Insurance Business 3.06

insurancebusinessonline.com.au Issue 3.6

NEXT GENERATION ATTRACTING MORE TALENT TO INSURANCE AGENTS OF CHANGE BROKING GROUPS RESHAPING THE MARKET

PETER HARMER

On IAG post-Wesfarmers acquisition

THE YEAR AHEAD

Industry leaders share their thoughts on the outlook for 2015

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COVER FOR COMMERCIAL FLEET

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EDITOR’S LETTER / 3.6

COPY & FEATURES EDITOR Tim Garratt REPORTER Jordan Lynn CONTRIBUTORS Ben Abbott, Darren Trott, Stefan Kazakis, Dan Gregory, Kieran Flanagan, Jan Pacas PRODUCTION EDITORS Roslyn Meredith, Moira Daniels

ART & PRODUCTION DESIGNER Joenel Salvador DESIGN MANAGER Daniel Williams

SALES & MARKETING GENERAL MANAGER Peter Smith COMMERCIAL DEVELOPMENT MANAGER Sophie Knight COMMUNICATIONS MANAGER Lisa Narroway MARKETING EXECUTIVE Alex Carr TRAFFIC MANAGER Abby Cayanan

CORPORATE CHIEF EXECUTIVE OFFICER Mike Shipley CHIEF OPERATING OFFICER George Walmsley MANAGING DIRECTOR Justin Kennedy CHIEF INFORMATION OFFICER Colin Chan HUMAN RESOURCES MANAGER Julia Bookallil Editorial enquiries Tim Garratt tel: +61 2 8437 4721 tim.garratt@keymedia.com.au Advertising enquiries Commercial Development Manager Sophie Knight tel: +61 2 8437 4733 sophie.knight@keymedia.com.au General Manager Peter Smith tel: +61 2 8437 4740 peter.smith@keymedia.com.au Subscriptions tel: +61 2 8437 4731 • fax: +61 2 9439 4599 subscriptions@keymedia.com.au Key Media keymedia.com.au Key Media Pty Ltd, Regional head office, Level 10, 1–9 Chandos St, St Leonards, NSW 2065, Australia tel: +61 2 8437 4700 • fax: +61 2 9439 4599 Offices in Auckland, Manila, Toronto, Denver insurancebusinessonline.com.au Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as Insurance Business magazine can accept no responsibility for loss.

BEGINNINGS AND ENDINGS The end of another year is almost upon us. It’s time to reflect on the highs and lows of the 12 months just passed, and cast our gaze forward to next year and contemplate all that could lie in store.

For our final issue of 2014, we’ve turned to several insurance industry leaders and asked them to share their highlights of this year and what they foresee for 2015 – the challenges, the opportunities and their own goals.

Something that’s struck me, whenever I’ve had the opportunity to speak to an industry leader recently, has been the passion they’ve exerted in discussing insurance. And it’s not just the leaders. My encounters typically with insurance industry professionals have been conversations in which people have expressed a great deal of goodwill towards the profession and the options it can offer and is, in fact, offering.

And yet, as one leader told me, it’s a well-kept secret. How can this change? How could the passion inside the industry be best conveyed to those outside it, so that insurance becomes a career of choice for those in search of new employment? It’s a difficult question, and one we’ve given considerable attention to this month in our feature, ‘Winning over the next generation’.

The good news is that there are indications some positive changes could be on the way.

Change is something Peter Harmer has played a key role in driving this year, as the new IAG landscape begins to take shape, following their acquisition of the Wesfarmers under­ writing businesses. He sat down recently to tell Insurance Business how it’s going, and what’s on the horizon.

I trust that our packed final issue for the year will see you through the holiday season. And as your new editor, I look forward to returning in 2015 to bring you all the new stories the industry has to offer.

Tim Garratt

Tim Garratt, editor, Insurance Business

CONNECT

Contact the editor: Printed on paper produced from 100% sustainable forestry, grown and managed specifically for the paper pulp industry

tim.garratt@keymedia.com.au DECEMBER 2014 | 1

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CONTENTS / 3.6

30

COVER FEATURE

THE YEAR AHEAD The outlook for 2015 from insurance industry leaders

NEWS 04 | Round-up Brooklyn and collaborators offer ‘Ebola coverage’

08 | Analysis National broking groups reshaping the market

12

THE BIG INTERVIEW Peter Harmer IAG’s new chief executive of commercial insurance discusses the Wesfarmers acquisition

47 | Why fearlessness often leads to failure The role of fear in leadership

50 | Stats Brokers on underwriters

INSURANCE INSIDERS 52 | Social life

FEATURES 18 | Winning over the next generation

VERO Awards celebrates risk managers, and ACE staff get out into the community

How does the insurance industry change its image and attract more talent?

55 | Favourite things

38 | Trade credit insurance: Awaking

NIBA president and managing partner of Reliance Partners David Wyner

the sleeping giant Wotton + Kearney discusses the growth of trade credit insurance in Australia

BROKING INTELLIGENCE 40 | Hourly rate identity crisis

56 | The last word Claim Central’s Darren Trott on the claims business of tomorrow

Maximising the return on your investment in your business

44

BROKING INTELLIGENCE Secrets to building an engaged staff The benefits of focusing on staff retention

issue

3.6

2 | DECEMBER 2014

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NEWS / ROUND-UP

BY THE NUMBERS

15,145

The number of reported cases of the Ebola virus in the current outbreak up until 16 November, according to the Centers for Disease Control and Prevention

5,420

The number of reported deaths as a result of the Ebola virus in the current outbreak up to 16 November, according to the Centers for Disease Control and Prevention

7,069

The number of cases of the Ebola virus in Liberia – currently the nation with the highest number of reported cases – in the current outbreak up to 16 November, according to the Centers for Disease Control and Prevention

50%

The average Ebola virus fatality rate, according to the World Health Organization

US$6.18b

The amount of money US President Barack Obama requested from the US Congress in order to address the current Ebola crisis both in West Africa and the US

BROOKLYN AND COLLABORATORS OFFERING ‘WORLD FIRST’ EBOLA COVER Local businesses now have access to the world’s first ‘business interruption’ policy for an Ebola-related shutdown, as the international community continues its efforts to deal with the biggest Ebola epidemic in history.

Brooklyn Underwriting has joined with Ark Syndicate 4020 and Prospect Insurance Brokers at Lloyd’s to be the first to offer the product in Australia, assisting businesses in protecting their organisations against potential business ramifications arising from Ebola.

“Prospect had been working with Ark Syndicate 4020 to offer this product in the USA with some success,” says Brooklyn Underwriting business development executive Tim Fairbrother. “When the opportunity came up to work with Prospect and Ark in delivering this product to the Australian market, we jumped at the opportunity!

“Following the outbreak of the avian flu a few years ago, most traditional policies … excluded ‘quarantinable diseases’ as defined by the [Quarantine Act 1908 (Cth)], and this included Ebola. With a serious gap in the market, and a genuine exposure, the development of this product has been perfectly timed.”

And while the new offering is a business interruption

policy, Brooklyn is already looking to tailor the product to cover another Ebola-related type of exposure, according to general manager David Porteous.

“The current product is a ‘business interruption’ policy per se, whereby this [new] policy would be a form of ‘contingency’ insurance. The trigger remains Ebolarelated.”

Porteous says the agency is looking to make a deal that covers this type of exposure with a large Australian university. As an example of a covered contingency, he mentions a scenario in which a university is suddenly faced with losing hundreds of thousands of dollars in international student fees, as a result of a federal government decision to deny visas to students because of their residence in an Ebola-affected nation.

Time will tell just how far the demand for Ebolarelated coverage might reach.

On the question of whether Brooklyn expects to see other Australian players offer similar coverage, Fairbrother says, “Depending on whether Ebola hits our shores, it’s hard to say if any others players will jump in, but, with insurance, this is always a possibility.”

4 | DECEMBER 2014

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Lumley Insurance is a trading name of WFI Insurance Limited ABN 24 000 036 279 AFS Licence No. 241461.

The ‘Greater Than’ symbol is a registered trademark of Lumley Insurance.

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NEWS / ROUND-UP

How much do consumers trust businesses?

70% 53%

INSURANCE COMPANIES

84% 78% 78% 72% 82% 71% 80% 74% 68% 69%

SUPERMARKETS

ONLINE SHOPPING SITES

TALK TO ME: CUSTOMERS WANT MORE COMMUNICATION WITH INSURERS Only 53% of Australians trust their insurance provider – a staggering finding of Ernst & Young’s (EY’s) Global Consumer Insurance Survey 2014.

In this third year of the survey, EY asked 24,000 people in 30 countries a host of questions about their relationships with insurance providers.

The result of 53% on the question of trust was well below the global average (70%), and well below local consumers’ level of trust in supermarkets (78%) and banks (71%).

But Walter Poetscher, EY’s insurance strategy and customer advisory lead, said consumer trust was in line with other mature markets. “Ultimately, what it [the survey] really highlights is a significant gap [between] the engagement and attention insurance customers expect and what they currently receive.

“It’s quite a staggering number of 50% of Australian consumers [who] would like to be engaged more than once a year and only half of them are currently receiving this … Quite an unusual finding in market research that consumers ask for more information in an age where they seem to be bombarded by communication.”

Another significant finding to emerge from the survey was that consumer advocacy of a provider, traditionally a good indicator of a brand’s health in the marketplace, may not actually point to the amount of business an organisation is retaining. Poetscher says, “About twothirds [of those surveyed] say they are likely or very likely to recommend their insurer and a staggering 38% of

BANKS

CAR MANUFACTURERS

PHARMACEUTICAL COMPANIES

Global

Australia

Source: Reimagining customer relationships – Key findings from the EY Global Consumer Insurance Survey 2014

those advocates have indicated they’ve closed their policy or switched providers in the last 18 months, which gives an opportunity to rethink how to stay connected with consumers once they’ve left.”

According to Poetscher, advocates still leave an insurer for two reasons – price point and failure to meet the customer’s need.

Poetscher says, “There is an opportunity for insurers to extend their definition of ‘customer’ beyond the tenure they have with the organisation and stay close and stay in touch and try to meet the customer need in future, because they are likely to hold them in high regard and come back … insurers really have the opportunity to create a winback strategy and stay connected to the customer.

“Customer centricity and really understanding what they [the customers] want is at the core of this.”

As to the role of brokers in trying to bring communication between customer and insurer into line with customer expectations, Poetscher says, “I think brokers should continue to get in touch but I would put an emphasis on the insurance provider to compliment what brokers and agents are doing and stay connected with the consumer.

“There is a win-win situation for insurance providers, brokers and customers getting more connected to really increase the value. It’s the collaboration that is the opportunity.

“With the rise of digital, big data and analytics, it’s going to be more accessible for insurers to create timely, relevant and meaningful interaction with their customers.”

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INSURANCEBUSINESSONLINE.COM.AU

THE FORUM

Finance Minister Mathias Cormann told the Senate Economics Legislation Committee recently that it was the federal government’s intention to make regulatory changes “as soon as possible”, allowing unauthorised foreign insurers to offer coverage to Australians.

The proposed changes, aimed at driving down the price of insurance premiums in North Queensland, have been the subject of considerable scrutiny since their announcement. Notably, Karen Hardy, director of ACME Insurance Brokers, has submitted to government the first draft of a petition containing more than 100 signatures, with a view to trying to halt the proposed regulatory changes.

Concern has also arisen from comments made at the Senate Committee meeting which indicated

that the proposed changes had no geographical determination.

In other words, while aimed specifically at addressing the challenges in North Queensland, the changes would also give Australians in other parts of the country access to unauthorised foreign insurers.

Speaking about the proposed changes, Senator Cormann told the committee, “We are making a very genuine attempt to come up with ways and means to increase competitive tensions in the market such that more people across Northern Queensland are able to access insurance cover at a price that is more affordable, understanding that there are some trade-offs along the way that come with that.”

ROBERT COOPER ON 3/11/2014 AT 1:06:04PM

“What is interesting is opening up, not just to North Queensland but the whole of Australia, the use of unauthorised foreign insurers.

“The only Broking firms who can vet carefully these unauthorised foreign insurers are the International Brokers. They usually have market security departments who scrutinise all the markets they use. They then can now set up cheap schemes using unknown markets in the USA and Europe.

They have the resources to bypass the Australian Insurance market altogether. They can pressure these markets to offer reduced rates and pay legitimate claims or lose worldwide support from their company.

“The pressure is now on small brokers to compete knowing that the buck will stop with them if a claim goes wrong. Our only hope is for our cluster groups to come up with something to respond with.

“The end result is likely to be that the big International Brokers will benefit and once again small brokers will be hit hard.”

AGEING BROKER ON 3/11/2014 AT 11:40:49AM

“Cormann is playing a dangerous game here and evidently he expects brokers to maintain UFI scrutiny and oversight that he is opting out of.

“This is not the solution to the problem but perhaps he thinks that a dog whistle to the ‘authorised’ market to get in and provide the required capacity in the North will mean that he can move on. If a UFI wants to write business in Australia then they should become authorised, simple.”

BROKER 2 ON 3/11/2014 AT 11:49:20AM

“This is a political stunt aimed at winning votes & brownie points from the uninformed general public.

“When the UFI’s don’t pay the claims or cannot meet the demands in a catastrophe situation, we will all be ‘tarred with the same brush’.

“The government is happy to pass the buck to the brokers, so we can all look forward to a bashing in the future.”

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NEWS / ANALYSIS

AGENTS OF CHANGE

National insurance broking groups are reshaping the market with the growth of formidable underwriting arms. As Ben Abbott reports, brokers and clients are likely to benefit - at the expense of mainstream insurers Steadfast CEO Robert Kelly makes no secret of his hope that the landmark acquisition of eight underwriting agency brands from Calliden Group by year’s end will not be its last foray into the underwriting agency market.

At its recent AGM, Steadfast proudly labelled itself in investor presentations as a ‘consolidator’ of the insurance market, and nominated agencies – alongside brokers – as ‘prime targets’.

