Insurance Business 5.06

insurancebusinessonline.com.au Issue 5.6

THE YEAR AHEAD

Industry leaders on what they expect in 2017

UNDERSTANDING YOUR LIABILITY An underwriter discusses dangerous exposures on the liability front

GETTING TECHIE The state of play in insurtech

A WINNING EQUATION XL Catlin’s Robin Johnson on the insurer’s post-merger growth NCIES E G A G N I T I NDERWR d most in 2016 U N O S R E resse BROK ncies that imp e age Recognising th

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DECEMBER 2016

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

CONTENTS

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UPFRONT 04 Editorial

Keeping up with insurance

06 Statistics

FEATURES

42

UNDERSTANDING YOUR LIABILITY

FEATURES

23

The recent Dreamworld incident has brought home the importance of liability insurance protection

20 2

10 Opinion

Redefining the role of insurance in society

12 News analysis

Industry commentators talk about the opportunities that insurtech creates for brokers

16 Insurer update

FEATURES

XL Catlin’s Australian chief Robin Johnson talks about success since the merger and the recent acquisition of Brooklyn Underwriting

What was the biggest challenge your business faced in 2016?

Aon Risk Solutions acquires global risk management firm and an industry legend returns to insurance

Recognising the Australian agencies that most impressed our broker readers in 2016

A WINNING EQUATION

08 Head to head

14 Intelligence

BROKERS ON UNDERWRITING AGENCIES PEOPLE

The results of KPMG’s 2016 General Insurance Industry Review are in … and they’re “probably average at best”

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THE YEAR AHEAD Senior industry leaders look back on 2016 and contemplate what is on the horizon

A high-profile German peer-to-peer insurance provider will soon be open for business in Australia

18 Underwriting agencies update Lloyd’s reports a notable rise in profits for the first half of 2016, in spite of challenging market conditions

PEOPLE 53 Career path

MECON Insurance CEO Glenn Ross reflects on his three-decade career in insurance

56 Other life

KPMG’s Martin Blake is a two-time Sydney to Hobart Yacht Race participant

FEATURES

54

BROKER INSIGHT Inside GSA Insurance Brokers, a business that prides itself on being different from its competitors

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UPFRONT

EDITORIAL

www.insurancebusinessonline.com.au DECEMBER 2016

KEEPING UP WITH INSURANCE

I

t’s almost inconceivable that we’re about to reach the end of another year. But by reflecting on the constant movements we’ve witnessed in 2016, one begins to appreciate that it’s been another full and hectic 12 months.

Brokers and underwriters have continued to feel the pinch of the soft market – a climate still showing no clear signs of abating. On the education front, this was the year when ANZIIF began operating as NIBA’s preferred supplier, unveiling its Skills Units content, which it says represents the way forward for broker education. And not long after the year began, the LMI Group announced a joint venture with The Financial Services School in Queensland to provide its own educational offerings to the industry. Conversation as to precisely what constitutes the best education for brokers of the future is ongoing.

Change is upon us, but only time will tell precisely what’s in store In March, the Northern Australia Insurance Premiums Taskforce released its final report, endorsing mitigation as the best method of effecting premium reductions in disaster-prone regions. While the government was expected to provide a detailed response to that report by 30 June, its shifting focus to the election campaign meant the date came and went without incident. As we continue to await that response, there’s at least some stability in the fact that insurance has remained in Kelly O’Dwyer’s portfolio post-election.

Also in March, local interest in the concept of peer-to-peer insurance was piqued with the announcement that Germany’s Friendsurance would make Australia its first international target for expansion. We continue to anticipate Friendsurance’s arrival in our market and what it will mean for the local industry.

Late in May, ASIC announced the cancellation of Winley Insurance Group’s AFS licence, following the earlier shock demise of the Perth-based group. And M&A activity has continued at a pace, the most recent high-profile local transaction coming in the form of XL Catlin’s acquisition of Sydney-based Brooklyn Underwriting.

Change is upon us, but only time will tell precisely what’s in store. On behalf of the entire Insurance Business team, I thank you for your ongoing support throughout 2016 and look forward to keeping you abreast of industry developments in the year ahead.

Tim Garratt, editor

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EDITORIAL

Editor Tim Garratt News Editor Jordan Lynn News Writer Mina Martin Production Editor Roslyn Meredith, Bruce Pitchers

CONTRIBUTORS Tom Herbstein, Andrew Voysey

ART & PRODUCTION Design Manager Daniel Williams Designer Joenel Salvador Traffic Coordinator Freya Demegelio

SALES & MARKETING General Manager Peter Smith Commercial Development Manager Sophie Knight 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

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UPFRONT

STATISTICS

2016: THE GOOD, THE BAD AND THE AVERAGE A recently released study reveals general insurers’ profits rose in the 2016 financial year. But there’s more to the story …

KPMG’S GENERAL Insurance Industry Review shows profits in the sector increased 18% to $4.058bn in FY2016.

But don’t be too buoyed by that figure, KPMG warns, because while the year had its share of weather events, nothing matched the scale and magnitude of the five natural catastrophes that substantially impacted the previous year’s results. Those catastrophes included the 2014/15 Brisbane and Sydney storms.

The industry loss ratio improved from 68.6% to 66% in 2016.

2.5%

Gross written premium rose 2.5% from 2015, despite competitive pressures

KPMG Australia insurance partner, Scott Guse, says it must be remembered these results come off the back of a “horrendous figure last year” and that, all things considered, the results are “probably average at best”.

“Moving forward, opportunities for top-line growth exist for those insurers that capitalise on innovative products and technologies,” says Guse. “Keeping ahead of the curve and meeting the constantly changing needs of customers is now a reality and those not prepared to keep up with the change in pace will likely fall behind.”

17.5%

2.6%

Profit increased $606m from 2015, reflecting reduced claims costs

The loss ratio dropped 2.6% with catastrophe events at normal levels

25.7%

The expense ratio remained flat because cost discipline was maintained

Source: KPMG General Insurance Industry Review 2016

COMBINED RATIO

THE YEAR IN SUMMARY

The combined ratio improved from 94.4% in 2014/15 to 91.7% in 2015/16. However, it remains above the combined ratios for 2013/14 and 2012/13.

