Industry leaders list their challenges and opportunities
ICA’s new boss on why we need to get moving
Q&A with IAG
Tough times, but Nick Hawkins stays positive
How UK broking giants will stir the market
PSC PSC NETWORK NETWORK FORGES FORGES A A NEW NEW WAY WAY FORWARD FORWARD
Local LocalKnowledge Knowledgeand andGlobal Global Reach Reach
Are Talkto tous usat atPSC PSC Network Network Areyou youaaCommitted. Committed.Professional. Professional.Team-player? Team-player?Talk Partners Partnerstotodiscuss discussthe thebest bestway wayforward forwardtotoachieve achieveyour yourbusiness businessgoals. goals.
www.pscnetwork.com.au PSC Network Insurance Partners ABN 23 141 574 914 AFS License No 344 648
Thereare areaagrowing growingnumber numberofofbrokers brokers There takingthe theplunge plungeand andbecoming becomingAR’s AR’s taking Becoming an Authorised Representative is the most Becoming an Authorised Representative is the security, most effective way to gain independence, financial effective way to gain independence, financial security, lifestyle flexibility while still getting the ‘back office’ lifestyle whileLicensee. still getting the ‘back office’ support flexibility from a proven support from a proven Licensee. Running your own broking business, takes courage and Running your broking business, courageisand passion but theown most important factortakes to consider passion butModel the most to consider is ‘What AR willimportant set me upfactor for success?’ ‘What AR Model will set me up for success?’
We offer you flexibility as a business owner We offer you flexibility as aand business to realise your aspirations allowowner you to to realise and and allow youfamily to build an your asset aspirations to support you your build an asset to support you and your family – you get to choose what works best for you! – you get to choose what works best for you! • Flexible ownership options available including 100% • ownership Flexible ownership or sharedoptions equityavailable model. including 100% ownership or shared equity model.
Flexible remuneration structure that rewards hard There are a lot of AR Models out there, all with different • •Flexible There are and a lotsupport of AR Models out there, alldetermining with different work andremuneration commitment.structure that rewards hard offerings structures. When work and commitment. offerings and support structures. When determining which model will provide your business with the which model will provide your business the to • Promote your own brand to build customer loyalty. solid foundations to meet your goals it iswith important • Promote your own brand to build customer loyalty. solid foundations to meet your goals it is important to consider: consider: • No ongoing fees , No client administration fees. • No ongoing fees , No client administration fees. 1. Who owns the clients and who owns the business? 1. Who owns the clients and who owns the business? • Protected by a fully funded and comprehensive PI, 2. What sign-on or transfer fees apply? • Protected by a fully funded and comprehensive PI, 2. What sign-on or transfer fees apply? ML, Cyber and D&O program. 3. Are there Administration fees charged by the ML, Cyber and D&O program. 3. Are there Administration fees charged by the Licensee? Licensee? Backed by PSC Group with over $1.8Billion in 4. What leverage does the Licensee have in the market? • •Backed by PSC Group with over $1.8Billion in 4. What leverage does the Licensee have in the market? premium with significant insurer leverage and 5. What marketing support is available to grow the premium with significant insurer leverage and 5. What marketing support is available to grow the extensive market access. business? extensive market access. business? 6. What protection do I have if something goes wrong? 6. What protection do I have if something goes wrong? Access to experienced Regional Managers who are 7. Who pays for your professional indemnity insurance? •Access to experienced Regional Managers who are 7. Who pays for your professional indemnity insurance? • available fortechnical technicaland andplacement placement support. available for support. Accesstotoin-house in-houseITITHelp HelpDesk, Desk,Claims, Claims, Compliance, • •Access Compliance, Marketing & Lead Generation, Training and Business Marketing & Lead Generation, Training and Business The PSC PSC Network NetworkPartners Partnersmodel modelisisdifferent, different,we weoffer offer The Mentoring. Mentoring. you everything everything you youwould wouldexpect expectfrom froman anAR ARnetwork, network, you but we offer one thing others don’t… FLEXIBILITY. but we offer one thing others don’t… FLEXIBILITY. AccesstotoSteadfast SteadfastMember Memberbenefits benefits including • •Access including Client Trading Platform, Exclusive wordings and Legal We have have integrated integratedour ourPSC PSCConnect Connectand andPSC PSCReliance Reliance Client Trading Platform, Exclusive wordings and Legal We Support. business operations operationsto toprovide provideour ourAR’s AR’swith withenhanced enhanced Support. business support and and services. services. support
Flexibility is is the the Key! Key! Flexibility
“We celebrated celebrated our our10 10year yearanniversary anniversaryinin2020 2020and andthe thenetwork networkcontinues continuestotogrow growand andprosper. prosper. We have a sole “We We have a sole focus of developing and supporting our AR Network Partners through providing value add services to assist focus of developing and supporting our AR Network Partners through providing value add services to assist inin buildingaasuccessful successfulbroking brokingbusiness. business.I’m I’mexcited excitedfor forwhat whatthe thenext next1010years years will bring.” building will bring.” TonyWalker, Walker,CEO CEOPSC PSCNetwork Network Partners Tony Partners
Our model model is is built builtaround aroundproviding providingvalue valueadd addservices servicestotoassist assistyou youininbuilding buildinga asuccessful successful Our broking business but don’t take our word for it – Hear it from our brokers: broking business - but don’t take our word for it – Hear it from our brokers: JamesRoyce Royce – Director, Delta Risk Solutions James – Director, Delta Risk Solutions “PSCNetwork NetworkPartners Partnersare arethe themarket marketleaders leadersfor forAR’s, AR’s,which whichmeans meansI can I canfocus focusononbeing being the market leader clients” “PSC the market leader forfor mymy clients” PhilDoran Doran– Director, – Director, GC Insurance Services Phil GC Insurance Services “I am am so so grateful gratefulto tobe bepart partof ofthe thegroup groupover overthe thepast past10 10years years&&totosee seethe thegroup groupgrow growtotothe the Beast they are today! The bigger you “I Beast they are today! The bigger you arethe thebetter betterdeals, deals,higher highercommissions commissions&&more morerespect respectfrom fromclients clientsknowing knowingI am I am part a publicly listed company” are part ofof a publicly listed company” Wesley West Rock Insurance Brokers WesleyStrong Strong– –Director, Director, West Rock Insurance Brokers “PSC important toto choose a network that “PSC Network Networkcame camehighly highlyrecommended recommendedfrom fromaanumber numberofofindustry industryprofessionals. professionals.It Itwas was important choose a network that could support toto the extremely efficient could offer offerus ussupport supportand andguidance guidancetotohelp helpour ourbusiness businesssucceed. succeed.From Fromplacement placement& &claims claims support the extremely efficient accounts I have made thethe right decisions” accountsdepartment, department,I know I know I have made right decisions”
Be Your Own Boss With the unwavering support of CBN... • A true business partner providing compliance, broking, strategy, IT & marketing support • Guidance on legislative changes & hard to place risks • Support & partnering services • Professional development opportunities & networking events • Succession planning guidance & so much more...
Join our network, we empower you to achieve. “CBN will make you feel supported, deliver avenues for growth, and provide opportunities to connect with like-minded people that really do care for you.” - Amanda Morris, ARMA Insurance.
Talk to Us Speak to your local business partner today: cbnet.com.au
“At CBN, you are the face and voice of your own business, but with the support of a team that helps you succeed.” - Kate Hanna, Insurance Matrix.
VIC/TAS Jonathan Lam m 0428 680 371
SA/NT/ACT Nicky Dunkin m 0419 411 152
NSW QLD Michael Wennerbom Chris Macpherson m 0420 990 720 m 0404 841 319
WA Stephen Kidd m 0439 910 790
Contents 6 Newsmakers 10 Blowing in the wind
The ACCC has completed its long-running inquiry into insurance problems in Australia’s north, but critics say the regulator has missed the mark
16 Defining times
Industry leaders give their thoughts on (among other things) a pandemic, rising catastrophe costs and increasing market tensions
22 When the going gets tough…
… brokers find alternatives and new competitors emerge. Here’s how efforts to find a home for clients’ hard-to-place risks have opened up some new thinking
26 Derailing the Orient Express
A UK court has overturned a decision that’s been influential in assessing business interruption claims after catastrophes
28 Time for action
Andrew Hall has hit the ground running by implementing a range of key strategies at the Insurance Council
54 ‘Act now or suffer the consequences’
Reinsurers worry about global climate change inaction after a destructive US hurricane season and massive wildfires
56 Selling a career
A recruiter is waking prime graduates to the many opportunities of working in insurance
companyNEWS 61 Celebrating in style
Insurance Advisernet achieves 25 years
61 Helping hand
Brokers Evolve with new Hollard training program
peopleNEWS 62 AICLA marks year’s end in Brisbane, Perth 64 UAC holds face-to-face expo 66 Maglog
36 Pride and positivity
IAG’s new boss is proud of the way his team and the industry responded to last year’s challenges. And he’s upbeat about the future
42 Feeling the squeeze
Clients and brokers are feeling the effects of an increasingly hard market. Here’s how the professionals on the front line view the situation, and what they’re doing about it
48 The Canterbury tails
After a decade of wrangling, the messy Christchurch earthquakes recovery has morphed into a collaboration between insurers and the EQC
Industry leaders list their challenges and opportunities
ICA’s new boss on why we need to get moving
Q&A with IAG
Tough times, but Nick Hawkins stays positive
How UK broking giants will stir the market
insuranceNEWS.com.au is a free daily online news service for the general insurance industry. The website has more than 29,000 subscribers, up to 117,000 unique visitors each month and recorded more than 7.7 million pageviews last year. In 2020 we published 2666 articles online. These were made up as follows:
Regulatory & Government
Breaking News More than 32,016 news articles – including 361 breaking news bulletins – have been published since we started in 2001. All articles can be accessed through our archives. Access to news articles and other services provided by insuranceNEWS. com.au is free. 0
QBE NAMES HOUGHTON AS REGIONAL HEAD QBE Group has appointed Westpac insurance head Sue Houghton as its Australia and Pacific CEO, effective from August. Ms Houghton, the Insurance Council of Australia President, has also been Chief Financial and Operating Officer for Arthur J Gallagher in Australia and New Zealand and has held senior positions at Wesfarmers Insurance division and IAG. QBE Group Interim CEO Richard Pryce says Ms Houghton is a highly regarded leader known for her sound judgment, resilience and adaptability, as well as for cultivating talent, fostering diverse and inclusive teams and driving performance. “Sue’s insurance expertise, together with
her experience as an executive to a major commercial lines brokerage, will be an asset to QBE, helping us continue to respond to the needs of our customers and brokers,” he said. Ms Houghton has led a large team across the lenders’ mortgage insurance, general insurance and life units at Westpac, which last year sold the general insurance business to Allianz in a deal due for completion in the middle of this year. QBE’s Australia and New Zealand business has been led by Interim MD Frank Costigan and Chief Customer Officer New Zealand & Pacific Declan Moore since the departure last August 0 of previous division leader Vivek Bhatia.
ACCC indicated they look forward “The to making submissions to the 2022 review recommended by the royal commission – so does NIBA. ” NIBA responds to an ACCC proposal that broker commissions should be banned.
ICARE BOSS AIMS TO RESTORE CONFIDENCE NSW state insurer icare has appointed former Tower CEO Richard Harding, pictured, as its new head. Mr Harding’s appointment follows the departure in August of John Nagle amid concerns raised over the performance of the insurer. “Richard has an impeccable record in leading complex businesses in both the public and private sector and the board and I are very confident he brings the necessary mix of skills, experience and dedication to address icare’s challenges,” Chairman John Robertson said. Mr Harding, who returned to Australia last year after leading Auckland-based Tower since 2015, has more than 35 years’ financial services experience. Previously, he led the Darwin-based Territory Insurance Office, Australia’s last government
-owned commercial insurer and the nominal compulsory third party insurer for the Northern Territory. He also held positions with IAG including head of China and head of strategy and mergers and acquisitions. NSW Treasurer Dominic Perrottet said last year a scheduled five-year review of the workers’ compensation scheme would be brought forward and expanded to include a “root and branch” examination of icare. Mr Harding said he was looking forward to the new role and acknowledged the challenges icare had faced. “There’s no doubt it’s been a turbulent time for icare and I look forward to working with the board and the executive to ensure we restore public confidence and deliver on key remedi0 ation activities,” he said.
PERTH BLAZE DECLARED THIS YEAR’S FIRST CATASTROPHE
Fire crews defend property in Wooroloo, Perth. Credit: DFES Incident Photographer Evan Collis
A WA bushfire destroyed 86 homes near Perth and caused insurance losses of more than $40 million. The Insurance Council of Australia (ICA) declared a catastrophe for the fires, which caused extensive damage to homes, sheds and fences northeast of the city. More than 270 claims have been received. “The declaration of a catastrophe means claims from these bushfires will be prioritised by insurers, who will be focusing on reducing the immense emotional and financial stress experienced
by residents, farmers and businesses,” ICA CEO Andrew Hall said. The catastrophe declaration is the first for this year and the first since the Southeast Queensland hailstorms at the end of October. The Wooroloo fire burnt more than 10,000 hectares after it was first reported on February 1. The Australian Financial Complaints Authority says it has also activated its significant event response plan, assisting early communication and expediting related processes. 0
UK’S HOWDEN TEAMS UP WITH STEADFAST International group Howden will expand in Australia through a strategic broking partnership with Steadfast. Howden will support Steadfast’s London Market broking requirements, while it is launching a new Australian broking operation that will join the Steadfast network. The London-based firm’s local business will be led by Andre Louw as Chairman and Igor Fijan as CFO, both previously Marsh executives. Its focus will be on corporate, people risk and speciality, which the firms say are segments SME brokers don’t traditionally service. “There is a clear opportunity in the Australian broking market for a credible international
alternative, and for the existing clients of Steadfast members to have access to expertise and capacity in London and globally,” Steadfast CEO Robert Kelly said. Howden Group, which changed its name from Hyperion Group last year, also includes underwriting business Dual. Steadfast and Howden say they have built a close working relationship since Dual launched in Australia in 2004. “Importantly, we know Howden very well, and share an outlook and ethos that mean our partnerships in London and Australia will be a natural development in our long relationship,” Mr Kelly said.
Howden says it has also been involved in the Australian market for many years as a wholesale broker for large complex business and placing binders for underwriting agencies, and will continue its operations in those areas. Mr Louw was previously chairman of Marsh for the Pacific region and JLT for Australasia and Mr Fijan is former Head of Integration of Marsh for the Pacific region and CFO for JLT, Australasia. “This launch represents a game changer for clients operating in the Australian market, it will transform the broking landscape by offering choice, expertise and local distribution against the backdrop of a consolidating market,” 0 Mr Louw said.
RESILIUM TARGETS GROWTH AFTER DEAL WITH ARDONAGH Authorised representative (AR) network Resilium has secured a strategic investment from Ardonagh Group, giving the UK’s largest independent insurance broker a majority stake in the business. Under the terms of the deal, Resilium will join Ardonagh, with Resilium CEO and MD Adrian Kitchin retaining his roles under the new ownership structure. Mr Kitchin says joining Ardonagh will enable the company to accelerate its growth plans this year and beyond. It will also allow Resilium to leverage off the experience and technology that has transformed Ardonagh into the largest independent insurance broker group in the UK. Industry identity Paul Lynam has been appointed as Chairman, complementing the
existing executive team led by Mr Kitchin, Sales and Distribution Director Ben Hastie and Operations and Compliance Director Drue Castanelli. Mr Lynam has 30 years’ experience in the insurance market across broking and underwriting and will oversee the mergers and acquisitions pipeline on behalf of the group. He will also work with Mr Kitchin and the team to leverage opportunities for Ardonagh’s wider portfolio within Australia. Ardonagh has pro-forma gross written premium in excess of $10.7 billion and pro-forma income of more than $1.4 billion, driven by mergers and acquisitions as well as underlying organic growth. “This strategic backing from Ardonagh will turbo-charge Resilium’s trajectory,
giving us access to the capital and resources to explore strategic, complementary acquisitions across the country while also continuing to grow organically,” Mr Kitchin said. Ardonagh Group CEO David Ross says Resilium will be the “the centerpiece of Ardonagh’s Australian operations” as the UK broker looks to grow its presence in this part of the world. “Like the rest of the group, Resilium’s working culture has been key to its success,” Mr Ross said. “The team’s unwavering focus on recruiting the very best talent in the market alongside a commitment to professional development has made them the ideal launch platform for our growth in this 0 dynamic region.”
