Insurance Business 4.01

insurancebusinessonline.com.au Issue 4.1

PROPONENT OF CHANGE AUSTAGENCIES’ ALEX GREEN TALKS CHANGE IN INSURANCE GENETIC TESTING ARE THERE IMPLICATIONS FOR INCOME PROTECTION OF MORE WIDELY AVAILABLE TESTING? PROTECTING THE PROFESSIONALS PROFESSIONAL INDEMNITY IN 2015

JOHN NELSON On Lloyd’s plans for the world The movers and shakers of the insurance industry

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UPFRONT

FEBRUARY 2O15

NEWS

CONTENTS

06 Round-up Cybercrime a billion-dollar problem in Oz

10 Analysis UFIs and North Queensland

BROKING INTELLIGENCE 50 Thinking outside the square Creativity in business

52 Stats

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THE PRICE OF GENETIC TESTING What does greater access to genetic testing mean for the income protection sector?

FEATURE THE HOT LIST

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Who are the movers and shakers of the Australian insurance industry?

COVER STORY JOHN NELSON

Where are the skills shortages in insurance?

INSURANCE INSIDERS 16 The big interview Austagencies’ general manager of distribution and analysis discusses change in insurance

34 Brooklyn’s new player Former rugby union star talks about joining Brooklyn Underwriting

54 Social life GSA ends year with frat party and ANZIIF TurksLegal claims scholarship winner announced

56 Favourite things ANZIIF CEO Prue Willsford

PROTECTING THE PROFESSIONALS

B T C n T

What’s happening in the professional indemnity space?

On Lloyd’s global strategy, ‘Vision 2025’

CONNECT WITH US

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Got a story, suggestion, or just want to find out some more information?

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The benefits premium funding can offer brokers and their clients

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CASHING UP

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UPFRONT

EDITORIAL

Change and innovation WE’RE WELL and truly into 2015 now, and the Insurance Business team is flat out, ensuring you’re kept abreast of all key developments in the insurance space.

To kick off the year, we’re bringing you our second annual Hot List, highlighting a number of industry professionals to keep your eyes on as the year progresses.

Change and innovation are themes you’ll find recurring throughout this issue. The importance of innovation was one of the key points in an address by John Nelson, global chairman of Lloyd’s, at the recent IBANZ-Lloyd’s Breakfast and Underwriting Agencies Council Expo in Auckland. I was fortunate enough to sit down with Mr Nelson following his address, and I’m excited to be able to share with you the highlights of our conversation.

Alex Green of Austagencies talks about the work he thinks the industry has ahead of it and some of the changes he’d like to see happen. We’ve also sought out several commentators to tell us about the current goings on within their own specialty areas, including their own innovations. The growing cyber threat is an issue you’ll find cropping up more than once in the pages to follow. It’s clear this is a challenge a lot of the industry is thinking about, and that it’s time for more and more businesses to evaluate and address their own cyber risks.

You may remember that, in our last issue, we took an in-depth look at the task of attracting new talent into the industry. I’m now pleased to be able to bring you some of the finer details of ANZIIF’s Careers in Insurance Quantitative Study: Australian Insurance Industry Workforce Insights. See our statistics pages for those findings.

Add in the usual mix of business strategy, and we’ve got a jam-packed issue we’re confident is the start of another great Insurance Business year!

Tim Garratt, Editor

www.insurancebusinessonline.com.au FEBRUARY 2O15 EDITORIAL

SALES & MARKETING

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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

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NEWS

ROUND-UP

Cybercrime now a billiondollar a year problem in Oz PROACTIVITY BY BOTH individuals and businesses to protect information stored online is critical, with the cost of cybercrime in Australia now totalling around $1.65bn pa.

Mikko Hypponen, the chief research officer of international computer security firm F-Secure, was in Sydney recently to discuss the potentially catastrophic risks individuals and businesses face when not properly educated about smart online habits.

Hypponen told Insurance Business that while he estimates criminals pocket hundreds of millions of dollars a year from cyber-attacks, hacked organisations suffer losses much greater than any profits made by cybercriminals.

He says business costs associated with losses – downtime, recovery, reimbursement of customers, rebuilding a company’s security and investing in that security – are very high.

F-Secure says the global surge in cybercrime, the government’s recent decision to review its cyber-security strategy for the first time in six years, and the leaking of politically sensitive emails in the lead up to the 2014 New Zealand election have raised concerns about the internet security environment in the Trans-Tasman.

In discussing the most serious legal ramifications a hacked company can face, Nick Abrahams, partner at law firm Norton Rose, highlights the 2013 US Target Corporation data breach case. He says that as a result of the Target attack, “Target’s revenue [went] down by half that quarter”.

Emma Osgood, NSW commercial practice leader for financial lines at AIG Australia, says “companies have a responsibility to ensure that the information they receive, hold, transfer and

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dispose of is done so in a secure manner and they should have policies in place to ensure that this happens where possible”.

“Proactive mitigation measures include use of anti-virus, encryption and firewalls.

Investing in training for employees should not be overlooked since employees are considered to be one of the primary causes of data breaches whether inadvertent or malicious.

“Data breaches are not going away and while an insurance policy should not be seen as a substitute for a sound risk management policy, it can provide an extra line of defence.”

On the role of brokers in assisting their clients, Osgood said: “Raising awareness of the evolving threat landscape should be on the agenda since clients cannot make decisions concerning insurance without being aware of their exposure.”

F-SECURE’S TOP FIVE MEASURES FOR PREVENTING CYBERCRIME AND PROTECTING SENSITIVE ONLINE INFORMATION 1. ENSURE JAVA AND OTHER SOFTWARE ARE UP TO DATE

The latest research from F-Secure found the top ranked infection to be due to outdated software; in Australia, 48% of malware occurred in old versions of Java and unpatched software.

2. PASSWORD PROTECTION

Ensuring security passwords do not include information such as any family names, birthdays and addresses, as well as regularly updating passwords, is considered best practice for online privacy. For even better security, F-Secure recommends using a password manager application.

3. BE SMART ABOUT USB PORTS AND PORTABLE DEVICES

F-Secure’s research showed USBs and removable drives as common vectors for spreading malware. However, simple precautionary measures such as not sharing portable devices between computers and running regular anti-virus software scans can help mitigate these risks.

4. DOWNLOAD AND UPDATE ONLINE SECURITY SOFTWARE

One of the most important ways to protect your privacy online is to ensure all mobile and PC devices are fitted with adequate and up-to-date security software.

5. DO NOT OPEN SUSPICIOUS EMAILS OR SOCIAL MEDIA POSTS

F-Secure’s research found hackers are using new techniques when it comes to encouraging users to click on phishing links. As well as old techniques of sending malicious software via email through phishing links and attachments, hackers are now embedding malicious vectors through camouflaged links into users’ social media news feeds.

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WHAT ARE THE MOST COMMON TYPES OF MALWARE FOUND IN AUSTRALIA?

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7%

ANGLER EK

RIMECUD

Exploit A collection of exploits that takes advantage of vulnerabilities in Internet Explorer, Java, Flash and Silverlight

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SINOWAL

Trojan A family of data-stealing programs. Stolen information includes usernames and password for online banking accounts

10 4%

5%

8

7

SALITY

Virus A large family of viruses that infect executable files. Uses an obscuration technique to hide its presence on the system

Worm A family of worms that spread via removable drives and instant messaging.

Allows attacker to gain access to an infected system

4%

6%

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MARKER

AUTORUN

Worm A family of worms that spread by copying themselves into the root directories of hard drives and other writable media. They may make changes to system settings or connect to a remote server

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Exploit A collection of malicious files that exploit known vulnerabilities in the Java Runtime Environment (JRE) to gain access and control to an infected system

Virus A polymorphic Word 97 macro virus. Some variants collect user information from Word and use FTP to send it over the internet

8%

3

ALMANAHE

Virus This virus propagates over a network. It has rootkit capabilities and forwards system information to a remote server

MAJAVA

5%

23%

1

Worm Also known as Conficker, this worm exploits a vulnerability in Windows.

Seven years after debut, it is kept alive by unpatched computers

18%

20%

2

DOWNADUP

MIXOR

Worm A family of mass mailing worms that may drop additional malware program onto the infected system

Source: F-Secure

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NEWS

ROUND-UP

General insurance needs to innovate to address growth challenges THE INSURANCE OF the past won’t be the insurance of the future.

That’s one of the key messages to take away from the 2014 JP Morgan Taylor Fry General Insurance Barometer, says Sharanjit Paddam, an actuary at Taylor Fry. Paddam explained to Insurance Business, that “increasingly, we’re seeing traditional products becoming much lower risk. But we’re also seeing an economy changing in where the risks are coming from”.

“So, insurers need to be getting on top of that trend and identifying new products that come with the new economy.”

The Barometer is an annual publication that aims to provide insights into the goings on of the Australian general insurance space, in terms of both prices and profits.

Among the Barometer’s key findings is that the outlook for growth in the industry over the next few years is particularly challenging. “The growth in the last two quarters of 2014 … has been the slowest rate we’ve seen in the last 20 years,” said Paddam.

He says in the longer term, growth will be a challenge for insurance for a number of reasons. “One is that risk management

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works. Workplaces are becoming safer in terms of accidents, numbers of road fatalities have been falling steadily since cars were introduced … all sorts of things are contributing towards lower risk generally.”

He also cites the very low GDP growth forecast for Australia in the next few years and the amount of capital in the market as adding to a climate that will make growth in insurance a tough task.

As well as understanding the need for new products, Paddam also suggests insurers, particularly for some of the commercial classes, understand their walkaway price. “In this highly competitive market with a lot of players out there, you can’t just keep cutting rates. At some point, you have to know what your walkway price is, and that kind of behavioural change is going to be very difficult for insurers because it’s not been the practice in the past.”

Finally, he adds, “I think people need to understand that there’s been a huge change in the capital supply to the market, and that capital is much stickier, and this idea that we need a big catastrophe for the capital to be scared away and then the rates will go

back up… yes, that’s happened every single time in the past, but I just don’t know if it’s going to happen this time”.

VIEWPOINT

WAS THE GOVERNMENT RIGHT TO CLASSIFY THE SYDNEY SIEGE AS AN ACT OF TERROR?

Yes

No

67%

33%

Total votes: 82

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THE FORUM

HAVE YOUR SAY ON insurancebusinessonline.com.au

Recruitment expert reports talent shortage in insurance INSURANCE IS “one of the most candidate or talent short” industries in Australia.

That’s according to Jane McNeill, regional director of Hays, which has recently released its latest quarterly report outlining key trends impacting the sector.

Speaking to Insurance Business, McNeill said the insurance industry was one of the most candidate short or talent short industries she’d experienced in her 27 years in recruitment.

As to how to address the challenge, McNeill says employers should be more open to taking on candidates with less experience. She added, “I think the more forward thinking ones, if they’re willing to take people on at a fairly junior level and start to train them up, even if it’s in the claims area, if they took people with good phone skills, the intelligence to deal with the claims handling, and actually trained them, they are going to increase the pool of candidates available.

“My advice would be to look at bringing more junior people and even more graduate training programs in because there is such a lack of new talent coming into the industry.”

GREG D ON 29/01/2015 10:07:22 AM With many insurers moving office tasks overseas, the proven training paths have reduced considerably and will continue to decline while insurers continue this practice. Many insurance brokers have taken the initiative of employing school leavers and introducing them to a rewarding insurance career.

LES ON 30/01/2015 11:12:27 AM I agree that there has been a shortage of young talent coming through the ranks in the insurance industry. A common refrain is that most people “fell” into the industry and stayed on. The industry is perceived to be non-glamorous with many talented young people gravitating to the finance and banking sectors. As a relatively young person (mid-30s) who has been in the industry for 10 years now, there were a lot of raised eyebrows among my peer group when I first started. Many questioned why I wasn’t in investment banking or with one of the big four banks. The insurance industry has done a poor job in marketing itself to the new generation.

STEVE CLANCY ON 3/02/2015 11:59:21 AM It is partly a problem of economics: most employers are reluctant to invest in training inexperienced job applicants as there is a perceived low likelihood of recovering that cost.

That is, once a junior gains enough experience to be valuable to other employers, they may choose to leave before their training cost has been recouped. One partial solution would be for the applicant/junior to internalise the training and development costs. Also, I agree that claims is a great place to start in the industry, and even stay and further develop technical skills.

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NEWS

ANALYSIS

Clarifying the clarification Unauthorised foreign insurers have been a hot topic in Australia since a government announcement late last year. Is there genuine cause for concern over the proposal or is it a matter of wait and see?

SINCE OCTOBER, debate has raged over Finance Minister Senator Mathias Cormann’s announcement of a set of initiatives aimed at addressing the problem of insurance affordability in North Queensland. According to the Australian Government Actuary’s report into home and contents insurance pricing, North Queensland premium rates increased by approximately 80% from 2005/6 to 2012/13.

In stark contrast, the increase in Sydney and Melbourne over the same period was about 12%.

While the proposal encompassed a number of components, it was one particular measure that sparked the attention of industry professionals. That measure was an intention to boost competition by clarifying that licensed brokers can sell policies from unauthorised foreign insurers (UFIs) where those insurers offer consumers a better price.

Soon after Cormann’s announcement, the Insurance Council of Australia (ICA) made its concerns clear, releasing a statement saying that it was urgently seeking more details of the plans.

“Existing licensed insurers operate under some of the tightest regulations of any industry sector, yet … UFIs may not be held to the same legal, prudential and capital requirements, nor the same consumer laws and remedies,” said the ICA’s acting CEO, Karl Sullivan, in the statement.

Sullivan added: “The ICA believes all market participants selling retail insurance products must abide by the same set of laws

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and capital requirements, and exceptions should not be made that would diminish consumer rights and create further uncertainty.”

Common concerns voiced during the discussion that has followed include questions about the burden on brokers when exploring insurance through UFIs and providing advice on their use, and the lack of any geographical limitation on the plan.

So what are the issues brokers should be aware of, which are part and parcel of placing risk with UFIs? And at the same time, how likely are the risks to materialise? Has the noise around the UFI issue possibly been premature?

The legal view Peter Bennett, partner at law firm Holman Webb, talked to Insurance Business about UFIs. He said the main issue associated with placing risk with UFIs was insolvency. He said, “The burden for brokers is that the policyholders will look to the broker for compensation if a claim is not met because of the inability of the unauthorised foreign insurer to pay, possibly shifting the [insured’s] loss to the broker’s professional indemnity insurer.

“Brokers will need to undertake their own enquiries into the financial position of the unauthorised foreign insurer and could be liable to the insureds if those enquiries failed to identify the potential for the insurer to be unable to meet claims.”