As KPMG reports, market conditions remained challenging for Australian insurers, with ongoing premium pressures, especially in commercial classes. The improved industry result was driven by factors including lower frequency of natural catastrophes, continued focus on cost savings and marginal growth in GWP. $50bn

2011/12 101.8% $40bn 2012/13 89.8%

2013/14 87.9%

$20bn

2014/15 94.4%

$10bn

2015/16 91.7% 80% 85% 90% 95% 100% 105% KPMG General Insurance Industry Review 2016 6

$39.958bn $30bn

0

Loss ratio 66.0% Expense ratio 25.7% Combined ratio 91.7% Insurance margin 14.2%

$40.953bn $30.420bn

$28.556bn

$4.058bn $3.452bn

$2.388bn $1.694bn Gross written premium

Net earned premium

Underwriting result

Insurance profit

Total 2015/16

Loss ratio 68.6% Expense ratio 25.8% Combined ratio 94.4% Insurance margin 11.3%

Total 2014/15

KPMG General Insurance Industry Review 2016

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EMERGING TRENDS As well as looking back on the year that’s been, the KPMG report identified 10 emerging trends for insurance companies and considered the ramifications of those trends:

NEW TECHNOLOGY

NEW PRODUCTS/MARKETS

Insurtech – Insurtech is attracting significant venture capital and attention from global insurers, but there are few Australian insurtech start-ups, despite a substantial demand from local insurers, who are looking for new technologies to improve their customer experiences and deliver innovative products.

There’s therefore a significant opportunity for collaboration between insurers and tech start-ups.

Driverless cars – All major carmakers have driverless car development programs, according to KPMG, and so too do Google and Apple. Several manufacturers already have cars on the road with advanced driver assist technology.

General insurers need to carefully consider their reaction to these developments, particularly the questions around liability in the event of an accident.

New Payments Platform – The New Payments Platform is due in the second half of 2017, providing insurers the ability to transact in near real time (<15 seconds) with other connected parties (consumers and businesses) on a 24/7/365 basis. KPMG says the NPP will provide a “compelling opportunity” for insurers to leverage the new functionalities being designed into the platform.

Telematics – Telematics continues to grow in Australia, albeit at a much slower pace than overseas. The technology can

Blockchain – Blockchain technology, KPMG says, will enable innovative business models and potential improvements in core business processes within industry and regulatory regimes. However, significant challenges (such as privacy laws and regulatory approval/ requirements) need to be addressed before the technology can be widely used in insurance.

instantaneously tell an insurer where and how an insured person drives, and use of that information has the potential to radically affect claims management and premium pricing.

Cyber insurance – KPMG notes that cyber policy wordings are complex and contain various exclusions, and that large-scale risk transfer to insurers is not currently occurring. It says insurers intending to turn cyber into a strong and sustainable line of business will need to become far more sophisticated in approaching assessment and management of cyber risk.

NEW INSIGHTS

NEW APPROACH

Big data – Some Australian insurers are investing in this space, but several are still not ready to fully exploit the opportunities associated with greater data insights, says KPMG. This is largely attributable to legacy systems, incomplete data sets and a general acknowledgement that they don’t know precisely what to do with the data.

Conduct and culture – As well as responding to underlying regulatory drivers, many organisations are appreciating that they will only truly embed conduct risk management within their businesses by looking beyond changes that ASIC may require.

Sustainability – “Unprecedented collective action” in 2016 to “create the world we want” should result in insurers stepping up, KPMG says.

New Accounting Standard IFRS 4 – KPMG reports that, if the International Accounting Standards Board has its way, the IFRS 4 will be released as an accounting standard by Christmas.

KPMG General Insurance Industry Review 2016

CHALLENGED CHALLENGERS?

MARGIN MEASURED

While challenger brands continue to pose significant competition in the personal lines space, their rate of growth slowed this year. According to KPMG, it’s hard to know whether the recent allegations and ASIC investigation into Youi will have further impact.

The various factors led to an industry insurance margin of 14.2%. KPMG’s report records the trend in insurance margins over the past five years – 2014/15 and 2011/12 being those heavily affected by natural catastrophes.

40% 35%

20%

30% 25%

17.8%

18.2%

15%

20%

10.7%

15%

14.2%

11.3%

10%

10% 5%

5% 0% Challenger brands

Total 2011/12

Total 2012/13

Industry

Total 2013/14

Total 2014/15

KPMG General Insurance Industry Review 2016

0%

Total 2015/16

2011/12 2012/13 2013/14 2014/15 2015/16 KPMG General Insurance Industry Review 2016

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UPFRONT

HEAD TO HEAD

Name the biggest challenge your business faced in 2016

Was it market conditions or obstacles on other fronts? Business leaders share their experiences

Andrew Boal

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Andrew Locke

Robert Cooper

Head of Australasia Willis Towers Watson

Managing director Adroit Insurance Group

Director CPR Insurance Services

“Bringing two organisations together to form Willis Towers Watson has been challenging, but definitely rewarding. Quite simply, we need to focus on our clients and how we can work together better to provide solutions that will make them more successful. That means leveraging the strengths of our legacy organisations in broking and consulting, while developing new solutions that weren’t possible before.

“As a result, we’ve created something unique in the Australian marketplace – a truly integrated business that addresses the full gamut of people and financial risks that our clients face.

“Mergers are never easy. In my 24 years with Willis Towers Watson, I’ve worked with clients on dozens of them. But we’ve come through this transition looking at risk in a new way. We’re working with our clients on managing their critical talent and culture, including appropriate reward structures, how to leverage technology, and strategies to mitigate or insure their financial risks.”

“The biggest challenge our business faced in 2016 is the continuing increase in what I term the natural attrition of our client base (that is to say, clients lost to our business due to no fault of our own, for example as a result of sale, receivership, etc). Five years ago, I estimated this to be 2-3% of revenue, now I estimate that to be closer to 5%.