WORKERS’ COMP CLAIMS CAN HAVE ‘TENUOUS’ LINK A worker who slipped on a wet log while walking his dog around a lake in Tasmania and broke his left thigh bone has won a workers’ compensation claim dispute. Lawyers at Moray & Agnew say the case highlights that injuries sustained during non-work activities while employees are either on call, or away on location for work, can give rise to a liability for compensation – even though the required connection between the activity and the employment “can be tenuous”. The injured man, who was employed as a relief area coordinator for the Hydro Electric Corporation, was required to live in employer’s accommodation at Tullah, about 55 kilometres from Cradle Mountain. At the time of the injury he was on call and required to be available to perform work within 15 minutes of being contacted. On a Friday morning in May 2018, the man was walking with his partner and their dog along the Tullah lakeside, noticed he was outside mobile phone reception range and decided to turn around as he was on call and had to be contactable. On the way back, he slipped and broke his femur. The man’s claim for workers’ compensation was disputed on the basis the injury did not arise out of or in the course of his employment. However, the Tasmanian Workers Rehabilitation and Compensation Tribunal upheld his claim. Although tenuous, there was a connection with the worker walking his dog and the employment, the Tribunal determined, with a daily payment indicating Hydro Tasmania induced or encouraged workers to be at the relevant place. Walking the dog while available for duty and intentionally remaining in range for a possible call out was found to be within the scope of activity that the employer encouraged the worker to undertake. As such, the injury was found to have 0 arisen in the course of employment.
Being caught between a rock and a hard place isn’t all that unusual for the insurance industry. Today it finds itself caught between an error of its own making – its reliance on legislation that hasn’t existed since 2016 – and the reputational damage inherent in finding a way through a mess that may cost it billions of dollars. In January last year COVID-19 was declared a listed disease under the Biosecurity Act 2015. The repealed Quarantine Act 1908 was never mentioned, catching by surprise those insurers who were still relying on a piece of dead law to avoid business interruption claims. When the pandemic closed down the Australian economy, thousands of businesses were holding policies that commonly excluded revenue losses due to “diseases declared to be quarantinable under the Quarantine Act 1908 (Cth) and subsequent amendments”. But when a test case was mounted last year in an attempt to find some way through the problem, five judges of the New South Wales Court of Appeal – the state’s highest court – were unanimous in finding against the insurers, closing off the possible escape clause of “and subsequent amendments” by pointing out that the Biosecurity Act is not one. So now the industry is trying to mount another test case. But if similar business interruption claims cases being tested in British courts are any example, the chances of success are not that great. The Insurance Council of Australia says a new test case would address other issues that need to be resolved “in order to determine whether policyholders will ultimately be covered”. This case – if it eventuates – “will determine the meaning of policy wordings in relation to the definition of a disease, proximity of an outbreak to a business, and prevention of access to premises due to a government mandate”. The insurers still have points to make. This isn’t just about some carelessly missed legislation. If you look dispassionately at the points outlined for the new approach – not everyone will, of course – the complexities of all become obvious. While all this goes on, pandemic-related BI claims aren’t happening, claimants are getting louder and lawyers are forming class actions. It would be helpful for the industry to stand up straight, admit their mistake to the community and explain why they are resisting payment at this point. Legal complexities aside, the industry’s reputation for paying claims will be under a cloud if it’s left to the media and politicians, in particular, to make the running on this issue.
TERRY McMULLAN Email: email@example.com
Insurance News Pty Ltd Tel: + 61 3 9499 5538 PO Box 116, Ivanhoe VIC 3079 Australia
MANAGING EDITOR: JOHN DEEX Email: firstname.lastname@example.org
ADVERTISING: MADISON SEYMOUR Email: email@example.com
SUBSCRIPTION ENQUIRIES: www.insurancenews.com.au/subscribe Email: firstname.lastname@example.org
PRINTING: Printgraphics, 14 Hardner Road, Mt Waverley VIC 3149, Australia www.insurancenews.com.au/magazine
CONTRIBUTIONS: We welcome all material that is relevant to the Australasian and regional risk insurance industry, including all aspects of risk management. Please contact the Editor, +61 3 9499 5538.
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 PEFCTM certified paper stock using vegetable based inks by a printer with ISO14001 Environmental Management System Certification. ISSN 1837-4972
UNDERINSURANCE. NO MEAN FEAT FOR AMBITIOUS BROKERS. 75% of customers* haven’t updated their property sum insured. Let’s flip the script and help them review their cover. When you work with CGU, you get access to data and insights like these that help you better serve your customers. We’ve been backing ambitious brokers for 165 years. Contact your Account Partner for your customer insights.
Insight based on FY20 CGU Business Package Property Cover portfolio data.
Heart of the issue: Queensland is hit by regular catastrophes, including 2017’s Cyclone Debbie. Credit: Bureau of Meteorology
fter three years, two interim reports and more than 420 submissions, the Australian Competition and Consumer Commission’s (ACCC) Northern Australia Insurance Inquiry has delivered proposals that include the sensible, the controversial, the often-repeated and the long-ignored. The Insurance Council of Australia (ICA) says it’s encouraged by the findings, the National Insurance Brokers Association (NIBA) says it’s concerned, and Townsville Mayor Jenny Hill says it’s disappointing. ACCC Deputy Chairman Delia Rickard says the inquiry examined insurance in Australia’s north in unprecedented detail and the group’s regulatory powers and approach meant the review was “fundamentally different” to previous investigations. “Our analysis has shown that, with the right actions, northern Australian insurance markets could work much better for consumers,” she says. “We believe our wide-ranging recommendations would address many of the problems we have identified.” The Hayne and natural disaster royal commissions recently touched on some of the same territory, while a Senate committee, the Productivity Commission and the Northern Australian Premium Taskforce are among others that have taken a look. The ACCC says it was able to obtain a “significant volume” of detailed information from insurers and
intermediaries that was not provided to other inquiries, and it brought expertise in competition, regulation and consumer protection to the task. The long-running inquiry was announced in 2017 by former Treasurer Scott Morrison a few months after Cyclone Debbie hit the Queensland coast, and since then further catastrophes and other insurance market issues have intensified calls for action. Historic floods hit Townsville in early 2019, the Black Summer bushfires burnt swathes of eastern Australia last summer and a hardening market has elevated concerns wherever risks are high, causing the Australian Small Business and Family Enterprise Ombudsman to launch its own review. Assistant Treasurer Michael Sukkar requested a separate examination of reinsurance pools after the Townsville floods, despite the idea having failed previously to gain political traction and with the ACCC inquiry continuing. The ACCC’s 560-page final report makes 38 recommendations, with three specifically directed at addressing immediate affordability concerns. The final document adds 11 new proposals to 27 brought through from interim reports. The inquiry opposed a reinsurance pool in its 2019 second interim report and the final version confirms that view, while adding a specific recommendation that
Blowing in the wind The ACCC has completed its longrunning inquiry into insurance problems in Australia’s north, but critics say the regulator has missed the mark By Wendy Pugh
if governments really want to intervene they should instead consider direct subsidies based on premium level and income eligibility. It says subsidies have greater potential to deliver targeted relief, while government-backed pools are best suited when insurance or reinsurance aren’t otherwise available, and there’s no failure in that regard in Australia’s north. “Private insurance markets continue to supply insurance, including for cyclone and flood risks,” it says. “As such, government insurers and reinsurance pools cannot be justified on the basis of availability concerns.” Insurers generally oppose a reinsurance pool, although Allianz is supportive, while local governments in Queensland are continuing to campaign in favour. Insurers have also said that direct subsidies to consumers would mask risk signals and don’t make lasting improvements. The report’s proposals for governments to remove insurance stamp duties, or at least rebase them and direct revenues to mitigation or affordability, are widely supported, but decisions on that remain in the hands of states and territory governments which have been reluctant to release their grip on such a reliable source of revenue. Besides affordability, the ACCC recommendations are grouped under these headings:
• Making it easier to search for and compare insurance products; • Choosing the right amount of cover; • Dealing with conflicts of interest; • Improving consumers’ rights; and • Reducing risk and building better. The regulator reiterates its call to ban broker commissions – which it refers to as “conflicted remuneration”. It says it looks forward to participating in a review flowing from the Hayne royal commission that will report next year on the issue. NIBA questions the ACCC’s views on availability, with Chief Executive Dallas Booth saying the regulator’s proposal on commissions will do nothing to address the problems the inquiry was set up to investigate. “I’m concerned that a lot of this report was prepared on the basis of technical analysis of data rather than full engagement with people on the ground familiar with the issues and challenges on a day-to-day basis,” he told Insurance News. “They say there is plenty of reinsurance cover available for the market and they also say there are eight insurers providing cover into northern Australia. Our members are absolutely adamant that they are very lucky to get two quotes, and most of the time they struggle to get two quotes.”
Strata Community Association (SCA) also takes issue with the ACCC over availability and opposes a proposal for dwelling managers placing cover to be remunerated by body corporates only. “There are currently a number of different ways that managers get remunerated, but at the end of the day if the current situation is changed the result is going to end up in a higher cost to the consumer,” SCA President Andrew Chambers told Insurance News. “Because, simply, somebody has to pay for the managers to do this work.” Mr Chambers says legislated compulsory strata insurance must be reviewed as owners fear being left without cover for other hazards, such as fire, as insurers avoid cyclone risk. “There is a market failure, because we are aware through some of our members in north Queensland that a number of them have strata properties that simply cannot get insurance,” he says. The ACCC contends a comparison website may reduce barriers to entry for insurers and help consumers shop around, and proposes the Government consider a national home insurance site, which would also be
more effective if standard cover and standardised definitions were introduced. Insurers have long opposed a comparator, and Allianz Chief Corporate Affairs Officer Nicholas Scofield says it could worsen northern Australia’s problems. The inquiry says insurers may raise premiums to avoid new customers in high-risk areas as they manage their exposures and reinsurance costs, but Mr Scofield says the regulator fails to see that, as a result, a comparison site may spur higher prices. “Insurance is not like other goods and services,” he said. “If you don’t take account of that, you are likely to come up with proposals that give you quite counter-intuitive outcomes. “It is arguable that the unique market dynamic that you get in this sort of context is something that bamboozled the ACCC.” Mitigation is supported generally in the report, but the regulator doesn’t see it as an immediate affordability solution and wants premium pricing more explicitly and transparently linked to actions taken by governments and households to boost resilience. It wants insurers to estimate premium benefits for
For small businesses, ‘extreme consequences’ are looming While not focused on northern Australian consumers, a separate inquiry into insurance in the second half of last year explored some of the same issues as the ACCC’s investigation and called for strong action to tackle a worsening crisis. Australian Small Business and Family Enterprise Ombudsman Kate Carnell began the inquiry after receiving complaints about soaring premiums and difficulty obtaining cover following natural catastrophes and as insurers’ risk appetites dipped in response to falling earnings. Ms Carnell says the inquiry, which released its findings about a week after the ACCC document was delivered to Treasurer Josh Frydenberg, heard from hundreds of small businesses facing closure because they couldn’t secure insurance. “The insurance market is opaque and small businesses desperately need help navigating it,” she said. “There is market failure that will have extreme consequences for the Australian economy if left unaddressed.” Contrary to the ACCC’s views, the ombudsman recommends expanding the Australian Reinsurance Pool Corporation to provide reinsurance for all natural disasters for commercial property as risks from events such as cyclones, bushfires and hailstorms continue to rise. “This is not an issue that impacts only one industry or
that can be mitigated by individual businesses,” Ms Carnell says. “The local pub cannot control the weather.” The ombudsman says that as authorities approve new development in local areas and release land, natural peril assessments for 1-in-100-year risks should be published. “Where land is released with known issues that are not disclosed to a purchaser or are otherwise not apparent, the relevant authority should carry the liability for the known issue in perpetuity,” the report says. Issues looked at in the report also include the availability of public liability and professional indemnity insurance, disclosure, claims experience and barriers to switching and market entry. Like the ACCC the ombudsman calls for “conflicted remuneration” for insurance brokers to be banned with a phased transition period. Ms Carnell says climate change impacts are likely to increase over time, affecting a greater number of businesses, and governments need to become more involved in finding solutions. “We are going to end up with more climate events, not fewer,” she says. “So, are we planning to tell everybody in the bushfire-affected areas, or north Queensland, to move? “I don’t think that’s going to be a terribly politically palatable approach. The fact is, it is a problem. It needs to be fixed.”
