Insurance Business 4.04

insurancebusinessonline.com.au Issue 4.4

JOSH FRYDENBERG The federal assistant treasurer on Northern Australia

THE INSIDER THREAT

CYBER SECURITY RISKS CLOSEST TO HOME

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THOROUGH DECONTAMINATION

EXPERTS TALK CONTAMINATED PRODUCT INSURANCE AND PRODUCT RECALLS

ONLINE EDUCATION

UNDERWRITING AGENCY’S NEW LEARNING COMMUNITY FOR BROKERS

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AUGUST 2015

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

CONTENTS

twitter.com/InsuranceBiz_au www.facebook.com/pages/ Insurance-Business-Australia

UPFRONT 06 News round-up

Berkshire Hathaway growing in Australia and New Zealand

FEATURES

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THE COST OF DOING BUSINESS

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PEOPLE

An expert shares what you need to know about D&O insurance

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PLAYING TO WIN

Approaching the competitive insurance environment like sport

The talented young professionals of the insurance industry in Australia

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20 Statistics

The underwriting agencies CEO survey

50 Thorough decontamination The importance of contaminated product insurance

PEOPLE 52 Broker profile

Australian broker pursuing career in London

56 Favourite things

AIG Australia’s Dan Collinson

FEATURES

THE INSIDER THREAT

Protecting your business from threats closest to home

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Opportunities for Australian insurance businesses in Asia are growing

Underwriting agency’s new online learning community for brokers

FEATURES

YOUNG GUNS 2015

14 News Analysis

48 Enrolment opens at Brooklyn University

Assistant treasurer Josh Frydenberg talks insurance

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Val Phinn joins broker education discussion

FEATURES

THE BIG INTERVIEW

SPECIAL REPORT

12 Opinion

INSURANCEBUSINESSONLINE.COM.AU

CHECK IT OUT ONLINE

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UPFRONT

EDITOR’S LETTER

www.insurancebusinessonline.com.au AUGUST 2O15 EDITORIAL

The next generation of leaders

M

ost people would be familiar with Mark Zuckerberg, founder and CEO of Facebook.

He’s amassed an estimated personal fortune of over US$34bn (A$46.69bn) and his social network currently has around 1.44bn monthly active users.

He turned 31 in May. Zuckerberg has been quoted as saying, “In a world that’s changing really quickly, the only strategy that is guaranteed to fail is not taking risks.”

The burning platform notion will certainly resonate in most sectors, including the general insurance space. We hear repeatedly about what an enormously competitive time this is for the industry, and that change continues to rapidly occur around us. The concept of ‘Uberisation’ is increasingly widely feared. Taking risks by embracing new and emerging technologies, innovating in product offerings and continuing to evolve educational programs is going to be key in the industry, both locally and around the world.

There can be no doubt that well-tenured industry professionals have a crucial role to play in solving these challenges, but newcomers to insurance, with new ideas and new ways of looking at things, will also contribute meaningfully to the process.

In this issue, I’m thrilled to be able to recognise some of the younger members of the insurance industry, whose excellence in the workplace has made them genuine assets to their employers’ businesses. They exemplify the kind of staff member an organisation wants to have on their frontline, working to tackle any substantial business obstacles that may arise.

Our Young Guns feature for 2015 includes an impressive list of high calibre young insurance professionals. It was incredibly pleasing to see how enthusiastic their employers were in putting their names forward and telling us about their achievements. Of course, our list is just a selection of the fine young people in insurance excelling in their careers and helping to build the businesses equipped to deal with tomorrow’s world. I hope you enjoy our Young Guns feature, and the rest of the jam-packed issue the Insurance Business team has worked hard to bring you this month.

SALES & MARKETING

Editor Tim Garratt

General Manager Peter Smith

Journalist Jordan Lynn

Commercial Development Manager Sophie Knight

Production Editors Roslyn Meredith, Moira Daniels, Carolin Wun

CONTRIBUTORS Val Phinn

ART & PRODUCTION Design Manager Daniel Williams Designer Joenel Salvador Marla Morelos Kat Vargas Loiza Caguiat Traffic Coordinator Lou Gonzales

Marketing & Communications Manager Lisa Narroway

CORPORATE Chief Executive Officer Mike Shipley Chief Operating Officer George Walmsley Managing Director Justin Kennedy Chief Information Officer Colin Chan Human Resources Manager Julia Bookallil

EDITORIAL ENQUIRIES tim.garratt@keymedia.com.au

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ADVERTISING ENQUIRIES

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Tim Garratt, editor, Insurance Business

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UPFRONT

NEWS ROUND-UP

BERKSHIRE HATHAWAY ANNOUNCES SERIES OF DEVELOPMENTS IN A/NZ WARREN BUFFETT’S Berkshire Hathaway continues growing its presence in the region… quickly.

Mid-June saw the announcement of a strategic partnership between holding company, Berkshire Hathaway Inc, and IAG. “Our strategic partnership with IAG will help fast-track our entry into this region, and provides us with opportunities to leverage IAG’s extensive capabilities while also making our expertise available to IAG,” Buffett said at the time of the announcement.

Under the terms of the partnership, IAG will acquire Berkshire Hathaway’s local personal and SME business lines and, in return, Berkshire Hathaway will acquire the

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renewal rights to IAG’s large corporate property and liability insurance business in Australia.

IAG and Berkshire Hathaway have had a reinsurance relationship since 2000.

“We have worked with IAG for more than 15 years and over that time we’ve developed a good understanding and respect for their people, what they offer and the way they do business,” said Buffett. “For us, they are a natural partner with a strong management team and brand presence.”

Before industry talk of the deal had the opportunity to subside, Berkshire Hathaway Specialty Insurance (BHSI) announced its entry into Australia’s healthcare underwriting market.

Tony Bainbridge, former regional head of healthcare for AIG in the Asia Pacific, has been tasked with leading that effort. He will be based in BHSI’s recently-opened Melbourne office.

Chris Colahan, BHSI’s president for Australasia, said that Bainbridge brings with him more than three decades of industry experience and deep technical knowledge of the risks challenging the local healthcare sector. “We look forward to bringing customised healthcare solutions and capacity to the Australian marketplace, and are pleased to have an executive of Tony’s calibre to lead our expansion into this dynamic industry,” Colahan said.

And just as news had come in of the healthcare expansion, BHSI shared news of a significant development across the Tasman.

The company had received its licence from the Reserve Bank of New Zealand and commenced underwriting property and casualty insurance through its new Auckland office.

Peter Eastwood, BHSI’s global president and CEO, said of the New Zealand operations, “We are pleased to bring the financially strong capacity and customer-centric underwriting and claims handling of BHSI to New Zealand.

We open our doors in Auckland with a highly experienced team, a broad appetite for property and casualty risks, and a commitment to providing responsive and enduring solutions to the marketplace.”

The BHSI New Zealand team includes Doug Thomson as property and energy manager, Anthony Posa as casualty manager and Megan Howe as claims manager. And leading the team, as country manager, is Cameron McLisky who, most recently, undertook the role of regional financial lines manager at AIG Asia Pacific. “I am delighted to introduce BHSI to the New Zealand marketplace,” McLisky said. “We have assembled an excellent team and look forward to collaborating with our brokers and insureds to provide stable, flexible solutions along with quality service that is a hallmark of BHSI operations everywhere.”

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BIG DATA A BIG CHALLENGE, LEADERS SAY MOST INSURANCE executives still see big data as a big challenge rather than a big opportunity.

That’s one of the key insights to come from ‘Big data: The BIG factor driving competitive advantage’, an article that appears in KPMG’s June edition of its ‘Frontiers in Finance’ series.

“There’s still a limited amount of education out there in the marketplace about what actually constitutes ‘big data’,” said article co-author, James Griffin, director of SR7, KPMG’s social media intelligence firm. “I think there’s a disconnect between what a lot of people are talking about in respect of big data and what it actually can be. So that might be information that people have on their customer or their client base, and it might be sitting in disparate areas of the business, and they just never considered looking at it from a different perspective, and then using some fairly simple and straightforward approaches to utilise or make that data work for them.”

Griffin thinks the insurance industry should look to the banks as a space taking up the

opportunities attached to big data. “I think it’s hard to go past financial services, particularly the banks, obviously because they have a lot of access to incredibly sensitive and important data,” he said. “They can really paint an interesting picture about their customer and they’ve made great efforts to be able to use that data but, at the same time, have in place the appropriate governance and security protocols to ensure that they’re doing that properly.”

There are also lessons to be learned from airlines, according to Griffin. “I think some of the airlines have made great efforts and [taken] a really innovative approach to monetising and commercialising their frequent flyer programs, and the information that collects about a person.”

Griffin says KPMG has noticed interesting applications of social media data in insurance.

“Some of that might be from the perspective of communicating or the fairly straight-forward aspect of marketing and communicating with clients,” he explained. “On the other end of the spectrum, we’re seeing some interesting uses around claims.”

He emphasises it’s important for insurance companies to appreciate that social media is not only an effective marketing tool, but also a medium that customers want to use as part of the claims process. “They want the immediacy that comes with social media to help them deal with their claims. We’re seeing Facebook pages, Twitter accounts and forums becoming a proxy for the customer contact centre.”

Griffin’s advice for company leaders wishing to start utilising big data is simple. “It’s just about identifying a set of data that’s within the business, and thinking about how you could improve or operationalise that information.”

But he also reinforces the need to ensure robust security and governance processes around storage and use of customer data are put in place. “As companies and organisations in insurance have more access and use data more frequently, they really need to mitigate any potential risks or concerns that could come from data leakage.”

BIG DATA BY THE NUMBERS

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The amount of digital information will increase tenfold every five years

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seconds creates 98,000 tweets, 695,000 status updates and 11m instant messages

90%

of the world’s current data was created in the last two years

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billion pieces of content shared on Facebook each month

Source: ‘Data, Data Everywhere!’ KPMG in the US, 2014

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UPFRONT

NEWS ROUND-UP

LEADING REINSURANCE INTERMEDIARY RELEASES LATEST MARKET REPORT INSURERS HAVE embraced growth opportunities by more fully accessing accretive reinsurance, according to Aon Benfield’s latest update of its Reinsurance Market Outlook.

The recently-released report provides an analysis of the key variables affecting reinsurance buyers at the conclusion of the June and July 2015 renewals. It highlights that, globally, reinsurance capital had reached US$580bn by the end of the first quarter, an increase of 1% over year end 2014, as operating earnings remain stable assisted by continued light catastrophe activity.

John Carroll, head of broking – Technical and Placement for Aon Benfield’s Australian and New Zealand operations, says that, while there was an increase in reinsurance demand in the ANZ region at June, it wasn’t an “overly significant feature” of local reinsurance renewals. “Reinsurance demand did increase, but it wasn’t significant. It was between the 3 to 5 per cent range,” Carroll told Insurance Business. “Outcomes for the Australian and New Zealand market were broadly in line with those we’ve seen in the other major

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international marketplaces, which is, essentially, that supply continues to exceed demand, which results in favourable reinsurance pricing and coverage environments for original insurers.”

While this region has experienced a frequency of small to mid-sized weatherrelated events, Carroll says no specific event was a capital concern for insurers. “They did highlight the susceptibility to earnings from weather events for the insurance industry.

As a result, we did see a little bit more focus from insurers at 30 June looking for aggregate reinsurance protections.”

He says there’s a significant appetite from property catastrophe reinsurers to diversify into non-catastrophe-exposed lines of business, such as motor and liability. “What that‘s meaning is that there’s much more capacity at a cheaper cost to these classes than in previous years, and we are seeing a broadening of terms and coverage points in those non-catastrophe lines of business,” he explained. “The non-CAT lines of business don’t tend to be very heavily reinsured, but

there is just now a significant diversification attraction for those lines of business, and reinsurers are fighting very hard for those.”

In the current reinsurance climate, Carroll says brokers and their clients will benefit from having access to an extremely well capitalised insurance industry, which is looking to grow and service the significant capital they have at their disposal. “This is invariably going to lead to an increased appetite and an ability to take on risk, which is reducing the cost of insurance and broadening coverage. But the strong competition will also require insurers to ensure that they clearly and adequately articulate and differentiate their value offering to brokers and clients.”

But he adds an important reminder: “Whilst improved pricing and coverage will be available market-wide, those brokers and clients who have the best handle on their risk exposures and risk needs will be in even greater demand from an industry that wants growth, because what they want is profitable growth, not just growth for the sake of it.”

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UPFRONT

FORUM EDUCATION REMAINS HOT TOPIC IN INSURANCE The subject of education in the insurance industry recently generated some of the strongest conversation seen on the Insurance Business online forum this year.

Recently, we conducted a website poll that received over 150 responses. Respondents were asked whether a bachelor degree should be mandated as a minimum requirement for an insurance role. The results revealed 73% of respondents disagreed with that proposition.

David Lamb, CEO of Sportscover, recently shared his thoughts on the subject. “I think a degree is a relevant qualification for a number of insurance roles, but I wouldn’t say it’s a prerequisite as a carte blanche, and I’d say one thing

we do lack is making sure we spend the time to invest in people and teach them some of the soft skills in the business, as opposed to purely the skills they can get from a university.”

He added, “So many people come with an important and well valued piece of paper in hard skills but so little in relation to relationship building skills, negotiation skills, and emotional intelligence.”

Lamb said he’d like to see a greater emphasis in insurance education on skills such as people management and sales focus.

What do you think should form the essential elements of education for insurance industry professionals?

VIEWPOINT What do you think will be crucial for tomorrow’s brokers in order to equip them to address new and emerging challenges?

25%

24%

20%

19.5% 17.5% 16.5%

15%

Total votes: 103

12.5%

10%

10% Formal Education

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Mentor Programs

Graduate Programs

Training around Technology

On-the-job Training

Other

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Have your say on insurancebusinessonline.com.au

FORUM COMMENTS

“I have a degree so this isn’t an issue for me either way. I can’t agree with the assertion that a degree is irrelevant nor am I convinced it has to be mandatory. We need to find a middle ground but still improve skills beyond the current regime.

My business studies degree has helped me enormously as an insurance broker. But that being said, I don’t think it should be absolutely mandatory, particularly for people already in the industry.

The degree helped with obvious things when dealing with clients such as accounting helping with BI calculations. But also less tangible concepts that the degree touched on such as basic law & ethics. This academic rigour helps with dissecting policy wordings & structuring & presenting information to clients.

The solution ought to be insurance qualifications that are more relevant to what an insurance broker actually does. When I did my tier 1 qualification, I learnt virtually nothing, it was just a box ticking exercise.

There needs to be more product content in the qualifications, if a broker deals with PI, they need to understand the quirks. The current courses don’t have any of this.

There should be a degree standard qualification as the ultimate goal so that people can keep studying.

The courses also need to be harder, it should be set at a level where some people fail. Currently, the qualifications are too easy to pass & too much help is given to those who struggle.”

“Today I am retiring. I entered insurance in 1959 and I have worked in it ever since. After reaching director level while working for international brokers, I founded my own business which, almost 36 years later, employs over 50 people.

I never attended university and, of all the people that I have employed over the years, only 1 has had a degree. I have never stopped studying insurance and risk management and, probably never will.

Some of the best ‘insurance people’ that I have known, were ‘dropped out apprentices’ who were prepared to get their heads down; take exams and work hard. They all received on the job training and were well prepared for any promotion they earned.