He said that, along with the risk of

insolvent insurers, there was also a risk that brokers, rather than an insurer, would be sued by disgruntled policyholders. He added that any litigation against the insurer might need to be brought in an overseas jurisdiction, given the insurer might not have any local connection.

Bennett said brokers who found themselves in the position of having to advise a client who was interested in seeking a policy from a UFI needed to ensure they had adequate professional indemnity cover.

Allaying fears While there are risks associated with placing business with UFIs, does the government’s October announcement mean it is now time to be contemplating those risks?

Dallas Booth, CEO of NIBA, says he doesn’t share the major issues or concerns that people have had over the government’s proposal. In mid-February, the Australian

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also that quite a few people didn’t really appear to understand what the current laws and regulations for UFIs are and how it works.”

According to data from APRA, businesses in Australia placed $1.331bn of risk with UFIs in the 2013/14 financial year. So while regulatory changes are part of the proposal, there currently already exists a framework for entities in Australia to place risk with UFIs. Peter Bennett says what is proposed is “a change in the businesses which an unauthorised foreign insurer can write business for.

“At the moment, this [is] limited to atypical risks, high-value insureds and other risks that cannot reasonably be placed in Australia. The category [will] now [be] widened to include where the risk is priced at relatively high levels by Australian insurers ...”

Clarification

Insurance Law Association held an event in Brisbane, ‘Opening the doors to UFIs’, at which Booth spoke.

As to the main message he wanted to deliver to brokers at the event, he says, “I wanted to make sure that people understood what the government actually announced, which was to clarify the operation of unauthorised foreign insurers and the role of brokers, and the provisions that apply in relation to the potential for obtaining substantially better terms from a foreign insurer, compared to what might be available in the market.

“As soon as the announcement started to be reported, I think all sorts of people assumed all sorts of things and possibly jumped to conclusions that might have been a bit premature,” Booth says.

“My feeling was that some of the comments were not as well informed as they might have been, and I got the impression

Booth says he has been involved in some general discussions with Treasury about the proposal. “We’re liaising on a regular basis, but I’m just keen to see what the draft is when it’s released. I know that Treasury has to go through a process of preparing draft materials, then clearly you have to get ministerial approval for the release of that …

They’re doing the right thing and going through proper process. And we look forward

just looking forward to seeing the actual wording of the proposals that the government wants to put in place.”

Booth says that as soon as NIBA receives the draft regulations it will be advising its members. Those draft regulations are expected to be released by early March, and Booth says his understanding is that the proposed changes are likely to be in place by the end of March.

Another unknown in the UFI discussion is precisely how attractive a marketplace Australia will be to UFIs, as far as personal lines and domestic insurance are concerned.

Booth says that, at the moment, the average premium for a policy placed by an entity in Australia with a UFI is approximately $130,000.

How keen will UFIs be to offer car and home insurance to individuals? And just how well placed will these organisations be to do so, when it comes to the level of service they can offer?

“The local market has a massive advantage in terms of being on the ground, being able to support, assess and respond to claims,” says Booth. “The Australian insurance industry does a phenomenal job when it comes to natural disasters.

“We’ve seen what’s happened with the Brisbane storm last year and the extent to which the industry has responded. The insurance industry in Australia does a phenomenal job and that gives them a

“The burden for brokers is that the policyholders will look to the broker for compensation if a claim is not met because of the inability of the unauthorised foreign insurer to pay” to the release of the draft in the near future.”

As to what he expects of the government proposal, he says, “[The minister] said [the proposal was] to clarify the operation of these provisions. That’s what I’m expecting will happen. Now what that actually means in practice, I just have to wait and see … [I’m]

massive advantage just in terms of the practical effects of getting claims assessed and paid when damage occurs.”

What remains now is for all stakeholders to wait until the draft regulations are released, when it will become clear precisely what the government’s proposal entails.

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COVER STORY

JOHN NELSON

A WORLD VISION On his recent visit to the Trans-Tasman region, chairman John Nelson spoke to Tim Garratt about Lloyd’s grand plans to increase its global footprint

IN 1688, Edward Lloyd ran a coffee house on Tower Street in London. The establishment became a bustling address, frequented by those whose business was connected to the ships. Quickly, the coffee house became known as the place to obtain marine insurance.

In 2015, 327 years on, Lloyd’s name is synonymous with insurance around the globe. It has reached lofty heights high above its humble origins at an address long since removed from the map.

Today, Lloyd’s of London is the world’s leading market for specialist insurance. It has 94 syndicates, managed by 57 Managing Agents, and more than 200 different brokers bringing in business from over 200 countries and territories.

Financially, Lloyd’s return on capital has averaged 15.5% over the last 12 years. In 2013, the last full year Lloyd’s reported on, it announced profits of US$5.3bn, return on capital of 16%; a combined ratio of just under 87%. It expects its 2014 results to continue this trend, and reports that Lloyd’s market has never been in a stronger financial position, with its credit ratings at an all-time high.

And despite technology leading all industries down a path to more and more automation of processes, chairman John Nelson was keen to impress upon attendees at the recent IBANZ-Lloyd’s breakfast in Auckland that Lloyd’s has no shortage of manpower. “I have heard it said that there are no real underwriters anymore – just computers, churning out off-the-shelf products,” Nelson told the room. “Well, in the case of Lloyd’s, nothing could be further from the truth. We have a growing global marketplace full of expert underwriters, more than we’ve ever had, writing the most innovative and specialist products going.”

Nelson described Lloyd’s as “the masters of bespoke” and added, “We have a world class reputation built on being flexible and responsive to our clients’ needs and our first-class knowledge of the changing risk landscape”.

Nelson began his role as chairman of Lloyd’s in October 2011, succeeding Lord Levene. Behind him is an impressive career in business that has included roles in financial services, real estate and the retail sectors.

JOHN NELSON ON THE IMPACT OF ALTERNATIVE CAPITAL “[W]e do have some concerns about the concentration of alternative capital focusing on a few specific areas – both geographic and in terms of peak risks. We need to try to harness capital on a broader basis, particularly to assist the industry in driving forward into new markets and new products.

“This will require sophisticated, knowledgeable and long-term investors. And they will need to be supported by the continuous development of analytical resources and techniques.

A lot of work is already being done on this within Lloyd’s – and it needs to be.

“As we continue to grow globally and alternative capital floods into the market, there are going to be many issues that we have to navigate.”

Strategy Seven months after Nelson’s appointment, UK Prime Minister David Cameron attended the world famous premises in Lime Street to assist him in launching ‘Vision 2025’, a new strategy for the development of the Lloyd’s market, which has as its chief aim making Lloyd’s the global centre for specialist insurance and reinsurance.

The ambitious plan involves global expansion, with Southeast Asia, China, Eastern Europe and Latin America all to become key to Lloyd’s business. Another central element of ‘Vision 2025’ is the goal of being globally diverse in its capital base, as well as being a diverse market by gender, age and ethnicity.

Nelson sat down to speak with Insurance Business while attending the Underwriting Agencies Council’s inaugural New Zealand Expo, an event held in tandem with the IBANZ-Lloyd’s breakfast. While still in its early days, Nelson says Lloyd’s has made “good progress” in working towards achieving the objectives of ‘Vision 2025’.

“Bottom line, I would say that ‘Vision 2025’ has very much been embraced, it’s very much being executed,” he tells us.

Speaking about some of Lloyd’s current expansion activities, Nelson says: “We are opening a new co-location hub in Dubai in March, which is going to be very important for our Middle Eastern business. There’ll be something like 10 managing agents going there to start with in the DIFC”.

Talking about movements in Europe, Nelson says: “Our business is growing well in Poland. We are in negotiation with the Turkish Government for an onshore licence

Source: John Nelson’s address at the IBANZ-Lloyd’s Breakfast, Auckland, February 16, 2015

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“We like to think we’re in the vanguard of innovation and it’s very important we are”

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COVER STORY

JOHN NELSON for Lloyd’s, and we’re hoping that the bill will go through parliament in the next few weeks.”

He comments that India is “more problematic” and adds, “India has had a very protectionist, restrictive regime in terms of foreign investment inwards into India, and the Insurance Amendment Bill, which has been approved by the Indian government … is due to go in front of parliament anytime.

“I think it will take a little bit of time because of the political situation, but we’re hopeful that, by the end of the first half of this year, that bill will have been passed, which will be very important for Lloyd’s.”

Nelson describes Lloyd’s presence in Singapore as “a proper hub”. “We have about 360 people there, we’ve got about 20 managing agents … and that’s going well.”

Further, he reports that Lloyd’s plans to increase its footprint in Malaysia, where it’s in negotiations at the moment, and has just been granted a licence to open an office branch of its Shanghai hub in Beijing.

“The other way around, we have interest in terms of some of the growth carriers coming onto the Lloyd’s platform,” according to Nelson. “China Re started their syndicate on 1st January … there’s always a pipeline of companies coming on, but we have to do it fairly steadily because we don’t want a sort of great glut coming in all at the same time…”

Inga Beal, we’ve ever had in Lloyd’s.

“She wasn’t selected because she was a female. She was selected because she was the best candidate. But I think it was a sign of the times that we had a female candidate who was the best candidate.”

Nelson says that while gender diversity moves along, nationality diversity remains a challenge. He says nationality diversity is “very, very important because, if you have true nationality diversity in the Lloyd’s market worldwide, you get much more input in terms of local culture and customs [and] understanding new local risks and new markets”.

Nelson points to the banking industry in London in 1980s as an example of successfully involving huge nationality diversity in business. He says that diversity was what really drove London to becoming the financial intermediation centre of the world. “I think we have the same opportunity in Lloyd’s in the London insurance market. You’re seeing greater diversity now, but there’s quite a way to go.”

Innovation Speaking about another priority of one of the insurance world’s greatest behemoths, Nelson talks about the emphasis Lloyd’s continues to place on innovation.

He told breakfast attendees of a startling statistic from a recent study undertaken by The London Market Group, in which it was reported that only 10% of

“In the short term, obviously there’s a glut of capital, very low interest rates, people competing aggressively … it’s going to be tough” Diversity Plans to make Lloyd’s mirror the geographic origin of the market’s business and capital read as every bit as ambitious as its endeavours to develop in high growth economies. Nelson believes that, in terms of gender diversity, Lloyds has made great progress. “Without wishing to overplay it, we have the first female chief executive,

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the corporate risk map is covered by insurance.

“What does this tell us? It tells us that in the same way there is a physical world out there needing coverage, there is a panoply of new, emerging risks demanding innovative solutions.

“Lloyd’s has the edge in terms of our global reputation for innovation. We have a

long and illustrious history of ‘firsts’. Our reputation for developing new solutions and new products to cover emerging risks must be upheld if we are to remain relevant.”

He refers to cyber, supply chain and reputation as being niche classes of business that are in high demand, adding that, “The bespoke, imaginative and intellectual challenges they represent offset the commoditisation of more traditional coverage.”

Speaking specifically in relation to Lloyd’s, he tells Insurance Business: “We like to think we’re in the vanguard of innovation and it’s very important we are”.

On the topic of technology in the back office, Nelson says it’s absolutely vital to make platforms more efficient and user friendly. “I would say the insurance industry, generally, is behind the rest of global industry in terms of embracing technology to improve their platforms, and

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that would be true of Lloyd’s as well. I think though now that the market has smelt the coffee. They understand they need to do it, and we’re doing that.

“It’s not just a cost thing, it’s making it more user friendly and, as we grow overseas, making it easier for stakeholders to plug and play…”

Outlook

LLOYD’S FACTS

70% 100% 60%

Lloyd’s covers almost 70% of the airline industry, 70% of the pharmaceutical industry and well over 55% of the telecoms industry globally Lloyd’s provides insurance to 100% of the Dow Jones Index and 94% of the FTSE 100 Approximately 60% of Lloyd’s business is direct insurance and around 37% is reinsurance

In 1973, Liliana Archibald became Lloyd’s first female broker The Lloyd’s building in Lime Street, London was officially opened by Her Majesty Queen Elizabeth II in 1986. Around 33,510 cubic metres of concrete, 30,000 square metres of stainless steel cladding and 12,000 square metres of glass were used during construction

Asked about the global outlook for the industry in the year and beyond, Nelson answers, “In the short term, obviously there’s a glut of capital, very low interest rates, people competing aggressively … it’s going to be tough. It’s going to be very tough.”

His advice for dealing with fierce competition is simple: “innovate to compete”.

When it comes to talking about the longterm outlook for specialist insurance, Nelson is much more optimistic. “If you look at Lloyd’s market, we think our addressable market at the moment, in annual terms, is around US$600bn. We think that, in 2025, that number will be around US$2trn.”

He says China, India, Brazil, Mexico and Turkey will form the majority of global GDP, and those countries are currently among the least insured in the world. He also says that, according to Lloyd’s figures, a 1% rise in insurance penetration translates into a 13% reduction in uninsured losses, a 22% reduction in taxpayers’ contribution following a disaster, and increased investment equivalent to 2% of national GDP. “The amount of risk that’s being created in these countries is prodigious,” he says.

“Governments know … they need to close the insurance gap just to make sure that the economies are sustainable…there is a real correlation between good insurance, diversified insurance and economic performance…”

As the years go by and Lloyd’s continues on the path to achieving its vision for 2025, it will be fascinating to see just how high above its seventeenth-century beginnings it can climb.

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THE BIG INTERVIEW

ALEX GREEN

PROPONENT OF CHANGE

From underwriting to actuarial work, Austagencies’ general manager of distribution and analysis, Alex Green, has enjoyed a vastly varied career in insurance. He recently shared with Insurance Business his insights into the industry and some of the major challenges it faces 16

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ALEX GREEN HAS a lot to say on the subject of change in the insurance industry.

When asked to name momentous changes he’s witnessed over his 25 years in insurance, Green singles out the 2001 collapse of HIH Insurance Group, which went into liquidation with losses of $800m. “[The collapse of HIH] still sticks in my mind as being probably the most significant market-changing event in Australia,” he says.

Change?

But when it comes to technologically driven change, has there been any real transformation in insurance over that time? “Technology is an obvious thing that’s changed massively,” says Green. “But the question I ask myself is, ‘What have we done with it? What impact has it had on us as an industry?”

Green opines that probably less has changed about the industry than the things around it. “It’s still a heavily relationship-driven industry. There have been a few new products that have come in, or a few new areas that have changed in terms of enhancements … but, fundamentally, the main covers, the main premium, the main everything else is pretty stable ...

“We could talk about all sorts of other things that have changed, like the mode of distribution, direct and online, and so forth. Nothing’s really lived up to the original expectations. What’s interesting to reflect on is, why isn’t that the case?”