“This is reflected in the 2016 Adroit Regional Business Survey, where a massive 52% of the 837 respondents have noticed a decrease in manufacturing businesses in regional Victoria; 39% have observed a decline in retailers; and 18% in construction and trades.

“Historically these industries have formed part of our core, and the natural attrition has been made worse by the fact that these industries have featured some of our more significant clients.”

“If I was to say that anything was the biggest challenge to our business in 2016, it would have to be the challenge of finding new staff that are suitably skilled for our office to assist with our ever increasing workload and not impact our bottom line too much.

“Instead, we must take on new employees who have limited knowledge and experience in the insurance industry or are new to the industry.

“We demonstrate it is a very interesting profession. We invest time and money to train them to a level of expertise, and then they get to a level where working for a small broker is no longer interesting or challenging. They then leave for a competitor on a much higher salary.

“My next challenge in coming years is a strategy to make sure they stay with us.”

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UPFRONT

OPINION

REDEFINING THE ROLE OF INSURANCE IN SOCIETY Tom Herbstein and Andrew Voysey discuss the potential implications of QBE’s ‘Premiums 4 Good’ initiative

AUSTRALIAN INSURER QBE recently launched a new initiative that attempts to realign the interests of its customers with its investment practices. If successful, it could represent a defining moment in the role of insurance in society.

‘Premiums 4 Good’ (P4G) allows QBE’s clients to mandate the insurer to invest up to 25% of their insurance premiums into socially responsible investments – predominantly green and socialimpact bonds at present. The initiative is optional, and QBE provides transparent reporting to highlight how investments are made and projects benefited. It offers no additional risk to QBE’s clients (mainly corporates), yet allows them to include the investments within their own analysis of their impact on society. P4G seemingly offers the client a win-win and, from a QBE perspective, some exciting commercial and strategic opportunities.

The context is important. QBE launched P4G amid a series of ongoing global corporate scandals that continue to undermine levels of trust between society and big business. The political implications of the resulting public discontent led Australian prime minister Malcom Turnbull to challenge his G20 peers to “civilise capitalism” at their recent summit in China.

As part of the financial services sector, insurers are not immune from these challenges. If anything, the low levels of public understanding of how insurance works means that, as an industry, insurers face an even more urgent need to connect better with the needs of their clients.

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At the same time, the climate-risk protection gap – growing exposure to climate risk versus an overall decline in insurance penetration – is continuing to threaten the relevance insurance plays as society’s risk manager.

Now a concern firmly on the boardroom table, there is growing consensus that the financial services sector needs to find ways to redirect capital flows into investments that can support the transition to a zero-carbon, climate-resilient economy. As the third-largest type of institutional investor, and being so impacted by climate risk, insurers are regarded as a key player in this respect.

However, a recent study called ‘Investing for Resilience’, by ClimateWise – an industry leadership platform facilitated by the Cambridge Institute for Sustainability Leadership (CISL), of which QBE is a member – highlighted how insurers are not ‘natural’ investors in resilience.

This is, in part, due to a mix of regulatory pressures, short-termism and the need for insurers to maintain risk diversification between their underwriting and investment portfolios. One of the biggest challenges is that the majority of the insurance industry’s invested assets are client funds (ie premiums), rather than company profits.

This means insurers’ primary concern is to ensure they have sufficient access to funds from invested premiums to be able to pay claims as they arise, rather than leverage any other systemic benefits their investment activities may produce.

P4G is an attempt by QBE to tackle some of these challenges head-on by inviting their clients more directly into the decision-making process around what impact they would like their invested premiums to have. Crucially, it is an attempt to get a clear mandate from the client that invested assets can, and should, be used to fund societal benefits, on top of generating sufficient financial returns.

From a QBE perspective, the benefits of P4G are clear. It offers a way to differentiate itself and add value to client relationships in ongoing soft market conditions. Customers get greater say over where their funds are invested (a complete novelty) and can include the impact of their invested premiums in their assessments of their own wider contribution to society’s goals. As P4G helps to build better and more transparent

relationships with its clients, this should resonate well with policymakers and regulators, highlighting the company’s intent to tackle the ongoing trust issues head-on. Lastly, and possibly most excitingly, P4G provides a potential opportunity for QBE to respond to some of the macro risks impacting society and, by default, the insurance sector, and this could be used in the future to target systemic risks, such as those arising from climate change.

Nevertheless, P4G faces its challenges. First, a lack of viable investment opportunities at scale means that considerable market growth, in suitable investment instruments, is required.

These will need to accommodate the fact that insurers’ investments must generate sufficient

environmental objective, and we are keen participants in such discussions”.

Brader is certainly not alone. Indeed, CISL has been working for the last three years with a group of institutional investors under the banner of the Investment Leaders Group. One particular project has been to develop a set of six simple, yet scientifically robust, impact metrics that would allow professional investors to tell their clients what impact their investments have had against the UN’s Sustainable Development Goals. Interest from the market has been significant.

In conclusion, P4G provides an exciting example of an insurance company innovating ways to achieve a greater societal impact via its investment activities by integrating the client

“P4G provides an exciting example of an insurance company innovating ways to achieve a greater societal impact via its investment activities by integrating the client directly into the process” financial returns, with strict liquidity requirements, to pay claims. The second is how to maximise the potential of P4G to tackle risks that are having a systemic impact on the underwriting side of the insurance business, such as investments that can help to enhance climate resilience.

Regardless, the attempt by QBE to redefine its relationship with its customers through P4G makes it a significant and exciting innovation.

Considering that QBE alone invests US$26bn of premiums, even a small proportion of this redirected into socially or environmentally beneficial investments could have a sizeable impact. Yet multiply this out across the $35trn of global insurer assets and you can see the impact this initiative could have if industry-wide scale could be achieved. This accounts for why Gary Brader, QBE’s group chief investment officer, says “we sense a strong momentum building across both issuers and investors to work together to create more investable product that ticks the necessary risk and return boxes, whilst at the same time delivering an additional social or

directly into the process. Ultimately the success of P4G will depend not just on client uptake but also on uptake by the broader insurance sector and the ability of insurers to align such investments with solutions to the challenges they face on the underwriting side of the business. This will require a shift in the way the industry approaches managing societal risk and resilience, how the regulatory environment enables the growth of such investments, and whether enough investment opportunities can be created. These are exciting times.