government mitigation projects, and report on actual impacts, while consumers should be told actual and possible price reductions from home improvements. “The absence of robust systems to clearly adjust premiums in response to mitigation works undertaken will undermine the incentive for residents and governments to invest in mitigation,” the ACCC says. “While insurers often assess the cyclone or flood risk at an address level, a number of insurers currently do not have measures in place which allow them to take private mitigation activity into account.” The inquiry looked closely at improving building standards and land-use planning in its final year – areas of focus welcomed by ICA, which has formed a working group with Master Builders Australia. “The insurance industry is already working with resilience agencies, scientists, local government and the building sector to develop above-code standards for homes and commercial properties,” Chief Executive Andrew Hall says. The Financial Rights Legal Centre, which assisted more than 120 people after the Black Summer bushfires and more than 375 others affected by other natural disasters in the past 12 months, backs the ACCC’s broad recommendations, including its subsidies proposal. “The Australian Government must intervene to ensure that insurance for Australians at risk of experiencing bushfires or other natural hazards is affordable,” Director of Casework Alexandra Kelly says. “We support the ACCC’s conclusion that direct subsidies have the greatest potential to work in a targeted way to relieve some of the acute affordability and cost of living pressures facing consumers in higher-risk areas.” The ACCC anticipates many of its proposals will benefit consumers across the country, but the inquiry’s mandate highlights the enormity of the challenges in northern Australia and the reality of its
extreme weather risks. Average home insurance premiums in the north rose by 178% from 2007/08 to 2018/19, compared to a 52% increase in the rest of Australia. The average premium was around $1900 in the region at the end of the period, which is around double the rest of the country. Suncorp Chief Executive Insurance Product & Portfolio Lisa Harrison told Insurance News the three-year inquiry once again confirms the risk of frequent and severe natural disasters is the main driver for the higher premiums. “Climate change will increase this risk, so the focus needs to be on policy action,” she says. “Insurers must do our part to improve affordability but we cannot do it without governments and homeowners helping tackle the root causes.” The Greater Whitsunday Alliance, a regional economic development group, says the report doesn’t go far enough in addressing the lack of competition in the market and, despite the ACCC’s rejection, maintains a reinsurance pool would go a significant way to improving the situation. “We also need the Queensland Government to examine the significant stamp duty ‘windfall’ they receive from increasing insurance premiums, and pressure needs to be applied to address this issue immediately,” alliance Chief Executive Kylie Porter told Insurance News. In Townsville, Cr Hill also supports a reinsurance pool and says the lengthy ACCC report has failed to address the fundamentals around insurance pricing in the region. “When I have spoken to others there is a general view that it was a waste of time, because there doesn’t seem to be anything in there that no-one really knew,” she says. “The ACCC took three years to complete its investigation into insurance in Northern Australia and over that time the situation has further deteriorated.” 0
Defining times Industry leaders give their thoughts on (among other things) a pandemic, rising catastrophe costs and increasing market tensions
nsurance News asked senior executives about the path ahead after a tumultuous year, with an edited selection of responses published below. Participants are Aon CEO Australia James Baum, AUB Chief Broking Officer Ben Bessell, Insurance Council of Australia (ICA) President Sue Houghton, Marsh Head of Risk Management Asia & Pacific Scott Leney, National Insurance Brokers Association President Dianne Phelan, Steadfast CEO Robert Kelly, Underwriting Agencies Council Chairman Kurt Nilsen and Willis Towers Watson Head of Australasia Simon Weaver. What do you see as the main opportunities for the insurance industry in 2021? James Baum: The events of 2020 highlighted how businesses and the public sector are operating in a volatile world of unforeseen risks. The COVID-19 crisis is one example of a highly specific challenge which lacks an equally specific solution. In an environment where we are seeing
industries, economies, communities and individuals underserved or not served at all because of current market dynamics, our industry has an opportunity to create more affordable and scalable products which will narrow the underserved gap which currently exists. Sue Houghton: As the risk and intensity of natural disasters increases in Australia, the insurance industry is strengthening its focus on critical economic support to communities, households, and businesses. ICA is advocating for lasting improvements to hazard exposure and adopting a systematic approach to disaster risk reduction. Working collaboratively across a range of stakeholder industries such as building, property and real estate, banking, financial counsellors and government disaster agencies, the insurance industry is striving to identify and progress practical solutions that will improve the resilience of Australian homes. Robert Kelly: The biggest opportunity the insurance industry has got right now is to
actually take advantage of the debacle about the pandemic coverage or lack of coverage, or inability for people to know whether they did or didn’t have cover. This may stir the consumer into thinking, “you know what, insurance is not a commodity. It’s not like buying a Big Mac or buying a paper. Maybe I need to spend more time on the nuances of what insurance does and familiarise myself with what I am insuring”. Kurt Nilsen: The underwriting agency sector will continue to show great growth, provided they have the capacity to meet the increasing demand. Agencies have the ability to adjust to market needs at fairly short notice, which gives them an advantage over the larger company markets. There will be M&A opportunities which could provide great growth opportunities and add value for brokers. Scott Leney: The main opportunities are improved clarity of coverage in insurance contracts, greater stability in premiums to relieve pressure on businesses, and improved risk quality as businesses better
Searching for solutions: ICA President Sue Houghton is calling for collaboration
understand resilience and prepare for future disruptions. Alternative risk solutions are also a big opportunity for the industry as we explore ways to help clients transfer risk in an affordable and sustainable way beyond what’s available in the current market via traditional insurance. There is also an opportunity to attract more talent to the industry by keeping the benefits of flexible working as we return to a hybrid model of office occupation and by accelerating the good progress made in the areas of inclusion and diversity as the world has learned from some polarising social events in 2020. What do you see as the main challenges for the insurance industry in 2021? Ben Bessell: Maintaining a strong reputation in an environment where prices are likely to rise and uncertainty around economic recovery exists. Resolving the business interruption legal proceedings will be important as it will be impactful for
different stakeholders involved in the issue. The insurance market has been impacted by the pandemic in many forms, in addition to severe weather events in recent times. These experiences will manifest themselves in different ways, such as pricing, risk selection and appetite. Insurers may be required to rebalance portfolios which may create challenges for customers and brokers. Dianne Phelan: The outcomes of the [business interruption] test cases will cause some challenges and the hard market will continue to impact not just the affordability but the availability of cover. This is not confined to northern Australia, with insurers reducing limits, introducing sub-limits or in some cases declining renewals in areas affected by bushfire and hail, for example. This will continue to have a negative impact on clients. Sue Houghton: There are emerging trends and risks on newly identified issues such as business interruption policies, resulting in the industry seeking clarity on claims related to COVID-19. The insurance
industry is committed to an efficient, transparent and consistent claims process that is fair to policyholders, while ensuring the sustainability of the insurance industry. Simon Weaver: As clients become comfortable self-insuring and managing their risks, instead of transferring most of them, insurers will need to look at recovering lost premium and their capital cost will continue to increase. Clients have become more aware of the options available beyond the traditional insurance market because of the continual premium increases across all product classes. Robert Kelly: The biggest challenge is the perception the consumer will have that insurance companies do not pay their claims. “In the case of [COVID-related business interruption claims] they said it’s definitely not covered, and when it was tested in court…” The fallback position to [the Australian Financial Complaints Authority] is now slightly under challenge because people over the past year who have been denied
Resilience is key: New NIBA President Dianne Phelan believes COVID disruption will continue Credit: DM Fotographica
claims that could have been put to AFCA have found that AFCA hasn’t wanted to rule on them because of the pending court case. That puts a big credibility gap over the existing system – do you trust the insurers when they say no? Secondly, the potential to take it to somewhere to get an advocate to adjudicate didn’t work. How will COVID-19 change the Australian insurance industry and working environment this year and beyond? Dianne Phelan: COVID-19 certainly showed that policy drafting and clear policy interpretation is something to be improved upon. Hopefully this results in improved drafting. However, it may result in some reductions in cover as part of making the intention clear. It also showed that a mobile workforce can work, and in some cases worked better than the normal office environment. We continue to live on a knife-edge with new COVID-19 cases causing swift lockdowns and border closures. We will need to build resilience to constant change, whilst ensuring the wellbeing of our people. Simon Weaver: Presenting risk to the insurance market virtually will continue. With so many risks now being re-marketed locally and submission flows to the
global marketplace set to increase significantly again, the need to differentiate is key. The fundamentals, however, will never change. Relationships are still vital. Brokers need to ensure connections with key decision-makers within insurance companies are strong. We must always remember we are a people business. We’ve transitioned to working outside the office but we need to make sure our culture, teamwork and training remains optimal to deliver for our clients. The quality of advice and client solutions/ benefits are directly correlated to the quality of people and talent in an organisation. Ensuring that quality people are retained and trained to deliver this level of advice will continue to be an opportunity and threat for the industry in 2021 and beyond. Kurt Nilsen: The way we transact or go about business from a day-to-day perspective has changed forever, and will continue to change. The impact to mental health cannot be downplayed, and employers have an added responsibility to their employees that needs to be considered more than ever before. Capacity providers will be reviewing policy coverage (most have already) and monitoring the progress of the BI cases. The general economic impact needs to be monitored, as we know some industries have suffered massive financial downturn, while
others have seen unprecedented growth. Ben Bessell: Risk mitigation and business interruption plans will be improved, in part to mitigate the impact of coverage changes but also in response to being more aware of rapid change and the impact it can have both commercially and socially. Stronger client engagement and advice will be of paramount importance. Robert Kelly: The insurance industry has realised that a lot of our people don’t actually need to be physically in their offices to do the job with great expertise and diligence. If you say there will be a lot of people who will work off-site, how do you get the socialisation correct? That is the challenge. Allowing the movement to work more from home, but secondly to blend that movement with time at home and time at work, and thirdly handling of the socialisation for people that become more isolated. What factors are driving the current hard market, how long will it last, and what are the key impacts? Kurt Nilsen: The cost of global catastrophe events coupled with low investment returns has pushed underwriters to focus on returning an underwriting profit rather than writing for market share. We have seen large portfolios become non-renewed
as markets try to “correct” their results, with very little or no room for negotiation. There is a general consensus the market will continue to harden and that the current trading conditions are likely to prevail throughout 2021/22. The impacts of a hard market such as rate increases, reductions or a squeeze to coverage will be with us for a while. James Baum: Despite four years of remediation by insurers in the Australian market, the majority of them have struggled to meet return on equity targets. This has been driven by a number of factors, from the increased prevalence and scale of natural disasters in the region, increased litigation and a low interest rate environment. None of these elements are new, but the compound effect of multiple years and the universal push by capital providers for correction is driving the need for change. Ben Bessell: The hardening market is likely to be evident for the medium term. Key impacts will be enhanced cost-efficient use of technology, a highly engaged workforce, and high customer engagement achieved through valued advice and engagement. Access and engagement with a range of contemporary products and services, plus maintaining and earning trust with clients and partners is vital. Scott Leney: The continuing uncertainty
of COVID-19 claims is extending the hard market. The test case(s) around prevention of access and intervention of government authorities will not likely be run until midyear at the earliest. There are a small number of major Australian companies that have lodged claims and if any of these are successful, there could be an avalanche of claims submitted to insurers. On a positive note, the catastrophe summer season, while incomplete, is looking like it will be modest on the claims front, which should help improve insurers’ profitability. We expect the current market conditions to prevail during 2021. However, we expect to see some levelling of premium increases for certain classes of insurance. We are already seeing it in some regions of the world. Can the industry keep up with the scale of planned regulatory change? Do you have any concerns about any specific reforms? James Baum: The industry can keep pace with regulatory changes, and while these aren’t without challenge, we embrace changes that result in greater transparency and value for clients. One of the bigger challenges will be the viability of smaller product portfolios where insurers and brokers will be significantly
challenged by the increased cost to serve. We have already seen insurers walking away from some portfolios not generating significant enough gross written premium. This is likely to be an unintended consequence and may hit buyers in some areas hard. Dianne Phelan: Reform for the betterment of client outcomes should never be a concern. However, reforms that do not provide benefit but can hinder those outcomes are of concern. The inquiry into conflicted remuneration in 2022 is a major focus for brokers. Scott Leney: One specific reform giving rise to some angst is the design and distribution obligations which come into effect in October. There remains some confusion as to what a target market determination should look like. The most pressing reform is the extension of unfair contract terms to insurance contacts, which applies from April. The inherently subjective test as to what is “unfair” is also generating a lot of discussion. Robert Kelly: I think some of the reaction to the Hayne royal commission about protecting the consumer is an over-reaction in terms of a small section of the market that was affected by very poor decisions by some insurers as to how they distributed product and priced remuneration. My main concern is that we don’t use a sledgehammer to put a tack in.
Reputational risk: Steadfast’s Robert Kelly fears the BI wording debacle will damage consumer trust
Simon Weaver: Regulation is our ticket to play and we have to comply with the regulatory environment. The alternative is that you stop doing business and hand back your Australian Financial Services Licence. Do you expect government intervention in the Australian insurance market to address affordability issues in northern Australia, or more broadly? Would you welcome government intervention, and if so, in what form? Scott Leney: We have a very successful government-backed insurance pool, ARPC (Australian Reinsurance Pool Corporation), to provide protection for declared terrorism events. We believe that something similar could be created for northern Australia catastrophe perils. Similar models could work to provide protection for pandemic events. In the absence of federal or state government backing, public and private sector leaders, officials, and residents will need innovative new models of catastrophe insurance delivery to secure widespread coverage and help sustain communities following a natural disaster event. One such model is community-based catastrophe insurance. Kurt Nilsen: I cannot foresee a solution being provided by the Government for northern Australia. Taking into account the extremely soft market conditions over the past 10 to 12 years, a pricing correction was inevitable. Is the Government focussed on a lack of capacity or the increasing cost? If there is a government solution, then it would be fair to say they would have to provide a solution to the inability to secure professional indemnity insurance in some sectors, or cover for the impact of bushfire, or flood,
etc. There is no quick fix for this. Ben Bessell: Government intervention in such areas as risk mitigation is important, particularly so far as flood, fire, cyclone and building codes are concerned. These factors are more extreme in certain parts of Australia, and if addressed could certainly have an impact on minimising damage and therefore impacting cost. Scrutiny of building standards and planning approval processes can be managed at a local government level, in addition to more targeted mitigation that could be facilitated federally. Sue Houghton: ICA has commissioned a review to be released mid-year that will recommend ways forward for the industry and policymakers. The review will provide a summary of practical solutions to problems that have been challenging sectors of the economy for a decade or more. As advocated by numerous parliamentary and other inquiries, ICA also supports the abolition of stamp duties on insurance. This would have an immediate impact on insurance affordability in that region. Robert Kelly: It’s a very brave government that starts to support certain sectors. So, if you support Far North Queensland because it’s expensive to get insurance up there, what do you do with the farmers in western NSW and north-western Victoria when they can’t get drought insurance? What do you do for the people that are suffering subsidence on the east coast when the big storms come, and what do you do for corporate Australia when they can’t get directors’ and officers’ cover? If you are going to throw a support blanket over the industry, how big a blanket do you throw? 0
attraction to McLardy McShane?
Come ﬁnd out.