If a degree had been a pre-requisite of getting into insurance, the industry would never have benefited from their efforts and dedication.

I agree that current education requirements are too low – but only from an ‘advancement’ perspective. I provide thorough ‘on the job’ training; set development programs and mentor my employees. If a junior (or senior) member of staff wants to aspire to advancement, then it is up to them to convince me that they are capable, and competent.

It is hard enough now to find good staff. I shudder to think how difficult it would be if I demanded a degree before considering an applicant.”

“The insurance industry needs to raise the bar. We need to stop being the fall back for people who haven’t got any tertiary qualifications and can’t get a job in any other industry.

Would you see a lawyer for legal advice if they didn’t have a degree?

Would you see a doctor for medical advice if they didn’t have a degree?

Why do we have people in the insurance and finance industry that only have a diploma? A diploma that is really quite easy to obtain.

The current barriers to entry are far too low, and it shows in daily dealings with the industry. ‘Soft skills’ are fine, but you need solid foundations in technical knowledge to properly carry out your job. As a broker, you’re giving advice to a client; they’re relying on you to know what you’re talking about. As an underwriter, you’re either dealing direct with the client, so you’re in the same position as the broker, or you’re dealing with brokers, and you still need to have an in-depth knowledge of business, risk, and in pretty much all cases, the law.

If insurance wants to be taken seriously as a profession, as opposed to a junketing necessary evil, then we need to increase our professional standards beyond that of used car sales.

A degree isn’t the be-all and endall, but it is a solid starting point. If more universities offered insurance based business degrees, then we would have a greater opportunity of increasing the education standard for the industry.”

JOHN on 30/06/2015 10:28:48 AM

PETER on 30/06/2015 11:38:48 AM

HIGHER STANDARDS on 30/06/201510:14:24 AM

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UPFRONT

OPINION

GOT AN OPINION THAT COUNTS? ibo@keymedia.com.au

A PLEA TO THE BROKING INDUSTRY

Val Phinn, director of an insurance education provider in Queensland, joins the discussion around broker education in Australia BROKERS WILL soon have a diploma course which offers significantly less scope for learning than any other diploma in the insurance industry.

The recent changes to the diploma will see it ‘dumbed’ down to 10 units of competency. Tier 1 is part of a Diploma of Insurance Broking.

A Certificate III course has more units of competency. The Diplomas of General Insurance and Loss Adjusting have more. These changes have been called by the industry skills council (IBSA) “continuous improvements”.

If I sound frustrated, I am. As an education provider we are bound by the standards for registered training organisation approved by the Australian Skills Quality Authority. These standards require us to follow the training package rules. If you will forgive the analogy, it’s a little like trying to erect a house without a solid foundation.

The industry skills councils are the ones who put the training packages together and set the rules. IBSA is the industry skills council representing the financial services sector.

Do I hold NIBA and ANZIIF responsible for the poor quality of the training packages for brokers? The answer has to be yes. NIBA and ANZIIF have been on the panel of IBSA for a significant number of years and have significant influence on how these training packages are developed. Recently NIBA commented that we had the opportunity to contribute to the development of training packages. Let me assure you that in the past we have endeavoured to do this, but with limited success. It was once suggested to me some years ago by a consultant

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working for IBSA to give up – only large industry groups were listened to.

The insurance industry including broking provides a salad bowl of opportunity to develop a robust training package covering business, technical and soft skills which provides clearly defined pathways and sets the standards for future generations. Yet here we are some 10 years later with Tier 1 still being process driven with units of competency which applied when administration processes were onerous and not driven by technology.

has a Tier 1 only to find they haven’t met the standards the broker requires or the cost of professional development to improve their technical skills. I’m not suggesting for a minute that Tier 1 be thrown out, but it does need adjustment. Tier 1 has now become the ‘top of the tree’ instead of the diploma. Why because I personally believe industry has lost faith in training and education.

Too often we hear from young brokers who have attended a professional development day and the subject matter has gone way over their heads – simply because they haven’t been taught the basics. You can’t go to university if you haven’t been to high school.

I have no problem with NIBA and ANZIIF being Registered Training Organisations, in competition with each other and us. What I have an issue with is the conflicts of interests which currently exist and the lack of action in developing robust training packages. In my view they have had 10 years of opportunity – time to give others a chance. My suggestion would be an independent working group made up of a cross section of small, medium-sized and large brokers with no conflicts of interests to tackle the issue of what is really needed in training courses for brokers.

“Times have changed. The new generation of brokers are missing out. They are not being afforded the opportunity to really learn” The new Certificate IV course has five units of competency devoted to workers’ compensation, the rest are generic business skills based. We have clients all across Australia whose prime source of business is domestic lines and SME commercial lines – yet there has been no effort to address these technical skills. There will be a new reshuffle of the Tier 2 units of competency.

No wonder industry gets confused on who is compliant and who isn’t.

Times have changed. The new generation of brokers are missing out. They are not being afforded the opportunity to really learn. The cost to industry is huge – consider how much the industry has spent on employing a person who

If you want to know what the difference will be between the sustainability of broking and the direct market – education. Insurers often have robust training provided ‘in-house’. As a consumer who would you trust - someone who seems to know what they are talking about, or someone who has limited technical knowledge and, as a consequence, no confidence?

Val Phinn is the director of The Financial Services School, a registered training organisation that has provided training and assessment to the general insurance industry for 10 years. Phinn has over 30 years’ experience in insurance

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UPFRONT

NEWS ANALYSIS

ACCESSING ASIA Asian markets offer increasingly attractive prospects for Australian businesses.

Insurance Business examines some of the key developments in the region and the pros and cons of making the move

FIFTEEN YEARS ago, Lloyd’s established its Asian underwriting base in Singapore.

Since that time, Lloyd’s has continued to enjoy significant growth in Asia. “Singapore’s been successful as a regional platform for AsiaPacific because it’s got a very pro-business environment, a regulatory environment which is very similar to what we have in the London

annually over the past decade, and the regional business written from Singapore in the last 13 years has quadrupled. We started underwriting in 2000 with two syndicates, and we now have 19 managing agent service companies in Singapore writing about US$630m. We’ve done all that in 15 years, and with 380 people now here in Singapore it’s become, well and

“The middle class will demand a whole range of new services, including financial services and insurance. It’s going to be very hard for an Australian insurer to ignore those macro dynamics” Grant Peters, Ernst & Young market, English is the first language, it has an open-door policy for foreign expertise and labour, and it has a good legal framework which, of course, Lloyd’s underwriters prefer for certainty,” says Kent Chaplin, Lloyd’s general representative in Singapore.

Chaplin tells Insurance Business, “The nonlife industry in Asia-Pacific has grown 10%

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truly, our regional hub for Lloyd’s.”

But Chaplin adds that 90% of the business Lloyd’s writes from Singapore is offshore business. “Whilst there’s a very strong domestic market in Singapore, only 10% of our income is actually Singaporean business,” he says. “We are here, as are our competitors, to write international business.”

The global insurance industry’s interest in Asia continues to increase, evidenced by the recent announcement of IAG and Berkshire Hathaway’s new strategic relationship. IAG has said the deal significantly strengthens its capital position, enabling the group to pursue growth opportunities, including those in its six target Asian markets of India, Thailand, Malaysia, China, Vietnam and Indonesia.

Changing economies and growing populations So precisely what’s going on in the region that’s increasing its appeal to Australian insurance businesses? Grant Peters, a partner at Ernst & Young Australia leading the Oceania insurance team, says low insurance penetration rates in the region represent a significant opportunity, noting that eight of the world’s 17 most underinsured countries are in Asia. Scott Guse, an audit partner for KPMG Australia in the insurance field, also speaks to the opportunities that present as a result of low insurance penetration. “If you take India, general insurance penetration is about 1% of their GDP [and] China 2%,” Guse says. “There is limited product at this point in time. Most general insurance products are motor vehicle-oriented only. There is very limited house, public liability, workers’ comp, health insurance …”

On top of low insurance penetration, population and economic growth in the region is very significant. It’s expected that, by 2030, 64% of the global middle class will reside in Asia, and the continent will account for over 40% of global middle-class consumption. By that time, it’s expected that China alone will have a middleclass population of around one billion.

“That population change is going to have pretty significant implications for the world overall,” Grant Peters says. “That goes to any product or service provider thinking about Asia … The middle class will demand a whole range of new services, including financial services and insurance. It’s going to be very hard for an Australian insurer to ignore those macro dynamics.”

According to Peters, Asia will have half of the world’s motor cars in 10 to 15 years’ time.

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“The volume of people with more assets than they used to have before naturally means that more people want to protect those bigger assets,” he says. “Insurance just naturally comes into play.”

On the commercial lines side, he says GDP growth, larger and more complex businesses, and urbanisation will bring to Asian markets additional insurance exposures.

The regulatory landscape And while growing economies demand more insurance, other significant changes are starting to make some Asian markets more conducive to a heightened Australian presence. Scott Guse mentions ownership structures. “When you look at Asia, there are different ownership structures that apply in different regions. Some are capped at 49%, such as Thailand, Indonesia is about 80%, whereas somewhere like Malaysia is 100% …

“But what we’re seeing is an aggressive opening up of those caps. [India] was 26%.

They’ve now changed that to 49% foreign ownership allowed. That only changed late last year, and what we’ve seen in the Indian market is that about 25 new entrants have come in in the last six to nine months.

“As ownership structures free up a bit more, that does create opportunities, and I can only see local participants wanting more and more to partner with foreign players, including Australian institutions, because there’s a lot that we can offer them in terms of new technology, new distribution channels, experience [and] data analysis capability and technology.”

Peters says: “Governments, historically, have found themselves an insurer of last resort effectively. But governments can’t afford to do that when population wealth increases, because the size of the potential losses from events get too big … Therefore, the government turns to the private sector to bridge that gap through insurance. And that’s what we’re starting to see. We’re starting to see different Asian governments relax the marketplace for domestic insurers, but also open

up the market to overseas insurers too.”

Guse says inroads have been made with respect to strengthening regulations across the region. “It will be a long wait before they get anywhere near the regulation structures that we have in place in Australia, but the more regulation there is, I think the better it is for insurance companies to operate in, as there’s more stability and certainty over the way they can do business there.”

Similarly, Peters sees regulatory environments in Asia as more ready for overseas insurers now than was the case not long ago.

“We’ve seen in the last five years quite a lot of change in regulations open up insurance markets. It would have been a little more difficult to enter Asian markets up until the last five years or so.”

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UPFRONT

NEWS ANALYSIS Some of the changing regulations have been around the cost of insurance. “There’s been a lot of regulation around pricing in a lot of Asian markets, and, in some markets, the pricing is actually quoted by the government,” Guse says.

“That is starting to ease up a bit, and we’ve recently seen Malaysia de-tariff their motor premiums. So instead of the government setting what you can charge for a motor policy, companies themselves are now being given that flexibility and freedom to price motor policies according to risk profiles.”

The ASEAN nations Then there’s the ASEAN (Association of Southeast

Asian Nations) initiative. “Indonesia, Malaysia, the Philippines, Singapore, Cambodia, Myanmar, Vietnam, Brunei, Laos and Thailand make up the ASEAN,” Kent Chaplin says. “These 10 countries are looking to agree on a multilateral free trade agreement and set up an ASEAN economic community not dissimilar in principle to the European common market. End of 2015 is the target date to establish the principles to ensure the free flow of goods and services, and significant progress has already been made, particularly in trade and manufacturing.”

Chaplin says, on the financial services side, it appears there will be a slightly longer gestation period. “It’s looking more to 2020. But we will

ASIAN AND PACIFIC ECONOMIES: REAL GDP (Annual percentage change) REAL GDP NAME

PROJECTIONS

Asia

2014

2015

2016

5.6

5.6

5.5

Advanced Asia

1.6

2.2

2.4

Japan

-0.1

1.0

1.2

Korea

3.3

3.3

3.5

Australia

2.7

2.8

3.2

Taiwan Province of China

3.7

3.8

4.1

Singapore

2.9

3.0

3.0

Hong Kong SAR

2.3

2.8

3.1

New Zealand

3.2

2.9

2.7

Emerging and developing Asia

6.8

6.6

6.4

China

7.4

6.8

6.3

India

7.2

7.5

7.5

ASEAN-5

4.6

5.2

5.3

Indonesia

5.0

5.2

5.5

Thailand

0.7

3.7

4.0

Malaysia

6.0

4.8

4.9

Philippines

6.1

6.7

6.3

Vietnam

6.0

6.0

5.8

Other emerging and developing Asia*

6.4

6.7

6.7

* ‘Other emerging and developing Asia’ comprises Bangladesh, Bhutan, Brunei Darussalam, Cambodia, Fiji, Kiribati, Lao PDR, Maldives, Marshall Islands, Micronesia, Mongolia, Myanmar, Nepal, Palau, Papua New Guinea, Samoa, Solomon Islands, Sri Lanka, Timor-Leste, Tonga, Tuvalu and Vanuatu.

Source: IMF World Economic Outlook, April 2015

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certainly see changes, and there’s been talk of a relaxing of trade barriers to allow the crossborder movement of insurance and reinsurance in the natural catastrophe space.

“The ASEAN is forecast to be the fourth largest market in the world, and you’ve got countries such as Indonesia, which has 250 million people – half of which are under 30 – with a vastly growing middle class [and] an increasingly well-educated workforce. In the ASEAN countries, there is an abundance of natural resources, such as oil and gas, minerals, commodities; and, of course, all 10 countries are within striking distance of Singapore. It makes it a fantastic opportunity.”

In Singapore itself, a major change has recently occurred, which Chaplin says has further cemented Singapore as the Lloyd’s hub in the region. “The regulator has approved Lloyd’s to be able to subdelegate its underwriting authority, which means the 19 service companies based in Singapore, which are wholly owned by their London managing agents, are able to delegate underwriting authority to intermediaries (Lloyd’s cover holders) in Singapore and overseas, which we expect to be a significant contributor of revenue to the market.”

Chaplin says the change means Australian insurance intermediaries, who can already access Lloyd’s capacity in Singapore, can now have that capacity delegated to them to underwrite on behalf of the Lloyd’s members.

He also says it means there’s an opportunity for Australian intermediaries to base themselves in Singapore as Lloyd’s cover holders. “For those Australian intermediaries, particularly in the specialist insurance market and who want to access Asia, they can do so through Lloyd’s in Singapore because the Lloyd’s service companies can also delegate authority to cover holders inside Singapore. That’s quite a big shift for businesses looking to grow outside Australia.”

Taking the opportunities Katherine Simmonds, managing director of Ironshore in Australia, says Ironshore’s partnership with Fosun International Ltd will help it continue building its brand in Asia. In

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UPFRONT

NEWS ANALYSIS May, it was announced that Fosun would acquire the remaining 80% interest in Ironshore that it didn’t already own. “We see this as a partnership opportunity with enormous potential,” Simmonds says. “With over $30bn in assets across its investments, Fosun opens up a whole range of new markets for Ironshore.”

Ironshore already has offices in Singapore, Hong Kong and Tokyo, but Simmonds says it sees great further growth potential in both its existing and new Asian markets. “At the moment, we’re looking at Malaysia as one additional country in Southeast Asia. We’re also looking to expand our Hong Kong operation quite significantly, alongside Fosun,” she says.