Green acknowledges that several insurance companies are using technological developments to improve internal efficiencies. But he adds that “… the further you get away from internal applications – the closer you get to the external and the customer – the fewer examples you have of really successful implementations”.

He says the industry is moving forward with respect to technology but needs to be serious about bringing itself up to speed. “Critical mistakes centre on a lack of information-gathering by underwriters from their broking community.”

As an example, he cites online systems that aren’t properly integrated with broker systems, merely shifting the burden to the broker.

“This problem is further compounded when a ‘timepoor’ broker needs to focus on double-keying data at the expense of servicing the insurance purchaser.

Brokers need to ‘pull stumps’ on systems that are not

user-friendly, and support underwriters that are meeting their needs.”

Green advocates intended end users of systems being involved in the process of deciding exactly how technologies will be utilised to build those tools. He says: “An insurance company typically starts building the system without starting out saying, ‘You tell us what can we build for you to solve your problem’, and I think that only really comes when you’ve got embedded really goodquality people … understanding the business issues and solving them from within the business, instead of trying to solve them centrally.

“Brokers need to ‘pull stumps’ on systems that are not user-friendly, and support underwriters that are meeting their needs” “There’s an opportunity ripe in big organisations, but equally in small ones, to better harness the technology we’ve got by basically distributing the development and the solutions, empowering the people that will get the most benefit from it, giving them the power to develop solutions for their own problems, instead of trying to develop them centrally.”

According to Green, it’s important for the industry to make a careful distinction between innovation and technology. “I hear a lot of rhetoric regarding innovation in respect to technology. This is, however, only one piece of the innovation jigsaw. Innovation involves the whole ‘box and dice’ – product, price, positioning, marketing, technology, etc. [It’s] the whole insurance transaction.

“To be truly innovative our industry needs to examine each step of the insurance transaction and ‘break the mould’ for the benefit of the insurance purchaser.”

The future of consolidation Reflecting on other changes in insurance, Green raises consolidation and questions how much more can occur within the space in Australia. “Consolidation has been the way people have delivered earnings and earnings growth. I think it just underlines that challenge in the industry around, well, ‘where do we go from here?’, because when the opportunity for further consolidation

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THE BIG INTERVIEW

ALEX GREEN

is limited, I think there’s a real strategic question for the major players ...

“It’s easy for the small players because we’ve still got plenty of headroom. It’s about outperforming and improving within segments. But for the major players, the issue is, without the likelihood of further consolidation, where do you go? And how does that change?”

Green says the industry is now at a crossroads, no longer able to look at the past pattern of acquisitions and expecting the same to continue. “[There are] relatively few reinsurers, [there are] relatively few major players; things have been mopped up. And that’s not to say that there will be no new small players and no new mop-up.

It’s just that there won’t be the frequency and rate and opportunity for all the players to get there … it’s running out; the clock’s running down.”

Team playing Turning his attention to the 18 years he spent at Royal Sun Alliance, Vero and Suncorp, Green recalls that his experience working to create an online underwriting tool was a particular high point of those years. “As an employee of an entity, certainly I always thought the most important part of my role was to deliver great results. But working as part of a team where, not only did you have … a really high-quality group of people but who all understood how they were going to contribute ... That was a highlight for me … building that team and working with those people to not just deliver very successful results for the business but to actually really enjoy work … “[That experience] delivered results but people saw it as being engaging … I suppose it’s in that environment, that I really enjoyed and thrived in, that we achieved the things like building an end-to-end online underwriting tool … [And] the view is that what was built there became a benchmark or a reference point internally for other people to aspire to, in terms of an end-to-end support tool.”

Green attests to the importance of assembling the right group of people in order to achieve outstanding results, and says, “Some teams … struggle to get the right engagement of the team because they can become concerned about their role or the position or their performance, or they become disengaged because the targets are unrealistic or whatever else … [I]t’s hard to achieve big things when people are more focused on the small, less important things.

“Having your people feel supported and comfortable

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“To be truly innovative our industry needs to examine each step of the insurance transaction and ‘break the mould’ for the benefit of the insurance purchaser”

and confident in their day-to-day stuff means that they’re empowered effectively to go the extra mile and put in that extra care, passion, ownership, whatever it be, to achieve the extras, which I think is what differentiates the average performers from the outperformers …

“It’s actually about performance. And you can’t control where the market’s at. You can’t lift pricing by yourself; you can’t make brokers place business here … [B]e focused on what you need to do to do it better than others so that, at the end of the day, if you’re outperforming the market consistently, you’ll be rewarded, and throughout the cycle that’ll eventually get recognised.”

Reward Green also pinpoints other significant benefits that have flowed from his career in insurance.

One particularly rewarding aspect in recent years has been assisting others with their own career development.

“I’ve been involved in the NIBA mentoring program for quite a few years now,” he says. “I do really feel good about sitting down and trying to help others and give back a little bit or assist and provide direction, because I think there is great opportunity within the industry for people with talent and capability.”

As well as mentoring, Green’s tenure as an insurance industry professional has given him an abundance of opportunities to do one of the things he loves most – solving problems. “I absolutely respond best to a challenge. I live for a big project or a big challenge … the bigger a problem I get thrown, the more I throw myself into it to pull it apart, work out the answer and get it fixed up.” He suggests a stint as a contestant on The Block could have been a good move!

“There’s always a new challenge and there’s always something coming up,” Green says. He mentions Austagencies’ acquisition of a 75% stake in Asia Mideast Insurance and Reinsurance, announced last July. “When those things come up, there’s always a problem associated with them … Either there’s another competitor or more than one involved, or someone wants something that you’re not quite willing to give and you have to find some middle ground …”

Talent development Green shares a view common in insurance that the industry needs to act to attract and retain more talent. “I think there is great opportunity within the industry for

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people with talent and capability. We need it. We absolutely need it as an industry. We need to nurture and support that,” he says.

He’s of the view that properly managing talent was a practice better undertaken by the industry in times gone by. “I think they used to do it better. As an industry, 30 years ago … the industry brought far more people in out of school and as graduates. It did far more around training and development of people … “[For example,] the first thing you’d do is go to insurance school and you’d work through the manual and it was much more formalised, in terms of what you did.

And I think the way information gets distributed now – whether it be online training, whether it be third-party stuff or whatever else – people have just tried to cut costs and drop it out or they put it online … so now there’s a training manual that you can access online. Instead of having to be trained, the expectation is more you just look it up and refer to it. It’s not the same …”

He adds: “There’s far more focus on consolidating and offshoring and streamlining than there is around having a talent flow … I know companies have made decisions to increase graduates … but I think if we wound the clock back 30 years there’d be many more companies with a much more regular intake of both school-leavers and graduates on a much more formal basis.”

Green says companies are making short-term decisions in order to improve margins and deliver better returns to shareholders. He’s concerned about what the next step will be for the industry, in terms of developing, once that has happened. “It’s one of these things that you don’t want it to die on the vine. If we milk and milk and milk and you can’t squeeze any further, what are the other consequences of this?

“I think that’s a challenge for the industry leadership … Where’s our next level of talent coming from? Where are we going to recruit from? How are we going to develop people?

“Even during this period of consolidation, there’s still a massive breadth of opportunity, whether it be in sales, technical, compliance, leadership, technology … there’s still all these problems to be solved and it’s still pretty exciting stuff.”

2015 Looking ahead and contemplating the next 12 months for Austagencies, Green says: “I think we’ve got to do what

UNDERWRITERS AND BROKERS IB: What do you think underwriters need to be doing in terms of their interactions with brokers, in order to grow and succeed in the market?

AG: There are a number of quality underwriters in the current market. The challenge

is keeping them motivated and energised to provide responsive service to brokers.

How an underwriter gains his or her motivation is generally a personal thing. However, from my experience, I believe strong leadership and facilitating a culture whereby underwriters are encouraged to ‘see the forest and the trees’ can help with motivation. Further, being a specialist in [a] particular discipline is a desired approach.

This gives brokers the sense of comfort that they require when they approach underwriters for business.

Overall, I believe staying motivated, responsive service, and quality ‘know-how’ is key to an underwriter’s success in the current market.

we do better. I think get clearer about tailoring our propositions better and making them more purposebuilt. So [I estimate in] probably about a quarter of our businesses … we’ve really got some work to do to lift their propositions to the level of the rest of our businesses. It’s a great challenge for us to have because it means there’s opportunity to simply improve the way we’re doing business, to improve performance.

“The reality is we’ve got a few businesses where just doing them a little bit better will really help lift the overall objectives of our business to improve the result.”

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Acco Archi Agen and C Cont Safet Illustr Infor Marri Proce Real Statio Loca Agen Artist Advis Drivin Engin Asses & Ex Land Merc Searc Reloc Agen Advis Cons Book Conf Advis Fores Cons Cons Logis Multi Reco Secre Traffi Wedd Aqua Busin Mana Servi Fune Advis Interi Mark Cons Advis & Fre Trans Woo Medi Broke Copy Elect Gem Asses Irriga Cons Analy Advis Cons Unde Acco

FEATURE

THE HOT LIST

Who are the movers and shakers making their mark on the insurance industry?

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Accountants Adoption Agencies Advertising Services Aged Care Consultants Agricultural Consultants Aquaculture Consultants Arbitrators & Mediators Arborist Archaeologists Architects Archival Firms Artist/Art Directors Authors Biologists Bookkeepers Botanists Building Surveyors Business Training Courses Business Brokers Business Coaches Buyers Agents and Advocates Career Advisory Services Civil Celebrants Conference Management Construction Management Compliance Consultants Copywriters Court Reporters Design and Construct Draftpersons Driving School Instructors Ecology Advisors Editors Education Advisory Services Educational Establishments Electrical Design Services Electrical Contractors Energy Consultants Engineers Environmental Consultants Forestry Consultants Fundraisers Funeral Directors Geographers Gemologists Graphic Designers Health and Safety Consultants, Workplace Assessors Heating & Air Conditioning Consultants Historians Horticultural Advisors Home Sustainability Assessors Human Resource Consulting Illustrators Image Consultants Import & Export Agents Industrial Relations Consultants Insurance Loss Adjusters Interior Designers Interpreters Irrigation Design and Consulting Information Technology Jewellers Landscape Designers Land Surveyors Logistic Advisors Management Consultants Market Research Marketing Consultants Marriage Consultants Marriage and Family Counsellors Mercantile Agents Migration Agents Multimedia Consultants Natural Resource Consultants Photographers Policy Analysts Private Investigators Process Servers Property Title Searchers Project Management Public Records Search Firms Public Relations Firms/Advisors Publicists Quality Control Advisors Quantity Surveyors Real Estate Recruitment Agencies Relocation Agents Safety Engineers Secretarial Services Security Advisors Shipping & Freight Forwarding Solar Energy Consultants Stock and Station Agents Statisticians Taxation Agents Textile Designers Town Planning Traffic Surveys, Engineering and Control Translators Travel and Ticket Agents Underground Cable Locators Water brokers Water Conservation Advisors and Irrigation Consultants Wedding Planners Wind Energy Consultants Wool Brokers and Classification Accountants Adoption Agencies Advertising Services Aged Care Consultants Agricultural Consultants Aquaculture Consultants Arbitrators & Mediators Arborist Archaeologists Architects Archival Firms Artist/Art Directors Authors Biologists Bookkeepers Botanists Building Surveyors Business Training Courses Business Brokers Business Coaches Buyers Agents and Advocates Career Advisory Services Civil Celebrants Conference Management Construction Management Compliance Consultants Copywriters Court Reporters Design and Construct Draftpersons Driving School Instructors Ecology Advisors Editors Education Advisory Services Educational Establishments Electrical Design Services Electrical Contractors Energy Consultants Engineers Environmental Consultants Forestry Consultants Fundraisers Funeral Directors Geographers Gemologists Graphic Designers Health and Safety Consultants, Workplace Assessors Heating & Air Conditioning Consultants Historians Horticultural Advisors Home Sustainability Assessors Human Resource Consulting Illustrators Image Consultants Import & Export Agents Industrial Relations Consultants Insurance Loss Adjusters Interior Designers Interpreters Irrigation Design and Consulting Information Technology Jewellers Landscape Designers Land Surveyors Logistic Advisors Management Consultants Market Research Marketing Consultants Marriage Consultants Marriage and Family Counsellors Mercantile Agents Migration Agents Multimedia Consultants Natural Resource Consultants Photographers Policy Analysts Private Investigators Process Servers Property Title Searchers Project Management Public Records Search Firms Public Relations Firms/Advisors Publicists Quality Control Advisors Quantity Surveyors Real Estate Recruitment Agencies Relocation Agents Safety Engineers Secretarial Services Security Advisors Shipping & Freight Forwarding Solar Energy Consultants Stock and Station Agents Statisticians Taxation Agents Textile Designers Town Planning Traffic Surveys, Engineering and Control Translators Travel and Ticket Agents Underground Cable Locators Water brokers Water Conservation Advisors and Irrigation Consultants Wedding Planners Wind Energy Consultants Wool Brokers and Classification Accountants Adoption Agencies Advertising Services Aged Care Consultants Agricultural Consultants Aquaculture Consultants Arbitrators & Mediators Arborist Archaeologists Architects Archival Firms Artist/Art Directors Authors Biologists Bookkeepers Botanists Building Surveyors Business Training Courses Business Brokers Business Coaches Buyers Agents and Advocates Career Advisory Services Civil Celebrants Conference Management Construction Management Compliance Consultants Copywriters Court Reporters Design and Construct Draftpersons Driving School Instructors Ecology Advisors Editors Education Advisory Services Educational Establishments Electrical Design Services Electrical Contractors Energy Consultants Engineers Environmental Consultants Forestry Consultants Fundraisers Funeral Directors Geographers Gemologists Graphic Designers Health and Safety Consultants, Workplace Assessors Heating & Air Conditioning Consultants Historians Horticultural Advisors Home Sustainability Assessors Human Resource Consulting Illustrators Image Consultants Import & Export Agents Industrial Relations Consultants Insurance Loss Adjusters Interior Designers Interpreters Irrigation Design and Consulting Information Technology Jewellers Landscape Designers Land Surveyors Logistic Advisors Management Consultants Market Research Marketing Consultants Marriage Consultants Marriage and Family Counsellors Mercantile Agents Migration Agents Multimedia Consultants Natural Resource Consultants Photographers Policy Analysts Private Investigators Process Servers Property Title Searchers Project Management Public Records Search Firms Public Relations Firms/Advisors Publicists Quality Control Advisors Quantity Surveyors Real Estate Recruitment Agencies Relocation Agents Safety Engineers Secretarial Services Security Advisors Shipping & Freight Forwarding Solar Energy Consultants Stock and Station Agents Statisticians Taxation Agents Textile Designers Town Planning Traffic Surveys, Engineering and Control Translators Travel and Ticket Agents Underground Cable Locators Water brokers Water Conservation Advisors and Irrigation Consultants Wedding Planners Wind Energy Consultants Wool Brokers and Classification Accountants Adoption Agencies Advertising Services Aged Care Consultants Agricultural Consultants Aquaculture Consultants Arbitrators & Mediators Arborist Archaeologists Architects Archival Firms Artist/Art Directors Authors Biologists Bookkeepers Botanists Building Surveyors Business Training Courses Business Brokers Business Coaches Buyers Agents and Advocates Career Advisory Services Civil Celebrants Conference Management Construction Management Compliance Consultants Copywriters Court Reporters Design and Construct Draftpersons Driving School Instructors Ecology Advisors Editors Education Advisory Services Educational Establishments Electrical Design Services Electrical Contractors Energy Consultants Engineers Environmental Consultants Forestry Consultants Fundraisers Funeral Directors Geographers Gemologists Graphic Designers Health and Safety Consultants, Workplace Assessors Heating & Air Conditioning Consultants Historians Horticultural Advisors Home Sustainability Assessors Human Resource Consulting Illustrators Image Consultants Import & Export Agents Industrial Relations Consultants Insurance Loss Adjusters Interior Designers Interpreters Irrigation Design and Consulting Information Technology Jewellers Landscape Designers Land Surveyors Logistic Advisors Management Consultants Market Research Marketing Consultants Marriage Consultants Marriage and Family Counsellors Mercantile Agents Migration Agents Multimedia Consultants Natural Resource Consultants Photographers Policy Analysts Private Investigators Process Servers Property Title Searchers Project Management Public Records Search Firms Public Relations Firms/ Advisors Publicists Quality Control Advisors Quantity Surveyors Real Estate Recruitment Agencies Relocation Agents Safety Engineers Secretarial Services Security Advisors Shipping & Freight Forwarding Solar Energy Consultants Stock and Station Agents Statisticians Taxation Agents Textile Designers Town Planning Traffic Surveys, Engineering and Control Translators Travel and Ticket Agents Underground Cable Locators Water brokers Water Conservation Advisors and Irrigation Consultants Wedding Planners Wind Energy Consultants Wool Brokers and Classification Accountants Adoption Agencies Advertising Services Aged Care Consultants Agricultural Consultants Aquaculture Consultants Arbitrators & Mediators Arborist Archaeologists Architects Archival Firms Artist/Art Directors Authors Biologists Bookkeepers Botanists Building Surveyors Business Training Courses Business Brokers Business Coaches Buyers Agents and Advocates Career Advisory Services Civil Celebrants Conference Management Construction Management Compliance Consultants Copywriters Court Reporters Design and Construct Draftpersons Driving School Instructors Ecology Advisors Editors Education Advisory Services Educational Establishments Electrical Design Services Electrical Contractors Energy Consultants Engineers Environmental Consultants Forestry Consultants Fundraisers Funeral Directors Geographers Gemologists Graphic Designers Health and Safety Consultants, Workplace Assessors Heating & Air Conditioning Consultants Historians Horticultural Advisors Home Sustainability Assessors Human Resource Consulting Illustrators Image Consultants Import & Export Agents Industrial Relations Consultants Insurance Loss Adjusters Interior Designers Interpreters Irrigation Design and Consulting Information Technology Jewellers Landscape Designers Land Surveyors Logistic Advisors Management Consultants Market Research Marketing Consultants Marriage Consultants Marriage and Family Counsellors Mercantile Agents Migration Agents Multimedia Consultants Natural Resource Consultants Photographers Policy Analysts Private Investigators Process Servers Property Title Searchers Project Management Public Records Search Firms Public Relations Firms/Advisors Publicists Quality Control Advisors Quantity Surveyors Real Estate Recruitment Agencies Relocation Agents Safety Engineers Secretarial Services Security Advisors Shipping & Freight Forwarding Solar Energy Consultants Stock and Station Agents Statisticians Taxation Agents Textile Designers Town Planning Traffic Surveys, Engineering and Control Translators Travel and Ticket Agents Underground Cable Locators Water brokers Water Conservation Advisors and Irrigation Consultants Wedding Planners Wind Energy Consultants Wool Brokers and Classification Accountants Adoption Agencies Advertising Services Aged Care Consultants Agricultural Consultants Aquaculture Consultants Arbitrators & Mediators Arborist Archaeologists