Kelly told shareholders – and Insurance Business – that underwriting agency acquisitions, as well as start-up agency businesses, remained a ‘key growth area’ for Steadfast, and a ‘strong’ acquisition pipeline still remained.

Adding to its stable of nine existing underwriting agency brands, the Calliden acquisition will soon make Steadfast the largest underwriting agency group in Australia, with annual GWP of circa $335m. Meanwhile, rival Austbrokers has made clear its intention to continue to grow its Austagencies business, which currently consists of 13 niche underwriting brands, and Arthur J. Gallagher has capabilities many believe it will increasingly deploy in Australia.

This market evolution, a hallmark of what Calliden CEO Nick Kirk terms the corporatisation of insurance broking, marks a profound shift. One that – if it continues – could dramatically alter the local distribution landscape.

THE AGENCY EDGE The value agencies bring to the market is clear to many business clients, who are crying out for the industry to better understand and price niche risks.

“Underwriting agencies thrive because they are specialists in their chosen fields of insurance expertise,” says UAC chairman Heath Amber.

“Broker networks are buying underwriting agencies because they have identified the strength the underwriting agency industry exhibits.”

Kelly says there are some niche areas of insurance “better served” by agencies. He notes their capacity to better understand ‘widgits’ or focus solely on niche risks, as well as their flexibility in placing and pricing these risks, due to their delegated authority, and whole-of-account loss ratio approach.

Kelly also notes the more ‘personal approach’ of agencies, which gives brokers direct access to expert underwriters, rather than being at the mercy of insurer electronic ratings systems or messagecarrying BDMs. Providing clients with a broader range of insurance offers as well as targeted insurance product and personal service can give brokers an edge to boost growth. “It can enhance the professional image of the broker network by having the capability of accessing expert underwriters,” Amber says.

“Every product that we sell and others sell is available to the open market – there is no special deal for us as opposed to somebody else” Robert Kelly, Steadfast

8 | DECEMBER 2014

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REACHING NEW HEIGHTS IN STRATA INSURANCE QUS and AIG have partnered together to deliver superior value and stronger support to strata insurance brokers.

This new partnership with AIG enables QUS to provide even stronger support to the Australian broker market, through an increase in risk capacity and location appetite.

For more information on our new product enhancements or for full details regarding this switch, visit www.qus.com.au.

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In Australia, products and services are written or provided by AIG Australia Limited ABN 93 004 727 753 AFSL 381 686. Not all products and services are available in all jurisdictions and are subject to actual policy language and underwriter discretion.

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NEWS / ANALYSIS

“If underwriting agencies are unable to maintain their operational independence and their specialist staff with product knowledge and expertise, their value as an underwriting agency dissipates rapidly” Heath Amber, chairman, UAC CLUSTERS OF POWER As broker networks snap up agencies and house them under a ‘cluster’ ownership strategy, they are leveraging economies of scale in back-office operations, claims management, and marketing to boost profits. They also gain diversification benefits, and regularly flag the ‘cross-sell’ opportunities.

However, there are broader implications. The rise of insurance broking groups with their own agency arms means the intermediary channel is safer from the dominance of insurers. Brokers now have more power to make change.

“There is the option now for brokers to introduce more carriers into niche areas themselves, as an alternative to the mainstream carriers here,” says Nick Kirk. “It opens up the ability for insurance capital to find its way to brokers in ways that otherwise a lot of brokers would be cut off from.”

Heath Amber says, “It could be seen to change the power structure because broker networks are obviously going to be inclined to place clients’ business where they can achieve the best terms and conditions for the client quickly.”

Kirk said broking networks’ growing agency reach raises the question of how existing carriers will differentiate themselves in the broking channel in future.

“If you take a longer term view, you’d have to say the cost of having many parties involved has to come out of the equation,” he says. “Will insurance companies effectively become ‘lumps of capital’, with brokers doing all the work – such as

administration – between the client and these lumps of capital? Or can insurers differentiate themselves in the broker market?”

DEFENDING THE DNA With a trend towards a concentration of brands under single network owners, is there a risk of these businesses compromising the interests of the client?

Kelly says every product Steadfast sells is available to the open market, with no “special deals” for its network as opposed to rivals in the market.

“Sometimes there is hesitance from ill-informed brokers that perhaps there is some sort of special deal and something untoward is happening,” he explains. “But for the most part we deal with all agencies, and it’s a personal choice for the broker based on knowledge and relationships. It’s quite interesting to see that among the diverse range of underwriting agencies owned by Steadfast, Austbrokers and Gallaghers, the business we all place with one another.”

And from Steadfast’s point of view, Kelly says this won’t change. He says the idea of having products tied or pushed down a particular distribution channel or network was “against the DNA” of the Australian insurance industry, and that the model was based on choice, advice and the client’s best interests.

Nick Kirk says, “I take the view that choice is a good thing for clients, so provided they [agencies] are run as a separate part of the overall group, and they are not and don’t tend to be exclusive for that network, the conflict gets managed quite well.”

Amber says that, as long as there is an “arm’s length” relationship between agencies and any broker owners and the ability for these agencies to deal with all brokers is not curtailed, ownership won’t matter. However, he has a warning. “If agencies are unable to maintain their operational independence and, most importantly, their specialist staff with product knowledge and expertise, their value as an underwriting agency dissipates rapidly,” he says.

ATTRACTIVE TO ALL The appetite from broker groups to acquire agencies is unlikely to abate. Nick Kirk says this can only be a good thing for the industry. “An insurance broker’s role is to find the best deal and be their client’s advocate. The fewer options that they have available, the more difficult it is to do that job.”

10 | DECEMBER 2014

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1300 078 285 Call, scan or visit www.centrepointalliance.com.au

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THE BIG INTERVIEW / PETER HARMER

NEW TERRITORY

Peter Harmer is chief executive of IAG’s newly created Commercial Insurance division.

He spoke to Insurance Business about the group’s progress since acquiring Wesfarmers’ underwriting operations, and what to expect from the industry giant in the year to come

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INSURANCEBUSINESSONLINE.COM.AU

Insurance Business: How are you settling into the new role?

Peter Harmer: I’m really enjoying it. This is a great opportunity for us. We’ve been talking about the potential to organise ourselves more effectively around our customers, and the Wesfarmers transaction has really given us that impetus – the opportunity to think more expansively about how we could structure ourselves. To be sitting inside a customer-focused organisation, supported by what is truly, I think, a world-class shared services operation, allows us to really focus on what are the customer and partner experiences we need to create and how we’re going to go about doing that.

I feel really energised by the level of focus that our new model has brought to us.

IB: Lumley and WFI became part of IAG as a result of the Wesfarmers transaction. What are the key messages you’d like the market to know about what this means for IAG and the services it delivers?

PH: [Lumley and WFI] have very proud heritages.

Both businesses have brands that are between 90 and just over 100 years old. WFI, of course, had a very, very strong rural and regional footprint, and Lumley’s business was very similar to the old CGU business … we’ve been incredibly impressed with what we’ve found within those businesses – the level of discipline, the quality of the people, the quality of the underwriting book. We’re really, really pleased with what we’ve been able to pick up there.

In terms of where we are right now, we’ve finished the first 100 days of planning integration.

We did say right at the outset that there was too much value in these businesses to rush the process.

We really needed to be respectful and take our time and discover all the things that we didn’t know about the business, and make sure that, as we looked at integrating CGU, WFI and Lumley, we did bring the best out of each of those businesses to bear for the benefit of our customers and our partners. So that’s where our focus has been.

We’ve begun the process of working out all of the premises integration; we’ve done the mapping of policy migration – that work will start sometime next year. That obviously has meant we’ve made systems decisions. So we feel we’ve got really good traction not only around the planning, but actually executing against some of those primary and more immediate decisions.

IB: Can you tell us more about the new products in the pipeline?

PH: When we reviewed the products that came to us with both WFI and Lumley against the ones we held within CGU, we found some features that were really quite clever and innovative, and, equally, I think that could be true for some of the CGU products, if you look back into the Lumley and WFI world. We think, by bringing the best of those features together into one product, we’re going to be able to offer our brokers something that they’ve not seen before. And so we’re really excited about getting the systems changes done so that we can actually go live with this new suite, starting from April of next year.

IB: What do you think will be of most interest to brokers with respect to these new product offerings?

PH: I think it goes even beyond the product offerings.

Clearly, as a combined business, we’re going to be able to reach more customers with more solutions than ever before. We’ll have a broader array of products and services. In our new operating model

“We think …we’re going to be able to offer our brokers something that they’ve not seen before”

THE WESFARMERS TRANSACTION: A RECAP December 2013 IAG announces its agreement to purchase Wesfarmers’ Australian and New Zealand underwriting businesses for $1.845bn. The acquisition includes the businesses operating under the Lumley and WFI brands, along with a 10-year distribution partnership with Coles Insurance.

22 May 2014 IAG announces the implementation of a new operating model for its Australian operations, comprising of three divisions (Personal Insurance, Commercial Insurance and Enterprise Operations). Peter Harmer is announced as leader of the Commercial Insurance division.

20 June 2014 IAG announces it has received final regulatory approvals for the acquisition.

30 June 2014 IAG completes its acquisition of Wesfarmers Insurance underwriting businesses.

13 October 2014 100 days after completing its acquisition, IAG reveals plans to reposition the Lumley brand as an underwriting agencies umbrella business, and to combine the product offerings of CGU and Lumley to create a new set of products to be launched in April 2015.

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THE BIG INTERVIEW / PETER HARMER

“I have a very deeply held personal belief that the primary obligation of leadership is to create opportunities for people”

TWO INSURANCE MARKET TRENDS PETER HARMER IS WATCHING

1

The insurance price cycle “CGU competes primarily on the strength of its partnerships and the quality of the service that it provides to those partners, but also our mutual customers. We don’t consider ourselves to be a price competitor. But equally, as pricing softens, it becomes increasingly difficult to grow. And so just managing that sort of balance between profitability and growth is going to be very important for the industry as a whole, and it’s one we’ll be watching to see how it plays out through the course of the next 12 months.”

2

Understanding of the broker’s role “In an increasingly difficult and commoditised world, it’s more important than ever that we support our brokers in being able to establish the value that advice represents to customers. We are launching a new advertising campaign, primarily television, print and radio, which actually focuses on the value of advice to a small-to-medium-enterprise customer and promoting the role that a broker plays in ensuring that those customers have identified the risks appropriately, and instructing their insurers to protect them in the event of unforeseen loss. Again, we’re looking at ensuring we do our bit to invest in a stronger business community by ensuring they understand the need for, and the value of, the advice they can get from their insurance brokers.”

we’ll have greater focus and discipline around making sure that whatever it is we take to market really does meet a customer need, and isn’t designed to meet our own needs first.

I think, also, we’ll have a bigger risk appetite. As a combined business, we’ve got a bigger balance sheet; we’ve got more capacity and resources to deal with more risks, more customer segments, and probably even more geographies than ever before. We’ve been investing at the old CGU for some time now in actually building or helping our business partners build their businesses. And so, as a combined company, we’ll be able to accelerate some of that work. And that work could involve such things as helping them invest in digital enablement … and actually create sales for them that way, but also investing in their people. We’ve synthesised three CGU programs to create a leadership development program for the talented employees of our major partners as well, and I think we’ve put about 30 of those people through these programs right now.

So I think our brokers will expect to see not just a better product suite, not just a broader risk appetite, but actually an increased ability to accelerate some of those investments in their business around sales, and their people around leadership.

IB: One of IAG’s strategic priorities is to drive customer centricity. What are the key things you consider to be essential for a business to become truly customer centric?

PH: We really do encourage people to think about what is the unmet customer need. Historically, I think most businesses have looked at viability first: “Can we make money out of it?” They’ve then looked at “If we can make money out of it, how feasible is it for us to do?’ And then, thirdly, they’ve said, “Now that we’ve built this thing, I wonder if we can find some poor mug customer to buy it?”

We’re really focused on establishing what is that unmet need – ie what is the desirability – first. Then secondly, have we got the resources to be able to bring this thing together? ... And then thirdly … how about we actually make some money out of it? Turning that around from viability, feasibility, desirability, to desirability, feasibility, viability, is exactly how we’re going to drive this change.

That means everything we do has to have the customer and our business partners at the centre. So all of our processes must be built around supporting a customer and/or partner outcome.

The other thing we’re doing … is ensuring every employee inside the company has a direct line of sight on how what they do impacts a customer or partner experience, and that’s critical. We don’t want people sitting in the back office with no idea of what it’s like to be a customer or a partner of our business.

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THE BIG INTERVIEW / PETER HARMER

IB: Is there anything you personally want to achieve at IAG in 2015?

PH: I have a very deeply held personal belief that the primary obligation of leadership is to create opportunities for people. I think the acquisition of Wesfarmers and the successful integration is going to give us a wonderful platform to create some truly exciting opportunities for both personal and professional development for all of our people … I think we’ve also got a great opportunity, as a combined organisation, to play a far greater role in helping communities understand and manage and possibly reduce or eliminate risk, and that’s some­ thing you’ll hear a lot more about from us over the next six to 12 months. We do think our leadership provides us not only with an opportunity, but also an obligation to be as constructive as we can be in these communities, in terms of reducing or eliminating risk.

“One of the things we’re really clear about is that a customer’s experience expectations are not created by our competitors” IB: What are you most looking forward to seeing in the insurance industry in 2015?

PH: Our group CEO, Mike Wilkins, has for some time been a leading voice in the industry for govern­ments to increase spending on risk mitigation, rather than simply on risk recovery, and we’ve begun to get some traction on that. We’ve made some very positive contributions to the Productivity Commission’s report [into natural disaster funding arrangements], which has been picked up already, so we’d love to see a lot more of that activity through next year.

Insurance is an absolutely necessary part of

society’s fabric. But it would be great if people didn’t need it. And I know that’s never going to be the case, but it would be great if we could actually reduce the reliance on insurance by making communities more resilient and safer. I think we’ve made some great progress, and I think government is starting to pick up on this as well, and if we could continue that through 2015, I think that would be a great outcome.