Tom Herbstein is the programme manager of the ClimateWise insurance industry leadership platform on climate change risk, facilitated by the University of Cambridge Institute for Sustainability Leadership (CISL).

Andrew Voysey is director of finance sector platforms at CISL, where he has led the institute’s work with investors, banks, insurers and their regulators for nearly a decade since the GFC.

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UPFRONT

NEWS ANALYSIS

GETTING TECHIE The global insurtech industry is burgeoning. Two industry commentators discuss the state of play and the opportunities created for Australian brokers

THE RECENTLY RELEASED 2016 Fintech100 demonstrates not only the scale of the disruption occurring globally in financial services, but also the continuing growth of insurtech.

The report lists the leading 50 fintech companies in the world, along with 50 organisations identified as the emerging stars of fintech. Twelve insurtech companies were featured in the combined list – almost double the 2015 total.

“In 2015, there was some US$2.5bn [$3.29bn] raised in terms of insurtech,” says Martin Blake, KPMG’s national sector leader for insurance. But he adds that about 60% of those funds were raised in the US. He describes the insurtech space in Australia as “embryonic”.

Scott Fergusson, PwC Australia’s insurance leader, says, “Insurtech is almost like a collective noun of tech-driven entrepreneurs who see opportunities to improve the customer experience and engagement in insurance through technology.

“Andreessen Horowitz, one of the world’s leading tech venture capital companies, sees insurance as one of its top 16 areas of focus, in terms of investment. It’s because they see … the power of software and technology – in changing the way all businesses work – is going to have a profound impact on the way insurance is provided and the way risk is transferred.”

Winds of change Blake says, globally, insurers are being forced to think differently about business, given the

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persisting low interest rate environment and low returns on investments, and are consequently turning their attention to technology that affords them opportunities to reinvent their client engagement. He also discusses the changing needs and behaviours of the different generations, including younger consumers’ reliance on smartphone technology and their increasing preference to communicate via digital channels across all stages of the customer value chain.

“You’ve also got … the expectations for convenience, value and on-demand offerings [continuing] to increase, and customers wanting more mass personalisation and curation of products, services and content, which take account of the context in which they are

While insurtech developments may pose a threat, there are opportunities for brokers, according to Blake.

“They have got to explore the art of the

“[Brokers] have got to explore the art of the possible and engage with some of these technology companies” Martin Blake, KPMG Australia operating as well.”

There’s also the trust aspect.

“Thirty per cent of Gen Y customers are willing to buy from a non-insurance company, and people are putting a lot more trust in terms of social and online recommendations, with nearly half of consumers considering social media commentary in terms of buying decisions,” Blake says.

possible and engage with some of these technology companies, which can enhance their service offering and enable them to reinvent themselves and be relevant. It really does provide them with an opportunity to materially improve risk assessment with massive amounts of data from internet of things devices, and also improve the customer satisfaction and engagement process

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THE 2016 FINTECH100 Insurtech companies in the leading 50 Oscar (USA – rank #3) Zhong An (China – rank #5) Collective Health (USA – rank #22) League (Canada – rank #36) Policybazaar (India – rank #44) Knip (Switzerland – rank #48) Emerging stars in insurtech Anivo (Switzerland) Compara Online (Chile) Fluo (France) Lemonade (USA) OSeven Telematics (UK) Pair Finance (Germany) Source: H2 Ventures and KPMG 2016 Fintech100

[by] having greater transparency for the underwriting and also rating process.”

Fergusson similarly believes data from IoT devices, as well as sensors, will help brokers ensure they’re adding value for customers as risk advisers, as opposed to being largely a “placement service”.

“There’s an explosion of sensor technology that enables one to have a better and predictive view on how … risks are unfolding, which then helps with the management of those risks and helps prevent those risks from becoming events,” Fergusson explains.

to provide the insights that the clients can’t come up with for themselves; and then the technology that enables efficient throughput of risk through to the insurance placement market … is probably

Taking part

the third piece,” Fergusson says.

“The thing about a lot of technology nowadays is that it’s not terribly expensive. Some is, but the trends are that you can use new technology in an efficient way to deliver greater value than you did in the past.”

Blake says a big question for brokers and insurers to ask themselves is whether they will

It’s therefore necessary, he says, for brokers to ensure they are well attuned to developments in technology.

“The types of tech that they’re really going to be interested in are types that are going to help their clients manage their risks on a preventative basis, and the types of data, tools and techniques

build, ally or rent the technological capabilities in question.

“The reality is that you don’t need to do this all yourself, and there definitely is a big opportunity to form partnerships in a selected way and partner to get access to some of this new capability, because if brokers or insurers just try to do it themselves, it’s going to take an awful lot of time and the speed at which this change is occurring is breathtaking, really.”

Fergusson stresses the need for local insurance businesses to support the insurtech space here.

“China wants 10,000 start-ups in the financial services space. Jack Ma [founder and executive chairman of Alibaba Group] is getting into insurance because he sees great opportunity for

“You can use new technology in an efficient way to deliver greater value than you did in the past” Scott Fergusson, PwC Australia insurance innovation in China. He’s already gone into a joint venture with Tencent and Ping An to create China’s first online insurance company,” he says.

“This is why it’s important that we all get behind Australian innovation to better serve our clients, but also better serve our community so that we can compete on the global stage.”

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UPFRONT

INTELLIGENCE CORPORATE ACQUIRER

TARGET

PRODUCTS COMMENTS

Aon Risk Solutions

Stroz Friedberg

Financial terms not disclosed and acquisition subject to customary closing conditions

CBL Corporation

Securities and Financial Solutions

The $150m strategic acquisition was given the regulatory green light in October

Cover-More Group

Travelex Insurance Solutions

Cover-More Group announced the $138m acquisition in September

BHSI ANNOUNCES NEW CIVIL LIABILITY POLICY

Berkshire Hathaway Specialty Insurance has launched Professional First Financial Institutions Civil Liability Insurance.