Speaking about some of Ironshore’s specialty products, Simmonds says the company is seeing substantial growth in Asia in mergers and acquisition insurance. She adds: “Another product that we’re seeking to grow across the Asian region, country by country, is political risk and trade credit. We already have a strong presence in that product in Australia and also in Asia, and we’re seeking to leverage that across the Fosun network, and also to partner with local marketplace participants, such as the brokers, to really expand our offering in that product.”

Peters expects more Australian insurance companies to move into Asia within the next few years. “Economic growth, the middle-class growth, and the underinsurance gap, I think … will naturally lead Australian insurers to think more about Asia … Our local market is quite mature, so insurers will look for new areas for growth … Those kind of dynamics, I think, all add up to point to Asia.”

Know the markets Both Peters and Guse single out China and India as future big insurance markets. “The sleeper is probably Indonesia, as far as the size of the opportunities,” Peters says. “But you then need to very much be aware … each Asian country is very different and you need a specific market-entry strategy for each individual country. You can’t really treat Asia as a collective, from that perspective. There’s always uniqueness

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UNDERWRITING AGENCIES COUNCIL PURSUING ASIA-PACIFIC EXPANSION The Underwriting Agencies Council (UAC) recently took its next step as part of its 2020 strategic plan, which includes Asia-Pacific expansion.

On 6 July, Chris Mackinnon, Lloyd’s general representative in Australia; William Legge, UAC general manager; and Lyndon Turner, UAC’s deputy chair, presented to Lloyd’s Singapore service companies, outlining the benefits of UAC membership.

Turner noted that UAC was founded in 1998 when Australian agencies needed an industry voice, and said the model could be replicated in the Asia-Pacific region. Legge told attendees that joining a professional association like UAC gave agencies credibility with regulators and industry recognition, provided confidence to agencies’ security, confirmed adherence to a code of practice, and enhanced agencies’ status in the marketplace.

“To be able to find the business that you want to write, and write it profitably, you need to be on the ground, you need to understand the local markets, you need to invest in those markets in terms of time and resources and data” Kent Chaplin, Lloyd’s around regulation, the level of existing competition, and culture. Culture’s very important, particularly around how insurance is positioned and sold.”

Chaplin agrees that it’s critical for Australian intermediaries to take the time to understand each individual local market into which they intend to move. “The risks here are so pricedriven, you need to be close to the risk to really select the business you want to write, and to be able to price effectively,” he explains. “You also need to exercise underwriting discipline, so you’ll need to be able to walk away from risks that aren’t priced adequately or that don’t meet your risk appetite.

“To be able to find the business that you want to write, and write it profitably, you need to be on the ground, you need to understand the local markets, you need to invest in those markets in terms of time and resources and data.”

Additionally, Guse highlights the sovereign risk of which Australian businesses venturing into Asia need to be aware. “I know a number

of companies that have had tax laws changed on them because countries needed to meet their budgetary requirements … One country changed its tax laws on 30 November so that it could achieve its budgeted position by the end of December.

“What goes with sovereign risk is the ability to get money out of countries once you’ve invested in those countries … In some of the smaller countries, it’s hard.”

Guse and Peters also say it’s important that businesses are prepared to stick it out for the long term if a move into Asia is planned. “I would say, if you’re going to invest in Asia, it’s a long-term investment strategy,” Guse says.

“You can’t do it for the short term and expect to make a profit … You need to go into it with that frame of mind – that it’s an investment for the future [but] not the short-term future.

“Whilst there are a whole lot of opportunities, there are an enormous amount of risks that exist in [Asian] countries. You need to weigh up the cost benefits of doing business there.”

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UPFRONT

STATISTICS

THE STATE OF UNDERWRITING

IN THE ANZ REGION

Underwriters play a crucial role in the industry and they are looking to bolster broker relationships in 2015 THE ROLE of the underwriter in the insurance industry is forever changing. Emerging technologies within the industry and developing risks throughout the market mean that underwriters need to continue to develop to stay on top of their game.

The second annual Underwriting Agencies CEO Survey, conducted by the Underwriting Agencies Council and Gratex International, revealed that underwriters are preparing themselves for a competitive future, with broker relationships a key area of concern.

96

The anonymous survey of senior executives in both Australia and New Zealand saw shifting priorities, said Milan Neklapil, managing director of Gratex.

“For the first time, we can share the shifts in priorities and dynamics that shape our domestic markets. Working on a daily basis with underwriting agencies, I was not surprised to see some of the pressure points that demand proactive action with unprecedented speed and agility under fiercely increasing competition.”

$2.5bn

58%

Number of UAC members across Australia and New Zealand

11.9%

UAC members are responsible for over $2.5bn worth of premiums in Australia

Number of respondents that report a GWP of $10m to $200m

The biggest decreasing challenge in this year’s survey was identifying clear opportunities for operational cost reduction Source: Underwriting Agencies Australia/New Zealand CEO Survey 2015

FAST, ACCURATE ONLINE EXPERIENCE KEY FOR BROKERS When asked how important each of the following is in the context of online dealings with underwriting agencies, brokers made it known that speed and accuracy are paramount

4.3 4.3 4.2 4.2

Fast and accurate processing of our requests The process to quote and bind simple policies is fast and simple The end-to-end policy life cycle is fast and efficient Client data is entered only once, minimising manual work

Nearly half of all underwriters surveyed said they were considering a change to their current systems in the coming year 47.4% No change planned

3.6 3.6

Ability to make types of endorsements ourselves Easy access to status and performance reports 0

1

2

3

4

42.1%

Considering change

2.6%

Change not a priority

2.6%

Changed in the last two years

5.3%

Prefer not to answer

5

Source: Insurance Brokers Insight Survey 2014

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CHANGE IN SYSTEMS COMING

Source: Underwriting Agencies Australia/New Zealand CEO Survey 2015

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BROKER LOYALTY, COMPETITION KEY CHALLENGES Underwriters see the broker channel as one of their key challenges for success in the future as fierce competition in the industry is also turning heads

What are the key challenges that impact on your business today, or might do so in the future?

71.1% 71.1%

Fierce competition (new entrants) Performance and loyalty of our broker channel

39.5%

Access to skills, lack of qualified people on the market

26.3%

Cost and complexity of digital online customer service

18.4% 18.4% 21.1% 15.8% 13.2%

Insurers’ strategy to service direct to the market Implementing regulatory change New business models entering the market Identifying clear opportunities for operational cost reduction Uncertainty of economic outlook

0

10

20

30

40

50

60

70

80

Source: Underwriting Agencies Australia/New Zealand CEO Survey 2015

THE UNDERWRITER OF THE FUTURE? The survey finds three major emerging trends for the underwriting industry, which could help shape the future of businesses Speed – of service and time to market

CLAIMS HANDLING IN INSURER SHIFT Underwriters are handling their own claims less and less, with a big rise in the number of organisations using a third-party claims service instead of their insurers

–2.1%

+3.9%

We process claims internally Collaboration – with broker channel and insurance partners New markets – diversification targeting new segments with new products

We use a third-party administrator

–0.9%

We use our insurer’s claims facility Source: Underwriting Agencies Australia/New Zealand CEO Survey 2015

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4/08/2015 3:55:06 PM

PEOPLE

THE BIG INTERVIEW

TAXES AND TASKFORCES Assistant treasurer Josh Frydenberg talks to Tim Garratt about Northern Australia, risk mitigation funding and stamp duty

ON 23 DECEMBER 2014, Josh Frydenberg was sworn in as assistant treasurer. Elected to the seat of Kooyong in the 2010 federal election, he was parliamentary secretary to the prime minister immediately prior to taking on responsibilities in the Treasury.

One of the first initiatives announced since Mr Frydenberg started his tenure as assistant treasurer was the Northern Australia Insurance Premiums Taskforce, the initial details of which were released on 30 March. The taskforce would examine options for reducing home, contents and strata premiums in the region.

Immediately, that announcement raised a question as to the status of Senator Mathias Cormann’s controversial plan to increase competition in North Queensland. That plan involved allowing insurance brokers to sell policies from unauthorised foreign insurers (UFIs) where those insurers offered consumers a better price.

The heavily criticised proposal was one of a number of initiatives simultaneously announced, aimed at tackling the high cost of insurance in North Queensland. Others included a comparison website, established by the Australian Securities and Investments Commission, to assist North Queensland consumers in searching for home insurance.

Roll-out of some components of Senator Cormann’s proposal, including the website, proceeded as planned. So why was it decided to form the taskforce rather than clarify the role of UFIs in Australia?

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“That decision about unauthorised foreign insurers is deferred until the taskforce’s report,” the assistant treasurer says. “What we are looking to do here is try to find comprehensive solutions to the challenge we face in the insurance market in Northern Australia … This issue has been raised over a long period of time. Government has had a series of reviews … But this review is more comprehensive than anything that’s been undertaken previously ... Clearly we need to

Additionally, he says, the taskforce has extensively consulted with the industry to date, and will continue to do so up until preparation of the final report. “The committee’s met with all of the insurers who operate in that area, but also with the reinsurance industry … [and] with consumers, insurance brokers, and consumer advocacy groups as well. It’s a continuum of consultation, and it’s very important to be fully appraised of the interests and views of

“What we are looking to do here is try to find comprehensive solutions to the challenge we face … in Northern Australia” do even more, and that’s why we’ve got this expert taskforce.”

Led by a former executive director in the Australian Treasury, Mike Callaghan, the taskforce committee comprises representatives from the insurance sector and community groups, and is described by the assistant treasurer as an “expert” committee. But is a proposal encompassing UFIs something the taskforce is considering as part of their investigations? Mr Frydenberg says: “[The taskforce] is looking at the existing framework, as well as what could possibly be introduced … We’re looking at a whole series of options, but we’re also looking at the existing policy settings to see if they’re adequate.”

the key stakeholders in putting together a report such as this.”

Mr Frydenberg says he expects to receive the taskforce’s interim report “very shortly”, and that their final report is due in November.

As to when it’s anticipated that there’ll be solutions, resulting from the taskforce’s investigations, which can be implemented in Northern Australia, he says: “We’ll have to see the nature of the recommendations out of the report. Depending on the government’s view as to which ones we take forward and which ones we do not, we have to assess that and then we’ll make any deliberations about an implementation timetable after that.” He adds: “There will be lots of considerations taken into account,

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PEOPLE

THE BIG INTERVIEW including setting up new infrastructure to implement some of those proposals.”

Risk mitigation funding When it comes to the question of insurance affordability, discussion frequently turns to financing for pre-emptive initiatives. In May, the final report of the Productivity Commission Inquiry into Natural Disaster Funding Arrangements was publicly released.

It recommended the Australian Government gradually increase the amount of annual mitigation funding it provides to state and territory governments to $200m.

Asked about the government’s stance on the importance of increased mitigation funding as a method of addressing affordability issues in disaster-prone regions, the assistant treasurer points out initiatives that have already been undertaken in this space, including steps taken following the 2011 Queensland floods. “There’s also been a series of other initiatives through the $52m natural disaster resilience program; there’s a national bushfire mitigation program; there’s additional monies that have been provided for aerial firefighting capability, as well as a national emergency management projects grants program. All of these are designed to mitigate risks,” he says.

“Mitigation is important. The federal government needs to work with the state governments in this particular area. And while the Productivity Commission recommended increased mitigation funding, it didn’t provide exact evidence of that level of underinvestment in mitigation activities.

So more work needs to be done, but mitigation is clearly important and this is an area where federal and state governments need to cooperate.”

Stamp duties In March, the assistant treasurer told the Insurance Council of Australia (ICA) that insurance stamp duties were “one of the most inefficient taxes in Australia”.

On 21 July, the ICA announced it was urging all states and territories to commit to abolishing taxes on insurance. Rob Whelan,

24

CEO of the ICA, said in a statement that state and territory governments remained overly reliant on inefficient taxes.

Does Mr Frydenberg support Whelan’s call to state leaders? While his view remains that insurance stamp duties are inefficient (he points to recent state government reviews in NSW and Victoria that support the eradication of these taxes), he says, “More work needs to be done in this area, but when you start abolishing state taxes, the next question [asked] is, ‘Who’s going to fill the funding gap?’ These aren’t straightforward issues.”

Professional, ethical and education standards Talking about the Parliamentary Joint Committee’s Report and recommendations to lift the professional, ethical and education standards in the financial services industry, Mr Frydenberg emphasises that the government’s focus is on Tier 1 products, consistent with the PJC’s recommendations, and does not extend to Tier 2 products.

He says, “We will work with the industry to ensure that we get an enduring framework that boosts the professional, ethical and educational standards in the financial services space, and we’re focusing on Tier 1 products.”

The balancing act Seven months into his role as assistant treasurer, Mr Frydenberg says he’s had “very constructive dealings” with the insurance industry and will continue to do so. “My job is to listen to the various viewpoints, to maintain public confidence in the sector, to deal with elements of market failure in various sectors, and to respond as appropriate to various reports by governmentcommissioned experts.

“I’ve got to find a balance between, on the one hand, ensuring that we don’t have too much regulation and government-imposed outcomes and, on the other hand, ensuring we maximise consumer protections and enhance consumer outcomes. And it’s that balancing act which needs to be done in all areas of financial services, including … insurance.”

JOSH FRYDENBERG: BEFORE TREASURY

PARLIAMENTARY CAREER Became the federal member for the seat of Kooyong in 2010. He was elected to the House of Representatives at the 2010 federal election and re-elected in 2013

ADVISORY ROLES Worked as assistant adviser to former attorney general Daryl Williams QC, senior adviser to former foreign minister Alexander Downer, and senior adviser to former prime minister John Howard

EDUCATION Holds degrees in law and economics with honours, a Master of Philosophy degree in International Relations from Oxford, and a Master of Public Administration from Harvard

LEGALLY QUALIFIED Admitted as a barrister and solicitor of the Supreme Court of Victoria

OUTSIDE PARLIAMENT Is an accomplished tennis player, a board member of the Kids Tennis Foundation, and has a keen interest in photography, having held his first exhibition at a Melbourne gallery in 2008

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SPECIAL REPORT

YOUNG GUNS

YOUNG GUNS The talented young professionals of the insurance industry in Australia WELCOME TO the Insurance Business annual Young Guns report. We asked you to nominate young insurance professionals from brokerages, insurers, underwriters and insurance law practices around the country.

The result is an outstanding list of rising stars aged 35 and under, all of whom are working hard in insurance and have the potential to shape the industry of the future. A quick glance at the young gun profiles on the pages that follow should leave you in no doubt about the capable hands into which the industry will eventually fall.

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YOUNG GUNS 2015

VANESSA YAP Associate, Insurance Group HOLMAN WEBB LAWYERS

KRISTY HUMPHRIES Property underwriting manager – Victoria & Tasmania ACE INSURANCE Kristy Humphries’ current client list includes some of Australia’s foremost companies, and she’s tasked with underwriting some of the largest property risks in the country.

Humphries joined ACE in Brisbane and quickly established herself as a skilled team leader and expert underwriter of property risks.

She successfully re-profiled the Queensland property portfolio, expanding the distribution network and strengthening relationships with key brokers. In 2014, she secured over $3m in new business.

Humphries currently serves as Australasian joint vice president of the Young Insurance Professionals (YIPS). She’s a keen mentor of young underwriters at ACE, coaching and developing underwriting team members, assisting in their advancement through the various levels of ACE underwriting authority.

Humphries is also a strong advocate for women in insurance. Last year, she was a guest speaker at the Queensland Women in Insurance End of Financial Year Luncheon. It’s her aim to inspire other women in the industry to focus on their personal and professional development, in order to maximise their career potential.