IB: What do you think will be the biggest opportunities and challenges for the industry next year?

PH: I think one of the challenges is where we find ourselves in the pricing cycle. I’ve been in this industry now for 35 years, so I’m well used to pricing cycles. It just never ceases to amaze me that we don’t seem to learn. Our customers do value a little bit of stability, and when prices jerk from very low to very high and back again, it’s really hard for them to budget and plan, and I’m quite sure they sit there wondering if we’re overly sensible or, sometimes, even credible. So trying to navigate our way through this stock market cycle in a way that provides some sort of continuity and certainty for our customers, I think, is a challenge.

I think technology itself is both an opportunity and a challenge. Many insurers are so reliant on legacy systems that they’re going to find it – and I think are already finding it – very difficult to have the agility that their customers require of them.

I think [customers] want to interact with us when it suits them and through their choice of channel.

And that’s fantastic, but many companies are very constrained in being able to meet that need. So, for us, a great opportunity is to continue our investment in our digital platforms, and making sure we’re really listening to our customers and what it is that they want …

One of the things we’re really clear about is that a customer’s experience expectations are not created by our competitors. In a digital world, [those] expectations are created by best-in-class service providers, whether that’s Google, Apple, Yahoo! ... the actual benchmark is no longer set by our competitors. And that’s actually an extremely exhilarating place to be, because it really does

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challenge your thinking about what might be possible. So we’re really looking forward to that as a huge opportunity through 2015 and beyond. And we’ve made a lot of progress already ... I’m really looking forward to … creating superior experiences for both customers and partners through 2015.

IB: Prior to joining IAG, you were the CEO of Aon Limited UK. Can you describe one satisfying experience of that tenure?

PH: The role in the UK was to turn around a business that had once been the jewel in the crown of Aon’s global enterprise. That was essentially a three-year focus for me and was enormously satisfying – being able to lead a team that took a business that was in very poor health, but had once been very proud, and restore it to not just that position of pride but to a position where it was one of the top two contributors to Aon’s financial success.

IB: What has been the most challenging experience of your time in insurance?

PH: While Aon UK was the most satisfying, it was also the most challenging. As I’ve said before, I’ve got a very strong personal belief that leadership’s primary obligation is to create opportunities for people. But to restore Aon UK to financial health, to actually give us the right, if you like, to have some influence over our own destiny, I had to close

a number of offices, significantly reduce the work­ force, and affect the terms and conditions of the remaining workforce. I found that very, very difficult.

Balancing that trade-off between down­sizing the workforce, closing offices, and negatively affecting people’s T’s & C’s versus ensuring we recreated a platform that was going to be sustainable, that could look after the remaining staff and our customers well into the future – I found that very challenging.

IB: What do you consider the key attributes of a person aiming to progress in the industry, and ultimately move into an executive role?

PH: I would say you really need to be a good listener and you need to be able to identify what are the right questions you need to ask. You also need a curious mind. You need to be able to ask those more difficult questions and you need to be actually looking continually for a different way to do things … and so having that curiosity, I think, is incredibly important … You have to have a sense of selfless leadership, if you like, and take a genuine caring interest in other people, because if you can’t, you’re never going to understand the needs of a customer or a business partner. And then, I think, you really need to be able to paint a compelling picture of the future. You need to be able to inspire people through what you can help them see by way of opportunity.

PETER HARMER ON ATTRACTING NEW TALENT TO THE INSURANCE INDUSTRY “I think insurance is absolutely unique in that we touch every single industry and every single business model in the world. People in insurance get to know a little bit about so many industries, so many businesses, so many business models, so many ways of doing business. It’s always terribly interesting.

We also have a huge range of roles, whether they’re technically focused or relationship management-focused. There is a role for every kind of conceivable vocation sitting inside the insurance industry.

“Moreover, I think what’s not understood by the general population is the very important

role that insurance plays in society. Insurance provides certainty to businesses, to families. It enables them to plan for tomorrow with a degree of confidence, and without that protection life as we know it would be very, very different.

“Insurance is an extremely noble profession, and I think focusing on the ability to actually make a positive difference to society is one of those things that people are looking for these days. The younger generation is looking for meaning, and I think ... there’s no reason why we can’t actually evidence the nobility of what insurance does and help people actually find meaning in roles within our industry.”

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WINNING OVER THE NEXT

GENERATION How can insurance make itself an industry of choice among jobseekers?

Insurance Business highlights some of the current initiatives to attract more talent – in Australia and abroad – and asks what more can be done The insurance industry has an image problem, and that’s likely to come as no surprise to anyone.

Poll a room of young jobseekers on their career aspirations, and you’ll struggle to find a single person eager to enter the world of insurance.

Chat to a long-time insurance professional, and quiz them about how they came to be in the business. Daniel Fogarty, CEO of General Insurance for Zurich in Australia and New Zealand, knows only too well the response you’re likely to receive.

“I’ve spoken at a number of conferences where … I get everyone to stand up … ,” Fogarty explains. “I say, ‘Sit down if you fell into the industry’, and inevitably 90% of people sit down.

“Why is that? Why don’t people pick our industry as a place to work?

They’re great careers, you get to do interesting work, you get to work with great people, you get to see the world, but it’s one of the best-kept secrets because people don’t really understand what we do until they get into the industry. And when people get into the industry, they rarely leave.”

UNDERSTANDING THE PROBLEM To young jobseekers in Australia, this industry doesn’t currently represent the beacon of opportunities employers might hope for. And while there is little to no issue with employing people at entry level, according to Meg Hurley, general manager of marketing and insights at ANZIIF, there are talent issues elsewhere.

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“As a fundamental, societal and community problem, there’s a lack of understanding and appreciation of insurance as a part of our economy and society” Sampath Soysa, YIPs and Gilchrist Connell pool. Anecdotally, this is driving up staffing costs and contributing to high levels of staff turnover.

“There are numerous explanations provided for the shortage, including improvement to technology and offshore outsourcing reducing entry-level jobs; the industry having a poor reputation; difficulty in attracting new talent; and the changing needs of today’s workforce not being met by employers.”

Hurley says that, in order to fully understand the scope of the issue, a quantitative research study has recently been undertaken. A working group across ANZIIF, NIBA and the ICA was formed, chaired by Daniel Fogarty, and a survey was sent out to industry professionals. She says the results of the survey were sent out to senior HR professionals, who were invited to participate in a roundtable discussion.

The results and an overview will be released later this year.

Fogarty says, “As an industry, we spend less on attracting people to our industry than some of our other competitor industries … So young people at school and university don’t actually understand what the careers are that are available in insurance, and they have quite a closed view of what that might look like.”

On the subject of attracting new talent, Hurley says, “What we do need to do as an industry is improve the perception of insurance, increase literacy about insurance [to parents and students], and increase awareness of the myriad of options available to people who work in insurance.”

So how does the industry go about achieving those goals? How could the industry better engage with young jobseekers in order to ensure that

businesses can continue to meet the demand for insurance professionals in Australia at all levels?

How can it secure a steady stream of new recruits who’ve entered the industry, having nominated insurance as their career of choice? And how does it ensure that those newbies remain engaged in insurance and committed to furthering their careers within this sphere?

VISIBILITY AND PERCEPTION Sampath Soysa, president of Young Insurance Professionals (YIPs) Australia and New Zealand, and principal of Gilchrist Connell in Melbourne, thinks the industry’s lack of visibility is a major issue. He says, “There’s very little awareness of the industry, and a lot of people you meet in the industry either end up in it by accident, or a surprising number of them have some sort of connection to the insurance industry, be it through family or direct personal contact … I haven’t met anyone who actively went out looking for a new career path or a career direction and found insurance, without some sort of pre-existing connection to it.

“As a fundamental, societal and community problem, there’s a lack of understanding and appreciation of insurance as a part of our economy and society … without that sort of fundamental appreciation and basic awareness of insurance, it’s very difficult. You’re starting on the back foot because you’ve got a basically invisible part of our economy and society … so it’s hard to expect people, especially younger people, to be considering that invisible industry as any sort of career path or profession.”

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Rhys Mills, managing director of Solution Underwriting Agency, agrees that perceptions need to change in order for the industry to be able to attract more jobseekers. “I think it always has been and it continues to be a challenge for the industry to attract new people,” Mills says. He believes there is a need “to educate people outside of it that insurance is a great business to be in, and it’s a necessary business. And you can actually have a long and fulfilling career doing many varied jobs within what’s [incorrectly] perceived as being a pretty small industry”.

A 2012 survey undertaken in the US by the Griffith Insurance Education Foundation and The Institutes revealed that just 5% of Gen Ys were familiar with the insurance industry, and less than one in 10 expressed an interest in working in insurance. When asked for their reasons, 52% said they did not want to sell insurance, and 44% said insurance sounded “boring”.

Tellingly, however, 61% of respondents said they would personally like a job that included analysing risks and recommending solutions. Additionally, when asked to name their priorities in a career, those surveyed cited competitive salary, career advancement opportunities, and helping others as among their top considerations.

So while that survey appears to provide indicia of a lack of understanding of insurance roles among young people, it also appears to suggest that the industry, through proactive efforts to change its image and improve its visibility, has a good chance of being able to engage and secure a larger pool of new recruits.

CONNECTING WITH YOUNG TALENT ON THEIR TURF Art Betancourt, vice president of MarshBerry in the US, even suggests trying to avoid using the word ‘insurance’ in job advertising. He says, “If you lead with the word ‘insurance’, it’s very difficult to get responses from younger talent. Instead, we talk about things like communicating with C-level executives, working in risk management, and being a consultant to business owners. After researching the company, people do realise it’s an insurance position, but they are much more inclined to reply.”

“You’re not going to attract a 25-yearold unless you differentiate yourself from the tried-and-true granddaddy’s insurance agency” Trey Hugley, Genesis Resources Trey Hugley, president of Genesis Resources, a US recruiting firm that focuses on talent acquisition for the insurance industry, points to the importance of using social media to attract the right young people. “I use a lot of social networking because that’s where [young people] are,” says Hugley, who has successfully placed young talent with American insurance employers of all sizes. “We do work with Facebook, Twitter and LinkedIn to connect with recent graduates.”

While employers can seek out the right employees online, young jobseekers conversely can and will search for the right employer. A young jobseeker has the ability to research a company within a matter of seconds, and may form an opinion of it just a few minutes later. In order to attract young people online, a company needs to reassess its own internet presence. That includes high levels of social media engagement, an effective display of company values, and a website that is streamlined, modern and highly functional.

“You’re not going to attract a 25-year-old unless you differentiate yourself from the tried-and-true granddaddy’s insurance agency,” Hugley says. “If all they see is a dead website and information on

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insurance, they’re going to rule you out pretty fast.”

Instead, Hugley suggests highlighting a company’s community involvement and “sense of fun”, which appeals to young people’s desire for a positive, well-defined company culture.

BACK TO SCHOOL While re-evaluating its social media presence could be an important step for a business in recruiting higher levels of new talent, a holistic approach to the task of attracting jobseekers surely has to involve moving beyond the virtual world and onto the grounds of tertiary education institutions, where career decisions are routinely made.

Vanessa Morton, a director of Gary Morton Insurance Brokers and current chair of NIBA’s NSW Young Professionals (YP) Committee, has enjoyed a career in insurance for almost 13 years. “I came across the Allianz stand at a career fair while I was at university,” Morton says. At the time, her parents had been running a family brokerage for several years and she had begun studying for an insurance qualification on top of her degree. “I already had a bit of an interest in insurance obviously.

“When I saw the Allianz stand at the careers fair, they had … amazing promotion and brochures that outlined what their graduate program was all about, and what appealed to me was the fact that I could go into an organisation, try out a number of different areas, based on what my skills and expertise and interests were, and then at the end of it discuss with them where I wanted eventually to be placed. So as somebody at university who wasn’t entirely sure where I was going to end up and what sort of area I wanted to work in, it was very appealing.”

Starting as a junior underwriter, Morton went on to spend several years at Allianz. “I did their two-year program, where I did multiple rotations throughout the company … and finished up in the broking area, and that’s where I stayed then for the next eight years that I was at Allianz.”

Three years ago, Morton left Allianz and started in broking within the family business. Speaking about the recruitment of young jobseekers and, specifically, efforts made in recent times to attract new talent, Morton says, “I think that we’ve done a lot of work over the last few years to promote our

FINANCIAL AND INSURANCE SERVICES Employment profile

The industry

All industries

Working part-time

17%

30%

Female

52%

46%

Aged 15 to 24 years

10%

16%

Aged 45 years or older

33%

39%

Outside state capital cities

18%

37%

Sources: ABS Labour Force; Employment projections, Department of Employment; Australian Jobs 2014, Department of Employment

“I think there’s definitely an opportunity within the school system” Sammi Baker, Simplex Insurance Solutions

profession a lot better. There have certainly been some great steps in making the insurance profession more attractive to graduates and school leavers. But I also think that there’s a lot more that we could be doing to attract young people into our profession.

And there are so many initiatives at the moment going on within NIBA and ANZIIF and the [ICA] to progress this, but it’s all a work in progress.”

Morton says that while there has been some promotion of the insurance industry at universities, such as representation at career fairs, “we need a more consolidated approach to it, where we can bring in all the resources of the industry, because there are so many people who can contribute to and add to this and bring it all together, so that we can show a united front and really get some better coverage across the schools and universities … it’s such a big job to be able to do that”.

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Rhys Mills was one of the last students to go through the undergraduate qualification at his university, and he says it ended due to a lack of demand. On targeting university students for recruitment, Mills says: “Certainly big accounting firms get into unis and start approaching students, and the insurance industry deserves to hold its head up high and get in there as well and be a viable option …”

In the US, risk management and insurance programs, as well as other insurance-focused curriculums, are now offered to students in more than 100 universities. And some leaders in the American industry have begun using universities as talent pools akin to the farm systems of professional athletics. Brian S. Cohen, former president of the Pacific Specialty Group in Anaheim, California, entered into a partnership with California State University, Fullerton, and began giving guest lectures, deploying younger staff to job fairs and offering a summer internship program to students.