Fun, ﬂexible, forward thinking and growing fast. AUTHORISED REP | JOINT VENTURE | BRANCH | EMPLOYEE | BUSINESS IDEAS
Call Don or Meg for a conﬁdential discussion. Don McLardy M. 0411 868 092 E. email@example.com Meg Long M. 0434 613 546 E. firstname.lastname@example.org
When the going gets tough… … brokers find alternatives and new competitors emerge. Here’s how efforts to find a home for clients’ hard-to-place risks have opened up some new thinking By Terry McMullan
hile market domination isn’t always the intention, mergers at the top end of an industry have the potential to crush smaller competitors, or at least limit their opportunities. That’s why the Australian competition regulator expressed disquiet on February 18 about the impending merger of Aon and Willis Towers Watson. Following so soon after the 2019 merger of Marsh and JLT, the Australian Competition and Consumer Commission’s “preliminary concerns” about the impact of the merger on the local market is understandable. The ACCC says Aon, Willis Tower Watson and Marsh “are the only three major brokers capable of providing commercial risk broking to large customers, reinsurance broking and employee benefits services in Australia”. The local regulator’s concerns are similar to those of its UK and European counterparts, and reports from London suggest Willis Re – a significant player in the global reinsurance market – may have to be sold to placate them, despite the protestations of Aon CEO Greg Case that Willis Re is “complementary” to Aon Re. When the dust finally clears with finalisation of the Aon-Willis Towers Watson merger later this year, Marsh will have given up the global broking top spot to Aon. But in Australia, Marsh will still dominate the S&P/ ASX 200 corporate market, with a local market share of more than 50%. The merged Aon-Willis Towers Watson will have a combined local corporate market share of around 28%. Between them, Aon and Marsh will control around 80% of the local corporate market. Marsh has gained additional weight from JLT’s strong specialty profile in the middle market, which is where more of the growth action is happening. For brokers focused on the SME market, the affairs of the corporate market operators may be of little more
than passing interest. But in the middle market at least, competition is likely to become more intense over the next few years after two cashed-up London brokers announced their arrival in Australia and their determination to make an impact. The first two months of the year have seen three announcements (all reported first by insuranceNEWS.com.au, incidentally) that demonstrate not only the continuing attraction of the Australian insurance market to foreign entrants, but also that insurers’ plummeting risk appetite has led Australian brokers to look overseas for capacity for some willing and able partners. Two of the announcements heralded the arrival in Australia of a pair of heavyweight British broker groups with the financial and technical nous to shake up the entire insurance market and possibly, over time, rattle the corporate market domination of Marsh and Aon as well. In January Steadfast, Australia’s largest locally owned broker network, revealed that London-based international insurance broker Howden has formed a “strategic partnership to support Steadfast’s London Market broking requirements”. The deal brings with it a clear path into the London Market for Steadfast brokers encountering problems placing clients’ hard-to-place risks in the Australian market. Managing Director Robert Kelly says the alliance with Howden is a “clear opportunity in the Australian broking market for a credible international alternative, and for the existing clients of Steadfast members to have access to expertise and capacity in London and globally”. Howden Broking has also moved into the local market as a Steadfast member, promising to take the fight up to the dominant international brokers. Mr Howden says it will be a “challenger broker” for Corporate,
Offering new solutions: David Howden
People Risks (including Employee Benefits), and other specialty lines. Howden Group – formerly known as Hyperion – employs 8000 people in 220 offices in 40 countries. It also owns, among other things, an extensive underwriting network that includes Dual Australia. With 2019 total revenue of $US942 million according to AM Best, it’s the 16th-largest global broker. The group’s founder and Managing Director, David Howden, told Insurance News from London that consolidations in the insurance market “show a real need for credible and talented broking services”. “Clients increasingly need data and information and expertise,” he says. “We have good data, and very efficient ways to analyse and translate that data. Aon and Marsh are great businesses, but they don’t work for everyone. Howden clients enjoy dealing with people who work in a business they also own.” He says Howden’s 20-year relationship with Steadfast has involved “Dual on the underwriting side, but also on the broking side across a number of technical areas, including acting on the placement of their bigger authorities on the London Market”. The fact that the strategic partnership was negotiated from opposite sides of the world via phone and Zoom – “there were plenty of early morning and late night calls,” says Mr Howden – set the seal on a working relationship that has spanned more than 20 years. “Now we’re taking our relationship to the next level,” Mr Howden told Insurance News. “Howden is capable of servicing large clients and complicated risks here in Australia, but critically for capacity in London, Singapore or even through Miami, Stockholm or Helsinki or wherever. “And it has come at a time when there’s a definite need, not just an opportunity.” The Steadfast-Howden deal was followed in
Turbo-charged: Resilium’s Adrian Kitchin
mid-February by news that authorised representative (AR) network Resilium has sold a majority stake to UK broking group Ardonagh. For Resilium Chief Executive Adrian Kitchin the acquisition is the perfect way to move forward, with Resilium now having the wherewithal to build a much more competitive future. Ardonagh says it’s keen to grow locally, leaving Mr Kitchin and his management team to get on with the job. Paul Lynam, who is Chairman of Ardonagh Australia, will also chair Resilium, act as its mergers and acquisitions chief and work with Mr Kitchin and his team to “leverage opportunities for Ardonagh’s wider portfolio within Australia”. London-based Ardonagh says it has gross written premium of more than $US10.7 billion and income of more than $US1.4 billion, driven by mergers and acquisitions and organic growth. Its chief executive David Ross is best known for building Arthur J Gallagher’s international network before moving to run diversified UK broker Towergate in 2015 – a move that resulted in an £8 million compensation payment to the US broker. Among the deals Mr Ross made at Gallagher was the 2014 acquisition of Australia’s then-largest locally owned broker, OAMPS. The deal came 17 months after acquiring the largest privately owned Australian underwriting agency, SRS, whose
majority shareholder was Mr Lynam. Towergate formed Ardonagh in 2017 following the acquisition of a significant number of UK brokers. It is now the UK’s largest independent broker and sits at 17 on the AM Best global broker rankings. Mr Kitchin sees the strategic backing of Ardonagh allowing him to – as he puts it – “turbocharge Resilium’s trajectory, giving us access to the capital and resources to explore strategic, complementary acquisitions across the country while also continuing to grow organically”. Mr Ross says Resilium will be “the centerpiece of Ardonagh’s Australian operations”, expressing admiration for the Australian company’s “unwavering focus on recruiting the very best talent in the market, alongside a commitment to professional development”. Following the Resilium move came news that Austbrokers, the broking arm of AUB Group, has established a dedicated unit, Austplacements, to handle complex risks. It will be managed by Heath Amber, who is the Managing Director of MGA-owned underwriting agency Millennium. While quite different to Steadfast’s strategy in its approach, AUB’s move is much the same in its intent: to secure additional capacity overseas for its member brokers and underwriting agencies in response to the local market’s restrictive conditions and low capacity levels. “It’s become increasingly challenging to place risks in the local market, and we, unfortunately, anticipate
Playing monopoly at the top end With every merger comes rationalisation, particularly in management ranks. That means there has been – and will continue to be for some months – a ready availability of experienced and skilled broking executives who have taken a redundancy package, possibly because they are confident another job is just around the corner. Others have lost out to a manager with the same skillset, or have found their career progression compromised. Or they simply didn’t like or “fit into” the merged entity’s culture. The merger of No 2 global broker Aon and No 3 broker Willis Towers Watson was announced in March last year and is expected to be completed before mid2021, if regulatory misgivings can be dealt with. It followed the previous year’s deal to merge No 1
broker Marsh with the (considerably) smaller Britishbased broker JLT. Following the merger with Marsh Andre Louw, who worked for JLT for nearly eight years and was most recently its chairman Australia & New Zealand, was appointed Marsh’s chairman for the Pacific region. He left Marsh in August and is now Chairman of Howden Australia. Igor Fijan, another JLT alumni, is the Chief Financial Officer of Howden Australia. He was CFO and company secretary at JLT, and took up the CFO role at Marsh after the merger. Mr Louw is confident the deal with Steadfast is a game-changer for clients in the Australian market, saying it will transform the broking landscape “by offering choice, expertise and local distribution against the backdrop of a consolidating market”.
this will continue for the foreseeable future,” AUB Group Managing Director Mike Emmett said. “This new enterprise will enable us to improve the placement of almost $1 billion in premium that falls into this category.” Mr Emmett says more risks are likely to be placed through international markets like London and Singapore. Mr Amber will also take responsibility for AustRe, Austagencies’ bespoke London placement and reinsurance capability. While the local brokers gear up and join forces with expansive internationals on the rise, the regulatory and media focus remains at the top end of the market, where the mergers of the four global broking companies – each with a substantial presence in Australia – have brought upsides as well as downsides for their smaller competitors. Regulators worry about lessened competition at the corporate end of insurance, but the two giants have dominated that sector for years. No such problems in the hugely competitive but very subdued local market, where brokers are working hard to meet insurers’ increasingly stringent conditions – often without a positive result. Hopefully Ardonagh and Howden will encourage small operators to climb the steep path of professionalism at the same time as they provide important solutions, expert risk knowledge and data. Both companies are careful to acknowledge the strength and expertise of Aon and Marsh, but they have already demonstrated in their home markets that they’re lean and ambitious. That may make competition in the corporate and middle markets sharper than it has been for a long time. And, possibly, ease the ACCC’s worries about competition. “Brokers are entrepreneurs,” Mr Howden says. “Winston Churchill said to ‘never let a good crisis go to waste’. I think COVID has taught us you can’t control the way things happen, so we just all need to 0 get on with it.”
Derailing the Orient Express A UK court has overturned a decision that’s been influential in assessing business interruption claims after catastrophes By Wendy Pugh
ike a best-selling thriller with plenty of twists, a legal dispute invoking the legendary Orient Express train but actually involving a New Orleans hotel has led to a judgment by a court in London that has implications for businesses in Australia. Fifteen years after Hurricane Katrina devastated New Orleans, the UK Supreme Court has ruled a landmark insurance decision that reduced the amount of money that could be paid to a damaged hotel was wrong. The ruling, part of a test case judgment on coverage for losses triggered by the COVID-19 pandemic, overturns a precedent relied upon by insurers to limit business interruption liabilities after catastrophes and disasters. “The reason it is significant is that it has implications beyond the coronavirus issues that are currently before the courts,” Herbert Smith Freehills Partner Mark Darwin says. “The decision will have widespread implications for bushfires, floods and earthquakes.” The original case involved a claim lodged by Orient Express Hotels after a property in the New Orleans French Quarter was damaged by Hurricanes Katrina and Rita in 2005. The hotel was closed during September and October, when the surrounding area
was also devastated by the hurricanes, and a claim for property and business interruption cover was lodged under a policy governed by English law. Business interruption claims are assessed by looking at previous financial performance, and adjusting for circumstances and trends besides the event triggering the claim, that might have affected trading. A manufacturer that has recently lost its largest client, or a restaurant whose celebrity chef has just quit, would receive payments that take account of those changes, reflecting a scenario where the business had continued trading and the disaster which halted operations, such as a fire, hadn’t happened. In the case of the New Orleans hotel, the business interruption part of the claim was declined on the grounds that even if the property wasn’t damaged by the hurricane, there would have been few visitors because of the destruction in the city. The dispute went to an arbitration tribunal, which found in favour of the insurer, and was appealed in London where the court backed the original determination in Orient Express Hotels Ltd v Assicurazioni Generali SPA  EWHC 1186 (Comm). The COVID-19 test case, launched by the
UK Financial Conduct Authority, brought Orient Express back into the spotlight as insurers looked to the decision to support their arguments, noting the coronavirus outbreak affected the whole country and lockdown rules applied widely. Shops and restaurants hit by the pandemic were like the hotel amid the devastation of New Orleans. The High Court’s Lord Justice Flaux and Mr Justice Butcher were not convinced the COVID-19 circumstances were sufficiently similar to the New Orleans hurricane situation, but said if they had viewed the Orient Express precedent as crucial, they would “have reached the conclusion that it was wrongly decided and declined to follow it”. “In our view, the consequence which flows from the Orient Express decision, that the worse the fortuity which befalls the insured and the vicinity of the insured’s premises, the less the insurance responds, cannot have been intended,” they said. The High Court judgment, which involved decisions on 21 sample wordings from eight insurers, was partly appealed to the Supreme Court, where arguments were considered by five justices and largely decided in favour of policyholders. In an echo from the past, the Supreme
Court justices delivering the main judgment were Lord Leggatt, who sat on the Orient Express case arbitration tribunal, and Lord Hamblen, who decided the 2010 appeal. Lords Hamblen and Leggatt came to a different conclusion this time, agreeing with the High Court’s view that surrounding hurricane damage caused by the same event that affected the hotel shouldn’t have reduced the business interruption claim. “On mature and considered reflection we also consider that it was wrongly decided and conclude that it should be over-ruled,” they said. Lords Hamblen and Leggatt say they had the benefit of more detailed and wide-ranging argument than at the arbitration and one-day appeal, and were operating in a different context. In acknowledging the contradiction compared to a decade earlier, they cite Justice Jackson, who was involved in a US case that went against an opinion he had given when Attorney General, and who highlighted a number of judicial reversals. “We likewise invoke whatever ways by which we may ‘gracefully and good naturedly’ surrender former views to a better considered decision,” Lords Hamblen
and Leggatt said. Other justices in historical cases cited by Justice Jackson have offered “the matter does not appear to me now as it appears to have appeared to me then”, and “I am amazed that a man of my intelligence should have been guilty of giving such an opinion”. The overturned Orient Express Hotels decision has previously come in for criticism for its potential to unfairly limit payments, while there are also arguments that it could deliver windfall gains for policyholders in some circumstances. The tenth edition of Riley on Business Interruption Insurance, written by experienced loss adjuster Harry Roberts and quoted in the Supreme Court judgment, doubts whether “it is actually a satisfactory outcome for either insurers or policyholders”. The text warns it may deliver “a potentially counter-intuitive result which is not likely to leave the insurance industry in a good light”. Lawyers say overturning Orient Express Hotels means cover is provided when damage caused by a wider catastrophe event, such as a hurricane, is concurrent with the catastrophe’s impact on the insured property, as long as there aren’t exclusions. Herbert Smith Freehills’ Mark Darwin
says the principles applied under the original Orient Express Hotels decision have been followed in Australia and New Zealand in assessing claims, but approaches following the Supreme Court ruling should change. “Strictly, UK law is not binding on Australian courts but it is influential, and insurers have been happy to rely on OEH for the last 10 years to reduce claims even though it was an English decision,” he says. Events where the Orient Express approach has been an issue in this region include the Christchurch earthquakes, where claims were lodged for damaged buildings in an exclusion zone put in place due to the catastrophe, he says. UK-based DLA Piper’s Leon Taylor and Oliver Saunders say on the law firm’s website that the Orient Express part of the COVID-19 test case is likely to have significant implications for the adjustment of property damage and non-damage business interruption claims. “The Supreme Court’s treatment of the controversial case of Orient Express Hotels is perhaps the aspect of the judgment which will have the longest-lasting impact on the insurance market going forward.” 0
Time for action Andrew Hall has hit the ground running by implementing a range of key strategies at the Insurance Council By John Deex
ndrew Hall started work as the Chief Executive of the Insurance Council of Australia (ICA) in September last year, and faced immediate and unprecedented challenges. The potential impact of COVID-19 on the insurance industry was becoming clear, and at the same time insurers were continuing to deal with a record-breaking catastrophe season that led to more than $6 billion in claims. On top of that, a raft of regulatory changes loomed as the recommendations of the Hayne royal commission flowed through to the industry. Despite this confronting introduction to his new job, Mr Hall remains optimistic about the insurance industry and determined to change it for the better. In his first in-depth interview since taking the role, he tells Insurance News his priority now is to push two key areas – the role of insurance in the economy, and its role in addressing the consequences of climate change. “Advocacy in positioning the role of insurance in the economy is critical,” he told Insurance News. “Without insurance the economy doesn’t function and, sometimes, it is a little bit taken for granted. “I see a real opportunity to elevate the role of insurance in the national economic narrative as we recover out of COVID-19.”
As for climate change, he splits the debate into two parts – the global effort to reduce emissions and whether it’s moving fast enough, and Australia’s progress in building resilience to the impacts. On the first point, Mr Hall believes the most valuable contribution the industry can make is through data. “When it comes to the broader question about national and international settings for emissions, the one thing that insurers can bring to the table is the data,” he says. “Whatever position we want to take in that debate, at the very least we can help policymakers understand what the data is that we’re seeing. “I know reinsurers in particular have some really interesting quality data that shows what the changing climate has been driving in this country. “I think we need to elevate our voice so that the data around that risk can be really well understood.” He says that with climate change, insurers are operating within a framework set by the Federal Government. But he believes most insurers “are subscribed to the goals of the Paris Agreement”, as well as targets to reach net zero emissions by 2050. “How you get there is a pathway. It will be understanding where the risks are, understanding your role in those risks and making the right decisions for how
Elevating insurance: Andrew Hall
you manage through that. “That’s the thoughtful and sensible approach that I think all sectors are taking. I went through that in the last couple of years with banking and I can see insurers doing the same.” On resilience and mitigation, Mr Hall says the industry has had a loud voice, but it must be louder still. “If we are to accept the fact that we have had increasing catastrophic climatic events, insurance is just going to be critical to how we respond to all that. “Australia is exposed to a lot of extreme events. As the climate change debate rolls on – and it will roll on – what we want to keep front and centre is how you build a more resilient community that can recover quickly from these unexpected events, and insurance needs to be part of that.” Having worked with the ICA board to identify key priorities, Mr Hall believes now is the time for action. He joined ICA from the Commonwealth Bank with extensive experience in corporate affairs and politics, thanks to high-profile roles at Woolworths and in the National Party. He intends to use that experience to drive action on insurance issues that have been talked around for years, sometimes decades. But that’s not to criticise the previous regime at
ICA. Mr Hall is hugely complimentary about the previous administration’s efforts to launch the new General Insurance Code of Practice, revolutionising catastrophe responses and laying the crucial groundwork for some of the programs he has planned to build on. And he understands that ICA has to tread a fine line as it bridges the competing needs of different sets of stakeholders. There are politicians “who are listening to the people that elected them”, but also companies that have to consider not just customers but also employees and investors looking for returns. “Getting that balance right is always pretty hard,” he says. “But you do that from trying to understand what people’s perspectives are at the get-go. “Some of these debates have been grinding on for years, with good reason. They are really hard to solve. “Decisions made around some of these issues can have very longtail effects on how a market may operate, both for what the taxpayer could end up paying and for any unintended consequences for consumers.” But the industry cannot allow this complexity to lead to the stagnation of such key debates, Mr Hall says. “Working through them really carefully is important. But people judge us on actions, not words, and that’s another lesson out of what the banks have been
through in the last few years. “I don’t want to labour the point, but it is the reality that if people want change, they need to see action. “There is so much work that has been done in the last 10 years, and we are already setting about looking at what those reports and inquiries have said. “We’re working out as an industry what we need to do, [and] what we have got control of that we can make some firmer decisions around.” These are some of the things Mr Hall and the ICA team will be focusing on in the next six to 12 months. “It’s our job to identify what would be the most effective actions to take and then what the plan is to do that.