According to a statement, the new policy expressly addresses the broad range of claims by which financial institutions can be confronted. It uses an expansive “professional services” trigger not linked to a client, fee or specified service. The policy also covers bail bond costs, deprivation of assets expenses, and court attendance and prosecution costs. It also includes pre-investigation loss coverage, as well as contractual liability and mandatory contractual terms coverage.

AON RISK SOLUTIONS AGREES TO ACQUIRE RISK MANAGEMENT FIRM

Aon Risk Solutions has announced its agreement to acquire all of Stroz Friedberg, a leading global risk management firm based in New York City with offices across the US and around the world.

In a statement announcing the acquisition agreement, Aon said the combination of the two entities would “extend Aon’s industry-leading position in cyber-risk brokerage and creates a comprehensive Cyber Risk Management Advisory Group with distinct client value, including standards-based cyber assessments and industry-leading risk transfer solutions.”

It also said that integrating Stroz Friedberg’s cyber security governance and advisory services would position Aon as the worldwide leader in cyber-risk management.

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XL CATLIN UPDATES ACTIVE ASSAILANT SOLUTION

Prompted by the 2016 Nice attack that saw a large cargo truck used to cause death and terror during France’s celebration of Bastille Day, XL Catlin has updated its Active Assailant solution.

The upgraded Active Assailant solution now covers the use of road vehicles in active assailant events in addition to coverage for property damage, bodily injury and business interruption.

The updated solution also includes enhanced extra expense coverage, which may include costs related to public relations assistance, relocation, counselling and/or psychiatric care, medical expenses, additional security and job retraining.

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FM GLOBAL UNVEILS CYBER INSURANCE FIRST

FM Global has launched a new cyber insurance innovation – Cyber Optimal Recovery – that will allow clients to maximise recovery following a cyber loss.

The endorsement, designed to work alongside FM Global Advantage products, allows clients to choose whether the Global Advance policy is primary, contributing, or in excess to a standalone cyber policy to maximise post-claim recoveries under both policies.

Recently, FM Global also launched a new combined engineering and underwriting unit designed to work in the cyber market, as the insurer looks to build on its history in the market.

The insurer has written first-party data coverage for more than a decade.

SOLUTION ENHANCES COMBINED POLICY

Solution Underwriting has added cyber liability to its combined Solution One policy.

Believed to be the first time cyber has been added to a combined policy that includes professional indemnity, general liability and management liability, Rhys Mills, managing director of Solution Underwriting, said that the cover is aimed at the SME market.

“It is mainly aimed at SME businesses rather than your larger corporations and it really gives them that comfort and protection of them all being within the same underwriting agency, the same underwriter and the same policy,” Mills told Insurance Business.

NTI LAUNCHES ENHANCED PRODUCT SUITE

Commercial motor and fleet insurer NTI has announced the launch of its new carrier’s cargo insurance product and enhanced product suite, following feedback from brokers.

The new product, Carriers Protect, was designed to cater to the unique needs of Australian transport operations. It is offered as a stand-alone product and as part of NTI’s Transport Package. The stand-alone Carriers Protect is also available via Sunrise and iClose.

NTI has also expanded its business interruption product to cover trailers, and has added business interruption cover within their Yellow Cover for trucks and trailers.

PEOPLE NAME

LEAVING

JOINING

NEW POSITION

Michael Peacock

n/a

Chubb

Head of energy and power, Asia Pacific

Stephen Hanna

n/a

Chubb

Energy & technical lines manager, Australia and New Zealand

Michael Frazer

n/a

Chubb

Head of property, Asia Pacific

Peter Bonney

n/a

IAG

Head of Digital Labs (interim)

Markus Nordlin

Zurich

QBE

Global chief information officer

Margaret Murphy

Barclays

QBE

Group chief human resources officer

Mike Wilkins

n/a

QBE

Non-executive director

Samantha Hollman

n/a

Steadfast Group

Chief operating officer

Fiona Thompson

n/a

Suncorp Group

Chief risk officer

Kate Olgers

Commonwealth Bank

Suncorp Group

Chief legal officer

David Carter

n/a

Suncorp Group

CEO, banking and wealth

MIKE WILKINS RETURNS TO INSURANCE

The former CEO and managing director of IAG, Mike Wilkins, has been appointed as a non-executive director of QBE, effective 1 November.

Wilkins left his role at IAG in November of last year.

His tenure in financial services spans three decades, predominantly in Australia and Asia, alongside experience in India and Europe.

In recent times, he’s been a non-executive director of AMP and previously held non-executive roles at Maple-Brown Abbott and Alinta.

Marty Becker, chairman of QBE, describes Wilkins’ contribution to the insurance industry as “exceptional” and says he’s delighted to welcome him to QBE.

SAMANTHA HOLLMAN IS NEW STEADFAST COO

Steadfast Group has announced the promotion of Samantha Hollman to the role of chief operating officer, following the resignation of Dana Williams.

Hollman has over 20 years of experience in insurance, with 13 of those having been spent at Steadfast. She’s held key executive roles including, most recently, executive general manager projects, brands, people. She’s also held executive roles in broker services, project management and marketing and communications.

In welcoming Hollman to her new role, managing director and CEO Robert Kelly said, “Samantha brings significant experience and a thorough understanding of our business. I look forward to continuing to work closely with Samantha in her new role.”

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UPFRONT

INSURER UPDATE NEWS BRIEFS Munich Re using big data to create new coverage

Munich Re is now using big data to improve the identification, modelling and insurance of risks.

Ludger Arnoldussen, a member of the board of management, said in a company statement that big data is integral to innovation processes at Munich Re. “It means new, clearly defined and more flexible insurance solutions and support services for our clients,” Arnoldussen said. “We are seizing these opportunities – with our own resources, and supported by external specialists.

We are also regularly involving the clients at an early stage in order to develop perfectly customised solutions and applications that can also be adopted at a global level.”

Vero sets up online risk calculator

Vero has launched a free online risk analysis tool to address the knowledge gap about business risk and insurance in the SME market.

