Albanese government are all too clear, with newspaper headlines full of stark warnings about rising prices, rising interest rates and corresponding falls in consumer confidence.

But as Swiss Re points out, it might not be all bad news for the industry, which has proven its extraordinary resilience through the covid pandemic.

Among the many talking points buzzing around the industry at present is the long-running and ultimately damaging war for talent. The economic environment, which in Australia features extremely high employment, plus the continuing impact of covid-induced border closures, means companies across the industry are finding vacancies are harder than ever to fill.

But as our article on page 32 explains, there’s a positive message here too, as insurance looks to tap into “the great reassessment” and draw talent across from other industries. Insurance offers great career opportunities – and it’s about time we got that message across more effectively.

Terry McMullan

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