Looking to the future, Humphries hopes to work in the Asian Insurance Market and join ACE’s senior management team.

Vanessa Yap has provided expert legal advice to the insurance industry for almost 10 years. Within two years at Holman Webb, she was promoted to associate level as a result of her commitment to the industry and client service standards.

Yap has responsibility for a complex portfolio, which includes heavy and domestic motor vehicle property recovery claims, general negligence and nuisance liability disputes, and demurrage and loss of profit claims. She’s co-instructed on two high profile cases that had a significant impact on the insurance industry and its operation. She was also instrumental in developing a free education program to assist brokers, underwriters and claims managers in understanding complex areas of insurance law.

Yap is a mentor to junior lawyers within Holman Webb and is part of the firm’s ‘Emerging Leaders’ program. She aspires to be a partner in the Insurance Group, with a strong mentoring focus on young female lawyers. She hopes to promote diversity in the workplace and lead by example by becoming the first Asian female insurance partner.

ATELE TOMA Senior underwriter – accident and health ARCH UNDERWRITING AT LLOYD’S AUSTRALIA Atele Toma has been integral in building Arch’s profile in the accident and health market in Sydney, and it’s said she’s cemented herself as one of the best sports personal accident underwriters in the market.

Toma has been tasked with growing a portfolio from scratch in the current soft climate, but has met that challenge head on and grown a profitable book of accident and health business in a short time, the result of having built strong and lasting relationships with her broker network.

Toma is focused on continued career development and learning, and hopes one day to be running Arch’s accident and health book in the region.

GEORGIA VAVASOUR Market manager, Australia and New Zealand HDI-GERLING With over 10 years’ experience in insurance, Georgia Vavasour is not one to maintain the status quo, constantly looking for new opportunities and thinking outside the square.

She heads up distribution for HDI-Gerling in Australasia, managing all market relationships across the business throughout the A/NZ region, developing strategic partnerships, leveraging multi-line placements and capabilities, delivering on HDI’s mid-market strategy and creating product-based initiatives.

Vavasour has successfully managed one of the largest management liability portfolios in the country, maintaining stable profitability and consistently delivering triple and double-digit growth over a fouryear period. She’s consistently been recognised for outstanding broker relationship management and creatively negotiating production obstacles.

A champion of diversity of thought within the industry, Vavasour is keen to lead and foster efforts with regard to the number of women holding senior positions in insurance.

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SPECIAL REPORT

YOUNG GUNS ROXANNE HEIBLOEM

JARED KAPLAN

Principal ROXANNE INSURANCE BROKERS (AR OF WESTCOURT GENERAL INSURANCE BROKERS)

Commercial state manager, Queensland ZURICH

Roxanne Heibloem started her own company in August 2014, as an authorised representative of Westcourt General Insurance Brokers.

Starting as the sole broker, she now employs three staff members and has opened her own office.

The company has experienced significant growth in its first year, and that growth looks set to continue with the engagement of a further AR. Heibloem is a believer in work/life balance, reflected in her company culture. She has created opportunities for her employees to work flexible hours that accommodate family and other commitments. Given research indicates that younger workers will increasingly demand more flexible employment arrangements, it’s employers like Heibloem who are perfecting the template for the kind of business that can meet those expectations.

Heibloem hopes that, as her business continues to grow, she’ll be able to support and mentor young up and coming brokers in general insurance.

JACINTA SIMPSON eBusiness advisor, intermediary distribution QBE AUSTRALIA Jacinta Simpson provides training and support for QBE’s electronic platforms throughout Western Australia.

In 2011, Simpson completed QBE’s graduate program and, in 2013, became part of the QBE eQuip program, which invests in the development of the next generation of insurance leaders. She has also participated in NIBA’s mentoring program and was nominated last year in QBE’s recognition program, which rewards employees who consistently live the insurer’s values.

Most recently, Simpson has been on secondment leading a project across WA to improve QBE’s processes for brokers. That project aims to deliver a more streamlined and efficient business system for both brokers and the organisation.

Simpson looks forward to continue working with brokers to assist them in achieving their business aspirations. She’s passionate about the intermediated sector and hopes to become a leader in the space.

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Jared Kaplan leads Zurich’s Queensland operation and is known not only for his high energy and passion for promoting a high performance and results-driven culture, but also for his flexible approach to work where the focus is on output rather than hours.

In 2013, Kaplan was selected to be part of Zurich’s future leaders program. Since then, he’s exceeded sales targets across multi-lines and managed to turn around performance of previously non-producing brokers GWP into multimillion dollar brokers. He continuously delivers significant new business and retention results.

He has set his sights on securing an executive management role within the next seven years and is also interested in pursuing global opportunities. Kaplan advocates for a higher level of professionalism and more holistic approaches to industry challenges.

SELOUS NYAKUNU Casualty underwriter AIG Selous Nyakunu’s passion and drive to deliver results have put him on the path to becoming a future leader at AIG. His role requires him to explore new opportunities for business growth through other commercial lines including property, environmental and financial lines. He’s also responsible for managing market-facing relationships with brokers.

Early in 2014, Nyakunu secured a large deal for a multinational telecom account, the eventual result said to be a testament to his resolve, industry knowledge and relationship management skills. Nyakunu has also been instrumental in re-engaging a number of dormant relationships with key mid-market brokers.

Nyakunu hopes to one day return to his birthplace in Africa and continue to deliver the One AIG approach he’s said to live and breathe every day.

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YOUNG GUNS 2015

TATE HARRIS Account executive ALLINSURE (CAR OF INSURANCE ADVISERNET AUSTRALIA)

AMY STEAD National relationship manager, Steadfast CI partner solutions, broker business, IAG COMMERCIAL INSURANCE Amy Stead holds one of the most important roles in CGU’s broker business, tasked with managing the insurer’s relationship with Steadfast, Australia’s largest broking network. Insurance Business has been told Stead’s experience, industry knowledge, passion and drive for insurance and the value it brings to customers and communities are what makes that relationship such a success.

Last year, Stead led a strategic analysis of the Steadfast relationship when the CGU and Lumley brands were being brought together. Her work enabled CGU to maintain its engagement with Steadfast during the integration of the Wesfarmers insurance businesses, ensuring the momentum and value of the relationship was maintained.

Described as a huge supporter of the broker distribution channel, Stead was previously a member of NIBA’s mentoring committee. She says she’s determined to be a role model for the industry and to lead and shape it in whichever capacity she can.

In April, Tate Harris was announced as our eighth-ranked broker in the 2015 Elite Brokers Top 30 list.

Harris has spent over seven years in broking and has worked with a broad range of clients across a number of industries. He specialises in construction and property-related risks. Harris is currently mentoring a team of three staff members. His colleagues say he’s developed a strong skillset in tailoring risk solutions to suit different business and industries. They also report that his dedication to his work and drive to provide quality advice and service to clients makes him a highly valued member of the allinsure team.

Looking ahead, Harris is looking to work towards earning a business partnership and understanding the essential elements that help drive a business.

SCOTT WOODWARD International program sales specialist, Global corporate division ZURICH Scott Woodward is a high achiever in and outside of insurance.

He works with customers and broking partners to ensure the Zurich Global Corporate proposition is delivered, ensuring the effective structuring, production coordination and servicing of global programs worldwide for multinational companies.

After graduating from high school, Woodward was selected by Zurich to undertake a cadetship that allowed him to experience and work in a number of roles. He secured his current role after completing a global business course at Prague’s Charles University.

Seen as one of Zurich’s rising stars, Woodward cites his greatest achievement to date as exceeding expectations by consistently retaining and growing his portfolio.

He is a member of NIBA’s YP committee, working with his colleagues to develop strategies for attracting more talent to the industry, and is part of NIBA’s mentoring committee.

Not only is Woodward an industry young gun, but also an Australian representative rower. While he’s looking to gain experience in a major international insurance market, he’s also working towards selection for the 2016 Olympic Games in Rio de Janeiro.

KRISTY MARTIN Practice principal INSURANCE ADVISERNET MERIMBULA (CAR OF INSURANCE ADVISERNET AUSTRALIA) Kristy Martin is described as being broker of choice on NSW’s Sapphire Coast, serving as an inspiration to others and confirming the old adage that anything is achievable at any age if you set your mind to it. Martin’s career in insurance began at the tender age of 16. After gaining valuable

experience working at a Sydney brokerage, she met with Insurance Advisernet Australia and subsequently moved back to her hometown of Merimbula and started her own business out of her parents’ spare room.

She was just 22-years-old at the time.

Today, 10 years later, Martin runs the now well-established regional practice out of professional offices and employs three staff members, having experienced solid and consistent growth over the decade.

Martin remains dedicated to supporting the industry via peer support to her colleagues and staff.

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SPECIAL REPORT

YOUNG GUNS KYLIE BARRS National relationships manager EMPLOYERS MUTUAL Kylie Barrs is responsible for developing and managing Employers Mutual’s key intermediary, association and corporate employer relationships nationally. Leveraging her expertise as an occupational therapist, she’s a trusted advisor to intermediaries and clients across the country, assisting them to address risks within their businesses and driving significant savings to her bottom line.

Barrs has grown her salesforce over the years

JAMES JESSUP

KATE FAIRLEY

Account director, workplace risk practice WILLIS

Senior insurance broker/ Branch manager SIMPLEX INSURANCE SOLUTIONS

James Jessup is responsible for managing the workers’ compensation program for a number of national businesses. He’s one of the youngest account directors within Willis’ Australian operations.

In 2014, Jessup won more than $200,000 in new revenue for the group. Earlier on, he was involved in winning a tender for a top 100 company and has since then been the day-to-day contact for that company. The company has a complex national workers’ compensation program with premiums in excess of $20m.

At the start of the year, Jessup was promoted to account director in recognition of his impressive skill and performance.

Viewed as an emerging leader by the organisation, Jessup’s performance is ensuring Willis’ performance in the workers’ compensation market is being noticed and that his team is highly regarded.

Kate Fairley is a name with which many in insurance will already be familiar.

Fairley is the creator/author of the ‘Get informed’ webpage and suite of products, specifically designed to assist brokers in engaging on a more positive level with clients and finding a more meaningful and effective way to converse with consumers about a variety of issues.

She’s now joined the team at Simplex Insurance Solutions, and is charged with leading Simplex’s Kyneton office. She has primary responsibility for the growth of the Kyneton book of business. Since commencing, Fairley has grown that book of business and fostered positive relationships in a regional area which, according to her colleagues, has very much been driven by a ‘who you know’ culture.

Fairley’s colleagues describe her as exuding passion and say she’s been instrumental in arranging a number of educational workshops and seminars. Fairley is determined to educate others and ensure consumers receive the best advice available.

ADAM HINES Practice principal AETHER INSURANCE & RISK (CAR OF INSURANCE ADVISERNET AUSTRALIA) Adam Hines has worked in insurance for 15 years, having chalked up extensive experience in both the local and London markets.

Hines is passionate about the reputation and future of the industry and, as a senior professional, is committed to its growth and development.

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and currently heads up a team of 12 direct reports. She’s a strong advocate for the development of customer and stakeholder innovation. Last year, Barrs was part of the Employers Mutual NSW tender team, successfully increasing the organisation’s market share in workers’ compensation by 15 per cent.

Barrs is also a founding member of the Employers Mutual Women in Leadership program, which endeavours to mentor young women in insurance and help them to become leaders and innovators while driving results for the business and customers.

Recently, he established his own business as a professional broker (AR) with Insurance Advisernet Australia. The business has experienced solid growth over the past year.

Hines won the 2014 NIBA NSW/ACT Young Professional Broker of the Year award and is a member of the NIBA YP NSW Committee.

In September, he will be a guest speaker at the NIBA Convention in Melbourne, presenting on how to run a successful AR business.

Hines is keen to mentor young brokers across Australia, particularly in regional areas. He’s determined to play an active role in the insurance industry and its development.

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YOUNG GUNS 2015

SEAN MCDERMOTT Account executive EVEREST RISK GROUP (CAR OF INSURANCE ADVISERNET AUSTRALIA) Sean McDermott’s insurance career involves a far wider focus than simply his core responsibilities.

McDermott works with the Australian Men’s Shed Association (AMSA) to help its members heighten their knowledge around risk and safety.

In both 2013 and 2015, he was invited to be a keynote speaker at their national conference.

Colleagues tell Insurance Business McDermott has been tasked with developing and writing industry materials in previous roles for different organisations, all with a view to assisting other aspiring industry professionals to improve their ability to perform their roles. He’s also helped other brokerages develop systems to empower their staff to be efficient and effective.

McDermott is currently undertaking a Bachelor of Business and, in 2018, hopes to commence a Doctorate of Business. He’s passionate about the work he does and is especially proud of what he’s achieved to date.

JAMES HARDING Senior account executive, international health MERCER MARSH BENEFITS James Harding is an Adelaide-based senior account executive. An acknowledged specialist within the international health insurance arena, Harding recently secured a significant new national account win, and has retained multiple corporate accounts and placed significant new business in a climate of intense competition.

Harding is actively involved with a number of Young Professionals insurance networks and is keen to develop up and coming insurance professionals on both a personal and professional level.

Harding is determined to be recognised by his clients as a trusted EB advisor and to eventually take on a leadership role.

DANIEL ROBINSON Associate CLYDE & CO Daniel Robinson is an associate in the insurance and reinsurance team at law firm, Clyde & Co. He advises and acts for insurers and reinsurers on a range of matters, his experience including matters in D&O, professional indemnity, warranty and indemnity and ISR insurance. One colleague describes Robinson as a “truly well-rounded individual, who will contribute greatly to the insurance industry.”

Robinson is involved in a number of industry organisations. He’s a member of the Australian Insurance Law Association’s (AILA) Young Professionals Committee and is particularly interested in encouraging young professionals and recent graduates to consider and take up careers in insurance, as well as encouraging young lawyers to contemplate practising insurance law.

Robinson ultimately hopes to become a partner of the firm and, in the meantime, to broaden his experience in insurance markets locally, regionally and internationally.

KATRINA HICKSON General manager, product and service innovation CENTREPOINT ALLIANCE PREMIUM FUNDING Katrina Hickson has been identified by her seniors as a high potential employee.

Over her eight-year career, Hickson has grown from having operational loan processing responsibilities to a business-wide focus. Currently among her responsibilities, she has national account leadership of the Steadfast Group and other major accounts. She’s said to have driven operational excellence, which has impacted the company’s ability to gain market share. She’s also served as project leader for the launch of Centrepoint Alliance in New Zealand.

Hickson recently enrolled to study for an MBA (accelerated course) and it’s her aim to be CEO of Premium Funding for Centrepoint Alliance within five years. She’s proud to have a career in a business closely aligned to the insurance industry and is following in the footsteps of her late father, Craig Rosender, who helped to pioneer risk and safety initiatives across the transport industry.

KRYSTAL LINNAN Technical consultant CI VIC TECHNICAL AND ASSURANCE, CLAIMS IAG COMMERCIAL INSURANCE For Krystal Linnan, nothing is said to be too hard.

Linnan is a technical claims specialist, a key operational role requiring her to ensure CGU’s Queensland claims teams apply and interpret policies appropriately, that any issues are escalated correctly and that CGU is fulfilling its policy obligations.

Linnan also coordinates the ‘Contentious Claims Panels’ (CCP) for the CGU, Lumley and

SUU brands, which follow major weather events.