“That is what we are thinking through at the moment, particularly where it can relate to contributing to an economic recovery, [and] it relates to building a resilient economy against climate change.” Many commentators see the affordability of insurance as the industry’s most pressing challenge, with the market continuing to harden and catastrophe-related problems continuing to affect the north of the country. The Australian Competition and Consumer Commission (ACCC) carried out a three-year inquiry into the affordability of insurance in northern Australia and released its final report late last year. It followed a report from the Small Business and Family Enterprise Ombudsman that described a
Andrew Hall on… …Regulatory reform “We need to accept that the change is coming, and we need to work collaboratively and closely with government on making sure that that change is as effective as possible, and that there are no unintended consequences out of some of these changes that may disadvantage consumers. “There are still some exemptions that we need to work through with government and they are giving us those processes to do that, and I think data will be key to making a case for some of the more logical exemptions that probably should take place. “I think the industry is listened to and my observations are that the government is actually hungry for even more data from the industry to understand better what we can see are the challenges.”
…Consumers “Understanding insurance is critical and we need to find other ways to have conversations with the community about that, about helping the consumer make the right choices for themselves. “Financial products can be quite complex, and helping the consumer understand upfront what they have purchased is really important. “I’d say that the industry has got quite a strong sense of community expectations and applying the fairness test these days, that perhaps a decade ago was a little less common. “I’ve heard about and seen some examples where
insurers do take a real consumer-centric view to some claims. The response to the bushfires is a really great example of how focused the sector is on meeting obligations.”
…COVID-19 “I think insurers did a really good job. “When you dig down you can see that a lot of the measures that already existed around hardship and vulnerability because of things like the code of practice…they actually did their job. “Whenever an economy or a community goes through an event, we have to sit back and ask ourselves as we are emerging from it what we would do differently next time around. “Regardless of the court cases, most business interruption policies were sold with an exclusion around the pandemic because it is such a large-scale event and premiums weren’t collected to cover that type of scale. “We now understand what that scale can look like – and that is governments intervening and literally shutting down the economic operations of businesses for health outcomes. “If there is a community desire to be able to protect against this type of disruption in the future, similar to what happened after 9/11, I suspect we will need to have some sort of discussion with government around how you would construct a model that would be able to cater for that kind of an outcome. “It is almost too soon to have those discussions – we’re still going through it, we are not out of it yet.”
Our Expertise is Your Solution.
Blue Collar ✓ Liability ✓ Accident & Sickness
If you’re looking for someone with experience, who knows the ins and outs of the industry - we’re your people.
Hospitality ✓ Liability
Our tight-knit team of Underwriters are on the front-line ready and determined to provide you with innovative solutions. We don’t back down from a problem and we always deliver what we promise.
Small Retailers ✓ Liability
We are ShieldCover, and we’re here to support you, so you can better support your clients.
Property Owners ✓ Liability
(07) 3510 9535 | email@example.com | shieldcover.com.au 19 Rosedale Street (PO Box 239) Coopers Plains QLD 4108 ShieldCover is a divsion of East West Insurance Brokers Pty Ltd. ABN 83 010 630 092 AFSL No. 230041
Quite a journey “People judge us on actions, not words, and that’s another lesson out of what the banks have been through in the last few years.”
“national crisis”, and alleged widespread insurance market failure. Now ICA has launched its own review of affordability and availability issues, to be led by former insurance executive and regulator John Trowbridge, in collaboration with economist Michael Blythe. A consultation paper will be released shortly and a final report is due mid-year. It’s an effort by ICA to take a leading role in the affordability debate and sort through the plethora of previously proposed solutions, with the intention to move forward on those solutions that could work. Mr Hall says ICA is still digesting the ACCC report, which takes up almost 600 pages and makes 38 recommendations. “We have been reading through [the report] carefully and we are talking to members now, and we will formulate a response to some of these recommendations. “Affordability and availability is something we are planning to spend a lot of time working through in the next couple of months. “We know that there are some segments of insurance where both affordability and availability are proving to be a challenge. “That’s because of a range of factors and we are committed to talking to government about what we can do as an industry to tackle some of those things.” Some commentators have predicted the impact of climate change will make large swathes of Australia uninsurable in just a few decades, but Mr Hall is less gloomy in his own assessment. “We have governments and companies in this country that understand what their responsibilities are, and they will find ways to work through it,” he says. “There are so many options, there have been so many reports and inquiries. It is not for lacking a range of suggestions to consider, that’s for sure. “Our job is really how we move forward on some 0 of the ones that make sense.”
Andrew Hall’s career started in the “wonderful world of journalism”, when he left university and landed a job on a local newspaper in the Northern Rivers region of New South Wales. “It was a great first job where you got to meet a lot of interesting people. Whatever was happening in the town that day, you got to be involved.” But while he enjoyed writing, he had a nagging desire to “contribute differently in life”. A friend scored a job as a press secretary for the Howard Government in 1996, and urged him to follow her lead. “So without any background in politics, I ended up applying for and getting a role as a media adviser,” Mr Hall says. “I was adviser for Warren Truss [who later became leader of the federal Nationals], and then in 2001 I flipped from working for a minister to actually working in the campaign side of things and ended up as federal director of the National Party.” In 2007 he decided he’d stayed in politics too long and looked for a private sector role. “That’s when Woolworths came along and I moved from Canberra to Sydney as head of government relations initially, and then took on corporate affairs more broadly for the Woolworths group.” It was at Woolies that Mr Hall “first thought deeply about insurance” as the supermarket giant launched its white-labelled insurance product line. Then “out of the blue” came the opportunity to join the Commonwealth Bank where he spent seven years as head of corporate affairs. “There were challenging and difficult times and good times as well,” Mr Hall says. “It taught me a lot around how companies need to work to get things right, keeping the consumer at the centre of everything we do, and always making sure that stakeholders are listened to.” Next stop, ICA. Mr Hall says he was attracted to an opportunity where he could share some of the lessons he’d learned from the banking sector. “There are a lot of differences [between insurance and banking] but also a lot of similarities around that whole ‘consumer trust’ piece, and thinking about a product when a customer really needs it and how you respond at the time. “I was attracted to that, and in my career I’ve always enjoyed areas of heavy regulation that require a lot of complex stakeholder management. “Insurance is definitely one of those.”
CYBER SECURE FUTURE: CREATING A CYBER RESILIENT INSURANCE STRATEGY Words by Scott Newland, General Manager Government & Long-Tails – Gallagher Bassett From ‘Firewall’ to ‘Honeypot’ and ‘Incident Response Plan’ – there are many phrases which continue to proliferate the boardroom and walls of organisations across Australia. While network and data cybersecurity are many business’s first defense, there is an alternate solution that could give customers peace of mind - cyber liability insurance.
in s u re rs . gallagh e rbas s e t t . c om.au
A R VE D
Whether it is an insecure home network, poor storage or destruction of private data or a lack of internal communication protecting employees from phishing attacks, it is crucial your organisation has sufficient and resilient cyber liability coverage. This coverage will protect your organisation from losses and liability incurred from attacks and data breaches.
POST-PANDEMIC RECOVERY While the recovery from the COVID-19 pandemic varies between states and territories, the cyber threats we saw during the peak of the pandemic are not lessening. Threats such as mask and essential supply scams, ransomware attacks, mobile adware and fleeceware are gaining speed as cyber security hits the spotlight. Sharks circle beneath the waters, as scammers and cybercriminals capitalise on the pandemic and target remote workers. The average cost of cybercrime in Australia is now around $276,323 to a business, or a total of $29 billion each year, according to Australian Cybercrime Online Reporting Network.
CREATE A CYBER RESILIENT INSURANCE STRATEGY Remote work arrangements will continue for the foreseeable future and in some cases, become part of the “new normal” – meaning organisations cannot ‘rest easy’ that their workforce will return to a more secure office-based environment any time soon. US cybersecurity experts predict there will be a cyber-attack incident every 11 seconds in 2021. This is nearly twice what it was in 2019. Now is the time to evaluate the emerging risks and vulnerabilities surrounding a fluid work environment and develop an insurance strategy resilient to cyber-attacks. Whether it’s managing complex claims, negotiation difficult settlements or helping you build a cyber-resilient insurance strategy, our Carrier Practice Team is dedicated to helping carriers manage the risks of cyber liability and prepare for the challenges our digital future holds.
Find out more at insurers.gallagherbassett.com.au
ABOUT GALLAGHER BASSETT Gallagher Bassett is a global leader in the insurance industry and the largest TPA in the ANZ market, delivering best-practice claims management solutions for all lines of insurance. Gallagher Bassett optimises supply chains and partners with insurers to enhance their brand, values and systems to improve customer service and drive cost and operational efficiencies.
This coverage can help carriers manage the cyber security concerns of their customers who are facing new and challenging risks as a result of the rapid shift to remote working. For companies new or unfamiliar with work from home processes, this shift can open gaps for cyber-attacks, data corruption and the misuse of collected data. The Australian Cybercrime Online Reporting Network has already reported big spikes in data breaches and cyber ransom attacks since the start of the pandemic in March.
How companies recover from the challenges of the pandemic and the trust businesses have in the cybersecurity protections in place to protect them go hand-in-hand. It takes just one successful cyber-attack to cause significant reputational and financial damage to your organisation.
A RI TO
WHAT IS CYBER LIABILITY INSURANCE?
Pride and positivity IAG’s new boss is proud of the way his team and the industry responded to last year’s challenges. And he’s upbeat about the future By John Deex
ick Hawkins took over from Peter Harmer as Managing Director and Chief Executive of IAG in November, just in time to deal with the fallout from the hard market, declining profits, the pandemic and its associated challenges. The long-serving IAG executive – he was chief financial officer for 12 years before being named deputy chief executive in April last year – was tagged by Chairman Elizabeth Bryan as having “a deep understanding of both global and domestic general insurance along with operational and financial experience”. His first few months in the job have been particularly testing for 52-year-old Mr Hawkins, with IAG recording a $460 million net loss for the six months to December 31, a turnaround from the $283 million profit for the previous corresponding period. However, insurance profit increased more than 33% to $667 million, thanks mainly to the present hard market. The main cause of IAG’s financial hiccup is the need to include a contingency worth an estimated $865 million following the industry’s failure to convince the NSW Court of Appeal to disallow pandemic-related business interruption claims on policies that referenced the outdated Quarantine Act. About half of IAG’s 76,000 business interruption policies refer to the old legislation, which was replaced by the Biosecurity Act 2015. John Deex: Looking first at the wider economy you’re operating in, what are the biggest challenges for the insurance industry? Nick Hawkins: The past year has presented some
of the most challenging events some of us had to face in our lifetimes. The heartbreak and scale of the Black Summer bushfires is something we hope we won’t have to experience again. As we were helping bushfire victims with their recovery, our customers were then hit by floods and severe hailstorms. And within weeks, the nation was dealing with the shock of the COVID-19 pandemic and the consequences we’ve all experienced since then. The constant for me through these events was the focus and dedication of our people in doing everything they could to support our customers. From our specialist teams basing themselves in the worst impacted bushfire zones, to the support measures we put in place for our customers struggling during COVID-19, we’ve done everything we can to be there for our customers during these crises. We know people continue to value insurance and the security it provides, and we’ll continue to support our customers, in their recovery from this pandemic. How long do you see it taking for the national economy to recover? I’m optimistic about the Australian economy. The federal and state governments’ stimulus packages and action by the Reserve Bank have played an important role in supporting the economy, especially Australian small-to-medium businesses. I think we will continue to see key economic indicators move in a positive direction. Tied to that is the hard insurance market, which is becoming a bigger issue for SME businesses in
Challenging start: Nick Hawkins
particular. When can we expect rates to start softening, and what should the industry be doing to help businesses facing an affordability crisis? Supporting small businesses has been a key part of our customer support measures. Over the last year we’ve also increased our focus on these measures for customers experiencing financial hardship and this is now part of our everyday approach. This includes a number of actions outlined in our Financial Inclusion Action Plan, which we released last year. You have split the former Australia division into direct and intermediated segments. What led to that decision and what benefits do you expect? I wanted to put in place an operating model with our Australian business that will provide greater clarity on roles and responsibilities and is more aligned to IAG’s brands and customer propositions. Simplifying how we operate means that we can help our customers better. What we want to do is build a stronger and more resilient IAG – and this includes a sharpened focus on our intermediary businesses and our brokers. You’ve highlighted growth of the intermediated sector as a key target for IAG. How will you achieve this and what can IAG do to enhance its broker relationships? On my first day as Chief Executive I established a dedicated Intermediated Insurance business. It will
focus on the needs of our brokers and partners who play such an important advisory role for our customers by providing specific advice to their clients, to ensure their assets and businesses are protected. For several years the broker industry has been adapting and becoming more digitally connected, and this has accelerated through the pandemic. Our focus on innovating and digitising the customer experience will help to support our broker partners as they continue to adapt to this digital world. It’s also important that we continue to demonstrate value for money, quality customer service and develop product offerings to support our broker partners. This will be enhanced through our Intermediated business which will focus on what our broker partners need. How do you feel IAG has negotiated the COVID-19 pandemic? What lasting impact has it had on customer support, use of technology and staff working arrangements? How has it affected you and your managers? Like most organisations, we’ve continued to review the way we work throughout the pandemic to ensure the safety and wellbeing of our customers, employees, partners and suppliers. This has involved making adjustments to our business operations to ensure we minimise any potential risks based on the latest information and advice from government and health authorities. At the height of the pandemic, 98% of our people were working from home. Since then we’ve provided the option to come into the office, work from a nearby IAG hub or work from home, and they continue to be
“The science is clear that in a warmer climate severe weather events such as bushfires, tropical cyclones and storms will become more frequent and more destructive.”
accessible via email and over the phone for our customers, partners and suppliers that need our support during this time. The pandemic has also meant an adjustment in how we support our customers. In addition to the range of support measures for our customers experiencing financial hardship, we also used the latest technology to support our customers with their claims. Where possible our claims assessing processes have been revised to allow desktop and digital assessments to minimise face-to-face interaction – for example, by using a live video assessment. This has been designed to minimise face-to-face interaction for customers who have made claims. Our assessors will contact customers to arrange virtual assessments. If we need to allocate a builder or supplier, or arrange for a claim assessment, we will ask screening questions regarding travel and health to ensure the safety of everyone involved. Our assessors also use appropriate personal protective equipment and follow the appropriate health and safety advice from authorities. The business interruption wordings issue remains unresolved to this point. Do you think the issue might have damaged the industry’s reputation as a fair dealer? Assuming that we did not exclude a pandemic and therefore our policies respond, how do they respond? Our wording wasn’t put together to contemplate a pandemic scenario because we thought we’d excluded it. So therefore the second test case is really about creating those “guardrails” at industry level as to how our policies would respond assuming a pandemic exclusion doesn’t occur. What’s really important here is the way the industry addresses this with speed and brings the issues to a head as quickly as possible through the courts so we have clarity on whether or not the exclusion applies, and secondly, the guardrails on how our policies respond to different scenarios.