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FEATURE

THE HOT LIST WELCOME TO THE SECOND INSURANCE BUSINESS HOT LIST. This year, it was again a tough task to determine which names were most deserving of a place on the list, given the admirable leadership and impressive innovation that continue to drive many corners of the industry.

You’ll likely find a name (or four) on the list that’s familiar, and perhaps a few that are not.

There are some chief executives of the country’s top insurers, and some leaders making waves in smaller spaces. There are several names you’ve seen on the list before, and almost half that you haven’t. You may nod in agreement with the choices made or feel compelled to castigate the list makers for an outrageous oversight.

If there’s a red-hot industry professional you feel should join the company of the names on the following pages, feel free to leave a comment at www.insurancebusinessonline.com.au.

PRUE WILLSFORD

SENATOR MATHIAS CORMANN

CEO, ANZIIF

Minister for Finance Since joining the institute at the end of 2013 with 25 years of financial services experience, Willsford has been a busy leader, working to achieve ANZIIF’s aim of bettering and strengthening the industry. Recently, ANZIIF released the results of its Careers in Insurance Quantitative Study, looking at skills shortages within the industry. As the results are shared and generate more discussions, how will the ANZIIF-led study prompt change in the industry, specifically in the way it promotes and markets itself to those outside it? Can Willsford and her ANZIIF team’s recent endeavours start to bring about real change in the wider community’s perception of the industry? And how might ANZIIF’s own education programs grow in response to the study?

It was the end of October 2014 when the Minister for Finance announced the controversial proposal. The plan was to establish a comparison website to allow consumers to compare home building and home contents insurance products, and to boost competition in insurance in North Queensland by clarifying that licensed brokers would be able to sell policies from foreign insurers where those insurers offered a better price. Since then, professionals across the industry have been engaged in discussions about the ramifications of Cormann’s plans, particularly the consequences for brokers. The industry expects the changes to be rolled out by the end of March and, following their implementation, will keep an eye on the market in North Queensland to see how much of an impact unauthorised foreign insurers (UFIs) actually have in the region.

KAREN HARDY

Director, ACME Insurance Brokers She was the highest-ranked woman on our Elite Brokers list in both 2013 and 2014. In November, Hardy submitted to Treasury the first draft of a petition, containing more than 100 signatures, in an effort to persuade the federal government to re-think its proposed regulatory changes to allow UFIs to sell policies to consumers where they can offer a cheaper price. Hardy is concerned that the proposed changes will cause Australian-based brokers to ‘flounder and fold’. As the government prepares to implement its proposal shortly, will Hardy continue to be a vocal participant in the discussion around the UFI issue?

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ROBERT KELLY

CEO & managing director, Steadfast For Australia’s largest insurance broking network, 2014 proved to be yet another highly successful year. Highlights included its acquisition of Calliden (making it one of the largest underwriting agency groups in Australia) and its acquisition of the second largest broker network in New Zealand.

Pick a sample of industry professionals, and you’ll find widespread respect and admiration for Kelly and Steadfast. Those not keeping abreast of activities at Steadfast in 2015 will be few and far between.

ADRIAN HUMPHREYS

General manager, business development, Steadfast Robert Kelly commented late last year that Steadfast’s new recruit would be an industry professional worth watching in 2015, bringing to his new role a diverse range of skills from work across a number of international jurisdictions. Under Humphreys’ leadership, Lloyd’s business in Australia grew from $1.1 billion to more than $2 billion in less than five years. Frankly, who could argue with Kelly’s endorsement?

Time will tell what gains Humphreys can make in his efforts to enhance the operations of Steadfast brokers.

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Keeps you in the game

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FEATURE

THE HOT LIST MARK SEARLES

CEO and managing director, Austbrokers With Searles at the helm, this leading insurance broking, underwriting and risk services group continues to grow, using its owner-driver model as the platform for its growth. Late in November last year, its acquisition of 100% of BrokerWeb Management and a 50% stake in BrokerWeb Risk Services immediately made Austbrokers New Zealand’s largest insurance broking cluster network, threatening to shake up the landscape of the local space, previously considered a duopoly.

The question now is how Austbrokers will continue to grow its business in 2015. Something tells us that, as far as the major broker networks go, it won’t be all about Steadfast.

CHRISTOPHER MACKINNON

General representative in Australia, Lloyd’s Following Adrian Humphreys’ move to Steadfast, Mac­ kinnon is Lloyd’s new number-one man on the ground in Australia. He started in the role earlier this month and comes armed with more than 21 years of experience in the international insurance industry. How will Mackinnon leverage that experience to lead Lloyd’s to continued local growth and development?

SAMPATH SOYSA

President, Young Insurance Professionals When not leading Gilchrist Connell’s legal practice in Melbourne or fulfilling the voluntary responsibilities tied to his membership of four other entities, Soysa’s attention is fixed on making insurance an industry of choice. He wants to ensure young people entering the industry have a desire to remain in the space.

Recently, YIPs almost doubled its membership in the space of 10 months, and Soysa is keen for the association to play a key role in any coordinated, industry-wide effort to address its talent gaps. Will such an initiative be borne out of discussions around the recent Careers in Insurance Quantitative Study, and will Soysa and his members play an integral role in its implementation?

GEORGE MELIGONIS

Managing director, Compare the Market Switch on your TV, and you can’t escape Aleksandr and Sergei. Compare the Market reports it now has 47,000 people comparing insurance quotes on its site each week, and that has to be keeping Meligonis smiling. Everyone in the industry has their two cents to share on the place of aggregators in the insurance space, but evidence points to the rising number of Australians willing to buy insurance online. How will Meligonis and his team work to deepen the aggregator’s infiltration of the Australian market? And how will brokers convey and reinforce the value of their advice to consumers?

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DALLAS BOOTH

CEO, NIBA Aside from time spent allaying member fears about looming regulatory changes concerning the potential utilisation of UFIs in North Queensland, Booth will have a busy year ahead. Late in 2014, NIBA’s board met to determine its chief priorities for the next three years, and one of its key focuses will be attracting young talent to the industry. NIBA is part of the joint working group formed for the ANZIIF-led quantitative study looking at skills shortages within the space. NIBA says its National Education Committee will look at ways of specifically highlighting careers in broking to school leavers and university graduates. Which activities will help Booth and NIBA successfully pursue that aim?

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FEATURE

THE HOT LIST HEATH AMBER

Chairman, Underwriting Agencies Council Heath Amber, the managing director of Millennium Underwriting Agencies, was recently re-elected to a second term as chair of the UAC board. The UAC just hosted its inaugural New Zealand expo in Auckland, but what else is the council planning for 2015? And what will be the focus of NIBA and the UAC’s joint strategy for the year ahead?

ANDY CORNISH

Chief executive, personal insurance, IAG The ICA’s former deputy began a two-year term as the Council’s president at the start of January.

Outgoing president Mark Milliner described Cornish as “a passionate advocate for general insurance and the essential role it plays in the community and Australian economy”. At the time his appointment was announ­ ced, Cornish said that as he dives into the role, high on the agenda will be addressing the outcomes of the Financial System Inquiry and the Productivity Commission report into natural disaster funding.

MIKE WILKINS

Managing director and CEO, IAG Last year was a big one for IAG. Its purchase of Wesfarmers’ Australian and New Zealand underwriting businesses received final approval in June, and in April of this year, a new set of products combining the offerings of CGU, WFI and Lumley are set to launch. The market waits to see just what products and services will appear.

Last year, IAG’s Peter Harmer told Insurance Business that Wilkins has been a leading voice in the industry for some time now in urging governments to increase spending on risk mitigation, rather than simply on risk recovery. Notably, IAG contributed to the Productivity Commission’s report into natural disaster funding arrangements. Expect Wilkins and IAG to drive more discussion around risk mitigation in 2015.

INGA BEALE

CEO, Lloyd’s Last September, Lloyd’s reported a profit of £1.67 billion, representing a 21% increase on the corresponding period the year before. It was the initial first-half result under the leadership of Inga Beale, the insurance giant’s only female head in its 327-year history.

Beale, who recently attended the World Economic Forum in Davos, is a firm believer that stronger diversity in management teams and boards leads to sustainably better results, and is keen to shake up the makeup of the male-dominated industry. As CEO, she will drive Lloyd’s with a view to achieving the company’s Vision2025 goals. Part of that strategy includes the aim of having true diversity that reflects Lloyd’s business and its customers. How will Beale and her team at Lloyds attempt to achieve that goal?

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RICHARD ENTHOVEN

Managing director, Hollard Insurance It’s no secret Enthoven and his team have become known for innovating, so it’s a no brainer to include him on any list of ‘hot’ leaders in the game. Early in 2014, he made the decision to abdicate his role as chairman of Hollard’s South African business, with a view to focusing more of his time and effort on the Australian market. So with less distraction from the international links of the global business, what has Enthoven got in store for the Australian market this year?

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FEATURE

THE HOT LIST PETER HARMER RACHAEL LAVARS

Chief executive, commercial insurance, IAG The leader of IAG’s newly created commercial division should have a big year ahead.

Harmer says IAG, through its new set of products, hopes to offer the market “something they haven’t seen before”.

What should brokers and their clients expect? Harmer told Insurance Business he’s determined to create superior customer and partner experiences in 2015. On the broker side, his CGU team recently launched what it believes is an Australian first: an advertising campaign reinforcing the need to obtain sound insurance advice from a broker. How successful will Harmer and CGU be in assisting the broker community at large to raise public awareness of the need to seek the right advice?

CEO, Macquarie Pacific Funding It was announced in January that Rachael Lavars, the head of the insurance broking segment for Macquarie Business Banking, would replace Stuart White as Macquarie Pacific Funding’s CEO. Lavars is said to have played a key role in the former Macquarie Premium Funding’s acquisition of Pacific Premium Funding. Bringing with her substantial experience in the premium funding space, she has been described by chairman Bruce Bollom, as a “well-credentialed industry expert” and a highly regarded member of the industry. We look forward to seeing what Lavars’ leadership will mean for Macquarie in the year to come.

GRAHAM STEVENS

President, NIBA Staying within NIBA, Stevens, also an executive director of Edgewise Insurance Brokers, recently became its new president, following the conclusion of David Wyner’s tenure. Stevens recently stated that the NIBA board’s review of its goals and objectives offers a clear way forward for the next few years. Alongside the talent goal, NIBA aims to maintain a strong focus on representing brokers’ interests to governments, regulators and the media, while enhancing the professionalism of members through ongoing training, CPD and the General Insurance Code of Practice. Look out for the activities and initiatives Stevens, Booth and NIBA’s remaining board and committee members introduce with a view to ensuring each of those goals remains firmly in sight.