Her colleagues describe her work as exceptional, and say it ensures CCP determinations are well considered, balanced and, in all instances, the correct decision for the customer and broker.

Linnan has delivered a range of training programs across both claims and underwriting to increase the technical capability of IAG Commercial’s teams. Her goal is to be a successful and inspiring woman in insurance by being an expert in terms of her technical skills, demonstrating leadership by coaching and mentoring others, and having the flexibility to adapt to the continual changes in the insurance industry.

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SPECIAL REPORT

YOUNG GUNS TANYA KLIESE Business development manager and liability underwriter, Victoria HIGH STREET UNDERWRITING AGENCY Tanya Kliese’s dual role involves developing and maintaining relationships with Victorian brokers, as well as providing liability quotes as requested.

Kliese is currently joint vice president of the Young Insurance Professionals (YIPS) committee in Victoria, participated in the 2015 Ron Shorter Memorial Public Speaking Awards, and was recently announced as High Street Underwriting’s 2015 sales person of the year. While she’s been with the company for less than a year, her colleagues report that she’s been able to autonomously develop and grow its Victorian business and has made significant inroads within the market.

Through her YIPS role, Kliese enjoys connecting young people with other like-minded professionals and is passionate about encouraging their development and growth.

Kliese hopes she’ll be able to progress to a semiexecutive position within High Street Underwriting, and have the opportunity to demonstrate her ability to both strategise and lead.

LUKE WARE State manager, South Australia WILLIS He’s an Ironman triathlon competitor and an accomplished musician, who’s released four albums and toured internationally.

And then there’s his insurance career!

Luke Ware manages Willis’ South Australian branch, overseeing a $3.6m budget and 16-member team.

Ware has created a strong sales culture and accountability for growth, which has culminated in SA having an exceptionally strong new business pipeline that has set the branch up to exceed budgets. Ware has leveraged national industry strengths to successfully secure major new business wins, including the largest corporate renewable new business win for Willis in Australia last year.

Ware has earned commendations from clients for service deliverables and program structure that led to a 98 per cent retention rate, despite some significant challenges.

Ware is currently participating in CGU’s Platinum Leadership Program. He’d like to gain experience in the Asian broking market, and is keen to develop his people management skills and push himself outside of his comfort zone. He’s passionate about assisting others to succeed.

MICHELLE RUDD Operations manager ARCH UNDERWRITING AT LLOYD’S AUSTRALIA Michelle Rudd’s achievements at Arch Underwriting are widely recognised.

At 28, Rudd was handling all aspects of compliance and operations of a start-up and has continued to do so for the past five years. It was through self-motivation and hard work that Rudd was said to have reinvented herself from claims manager to operations manager.

She’s described as possessing the enviable mix of attention to detail, client focus and strong service/work ethic, and it’s those attributes that now see Rudd contributing to Lloyd’s strategic agenda in Australia. A colleague told Insurance Business they believe Rudd is destined for significant management roles in the industry, already understanding all aspects of running an insurance company at her young age.

LUKE GRASIC Business development underwriter SPORTSCOVER Luke Grasic’s role requires not only promoting and developing the business, but also creating product proposals for brokers and their clients.

Grasic is said to work extremely hard on creating and maintaining relationships with brokers. He’s managed to

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exceed his budgets off the back of minimum premiums and, in the last calendar year, wrote five times more business in Tasmania than any of his colleagues. In fact, he wrote more new business than anyone else in the company.

We’re told Grasic has set the standard for the rest of the Sportscover team when it comes to building relationships, getting new business opportunities and keeping retention figures high.

Recently, Grasic was declared runaway winner of Sportscover’s staff-voted employee of the year award, attesting to the high regard in which he’s held by colleagues across the business.

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YOUNG GUNS 2015

SAMANTHA BAKER Senior insurance broker/Trainer SIMPLEX INSURANCE SOLUTIONS Samantha Baker is described by her manager as “the cornerstone of all things construction related” and Simplex’s very own “internal construction guru”.

Baker is highly regarded by a number of underwriters and insurers, and has been a key contributor to the development of a recent MECON construction scheme. Two years ago, she was awarded the Norm Dyer Award of Excellence and, more recently, was acknowledged by ANZIIF for exceptional academic results in her Diploma studies.

Over the past six months, Baker has taken part in a leadership training program to complement her technical knowledge with the additional skills necessary for successful leadership and management skills.

Baker is an important contributor to the effective operation of Simplex and is keen to further develop her skills in order to progress to more senior positions.

Her contributions to date have already resulted in development and further enhancement of construction scheme wordings – ultimately, a benefit to the end consumer.

ALLAN SUDALE Development manager NSW CALLIDEN COMMERCIAL Allan Sudale’s Calliden colleagues tell us he’s becoming a positive influence on the industry through his innovative solutionbased thinking, coupled with his positive attitude.

Sudale has succeeded in securing large opportunities for the business and developed these with intermediaries to provide better solutions for clients. Strong negotiation and relationship skills are said to have put Sudale in good stead to effectively overcome any challenging situations.

In the short term, Sudale will be focusing on his development in sales, distribution and relationship management. Mid to long term, his career goal is to have a leadership role in the industry.

ANDREA DUNKERLEY Operations manager – Claims, service, retention and underwriting BIZCOVER Andrea Dunkerley has been a defining member of the BizCover team, significantly contributing to the business’ growth through practices, policies and procedures she has driven and implemented.

Dunkerley started as a sales consultant in the call centre in 2010 and has since expanded her knowledge in various lines of insurance distribution, as well as in all financial services insurance products.

She’s now regarded as a subject matter expert internally.

Recognising her standing within the business, Dunkerley was selected to participate in QBE’s equip program. She is working on developing her leadership and management skills so that she can act as mentor and coach to the team. Over the years, Dunkerley has seen the company grow from three employees to over 30 and has been a key part of the on boarding process.

It’s Dunkerley’s aim to one day become a leader in the insurance field. She constantly pushes for innovation within the business to improve the overall customer experience and drive business efficiencies, and has worked tirelessly with BizCover’s IT and marketing team in improving the customer journey from start to finish.

ARNE BOOYSEN Senior underwriter – professional indemnity/directors & officers LONDON AUSTRALIA UNDERWRITING (LAUW) When Arne Booysen was employed by LAUW in 2009, it was to focus on professional indemnity insurance. It wasn’t long before he began crossselling management liability with the professional indemnity placements and, within two years, he was promoted to senior underwriter, having grown the management liability book by 25 per cent, alongside his professional indemnity responsibilities.

Booysen’s colleagues say his service ethos has created strong broker relationships, which have enabled him to not just maintain but grow LAUW’s presence in the market.

Booysen hopes to have increased exposure to the emerging products side of the business, including cyber liability and technology. He constantly strives to be a valuable member of the LAUW team with a view to eventually becoming part of the senior management team, and taking the company on to greater success.

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SPECIAL REPORT

YOUNG GUNS ANGELA O’REILLY National senior underwriter, Accident and Health DUAL AUSTRALIA Angela O’Reilly is experienced in claims and underwriting, and manages a nationwide portfolio worth $5m.

Early on at DUAL, she identified an opportunity for the organisation to develop a new product to address a market gap. This new coverage is currently being developed and will be released in the coming months.

It’s said O’Reilly was instrumental in the innovation of accident and health claims handling and response at DUAL, where she set up a medical and return to work response for personal accident claimants. It provides direct medical support to individuals and has resulted in immediate and substantial claims cost savings and future lower premiums for clients via lower loss ratios.

O’Reilly’s role also extends to team management, including mentoring and training of DUAL’s accident and health underwriters.

In the future, O’Reilly hopes to become part of DUAL’s senior leadership team, to be involved with portfolio management, to continue DUAL’s portfolio expansion into other regions, and to introduce and develop new products to the market.

CHRIS WEBBER Managing director WEBBER INSURANCE SERVICES (AR OF WESTCOURT GENERAL INSURANCE BROKERS) Chris Webber has worked in insurance for over 10 years.

In 2011, he decided to set up his own business as an AR. Starting out as a sole broker, he’s grown his business to a team of four, with over 1,600 clients. It’s now one of the largest Westcourt ARs in Australia. It’s said Webber has managed excellent growth of the book while managing all small business affairs.

Webber also serves as a mentor to his brother, Daniel, who ranked in Insurance Business’ top 30 Elite Brokers in 2015. As Westcourt AR Committee chairperson, Webber played an important role in getting the Westcourt Premium Funding JV in 2014. As AR committee member for SA, he continues to be a great source of information.

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BRAD LYNCH Regional manager, NSW/ACT RESILIUM Brad Lynch leads a team of five business managers, tasked with growing a profitable general insurance business through the Resilium Adviser Network.

Lynch was a key member of the team that established Resilium Insurance Brokers and helped to shape and deliver the Resilium value proposition.

Lynch’s team has achieved solid growth.

In 2014, he oversaw Resilium’s largest-ever account win.

Lynch is regarded as a key business leader by his colleagues. The team has achieved exceptional internal engagement and enablement scores and Brad’s own ‘leader index’ scores are also extremely high.

Prior to his current role, Lynch worked as a business development manager with Vero and achieved double-digit growth on his portfolio each year. He spent more than two years on the NIBA YP Committee in NSW. Lynch is keen to progress his career within the Suncorp Group and, longer term, aspires to senior management positions.

DANIEL GRONERT Chief executive officer PRINCIPAL FINANCE He once harboured ambitions to become Australia’s answer to Jerry Maguire, which led him to start a career with a global sports management firm. It was down the track that Daniel Gronert began working with Principal Finance as Queensland business development manager. In January 2014, he transferred to Adelaide and was appointed CEO at the age of 33.

Gronert oversaw premium funding growth of 19 per cent in 2014/15 and a 13 per cent increase in the number of supporting brokers to a total of 530 nationally.

As CEO, Gronert is focused on continuing to make premium funding even easier and more seamless for brokers and their clients.

Gronert’s career to date has encompassed roles in the UK and Australia, working in a variety of capacities. A man with ingrained entrepreneurial ambition, he aspires to double Principal’s market share within five years through further strategic partnerships with brokers and AR networks.

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YOUNG GUNS 2015

LUKE SCOTT

SHANE CROWLEY

Senior underwriter LONGITUDE INSURANCE When Luke Scott began at Longitude Insurance, it was him and his managing director. In the space of three years, Scott has helped to grow the agency to 65 employees, working in five offices in four states, as well as being a key participant in the business’ GWP growth from $10m to $70m over the same period.

Scott has helped secure a number of large accounts through careful underwriting consideration, including a whole account worth in excess of $300,000 and another account with assets exceeding $300m.

Scott’s colleagues tell us he’s helped established Longitude as one of the most trusted professional brands.

Recently, Scott participated in the 2015 Emerging Leaders Program. Moving forward, he wants to continue building up his knowledge base in the niche strata market. His general goal is to hold his current position at a national level and be responsible for an overall portfolio.

MARTIN GOMEZ Analyst NEWSURETY Martin Gomez is an underwriter of surety bonds, required to analyse complex transactions, review detailed contracts, compile and interpret company financials and provide insurance brokers with a succinct understanding of the risk matrix for their clients.

Gomez has been a key part of key transactions at NewSurety. This includes a $150m structured surety transaction – that involved working with both Australian and international financial institutions and an international broker – and several intermediated surety bond transactions that have totalled more than $100m.

Gomez is committed to growing market awareness of insurance-based solutions to non-traditional insurance markets. His career goals centre on the further development of expertise in bancassurance.

Director/insurance consultant ABLE INSURANCE SERVICES NT (AR OF WESTCOURT GENERAL INSURANCE BROKERS) Shane Crowley manages a large domestic insurance book, as well as catering for SME business insurance needs, and has achieved a higher than 50 per cent increase each year in premium growth.

He’s set that level of growth as a key goal going forwards.

In 2009, while studying, Crowley established a financial planning arm for the Able Finance business and, in 2012, through Westcourt General Insurance Brokers, began a general insurance arm.

Crowley is said to have become an integral figure in the Northern Territory’s insurance and financial services industry. He’s aiming to improve the Territory’s industry to heighten competition among insurers and provide the best outcomes for clients.

Crowley is seeking to increase the Able Group’s foothold in Darwin, with a view to becoming a one-stop shop for clients’ finance and insurance needs.

SIMON ELLIOT Practice principal MOODY KIDDELL & PARTNERS (INSURANCE) (CAR OF INSURANCE ADVISERNET AUSTRALIA)

JEMMA GATES

Simon Elliot started with MKP eight years ago and was promoted to a leadership role within 18 months.

Initially, the business focused on the mobile plant and equipment and civil contracting sectors. But as it’s matured, Elliot has sought out other sources of business and gained traction with a number of referral partners, introducing financial lines and large property accounts. This diversification has led to increased stability and profitability.

The hard work of Elliot and his team has led to significant recognition within the Insurance Advisernet Australia (IAA) network, including four nominations for IAA’s AR of the year award and a runner-up finish for Allianz’s AR of the year.

Elliot prides himself on being able to maintain and lead a strong, motivated, competent and award-winning team. He aims to develop a strong and respected insurance team in Brisbane and Melbourne, completing his goal of making the business a national company.

For three years, Jemma Gates has managed a very sizeable book of retail-only business. Before her time, it was considered a book of business simply offered to clients as support to their commercial portfolio or standalone policies that no one wanted to insure. Gates has turned it into a successful profitable portfolio of clients, from strata and standalone home and contents to high net worth clients with no commercial business but a need for a professional service to manage their personal needs. She’s overcome a number of market difficulties to secure a loyal client base.

Gates is said to have helped prove that this retail business is not only profitable, but that retail clients are interested in what brokers have to offer in this space from both a service and product perspective.

Retail manager AUSTBROKERS COAST TO COAST

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FEATURES

D&O INSURANCE

THE COST OF DOING BUSINESS It offers crucial protection, but how well is it understood? A specialist shares his expertise in D&O insurance In association with

AROUND 700 separate legislative provisions – at both federal and state and territory level – impose personal liability on directors and officers for the conduct of their organisations. It’s a conceivably terrifying reality, reinforcing the necessity for a company’s chief decision-makers to be protected against their potential exposures.

“D&O insurance is a must-have for any past or present director, officer or senior manager of an organisation, regardless of the size and nature of their operations,” says Jayson Symonds, national manager of financial lines at DUAL Australia. And he highlights that it’s not just an individual director or officer who’s exposed.

“Claims can be made against the director or officer’s spouse or estate, and family members could be held personally liable for expenses associated with settling a claim against an organisation.”

Symonds tells Insurance Business it’s important that individuals start thinking about their potential exposures before agreeing to take on such a role. He says, “Any prospective director, officer or senior manager of an organisation should enquire about the insurance arrangements in place for the

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organisation they’re considering joining as part of their due diligence process prior to accepting any position.”

Misconceptions It’s commonly thought that only large public companies require D&O insurance and, according to Symonds, that misconception is largely fuelled by the publicity typically surrounding large securities and shareholder class actions. “All Australian companies –

“D&O insurance is a must-have for any past or present director, officer or senior manager of an organisation, regardless of the size and nature of their operations” Jayson Symonds , DUAL Australia large or small, public or private – must abide by the Corporations Act 2001 … and all directors of the organisation are subject to the same statutory and common law duties,

irrespective of the size of the entity they sit on the board for.