Do you see affordability issues increasing, particularly in the north, as climate change affects the frequency and severity of natural catastrophes? We know communities in northern Australia bear the brunt of the nation’s risk of extreme weather, such as cyclones and floods, so we have undertaken significant research in this area to help inform all our stakeholders and to help protect these communities. We have long advocated that a nationally co-ordinated and well-resourced disaster resilience program, including greater investment in mitigation, that reduces the impact of extreme weather events, is critical and can help to support insurance affordability and availability. We speak with all levels of government to help protect communities from the risks they face, including the impacts of climate change. Our Natural Perils team has been involved in a number of research projects that explore the future impacts of climate change on our communities – including the release of two editions of the Severe Weather in a Changing Climate Report developed in partnership with the National Center for Atmospheric Research in the US. The report shows that extreme tropical cyclones, storms, hail, floods and bushfires are becoming more frequent and intense in a warmer world – and the increase in global temperatures to date is already influencing these events and impacting communities now. This is why we need to work together to mitigate these events and ensure we are prepared. Do you think governments are doing enough to mitigate the increasing risk? Should more be done to reduce carbon emissions? Do you think market intervention is required in the form of a reinsurance pool or similar, in order to alleviate the immediate problem? We believe everybody needs to take responsibility for climate change, and it’s critical that all levels of government work with our communities, [non-government organisations] and businesses to minimise the impact. As an insurer we see the impacts of a changing
in Fleet #1 wording in market
#1 in claims management
3 years replacement and $50M Section 2 cover for non-DG.
#1 Fleet on Sunrise
partner.nti.com.au Insurance products are provided by National Transport Insurance, a joint venture of the insurers Insurance Australia Limited trading as CGU Insurance ABN 11 000 016 722 AFSL 227681 and AAI Limited trading as Vero Insurance ABN 48 005 297 807 AFSL 230859 each holding a 50% share. National Transport Insurance is administered on behalf of the insurers by its manager NTI Limited ABN 84 000 746 109 AFSL 23724. 3 years replacement and $50M Section 2 cover for non-DG. Terms and Conditions apply.
“Personally, I found remote working to be a positive experience, and I want to continue working this way in the future.”
climate on communities firsthand. We talk regularly with all levels of government on a wide range of issues, particularly the impacts of extreme weather events and disasters on communities, and what we can do to mitigate the financial and social impacts of disasters. And I believe we’re making a difference on climate action. We’re really proud of the work we do through our NRMA Insurance brand in the community to help people understand how they can make their homes safer and protect themselves from risk. We also have our own climate action plan, with specific actions we as a business are taking on climate change. We’ve been carbon-neutral since 2012 and have reduced our carbon emissions by almost 25% since 2015. We also have a commitment to reducing the overall emissions contained in our portfolio to be aligned with the Paris Agreement. Additionally, our most recent FY20 Climate Action Plan Scorecard released at the end of last year outlines a new commitment to deliver net zero investment portfolio emissions by 2050. IAG has been the industry leader in promoting programs related to climate change. Do you see an intensification of this approach, and what should the wider industry be doing to deal with climate change impacts? The science is clear that in a warmer climate severe weather events such as bushfires, tropical cyclones and storms will become more frequent and more destructive. This is a challenge for all of us. For more than two decades we’ve worked with other insurers, scientific and academic institutions, community organisations and governments on a number of projects to understand the impacts of climate change and what we can do to mitigate these impacts. Over the last year we’ve seen a change in the national dialogue on climate change, brought about by the terrible Black Summer bushfires, and we welcomed governments’ quick response in calling a royal commission and other inquiries into that
catastrophic event. We can do better as a nation to mitigate the impacts of natural disasters and we support the Government and various stakeholders in doing everything we can to protect the nation’s communities from the impacts of climate change. Can the industry cope with the volume of regulatory change slated for the coming years? Do you have any concerns about any particular reforms? Broadly speaking, we support any reform that is going to ensure better, fairer outcomes for customers. There is a big regulatory reform agenda underway and we’re really well placed with it. What I would say is that we’re always advocating for reform that is done in partnership with government, regulators and consumers groups. This sort of collaborative approach is more efficient because it avoids any unintended consequences. Putting in place a more streamlined transition process would also ensure there’s no duplication or overlap in obligations and sets a clearer path to compliance. You’ve been working at the top level of IAG for a long time. What’s your personal view on the developments of the past year like the pandemic, and how can companies inspire their employees to seize any new approaches and opportunities? COVID-19 has made us re-think what work looks like. We know the majority of our people have really enjoyed the flexibility of working from home but have missed the face-to-face interactions and social contact. What we are moving to is a hybrid way of working which will give our people the best of both worlds. Personally, I found remote working to be a positive experience, and I want to continue working this way in the future. One of the things that surprised us about working in a less-centralised way is the sense of inclusiveness it fostered, and this will really help us adapt to 0 our next new way of working.
Battling to stay afloat: John Allport
ohn Allport isn’t feeling confident about getting the public liability cover for his jet boat tourist business renewed later this year. Like so many business owners, the hard insurance market is another existential problem to count alongside the slow-burning economic fallout from the pandemic. At the moment the Tasmanian businessman has a policy issued by an offshore specialist underwriting agency operating in Singapore. It was the only offer that came up after five months of searching when his old policy expired in April. His previous broker had approached more than 35 underwriters in Australia before the old policy ended, and the answers were always similar: no, not interested. Just as the pandemic has severely affected so many businesses, overcoming the hard insurance market – one that blindsided many after years of budget-friendly premiums – is every bit as difficult and challenging. In Mr Allport’s case, government restrictions introduced in March last year to curb the spread of the COVID-19 virus forced him to close Huon River Jet Boats
for a few months, giving him some breathing space to look for a new insurance provider. But the task turned out more difficult than he had anticipated. “We just didn’t know what was going to happen with the business,” he told Insurance News. “It was looking very much like an early retirement for me. I own the business. To a certain extent, the business is my superannuation.” His experience has left him feeling not too optimistic when his current policy runs out in October. He has made just two minor claims of under $10,000 since his business started in 1989, and during that time he has paid more than $300,000 in liability premiums. The way he sees it, the current situation is not necessarily a problem for his broker. “It’s the insurers as such and their preparedness to accept risk,” Mr Allport said. “A business might be highrisk with the activities it carries out but if it’s well managed, it is not really all that high.” But relief is a likely to be a long time coming. Insurance experts say the end of this cycle of premium
Feeling the squeeze Clients and brokers are feeling the effects of an increasingly hard market. Here’s how the professionals on the front line view the situation, and what they’re doing about it By Bernice Han
rates increasing at a double-digit pace, combined with insurers’ shrinking risk appetite across many commercial classes, is at least two years away. The latest commercial pricing update from Marsh says renewal rates in the Pacific region – in which Australia is easily the biggest market – accelerated 35% in the December quarter. It was a new record, coming after the 33% rise in the preceding September quarter and 31% in the June quarter. The current conditions in the insurance market have, understandably, left the business community frustrated and anxious. Kate Carnell, the Australian Small Business and Family Enterprise Ombudsman, warned last year that a growing number of businesses were being forced to close because they can’t get the insurance they need as a condition of their operating licences. Her December report on the results of her inquiry into the insurance difficulties facing businesses across the country categorised the present situation for SMEs as a “market failure” that needs immediate action from
the Federal Government. That comment is a controversial one. Many in the insurance industry say the current conditions are long overdue after years of under-pricing risks. Similarly, the stricter underwriting terms are also a necessary adjustment to reflect the significantly riskier landscape since the last hard market more than 20 years ago. A lot has happened in that 20 years. Climate change awareness, for example, has accelerated globally, thanks to more weather-related catastrophes in increasingly densely populated areas, including Australia. Claims costs have increased, and so have the risks. Cyber risk, for example, wasn’t recognised as a major risk as recently as 10 years ago. Chris Dardaneliotis, Director of Sterling Insurance, an underwriting agency specialising in complex and hard-to-place risks, doesn’t see the present situation as a market failure, and he’s not surprised that the “correction” has been as painful as it has. “In the classes that we write, we were hoping for the market to harden as far back as 2013 because we could
“The property insurance market in Australia has, in its entirety, not been profitable for more than a decade.”
see that market pricing and practices were not sustainable,” Mr Dardaneliotis says. “But the market continued to soften until 2017. “The professional indemnity market turned sharply in 2018 and that was followed by the general liability market in 2019, albeit slower.” He says businesses that now can’t get insurance are not the only ones affected. “The entire market is caught up,” he told Insurance News. “It involves brokers, agencies, insurers, Lloyd’s and to a lesser degree, reinsurers.” He thinks the premium plateau for the business classes that his agency operates in is still two years away. “There may be the gradual return of capacity over the next one to two years,” Mr Dardaneliotis says. “It depends on the market’s results and if that capital can get better returns elsewhere. “I cannot see a broadening risk appetite for another year. Naturally, the only qualifier is if an underwriter is prepared to write the exposure and at their desired terms.” Underwriting Agencies Council General Manager William Legge says the cost of claims across the entire Australian insurance portfolio is going up and that, combined with the increase in weather-initiated catastrophes, has left insurers with no choices. In the property space, the effects of climate change have been laid bare in the form of more severe and frequent weather events that have translated into costly
claims outcomes for the industry. “Insurers recognise that the mid-to-long-term outlook on climate change carries massive risks,” Mr Legge told Insurance News. “The industry has no choice but to assess and manage the adverse impacts. “The property insurance market in Australia has, in its entirety, not been profitable for more than a decade. Insurance purchasers unfortunately believed the low rates they have enjoyed for almost a decade were realistic. “That, coupled with the low interest rates in investment markets, means insurers have to ensure their core business is able to sustain their operations.” He says the ramifications of industry-wide changes are being felt across the underwriting agency sector, even if the lines they write are not always in the frontline of portfolios directly impacted. “Agency pricing, after all, merely reflects what the insurance market overall can offer.” Caught in the middle of all this are the brokers. Many share the frustration of their clients whose renewal applications have been knocked back repeatedly by insurers and underwriters. But their hands are tied because they don’t set the premiums. “Obviously our role is to negotiate the best terms for our clients,” Strata Insurance Solutions Practice Manager Tyrone Shandiman – a Queensland-based authorised representative of Insurance Advisernet
“Underwriters struggle with the tourism world if their business activities do not fit properly into one of their rating boxes.”
– told Insurance News. The present conditions have exacerbated the long-running insurance affordability challenge in the state. “We’re not talking about just not getting insurance, but we are also in a hardening market,” he said. “We are starting to see insurers with a ‘take it or leave it’ position with their quotes.” A number of brokers say explaining to clients about the current insurance market conditions and making adjustments will help to relieve some of the pressure from the situation. JMD Ross Insurance Brokers’s Tourism Account Director Jonathan Ross, says there are insurers with varying appetites, so up-to-date knowledge of the market is also crucial. “We do expect hard times to continue for this industry,” he told Insurance News. “Frustration often stems from the insurers not seeing the high-risk tourism operators as individuals, and judging them on their own personal claims history or risk management profile, as opposed to the underwriter’s portfolio underwriting viewpoint. “Underwriters struggle with the tourism world if their business activities do not fit properly into one of their rating boxes, or when they are faced with overseas contracts which even the smallest tourism clients are often forced into. “Understanding both worlds is key to bringing both
parties to appropriate terms. The tourism industry seems very pleased when a broker proves that they understand their industry.” Aon’s Branch Manager in Hobart, Debbie Spandonis, who arranged the public liability cover for Mr Allport’s jet boat business, believes the hard market gives brokers an opportunity to set themselves apart. She asked for a lot of information from Mr Allport, which also serves as an education process for clients. “It’s been a soft market for many years,” Ms Spandonis told Insurance News. “It now comes down to really planning months in advance, well before you sit down with clients and discuss what is happening in the market and why it is happening. “It’s really important that they can put the pieces of the puzzle together and understand why insurers are now taking the action they are taking in remediating their books of businesses, and also what that means for them in terms of their own business.” A hard market is always challenging for brokers, who must present their clients’ risk details and claims history to insurers who have sharply reduced their risk appetite to rebuild their customer base. Issues like commercial insurance availability and affordability will continue well into the foreseeable future, and with them will come new pressures from industry groups and politicians who have little or no sympathy – or understanding – of the hard mar0 ket’s underlying causes.
Who better to host your broking system than the people who designed and built it?
More and more businesses are looking at Cloud options as a means to streamline operations, reduce capital expenditure and increase operational efficiencies. Feel confident your business' data is in good hands as the Ebix team take care of the full scope of the project, moving your broking system from on-premise to the cloud.
Enterprise Level Cyber Security • Automatic system updates and patches • Enjoy access to a secure VPN • Rest easy with enterprise level of cyber security • Your private data is kept onshore, under Australian jurisdiction.
Better Protection for Your Business • Industry leading Tier III Data Centres • High speed connectivity • Uptime levels of 99.9% • Optional disaster recovery. Save While you Upgrade • Upgrade to new, state-of-the-art hardware • Save on your overall hardware expenditure • Only pay for what you use with user-based monthly pricing • Ease of scalability, both up and down.
Unprecedented destruction: more than half of Christchurch buildings were damaged. Credit: Margaret Low/GNS Science
ew Zealand might be receiving world attention for its handling of COVID-19, but possibly just as important is the way the nation has embraced lessons learned the hard way on how to hone its natural disaster response. Ten years ago this month, the largest of a series of major quakes to strike Christchurch and its surrounds happened on a conservative plate margin between the Pacific Plate and the Australian Plate. Its magnitude was 6.3 and the focus was very shallow at 4.99km deep. That was followed by a sequence of thousands of smaller quakes and extraordinary devastation for the nation which, unprepared for the magnitude of the event, endured years of wrangling to determine costs. There have been around $NZ36 billion in insured losses to date across around 750,000 claims. It was the biggest insured event in New Zealand history and at the time the fourth most expensive insured natural disaster. “This is the largest and most complex, single economic project in New Zealand’s history,” then-prime minister John Key said in 2013. “The scale of the rebuild is unprecedented.” Prior to the Christchurch catastrophe, The Earthquake Commission (EQC), a government agency originally established to deal with war damage but which had earthquakes added to its mandate in the 1940s, employed just 23 staff and was equipped to manage just a few thousand claims a year. Then came the Christchurch catastrophe.