DAVID HOSKING

Chief general manager of broker and agency, Allianz Australia Hosking was appointed to this position in August 2014, and not too long after, he told Insurance Business that Allianz is strongly committed to the global broking channel and that there are some interesting best practice initiatives, some of which he is looking forward to adapting to the Australian market. It will be interesting to watch what practices Hosking introduces locally, and the changes and innovations the local arm of Allianz decides to implement in efforts to become the leading insurer in the broker market.

DAVID HOSKING

Director, Grampians Insurance Brokers No, it’s not a typo – Insurance Business decided that not one, but two David Hoskings were worthy additions to our 2015 Hot List. A broker based in regional Victoria with more than 30 years’ industry experience, the second Hosking was the winner of ANZIIF’s inaugural Community Service Award in 2014. His dedication to coaching at a local sporting club, improving club culture through a focus on community service, and raising awareness of issues such as cancer and domestic violence, serve as fine examples of his hugely positive contributions to the community. His admirable dedication to improving community standards should serve as inspiration to other professionals to follow his lead and pursue their own community service endeavours.

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DANIEL FOGARTY

CEO, general insurance, Australia and New Zealand, Zurich Zurich has been the recipient of both Insurance Business’ Insurer of the Year award and NIBA’s General Insurer of the Year award for the past two years. Fogarty told Insurance Business last year that Zurich, one of the world’s largest insurers, sees substantial opportunity for growth in the commercial and corporate markets. Keep an eye on Zurich to find out how it will achieve those aims. Fogarty also led the ICA, NIBA and ANZIIF working group that was responsible for the Careers in Insurance Quantitative Study. How will he – and the group – continue to progress efforts to attract more talent to insurance? It’s not just Fogarty’s contributions in the insurance space that are likely to be significant.

Both a lifesaver and member of the advisory committee for See Beyond Borders, a charity dedicated to the education of children in Cambodia, Fogarty is passionate about helping others in the community.

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FEATURE

THE HOT LIST

DAVID PORTEOUS

Director, Brooklyn Underwriting Brooklyn Underwriting has been the recipient of UAC’s gong for Underwriting Agency of the Year for three years running. So what exactly are Porteous and his team doing? Brooklyn prides itself on its customised market-specific solutions, supported by a specialist underwriting staff. Recently, it began offering the world’s first ‘business interruption’ policy for an Ebolarelated shutdown. But it’s not just its product innovation that rates a mention. Porteous’ team is becoming increasingly well-known for the office’s ‘fun’ culture. He says the agency will continue its NEXT events in 2015, aimed at allowing the next generation of industry professionals to get to know each other in a fun environment. You get a sense from Porteous and his team that Brooklyn is a place essentially anyone and everyone would be happy to call their workplace. Perhaps Porteous has per­ fected the template other workplaces should be looking to adopt in order to attract and retain new talent in insurance.

LAMBROS LAMBROU

CEO, Aon Risk Solutions Australia At last October’s Aon Advanced Risk Finance Conference, Lambrou delivered a warning to the industry that, when it comes to big data, it’s a case of ‘innovative or die’: Industry professionals must understand big data and its implications for the insurance space in order to remain competitive and relevant. Lambrou’s com­ ments have made us wonder what kind of innovation is currently going on within the local offices of this global industry leader. They suggest perhaps the industry should be looking to Lambrou and his team to understand just how big data can be harnessed and interpreted, and how the industry can raise the bar on factbased decision-making.

Managing director, Allianz Australia The local arm of Allianz, one of the world’s largest insurance providers, made headlines late in 2014 when the Northern Territory Government announced the insurer would take ownership of the Territory Insurance Office in a deal worth $424m. Peiris announced at the time that Allianz wanted to preserve and pro­ mote TIO’s brand and maintain the coverage on which Territorians rely. He also said, “We are here to grow TIO, not change it.” How will Peiris and Allianz grow the TIO through this year and beyond?

SCOTT LENEY

ANDREW GODDEN

CEO, Australia, Marsh

Chief executive, Australia Arthur J. Gallagher & Co.

Marsh announced Leney’s appointment in mid-January. Leney has more than 26 years of experience with the organisation, including six years as Marsh’s local executive director. According to a company statement, he will be tasked with ‘identifying opportunities for growth and ensuring the delivery of Marsh’s full capabilities to clients in Australia’. How will Leney grow and enhance the broking behemoth’s local arm?

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NIRAN PEIRIS

AJG’s Australian operations have seen a hive of activity in recent times. Acquisition activities were abundant – there was the acquisition of Blue Holdings Pty Ltd and Instrat Insurance Brokers in December, Parmia Insurance in September and its agreement to purchase the Wesfarmers Insurance Brokerage’s operations and OAMPS Insurance Brokers earlier in the year. What do Godden and AJG have planned for 2015?

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ROB WHELAN

Executive director and CEO, Insurance Council of Australia Whelan told Insurance Business at the end of last year that insurance affordability and tax reform were two issues coming to the fore in the minds of the community and government across Australia. He said the ICA is continuing to talk to governments about investment in permanent mitigation for flood-prone communities, introducing measures to improve the resilience of buildings in high-risk areas, creating better planning laws to prevent properties being built in high-risk areas and ensuring new properties are built to withstand natural disasters by revising building standards to improve resilience. Additionally, the ICA is firm that substantive tax reform is a ‘must’ for state and federal governments, and believes abolishing all state levies and stamp duties is achievable if those governments work together on tax reform. Can Whelan and the ICA bring government around?

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FEATURE

THE HOT LIST KAY JACKSON

Director, Simplex Insurance Solutions In 2005, Jackson started the regional Simplex Insurance Solutions in Victoria with one employee and no clients. Fast forward to 2015, and the brokerage now employs a staff of 14, comprises three offices across Victoria and works with clients across Australia. It’s notched up numerous awards, including Insurance Broker of the Year at the 2014 Asia-Pacific Banking and Finance Insurance Awards. Jackson has said it was always her aim to build a brokerage that served as a training ground to develop the skills of the next generation of brokers. Among her team members is a 22-year-old senior broker who joined Simplex as a trainee at 18, and who serves as a clear demonstration of Jackson’s commitment to talent development. Keep an eye on this brokerage director and her team as they continue to grow and make their impact in the insurance space.

NOEL CONDON

CEO, AIG Australia

WARREN HUTCHEON

CEO, Ansvar Hutcheon took the top job at Ansvar in May 2014. Since that time, he’s made two senior hires, implemented measures he expects will improve Ansvar’s underwriting decisionmaking responsiveness and boost its representation in the SME market. Ansvar also has backed the Victorian government’s plans to compel non-government, state-funded organisations to be adequately insured. What’s on the agenda for 2015?

CRAIG LANGHAM

Country manager, chief executive, Australia, XL Group

AIG was another major player who racked up a number of highlights in 2014. Significantly, late in the year, AIG entered an agreement with QUS to be the new carrier for all new and renewal QUS strata insurance. This move was aimed at establishing the insurer as a major player in the Australian strata insurance market – the fastest-growing real estate sector in the country and a space in which AIG previously had no play. What’s next? Condon told Insurance Business last year that AIG will continue to expand its suite of financial lines products. Precisely what will be on the cards? And how will AIG continue to work towards achieving its aspiration of becoming the most valued insurer in the markets it serves?

CRAIG PATTERSON

Managing director, Austagencies There can be no doubt that Craig Patterson’s team at Austagencies has a keen interest in pushing the envelope when it comes to the way things are done in insurance. After a solid year of growth in 2014, expect to see Austagencies developing very different offerings in the coming months and focusing on solidifying their relationships with brokers through new product development.

Patterson recently spoke to Insurance Business about one initiative in the pipeline: start-ups that will involve partnerships with insurers to build new product spaces for both Austagencies and those insurers. Staying aware of the goings-on at Austagencies is probably worthwhile – their nose for game-changing activity might see a number of others following their lead in the not too distant future.

MARK MILLINER

In a deal worth a reported £2.79b (AU$5.36b), the XL Group’s takeover of Lloyd’s insurer, Catlin, was the first major global insurance news of 2015. It’s said the combined entity will be the eighth biggest reinsurer globally. We’re eager to learn precisely what the deal will mean for XL’s Australian arm.

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CEO, personal insurance, Suncorp Group It’s widely known that the Suncorp Group’s chief executive, Patrick Snowball, will retire some time in 2015 and that the insurance giant expects to have a new man at the top before year’s end. Among those seen as potential successors is Milliner, who’s headed personal insurance for more than five years and has been with Suncorp since 1995. Having recently completed his tenure as ICA president, his time might be more freed up to participate in the Suncorp board’s succession plans, but only time will tell whether Milliner becomes Suncorp’s next top man.

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ANTHONY DAY MICHAEL GOTTLIEB

CEO, commercial insurance, Suncorp Group

Managing director, Mega Capital and BizCover His Mega Capital professional risks insurance brokerage was named the Insurance Business Brokerage of the Year in both 2013 and 2014, and his BizCover website, aimed at streamlining the process of comparing and buying commercial insurance, has certainly gotten the industry’s attention. In 2015, Michael Gottlieb and his teams will be focusing on continuing to build on Mega Capital’s value proposition, and strength­ ening BizCover’s around providing “a more innovative solution to SME clients and their insurance brokers”. Will Gottlieb succeed in persuading an ever-increasing number of businesses to go online for their insurance needs?

BRIAN SIEMSEN

MICHELLE ASHBY

CEO, Claim Central

Technical capability and delivery consultant, Vero New Zealand

Once a frontrower for the South Sydney Rabbitohs, Siemsen continues to chase his goal of revolutionising the world of claims with his Claim Central business.

The company is focused on utilising the latest technological developments to create innovative claims management solutions for industry professionals, with efficiency and ease being the name of the game. Keep an eye on Siemsen and his team of revolutionaries.

Ashby is kept well occupied, not just by delivering technical learning across Vero New Zealand, but also by her role as current chair of ANZIIF’s Women’s Council, a group dedicated to promoting women’s engagement in the industry. How will Ashby and her nine council peers heighten the visibility of women in insurance in 2015, facilitate discussion to address the pay gap and work to assist the ascension of more women into executive roles?

RON TATARKA

Managing director, Scott Winton Insurance Brokers A Melbourne-based broker with more than 20 years of industry experience, Tatarka has received Insurance Business’ Broker of the Year award for the past two years. Can he make it a hat trick in 2015?

Regardless of whether he chalks up a third win, his continued emphasis on client satisfaction and ensuring the client’s needs come first every time should keep Tatarka and his brokerage at the top of their game.

LARRY PAGE

CEO, Google Last year, Insurance Business predicted Google would use its data to make a play in the insurance space. And sure enough, it’s recently been reported that the search engine giant is looking to establish a car insurance comparison website in the US. While it appears the current efforts are concentrated on establishing an online resource for the US market, you have to wonder whether Google’s ultimate plan is to go global with web insurance offerings.

An industry veteran with 34 years in the business, Day told Insurance Business he sees a big opportunity in the privatisation of government insurance schemes. Last year, Suncorp (as well as IAG) made news for its submission to the federal government’s inquiry into the financial services industry, in which it argued in favour of privatisatising state-run workers’ compensation and CTP regimes. The Suncorp view is that there’s potential for the private sector to increase efficiency and productivity to provide better outcomes for policyholders, particularly injured parties. Will Day and Suncorp be just as vocal this year about the opportunities they see through privatisation of these schemes?

COLIN FAGEN

CEO, Australia and New Zealand operations, QBE The head of the country’s largest insurer, Fagen will be even busier than usual, having recently been appointed deputy president of the ICA. Fagen and his team also have led the way in introducing telematics to Australia with ‘Insurance Box’, giving customers the ability to use a device or smartphone app to directly influence their car insurance premiums. Surely QBE’s competitors will be clamouring to provide similar offerings to their own insureds.

The work undertaken to bring this technology to Australia begs the question of what other innovations are on the horizon at QBE.

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PROFILE

RYAN CROSS

BROOKLYN’S NEW PLAYER

Insurance Business caught up with former Wallaby Ryan Cross, hot off the back of his signing up to a new team

ONCE A CENTRE on the Wallabies’ Rugby World Cup squad, Ryan Cross is now set on charging up another field with a new, yet equally determined, team at Brooklyn Underwriting.

Cross is the latest addition to Brooklyn, as a business development executive, and enters the insurance world with an impressive array of achievements under his belt. Once a professional rugby union and rugby league player, he’s starting to spend his days with brokers across Australia, offering them Brookyln’s product solutions.

Always a team player, Cross looks forward to what he can achieve with his new colleagues. “There’s a good team [at Brooklyn]. Hopefully, I can help them keep going,” he says.

From an early age, football was the career Cross was intent on pursuing. His father, Paul, was himself both a rugby league player and coach, spending many years as part of the Balmain Tigers in the 1960s and 70s. “I was always hanging around the dressing rooms and things like that,” says Cross. “I always dreamed of being a rugby player, but you’re never quite sure.”

Kick-off At 17 years old, Cross was selected to play in the Australian Schoolboys Rugby Union side. He played with the side for two years before being offered a contract to play rugby league with the Sydney Roosters. “I was lucky enough to be recruited by Arthur Beetson, who was a friend of my father,” Cross told Insurance Business. “I always had a great relationship with Arthur. His passing was sad for the family.”

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As could be expected, the move into a professional league side was challenging for Cross. He says, “You’re playing with some of the players you looked up to.

You’re never quite sure if you could go to that level. It was definitely a big learning curve for those first couple of years. Phil Gould was coach and he was a pretty hard taskmaster, and he grew me into the player that I [became].”

Cross went on to enjoy a successful nine-year career with the Roosters. In 2000, he was part of their first grand final side in 20 years, he was season player of

meet Tim Fairbrother, himself a player until 2012 and someone Cross now works alongside again at Brooklyn.

Following the move to union, Cross spent two seasons with the Western Force, culminating in his winning the player of the year award in July 2008, after what was considered a sensational Super 14 season. It was that year that Cross found himself selected to join the Wallabies.

Cross described receiving the phone call from coach Robbie Deans as “a pretty special moment”. He played his first game against France in Sydney.

And interestingly, in 2011, Cross found himself in France playing rugby in the French Top 14. He was offered a threemonth contract to play with Perpignan. “It sounds glamourous, but it’s probably some of the hardest training and football I ever had,” he says. “They love the scrum over there … but it was a great experience, something that I really enjoyed and my family went over with me. That was the best thing about it.”