“All directors and officers have the same statutory and common law duties and

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responsibilities. They have a duty of care, skill and diligence, and if they breach these duties, then they open themselves up to the attention of regulators and potential litigants.”

He says, in his experience, there’s a much higher claims frequency from nonshareholders (such as customers, creditors, competitors and regulators) than there is for shareholder claims. “Individually, these actions rarely get a mention in the press; however, cumulatively they’re a much larger exposure for Australian businesses,” he adds.

The need for smaller companies to have coverage cannot be underestimated. “Smaller

organisations are not immune to litigation, especially during a time of depressed economic conditions, and they’re less likely to be in a position to adequately fund their defence when required,” says Symonds. “D&O cover not only protects against settlements but also provides what is perhaps of more relevance to the smaller entity – access to, and funding of, a high-quality legal defence that may be otherwise out of reach for the smaller organisation.”

Another common misconception to which many subscribe is that organisations such as not-for-profits, charities and trusts are immune

from this type of litigation. “All organisations can be investigated and sued for the way they are managed,” Symonds clarifies.

And then there’s the assumption that leaving an organisation means also leaving your D&O liability behind. “You can still be investigated and sued for your actions whilst you were at the organisation,” Symonds says. “This is why retired director cover and run-off cover is critical for anyone who has ever served on a board.”

Employment practices liability When it comes to underappreciated exposures, Symonds opines that employment practices

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FEATURES

D&O INSURANCE liability (EPL) is high on the list. “It’s a relatively easy and inexpensive cover to get if you are a small company as it’s incorporated into most management liability policies,” he says. “However, very few medium or large corporates purchase EPL cover on a standalone basis.”

And that’s concerning, says Symonds, because it’s the larger organisations at greater risk, given their much larger workforces, where there tends to be less control over line managers. “They may have all the appropriate policies in place, but can they confirm all their

line managers are adhering to them?”

Symonds say DUAL’s experience over the past decade has shown a steady increase in the frequency of employment practices claims relative to other areas of corporate liability.

He says in the past five years the figure has crept up by 10% so that employment practices claims now account for 40% of all claims in the D&O portfolio.

Unfair dismissal cases now cost around $725m per year, and that figure continues to rise. Referring to recent quarterly statistics published by the Fair Work Commission,

THE LEGAL FRONT “Directors’ and officers’ liability is a constantly evolving space, and almost every day something new requires the attention of D&Os and their insurance partners,” says Jayson Symonds.

He identifies the following as current key legal developments in the space:

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“The ASX has recently updated its guidance note on Continuous Disclosure – Guidance Note 8, which is particularly relevant for any listed company (large or small) and provides additional guidance regarding earnings surprises and post-balance-date events. The failure of companies to appropriately follow this guidance could lead to regulatory and shareholder action.”

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“The ASX Corporate Governance Council released its 3rd Edition of its Corporate Governance Principles and Recommendation last year, and this will be the first time that many ASX-listed companies will be required to report against the updated guidelines. As this forms part of a company’s disclosure obligations, it attracts the attention of regulators, shareholders, market analysts and a variety of other stakeholders, including potential customers and clients.”

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“ASIC has recently announced its key focus area for 30 June 2015 financial reports as being impairment testing and asset values,

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accounting policy choices, and material disclosure of information in financial reports. Organisations need to ensure they pay due care and attention to their financial position and disclosures, as regulators, shareholders and creditors will all be looking at this with interest when making decisions with respect to the organisation.”

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“Insolvent trading is an issue for both public and private companies and is always on the radar for corporate Australia … The Productivity Commission has recommended that the insolvent trading provisions in the Corporations Act 2001 be amended to include a safe harbour for directors in certain circumstances and, if adopted, will be very welcome and useful in assisting companies stay afloat during troubled times.”

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“The introduction of the Australian Privacy Principles in 2014, the federal government stating that it is committed to introducing a mandatory data breach notification scheme by the end of 2015, and the March 2015 ASIC Cyber Resilience Health Check report highlight that [cyber liability] is a rapidly evolving exposure that organisations of all shapes and sizes must address to not only ensure protection against regulatory investigations and litigation, but to also ensure continuity of the organisations’ day-to-day operations.”

Symonds says 3,622 unfair dismissal applications were lodged with the commission from January to March of this year. “Generally, employees are experiencing a higher success rate now than through the previous industrial relations system,” he says, and adds that 90% of those unfair dismissal cases were settled before a decision could be made. “What that highlights to me is that it’s clear that ‘go away’ payments are increasing and rife amongst businesses who, it would appear from the stats, are of the opinion that it’s more costeffective to make a commercial decision to

“Climate change is an emerging area of risk that will eventually start to impact underwriters’ pricing models, risk appetite and policy terms and conditions” pay a few thousand dollars so they can simply get back to running their businesses, rather than defending the claim.”

Cyber risk As the commercial world changes, so too does the nature of the responsibilities with which directors and officers are charged. It’s crucial that companies recognise the need to invest in robust cyber protection measures, covering both the pre- and post-event periods. For the first time recently in the US, company directors have been found to be in breach of their duties due to an alleged failure to take sufficient steps to safeguard key data from cyberattacks and breaches. “The Target Corporation data breach resulted in two shareholder derivative suits and

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4/08/2015 3:56:39 PM

FEATURES

D&O INSURANCE approximately 140 lawsuits from consumers, banks and payment processors,” says Symonds. “I understand these were the first derivative suits brought by shareholders against the directors and officers of a company, alleging a failure to maintain adequate cybersecurity and a failure to manage a breach appropriately.”

On the cost of the actions, Symonds says the last update he saw on Target was that a US$10m (A$13.62m) settlement to customers had been agreed on (though it is currently subject to court approval) and Target has

PENALTIES RECENTLY IMPOSED ON AUSTRALIAN COMPANIES AND DIRECTORS Not only do directors and officers face the risk of becoming parties to class action settlements, but both the Australian Competition and Consumer Commission (ACCC) and the Australian Securities and Investments Commission (ASIC) have imposed very significant financial penalties against many of these individuals. Jayson Symonds highlighted some recent examples for Insurance Business.

• May 2015: The ACCC penalties ordered the sole proprietor of an online electronics retailer to pay $100,000 for misleading customers.

• April 2015: The ACCC ordered a utilities company to pay $700,000 for misleading representations.

• April 2015: The ACCC ordered an online group buying website to pay penalties of $600,000 for false or misleading representations.

• February 2015: ASIC was successful in obtaining a civil penalty of $18.975m against a payday lender. According to Symonds, this represents the largest civil penalty ever obtained by ASIC.

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incurred US$256m (A$348.7m) in related expenses to date, of which only about US$90m (A$122.6m) constitutes an insured loss.

Symonds says that, in time, data protection will emerge as one of the greatest exposures for an organisation. “There is some evidence to suggest litigants are preparing a case against Home Depot as we speak, and market commentators are watching this area with interest as it will be a good indicator of what may happen in the future for data breachrelated litigation,” he says.

This raises the question as to whether D&O coverage actually extends to any breaches of duties related to data protection.

“Traditionally, D&O policies are usually silent on the issue of cyber risk,” Symonds says. “They neither specifically include nor

exclude cover. However, there may be some interesting consequences of the crafting of cover with regard to fines and penalties or the application of professional services exclusions moving forward.”

Climate change While it’s imperative for directors and officers to be aware of their still-crystallising responsibilities in respect of cyber, there’s also an increasing need for directors to be cognisant of the risks for their companies around climate change. “Climate change is an emerging area of risk that will eventually start to impact underwriters’ pricing models, risk appetite and policy terms and conditions,” Symonds says. “This topic does seem to have gained significance recently after

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FEATURES

D&O INSURANCE effects for directors and officers of listed companies through securities class actions.”

Symonds stresses that some liability hurdles need to be overcome with respect to climate change liability. “Climate change liability is unique due to the nature of the loss and damage potentially suffered; challenges with establishing causation and responsibility for impact, particularly where a claim relates to failure to act rather than the effect of positive actions; uncertainty regarding the likelihood of future impacts, which affects long-term planning; and the evolving body of scientific information which underpins decision-making.”

Watch this space

“The broker needs to understand their client’s unique operating structure, the industry their client operates in, the legal landscape they are subject to, and what their client’s plans are for the future” environmental advocate groups wrote to board members and executives at some of the largest oil and gas companies (and their D&O underwriters) last year, questioning cover and their personal liability where lawsuits are filed over the deliberate dissemination of climate-related misinformation, including risk to shareholders.”

Since 2010, Symonds says, US companies have been required to make periodic disclosures of financial risks posed by climate change, and to include climate change risk disclosures in their annual reports. He says,

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unfortunately, very few companies are adhering to that requirement, which he attributes to the lack of significant penalties for non-compliance.

Speaking specifically about Australia, he says, “Many research units at investment managers now have dedicated ESG (environmental social and governance) analysts, and this research is now mainstream and one of the most important research areas for superannuation funds. Poor practices in this area can significantly impact the valuation of a company, which can then have flow-on

Asked about other key developments and activities going on in the D&O space, Symonds reveals some of the areas on which he’s keeping a watching brief. “With all of the increased merger and acquisition and equity capital market activity going on in the local market, organisations need to ensure they conduct appropriate pre- and post-acquisition due diligence and ensure they have all adequate protections in place should things not go to plan,” he says. For private companies about to go public, he says there’s a substantial amount of compliance they may not be expecting, as well as the possibility of a potentially huge cultural shift.

“In M&A transactions when problems arise in the integration process, this can have a disastrous impact right across the risk spectrum, resulting in everything from securities class actions for publicly listed companies through to culture wars for small to medium-sized enterprises,” Symonds says.

He warns that the potential consequences can include EPL disputes, talent retention issues, workplace health and safety issues, and the diminution on value for shareholders.

Symonds also mentions the recent hive of media attention around high-profile organisations alleged to have been involved in corruption. “Not only does this have the obvious liability exposures but there are policy

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response considerations for directors and officers through the application of a ‘wilful dishonest conduct’ exclusion, which is standard across all D&O polices.” But he adds that of even more interest – yet rarely mentioned – are the indirect consequences on a business that flow from corruption, including loss of customers and difficulties in recruitment and retention. “In the 2015 Ernst and Young APAC Fraud Survey, it was found that 80% of respondents are unwilling to work for companies involved in bribery and corruption,” he says. “It’s hard to run a business when no one wants to work there.”

Several company governance matters are hot topics of late. Symonds specifically references director overboarding, director independence and tenure, and director diversity.

Finally, Symonds brings up accounting.

“An issue that’s starting to raise its head again in the US is the potential for another wave of accounting scandals like we saw in the early 2000s.” He says some companies are buying back shares with one hand and, with the other, issuing stock options or restricted shares to

executives and other employees as part of their compensation. “Australia has the two-strike remuneration policy, which creates a slightly different environment,” he highlights. “But it will still be interesting to see how it plays out in the US and whether this impacts capacity and/or terms and conditions locally, especially considering there are currently 16 of the top 300 companies in Australia that are facing a board spill due to receiving a strike already.”

Brokers and D&O When it comes to broker conversations with clients around D&O coverage, Symonds emphasises the importance of brokers appreciating that each organisation has its own unique exposures. “Even companies that operate in the same industry can have vastly different exposures depending on size and geographic spread.

“D&O policies are not standard form like home and contents or car insurance. The broker needs to understand their client’s unique operating structure, the industry their client operates in, the legal landscape they

DUAL AUSTRALIA Established in 2004, DUAL Australia Pty Ltd is a specialist underwriting agency focused on providing innovative insurance solutions to the mid-market.

We specialise in accident and health, financial lines, general liability and marine insurances.

We have four offices across Australia in Sydney, Melbourne, Perth and Brisbane, and employ more than 80 people.

We underwrite exclusively on behalf of certain underwriters at Lloyd’s, who enjoy an S&P rating of A+ (Strong). Lloyd’s of London is an APRAregulated insurer, and since the late 17th century the name Lloyd’s has been synonymous with insurance.

DUAL is a growing business. In 2014, DUAL wrote over $100m in gross written premium across 45,000 policies, making DUAL the largest

independent underwriting agency, and Lloyd’s coverholder, in Australia.

Our parent company, DUAL International, is the world’s largest unaffiliated international underwriting agency and Lloyd’s largest international coverholder. The group has annual GWP of US$1bn and employs more than 400 people across Europe, the Asia-Pacific and the Americas. DUAL is part of the Hyperion Insurance Group.

We identify underserviced or overcomplicated sectors of the insurance market, and using the expertise of our team of specialists we create simple, innovative solutions for the mid-market.

We’re committed to providing innovative solutions to traditionally complex insurances, and giving our brokers what they want, not telling them what they need.

are subject to, and what their client’s plans are for the future.”

He adds, “Brokers also need to counsel their clients to ensure they fully understand the terms and conditions of their policy and are aware of situations which may impact cover, such as an equity capital market transaction or expansion into a new geographic region.” He draws attention to an online guide the Australian Securities and Investments Commission published in May for small business directors. “[It’s] a very useful guide to help small business owners understand their role, responsibilities and potential liabilities as company directors. I would encourage all small business owners and brokers who have small business clients to read this free resource, available at www.asic.gov.au/sb-directors.”

Mitigating the risks As is true of most insurable risks, risk mitigation activities should play a key role in any efforts to protect directors and officers.

Symonds says it’s common for organisations to have a raft of sound policies and procedures in place, but few employees have been trained in or are even aware of them. “Directors need to understand their company’s risk culture and make sure staff are appropriately trained and aware of the policies that they have in place,” he says.

He recommends regular training of staff on key exposure areas, such as anti-money laundering and counterterrorism financing for financial services, and continuous disclosure obligations for listed companies.

Additionally, Symonds says business continuity plans and disaster recovery plans are important for all businesses that have an online presence.

And then, of course, organisations need to be prudent in the hiring process. “Directors and executives should be selected on competency, and there should be an adequate number of independent directors on the board to ensure diversity of ideas, interests and knowledge.”

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FEATURES

COMPETITION IN INSURANCE

PLAYING TO WIN For David Lamb, Sportscover CEO, succeeding in insurance means approaching the business from a perspective similar to that of the industry he serves In association with

MUCH LIKE the rungs of a premiership ladder, competition between teams in insurance is fierce. How does an insurance company grapple with the changing environment? How can you not only compete but stay a step ahead of the competition in the tough climate?

Player list David Lamb, Sportscover CEO, says the recruitment process is critical. “We generally look for people who’ve got a background in

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sport, whether they are former players, coaches, officials, or just have a very broad interest in sport, so that when a client or a broker rings up, they’re speaking to someone who’s on the same wavelength,” Lamb says.

A focus on company culture is also important. Lamb describes Sportscover as having “a relaxed but competitive environment”, and adds, “We set KPIs, targets and benchmarks for all of our staff …We have a little bit of friendly competition …We do all sorts of fun

things, reflecting the competitive nature of the business.”

Good coaching is also key. “It’s very important with a player list to get your coaching right … We hired a business coach not just for myself but for all of my managers and all of my sales and claims staff, who now get one-on-one time with a professional business coach to help them improve.”

Lamb says the results have been fantastic.

“It’s a bit like having a specialist coach in a

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football or soccer club. This person comes in, spends a lot of time with the business, and now we’re actually ahead of track in relation to sales and on track in relation to a number of other metrics, which, in the current market conditions, is really, really good.”