Several of the interns Pacific Specialty has hosted in the past two and a half years have gone on to become engaged by the company in full-time roles.

“In years to come, there will be a huge role for talented people to further develop Australian insurance” Meg Hurley, ANZIIF Offering internships is an effective opportunity for both an intern and a company to take a ‘test drive’.

Data obtained from The Institutes in the US shows that 42% of new hires went through internships.

“Employers who offer internships can use them as month-long interviews,” says The Institutes’ executive vice president, Anita Bourke. “They’re

able to choose highly qualified candidates from the beginning and determine, at the end of the internship rather than an hour-long interview, if the interns are good fits before committing to hire them.”

While stepping up efforts to attract university students and recent graduates has been suggested, promoting insurance career awareness even earlier – in high school – is seen as another potentially highly effective method of attracting new jobseekers to the industry. Many high-school students are undecided about their future, even towards the end of their final year, so an introduction to insurance at this crucial time might assist in starting to shape the career paths of many students.

Sammi Baker has worked at Simplex Insurance Solutions, which is a member of the Steadfast Group, for four years. She was recently named an Elite Broker by Insurance Business.

“I finished school and I didn’t want to go to university,” Baker says. “I was looking for a job where I could learn on the job, so more a traineeship sort of role.

“Simplex presented the opportunity to start a traineeship, so I could be working and earning money while I was getting a qualification at the same time … that’s how I came to be in the industry.”

Baker admits to being presented with some commonly held negative perceptions of insurance when discussing her career with others. “Often when I tell people what I do, they say that it sounds boring … Everything I do here, every day, is different.

It’s definitely not boring.”

After starting at Simplex, Baker worked in reception and has since gone on to become a senior broker, primarily assisting builders with their coverage. Additionally, she was the recipient of the Norm Dyer Award of Excellence at the 2013 Insight Insurance Conference.

Talking about her current role, Baker says: “I get to assist a lot of clients with some more complex things, where they could have some gaps that would leave them exposed to certain types of claims … it’s good to be able to assist them … we can really look after the client and build some great relationships … I do like that side of it.”

Baker recalls that, while still at school, a career in insurance was not something she had considered.

“It’s not something that you really hear about or think of … it doesn’t really present itself the same way as some of the other industries do.”

She feels that promotion of insurance careers to high-school students is a worthwhile exercise

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“You’ve got a lot of these younger people who are stuck in these roles where they can’t really see where their career is heading” David Porteous, Brooklyn Underwriting

for the industry. “I think there’s definitely an opportunity within the school system … insurance is really absent there. There’s not anything where you can get a little bit of information and get a little bit involved and see if it’s something you would [want to] consider pursuing … I think that’s probably a fairly big gap that we’ve got there.”

Vanessa Morton says she and other members of NIBA YP have been involved in high-school activities aimed at raising the profile of the industry. “A number of people get approached … to go and present to a group of Year 11s or 12s about what the insurance profession’s all about, and how they can get involved in it … that’s already happening now,” she says. “But I guess what we’re not seeing is a consolidated approach to it. It’s really only on an ad hoc basis … what can we do to proactively speak to career advisers and speak to local principals to be able to be on that agenda every year in all of the key schools?”

Providing high-school students with a taste of the industry is precisely the aim of US businesses that work with Project InVEST. A non-profit organisation launched through Independent Insurance Agents and Brokers of America, Project InVEST has a two-fold mission: to increase insurance literacy among high-school students, and to communicate the advantages of a career in insurance.

Project InVEST has existed since 1970, but its executive director, Diane Mattis, believes the program’s benefits are greater now than ever before.

“High schools are no longer primarily interested in getting students college ready; they want students to be career ready,” Mattis says. “These students are making career choices in high school, and we’ve got to be in there as an option.”

Through InVEST, insurance professionals can visit schools and speak to students about a career in the industry, and the organisation even offers summer internships and part-time jobs. Students set up mock insurance agencies during the program and get a chance to converse with local agency representatives, and it’s all free for the agency.

Mattis says the response of students has been “overwhelming”.

“Once we get the volunteer agencies and schools connected, both teachers and students are amazed at the different career options within the industry,” she says. “I think it’s a very ‘aha’ moment for them.”

InVEST currently works with 518 teachers in 45 US states, and has almost 19,000 student graduates. A significant number of these students have gone on to insurance careers straight out of high school.

Back in Australia, Meg Hurley says, “ANZIIF already has several programs in place which support assisting young people with information about the insurance industry: Careers in Insurance (a website and supporting booklets distributed through schools) and the Why Risk It program, which delivers the insurance elements of a schoolbased financial literacy program.”

Hurley imagines that, as part of the current ANZIIF review, both programs will be strengthened or expanded, though no decisions to that effect have been made yet.

ENGAGEMENT, DEVELOPMENT AND RETENTION Of course, just as important as attracting fresh talent to insurance is paying close attention to the training and mentoring new recruits receive, in order to retain the benefit of their talent within the

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industry. “You can hire the right person, but if you don’t implement the right process post-hire, you’re not going to be successful,” says Art Betancourt.

David Porteous, general manager of Brooklyn Underwriting, says there is currently no shortage of young talent in the industry, but thinks there’s a problem in how the industry is advancing the careers of many of those young people. “You’ve got a lot of these younger people who are stuck in these roles where they can’t really see where their career is heading,” he says.

“Of course there are young people doing great things. Of course there are young people building great careers. But I do know that a lot of young people who’ve come to Brooklyn have fallen out of love with their employer because of … the lack of … career direction for them.”

YIPs’ Sampath Soysa says, “I think it’s difficult for people [in] the more junior levels of the industry to see the big picture, and to understand where their careers can go, and to develop from whatever entry point they’ve come into the industry at.”

Brooklyn Underwriting prides itself on its ability to foster young talent. Asked about how it achieves this aim, Porteous says: “What we have at Brooklyn is a really great culture. We have … an incredibly flat organisational structure. Not only am I available to [our newest young underwriter], but I expect of them that they interact with me and tell me how they’re going and tell me about their problems. I think where others in the market don’t have that right is that the senior people within an organisation tend to be put on these pedestals, and they’re not easily accessed by young people and there’s not the mechanism by which a younger underwriter can go and ask a very senior underwriter or a manager of a business about an issue they might have. At Brooklyn, we certainly try and do away with all that sort of stuff, and it seems to be reaping rewards …”

In addition to robust post-hire procedures and practices, social and networking events targeted specifically at young insurance professionals also have the capacity to contribute meaningfully to sustaining and heightening a young person’s engagement in the industry.

Through its NEXT initiative, Brooklyn aims to provide young insurance professionals with the opportunity to mix with others in their industry.

RETAINING AUSTRALIAN WORKERS: KNOWING THEIR MOTIVATORS A recent survey of over 1,600 Australians, aged between 18 and 70, revealed that individuals’ reasons for working varied based on age

Common motivators across all age groups

Enjoyment

Recognition

Flexibility

Differential motivators by group Basic pay

Responsibility and challenges

Responsibility and training implementation

Millennials

Gen X

Baby boomers

Motivated by enjoying work BABY BOOMERS

71%

GEN X

67%

MILLENNIALS

60%

Source: Kronos Whitepaper: Australia’s Choice: Live to work or work to live? (2014), research by Galaxy poll

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THE UNSUNG BENEFITS OF A CAREER IN INSURANCE “There are tens of reasons why insurance is a great career,” says ANZIIF’s Meg Hurley.

So what precisely should you emphasise to maximise the appeal of your vacant role to a jobseeker? What are those attributes many people might be surprised to learn are on offer if they opt for a career in insurance?

Sampath Soysa, of Young Insurance Professionals (YIPs) Australia and New Zealand, points to the diversity of opportunities available. “There are really jobs or roles for every personality type and skill set,” he says. “There are considerable travel opportunities which people, especially young people, are very interested in.

I think young people really appreciate the transferability of skills and lateral opportunities … you can change what you’re doing, change your career path, but you don’t actually need to leave the entire industry to do it …”

Soysa also believes networks and community are great benefits of pursuing a career in insurance. “Friends who’ve joined the industry … have been amazed at the networks they’ve been able to develop, especially through things like YIPs, where you suddenly meet people who are similar to you … and form business relationships and enduring friendships with them … that’s something that really attracts people and keeps them once they experience it.”

Vanessa Morton, chair of NIBA’s NSW Young Professionals Committee, agrees that the variety of roles on offer in insurance is one of its most attractive benefits. She says, “You can move into so many different areas … you’ve got different streams where you can move from underwriting through to more technical areas of claims; there are sales positions, there’s e-business, there’s marketing. So within insurance, while there’s that sort of overlying theme, there are so many different careers and pathways you can take.

“On top of that,” Morton says, “I think that, particularly as a broker and certainly as an underwriter as well, every day is different. So you’re faced with different challenges every day, particularly when you’re dealing with clients.”

David Porteous, of Brooklyn Underwriting, comments on how far remuneration structures have moved in the industry in recent years.

“You can be a university graduate with a commerce degree perhaps, and you can command a salary that, I think, would far outstrip that of a legal graduate going into a law firm.”

On diversity of opportunities, he says, “If you get into ‘insurance’ … it could be insurance for satellites, it could be ships, it could be forests, it could be aeroplanes, it could be a whole range of things.

“I think the other area of the insurance industry that’s really interesting is its international profile. Brooklyn, as an example, has partners right around Australia, and insurance partners in Singapore and in London. And so you get, in a little agency like us, exposure to international markets, which is interesting and exciting.”

And on just how far-reaching the opportunities in insurance can be, Meg Hurley says, “This is a global business that is perfect for people interested in international careers, or people who are interested in international trade. As an example, one of the winners of our Innovation of the Year at the Australian Insurance Industry Awards in August was a company that worked on farm insurance products for the developing world. Most people would be surprised to hear that an insurance career could take you into the depths of East Africa, but that’s the point – it can take you anywhere.”

Porteous explains: “Generally what we do … is bring in some people of interest who aren’t necessarily from the insurance industry but who faced the challenges of developing a career of some kind. And they might be a sportsman, they might be from the political sphere … and they will just talk about the challenges that they’ve faced in forging a career.

And, hopefully, some of that resonates with the people at [the] event.”

Porteous says NEXT events held to date have been well received. “I think they’re very fun. And we’re trying to embed that fun Brooklyn culture within the events. And thus far, as I say, [they’ve] been warmly received by everyone.”

The NIBA YP Committee, in conjunction with NIBA, also develops a number of initiatives to bring young professionals together, and holds events to interest and engage them in the industry, says Vanessa Morton. “One of the main things we do is the mentoring program … the purpose of that is to bring young or new entrants to the industry together with more experienced people, to give them some guidance and perhaps some education along the way as to where their career’s headed, and some direction as to where they could go next.”

Morton has benefited from NIBA YP’s mentoring program, both as a mentor and a mentee. She says of the program: “We look at what the mentee is actually after, and we try to customise the mentor that we match them with to be able to meet those requirements.

“I do try to participate once a year to mentor a young broker. At the moment, I’m working with a young broker … She’s working in a particular area of brokerage, and I’m helping her to branch out and move into other areas, so broaden her skills and abilities. [I’m] not actually teaching her those skills and abilities, but help give her the right contacts and the right pathways and, I guess, the confidence to be able to move into those other areas.

“I get a great deal out of it,” Morton says. “I really enjoy working with young brokers. It’s something that I’ll be continuing over the next few years.”

Similarly to NIBA YP, it’s the mission of YIPs to assist younger insurance professionals with their careers in insurance. The group aims to facilitate a young person’s development of relationships in the business via education and, again, like their NIBA YP and Brooklyn NEXT counterparts, they

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run networking events. An independent non-profit organisation, YIPs is intent on making insurance a career of choice.

According to Soysa, YIPs’ membership has grown from approximately 2,000 to 3,600 members in the past 10 months. By this time next year, it aims to be operating in all Australian states and territories (currently, it has a presence in all except the ACT and Tasmania), and to open its second branch in New Zealand.

“Just on numbers alone, there’s a clear inference you can draw … there’s a huge demand for what we do amongst younger members of the industry or people who are new to the industry … We are concentrating on … making sure [our members] enjoy the industry they’re working in and stay in it,” says Soysa.

For the past 12 months, YIPs has run Certified Insurance Professional events, accredited by both NIBA and ANZIIF. “We’re not setting out to compete with the qualification framework that NIBA College and ANZIIF offer,” Soysa explains.

“We’re providing seminars which attract points but are on topics and issues which people are interested in, but maybe not necessarily things that have direct business operational imperatives …”

THE BEST APPROACH? Soysa’s view is that, in working to attract more talent to insurance, the uniform engagement of the industry in one process will yield the best results.

He says: “I think a coordinated, industry-wide approach is what’s required … We’ve looked at running career expo stands, we’ve looked at doing presentations to school leavers and career counsellors, things like that, but … the conclusion we’ve reached is it’s not appropriate for us to be trying to do that without the realistic, significant backing of established, industry-representative bodies … there’s no point us trying to either chase rainbows or do it alone with very, very limited resources, without the actual backing and support of wider bodies …”

Morton says, “I think there’s a huge opportunity for us to use the industry bodies we have now, being NIBA and the ICA, to be able to promote effectively to these young people. It’s such a great profession to work in. It gives you great career opportunities, good progression, and good variety

“I think there’s a huge opportunity for us to use the industry bodies we have now ... to be able to promote effectively to these young people” Vanessa Morton, Gary Morton Insurance Brokers and NIBA YP as well. To be able to get that message out there would be fantastic!”