Despite having a football career of many highs, Cross encountered some considerably challenging times. Asked to

“I needed somewhere where there was a team environment, where you’re working towards one goal. I’ve found that at Brooklyn” the year in 2005 and, when he left the club in 2006, he had become their fifth highest try scorer of all time.

A conversion But the end to his time with rugby league was far from the end of his career as a professional athlete. At 26 years old, Cross signed a two-year deal with the Australian Rugby Union to play Super 14 for the Western Force, based in Perth.

Cross described the response he received, following his signing to rugby union, as “pretty positive”. He says, “I always wanted to do it and I got an opportunity and met some great people …

I loved my time in rugby [union].” Cross’ code switch gave him the opportunity to

cite the greatest obstacle of his football years, he singles out breaking his leg in 2001. “That was a big injury, and I came back for four games and then, next year, I blew my knee out, so two years were pretty much wiped out … I never knew if I was going to come back.” Cross names his eventual return to the Roosters, and his ability to go on playing football for a further 10 years, as a standout triumph.

“Definitely coming back from those sorts of injuries is the greatest achievement.”

Full time After retiring from professional sport, Cross became a stockbroker. But after a couple of years, it was clear it wasn’t the role for him. “It’s a very insular sort of

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occupation … it was pretty hard that way.

“I needed somewhere where there was a team environment, where you’re working towards one goal. I’ve found that at Brooklyn.”

So, how was it that Cross even came to consider a career in insurance? “While I was in stockbroking, I was looking at what else was out there … someone introduced me to Paul Hines [Brooklyn’s CEO] just to have a chat about life and different things, and he directed me towards a few people … one thing sort of led to another and there was a position available…

“Hopefully, I can be part of [Brooklyn’s] growth and help them to get their goals.”

Talking about what he’s most looking forward to in his new career, Cross says, “There’s a lot of scope to create new products for different needs in the insurance world, so hopefully I can find a little niche and grow that”.

Advantage On the attributes he brings with him from his time in both rugby codes, which he feels will be assets as he embarks on this new career, Cross says, “I think dealing with adversity is one. And, obviously, being in a team for such a long time, I think I work well with people and hopefully I can complement what they do and work together [with them] to grow”.

David Porteous, director of Brooklyn, is enthusiastic about what he believes Cross will bring to the Brooklyn team. “I think it’s the desire to succeed. It’s a desire to do good things, but it’s not one man out. It’s a desire to do great things as a team, and I think that’s why Ryan is going to be a perfect fit.”

Talking about Cross’ role, he says it’s “… to be in front of brokers, introducing himself and the Brooklyn brand and products, but also entering into dialogue with these guys saying, ‘Look we’re not a massive insurer. We’re a niche agency. We’re here to help. What do you want from us?’

“And it’s that collaborative approach that we take to business development, and I think that’s Ryan skillset … I think that’s why Ryan is a perfect fit for this role.”

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19/02/2015 4:06:23 PM

FEATURES

INCOME PROTECTION

THE PRICE OF GENETIC TESTING In association with

Genetic testing will soon be within reach of a wider section of the Australian community than ever before.

What does this mean for the income protection sector - the providers and policy applicants? Jeff Roser, managing director of Windsor Income Protection, shares his thoughts THE ACCESSIBILITY OF genetic testing for all Australians, disclosing an individual’s likelihood of developing a number of diseases, is one step closer to becoming reality.

According to Associate Professor Marcel Dinger, head of the Kinghorn Centre for Clinical Genomics at the Garvin Institute of Medical Research, the Centre is currently seeking to be accredited by the National Association of Testing Authorities (NATA) for clinical whole genome sequencing.

“With accreditation, we will be able to sequence patients referred by qualified health professionals,” says Dinger.

He tells Insurance Business that the Centre expects the first requests for this clinical sequencing will be to diagnose genetic disease, determine susceptibility to genetic diseases (including cancer), characterise cancer mutations to guide

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treatment, and provide information about a patient’s likely response to treatment. A tested individual’s genomic results would be returned to the physician by way of a clinical pathology report. Dinger also says it’s anticipated the Centre will start receiving requests in mid-2015, but that’s dependent completely on the NATA accreditation process.

He adds: “Even though the patient’s whole genome will have been sequenced, the only information returned, at this stage, will be related to the clinical question that was asked and/or classified by a multidisciplinary team to have substantial relevance to the medical care of the individual.”

The Centre will determine and announce its clinical sequencing fees once accredited, but it’s the dramatic reduction in the cost of sequencing a human genome over the past

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decade, along with rapid technological developments, that are making it financially feasible for the Centre to offer genetic testing as it proposes. The Centre says that, in 2001, the cost of sequencing a genome was A$100m. It says the base cost of sequencing the six billion bases of a whole human genome is now less than US$1,000.

As to the base cost of a test, Dinger advised the current cost was under A$2000, but that that figure did not include costs involved in obtaining and preparing samples, or the costs of the “still labour-intensive analysis and interpretation of data�. The National Genomic Healthcare Initiative is currently preparing a submission proposing the funding of genomic testing for appropriate conditions through Medicare.

The benefits championed by proponents of genetic testing are widely appreciated.

Tests can offer individuals a heightened understanding of their risk of developing certain diseases, assist them in making informed decisions about their own health (such as taking certain preventative measures or subjecting themselves to appropriate monitoring), and, where a person already suffers from a particular disease, this kind of testing can be useful in identifying treatments likely to be most effective.

But the issue of genetic testing also stirs heated discussion as to its ethical, legal and social ramifications. Among the questions that arise for consideration is the issue of how results of genetic tests could factor into a decision to approve or deny insurance coverage to an individual.

Could a test result become a piece of data utilised by insurers in future to cherrypick their insured?

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FEATURES

INCOME PROTECTION

Testing affecting insurance?

Jeff Roser wasn’t surprised to learn of the recent news from the Centre. “Advancements in technology relating to medical testing and treatment is an area that is constantly monitored and reviewed by the sector,” he says. “So when it comes to genetic testing becoming widely available, it’s not an unexpected development.

“It will drive a lot of discussion and deliberation as to whether it can be used, and to determine what are really substandard risks, and then whether the industry will look at those risks and what impact that will have, in fact, for the greater protection against them.”

when looking at a risk is not something that’s new, and will continue to happen.”

However, he doesn’t believe there will be major implications for the income protection industry resulting from more widely available genetic testing.

He says: “On an income protection side, I’m not sure that it will have such a major impact. On death and TPD claims, there may be, in fact, a greater impact. But it will allow insurers, I suspect, to probably match a product design with some appropriate pricing, which becomes a win for both the insurer and the vast majority of consumers.”

Roser continues: “If you can identify high-risk individuals, you can then build a

“When it comes to genetic testing becoming widely available, it’s not an unexpected development” As the National Health and Medical Research Council (NHMRC) has clarified via a fact sheet, genetic information cannot affect health insurance in Australia, given that health insurance is ‘community rated’.

However, it can be taken into account when applying for life insurance products such as cover for death or income protection.

On the subject of life insurance and income protection providers taking genetic test results into account, Roser says, “I can’t see any legal reason why an insurer couldn’t take that information into account when assessing a risk, be that whether it’s genetic testing or some other form of information.”

He raises the example of motor vehicle insurance and says, “Certain companies are refusing to insure high-risk drivers, and they actually advertise that on TV as an attempt to attract those low-risk people, so taking information into consideration

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product which may exclude those conditions. That’s generally how the retail industry operates. I’m not sure I would say that that’s how we operate. We might deal with that later on, but I think that, in general, that’s how I would see the industry at a retail level using genetic testing.”

Testing requirements As the cost of genetic testing becomes less prohibitive, could life insurers and the income protection industry decide to make it a mandatory prerequisite for individuals to undergo testing prior to obtaining life insurance and income protection policies?

Roser says, “In the retail sector, I can see that. In the group sector, I can’t see that.”

The NHMRC says the life insurance industry in Australia has agreed that it will not require individuals to have DNA tests prior to obtaining life insurance. But could

that stance change over time?

The NHMRC says that, if individuals have had DNA tests, they are required to report the results when applying for that insurance. Could this in itself create an issue?

Would income protection professionals need to become concerned about people actively avoiding genetic testing, in order not to compromise their chances of obtaining a policy?

Roser says: “At this point, that’s probably unlikely. As time goes and genetic testing becomes much more not only readily available but acceptable by both the insurer and the general public, there will be a need to closely review what’s occurring. One of the possible outcomes is for the insurer to simply include genetic testing in their medical underwriting requirements.”

Roser comments that often, in discussions around these kinds of issues, the difference between a retail (or individual) product and a group insurance product is missed.

“We [Windsor Income Protection] operate in the group insurance product area and, within that area, you generally find that the levels of cover available, coupled with the significant discount pricing, mean that … holders of retail policies should very seriously consider looking at what’s being offered by the group market …

“In a group product … the natural risk is spread around much more greatly and therefore the requirements – be those health requirements, be those the level of cover that you can obtain or be they reasonable prices – [are] much, much better in the group area than … in the retail product.

“In group products, very rarely do people get commissions for putting somebody into a group product. In a retail product, generally somebody’s getting a commission,

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and therefore some of the premium’s being used for other than the insurance purpose.”

Given some of the foreseeable ramifications of genetic testing for the space, are there particular measures that should be put in place (regulatory or otherwise) as tests becomes more widely accessible?

The legal landscape The NHMRC says steps have already been taken in some countries to prohibit genetic discrimination. In 2008, the US saw the introduction of the Genetic Information Nondiscrimination Act. Additionally, the NHMRC cites Belgium, Norway, Austria, Denmark, France, Sweden and Germany as European countries to have adopted legislation banning genetic discrimination, while others, including the UK, have introduced a moratorium on using genetic test information for the purposes of life insurance applications.

Contemplating moves that could be made locally, Roser suspects there will be rules around the use of testing, which will need to be coordinated within the sector itself, in order to ensure that insurers use that testing in a reasonable manner to meet customer protection requirements.

He adds: “Often, the market will police itself through selection from the consumer, where those insurers are being unreasonable. Less consumers will go to them at the end of the day, and I think it will bring about a sort of evening up of … the rules that sit around how and what you can do with the results from genetic testing, because, at the end of the day, the fact that genetic testing says you’re prone to something or more prone to something doesn’t stipulate that you are definitely going to suffer from that disease.”

WINDSOR INCOME PROTECTION Windsor Income Protection is an Australian-owned and based underwriting agency that targets the group income protection market sector specialising in income protection insurance, superannuation funds, employers and unions.

The clear strengths of our organisation include product innovation (three-time winner of best insurance within superannuation), and our robust claims set-up where the onus is on servicing the member via claims management principles rather than claims servicing, proactive communication channels, and utilising technology by alerting members via SMS of claim payments.

Windsor Income Protection, through its consultative approach, has achieved major innovation for the market and, more importantly, our clients via: coverage for all insured persons – no occupations or employment categories excluded, including part-time and casual workers ease of fulfilment – removal of the requirements for medical underwriting benefit levels above industry standard: > up to 100% of salary plus a superannuation benefit > up to $100k per month maximum benefit > Flexible periods – waiting periods as short as 14 days, benefit periods of one to five years > Loyalty benefits – based on years of cover Our focus is to provide a positive customer experience via: > a sustainable tailored product solution for our clients > claims authority and expertise, utilising technology to improve communication and therefore the claimants’ experience > trusted account and relationship management

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FEATURES

PROFESSIONAL INDEMNITY

PROTECTING THE PROFESSIONALS Solution Underwriting Agency’s managing director, Rhys Mills, talks about the year ahead in professional indemnity – innovation, the growing cyber threat, and the importance of brokers building relationships with underwriters WHEN INSURANCE BUSINESS caught up with Rhys Mills at the end of last year, he spoke about the increasing competition he expected to see in the professional indemnity space in 2015.

Yet, despite that heightened competition, Mills said Solution Underwriting was continuing to see growth in PI. Sitting down with us again recently, Mills identified three key drivers of growth in PI. Firstly, he mentioned the increasing number of clients seeking coverage as a result of being obligated to obtain PI and public liability insurance, in order to secure a contract. He then cited legislative changes, which require

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a host of business professionals to hold PI in order to practise their professions.

Finally, Mills pointed to higher awareness among professionals of the need to protect themselves. He said, “People realise, upon the advice of their brokers, that they are liable in the event that they are negligent in their professional services, that they can be sued, and there is an insurance product out there that is available that can provide them protection.”

The right protection With such substantial competition in the space, how should brokers go about finding

In association with

coverage that best fits their clients’ needs?

What are the attributes that set some PI products apart from the rest?

According to Mills, for the more straightforward risks, there’s not a great deal setting products aside from others. “Generally, the products, pricing and security behind the products are all excellent within Australia,” he says. He recommends brokers instead focus their efforts on finding providers who will offer superior service. “Where are they going to be able to pick up the phone and actually speak to an underwriter that can help them and that can make a decision that can, in turn, help them [the brokers] help their clients?

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SOLUTION UNDERWRITING AGENCY Solution Underwriting Agency is a true old-school underwriting agency. Situated in the eclectic coffee lanes of Melbourne, it’s independently owned, with its owners working in the business every day, but has a modern, edgy IT approach to its business and its market.

Solution Underwriting formed in 2010 as a ‘green field’ business. Supported by a local binder and strong broker relationships in a competitive and saturated market, Solution Underwriting Agency successfully gained market share by understanding the dynamics and complexities of the SME sector in which it operates.

Within four years Solution Underwriting Agency has exceeded its projected GWP targets and is a recognised market player in the PI space. A professional approach to underwriting has created a profitable platform to underwrite various types of insurance products.

Solution Underwriting Agency underwrites over 200 specialist occupations, including accountants, engineers, architects, recruitment agencies, management consultants, marketing consultants, human resource consultants, graphic designers, business trainers, bookkeepers, taxation agents, IT consultants – please go to www.solutionunderwiritng.com.au to see the full list.

Solution Underwriting Agency has led the market in providing easy, efficient and fast ‘solutions’ to brokers through its secure and efficient online portal. The online quoting tool’s key features include an extensive list of occupations, various cover limits, a pre-populated proposal form, higher commission levels, and lower policy fees. All quotation and policy documents are emailed to the broker immediately.

In addition to the fantastic online quoting system, Solution Underwriting has also just released its revolutionary Solution ONE policy wording which combines Professional Indemnity, Public Liability and Management Liability in the one wording. One proposal form, one quote, one closing, one policy schedule and one wording. “It’s all in ONE!” Our innovation, technology, service and personal touch set Solution Underwriting Agency aside from its competitors.