Work-life balance is an integral aspect of Sportcover’s culture. “We have a reward and recognition program, which allows [employees] individual incentives and opportunities to enjoy some good time outside of work if they’re doing really well. [And] we have quite a flexible workforce.”

And mentoring assists Sportscover in looking after its best and brightest younger players. It would appear those efforts are paying off. “We were fortunate enough in 2014 to be voted the ‘Youth Employer of the Year’ in the Insurance Industry Awards … which was pretty exciting for the organisation,” Lamb says.

Tactics Whether it’s success in business or in the sporting arena, goals aren’t achieved without a clear strategy. And in challenging times in insurance, no one knows that better than Lamb.

“One thing that’s been important for us is to be very, very innovative. It’s a very clichéd catchphrase, but when we started the business nearly 30 years ago, there were no other specialist sports insurers.” Other teams have now moved into the space. “That’s okay,” Lamb says. “We just have to continue to innovate and stay ahead of the game.”

He says it’s Sportcover’s aim to be thought of not just as an insurer but as a supplier to the sports industry. “We’re looking to provide a broader range of related services to sports and insurance brokers,” he explains. “That basically extends as far as your imagination extends. A specific example of that is the work we’ve been doing in relation to concussion insurance.

We’ve been working with a few elite scientists in the area of concussion risk management, and we expect to be launching what may well be a world-first concussion insurance product inside the next, probably, month.

“We take the view that it’s much more of a sustainable competitive advantage to create things that really add value. If you just increase

your policy sub-limit or decrease your price, then you’re vulnerable to being copied or attacked very quickly.

“The idea for us is to make sure we’re not easily commoditised, because commoditisation is death for us because then you end up in a race of who’s got the lowest cost base, supplying homogenous or vanilla ice cream products …

We want to make sure that the product’s superior and the overall, holistic approach is far more valuable.”

Teamwork Most people know the old adage, ‘Many hands make light work’. For Lamb, ‘teamwork’ is a synonym for service. “One thing that’s really important for an insurer is to have great quality service,” he says. “One of the ways we measure that is we’ve started doing claims surveys.” In recent years, Sportscover has sent surveys out to all of its claimants and used feedback to steadily improve its processes.

“The other thing we’ve taken pride in doing is being very hard and tough on dubious claims, because if we pay money out on behalf of our clients, then it comes back to bite them in relation to insurance costs and fees. If we get dubious claims, then we fight them hard. We don’t just pay go-away money. We make sure that we take a stand on those claims.”

Leadership “I see my responsibility as to challenge and coach the team, because if I’m the smartest person in the room, then we’re in real trouble,” Lamb says. “We need to make sure we’ve got our managers coming up through the business.”

Lamb opines that, like sports coaches, company CEOs have a shelf life. “So you’ve got to get in there and make a difference and leave a legacy for the business. We’re working very hard to challenge and create new leaders, and I’ve also tried to set an example of lofty goals and trying to achieve them.”

Lamb has the goal of completing 10 Olympic-distance triathlons in 10 countries.

He’s just finished number six in New York.

“Apart from being a fulfilling personal goal, it sets an example to the staff of setting goals and really working hard to achieve them ... It’s great

DAVID LAMB David Lamb is CEO of Sportscover Australia, with responsibilities spanning Australia, NZ and Asia.

It’s a role he has held for the last three and a half years and comes well qualified for, having previously played, umpired or coached cricket, AFL and basketball. These days he scuba-dives for fun and has a love of triathlon; he is currently on a mission to complete 10 Olympic-distance triathlons in 10 different countries over the next two years (he is up to number six).

Prior to joining Sportscover, Lamb ran major and multinational accounts at AIG and helped lead AIG successfully through the GFC. Amid all the naysayers, AIG kept over 90% of the accounts, a result that is still the achievement he is most proud of.

Building on almost 30 years of success and a reputation for unrivalled sports expertise, Lamb has introduced a number of business disciplines and cultural changes at Sportscover, including a collaborative approach to business planning, a rigorous large-claims peer review process, and a formal mentoring program to develop emerging staff. Recognising the need for life balance, Lamb also introduced a volunteering program assisting a local intellectually disabled football team, as well as a program (aptly named ‘Supporting You in Sport’) that grants staff either time off to participate in sport or financial assistance with things like memberships.

Lamb is a director of VicSport as well as the Underwriting Agencies Council, and is focused on Sportscover continuing to lead the sports and leisure insurance marketplace and grow its presence in the region. if you can set an example of leadership and striving, and have those around you take that on board.

“We’ve tried to empower our leadership group, give them the freedom to fail and to grow, and, hopefully, that becomes the legacy that I can leave behind for the business.”

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FEATURES

CYBER PROTECTION

THE INSIDER THREAT Awareness of cyber exposures is growing, but how much of the focus is on the threats that come from within? A key investigator on the Snowden case weighs in IT’S A frightening statistic that the total global cost of cybercrime is now $3trn, making it more profitable than the global trade in marijuana, cocaine and heroin … combined.

In Australia, the cost of cybercrime to organisations and individuals is approximately $1bn a year, according to the Australian Crime Commission. And the Ponemon Institute’s 2015 Cost of Data Breach Study says the average overall cost of a data breach for local companies is nearly $3m.

While much of the focus of cybersecurity remains on the risks posed by external hackers, it’s the threats much closer to home that some experts say urgently require our attention.

In March, a former National Australia Bank employee, who admitted to having stolen $7m using market-sensitive ABS data, was sentenced to seven years and three months’ imprisonment. In May, Woolworths were forced to move quickly to cancel over $1.3m worth of shopping vouchers following a massive leak of customer data.

Insider threats can appear in a number of guises: in the form of malicious insiders, loss or theft of devices, and errors by IT and security administrators.

Insiders use their position to advance personal, political or nation-state agendas.

Additionally, insiders steal or leak financially valuable data, including credit card numbers and personally identifiable information, which

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can be used to commit fraud or be sold on the black market.

The dangers Keith Lowry, senior vice president of Business Threat Intelligence and Analysis at software company Nuix, says governments and companies need to take insider threats much more seriously to prevent significant data breaches. “Somebody from the outside can drill in, but they usually have to have pre-knowledge of the network; they have to be able to map it out, they have to have somebody who’s been there to introduce them to it,” he tells Insurance Business.

Of course, for insiders, it’s a very different story. Lowry says they have the ability to access, exploit and leak sensitive and criticalvalue data better than most hackers. “They’re more damaging because they know how to get around, they know what the security posture is, they know what the rules are, and they know how to circumnavigate them,” he says.

Lowry has extensive experience in the investigation of insider threats that have significantly affected both governments and corporations. He was chief of the Strategy and Evaluation Group at the US Office of the National Counterintelligence Executive during the investigation of Edward Snowden.

He also had key involvement in the US Army’s investigation into Bradley/Chelsea Manning,

who disclosed almost 750,000 sensitive and diplomatic documents to WikiLeaks. Now, in his role at Nuix, Lowry is based in Herndon, Virginia.

Lowry visited Australia in June to meet with senior Australian government security, intelligence and business representatives to discuss insider threats. Insurance Business had the chance to speak to him after he delivered an address at an event at the Sydney office of global law firm DLA Piper.

According to Lowry, it’s far from a select group of organisations that need to turn serious attention to insider threats. “Anybody who has something of value has to know how

MOTIVATORS FOR INSIDER ACTIVITY Financial gain

47% 20%

Ideology Desire for recognition

14%

Divided loyalty

14% 0

10

20

30

40

50

Source: Centre for Protection of National Infrastructure (UK), 2013

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RISK MITIGATION According to Nuix, organisations should develop a proactive insider threat mitigation program that combines three key elements: 1. Understand and focus: Identify where critical-value data is located, who has access to it and how.

2. Protect and disrupt: Use intelligence and analysis to identify insider threat actors within systems and networks.

3. Deter and detect: Have accurate and up-to-date cybersecurity and IT policies, training and forensic tools in place.

to protect it, and the larger the value, the more susceptible you are to being attacked,” he says, adding that, if companies aren’t sitting up and taking notice, it’s to their detriment.

Figures suggest that more than one-third of cybercrimes and security breaches are caused by insiders but, in Lowry’s view, the actual figure is likely to be much higher because many organisations don’t know when an insider breach has occurred or are reluctant to report such instances.

Taking action Lowry also says old security models and IT systems that focus on outside cyberattacks

INSIDER ACTIVITY

BY GENDER

Male 82% Female 18% Source: Centre for Protection of National Infrastructure (UK), 2013

provide very little protection against insider breaches. He says many organisations don’t even know if and when an insider breach has occurred, owing to the fact that they don’t know where all of their most sensitive and criticalvalue data is held. That data is what Lowry refers to as the ‘crown jewels’. Even defining what precisely constitutes the ‘crown jewels’ is often a challenge for a company and, as Lowry says, you can’t protect the data that’s key to an organisation’s operations without being able to properly pinpoint it.

As well as defining that data being of paramount importance, Lowry says buy-in from the executive leadership team for initiatives to counter these threats is crucial, in order to ensure that an entire organisation has a proper attitude towards data security and identifying insider threat risks.

Talking about cyber insurance, Lowry tells of how he learnt that a number of cyber insurance policies have lacked a definition of ‘insider threat’. “That was identified to me by an insurance consortium,” Lowry says. “I was speaking with a person who was the main policy writer for one of the world’s largest insurance companies. When I asked this individual what was the definition of ‘insider

threat’, he said, ‘We don’t have one’.”

Lowry thinks underwriters and insurers should be conversing with software platform providers in the business of cybersecurity, in order to ensure their policies properly define the threats against which their clients will need protection. “The definitions are what the insurance is based on,” he says. “If you have a poor definition, how do you write insurance? What is it you’re protecting?”

Referring clients to such providers to come up with effective security monitoring solutions for their businesses is something Lowry thinks brokers should be doing, in their efforts to assist those clients with risk mitigation strategies. “If I were a broker, I would not be the expert. I would be an expert at being a broker … [For] any specialty issue, you’re going to want to find out who the experts are.”

Nuix draws attention to the fact that the federal government has acknowledged the seriousness of insider threats for departments and businesses, recently releasing a handbook entitled Managing the Insider Threat to your Business, which endeavours to help organisations understand and address key insider risks.

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FEATURES

ONLINE EDUCATION

ENROLMENT OPENS AT BROOKLYN UNIVERSITY A leading underwriting agency has created an online learning community for brokers that it hopes will be not only valuable but fun AUSTRALIAN INSURANCE brokers’ obligation to participate in continuing professional development (CPD) is a requirement aimed at ensuring advice providers remain cognisant of the latest technical, product and regulatory changes impacting on the broker community.

It’s vital that CPD events and learning programs are carefully thought out, and that sufficient options are available to brokers in regional areas. A sure-fire method of overcoming the tyranny of distance is the creation of offerings in the online space. While major education providers continue to enhance the value of their online presence, a recently launched resource has widened the available options.

Brooklyn Underwriting, named ANZIIF’s Underwriting Agency of the Year for the past three years, is sharing its specialist knowledge and expertise with the broader general insurance community via the launch of Brooklyn University.

It’s an online learning community for insurance professionals that hopes to assist participants in heightening their industry knowledge in an interactive, valuable and fun environment.

Revealing the origins of the university concept, director of Brooklyn Underwriting David Porteous says it’s been all about putting meaning behind its brand philosophy, ‘Making you the expert’. “The idea of creating Brooklyn [Underwriting] ... has always been designed to add something to the mix for brokers and their clients,” Porteous says.

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He says the idea of the university was conceived at a company off-site workshop last year. “We threw around some ideas and we thought, ‘What’d be really great is to create something where we could share all of this specialist knowledge with our brokers’. And that session evolved quite quickly into, ‘Well, why don’t we create a university? Why don’t we create Brooklyn University?’”

insurance is that you become specialised in a certain area, either by choice, by design or not,” he says. “So I think it’s imperative brokers continue to broaden their horizons ... We’re certainly committed to being part of the broker education piece for as long as Brooklyn is around.”

Talking about education evolving to equip the brokers of tomorrow with the necessary skills, Porteous says, “The education of brokers needs

“I think it’s imperative brokers continue to broaden their horizons … We’re certainly committed to being part of the broker education piece for as long as Brooklyn is around” David Porteous, Brooklyn Underwriting The curriculum The platform allows industry professionals to complete six subjects online – property, liability, IT liability, miscellaneous PI, EPS and resource professionals – and to earn one NIBA-accredited CPD point for each subject completed.

While CPD points are a significant incentive to complete these online subjects, Porteous also believes it’s critical for brokers to partake in ongoing learning in order to remain at the top of their profession. “What tends to happen in

to evolve constantly. I think that’s a given. I think the established institutions, NIBA and ANZIIF, have done a really good job of doing that.” He says content of educational offerings will need to continue to evolve in line with the emergence of new risks.

On the method of delivering education programs, Porteous says, “In 2015, the way in which we actually educate the brokers is not the oldfashioned way of sitting down and doing an exam and reading through a textbook. It’s online, it’s

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interactive; it’s a bit shorter, sharper, to-the-point.”

Porteous also points to the importance of online education options in ensuring the accessibility of further learning activities to everyone. “What the industry does very well is put on a seminar,” he says. “Every day you could find a seminar here in Sydney put on by someone – an insurance firm, broker or a law firm – but that’s no good whatsoever to the guys out in regional Australia.”

Brooklyn Underwriting marketing and communications executive Rocco Pirrello says Brooklyn University has attracted a diverse range of industry professionals in its early days. “We’ve had lots of different brokers using Brooklyn University – very young brokers new to the market; and we’ve also had a lot of traditional brokers saying, ‘This is great. How do I sign up?’ or ‘How do I do it?’ – and, with a little help, they get online and, all of a sudden, they’re fully immersed in it.”

The report card Both Pirrello and Porteous have been astounded by the response so far to Brooklyn University.

“I think we had maybe 400 registered users in the first few hours,” Pirrello says. “Now we’re

sitting at over 1,350 registered users and over 3,500 CPD points. It’s definitely been overwhelming.” He adds, “One trend that we’re finding is we see one person from a brokerage complete their courses, and then within a matter of days it’s like the floodgates open and that whole office is, all of a sudden, learning and keeping up to date.”

Porteous admits the level of success Brooklyn has experienced to date with its latest initiative has been surprising. “What is very clear is that it works,” he says. “That has strengthened our resolve to spend a bit more time and money taking Brooklyn University to the next level.”

And according to Porteous, taking it to the next level will involve developing further courses. “Within a few weeks, there’ll be 12 online courses. They will include some emerging risks … cyber liability, for example.”

Creating more complex offerings is also on the agenda. “We’ve got a number of subjects on there at the moment that we call ‘101s’ … designed for new entrants to our industry,” Porteous explains. “So there’ll be a suite of ‘201s’ … the next level of complexity.”

He also says participants can expect to see a

‘claims faculty’, which will be created in response to a considerable demand for claims content.

Porteous and Pirrello say they’re keen to work with industry partners in the ongoing development of Brooklyn University. “What we don’t want to do in the education space is create competitive friction. We’re not here to take yards off NIBA or ANZIIF,” Porteous stresses.

“In fact, I think what’s become clear is that we’re here to work with NIBA and ANZIIF. “We’re talking to Lloyd’s about using some of their knowledge that they’ve obviously got from a global perspective about insurance risks … They’ve got some knowledge over there at Lloyds, 400 years of it, that we simply can’t replicate … I think collaborating with our industry peers will really put a rocket under the university and give it some breadth.”