LOOKING TO THE FUTURE While there is clearly work to be done to make insurance a career of choice for young jobseekers and those contemplating a complete change in field, industry professionals should focus on the fruits that efforts to address the talent issues will produce. When the ANZIIF-led research results are released, an industry-wide conversation should follow, and perhaps ultimately it will inspire the most consolidated and heavily backed endeavour to address recruitment issues in insurance that the industry in Australia has seen to date.

Could we finally see insurance’s tainted image replaced with a favourable general perception of an industry of choice? Could an insurance career at last be seen through the eyes of secondary and tertiary students as an alluring vocation of vast and varied opportunities?

It can be done. How and when is in the hands of the industry itself. But with such attractive opportunities on offer, it seems the industry should highly prioritise sharing the secret with the rest of the population.

“Financial services is one of Australia’s biggest industries, and insurance has a bright future ahead of it,” says Meg Hurley. “In years to come, there will be a huge role for talented people to further develop Australian insurance.

“It will certainly be a very exciting industry to be a part of.”

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THE YEAR AHEAD As another year draws rapidly to a close, it’s time to turn to industry leaders for a reflection on the year that’s been and a forecast for what’s ahead.

Insurance Business delivers their insights

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ANTHONY DAY

CEO commercial insurance, Suncorp Group Anthony Day hopes to see “a rational, stable market that is focusing on the customer, not on price” in 2015. He says he thinks that carriers who are focused on achieving this will succeed.

Day foresees two major challenges for the industry next year. “Firstly, with customers themselves, particularly the SME market, I think growth in the economy and the broader global environment is certainly a challenge for them, and that has a flow-on effect to their ability to purchase the right sort of covers at the right levels. I think that’s really how the SME market’s going to continue to grow. That’s a challenge for us as a carrier that’s big in the SME market.”

Secondly, he cites competition.

“There’s a lot of competition. An abundance of global capacity has come into the market, and the competition will continue.”

However, Day also recognises a major opportunity. He tells Insurance Business: “With the implementation of the NDIS [National Disability Insurance Scheme] and NIIS [National Injury Insurance Scheme], you’re seeing state governments around the country look at privatisation of government schemes. If we look at workers’ compensation and CTP, it’s about a $15bn market. Of that, $10bn is still in the public sector and only $5bn in the private sector.

“That creates enormous opportunity for insurers to go through and take an active role in that personal injury market.

And the recent announcement by the South Australian government [about] privatising CTP is certainly the start of a big opportunity. So I think that those who are focused in that market can certainly expect to thrive.”

On who to watch, Day says, “I think everyone is continuing to watch what’s occurring with Steadfast and the evolution of their business model … I think [that that] evolution is going to be one to watch over the next two to three years …”

Asked for his top advice for brokers for the coming year, he says brokers should concentrate on how to navigate customers through the minefield of information and options available to them, “really focusing on the customer’s needs, rather than the price”.

And speaking about his own targets and objectives, Day says, “We’re in a really strong position to grow. So we’ve set ourselves a target to go 3–4% above system [growth] and to meet or beat an underlying ITR of 12%.

They’re the two main targets that my team is really focused on.”

DANIEL FOGARTY

CEO general insurance, Australia and New Zealand, Zurich Zurich has been named Insurer of the Year by Insurance Business for two years running, as well as having won back-toback NIBA gongs for General Insurer of the Year. Daniel Fogarty cites that recognition for the organisation as a highlight of 2014. “I think the reason why we get [these awards] is we continue to engage with our brokers. We’ve continued to ask their advice, and continued to try to … make sure that our business works really well for the insurance brokers that we deal with.”

In 2015, Fogarty hopes for a benign claim environment and rational competition, and he’ll be continuing to look at the question of how more talent can be attracted to the insurance industry – an issue he is currently involved in examining as part of an ANZIIF-led research project.

Fogarty expects 2015 to be another very competitive year and says, “Places that are going to thrive are probably going to be areas where people start to bring a bit more innovation into what they’re doing.

And that’s what competition drives – innovation to be more competitive.”

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FEATURE / 2015 AND BEYOND

On the best advice he could offer to brokers, Fogarty says: “Brokers need to [keep] doing what they’re good at, which is continuing to really understand their customers’ needs and focus on giving the right advice to their customers. I’d say that, in a competitive market, there will be temptations to take premiums that may be very attractive, and I’d say that brokers need to continue to focus on their advice and [ask]: ‘Am I going to get the claim paid?’, ‘Am I with a reputable insurer

where I’m not going to have challenges when it gets to claim time?’

“So I’d say focusing on advice, focusing on understanding what insurers they’re putting their business with, and then I’d say … supporting those insurers that support them. We only distribute through brokers, so we’re there to work with them, and that’s what we want to continue to do.”

Fogarty says he’s interested in observing how brokers continue to evolve their

MARK SEARLES

WHAT ARE YOU MOST LOOKING FORWARD TO AWAY FROM THE OFFICE IN 2015?

“Getting out on my motorbike a lot more often.

I got a new bike this year and I haven’t ridden it enough …”

Anthony Day “Reading all those books I didn’t get to in 2014, such as Russell Brand’s Revolution and John Cleese’s latest book, So, Anyway. I’m an optimist!”

Rob Whelan “Definitely a trip to the UK in September to hopefully watch my beloved Springboks lift the Rugby World Cup!” Michael Gottlieb “I’m planning a trip to Northern Chile to go horse riding in the Atacama Desert.

The family don’t know yet, and they are coming with me!”

Noel Condon “Jumping on a plane to Japan in the first few days of 2015 and seeing Tokyo and doing a bit of snowboarding.”

Rhys Mills

CEO and managing director, Austbrokers Mark Searles says that achieving nine successive years of double-digit growth is a testament to the strength of the Austbrokers model, the clarity of their strategy, and the discipline they utilise to actually deliver against it. Next year, Searles hopes to see what he describes as “more rational behaviour on pricing”. He says: “With prices being driven down as they are at the moment, I don’t think it benefits anybody … even clients, who will benefit in the short term. I think eventually, as prices will start to rise again … it just causes confusion in the market.”

As to opportunities, Searles says, “Cyber risk is a big area that I think will get more traction over time.”

On what to watch in the coming year, he says: “I think what we should be watching … is what’s happening to insurance capacity … I think there’s a lot of capacity knocking around at the moment or around in the marketplace. I think there’s the potential for a lot more to enter it … it creates a degree of uncertainty about the future.”

On advice to brokers for the year ahead, he says: “It’s all about being very focused on the client and making sure that they’re really giving them all the

businesses in a competitive environment.

“I’ll continue to watch what Robert Kelly does at Steadfast and what Mark Searles does at Austbrokers … I have a healthy respect for both of them, and they’re very key to our business.”

As to Zurich’s plans for the year ahead, Fogarty says, “For us, it’s about continuing to enhance and grow our business. We’re active in the commercial and corporate markets. We still see lots of opportunity for Zurich to grow in those markets.”

best advice around risk protection, and providing the relevant solutions … We live in a world where risk is an ever-increasing facet, and we’ve got to make sure that we’re staying ahead of the curve in the advice that we’re giving and the solutions we’re providing.”

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FEATURE / 2015 AND BEYOND

MICHAEL GOTTLIEB

Managing director, Mega Capital The head of Insurance Business’s number one brokerage for both 2013 and 2014 would like to see the industry tackle its poor reputation. He says, “I think that we’re a great industry and we have a lot to offer. And often, when there’s criticism around our industry, we’re very quick to defend it. And I just think we need a plan ... to understand what these perceived issues

are, and … to improve the value proposition to the client rather than continue to defend the position.”

On the subject of who to look out for next year, Gottlieb says we should keep an eye on BizCover (though he admits his obvious bias!). He explains: “I really think the BizCover model is very innovative and is doing something slightly different to what the rest of the market is doing. And I think, as there’s a greater uptake of consumers who are willing to transact online, and there’s a greater percentage of clients who are really not looking or willing to pay for advice or advocacy, BizCover could be a business that benefits from that trend.”

Asked to identify the biggest challenge for insurance in 2015, Gottlieb mentions the access to very cheap capital, and the excess amount of capital available to the industry.

On his own targets and objectives, he’s hoping to bag a third gong for Insurance Business Brokerage of the Year, but adds: “From a business perspective, we need to continue to improve and maintain Mega Capital’s status as the leading financial lines broker in Australia, and maintain and improve BizCover’s value proposition around providing a more innovative solution to SME clients and their insurance brokers.”

Asked what he

expected to be the breakout product of 2015, Gottlieb says: “I think cyber insurance, again, is the product that really is least understood in the marketplace at the moment. I think it’s the biggest uninsured exposure that clients face … and I don’t necessarily think they understand the exposure or the consequences to their business of a cyber attack. So while I don’t think it’s something that will ‘break out’, certainly there’s been a lot of traction over the last few years, the premium pool’s increasing, there are more and more clients who are aware of it, and it’ll be a slow build as the education process continues. But over the next few years I expect cyber insurance to become more and more prevalent in our industry.”

Gottlieb says brokers need to understand what their clients perceive as value, and ensure that they’re providing this value to their clients. “Most clients are really looking for advice, advocacy and access to a wide range of insurers, and I think, if brokers are providing the service to their clients, they’ll be in a good situation to continue to remain relevant in the industry and maintain their clients.

However, if brokers are really providing an information or transactional service, there’s probably more efficient ways for clients to look to do the service. So … really understand the value proposition, and ensure that if it is around advice, advocacy and access to the market, you are providing that to your clients.”

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NOEL CONDON

CEO, AIG Australia

“What I’d like to see brokers do is continue to give us feedback on how we’re doing …

They’re generally never that reluctant, but I’d like them to give it to us straight, and to help us continue on our path to improve.”

That’s Noel Condon’s key advice to brokers for the year ahead. Asked to look back and cite highlights of 2014, he speaks about AIG’s recognition as an Australian Business Awards ABA100 winner of Best Technology Product for its Travel Guard smartphone app, and the launch of the Women & Allies Employee Resource Group. Condon also cites AIG’s move into strata, announced in September. “We’ve not had a strata play, and so later this year we will be the capacity provider behind QUS … that’s really exciting. It stands out for me … because it marks our move into a brand new space.

“But overall, I think the way that we’ve

actually handled some high-profile, bigticket claims in construction, liabilities, financial lines, property … just the proactive, positive attitude that we’ve brought to some of those claims … it’s actually had a very positive effect … It’s imbued confidence in the brokers that we’ve touched with that, and the clients, so much so that we’ve seen situations where we’ve actually won new business, renewed accounts against big competition, or we’ve actually had an increased share on a risk because of that confidence we imbued …”

On what he’d like to see next year, Condon hopes for more talent coming into the market, and for insurance to become an industry that appeals to more people coming out of education. “I know it’s an aspiration I share with a number of other company leaders,” he says.

“In the marketplace itself … there are a number of maverick underwriters in certain classes of business that I’d like to see get a little bit more sense. And it’s not about price. It’s about just paying more attention to coverages that are just being given away that ought not to be.”

On his targets and objectives, Condon says employee engagement was a major focus for AIG in 2014, and this will continue in 2015. He also says: “A few years ago, we set ourselves a goal – an overall aspiration of becoming the most valued insurer in our markets, and that means in the eyes of all of our stakeholders … We’re on track for that.

We’ve really thrived in 2014; we’ve innovated in 2014. So we want more of the same. We want to continue to thrive and to think about responses to the issues of the day. We’ll be continuing to expand our suite of financial lines products …

We’re going to continue to bring new ideas and challenge ourselves to actually respond … We’re committed to bringing those new ideas into the marketplace.

“We’ve grown in 2014; we’re profitable, and, in terms of numbers, I want the same again. And that’s going to be a big challenge.”

ROBERT KELLY

CEO and managing director, Steadfast Reflecting on the year, the CEO and managing director of the country’s largest broking network says: “I think the industry highlight [of 2014] is the fact that general insurance seems to continually be exempted from FoFA regulations on the basis that it seems to have control over its distribution costs, and its conflicts don’t seem to be as strongly regarded by the regulators as they are in the life and investment areas. So I think it’s a highlight that, over the years, the regulators have come to understand that general insurance remuneration structures seem to be robust and of good value to a consumer who seeks advice from an intermediary.”

In 2015, Robert Kelly thinks some of the emerging risks will start to take off. “I think that the highlight of that might be the cyber risk … It’s been around for some time, but it’s now starting to manifest itself in certain areas, and we’re seeing it more in medium enterprise … that’s definitely an emerging area.”

As to what he’d like to see, Kelly mentions the pricing issue. “I’d like to see some sanity in the pricing mechanism across Australia and New Zealand, where I see so many insurers still deciding that the best way to increase their top-line growth is by reducing their bottom-line margin by discounting, beyond reasonable levels, the premiums that they offer into the market.”

He says a change in the perception of the aggregators will be the biggest challenge for insurance next year. “I think the hardest thing to do is start to recognise that the aggregators that are coming into the Australian market actually have a role.

They’re not the alligators in the swamp that people make them out to be. The consumer should have a right to seek alternative pricing on any form of insurance that they get and need. And the most expeditious way to do that would seem to be to allow external and internal aggregation by allowing one set of data to DECEMBER 2014 | 35

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FEATURE / 2015 AND BEYOND

year. “I think the hardest thing to do is start to recognise that the aggregators that are coming into the Australian market actually have a role. They’re not the alligators in the swamp that people make them out to be. The consumer should have a right to seek alternative pricing on any form of insurance that they get and need. And the most expeditious way to do that would seem to be to allow external and internal aggregation by allowing one set of data to be given out and then the quotes to come back so that the consumer’s well informed about what the highs and lows of the market may be, and indeed the differences between some of the product lines, not only on price but on variation of product coverage. I think that’s a big thing.”

On the year ahead for Steadfast, Kelly says: “We want to deliver to our shareholders and our network brokers in two areas. For our shareholders, we want to comply with our guidance that we put out. And to our network brokers, we want to continue to deliver the products and services that we’ve done for the last 18 years.”