“In any industry, innovation and ease of delivery is important, and it’s no different in insurance …”

“I think that’s what brokers do and should be looking for … that relationship with an underwriter …”

Keeping up with the Joneses But while Mills attests to the general quality of PI products in Australia, he thinks it’s important for those in the space to be utilising new and emerging technologies. “Innovation is key,” he told Insurance Business. “We’ve always prided ourselves on being at the forefront [when it comes to] legislative changes and also innovation in how to easily deliver … professional risk products … to our brokers …

“In any industry, innovation and ease of

delivery is important, and it’s no different in insurance … There is that important need for us to be able to inform our brokers of what our offerings are, deliver those offerings, and give them access to those offerings as easily as possible, and make their lives easier by providing a system that works.”

Slow on the uptake?

Of course, with the range of opportunities new technologies represent, they also come packaged with new risks that businesses need to be aware of and take action to protect themselves against. With much industry talk around the emerging cyber risk, Mills reports

that businesses aren’t opting for cyber extensions when taking out PI coverage as much as should be occurring. “We’re still not seeing the uptake that there should be … We certainly understand that the majority of businesses, if they have some sort of online presence, have a cyber exposure.”

As to why the uptake is slow despite the ever-increasing number of organisations creating and enhancing their online presence, Mills identifies two factors. “I think there’s probably a combination of there not being an awareness out there that there is a policy that can provide protection against cyber attacks, and, second to that, there’s probably a bit of

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FEATURES

PROFESSIONAL INDEMNITY

PROFESSIONAL INDEMNITY BY THE NUMBERS GROSS EARNED PREMIUM FOR DIRECT BUSINESS BY STATE OF AUSTRALIA Quarter end September 2014 ($ million)

NSW

VIC

QLD

SA

WA

139

91

63

19

41

TAS 5

ACT

NT

TOTAL AUSTRALIA

7

2

367

GROSS INCURRED CLAIMS FOR DIRECT BUSINESS BY STATE OF AUSTRALIA Quarter end September 2014 ($ million)

NSW

VIC

QLD

SA

WA

TAS

ACT

NT

TOTAL AUSTRALIA

139

55

45

12

36

4

4

2

295

Source: APRA Statistics: Quarterly General Insurance Performance Statistics (September 2014)

complacency that clients and businesses out there, whilst they may understand that there is a product out there that can provide protection, probably don’t see it as a priority at the moment.”

What will it take for companies to properly appreciate cyber risk and prioritise efforts to acquire coverage? Mills says that, going back 12 months, the general opinion was that it would take some widely reported cases involving the hacking of high-profile businesses to force others to sit up and take notice of cyber. “That has now happened with Target and Sony [in the US] and, despite those occurrences, it hasn’t actually had too much of an impact.”

So if not scared into action by welldocumented attacks on major organisations, what are the other factors that will force business to address the swelling cyber threat? “I think it’s time and education,” Mills opines. “I think, given time … people will start to realise that it is something out there and it is an exposure that can be protected for relatively small amounts of money, in terms of premium, and provide comprehensive protection against these cyber attacks.”

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A big tick for brokers Mills is highly complimentary of brokers when it comes to discussing their promotion of the importance of PI to clients. He comments: “I think that brokers that we deal with and that we speak to are very professional.” A lot of them know exactly what their clients’ exposures are and know exactly what they need out of a PI policy.

“Some understand that their client has a PI exposure but don’t necessarily fully understand or appreciate the exposures that they have, and

the best way to go about protecting those exposures. So that’s where we can obviously guide those brokers, that perhaps have less experience in the professional indemnity space, to make sure that we help them put together the right cover for [their clients].”

Mills says his Solution Underwriting team deals routinely (“daily”) with brokers who have clients in a vastly different situation. He says, “We’ve got industries or clients that … are being contractually obligated or told that they have to carry public liability and professional indemnity when there is literally no insurable professional indemnity exposure …

“We certainly won’t obviously offer cover where there’s no exposure, but, at the same time, we understand that the clients want to fulfil that contract so that they can have a successful business, and, because of that, we’ll always educate the brokers and assist them in how they can assist their clients to make sure that they don’t necessarily miss out on the contract purely because we can’t provide professional indemnity.”

As to what the future holds, Mills says Solution Underwriting is highly optimistic about the year ahead. “We’re certainly expecting a very big 2015, certainly with our ‘Solution One’ policy. We see that as being quite a game changer. But we’re also working on some other things that’ll be quite exciting for us … we’ve very excited about 2015.

We think it’s going to be a great year, and [we’re] looking forward to getting stuck into it.”

RHYS MILLS ON WHEN A CLIENT NEEDS PI

Rhys Mills Solution Underwriting

I think the key thing that brokers should be looking at in discussing professional indemnity and whether there’s a need for it is, are they providing a professional service, whether it be a specification for something, whether it be a design of something, or whether it be purely a written report or advice on something?

If the client does provide any of those things, that should certainly be a trigger point for the broker to then discuss professional indemnity with them. If the client is out there purporting to be a professional or offering professional services in any sort of area, and if those professional services are for a fee, they have a professional indemnity exposure they should then be looking at obtaining professional indemnity insurance to cover.

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FEATURES

PREMIUM FUNDING

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CASHING UP

It’s an industry now funding around $5bn in insurance premiums in Australia each year. Insurance Business asked two pundits in premium funding to predict what’s in store for the space and expound on the benefits that funding can offer to brokers and their clients

Insurance Business: What do you expect to see in the premium funding space in 2015?

Jurgen Rammesmayer: There is a lot of reinsurance capacity in the market, which together with intense competition amongst insurers is putting downward pressure on insurance premiums. At the same time, we’ve got interest rates at historic lows which we forecast are not going to move upwards at least for the next 12 months, although there are some commentators who think rates might still move downwards. So the combination of stagnant and, in some risk sectors, declining premiums, together with low interest rates will continue to put pressure on premium funding revenue and margins.

Pricing in our industry over the last 12, maybe 18, months is reflecting a benign risk environment, but if we do have a deteriorating economic situation in Australia and we see an increase in business failures in this country, then I think we could see, in the premium funding market, a re-rating of risks and pricing, especially for larger loans, where obviously the impact of a potential bad debt

can be quite material to the bottom line.

Ross Hayward: I think the market’s going to settle down a bit. With the acquisitions that have happened and the new entrants that have come in, the dynamics have shifted

and the pace of change is exponential.

The second thing is a lot more of the younger generation coming through are more tech-savvy. So whether it’s brokers, who are our direct clients, or whether it’s

“At the moment, I think brokers and clients are the ones that are winning as all the funders scrap to build market share” and everyone’s learning who the new players are. I think the frantic pace that everyone’s set in 2014 may die off a little in 2015 as we all get on with business. I don’t know what the knock-on effect will be for brokers, but, at the moment, I think brokers and clients are the ones that are winning as all the funders scrap to build market share.

IB: How important is it for premium funders to embrace new technologies?

JR: I think it’s very important. First of all, there are massive advances in technology,

the brokers’ clients, they’re all embracing technology and they’re continuing looking for ways to leverage development of technology to either improve their operational efficiency or provide a more seamless delivery to their clients of their service. So we in the premium funding industry are no different. We have to continually look at how we can operate more efficiently using technology, and then we also need to look at how we can use technology to better meet our clients’ needs.

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FEATURES

PREMIUM FUNDING

RH: It’s absolutely essential. A broker’s job is to arrange insurance. This is a timely, difficult task. Premium funding is an easy product, and we need to make that as efficient as possible for brokers. We need to ensure we do not impede on their or their clients’ time. Funding needs to be as simple as possible; embracing technology ensures this. Automation is the key, from creating the documents, to approval, to settlement and reconciliation. All has to occur seamlessly for brokers, with the minimal amount of ‘touch’ from all involved.

Innovative, modern and progressive technology really is one of the core competitive advantages a funder can possess.

IB: What should clients know before obtaining premium funding?

JR: The key things that a consumer/a business should know about premium funding are, number one, there’s no need for security, although, if there is a default, a premium funder can cancel the insurance policies. It’s quick and easy to arrange, and there’s minimal upfront fees. And then the third thing that you’ve got to be aware of is the interest charge. Clearly, if you’re borrowing money, you need to know what the interest charge is, but, at the same time, I think it’s important for a business to also understand the opportunity cost of using an alternative source of funding, be that cash reserves or a bank facility. So I think that, when looking at premium funding, a business should be comparing the interest charge that the premium funder is charging to the opportunity cost of using cash reserves or using a bank line to fund.

RH: Something they need to be aware of, I think, is that it’s a finance contract and, if they cancel their insurance, then there is a shortfall and, in most instances, they will be pursued for the shortfall. I think that probably needs to be a little more clearly communicated at times by brokers. But in saying that, cancellations are so few and far between that it’s not a big issue. It really is a terrific tool. I can’t think of another finance product out there that is instantly approved. In 95% of cases we don’t assess the client at all – the reason being that we rely on the insurance premium as security, and there’s an

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“Brokers have been pretty effective at promoting premium funding as part of their overall value proposition”

undertaking between us, the broker and the client that, if the client doesn’t pay, then we can cancel their insurance. If I’m a business and I apply for an overdraft, a credit card, car finance or other debt solutions, I can expect to have my business’s financial affairs explored, credit checks performed, and often to sign personal and directors’ guarantees. None of this occurs with funding. So it is an easy form of cash flow management at, what are these days, extremely low rates.

IB: Could brokers better promote premium funding to their clients?

JR: I think there’s always room for improvement, but they’re generally quite good at recommending premiums to their clients. Brokers have been pretty effective at promoting premium funding as part of their overall value proposition. In terms of improvement, I think what we’ve seen over the last 12–18 months in the industry has been an increasing number of clients who are choosing to use either cash (if they have excess cash) or bank facilities. So the one thing that brokers could do is educate their clients on the real cost of using cash reserves or bank funding, as opposed to using a premium funding product. If a broker’s client uses cash reserves or uses a bank line to fund their premiums, it represents lost income for both ourselves as a premium funder and also the broker.

RH: It’s up to the broker. It really is. If the broker wants to push funding, they can push funding.

Automation will certainly assist with the ease of putting funding contracts in front of clients. We have made some great inroads in this regard, and later in the year we’ll be launching a product that will transform how the industry provides funding.

Brokers are relying on us, trusting us enough to allow a third party to contact and deal with their clients.

We’ve got to respect that their core business and income comes from providing insurance. We’ve got to protect that relationship between them and their clients. The moment funders become hard to deal with, it’s going to impact badly on the broker-client relationship. If funders cause issues with clients for brokers, I can understand that they will have trouble coming to terms with pushing the product.

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FEATURES

PREMIUM FUNDING

IB: Are there any misconceptions about premium funding that should be clarified, or incidental benefits not widely appreciated that you’d like to highlight?

JR: One of the misconceptions – and it’s not true in all instances; it all depends on the client – is that premium funding is more expensive than using cash reserves or a bank facility. Now that may not always be the case, especially if the client generates a good return on their business, because, by retaining working capital in the business – cash reserves, or a bank line of credit – they are able to respond to new opportunities or ride out a downturn in their trading cycle. This is the opportunity cost of using cash or a bank facility, and it can, in many instances, exceed the cost of premium funding.

RH: I think the big benefit that I see is the fact that you’re accessing a finance product without affecting existing loan covenants. A lot of businesses don’t put the funding loans on their balance sheet. So let’s say it’s a $100,000 premium.

They’ve gone from having to use their overdraft to pay the $100,000, or having to tell their bank about the fact that they’ve gone and got finance for $100,000, to just paying the $10,000 invoice that comes in each month. It’s access to capital that they can do in a non-burdensome way.

IB: Do you have any advice for brokers about their conversations on premium funding with clients?

JR: Brokers could consider having conversations early on in the insurance renewal cycle on how a client intends to pay for their premiums. So, instead of waiting [until] just before the policies renew, have conversations earlier on in the piece about how the clients intend to fund their insurance policies. That gives the broker more time to work with their premium funding partner to structure the loan in a way that reduces the risk to the funder and therefore reduces the rate that we charge the client.

IB: Do you have anything else to add about premium funding?

RH: All I can say is that it is the best time for brokers and clients to be engaging with funders because everyone’s offering really terrific rates at the moment. The rates are low and funders are giving margin away to buy volume.

Whether that’s sustainable or not will remain to be seen, but it’s certainly a good time to be a broker and a client dealing with funders.

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INNOVATING IN PREMIUM FUNDING

Jurgen Rammesmayer CEO, Elantis Premium Funding

Ross Hayward Director, Premium Funding

As part of our commitment to partnering with our brokers, we’re looking at ways not just to provide premium funding for them but find ways we can actually add value to their operations. Towards that objective, I’m pleased to announce that we’ve developed an Elantis Learning Academy that will provide brokers and their staff with NIBA-accredited education and development programs. This learning academy will be part of a new broker loyalty program that we’re putting our finishing touches to, and we’ll provide more information on both the learning academy and the loyalty program when it gets launched in the coming weeks. We are very excited about this initiative and we think it will really add value to our brokers’ businesses.

The products that we look to introduce are mainly focused on automation. We also try and create bespoke products that assist various sectors. We recently launched our Premium Funding corporate product, which is a product designed to combat Westpac and banks that are looking at entering the industry. And that’s been a huge, huge assistance to the brokers. It’s opened the door to brokers that we’ve never spoken to, that are looking for that rate which is by far the cheapest out there and most transparent out there. And it’s just trying to combat the direct approach that Westpac and other banks are making. We also have some terrific technological advancements being worked on here by our in-house team of developers in conjunction with the major broking software houses.

These are all unique first-to-market innovations that I guarantee will change the way funding is transacted in Australia.

Watch this space!

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Are you Australia’s top insurance broker?

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Benchmark your performance against the best in the industry Boost your profile – the Elite Brokers ranking will be published in issue 4.2 of Insurance Business magazine Use the Elite Brokers ranking as a valuable independent endorsement in your own marketing

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BUSINESS STRATEGY

CREATIVITY

THINKING OUTSIDE THE SQUARE How can creativity be funnelled into innovative outcomes for business? Iain Hopkins asks where our childhood creativity goes and how we can bring it back INNOVATION CAN COME from anyone, anywhere – that’s because all human beings are creative. We lose sight of that fact as we progress from childhood through to adulthood and it gets buried, especially when we hit the workforce. Yet there are countless examples of everyday workers using creative thinking to resolve business issues.

The three biggest innovations at McDonald’s came from people who were flipping burgers.

The Big Mac, the Egg McMuffin and the Fileto-Fish all came from the front line, not the head office. The worker who invented the Filet-oFish realised that Catholics would not eat hamburgers on Fridays. He suggested an alternative might be a burger containing fish.

The idea went up the chain, and a new product line was born.