Pirrello says the whole process of creating the university has been fun, and he hopes that Brooklyn University course participants are also having fun in the process of completing subjects. “The whole office is engaged in it and we’re all enjoying doing it, and seeing feedback from brokers and the positivity from it,” he says.

“It’s a positive, fun experience and we can’t wait to continue to share it.”

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FEATURES

CONTAMINATED PRODUCT INSURANCE

THOROUGH DECONTAMINATION Experts discuss with Insurance Business the need for contaminated product insurance and strategies to prevent recall incidents becoming major crises

EARLIER THIS year, Australian manufacturer Patties Foods recalled 1kg packets of Nanna’s Mixed Berries following allegations that over three dozen people had fallen ill with hepatitis A after consuming the berries. In June, managing director and CEO of Patties Foods, Steven Chaur, said the company had been significantly impacted by the frozen berries recall and that it was expected 9% would be wiped from the company’s net profit for 2015.

According to the ACCC, there were 513 product recalls in Australia in 2014, compared to 359 recalls in 2010.

Andrew Beare is liability underwriting manager for Australasia for HDI-Gerling, which provides contaminated product insurance to businesses in

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the food and beverage industries. Beare says upwards of $49bn worth of food fraud occurs globally each year. “That involves contamination, extortion [and] anything to do with food not being what it should be,” he adds.

While organisations obviously incur high costs as a result of dealing with recall events, reputational damage can ultimately have an even greater impact. “Reputational risk is one of the greatest risks to a business in the event of a recall, especially if it’s not handled professionally and honestly,” says Beare. “If the reputation is damaged to such an extent, a business may never recover.”

Former crisis management underwriter turned tech founder, Nga Nguyen, says many organisations tend to forget the ‘soft costs’ (or

indirect costs) of product recalls, including reputational damage. “Typically, in a major recall, soft costs are disproportionately higher than hard costs,” he says. “I’ve read studies that have shown that the hard costs represent less than 20% of the total costs. The actual rehabilitation, repairing the organisation’s brand equity, accounts for the majority of the total costs.”

And when significant reputational damage occurs, substantial profit losses can follow.

Andrew Beare highlights other consequences that can flow from product recalls. “There are significant recall expenses, which include recovery of affected product from retail outlets. You then have to dispose of it. There’s also the loss of other lines of business and products from the same

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manufacturer going by the same name. They can all be tarred with the same brush,” he says.

Nguyen mentions the risk of manufacturers losing major supply contracts with retailers.

“Particularly in Australia, if you’re in the food and beverage space, retail is dominated by major players. If you lose a contract with one of the major retailers, you’re in a lot of bother.”

He says companies make three common mistakes in handling product recalls. “Number one would be lack of preparation. A big thing is failure to conduct mock recalls,” says Nguyen.

“Number two would be allowing an incident to

Beare says there should also be product recall expense coverage, and product rehabilitation expenses to help reduce reputational damage. He also says it’s important that coverage extends to government-instigated recalls.

Finally, he says good policies should include coverage for loss of profits from the recalled product, coverage for loss of profits due to decrease in the organisation’s overall turnover, and coverage for third party recall expenses.

So what types of questions should brokers ask their clients to ensure they can organise appropriate coverage? For brokers with clients

“Reputational risk is one of the greatest risks to a business in the event of a recall, especially if it’s not handled professionally and honestly”

FOOD RECALL STATISTICS According to Food Standards Australia New Zealand, the food categories in the table below are those most commonly associated with food recalls between 1 January 2005 and 31 December 2014

Mixed and/or processed foods

Fruits, vegetables and herbs

Number of recalls: 123

Number of recalls: 37

Meat and meat products

Fish and fish products Number of recalls: 35

Number of recalls: 78

Dairy products

Cereals and cereal products

Number of recalls: 66

Number of recalls: 29

Andrew Beare, HDI-Gerling escalate into a crisis. That could mean allowing the investigations to be protracted. So, in other words, failure to take responsibility and act decisively on a known problem, and also failure to monitor the effectiveness of recalls that are in flight and adjust strategies as required.”

The third mistake Nguyen cites is a failure to conduct adequate supplier audits. “Supply chains of today are highly distributed and extremely complicated,” he says. “A lot of manufacturers nowadays purchase components from offshore companies.” He says that leads to a raft of issues around how to properly audit overseas suppliers and identifying the standards to which they should adhere.

As to essentials for good product contamination and recall policies, Beare stresses that no two policies are identical, but identified some features he sees as important. “Firstly, you’ve got to have a good broker. They need to know what’s going on in the marketplace [and] what’s available,” he says.

“From a policy containment situation, direct access to a globally-experienced crisis management consultant is absolutely essential.” He also mentions provision of pre-incident planning simulations. “This is done usually through the crisis management consultant,” he adds.

in the food and beverage industry, Beare says he considers a few particular questions to be very important. “First and foremost, brokers need to understand and demonstrate to insurers that they know what their client’s risk is because they have to tell us what it’s all about,” he says. “For example, does the applicant have a documented product recall plan? When was it written? When was it last reviewed? When has it been tested? And what was the outcome of the tests?

“Another one is how does the applicant manage his suppliers and vendors for quality control? What is the traceability of products? Are they barcoded?”

Next, Beare mentions the client’s history. “Has there been any previous need to recall any of their products, and what were the reasons for that?

And what did they learn? What risk mitigation strategies are employed? Have these been tested?”

Beare adds it’s essential that clients buy the right limit of coverage. “There’s plenty of capacity around in the marketplace, so they shouldn’t hold back on buying the right limit because, if [they] buy the wrong limit, once the limit’s exhausted, everything else that has to be paid comes off their bottom line.”

Nguyen’s CrisisFlo, an Australian technology

Confectionery

Non-alcoholic beverages

Number of recalls: 47

Number of recalls: 24

Breads and bakery products

Foods intended for particular dietary uses

Number of recalls: 45

Number of recalls: 123

Source: Food Standards Australia New Zealand, Food recall statistics

firm that specialises in crisis management systems, has just launched CrisisFlo Recall Manager, a web-based tool that provides workflow orchestration for a business’ product recall team with the aim of facilitating better communication, coordination and collaboration before, during and after a recall event. Nguyen says the intent is to resolve issues at incident level, preventing situations from escalating into crises.

And while CrisisFlo’s technology should serve as an adjunct to good insurance, the company hopes its technology can contribute in some way to lowering the cost of product recall claims which, longer term, could result in an adjustment of premiums that makes the coverage more accessible to a wider range of suppliers and manufacturers.

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PEOPLE

BROKER PROFILE

SWAPPING SYDNEY FOR THE SQUARE MILE Two years ago, Struan Todd left Australia to pursue his insurance career in London.

Insurance Business checks in on his progress IN APRIL 2013, former Sydney-sider Struan Todd packed his bags and embarked on a new life in London. Today, he’s part of a major broking group, assisting clients across the globe.

Todd is an account handler in Howden Insurance Brokers’ professional indemnity division. “I deal with professional business from all over the world,” he says. “A large portion of my business is Australiabased… but I’ve got risks in Canada, Europe, Asia, the Middle East and even the Caribbean.”

Todd was chosen to join a select group of employees to train in cyber-insurance broking.

“I got picked as one of less than 15 individuals,” he tells Insurance Business. At the end of a sixmonth training regime, he was given the chance to take part in a trip to the organisation’s Tel Aviv office. That trip involved not only learning the finer details of cyber-coverage itself but, in Todd’s words, “seeing people, essentially, hack computers in front of you”.

Having now completed cyber training, Todd’s portfolio of PI clients has broadened. “I used to just do PI for engineers, law firms… I’ve [now] also gotten into media, tech…” He’s excited to be working in the key emerging risk area that continues to dominate conversation in the global industry. “You can see that everyone around the world is asking about cyber and there’s now a fair few people starting to buy it,” he says.

Tracking back to the time before his relocation, Todd was part of the underwriting team at Brooklyn Underwriting in Sydney. While at Brooklyn, Todd also completed his Bachelor of Business degree. “They got me into professional indemnity underwriting as an assistant. And then in the last couple of years there, I was a professional indemnity underwriter.”

Despite success in a role with a leading

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

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

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

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

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PEOPLE

BROKER PROFILE Australian underwriting agency, Todd’s passion for travel and a keen interest in becoming acquainted with the Lloyd’s of London market compelled him to begin contemplating a major move. A third factor made the pull of the UK even stronger. “I wanted to do my Masters somewhere overseas, and the only place that [offered the] Insurance and Risk Management Masters was the City University of London.”

Making the move Todd applied for a number of London-based roles before leaving Sydney, ultimately deciding to join Howden.

Discussing his decision, he says, “I decided I wanted to be on the broking side, so I thought Howden was the best way to go, and they invested a lot of time in making space for me and giving me what I was hoping to get.”

“You don’t understand the intricacies of the London market until you’re here. The technicalities of the industry are so different from the way the Australian market works” Todd recommends that those considering relocation to the UK similarly have roles lined up prior to their arrival.

“It’s quite hard once you get here, especially if you’re only on a two-year visa, to sort yourself out with something,” he explains.

Reflecting on his time working in London to date, Todd has found it a stark contrast to his experience of the insurance industry in Sydney. “[It’s] completely different to Australia. It really is, and I think that was the shock,” he says. “You don’t understand the intricacies of the London market until you’re here. The technicalities of the industry are so different from the way the Australian market works.”

He firmly believes he’s benefited professionally from his firsthand experience of the Lloyd’s market. “I think I really didn’t understand exactly how Lloyd’s worked. You get told about how it works, broking-wise… To actually see it in practice and do it yourself is a very different experience.”

But what Todd cites as the greatest difference between the Australian and London insurance markets is the significantly heightened importance of in-person interactions in London. “In Australia, not a lot of business

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S STRUAN’S ADVICE TO INSURANCE PROFESSIONALS CONSIDERING A UK MOVE

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“Use your contacts to help you get across. Applying out of the blue, especially without a UK passport, can be very difficult because they’re not going to employ you short term. They want people they can invest in under the [understanding] you’re going to be around for a while and you’re going to be able to benefit the company rather than just benefit you.”

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“Focus on education. A lot of employers really like it over here because it proves you’re hardworking and willing to dedicate your time for your firm and yourself. What Howden’s been fantastic with is they’ve given me the time to go and do my studies and, when I’ve needed a day off here or there, they’ve given it to me. They’ve been so helpful and accommodating… I think a lot of firms will be like that, as long as you’ve shown that you’re driven and hardworking and dedicated to a company.”

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“Whether it works out to be valuable for your career or not, living in London is a fantastic experience… I’d recommend it to anyone who was even remotely contemplating the idea.”

is done face-to-face. Sure, you go to networking events and you meet people like that, but you pick up a phone or you send an email, and that’s about as personal as it gets.

“Here, if you’re trying to get anything over the line, you walk into Lloyd’s and you talk to 15 different underwriters, who you’ve got a great relationship with, and if that doesn’t work, you catch up with them for lunch and a coffee, and see what aspects of the risk they’re uncomfortable about to see what they can do to help you out. And that’s very, very different to the way that, at least, the market worked in Sydney when I was there.”

After-hours relationship building is crucial in London, according to Todd. “You wouldn’t make those market connections to use during the business day if you don’t go outside of your normal hours as well, whereas in Australia, you can get away with it.”

Looking to the future, Todd hopes he’ll be able to continue to enjoy the easily accessible travel opportunities he has as a result of his current London base. “Long-term, I’d ideally like to be CEO or one of the execs of a big firm globally,” he says.

“I don’t particularly want to be stuck in one area. As I said, I love travel, so I would like the opportunity to still be able to do that on a regular basis. I’m not sure yet where I want to be, whether that’s Australia, the US or the UK. Ideally, something that would entail all of that.”

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SURVEY The inaugural Insurance Business Brokers on Underwriting Agencies survey will identify the best underwriting agencies in the country from the broker perspective.

Following in the footsteps of Insurance Business’ leading industry reports such as Brokers on Insurers and Elite Brokers, this survey puts the spotlight on Australia’s non-major insurers. Brokers are invited to rate their top underwriting agencies on criteria such as coverage, claims turnaround times, broker support, commission structures, and overall service levels.

The underwriting agencies themselves will also be given the opportunity to support their entry by submitting details regarding volumes, conversion rates and more.

The Brokers on Underwriting Agencies survey will be a valuable opportunity for non-major insurers to benchmark their performance and identify areas for improvement. The full report will be published in issue 4.6 of Insurance Business out in December as well as online.

Look out for survey information and updates at www.insurancebusinessonline.com.au 52-55_Broker Profile_subbed.indd 55

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PEOPLE

FAVOURITE THINGS

DAN COLLINSON Head of financial lines, AIG Australia

Byron Bay beaches, Back to the Future, Britpop and basketball – AIG’s Dan Collinson shares some of his favourite things

Favourite book I wish I had time to read more books.

That being said, the last book I can remember really devouring was The Wolf of Wall Street by Jordan Belfort. The movie was pretty wild, but the book takes it to a new level!

What’s on your playlist?

Music is pretty important to me. I grew up in the UK in the ’90s so I was at the coalface of the grunge and Britpop eras – so it explains why Radiohead, Nirvana and the Foo Fighters get lots of airtime. But these days my kids seem to influence the playlists with the latest pop tunes, so Ed Sheeran is dominating over my ’90s tunes.

Best day you’ve had working in insurance Probably the day we launched our Private Edge product on Sunrise. That was pretty special.

It was the culmination of a new direction for financial lines at AIG and has been the bedrock of our diversification over the last five years. We had a great team and delivered it on time and budget – that’s pretty rare!

Favourite holiday spot My favourite holiday spot would have to be Byron Bay. As a family, we have been going there every year since we arrived from the UK eight years ago. We have good friends there and it feels like our second home – beautiful beaches, great weather and a nice laid-back atmosphere.

Favourite advice Work out what is important to you and ensure you live your life by those values. That way every decision you make is true to what you believe. It’s way easier to drive success if you believe in what you are doing.

Favourite indulgence Travel is top of the list for me. My two boys are now at a perfect age for travel and adventure. I am keen to do as much as possible with them before it’s too late and it’s no longer cool to go on holiday with Mum and Dad! Other than travel and exploring new places, good food and wine are a close second.

Favourite sport Anything – I am sports mad! But it’s mostly what my kids play on the weekend that gets the most attention. In winter it’s basketball and AFL, and then in summer we are focused on cricket. As an Englishman I always love an Ashes series, especially if the English are competitive in any way! AFL took me a few years to understand, but as a spectator sport it’s pretty hard to beat.

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Favourite film I love a movie with a sports theme – the original Rocky is a great one. And with my boys I am actually getting to re-watch all of those classic movies that were around when I was a kid, like Back to the Future, Indiana Jones, and Teen Wolf.

It’s amazing how they’ve stood the test of time; they love them.

Strangest insurance coverage you’ve come across/offer Some of the cover the market puts into management liability makes me laugh. Cover for tax audit is a good example. It amazes me that clients are making decisions about such a broad policy based on whether they have this little extension!

Best thing about working in the insurance industry Variety! Meeting different clients; different partners; different opportunities. Very few days are the same for me, and that keeps me engaged. It’s also a very sociable industry – having worked in insurance for 20 years in different parts of the world, I have made some great friends right across the globe.

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