Asked to name a company or individual to watch in 2015, Kelly mentions Adrian Humphreys, who joins the Steadfast Group shortly after having been Lloyd’s Australia’s managing director for the past four years.

“He has a diverse range of skills across many jurisdictions … he’ll be interesting to watch.”

RHYS MILLS

Managing director, Solution Underwriting Melbourne-based agency Solution Underwriting has recently moved to a new, larger office space, having outgrown its former premises, and Rhys Mills says it’s a company to watch in 2015.

He tells Insurance Business, “We’re looking at releasing some new products, which are going to be a little bit revolutionary, a little bit exciting.”

In the new year, Mills expects we’ll continue to see increased competition.

On the trajectory of professional indemnity insurance, he says, “More and more people are requiring, or being told or having a requirement in their contracts to hold professional indemnity insurance.

So we’re certainly seeing growth in that area, and we expect that to continue into 2015.”

He tells brokers they shouldn’t be afraid to ask for help or advice from underwriters. “A lot of the calls we get would be calls from brokers that aren’t necessarily calling to speak to us in relation to a piece of business they know that we could help with. They quite often start the conversations with, ‘I know you can’t help me with this, but I just wanted to run something by you’, and we take that as a good gauge, firstly, of a good broker who’s not afraid to ask a question and, secondly, of us being a trusted adviser to them, helping them find the right home for their client’s risks.”

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ROB WHELAN

Executive director and CEO, Insurance Council of Australia Insurance affordability and tax reform are the two biggest challenges Rob Whelan foresees for insurance in 2015. “These two issues are coming to the fore in the minds of the community and government across Australia,” he says. “Access to affordable insurance is a significant issue for communities that are exposed to floods and cyclones on a regular basis. We are working closely with governments and customers to help them understand insurance risks and work towards practical solutions.

“The ICA has several programs in place, including its consumer initiative, Understand Insurance, and ongoing affordability projects such as the ICA Data Globe and the Property Resilience Exposure Program.”

On tax reform, Whelan says: “Substantive tax reform is a must for state and federal governments. State taxes and levies on insurance products remain a significant cost disincentive for households, and the ICA has long argued that these are unfair and inefficient. They penalise responsible property owners, serve as a disincentive to be adequately insured, and significantly add to the price the customer pays. The ICA believes the abolition of all state levies and stamp duties is achievable if state and federal governments work together on tax reform.”

On the highlight of 2014, Whelan says: “Without doubt [this is] the 2014 General Insurance Code of Practice, which we believe sets the benchmark for industry self-regulation in Australia and enhances the rights of consumers. The Code commits insurers to high standards of service that are above and beyond their statutory obligations under the Insurance Contracts Act (Cth), and promotes better and more informed relationships between insurers and their customers.

“Stay close to your clients – you never know when they may need your help” “The development and launch of the 2014 Code followed a thorough, independent review and extensive consultation with a range of consumer groups, government, regulators and industry. We listened to the perspectives and concerns of the community, consumer advocates, governments and regulators, as well as the industry itself.”

In 2015, Whelan hopes to see “widespread recognition from all levels of government that the only sustainable approach to protecting communities at risk from natural hazards, such as cyclones, bushfires and floods, is to focus on development controls, planning and investment in risk mitigation projects”.

Whelan’s advice to brokers for the year ahead is: “Stay close to your clients – you never know when they may need your help. If they see you as a source of information on risks that affect them, they will automatically contact you when they need advice on their insurance policy or claim.”

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FEATURE / TRADE CREDIT INSURANCE

Trade credit insurance: AWAKING THE SLEEPING An unpredictable global economy is raising the local GIANT profile of trade credit insurance. Wotton + Kearney In association with

partner Raisa Conchin and associate Elizabeth Conlan discuss its growth in the market

Many insurance lawyers make it through their careers without ever stumbling across a trade credit policy. That is expected to change.

Trade credit insurance has grown into a multibillion-dollar line of business. It was once the province of specialised under­writers and brokers selling cover to a customer base largely comprised of international exporters. Trade credit insurance is now marketed as a risk management tool suitable for a wider range of businesses looking to manage the effects of global economic volatility.

In this article, we examine the growth of trade credit insurance in Australia and the sources of tension that underwriters, brokers and insureds may encounter in the course of managing claims under trade credit policies.

THE RISK OF BAD DEBT During the 2013/14 financial year, an average of almost 820 companies went into external admini­ stration in Australia per month.1 Of the nominated causes of failure, almost half consisted of poor management of accounts receivable, inadequate cash flow and poor financial control.2 The message from those in the trade credit space is that no one is immune to the risk of bad debt.

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In the prevailing economic conditions, trade credit insurance is one of the sleeping giants in the Australian insurance market. Although Australian businesses have generally been slow to take up trade credit cover, considerable growth in this area, particularly where SMEs are concerned,3 is predicted.

As this part of the market opens up, the ‘knowledge gap’4 in respect of trade credit cover needs to be plugged. This will impact on the uptake of the cover and whether consumers perceive that it lives up to all of its promises.

WHAT IS TRADE CREDIT INSURANCE? Trade credit insurance covers the payment risk associated with the supply of goods and services on credit. Trade credit policies usually cover the risks associated with a portfolio of insured buyers. If an insured buyer fails to pay the insured debt due to insolvency or protracted default, the insured is entitled to be indemnified by the insurer for an agreed proportion of that debt.

NOTIFIABLE EVENTS Trade credit policies broadly define events in respect of which the insured is obliged to notify the insurer.

These events are relevant to quantifying the sum the insured is entitled to recover under the policy, the application of certain exclusions, and the timeframe in which recovery action must be taken if the insured wants to recover its entire debt collection costs.

In some instances, it can be difficult to determine whether a notifiable event has occurred. There are tensions within these policies between permitting the insured to postpone the original due date for payment of the debt (thus recognising some latitude in the commercial relationship between the insured

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and the insured buyer) and notifying the insurer of circumstances that would lead a prudent insured to believe that the insured buyer may not pay the debt.

Tensions also arise between the insured’s notification obligations and the realities of commer­ cial trade. For instance, some policies provide that the dishonouring of a cheque in respect of any indebtedness by an insured buyer is a notifiable event. Until recently, these policies did not contain express provisions dealing with the rejection of direct debits.

Rejection of direct debits is a common occurrence in commercial trade of all types. It does not necessarily mean that the debtor is unable to pay the debt. If the policy provides (or is capable of being construed to mean) that rejection of a direct debit is a notifiable event, the burden on the insured in terms of notification may, depending on the nature and size of its business operations, be significant.

EFFORTS TO SALVAGE THE DEBT Generally, an insured will not be entitled to claim on a trade credit policy until it has provided the insurer with: (a) in the case of insolvency, confirmation that the debt has been admitted to rank in the winding up of the insured buyer; (b) in the case of a protracted default, evidence of a judgment debt.

The availability of coverage is premised on the insured pursuing recovery action at its own expense.

Some policies provide coverage in respect of debt collection costs. However, the extent of that coverage sometimes hinges on whether the insured appoints a debt collection agency nominated by the insurer to pursue recovery.

This can be problematic for two reasons. Firstly, if the insured’s financial position is such that it cannot justify the expense of pursuing recovery action, coverage may not available.5 Secondly, it is not uncommon for the nominated debt collection agency to be owned and controlled by the interests behind the insurer. This can result in at least the perception of a conflict of interest, particularly where the insured has incurred debt collection costs

The message from those in the trade credit space is that no one is immune to the risk of bad debt with the nominated agency but for some reason indemnity is not forthcoming.

CONDITIONS PRECEDENT TO LIABILITY Some trade credit policies make compliance with each of the terms and conditions by the insured a condition precedent to the insurer’s liability to indemnify.

Prior to the decision of the High Court of Australia in Maxwell v Highway Hauliers Pty Ltd6 (Highway Hauliers), some insurers relied on certain types of non-compliance (such as non-disclosure and failure to notify notifiable events during the period of insurance) to ground declinatures. This was done on the basis that Section 54 of the Insurance Contracts Act (ICA) did not apply where the insurer’s liability had not crystallised.

In light of Highway Hauliers, it may be that this approach is now untenable. An insurer may still, however, sustain a declinature pursuant to Section 54(2) of the ICA on the basis that the insured’s breach is causative of loss in respect of which cover under the policy is provided.

CONCLUSION Trade credit insurance has the potential to greatly expand in the Australian market, particularly in the current economic climate. It is not, however, a panacea for economic instability. Tensions between consumers’ expectations of the cover and the cover in fact provided may impact on the trajectory of its growth. The manner in which these tensions are managed is likely to affect when this sleeping giant ultimately wakes.

ASIC, Australian Insolvency Statistics Series 1: Companies entering into external administration January 1999–August 2014 (October 2014).

ASIC, Australian Insolvency Statistics Series 3: External administrators’ reports (October 2014).

Bernard Kellerman, “Boom predicted in trade credit cover for SMEs”, IRP Online (8 April 2014).

4 See note 3.

5 Even if the insured does not comply with the terms relating to recovery, the insurer may still be obliged to indemnify. However, the insurer may be able to reduce the sum that the insured is entitled to receive under the policy pursuant to Section 54 of the Insurance Contracts Act 1984 (Cth) (the ICA) by reference to any prejudice sustained as a consequence of the insured’s non-compliance.

6 [2014] HCA 33.

1

2

3

Raisa Conchin is a partner in Wotton + Kearney’s Brisbane office. She has broad expertise in professional indemnity, advising insurers on a range of indemnity and subrogated recovery issues. Elizabeth Conlan is an associate also working in Wotton + Kearney’s Brisbane office.

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BUSINESS STRATEGY / FEE-FOR-SERVICE

Hourly rate

identity crisis

If you are a sole operator or business owner who is working every hour available to you but still have your back up against the wall, this excerpt from the book From Deadwood to Diamonds by Stefan Kazakis is for you

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Have you thought about the investment you are putting in to your business? Are you working for nothing? Or are you satisfied with the return on your personal exertion investment?

I find that about 75% of small business owners have a disconnect here. The issue of maximising the return on each hour you work can be a tricky one and it can be another thing that is holding you back.

I call this the Hourly Rate Identity Crisis.

To see whether you’ve hit this crisis, answer the questions below: Q. How much do you charge out for your time an hour?

Q. How many hours on average do you work a week?

Q. How much did you pay yourself last month?

Q. Is there a disconnect?

Chances are you have worked out what an hour of your time is worth, based on your skills and experience and the industry you are in. This isn’t where the problem usually lies. The issue is, how many hours a week do you actually earn that rate?

Time is a finite resource so it’s crucial that you put it to good use. If you have an identity crisis here it can spell trouble.

What activities should you be doing to give your business the best outcomes for each hour you work?

Be clear about who you are, what you do, and why.

Think about your #1 Big Outcome. The best opportunity for your business is to build one reputation for doing one thing, then add to it. Ask yourself, what’s my one thing? What am I actually worth an hour? Why? What are the activities that I do daily, weekly and monthly that help me ensure I achieve that rate?

The next question is, how many hours a week do you work on average? Now you can calculate the following equation: What you are worth per hour × How many hours you work on average per week.

Consider the answer carefully.

Now, here’s the kicker: when was the last time you took home a weekly pay cheque close to that amount? Sadly, for some business owners the answer is never. If this is you, this is a huge wasted opportunity for your business.

So if you’re not taking home close to that amount each week, or even some weeks, or even occasionally, what’s the problem? If you’re not skiving off and going to the beach then clearly you’re spending time at the office doing tasks you shouldn’t be

doing. Yes that’s right, you shouldn’t be doing! I’m not saying those tasks don’t need to be done, just that they don’t need to be done by you.

What about if you are achieving this every week?

Does that mean everything is peachy? Not at all. If you are reaching this target every week your hourly rate is too low! Nobody can work at their maximum achievable hourly rate every single hour for a whole week, let alone week after week, so if you think you are doing this you need to increase your hourly rate.

There is clearly room for you to do so and you are currently missing out on this opportunity.

FOCUSING ON YOUR STRENGTHS Once you start asking some brutal truth questions and facing up to reality you will realise that a lot of time you spend in your business is wasted opportunity. Too many small business owners spend time on things that earn a low hourly rate for their skill set. It’s a very common problem. Many entrepreneurs start out alone with little cash, and so they get into the habit of doing everything themselves and trying to cut costs while they do so.

This can be okay – and is often necessary – in the very early days of getting the business off the ground but, once you are past that stage, having a Lone Ranger complex will be a massive hindrance to the growth of your business

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BUSINESS STRATEGY / FEE-FOR-SERVICE

DELEGATION IS A WONDERFUL THING

Stefan Kazakis is a business strategist, sought-after presenter, and speaker and author of the new book, From Deadwood to Diamonds (Major Street Publishing, $29.95). He is a futurist and an inspiring communicator with the voice of experience. For more information please visit www. stefankazakis.com or email info@ stefankazakis.com

Have a look at what you are doing each day. For each activity you do that is not at your maximum hourly rate, you have four options.

Delegating: You need a great team around you. Not good, great. And what’s the point of a great team if you don’t delegate to them?

Outsourcing: You can outsource just about anything these days without too much expense and you can trust that the job will be done right. Some small business owners see this as a cost they can’t afford, but your maximum hourly rate will be more than the hourly rate you pay for outsourcing, so you come out in front and you can be spending your time more productively.

Terminating: Sometimes you’ll find that a task can simply be done away with altogether. Plenty of businesses have old habits and systems that they could get rid of but nobody has stopped to look at them closely. Or maybe there’s something you do five times a week that really only needs your attention twice a week.

Systematising/automating: Can you set up processes that reduce or eliminate time spent on a task? For example, can you set up your website so that orders go direct to your suppliers and you don’t have to send products out?

Delegating and outsourcing are essential to the growth of your business but these are two areas people often struggle with. Let’s have a look at some common challenges to outsourcing and delegating.

1

I don’t know what I don’t know Sometimes we just become so caught up in the day-to-day craziness that we don’t even stop to consider other options. Make the time to stop, look and listen; find out what the issues are in your business and how you can address them. You can’t solve a problem that you don’t know about.