“Ideas come from where problems exist,” suggests Jason Clarke, founder and lead ‘mind worker’ at Minds at Work. “Go where the problems are. You need to empower people where the problem is and say to them, ‘What would you like to do about this?’ ”

Creativity and innovation First, it’s important to recognise the close, interconnected realms of creativity and innovation. Clarke suggests the relationship is similar to the one between bread and toast; in other words, the two are one and the same.

“Creativity is one of the fundamental mindsets you need – you cannot have innovation without creativity. Innovation is simply when you say, ‘Let’s take those ideas and turn them 50

into things which will deliver outcomes or progress or whatever else’. Innovation is the application of creativity.”

Clarke confirms that everyone is born creative, but this particular trait “goes into hiding” as we get older. “If you think about people who are anxious, they are actually expressing creativity; they are imagining something that might not be a problem. People who dream – dreams are creativity while you’re asleep. It’s there. Our ability to invent and create is hardwired into us – you can’t stop it.”

Even empathy, he notes, is a form of creativity. Whenever we’ve felt for someone or wondered how it would be to be someone else, we’re using our imagination and creativity.

So, what happens to that creativity?

“I think part of the problem is people aren’t given the confidence to be creative,” Clarke says. “A lot of that happens in early childhood.

It’s a bit like sport. When kids are encouraged to be sporty when they are little, they become comfortable with that as part of their personality. But if you’re one of those kids who was never picked at sport, you tune that part of you out.”

What goes wrong?

Most businesses, consciously or not, then proceed to squash that creativity even further.

But it must be remembered that, like McDonald’s, creativity can actually be used to enhance and improve business outcomes. It’s just a matter of drawing it out of people.

“Organisations will ask, ‘Have you got any

ideas’? People will generate ideas and the organisation will say, ‘That doesn’t address any of the problems we’re dealing with. I was hoping someone would come up with an idea to solve problem F, not A, B, C’,” Clarke says.

The first step is to identify whatever the organisation is not happy with, something that isn’t working as best it could. It could be a loss of market share, or bad customer experiences, or too much time being wasted in meetings.

Once the problem is established, it’s time to tap into the minds of employees.

“This is where creativity becomes innovation – it becomes targeted. Very often the creativity doesn’t have a target,” Clarke says.

The concept of the ‘lightning rod’ is handy to keep in mind. The problem with the traditional ‘ideas box’ is that people will submit ideas but very few can actually be used. A lightning rod, on the other hand, is staked to the ground to bring sparks to where you want them.

“Organisations should say, ‘Let’s have a dozen suggestion boxes. Suggestion box one is how do we improve the customer experience?

Box two is how do we cut our operating costs?

Box three is how can we boost staff morale? So the ideas are going into something useful,” says Clarke.

To cite just one example, on 25 May 1961 President John F. Kennedy announced before a special joint session of Congress the ambitious goal of sending an American safely to the moon before the end of the decade. He didn’t specify how it should be done, but he planted the seed.

The announcement kick-started a period of incredible invention and innovation – people had a clear goal to work towards, and it would take their own creative ingenuity to make it happen.

Funnelling the ideas A second key tip is to create some form of creativity process, so the wonderful ideas have a direction and pathway to eventually end up as an innovative product, service or ‘thing’.

“The trick is making it simple and straight enough so that ideas can actually get up,” says Clarke. “You can get people fired up about creativity and innovation – that’s very easy.

People are waiting for someone to invite them to have this discussion. So it’s about getting on a train, filling it up with coal, and getting people

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really excited. But if there’s no track for the train, it will just plough into the dirt. No one knows what happens next.”

The alternative is that there are tracks, but they run like the roller coaster at Disneyland: complicated, twisty, double-backing.

Clarke cites a recent client that had an innovation process in place, but it was so long, with many layers and steps, because it had been put together by the legal department and the finance department and the rest, to ensure nothing dangerous or risky happened.

“All they succeeded in guaranteeing is that nothing ever happens,” he comments. “Waiting years for approval is just going to kill everyone’s enthusiasm.”

The innovation process The innovation process goes through several stages or progressions. Each stage is vital to an idea moving through to an executed reality.

Here’s a basic four-step plan: At the first stage, you want open, free and unbounded ideas. Fill the bucket with ideas.

Be playful, imaginative, creative. “This thinking will get you started, but it won’t get you to the end,” says Clarke.

The second stage is about designing, planning and engineering. This is where you say, ‘Let’s think creatively but within the constraints of the thing we’re trying to fix’.

“Putting some KPIs around things might inhibit the creative people, but it will inspire the more practically minded people,” says Clarke.

The third stage is when you start to get more critically minded. “Let’s test it in terms of its politics, its legality, the finances and the rest. A lot of organisations apply this third phase at the beginning. It’s what we call premature evaluation, where we kill the idea before it has a chance to grow,” says Clarke.

The fourth is the pragmatic stage. “If you make a decision, what are the next steps, how do we break it down, what’s the budget, what are the KPIs that will track success?”

1

2

3 4

Each of those stages requires different thinking. You start off naive, then you become more practical, then critical, then pragmatic.

You may need different people at different stages. “This means that, if I say to John, ‘You’ve got this great idea; you’re now in charge of

making the whole thing work’, it will probably fail – we don’t have the mindset that can do all of those things. I don’t think anyone does. We say to clients: great minds don’t think alike – you need a diverse set of characters, skills and egos to do it all,” Clarke says.

Importantly, innovation needs cynicism as much as it needs optimism. It isn’t just about believing in things and hoping for the best; you need someone to say, ‘Is this really going to work?’

“However, if you get the sequence wrong, if you are negative too early, or optimistic too late, it won’t happen,” Clarke warns.

Further tips There are two further critical pieces to consider: organisational culture, and the role of leaders.

Clarke notes that clients often approach him and talk about their fear of failure, yet this is not a human condition. When a child walks for the first time, they are not afraid to fall.

“What we’re afraid of is blame and ridicule,” Clarke says. “We’re afraid of being accused of screwing up. It’s not the failure that we have a problem with; it’s the way people respond to us having tried to do something new and it didn’t go exactly the way we thought it would.”

Clarke’s recommendation to organisations is to get past the narrow definition of ‘failure’.

“We use the word failure to describe a range of things. Let’s imagine I’m a pilot and I didn’t put the wheels down when I landed the plane because I was too busy texting. That’s a failure, a potentially very serious failure. We shouldn’t be using the same words when describing, ‘Well, John wanted to try something new and it didn’t work quite the way we thought it would work’. I don’t think John should be punished for trying something new, because he could potentially figure out the way forward for the rest of us.”

The most important contribution leaders can make is their influence on culture, one that fosters innovation. A leader’s job is not necessarily to be the innovator – you don’t have to be the genius; you have to find the genius.

Richard Branson is the prime example of this.

Virgin consists of around 250 companies.

Branson didn’t come up with every single idea within those companies. But he’ll be the guy who had the idea, or the guy who supports the guy who had the idea, or the guy who turns up

at the launch and makes a big fuss about the guy who had the great idea. He’s quite happy to put his ego aside and step back and let other people step forward.

“That’s the hardest challenge for leaders – they get excited about being a leader and their egos get too big. If you’re a boss with 1,600 brains working for you, you’re just another one.

Get out of the way and encourage people to put their ideas forward,” Clarke says.

No time? No excuse Not surprisingly, Clarke scoffs at the suggestion that there is no time to be innovative today, to take the time to think outside the accepted square. He flips this concept on its head: Why are we so busy in the first place? Why are we working so hard? The answer is simple: the old ideas don’t work anymore.

Yet the whole idea of innovation is not to invent new work. It’s to simplify and make better use of our resources.

“We invented the wheel not to make ourselves busy but because we couldn’t be bothered walking,” says Clarke. “The commute time in Sydney is, on average, 15 hours per week. At what point do we say, ‘OK, this is ridiculous. We need to find a better way. Could we work from home? Could we use flexi-days or alternate start/finish work times?’ I don’t buy the idea we don’t have time – the time we have is going into old ideas that don’t work anymore.”

TOP TIPS »» Define what innovation means to your organisation »» Ensure members of your executive team understand and are aligned in terms of what good innovation looks like for your business »» Engage your broader leadership group to think-tank innovative concepts regularly, and build a bottom-up culture of idea generation »» Leverage your strategy teams and business experts to work with your high-potential leaders to turn concepts into strong business cases »» Prioritise practical, ROI-focused ideas and gain executive agreement on value-based investing »» Create a culture that supports the continual flow of new ideas and strong feedback loops

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19/02/2015 4:24:35 PM

CAREERS IN INSURANCE

STATISTICS

CAREERS IN INSURANCE In our last issue, Insurance Business reported that a quantitative research study had been undertaken, in order to better understand skills shortages in insurance. A survey was conducted, and ANZIIF has released the results in the Careers in Insurance Quantitative Study: Australian Insurance Industry Workforce Insights.

Responses were received from 58 companies, representing over 20,000 employees across Australia.

The results reveal where perceived shortages are, and measures being taken by employers in an effort to alleviate these challenges. The survey is the first of its type in the industry in Australia.

SKILLS SHORTAGES

REASONS FOR SHORTAGES According to respondents, the industry is not recruiting well enough out of secondary and tertiary education, with 70.6% citing lack of awareness of the industry as a contributing factor

40% of respondents to ANZIIF’s survey believe a skills shortage exists in the industry, and the majority perceive it is worse than in other parts of the economy.

The survey indicates a skills shortage is not widespread, but instead is isolated to technical roles for both general insurers and brokers.

TECHNICAL ROLE

% who believe there is NO SHORTAGE

% who believe there is SOME SHORTAGE

% who believe there is a SIGNIFICANT SHORTAGE

JUNIOR

33%

50%

17%

MID-LEVEL

0%

79%

21%

EXPERT

8%

15%

77%

A perceived poor reputation of the industry was also cited as a contributing factor A lack of talent and required skill in existing pipelines was noted by 29.4% of respondents Reduced learning and development budgets are impacting on formal learning, and there is too much reliance on on-the-job training, according to respondents

THE OUTLOOK Over the next 12–24 months, do you expect the skills shortage to …

... remain the same?

... improve?

67%

21%

... get worse?

12%

DRIVERS OF DEPARTURE Why do insurance industry employees change jobs?

44.7%

Offered higher salaries Better career path opportunities

14.9%

More favourable work-life balance

0

25.5%

20

40

60

80

100

Source: Careers in Insurance Quantitative Study: Australian Insurance Industry Workforce Insights

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RECRUITMENT AND STAFF RETENTION ACTIVITIES How do brokers rate the performance of UAs? Reported a greater reliance on head hunting through the use of specialist recruiters

20% 10%

Are directly targeting staff from competitors Are creating traineeships

7.3%

Have moved to recruiting mature-aged staff from other industries

7.3%

Are either recruiting part-time staff or engaging temporary/ contract staff

23.3% 2.5%

Are recruiting from overseas

0

10

20

30

40

50

What changes have taken place over the past 12–24 months in order to attract suitable candidates?

55.9%

Reported increased time required to fill vacancies, taking up to 90 days longer to fill roles Stated that increased starting salaries are required, along with offering other financial incentives, including increased commissions, bonuses and profit shares

52.9%

Have introduced non-salaried incentives, including flexibility in hours and days worked, additional leave, health and wellness programs including gym memberships and fully paid education programs Are recruiting from overseas

32.4% 17.7% 0

20

40

60

80

100

What are insurance employers doing to retain staff?

67.4% 67%

Reported paying higher than average wages to existing staff Provide increased internal training Provide reimbursement or fully funded external learning and development opportunities

37.2%

Report they have introduced greater flexibility in work hours

55.8%

Have formalised coaching and mentoring programs

25.6%

Have provided non-salaried incentives

14% 0

20

40

60

80

100

Source: Careers in Insurance Quantitative Study: Australian Insurance Industry Workforce Insights

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20/02/2015 1:20:12 PM

PEOPLE

SOCIAL LIFE

GSA SAYS GOODBYE TO 2014 WITH SUMMER FRAT PARTY Many insurance industry professionals around Australia capped off 2014 by celebrating the festive season in style, but it was the end-of-year merriments at GSA that really took the cake. Guests decked themselves out in their best frat getup and toasted a successful 2014 with their colleagues in the ultimate frathouse on Sydney Harbour. By all accounts, the party was a hit and won’t be forgotten by those fortunate enough to attend any time soon. Attention now turns to how GSA can raise the bar again in 2015!

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19/02/2015 4:26:39 PM

ANZIIF TURKSLEGAL CLAIMS SCHOLARSHIP 2014 WINNER ANNOUNCED ANZIIF’s Annual General Insurance Breakfast in December was a jam-packed morning of highly engaging and thought-provoking industry discussion. Among the highlights was the announcement that Kevin Nhan, client manager at Instrat Insurance Brokers, was the recipient of the 2014 ANZIIF TurksLegal Claims Scholarship. Nhan received the accolade for his essay on the duty of utmost good faith in the Australian insurance industry. In this its seventh year, a record number of entries were received for the scholarship, which offers professionals working in the general insurance industry the opportunity to attend a major international claims conference and insurance services expo in the US, and the ANZIIF Claims Convention in Australia. Prue Willsford, ANZIIF’s CEO and a member of the judging panel, said the high calibre and number of entries received in 2014 was impressive, and that it was encouraging to see that general insurance industry professionals in Australia were among the world’s best. As winner of the scholarship, Nhan receives a package valued at up to $8,000. Sharyn Sullivan, executive manager for Queensland CTP Claims at Suncorp, was announced runner-up for her essay on the role of social media in the future of claims management. Congratulations to Kevin and Sharyn! www.insurancebusinessonline.com.au

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19/02/2015 4:26:50 PM

FAVOURITE THINGS

PRUE WILLSFORD CEO, ANZIIF

She’s the head of the leading education, training and professional development organisation for the insurance and finance industry in the Asia-Pacific region. Upon returning from a recent trip to China, Prue Willsford shared what she enjoys most when not focused on educating industry professionals Movie: Bladerunner.

Existential fun.

Food: Anything fresh and fabulous.

Sport: Swimming to do, tennis to watch.

Book: I grew up with Roald Dahl, and he still fires my imagination.

Vacation spot: Where the forest meets the sea.

Drink: Gin martini. One is amazing. Just remember that nothing good happens after two.

Music: Talking Heads/ David Byrne.

Place to be: Home. It’s where I want to be, but I guess I’m already there.

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Best thing about working in the insurance industry: It’s never dull.

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19/02/2015 4:28:20 PM

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.

1300 814 011 www.qus.com.au AFSL 321877

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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19/02/2015 4:28:32 PM

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19/02/2015 4:29:12 PM