The EQC was the first port of call for about 500,000 residential insurance claims in Canterbury, some of which remain unresolved today. To date, the EQC has paid close to $NZ11 billion in claims for the Canterbury events. A damning public inquiry report published in March last year exposed major shortcomings in New Zealand’s natural disaster cover, finding the EQC was poorly prepared, to put it mildly, to cope with the volume of claims. Today, the New Zealand Government is busy modernising the 1993 Earthquake Commission Act and expects to introduce a bill this year based on the findings of a year of community engagement which resulted in a raft of recommendations. The EQC has agreed a world-first arrangement in which private insurers will in future assess and manage earthquake claims, acting as agents, a vastly more efficient arrangement removing a number of the causes of anguish and delays from the Canterbury earthquakes experience. “Some of the people of Canterbury are still, after all this time, waiting,” Consumer NZ Head of Research Jessica Wilson told Insurance News. “There’s been a legacy of botched repairs.” In a notorious two-step process, the EQC’s claims management was capped at $NZ100,000 (later raised to $NZ150,000). Cases that went over this sum were forwarded to private insurers, where the process started all over again. Only after the Christchurch claims shemozzle did
The Canterbury tails After a decade of wrangling, the messy Christchurch earthquakes recovery has morphed into a collaboration between insurers and the EQC By Miranda Maxwell
the EQC introduce a policy under which a single case manager deals with the settlement of each claim, rather than multiple individual contacts separately dealing with damage to the house, the land, the drains and so on. “It was a very messy and difficult process for customers to navigate through at a time of severe need which certainly created a lot of stress for people,” EQC Chief Executive Sid Miller says. “The customer was really sort of caught in the middle of this complex process, and many handovers, which led to incredible frustration.” A decade on from February 22, 2011, the details of the claims confusion continue to cause shock and bewilderment. The tragedy resulted in the deaths of 185 people, and thousands more were injured. More than half the city’s buildings were damaged. The economic and social aftershocks have rippled through the community in the years since. Arcane terms like “over cap”, “liquefaction” and “red zoned” are all too familiar to Canterbrians, as the city of 350,000 clocked up an insurance claim for every man, woman and child, as Insurance Council of New Zealand (ICNZ) Chief Executive Tim Grafton puts it. “It was a very complicated, very large event,” he tells Insurance News. “Lots of different building requirements had to be developed, depending on the classification of the land and foundations.” The EQC freely admits it was slow to adapt and not as easy to deal with as it should have been. The inefficient system, which also managed repairs, saw
unfortunate competition with private insurers for the same pool of resources, such as loss adjusters, and led to the EQC using builders instead, prompting complaints of unprofessional results. “You need to have the most efficient use of resources across the whole insurance sector, whereas that fragmentation of it created an awful lot of problems,” Mr Miller says. “The EQC was rightly criticised.” The innovative new claims processing model, which is in implementation phase at the moment and will go live in the middle of this year, will see private insurers handle New Zealanders’ claims from start to finish, with the EQC reimbursing the insurers. “We are the first in the world to have done that, so there is a lot of interest globally,” Mr Miller says. “We are certainly quite unique in the way we are positioned now, and I want to acknowledge that is about learning the lessons from Canterbury. “We are tapping into a workforce that’s already there dealing with a very high volume of claims for a single lodgement, single settlement pathway.” The EQC and its board retain all their statutory responsibilities and will be responsible for monitoring the performance of insurers in handling claims to ensure everything is compliant with the EQC Act. The ICNZ’s Mr Grafton says private insurers will now have “clear line of sight right from the get-go” and avoid the “duplication, and sometimes triplication” that occurred after the Canterbury events when a claim went “over cap”. “That was totally unacceptable and I am very
“Insurance has definitely proved its worth. Having said that, there have been lessons.”
pleased that the EQC and private insurers have come together to address that issue and remove those hurdles.” Mr Grafton says. Not everyone loves the new arrangement. Consumer NZ says there are cost implications of “farming that process out to a range of different insurers” rather than having it centralised within the EQC. It would prefer the EQC claims cap to be raised to $NZ400,000 instead. While that would increase the EQC levy paid alongside home insurance, Ms Wilson says it should also reduce insurance premiums. “The amount you pay your private insurer should go down because they are paying much less of the risk,” she says. The EQC’s $NZ100,000 level, which was in force until 2019, was set in 1993 when the estimated cost of a house build was $NZ774 per square metre. It’s now estimated to be closer to $NZ3000 per square metre. The recovery response to the earthquake catastrophe has dramatically changed the topography of the Canterbury region. Much of the land in eastern Christchurch was very low lying with a low water table, either side of the Avon River, and highly vulnerable to earthquake-caused liquefaction in which water-saturated sediment lost strength and became fluid. Large areas of towns such as Dallington were deemed unfeasible to rebuild on and placed into a residential red zone, under which around 8000 houses were voluntarily acquired and demolished. Further west are higher water tables and non-liquefiable land. This has benefitted satellite towns such as Rolleston. Here, only a few houses were condemned and there has been a boom in demand for property,
encouraged by a new motorway. Almost the entire CBD was demolished, though large parts of that have now been rebuilt, assisted by more than $NZ10 billion in commercial property private insurance settlements. Commercial insurance payouts after the earthquakes – exclusively the remit of private insurers – broke national records. Christchurch City Council received a record $NZ635 million and the University of Canterbury $NZ550 million from their insurers. The Lyttelton Port Company received $NZ440 million after mediation with Vero, NZI and QBE, while the Canterbury District Health Board settled for $NZ320 million, and the Arts Centre $NZ163 million with Ansvar New Zealand and Lumley Insurance. Insurers also helped with the establishment of a Residential Advisory Service (RAS) to provide free legal advice and helped community groups support Cantabrians with social issues. ICNZ says a lot has changed for the better in the region, with more resilient buildings erected. These have attracted more affordable insurance premiums, which have been a catalyst in changing the complex relationship between government, public insurers and residents. “The scheme and the insurance industry in New Zealand was tested like never before,” the EQC’s Mr Miller says. “We’ve learned an awful lot on the way.” Fortunately, New Zealand had very high levels of insurance penetration in both residential and commercial assets, and insurance and reinsurance effectively met the costs of around three-quarters of all losses from the earthquakes.
Medium to Higher Hazard Property The placement of Medium to Higher Hazard Property insurance can often require complex and bespoke solutions. Since 2001, Epsilon has been making sense of the complex. In a rapidly changing market, opt for stability, consistency and reliability. As other insurers exit the market and limit capacity, Brokers can rely on our experience and expertise: •
Stable internationally rated security
Consistent underwriting guidelines and processes
Reliability through market-cycles
Quick turnaround times and responses
Access to decision-makers with extensive underwriting experience
Broad appetite with a wide range of occupations considered
Lead or follow capacity
Local claims handling authority.
Epsilon’s policies offer flexibility and innovation through the development of close, long-term relationships with Brokers whilst gaining a deep understanding of the risks we insure.
Let us help you with your client’s complex risks, contact one of our Underwriters today: T (02) 9299 3466 or (07) 3733 1033 E firstname.lastname@example.org S.1503, Lvl 15, 1 Market St Sydney 2000
S.1203, Lvl 12, 133 Mary St Brisbane 4000
Epsilon Insurance Broking Services Pty Ltd ABN 68 097 402 134 | AFSL 245612
“Christchurch is back to being a very vibrant city. There are still things to be done but the people are really active and enjoying life in their city.”
“It’s been a positive story,” Mr Grafton says. “Learnings taken from the experience will make the response to the next major event much better. “[The Christchurch quakes] were very substantial, huge for New Zealand, in terms of losses and the impact on the economy. So insurance has definitely proved its worth. Having said that, there have been lessons.” Those lessons are being applied across the nation, for example in Wellington, a high-risk seismic area. Much of the capital city’s CBD is built on reclaimed land. “It has been built in the wrong place,” says Mr Grafton, whose office sits on an escarpment above the low-lying CBD. “We have got to be focusing on how we can make rebuilding in Wellington more resilient.” Mr Grafton says the Canterbury earthquakes, which produced insured losses in the order of $NZ23 billion for private insurers, have helped refine insurance pricing, which now better reflects the true underlying risk. There has been a “very clear message” about what is required from planners, builders and other stakeholders. “The truth is that the pricing of the risk had been far below what it should have been for many years,” he says. Understanding the risks around liquefaction, multiple earthquake events occurring over many months and the ways multi-story buildings behave when shaken has since been perfected, giving confidence to reinsurers. Mr Grafton says he “firmly believes” reinsurers will continue to support New Zealand. The country buys some of the largest reinsurance programs in the world, spurred by its almost saturated insurance penetration. EQC is just starting this year’s negotiations for its $NZ6.2 billion program, and will know the outcome by
the end of March. Mr Miller is confident the new agreement with private insurers will assist the faster settlement of claims and less disputes via the single settlement path. “I am entering the [reinsurance] negotiations from a confident starting point,” he says. “We are certainly hearing that there is capacity in the market. We continue to have their confidence and they continue to support and grow the program. It’s been a positive start.” ICNZ approached the EQC after the Kaikoura earthquakes in 2016, insisting they could do better than in Christchurch if insurers were made agents for managing and settling the commission’s claims so customers had one point of contact, accountability and responsibility. The arrangement agreed formally last year followed a spate of public apologies from the EQC, which apologised “unreservedly” for “shortcomings in our response to the Canterbury earthquake”. The EQC said it was required to take on functions it was “not well equipped” to perform, particularly a huge managed repair program, while it was inundated with an unprecedented number of often complex claims. Cost allocations also became an issue because a series of earthquakes struck the region between the two disasters, resulting in complexities in calculating building and land damage plus the cost of repair between the different earthquake events. Some of the initial Christchurch assessment was done visually and the real damage was only discovered much later, with what was deemed superficial damage in the first event later revealed to be significant structural damage in subsequent events. That created many challenges in trying to apportion amounts between
events under reinsurance contracts. “We did not do as well as we should,” former EQC Chairman Michael Cullen said in acknowledging serious criticisms of its handling of the earthquake claims. “This has left a legacy of mistrust and hurt that we must continue to address and remedy,” he said, admitting the commission “too often added to the trauma felt by the residents of greater Christchurch”. Inquiry Chair Dame Silvia Cartwright noted “an adversarial environment of continuing litigation” between private insurers and the EQC over land damage valuations or sums owed by the EQC to private insurers. Since then, Suncorp – which operates the Vero Insurance and AA Insurance brands in New Zealand – as well as IAG New Zealand and locally owned listed insurer Tower have reached cost allocation settlements with the EQC for the 2011 earthquake claims, avoiding protracted court proceedings. “We’ve captured an awful lot through the experience with Canterbury,” Mr Miller says. “Christchurch is back to being a very vibrant city. There are still things to be done but the people are really active and enjoying life in their city. “It’s about staying ready and being adaptable and agile and not unprepared when [the next big earthquake] happens, because we don’t know when it will occur. But we 0 know it will.”
‘Act now or suffer the consequences’ Reinsurers worry about global climate change inaction after a destructive US hurricane season and massive wildfires By Bernice Han
he world’s largest reinsurers have highlighted the increasing cost of natural disasters, warning that concerted action to reduce the causes of climate change is becoming increasingly important. Munich Re says weather-related events in the US in 2020 are a reminder to the rest of the world about the price of inaction on climate change. It says political leaders have struggled to present a united front to reduce greenhouse gas emissions since the Paris Agreement came into force in 2016. The German reinsurer says natural disaster losses and the severity of perils will worsen if the world continues to shrug off the impacts of climate change. The financial consequences are clear, with global economic losses last year about $US44 billion above the 2019 total. “Natural catastrophe losses in 2020 were significantly higher than in the previous year,” Munich Re board member Torsten Jeworrek says in a report on last year’s natural disasters. “Record numbers for many relevant hazards are a cause for concern, whether we are talking about the severe hurricane season, major wildfires or the series of thunderstorms in the US. “Climate change will play an increasing role in all of these hazards. Five years ago in Paris the global community set itself the target of keeping global warming well below 2 degrees Celsius. It is time to act.” Swiss Re has taken a similar line in its roundup of 2020’s global natural catastrophes, which estimates insured losses at $US76 billion, up 40% from 2019. Including man-made disasters, total insured losses came to $US83 billion, the fifth costliest year for the industry since 1970. The Zurich-based reinsurer says the losses were driven by a record number of severe convective storms – thunderstorms with tornadoes, floods and hail – and
wildfires in the US. These and other secondary peril events in the US, which accounted for 70% of insured losses caused by natural disasters last year, are expected to worsen because of climate change. “As with COVID-19, climate change will be a huge test of global resilience,” Swiss Re’s Chief Economist Jerome Jean Haegeli says. “Neither pandemics nor climate change are ‘black swan’ events. But while COVID-19 has an expiry date, climate change does not, and failure to ‘green’ the global economic recovery now will increase costs for society in future.” The reinsurers’ reports are matched by a separate assessment from Aon, which says 76% of the $US97 billion in insured losses recorded last year came from the US and the 10 leading insured events all took place there. Of the 28 individual disaster events that crossed the billion-dollar claims loss mark, 22 occurred in the US. Overall economic damages from natural catastrophes were around $US268 billion, Aon says. The US share of economic damages was about 44%. Apart from a hyperactive hurricane season that rewrote the record books, severe convective storms proved equally damaging. A rare derecho – a line of thunderstorms with widespread damaging winds – generated damage of $US11 billion when it pummeled the Midwest region in August. Munich Re’s report puts the US share of the $US210 billion in overall economic losses caused by natural perils last year at 45% or $US95 billion, more than any other country. When measured on an insured loss basis, the world’s largest economy also occupied top spot, accounting for 82% or $US67 billion of the $US82 billion that insurers
had to pay out for disaster-related claims. In terms of insured losses by events, the disasters that make up the five costliest catastrophes for insurers had a US connection too. Hurricane Laura last August topped the list at $US10 billion, followed by the California wildfires ($US7.5 billion) and severe thunderstorms in the Midwest region ($US5 billion). Hurricanes Isaias and Sally rounded up the top-five list at $US4.1 billion and $US3.5 billion respectively. In 2019 the US portion of global economic damages from natural disasters was just $US51 billion and $US26 billion for insured losses. That the numbers rose so sharply a year later, to $US95 billion and $US67 billion for economic and insured losses, reflect in part the increasingly adverse impact of climate change on weather events in the country. The annual Atlantic hurricane season, which starts in June, produced a record 30 storms by the time it officially finished in November, breaking the previous alltime high of 28 in 2005. Of the 30 storms recorded, 13 progressed to “hurricane” status. “The hyperactive season in the Atlantic was a result of a number of factors,” Munich Re says. “Aside from unusually warm sea surface temperatures, in which climate change already plays a part, La Nina conditions in the equatorial Pacific also acted as a driver.” La Nina is the cold extreme of the El Nino-Southern Oscillation and creates atmospheric conditions that promote the development of cyclones in the North Atlantic. The latest hurricane season also set a new landfall record. Twelve hurricanes made landfall last season, three more than the previous record. Overall losses from the hurricane season in North America came to US$43 billion, of which $US26 billion was insured. The impacts of climate change are not just confined
to the US. In the regions north of the Arctic Circle, temperatures rose more than twice as high as the average global increase. And in parts of northern Siberia extensive wildfires raged as temperatures soared above 30 degrees Celsius. Ernst Rauch, Munich Re’s Chief Climate and Geoscientist, says that even if the weather disasters for one year cannot be directly linked to climate change and a longer period needs to be studied to assess their significance, “these extreme values fit with the expected consequences of a decades-long warming trend for the atmosphere and oceans that is influencing risks”. “An increasing number of heatwaves and droughts are fuelling wildfires, and severe tropical cyclones and thunderstorms are becoming more frequent. Research shows that events such as last year’s heatwaves in northern Siberia are 600 times more likely to occur than previously.” Australia also felt the fiery effects of climate change as bushfires in the 2019/20 summer season led to unprecedented losses of $US2 billion. About $US1.6 billion of the losses were insured. Achim Kassow, another member of the German reinsurer’s board, has urged Canberra and other governments in the Asia Pacific to address the worsening climate risks they face. “Although the bushfire risk during this time was elevated due to natural climate oscillations, a number of studies suggest that climate change will make bushfires in Australia more likely in the long term,” Mr Kassow says. “The consequences of climate change remain a serious concern, and this risk is one that governments, the insurance industry and societies across the region need 0 to come together to address and prepare for.”