2

Trust This is a common problem for entrepreneurs.

They are so used to being experts in their field and doing everything themselves that they are reluctant to hand responsibility to others. If you want something done properly you have to do it yourself, right? Wrong! The tasks for which you

earn your highest hourly rate are best done by you, but let me tell you something: for most other tasks in your business there are people out there who are better at it than you – and that’s fantastic! Chances are you are not an expert bookkeeper, or warehouse manager, or marketing manager, or customer liaison, but too many small business owners try to wear too many hats and don’t perform any of these tasks as well as they could be done. You need to trust your staff and service providers. You don’t need to be afraid of outsourcing to Bangladesh or maybe even Russia.

3

Too busy As a business coach this response drives me nuts! The reason you think you are too busy today is that you didn’t stop and make changes yesterday. You must make the time to improve things today; that’s the only way you’ll be less busy tomorrow. Got it?

Putting things in a format people can follow because small business owners get used to doing everything themselves they often develop their own unique methods and this becomes an impediment to delegation. But this is an easy problem to overcome – you just need to spend some time developing processes that you can easily pass on. It may take a bit of extra effort now but I guarantee it will save you time in the long run.

4

We can’t afford it Let me dismiss this one for you here and now – if you want to grow your business you can’t afford not to delegate and outsource. Even if you are outstanding at what you do, if you don’t let go of managing the day-to-day issues in your business you are putting a ceiling on how much you can grow, and that ceiling is how many hours you can work in a week. If you think you can’t afford it, can you afford not to? If you are this close to the edge something has to change.

If any of these are holding you back you have to address them – now. You need clarity about where your best work is done and what is getting in the way of growth. It might be you. The sooner you do this, the faster you will build a business that gives you the outcomes you deserve.

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HOW TO BEST SPEND YOUR TIME? To work out what you should be doing with your time, just figure out the three to five activities that are your strengths.

It can’t be more than this or you’ll just start getting bogged down again. Most of my clients have about five activities that they are really good at within their skill set and are their highest hourly rate activities. For most small business owners these activities will be related to the skills that got them into the business in the first place. If you’re a graphic designer you didn’t go into business to spend time doing the accounts, chasing new clients or firefighting problems as they arise. There are other people who will be better at these things than you so let them do it; then you can spend your time doing what you do best.

Even if you are on your own you can still find somebody to help keep you accountable.

I’ve been getting coached for 22 years. I still get coached today. I still write a cheque for somebody to help me improve my business. Once you’ve identified these activities, answer this question: how much of your time each week as a percentage is invested in these specific tasks? The difference between how much time you could be spending on these tasks and how much you are spending on these tasks is your gap to creating a business that at some point will give you freedom of time and freedom of money.

Your long-term goal is to spend 80% of your time on your highest-rate activities. No matter how well you do you won’t get to 100%. As the leader and key decision-maker in your business you will always be required to spend some time on more mundane decisions and tasks. The most successful business people I know are at 80% and that’s great.

Even if you are on your own this is achievable.

There are all sorts of excellent outsourcing services that cater to small businesses. Trust yourself to find the right people and guide them well, and then trust them to do the job for you. Give them good systems, wind them up and let them go. The world has become a smaller village and the days of dodgy overseas outsourcing are long gone.

Once you start to address these harsh truths about how you’re spending your time and you start walking the walk you will quickly learn that you shouldn’t be making the coffee, going to the post office and chasing unpaid bills. It’s about having a strategic mindset.

How will your next hour best be used to grow your business? You have to hold yourself accountable, and this can be tough because it can mean facing the fact that you haven’t been working as well as you could have been. I see it all the time: people think the solution to a struggling business is to work harder, but it’s not. It’s to work better.

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BUSINESS STRATEGY / EMPLOYEE ENGAGEMENT

SECRETS TO BUILDING AN ENGAGED STAFF As winner of Aon Hewitt’s Best Employer award four years in a row, it’s obvious that Hilti Australia is doing something right in the staff retention stakes. Managing director Jan Pacas explains how the company continues to please its staff 44 | DECEMBER 2014

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With such a diverse range of businesses fishing from the same talent pool, finding the best fit for your organisation has become a competitive pitch that is just as much about the applicant selling themselves as about selling the business. Therefore, once you’ve integrated staff into your business, it’s never been more important to retain them for the long term. The benefits of minimising staff turnover go far beyond simply financial; they impact on employee morale, productivity and loyalty. The key to instilling a focus on staff retainment all comes down to employee engage­ ment and providing each team member with a sense of purpose, identity and direction.

As managing director of leading power-tool manufacturer and distributor Hilti Australia, named Best Employer by Aon Hewitt for a fourth consecutive year, I have reflected on the successful strategies that have made a measurable impact on our business and how we maximise our staff retainment.

CHANGE LED FROM THE TOP The first thing to bear in mind is that the effectiveness of any sort of change in the business comes down to the top-level management team.

There must be an agreed commitment of time, resources and finances to your employees, their development and their level of job satisfaction, and if you want your staff to get passionate about a strategy, you must lead by example and begin personally embracing it. Never forget the fact that you serve as a role model for staff, so even the most subtle, sarcastic remark or negative comment on an initiative will have a flow-on effect throughout the business.

HIRE THE RIGHT PEOPLE In order to get staff excited about leading the business from success to success, you first have to hire the right group of people. Have a clear idea of the culture you are wanting to nurture, and hire

Never forget the fact that you serve as a role model for staff, so even the most subtle, sarcastic remark or negative comment on an initiative will have a flow-on effect throughout the business accordingly, valuing personality over expertise.

The number one reason that staff leave a company within the first 18 months is down to ‘attitudinal differences’, so ensuring from the outset that you’ve chosen a team member who will be well suited culturally is essential. Remember you can always train staff on technical knowledge or skills they may be lacking, but it is much more difficult to change an attitude or personality.

ACTIONS SPEAK LOUDER THAN WORDS The next step is to remember that actions speak louder than words, and although a simple email congratulating a staff member should be an essential part of the day-to-day management of a team, nothing is more motivating than receiving a physical reward that is of personal value to the employee, whether it be a voucher to their favourite store or some time in lieu to use as they wish. This strategy is more about time and thought than money, and is often far more motivating than just handing out stock-standard rewards to all staff, such as branded collateral or local restaurant vouchers.

As well as offering these smaller incentives, it’s also imperative to invest in a larger, companywide recognition program. This allows everyone from the sales staff to the directors to be honoured for their outstanding achievements in front of their colleagues, both motivating for those being DECEMBER 2014 | 45

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BUSINESS STRATEGY / EMPLOYEE ENGAGEMENT

As our tactics were implemented and the level of employee engagement increased, we saw a significant improvement in customer loyalty and an outstanding 210% increase in company earnings honoured, as well as for those watching. At Hilti, we have instated a business-wide awards program called the Champions League. This program recognises high-performing staff at all levels of the business, and the best of their field are given a luxury overseas holiday. This ceremony has become a highlight on the work calendar, and staff look forward to it year-round.

INVEST IN CAREER PROGRESSION

Jan Pacas is the managing director of Hilti Australia, which is renowned for its high-quality products in supplying power tools and fastening technology. Operating in 120 countries, Hilti Australia employs 300 staff and has a company culture based on the following four values: integrity, teamwork, commitment, and courage to embrace change.

Another key aspect of keeping staff engaged is ensuring that you invest in the career progression of each individual team member. Every employee should have their own development plan that outlines tactics for how they can progress in their current position, as well as their future potential roles. Annual development discussions between each staff member and their direct manager should be the norm, with the aim of getting a clear understanding of the employee’s motivations, behaviour, strengths, weaknesses, goals, and the tools they need to be able to progress. This allows all parties to be clear on the direction, and by putting together a formal document for this plan it adds a level of accountability and motivation to seeing these developmental objectives come to fruition. Not only will this initiative have a positive effect on employees, who see the business investing in their future, but it also allows the business to have clarity on employee goals, and the ability to refer to these goals when opportunities arise for internal promotions or role expansion.

SET CLEAR EXPECTATIONS The final element in creating an engaged, motivated staff is to set clear expectations from the outset, and providing employees with both short- and longterm KPIs or objectives is a great way to implement this. The short-term objectives allow staff to focus on something achievable, whereas the long-term goals allow them to understand their place in the business, and see that they are working towards something bigger. At Hilti, we manage this by having just a few monthly objectives per staff member, as well as one annual or five-year ‘bigger picture’ goal.

The most important part of this exercise is to allow the time for line managers to conduct monthly updates with each employee, so that both the staff member and their manager keep their performance goals as a priority and top of mind.

Following industry research pointing to the fact that employee engagement has a direct impact on overall business performance, Hilti has invested significantly in tactics to motivate staff in the workplace. From this we have developed a measuring tool that we term the Triple Bottom Line, and the results we received throughout the trial floored us. As our tactics were implemented and the level of employee engagement increased, we saw a significant improvement in customer loyalty and an outstanding 210% increase in company earnings. These are the types of figures that any business would be happy to have, and serve to show just how essential it is to invest in the heroes of the company – its staff.

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WHY FEARLESSNESS OFTEN LEADS TO FAILURE

In this extract from their book Selfish, Scared & Stupid, Dan Gregory and Kieran Flanagan reveal how being fearless – while idealised to a great extent – can lead to sloppy mistakes and poor decisions

Throughout history, the headlines and accolades have always belonged to the fearless.

We celebrate the heroic souls who dismiss personal safety and stride forth into the fray against odds that seem insurmountable. St George and the dragon, Jason and the Argonauts, Odin and the Frost Giants – almost every culture has its myths and legends lionising bravery and self-sacrifice.

Australians, too, have a history of finding national cohesiveness in some pretty catastrophic military losses – Gallipoli the most obvious.

So, what is it that we find so enticing about bravery and fearlessness when most of us in reality prefer lives of relative safety and comfort?

Certainly, part of it has its origins in our evolutionary history – adrenaline in the correct doses is a highly addictive substance, hence our

obsession with horror films and roller coasters.

However, one of the more significant reasons the fearless are so admired is that they very much represent the outliers in the human experience.

Few of us regularly seek out truly risky situations.

For instance, most of us prefer job security to the unknown of the entrepreneurial lifestyle, and though many of us do travel, most of us prefer to settle within a short drive from where we grew up.

We are also mostly inclined to base our judgment on past experience rather than speculate with the new – however compelling.

In truth, we love to look at the adventurous road, but mostly from the comfort of the safe path.

But is that such a bad thing? Can fear be a factor in achievement? And is the favouring of heroism and persistence over contrary data and good judgment DECEMBER 2014 | 47

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BUSINESS STRATEGY / LEADERSHIP

actually a formula for success, or simply a way to have stories told about you in the past tense?

As is the case with many such questions, it kind of depends.

FEAR IS ONE OF THE REASONS WE HAVE SURVIVED Fear, it turns out, is actually quite a useful emotion when it is appropriately applied. An overly curious nature mixed with naivety and overconfidence can be a recipe for disaster. Sending a canary into a mine to test for the presence of gas, while cruel, is actually a pretty savvy thing to do. In this case, fear not only ensures the survival of many miners; it also increases the chances of eventual success while reducing costs – miners are rather more expensive than songbirds.

What’s more, many of our latent fears are based

One of the burdens of leadership is that when you do achieve a success, it’s your team who won, but should failure be the outcome, you lost on our survival – spiders, heights, water all have their origins in some pretty rational concerns.

Where fear can undermine leadership is when it becomes paralysing, when judgment is replaced by constant evaluation and data-seeking. The truth is, in any decision we make we never have the complete picture or enough information. This is, it turns out, why good judgment is so critical to good leadership.

FEAR CAN BE AN AIDE TO JUDGMENT One of the things that particularly defines leadership is a willingness and ability to make decisions and back them. What this really means is embracing ownership of the results. One of the burdens of leadership is that when you do achieve a success, it’s your team who won, but should failure be the outcome, you lost.

This makes good judgment one of a leader’s key accountabilities. While the soldiers who fought at Gallipoli are considered heroes despite their

eventual loss, we don’t look quite so favourably on those who had them fighting what was, literally, an uphill battle.

So fear must necessarily be a part of this equation. It has us identify and weigh up risks, and consider more than just the possibility of success and account for it.

One of the criticisms we often make of strategic business plans is that the margins allowed for error are so slim. In other words, success is only guaranteed if everything goes exactly according to plan.

Of course, this is statistically unlikely, and a far better approach is to stack the odds of success in your favour by implementing systems and processes that allow for success, even on those days when not everything goes as it should.

Failure is often cited as being critical to success.

But this is far more than a twee catchphrase of the eternally optimistic; it is a recognition that failure, rather than being a result, is a constant feature of the results we produce daily and should therefore be accounted for.

LEARN TO SEE FEAR AS A LEVER FOR POSITIVE CHANGE If we accept that fear has a lot of downsides, how can we turn this around and use fear as an asset in achieving positive change in order to generate the behavioural change we so desire? How can we generate an opposite fear, one that is linked to not changing?

TEDx speaker Kelly McGonigal and other health psychologists assert that, contrary to popular belief, not all stress (which is essentially a fear of possible outcomes) is necessarily bad. They further state that stressful experiences can be used to promote adaptive responses, and individuals can be trained to think of stress arousal as a way of maximising performance.

The long and short of it is that reframing fear as an asset may not only remove impediments to performance but can actually serve to heighten and lift it. Fear (and its close cousin, stress) is suffering from some bad PR and really needs rebranding. We all need reminding that sometimes fear has been the good guy, and it has certainly been a considerable asset in the armoury of social change. AIDS awareness campaigns have featured

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Failure is often cited as being critical to success. But this is far more than a twee catchphrase of the eternally optimistic; it is a recognition that failure, rather than being a result, is a constant feature of the results we produce daily and should therefore be accounted for the fear that was limiting them, people have found that a better, or more compelling, strategy has been to increase the fear on the other side of the equation.