Vero’s Risk Gap Calculator is an online questionnaire and interactive tool that brokers can use to begin to converse with SMEs about risk exposures. Using the tool, they can help customers understand their business risks and the level of insurance coverage they need to protect their business.

It uses simple questions to ask customers about their business concerns and existing insurance cover, to inform them about potential gaps in their coverage. It’s available through the VeroCentral website.

IAG’s sights set on growth in Asia

IAG is keen to develop its business in Asia on the basis it makes “good commercial sense” to do so, according to managing director Peter Harmer, speaking at the

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organisation’s recent AGM in Sydney.

Currently IAG has a presence in Thailand, Malaysia, Vietnam and India.

“We are particularly keen to build on the sound businesses and good markets that we have in Malaysia and Thailand,” Harmer said. He also said IAG is planning to increase its holdings in the joint venture with AmBank in Malaysia. Currently, it holds a 49% stake in AmGeneral Holdings.

Insurance giants form blockchain initiative

Aegon, Allianz, Munich Re, Swiss Re, and Zurich have joined forces to launch the Blockchain Insurance Industry Initiative B3i, in a bid to explore the potential of distributed ledger technologies to make the industry more efficient.

According to a statement, if the technology proves viable, it could be utilised to streamline paperwork and reconciliations for re/insurance contracts, accelerate information and money flows, and significantly improve auditability.

For their pilot project, the group will conduct a study to examine the feasibility of the use of blockchain technology to develop standards and processes for the insurance industry.

Ansvar launches broker toolkit

Specialist insurer Ansvar recently launched its new Business Resilience Toolkit at its broker forums around Australia. Designed to help brokers assist their SME clients in the event of a crisis, the new risk solution product follows the release of Ansvar’s new business insurance products for SMEs in July.

According to a statement, Ansvar’s Business Resilience framework comprises a crisis management plan, a business continuity plan and recovery plans – all of which aim to allow brokers to work easily with their SME clients when faced with a disruptive event.

P2P PROVIDER HAS ARRIVED A high-profile German insurance innovator is about to begin offering its products here in Australia Berlin-based peer-to-peer insurance brokerage Friendsurance has announced it will launch its first product in Australia in early 2017.

Said to be the first company worldwide to launch genuine peer-to-peer insurance products, the expansion of Friendsurance to Australia was announced on the company’s sixth birthday back in March.

Co-founder and managing director Tim Kunde told Insurance Business earlier this year that the idea for the business was “inspired by insurance in its original form”, and that the company’s vision is to make insurance more customer-friendly.

“Today, big insurance companies can carry claims of any amount, but marketing, administration and fraud cause remarkable costs,” Kunde said at that time.

“Against this background, we developed an insurance concept that again implements smaller groups within bigger insurance societies and rewards remaining claimless within this group with annual cashbacks. This is how insurances get more affordable and fair.”

According to a company statement, Friendsurance will operate in Australia through a licence arrangement with Friendsurance Australia. Friendsurance provides IP and support from Berlin to the Australian start-up, while Australian-based Ellerston Ventures, the venture capital arm of Ellerston Capital, is the business’ primary financial backer.

In Australia, the plan is to offer a range of insurance products based on Friendsurance’s share-economy approach. Customers form groups of, typically, 10 people, and each customer contributes part of their premium to a pool to cover smaller claims. Customers can

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receive up to 40 per cent of their premiums back annually if they maximise their group size and make no claims. The amount returned to customers decreases as claims are made by the group.

“The timing is right for Friendsurance in Australia because Australian customers are looking for new and different options

“Australian customers are looking for new and different options in the insurance space” in the insurance space,” said Perry Abbott, Friendsurance Australia’s CEO and managing director. “In Germany, Friendsurance customers have received, on average, 33% cash back annually in property lines, which is an incentive we would like to bring to our Australian customers.”

Abbott added that he sees the peer-topeer model and cash-back incentive as only the beginning of the changes in the way that insurance works.

“People will always buy insurance because it makes good sense to be protected, but our lifestyles are changing and the risks we are exposed to are different today than they were 20 years ago. Friendsurance wants to work with the insurance industry to offer customers new dimensions in insurance products that they’ll feel good about.”

Q&A

Jessica Wisniewski Manager, insurance literacy and engagement IAG

Background Attendees of the recent NIBA convention in Melbourne had the opportunity to experience IAG’s First Place, a virtual reality game that helps participants identify hazards in the home

IAG’s virtual reality for brokers Can you provide some background to First Place?

We’re passionate about exploring new ways to make the world a safer place and the First Place pilot is one of several initiatives we have developed to help create positive change for our customers and communities.

We know that millennials (young people aged between 18 to 32 years) often aren’t taking the right steps to protect themselves from risks and unexpected events when they move out of home for the first time, and saw an opportunity to use our expertise in home safety to help millennials be better prepared for the future.

We worked closely with a group of millennials to explore how we could develop an experience that was both engaging and educational. Together we created the First Place game, which uses virtual reality technology to give participants a first-hand experience of common home hazards and how to avoid them.

Over the past few months we have been test-driving the First Place experience with our people and partners to capture learnings and feedback that will help to fine-tune the game and shape how it can be used in the future.

Can you describe the First Place experience?

We’ve used the latest Microsoft HTC Vive virtual reality technology to provide millennials with a really immersive experience.

When the participant puts on the virtual reality goggles, they will be transported to a virtual home filled with hidden hazards. Each participant has 90 seconds to identify the dangers or work out how to avoid them. The game is a very powerful demonstration of how easy it is for unexpected things to happen in the home.

It’s been incredibly rewarding to see millennials get so much enjoyment from the game, while learning at the same time. The majority of participants have said they are more likely to spot hazards in their home after playing the game, and then go home and make changes to their living environment. For us, that’s a great initial outcome.

What has the feedback been from brokers who’ve experienced First Place?

The NIBA convention was one of the first external events we visited during the First Place pilot and we were delighted with the broker engagement at the conference.

The broker community is eager to embrace new technologies and we loved seeing so many of our broker partners giving it a go.

The feedback was overwhelmingly positive and showed us that the game really does appeal to both the young and young at heart!