Selling a career A recruiter is waking prime graduates to the many opportunities of working in insurance By Miranda Maxwell
n the 1967 movie The Graduate, young Benjamin Braddock was famously given short and blunt career advice: “I just want to say one word to you... Plastics.” Like plastics, insurance has notoriously suffered an image problem among the crème de la crème of young university and college graduates, overshadowed by the lure of newer and faster-moving industries and hurt by a perception of a staid, risk-averse culture. Specialist recruiter Fuse is disabusing graduates of this notion with its award-nominated Future Insure Graduate Program, showing Australia’s young high achievers that insurance can in fact be a rewarding, secure and varied career choice suited to a wide range of skills and qualifications. With the help of brokers and other industry partners who commit to taking a minimum of one graduate every year from the tailored program, Fuse is supporting the long-term development of the industry through a pipeline of new talent and future leaders, addressing under-representation of graduate talent in insurance. “These are people that are going to be the future leaders of industry and we need to attract a lot more of the graduate talent that is available,” Fuse Manager Insurance & Wealth Management Cameron Watson told Insurance News. “I don’t think as an industry we’ve done a good enough job to create the right profile around insurance. “We tend to come up against the sexy brands of PWC and Deloitte, banks – all of those big brands that attract the large majority of graduate talent. Insurance is generally a candidate-short market and it’s a real skill shortage,” Mr Watson says. Fuse has already placed more than 50 graduate candidates since the program’s Melbourne launch in 2018, and is now expanding the program into Sydney and Brisbane, with the prospect of placing
as many as 100 graduates each year. The recruiter says it fills a niche that hasn’t been met by previous attempts to snare the brightest new achievers brandishing shiny new degrees. Fuse noticed those mid-tier organisations in insurance saw the attraction of graduate talent but didn’t have the time, resources or structures to develop a whole graduate program in their own right. “The major insurers and the larger broking houses all have enough capacity and capability to have really structured programs, but the next level down is where the big gap is in the market,” Mr Watson says. “We play that little piece in in bridging that gap between the majors and the rest of the market and we think that’s a fairly big gap that exists at the moment in the insurance industry.” Mr Watson says he has “a real passion” for insurance, having spent more than 20 years in the industry across multiple roles at Allianz and CGU, where he managed graduates first-hand. However, like most people who find fulfilment in insurance, his arrival in the industry was a happy accident. “I fell into insurance, and there would probably be 90% of the people that are sitting in insurance now that fell into it as a career as well,” Mr Watson says. “It’s something that I would love to see change. I would like to have graduates that are actually making a conscious choice of insurance as a career.” The greatest challenge as an industry is the “inability to attract more”, he says. There is a lack of true natural progression within the industry via education pathways, with no specific university degree to highlight what a fantastic and versatile industry it is. Mr Watson says the Australian and New Zealand Institute of Insurance and Finance (ANZIIF) and its Careers in Insurance initiative, along with the admirable inhouse graduate programs such as Aon’s, have improved the profile of insurance as a potential career option, yet more needs to be done. “There are a number of really great programs out there, but we felt they missed a pretty integral piece: that in addressing the issue of attracting more and more young talent to the market, it didn’t really go anywhere. “There was a missing piece between that awareness being created and then providing a vehicle for graduates to actually apply for opportunities within the market.” At EY, Global Insurance Leader Isabelle Santenac describes talent as the “secret sauce” for maximising insurance industry returns. But she warns: “Insurers generally rank low in terms of where university graduates want to work. “To attract the right talent in this competitive environment, insurers must define and communicate a clear sense of purpose – why the industry matters, its societal value and why it’s an appealing sector in which
to develop a career.” Fuse is investing resources to understand what motivates graduates and the “fit” their degrees and particular strengths and personality traits have to best align with certain roles. The team then assesses a candidate’s culture fit with the businesses signed up to the program. Fuse says firms can hire “potential, not experience”, and graduates offer proven return on investment, are driven and enthusiastic, socially and environmentally conscious and flexible. Mr Watson says they are keen to learn, have solid transferable business skills, bring new perspectives, are tech-savvy, work well to deadlines, are fast learners and bring fresh ideas and new skills. The program offers two primary intakes a year, conducting screening of candidates and career days with program partners. Fuse works on brand awareness, attracting graduates to the program, and participates post-placement, ensuring graduates are settled into the role and that the company has mentoring capacity. Sponsors commit to employing at least one graduate each year on a starting salary of at least $50,000. Most graduates start in claims, broking or underwriting – the traditional roles in insurance – to develop their capability. Degrees in business, commerce, finance, law and engineering have dominated so far, but the program is not degree-specific. It has enjoyed high retention, with only three graduates departing the program in the first two years, some due to relocation and one returning to teaching, and Mr Watson has a vision for a tightly bonded and active alumni community offering like-minded support among a group naturally bonded by similar demographics. “That’s our grand plan down the track – that we are standing up in front of 500 or so graduates that have all found their way into insurance as a career.” Fuse has found graduates are impressed when they attend assessments and hear about insurance in detail, all it encompasses and the size and scope of the industry. “Their eyes are opened very widely,” Mr Watson says. “Once there’s a greater level of understanding about it, people quickly realise that it is a great industry to be part of.” A recent study by GlobalData confirmed insurance does indeed have a challenging image problem globally, with news sentiment hitting its lowest ebb as COVID struck in March and April among media reports that many travel and business interruption claims were not valid. That was “incredibly damaging to consumer trust and will have lasting damage”, Mr Watson says. He agrees the media generally fosters a negative association with insurance and the industry cops unfair criticism despite only a small percentage of claims being declined.
Finding bright sparks: Fuse’s Cameron Watson
“We’re always hit over the head,” he says. “If there’s been a claim event that we haven’t responded to in every single way in which the community would like, we generally get a bit of a bad rap. “There’s been a whole range of negativity associated with the insurance market over the years that we’ve just battled to overcome as an industry.” Still, the need for insurance will not wane, a need only underscored by COVID and climate change. Yet some see the pandemic possibly helping “sell” a career in insurance as new value is placed on job security. “It’s an industry that has longevity around it and a real level of security that I think is an attractive proposition to anyone – certainly to those leaving school and looking for a long-term career,” Mr Watson says. Declan Gaffney was placed as a graduate insurance broker and says his favourite part of the job is relaying to a client that a claim has been settled. “When we are able to help businesses that have suffered a loss, it feels really good,” he says. Mat Norman graduated with a Bachelor’s degree in Commerce from Deakin University in 2018 and is now a Broker Support Officer at Future Insure. He says he loves the “learning aspect” of his role and that he “could potentially one day save a client’s livelihood or protect them from losing everything”. Testimonials from sponsors say the Fuse process makes identifying candidates and recruiting seamless, and the graduates are of a high calibre, having pre-qualified from both a technical and “cultural fit” perspective. Austbrokers Countrywide Manager of Corporate
Broking Darren Toll says the program is leading the way in addressing the issue of developing future talent in the insurance industry. “For years everyone involved in the industry knew about this issue, but Fuse Recruitment is actively addressing it,” he says. PSC Insurance Brokers Commercial Manager Darren Fenech says PSC had long lamented a lack of awareness in major universities about careers in insurance and has gratefully employed “outstanding” candidates via Fuse. “The benefits of being able to recruit young people directly from university into entry level roles has been obvious to PSC for some time however we really needed someone who could manage that for us,” Mr Fenech says. “Because Fuse were able to accurately convey the opportunities and pathways for a career in the industry, expectations have been managed, met and even exceeded.” Fuse has just become a corporate supporter of ANZIIF, a partnership which Mr Watson says offers a “real strong platform for us to grow this quite aggressively over the next few years”. All of this suggests insurance is a rare sector that under-promises yet over-delivers. “We all say that once you get into the industry you rarely get out of it because it is such an amazing industry,” Mr Watson says. “There’s a really good story to sell about insurance as a career path and we’ve got to continue as an industry to promote it and promote it 0 very loudly.”
SUBSCRIBE TO THE INSURANCE NEWS WEEKLY PODCAST
Our new weekly podcast, INsight, allows Insurance News to give more information, background and in-depth commentary on the issues that are shaping the industry. Subscribe now on iTunes, Spotify and all good podcast channels.
Cheers: the Allinsure team marks a major milestone
Celebrating in style: Insurance Advisernet achieves 25 years Insurance Advisernet has marked a quarter of a century since first opening its doors, with its expanding network of practices across Australia and New Zealand celebrating the occasion this month. The business has grown from a start-up founded in 1996 to an Australian and New Zealand group that looks after more than 95,000 clients and 190,000 policies, and which handles more than $850 million in premium. The firm says independent customer research shows a 97% overall satisfaction rate, a net promoter score of +85 and a 90% claims satisfaction rate, highlighting its ongoing success in assisting clients. “We are extremely proud of our achievements over the past 25 years,” Founder
and Chairman Ian Carr says on the group’s LinkedIn page. “As we enter the next 25 years, we will continue to put the interests of our clients first at all times, led by the four core business pillars that have anchored us since day one: advice, trust, value and choice.” Offices were invited to submit photos of celebratory morning teas held on the February 15 anniversary, with 10 practices receiving $2500 for their chosen registered charity from the IA Foundation. Australian winners were Thompson Insurance, Allinsure, Astute Insurance Services, Strata Insurance Solutions, IAA Merimbula, Northern City Insurance Solutions, IAA South West and Fordsure.
In New Zealand, Greenstone Insurance and Allied Financial Advisers received the honours. The group’s conference at the Gold Coast in October will also highlight the anniversary, with teams from Australia and New Zealand set to attend, depending on the COVID-19 situation. Insurance Advisernet, which has more than 250 authorised insurance advice practices and 900 staff across the two countries, is the largest member of AUB Group. “While much has changed since 1996 our focus remains as strong as ever: to provide our network with the highest quality advice and industry-leading products and 0 services,” Mr Carr says.
Helping hand: brokers Evolve with new Hollard training program Hollard Commercial Insurance (HCi) has rolled out an online training program called Evolve that provides brokers with the flexibility to undertake accredited courses. The program can be accessed through the HCi web portal, with each training module running for about 15 minutes. Content for the training modules is delivered by TurksLegal, an insurance specialist law firm. “We are always exploring ways to save our brokers time and that is precisely how the Evolve program came about,” Jack Joubert, the Chief Executive of HCi, said.
“Our brokers indicated the need for an updated accredited training service that fits in with their schedule so we are delivering training which can be accessed at a time convenient for them.” Response to the program has been good. The “bite sized” modules are designed to be short and informative to fit the busy schedules of brokers. “Given the large number of registrations within the first two days, it’s clear our brokers like the efficiency of the Evolve training which they can do at their own pace,” Mr
Joubert said. “We’re all very excited to offer yet more value to our broker network.” Topics covered by the training program to date include liability for contractors, policy interpretation and an overview of litigation and key sections of the Insurance Contracts Act. “HCi’s commitment to training and providing support for brokers is perfectly aligned with TurksLegal’s belief that a well-informed insurance industry leads to better outcomes for customers, brokers and insurers,” 0 Partner at the law firm Paul Angus said.
AICLA marks year’s end in Brisbane, Perth The Queensland and Western Australia divisions of the Australasian Institute of Chartered Loss Adjusters (AICLA) held end-of-year events for its members, who responded enthusiastically to the gatherings. The Queensland event at Brisbane’s W Hotel in November was a sellout, with 145 members, retired members, suppliers and other guests in attendance. It also was AICLA President Glyn Lloyd’s first official event since he took on the role. Josh Walters, the winner of the 2020 Carey Bird Scholarship, was on hand to receive his framed certificate from Elouise Cave, who was recently elected Queensland Chairman. Following the luncheon, the Queensland division announced a donation of $2000 to the Children’s Hospital Foundation. The donation is part of its longstanding support for the foundation and its work. The WA Division Diary Sponsor and Christmas Function was held at the Marmion Angling and Aquatic Club in December. Almost 100 guests turned up for the event, which invited Karl Langdon, the former West Coast Eagles AFL footballer and commentator, 0 as guest speaker.
UAC holds face-to-face expo The Underwriting Agencies Council (UAC) hosted a successful Sydney event, giving the industry an opportunity to meet up and network after months of pandemic restrictions. Some 180 brokers and 43 exhibitors took part in the Northwest Sydney Underwriting expo at Bankwest Stadium in Parramatta in November. Staggered sessions were held during the one-day event in accordance with COVID-19 social distancing rules. General Manager of UAC William Legge says the industry had been
looking forward to the expo. “We found the desire by brokers to have a face-to-face is as intense as ever, especially with all the cancellations we all have experienced,” Mr Legge said before the event. “Our brokers and members are very much looking forward to it.” Four lucky brokers went home with vouchers in time for the holiday season after their names were pulled out in a prize draw sponsored by UAC Business Service member 0 Sedgwick.
maglog > W
hen Insurance News launched 11 years ago, Facebook was a useful and entertaining online platform in the early stages of learning how to screw billions of dollars in revenue out of advertisers by tailoring its advertising to customers’ individual interests. Who could have foreseen that 10 years later it would close down every Australian news site, including Insurance News, rather than negotiate with publishers in Australia. Now that the dust has cleared and Facebook has backed down for the time being, it’s worth looking at the ways the so-called digital giants interact with the companies that provide the material they republish and sprinkle their ads all over. Did I say interact? I meant ignore. Facebook is a tremendously powerful machine operated by a man who still dresses like a college kid but mainly just looks confused. Mark Zuckerberg isn’t an inspirational genius like the late Steve Jobs, and neither is he a hard-headed, laser-focused innovator and businessman like Jeff Bezos. He’s just a guy who allegedly stole* an idea that coincided perfectly with the growth of the internet. But for some reason he hasn’t yet finessed the art of balancing awesome reach and power with the realities of the world. For example, had Facebook (and Twitter) acted intelligently from the start towards Donald Trump and his stream of unhinged tweets and posts, would the United States have got into the sort of mess that led to the invasion of the Capitol in Washington in January? So with that in mind we shouldn’t be too surprised that Zuckerberg made the decision he did when it came to new Australian legislation that would force the digital giants, especially Google and Facebook, to strike a deal to share the advertising revenue with Australia’s major news publishers. The publications get their articles out there, but at present Google and Facebook keep all but a small percentage of the ad revenue. While Facebook’s reaction to the legislation was spiteful, Google’s threat to withdraw from Australia for the same reason would have hurt far more Australian businesses had it gone ahead. Which should give us pause to consider whether these US companies should have been allowed to scoop up and bury any potential competitors until they grew to a size where they could behave like Benito Mussolini. I’m indebted to my friend Nassim Khadem, an Insurance News alumnus who is now ABC News’ Business Reporter, for pointing me to her own article
By Terry McMullan Publisher
on the Facebook fracas, which shows that Zuckerberg’s baby is nowhere near as important to publishers as Google. Using the Australian Competition and Consumer Commission’s Digital Platforms Inquiry report, she shows how 34% of referrals to the websites of Australian print/online and online-only in 2017/18 came from Google, while only 16% came from Facebook. Last year we published 2678 articles online, 26 of them Breaking News and those articles have been read 7.7 million times. We have just under 30,000 subscribers and 35,000 LinkedIn followers and our articles are regularly picked up by Google News. We just see that as part of being accessible to subscribers and readers. We’re not hanging our future on getting a cent from the ads Facebook and Google sprinkle around articles like confetti. Having seen the damage done by Google a few years ago when it decided to move in on small businesses and downgrade them to the back pages of their search engine, we don’t think any of the digital giants have a conscience. As an independent publisher our focus has always been on attracting the largest possible audience through the quality and value of our journalism – which also ensures we give our advertisers the best access to the people they want to reach. Nassim says small news publishers who are heavily reliant on referrals to their news sites from Facebook would have suffered from Zuckerberg’s ridiculous dummy-spit. We didn’t, thanks to the strong support of advertisers, the industry and our readers. History shows that while Facebook and Twitter are top of the heap at present, it’s still consumers who drive the digital universe. New platforms and concepts are emerging all the time, and somewhere right now someone is toiling in their parents’ garage developing the next big thing in online person-to-people communications that will diminish the power of Facebook – if the digital giants are prevented from buying it for themselves. For Insurance News, the digital future isn’t reliant on the digital giants. Our plans include such things as podcasts and whatever other innovations will best serve our readers’ interests. And in a world that’s changing so fast, who knows where that might take us? 0 * Be sure to read Ben Mezrich’s excellent book “The Accidental Billionaires: The Founding of Facebook, a Tale of Sex, Money, Genius, and Betrayal”.
Email. email@example.com Tel. 1800 411 580 Web. 360UW.com.au/CommercialMotor
YOUR FUTURE IS READY.
Ready to branch out and make your mark? Now is the perfect time to start your own adviser business with Insurance Advisernet. ✓
Australia’s original AR Network
25 years of experience and proven success
Approaching $1 Billion in Gross Written Premium
Access to 100+ approved insurers
Industry leading web-based software solutions – Sales Management, Risk Management, Policy Management, Claims Management, Business Information Management
Strong compliance regime and ongoing support.
CELEBRATING 25 YEARS
WHY WAIT ANOTHER YEAR? To discuss the opportunities, please contact your regional manager today or visit insuranceadviser.net to find out more.
0437 884 003
0418 534 883
0428 233 032
2018 WINNER Authorised Representative Group of the Year
2019 WINNER Authorised Representative Group of the Year