REBALANCE THE FEAR

Grim Reapers in bowling alleys, bowling victims down like tenpins, in an effort to shift the fear of not having sex, to having sex; and immunisation and anti-immunisation campaigners have traded blows in a war of fears, each trying to tip the argument in their own favour.

Rory Sutherland, vice chairman of Ogilvy Group UK, famously tells the story of Atatürk, a military leader in the then Ottoman Empire and later the first president of Turkey, who in an effort to stabilise the food supply added an additional carbohydrate to the mix – in this case potatoes – flipping the fear of eating potatoes into a fear of not eating them. In fact, by decreeing them a ‘royal’ vegetable that no commoner was to eat, he also ensured that not only was the fear flipped but a desire to eat them was achieved.

Rather than seeing fear as one-sided, these examples show that by seeking to defeat or decrease

This is perhaps the most important point. We are not advocating that you ignore your fears or throw yourself at them as part of a midlife extreme-sport crisis, nor are we suggesting that they are all irrational and imaginary. What we are suggesting is that they can be useful for driving change and shifting behaviour, and this relies on shifting the balance of the fear equation from one side to the other.

For instance, if you are afraid to go for a jog because you’re looking a little wobbly around the middle (after a few too many ice creams) and are scared that people might laugh at ‘the fat guy in tight-fitting exercise gear’, that’s one side of the fear ledger. But if a chainsaw-wielding madman were storming through your house, you would not only jog but hurdle, parkour, long-jump and sprint, all while dialling the emergency services. (And if anyone did choose to criticise you at this juncture, you would happily use them as an obstacle to slow down the chainsaw-wielding maniac.)

The next time you’re quaking in your boots and wishing you had picked up that ‘clinical strength’ antiperspirant, stop to consider fear not as a barrier to success but as possibly one of the most overlooked and underutilised motivators we have for driving us to success. Then set about reframing your fear.

The trick is to see fear – when appropriate – as a useful tool of leadership rather than as something to avoid.

Published by Wiley, Selfish, Scared & Stupid is available from October 2014 in paperback, RRP $25.95, from www.selfishscared andstupid.com

Kieran Flanagan and Dan Gregory are behavioural researchers and strategists. An author, educator and corporate coach, Flanagan is the chief creative officer at The Impossible Institute, while Gregory is a regular on the ABC’s Gruen Planet and president and CEO of The Impossible Institute – an innovation and engagement think tank.

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STATS

BROKERS ON UNDERWRITERS

Gratex International’s Insurance Brokers Insight Survey 2014 provides clear insights into broker perceptions about the business relevance and performance of Australian underwriting agencies (UAs). The results revealed that the majority of brokers surveyed predict growth of GWP for UAs, and that creating a great customer experience is the broker’s chief concern PRODUCTS How important are the following aspects to brokers?

Servicing specific market segments with niche products The products are flexible and allow complex options and extras for individual client needs Development of innovative new products

How do brokers rate the performance of UAs? Servicing specific market segments with niche products The products are flexible and allow complex options and extras for individual client needs

4.2 4.1 4.0 0

1

2

3

3.3 3.4

Development of innovative new products

3.6

Deliver new products within short time to market

3.7

3.1

Deliver new products within short time to market

4

5

0

1

2

3

4

5

Rating: 1-5 with 1 = lowest score, 5 = highest score

Rating: 1-5 with 1 = lowest score, 5 = highest score

BUSINESS How important are the following business aspects to brokers?

The UA has a deep understanding of my customer requirements

How do brokers rate the performance of UAs? The UA has a deep understanding of my customer requirements

4.0 3.9

The UA has a track record of excellent customer service The UA works proactively with my business to add value

The UA works proactively with my business to add value

The UA helps me to reduce my operational cost through effective online service

3.3

The UA helps me to reduce my operational cost through effective online service

The UA helps me to identify growth opportunities for my business

3.3

The UA helps me to identify growth opportunities for my business

3.0 0

1

2

3.2

The UA has a track record of excellent customer service

3.8

The UA has the lowest product prices in the market

3.4 3.0 2.7 2.5 2.9

The UA has the lowest product prices in the market

3

Rating: 1-5 with 1 = lowest score, 5 = highest score

4

5

0

1

2

3

4

5

Rating: 1-5 with 1 = lowest score, 5 = highest score

Source: Gratex International Insurance Brokers Insight Survey 2014: Underwriting Agencies – Relevance & Performance

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THE CLIENT EXPERIENCE How important are the following service aspects to brokers?

How do brokers rate the performance of UAs?

Highly satisfactory client experience during the claims process

4.4

Highly satisfactory client experience during the claims process

Phone access to highly qualified staff

4.4

Phone access to highly qualified staff

Time it takes to manage claims

4.4

Time it takes to manage claims

Time it takes from quotation to policy inception

4.3

Time it takes from quotation to policy inception

Turnaround time of client issues

4.3

Turnaround time of client issues

Effort and time it takes to customise quotes and policies

3.7

Access to an online self-service quotation system

1

2

3

3.3 3.1 2.6 3.1

Transparency of all policy administration information through online systems

2.9

Face to face access to qualified staff for complex products

3.2 0

3.5

Access to an online self-service quotation system

3.5

Face to face access to qualified staff for complex products

3.1

Transparent claim status through online access

3.6

Transparency of all policy administration information through online systems

3.5

Effort and time it takes to customise quotes and policies

4.0

Transparent claim status through online access

3.2

4

5

2.7 0

Rating: 1-5 with 1 = lowest score, 5 = highest score

1

2

3

4

5

Rating: 1-5 with 1 = lowest score, 5 = highest score

Source: Gratex International Insurance Brokers Insight Survey 2014: Underwriting Agencies – Relevance & Performance

10-30%

54%

Stay the same

Increase

42%

50% Over the next 2 years, do brokers expect the GWP volume their businesses conduct through UAs to…?

What percentage of GWP do brokers transact through UAs?

99.5%

of those surveyed don’t expect to move entirely to direct business relationships with insurers

30-50%

14%

less than 10% 50-70%

4%

more than 70%

4%

24%

Strongly increase

5%

Decrease

3%

Move entirely to direct business with insurers

0%

Source: Gratex International Insurance Brokers Insight Survey 2014: Underwriting Agencies – Relevance & Performance

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SOCIAL LIFE

VERO CELEBRATES RISK MANAGERS AND STOPS NATION WITH LUNCH

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Industry leaders in innovative and effective risk management planning were recently toasted at Vero’s RM Advancer Awards. In a gala event at Melbourne’s Eureka Tower, Buller Ski Lifts, GPT Group and Maxam took out top honours. The awards aim to reward and promote the best risk management plans carried out

by Vero customers within the previous year. Next year, the event celebrates its 10th anniversary and will be staged on the roof of the Museum of Contemporary Art, allowing attendees to soak up a stunning Sydney Harbour backdrop. And speaking of events with stunning backdrops, Vero invited industry members to celebrate the highlight of the spring carnival in style at Ananas Bar and Brasserie in The Rocks. The 2014 Melbourne Cup Luncheon was definitely an event not to be missed!

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SOCIAL

ANZIIF LEADERS OF THE PACK AND NZ AWARDS Young industry professionals in NSW got the chance to mingle recently at ANZIIF’s flagship Generation i event, ‘Leaders of the Pack’, at the Pullman Sydney Hyde Park Hotel. It wasn’t all fun and games. Sue Zablud, director of Human Asset Development Group, fostered group conversations, including discussion around what today’s insurance industry leaders are looking for from the leaders of tomorrow. The session concluded with networking drinks – always a highlight! And across the Tasman, industry members gathered in Auckland to celebrate the best in the business at the third annual NZ Insurance Industry Awards. Among the winners on the night, Rothbury Insurance Brokers took out Best Large Insurance Broking Company. Congratulations to Rothbury and all other award recipients!

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AIG AND WILLIS ENGAGE INDUSTRY PROFESSIONALS IN DEBATE The AIG Women & Allies and the Women at Willis Employee Affinity brought insurers together in Sydney for a fascinating and highly topical panel discussion, “Bridging the Gap – Realising the Potential of Women in Leadership”. Panellists were Helen Conway, director of the Workplace Gender Equality Agency, Naseema Sparks, an experienced director of ASX-listed companies, advisory boards and regulatory bodies, and Rowan Arndt, director of 2Include and Australian ambassador at Catalyst Inc. Discussion between panellists and other attendees covered a raft of issues, from the gender pay gap to the number of female voices in the boardroom. It was a vibrant discussion that could have continued well into the night!

SOCIAL LIFE

ACE EMPLOYEES GET OUT INTO THE COMMUNITY

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ACE Group recently held its annual Day of Service, with staff volunteering for community organisations and raising funds for charity. Both in Australia and New Zealand, ACE partnered with United Way and other organisations to facilitate several activities for their employees, including environmental conservation projects, after-school care with underprivileged children and a ‘Backyard Blitz’ at a care facility for disabled children. Staff also donated blood to the Red Cross and participated in First Voice’s Loud Shirt Day to raise funds for deaf children. The Day of Service became an annual event in 2012 for ACE employees across 11 countries in the Asia Pacific.

25/11/2014 9:21:32 AM

INSURANCEBUSINESSONLINE.COM.AU

Favourite things...

David Wyner, Managing partner, Reliance Partners, and NIBA president

David Wyner has been president of NIBA for almost two years. He’s also managing partner of Reliance Partners - part of the Reliance Group, which recently ranked second in Insurance Business’ Top 10 Brokerages for 2014. The busy industry leader offered a brief insight into his life away from insurance Movie: My favourite film of all time would have to be The Sha wshank Redemption. It’s one of those films that you wish didn’t end. It’s such a good movie!

Best thing about working in the insurance industry: It’s an easy answer and I think everyone would give the same answer. It’s the people. I think we’re a really close-knit industry. When we’re together, we’re not like competitors, we’re like friends…it’s a really nice industry. It’s got a beautiful feel about it.

Place to be: Anywhere there’s a beach. I love the ocean.

Book: King Solomon’s Mines [by Sir H. Rider Haggard]. I read it at school many years ago and I really enjoyed it.

I still enjoy it.

Drink: Coke – not Coke Zero, not Diet Coke, the real stuff!

Sport: I’d have to say tennis – a good spectator game!

Food: Anything Italian.

Vacation spot: Winter – Cairns, summer - Torquay

Music: Stuff from the ’70s. I like Fleetwood Mac, Elton John, that sort of stuff. I’m a bit old-fashioned!

DECEMBER 2014 | 55 NIBA/Studio Commercial

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25/11/2014 9:22:01 AM

THE LAST WORD

I can’t get no satisfaction…

How will a claims business endure and thrive in the world of tomorrow? Darren Trott shares his advice

“It’s no longer good enough to leave the customer on the receiving end of your claim process, with fingers crossed and hoping for the best”

There have been some excellent papers published recently, highlighting the current state of play in insurers’ claims operations, and the need to undertake significant transformation in order to remain competitive, or even just survive, in the future insurance world.

PwC’s Claim to Fame and Accenture’s Claims at a Crossroads publications draw upon each company’s global experiences and data analyses, and although the Australian general insurance industry operates in a local market often described as mature, many of the insights and recommendations can be directly applied to insurers in Australia.

CUSTOMER EXPERIENCE Today’s insurance customer expects transparency, honesty, flexibility and reassurance, in addition to ‘having their claim paid’. It’s no longer good enough to leave them on the receiving end of your claim process, with fingers crossed and hoping for the best.

It’s no wonder Accenture’s survey found that 41% of customers who were ‘satisfied’ with their claim experience were still ‘likely’ or ‘very likely’ to change insurers within the next 12 months.

This means we need to take existing, historically developed claims models and totally rethink them, putting the customer’s experience at the centre of everything. The transformation process must begin here, otherwise it’s just another deck-chair shuffle.

Suncorp has fully embraced this concept and the results are starting to show. I’ve heard many positive comments from industry colleagues about Suncorp’s change program, and it’s great to see a major insurer leading the way in Australia. Real Insurance is also achieving excellent claims experience results from customers in the direct market.

PEOPLE

Darren Trott is executive general manager of Claim Central.

Then there is the challenge of attracting, retaining and motivating highly skilled claims professionals.

It’s a sad reality that we have fewer claims professionals today than a decade ago. In tough financial times, insurers have shed claims staff and offshored claims operations, or outsourced them.

The Accenture survey revealed that claims professionals spend almost half their day on activities that do not impact on the claim outcome.

Imagine what could be achieved if this wasted talent and skill was channelled towards productive claim outcomes!

The future claims professional will work in a highly collaborative and distributed environment that is extended to include valued vendors and suppliers, and the customer. The key to becoming a successful claims professional is to surround yourself with experts. It’s not about having all of the answers yourself; it’s about knowing where to find the expertise.

Insurers who are leading the way in this area encourage close working relationships between claims staff and suppliers, in some cases having embedded staff to foster greater collaboration.

TECHNOLOGY The pace of change created by new technology, particularly in the claims environment, is outstripping the ability of some insurers to comprehend and understand what this technology can deliver.

Imagine trying to explain the concept of iTunes and iPods to a record store owner 25 years ago and you’ll get some idea of the challenges we face today.

Technology provides the foundation for change, beyond traditional green-screen legacy systems.

It offers tremendous opportunities to streamline processes, create mobility and generate future flexibility. Rich claims data can be captured, analysed and shared in real time, significantly reducing claim life cycles, improving claim decisions and generating positive customer experiences. Importantly, all stakeholders within the claim can have access to claim information, promoting transparency and collaboration in claim outcomes between brokers, loss adjusters, repairers and customers.

What’s needed is a holistic approach to the future claims model that incorporates customer experience, people and technology collectively in a fundamental move away from traditional models and piecemeal improvement programs.

56 | DECEMBER 2014

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25/11/2014 9:22:36 AM

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25/11/2014 9:24:38 AM 24/11/2014 4:53:03 AM

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