It has been amazing to see the role this technology can play in building awareness and creating behaviour change. The feedback we have received during initial testing has been very valuable, and we’re excited about how we can use this to further enhance the First Place pilot.

Friendsurance founders (from left) Janis Meyer-Plath, Sebastian Herfurth and Tim Kunde.

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UPFRONT

UNDERWRITING AGENCIES UPDATE

LLOYD’S H1 2016 PROFITS SOAR The industry giant reports a significant rise in profits, despite an uncertain, low interest rate environment

navigate our way through these difficult times.”

Speaking about Lloyd’s future steps, Beale said: “Clearly the UK’s referendum on its EU membership is a major issue for us to deal with, and we are now focusing our attention on having in place the plans that will ensure Lloyd’s continues trading across Europe.”

Nelson commented on Lloyd’s global access: “Whilst we are operating in difficult conditions, we have continued to make significant progress in growing our presence in the fast-growth

“Lloyd’s capital position does remain strong, increasing 6% on December 2015 to £26.6bn, as do our financial ratings”

Lloyd’s has posted a £260m (A$430m) increase in profits to £1.46bn (A$2.37bn) for the first half of 2016, compared to £1.20bn (A$1.95bn) in the same period last year. The world’s specialist insurance and reinsurance market has also reported an 11.7% (H1 2015 10.7%) annualised return on capital and a 98% (H1 2015 89.5%) combined ratio for the first six months of 2016.

In a joint statement, Lloyd’s chairman John Nelson and chief executive Inga Beale acknowledged the pressure posed by

NEWS BRIEFS

challenging market conditions on premium rates, with 2016 witnessing an increase in major claims, primarily due to the Fort McMurray fires in Canada. The two stressed, however, that Lloyd’s remains financially sound.

“Lloyd’s capital position does remain strong, increasing 6% on December 2015 to £26.6bn, as do our financial ratings. Our rating with Fitch is AA- (Very Strong), AM Best reaffirmed our A (excellent) status as did Standard & Poor’s at A+ (strong), which is a significant vote of confidence in our ability to successfully

Steadfast-owned strata specialist forays into insurtech

CHU Underwriting Agencies says it’s venturing into the insurtech space with the launch of digital underwriting agency CHUiSAVER Underwriting Agency.

The digital agency’s first product will be residential strata insurance, underwritten by QBE, which will be available once it is granted its Australian Financial Services Licence.

CHU CEO Bobby Lehane said: “With the use of technology, CHUiSAVER will deliver high quality strata products at lower cost.”

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markets across the globe. In 2016 we have applied for onshore reinsurance licences in India and Malaysia, as well as opening a new office in Bogota, Colombia. This complements the growth we are seeing in Dubai, China and in our more traditional markets, particularly the United States.”

Lloyd’s has seen the departure of Tom Bolt, performance management director, and Sean McGovern, legal counsel and chief risk officer, in 2016, after seven and 22 years, respectively, with the company. They also welcomed John Hancock, who joins Lloyd’s in December, as performance management director.

Lloyd’s says cyberattacks could cost Australia billions

Cyber breaches and attacks in Australia could cost the economy up to $20.83bn, Lloyd’s has said, stressing that it’s essential that companies have appropriate risk-mitigation strategies and coverage in place.

A joint Lloyd’s and Cambridge University study found that out of the world’s 301 major cities, Sydney has the 12th most GDP at risk from cyberattack. It says $6.8bn of GDP is at risk from 2015-2025.

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Q&A

Chris Mackinnon General representative in Australia, country manager LLOYD’S

Fast facts Lloyd’s Dive In festival this year featured 45 events in 16 cities across four continents, with its aim to foster inclusive workplace practices that extend to all employees

Lloyd’s champions diversity and inclusion How was the response to the Dive In festival events in Sydney?

Every single event that we ran was oversubscribed … and we ended up with about 20 separate pieces of media coverage in Australia and we reached – we believe – somewhere in the order of 10 million people with the messaging that we wanted to get across … we got general recognition that what we did with Dive In was completely unprecedented, and it was brought together in a non-competitive environment, which was important for the whole industry to get behind.

To be honest, I was completely overwhelmed by the response from the general insurance market here in Australia. I thought it was an absolutely superb example of what we can do when we work together.

Were there any sessions in Sydney that received an especially strong response?

I think all of the sessions did in their own right, because they were all pitched to try to target certain sectors of D&I type activity … I think one of the key messages that came out to us from all of the events, quite loud and clear, was really about the war for talent.

The importance of having a diverse and inclusive workplace is getting more and more relevant and more important to the next generation of talent coming through. It seems to be if you interview a new

Insurance needs diversity, says Lloyd’s chief

According to Lloyd’s global CEO, Inga Beale, embracing diversity is vital for the future of the industry. Speaking at a Lloyd’s Dive In Festival event in London in late September, Beale said: “The world is changing, and we know the economic power is going to be shifting to countries that we aren’t perhaps that familiar with dealing with.

“People are going to be buying insurance in a different way, and coming from different cultures. They’re going to want different people who reflect them more and more.”

young staff member coming in and you ask them if they have any questions, quite often you’re hearing, “What are you doing about diversity and inclusion?”

The other thing we learned from it … is it’s not just about gender, LGBTI or physical or mental health. It’s also about skill sets, and I think … given the tendency at the moment for the world to be moving at about five times the pace of the insurance sector, we have to maintain that pace and we have to catch up with the speed of evolution of emerging risk and new threats and new opportunities, and we’re not going to do that by recycling people internally within the insurance industry. We’ve got to bring in expertise in different fields and different walks of life to try to embrace these challenges, whether it’s cyber technology, the internet of things … even climate change. We need experts in that field working in our insurance industry to be able to help us manage the risk going forward.

Will Lloyd’s run Dive In festival events again in Australia in 2017?

We definitely will be doing a festival again in 2017, but I think one of the more important aspects of this is … the work starts now. We’ve done the festival; we’ve done the talking; we’ve raised the awareness; and now we need to actually start implementing change and implementing strategies to try to change our marketplace.

MECON expands into NZ

MECON Insurance has extended its Australia-wide construction-sector insurance into the New Zealand market, with an Auckland office.

Glenn Ross, CEO of MECON and a Kiwi, said it had always been their plan to export their business model, now in its 14th year, to NZ. “With common risk profiles in construction globally, it’s relatively straightforward to implement the business in New Zealand.

Having built the business to its current size in Australia, we now have the capability to work in the New Zealand market at all risk levels.”

New digital claims technology to be offered locally

Technology provider CSC announced it will offer self-serve digital insurance claims technology by 360Globalnet, a UK-based digital insurance solutions provider, in Australia and New Zealand. It says the technology will allow customers to easily manage the end-to-end claims process via the internet.

Michael Neary, head of insurance, CSC Australia and New Zealand, said the capabilities will “redefine the customer experience” in claims management.

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PEOPLE

THE BIG INTERVIEW

A WINNING EQUATION XL Catlin’s Robin Johnson talks about the successful integration of two sizeable insurance businesses and working to build new broker partnerships

XL GROUP’S acquisition of the Catlin Group is one of the highest profile M&A deals in insurance in recent times.

Robin Johnson has led the combined XL Catlin insurance business in Australia since July 2015, previously having headed up its Singapore insurance operations. With a background in financial lines underwriting and a CV encompassing leadership roles across the globe, he joined XL Catlin after a decade with AIG. Johnson discusses the rapid integration of the XL and Catlin businesses locally.

“Our priority when we brought the company together was to keep all our employees and our clients, and to maintain our business retention metrics,” he says.

“I think we’ve achieved that and more.”

He says XL Catlin has exceeded its own expectations in the level of growth it’s achieved in Australia in the past 18 months.

“We were fortunate that the transaction happened in May and everyone was working on the June renewal season. As a consequence of that, we put the two companies together and everybody just had to work together. They had this instant opportunity to collaborate on accounts.”

Johnson says the Australian business put “some pretty good wins on the board” immediately after the transaction completed.

“I think that gave us an internal morale boost and it raised our profile in the market,” he says.

“I think it demonstrated to our brokers our increased scale. We’d come to market at the transaction with a very clear message that one plus one equals two or more … we were effectively saying our capacity on any

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particular line is the sum of the two capacities and our appetite for any particular risk is the sum of the two appetites. We’re not going to reduce our appetite. We’re only going to expand it.”

Standing out Johnson thinks XL Catlin is a business of the perfect size.

“We’re large enough and we have the scale of balance sheet to be able to take on clients’ most complex risks and for them to be very comfortable with us, and we’re very well rated as a consequence of that,” he says.

“But we’re small enough to be very accessible and nimble and responsive …

significant authority to be able to sit in front of clients and make decisions, and work with brokers and make decisions.”

The same thing is true, he says, of the claims team.

“Our claims team has sufficient authority here to be able to handle the vast majority of claims that come across their desk – even very large ones – and that means that we can give great claims service.

“Our claims team … is constantly meeting with brokers and clients … we want them to understand what the brokers and the clients want – and having these face-to-face interactions will also enable them to contribute their experience to

“We’re large enough and we have the scale of balance sheet to be able to take on clients’ most complex risks and for them to be very comfortable with us” our very top management are incredibly accessible, and we don’t have very many layers. We are not bureaucratic. We have very short decision chains and, typically, they’re local decision chains.”

Johnson says the insurer’s big play in Australia is its specialty products.

“We have a very broad product suite … we’re not just doing property and casualty,” he says.

Johnson says another key differentiator of XL Catlin from its competitors is its staffing model: “In Australia, 75% of our underwriters are senior underwriter or above. That means they are capable, empowered and they have

the underwriting process, which clients appreciate and helps resolve matters quickly.”

Johnson also cites XL Catlin’s global network as another key advantage.

“We can serve clients in over 200 jurisdictions around the world, and I think there are probably half a dozen insurers that can do that,” he says.

“That’s increasingly relevant when you think about how even relatively small Australian firms are now doing business, because of the internet and because of technological advancements, all around the world. They have a need for international

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PEOPLE

THE BIG INTERVIEW

paper to insure their business, and we can make that extremely simple for them.”

The future Johnson sees enormous opportunities for XL Catlin in Australia.

“We are underpenetrated in almost every single line that we’re in,” he says.

He talks about the strong appeal of the Australian market, owing to its size, its profitability and its sophistication.

“The clients are sophisticated and they have sophisticated needs. They’re looking for business partners that can provide innovative products and great service, and that enables us to leverage our differentiators. It plays very much to our strengths.”

Talking innovation, Johnson mentions the agreement XL Catlin announced back in January in London with Oxbotica, a global leading organisation in autonomous mobile robotics technology. The agreement is an important step for the insurer in its efforts to understand how to insure emerging risks without loss histories.

“We have an agreement with [Oxbotica] where, effectively, we work with them, sharing our respective expertise. We are bringing to

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the table our knowledge about risk and insurance, and gathering data from their trials so that we can analyse and understand how to insure a product with no claims history,” he says.

“What’s particularly interesting about technology now, and the Oxbotica technology in particular … is that the technology and the risk isn’t static because these systems are self-learning. What we’re effectively doing at the moment is not just learning how to underwrite a product with no claims history, but also how to underwrite product that is constantly improving itself and learning.”

The Brooklyn acquisition In October, XL Catlin announced its acquisition of Sydney-based Brooklyn Underwriting.

“I couldn’t be more pleased that we’ve closed the deal,” Johnson says.

“We’ve worked with Brooklyn for many years as a capacity provider, and when the opportunity was given to us to look at acquiring them, we were very excited and we spent the best part of a year doing the deal with them.”

The Brooklyn acquisition is a play by

XL Catlin for a bigger presence in the SME sector.

“Brooklyn is a great partner for us. We are predominantly a major accounts underwriter.

We’d like to be in that SME space. Their model is an extremely efficient way of accessing that SME space. They have the right people, the right systems, and the right marketing approach. And the right relationships – that’s probably the key thing.

“They’ve got a very good business model, which is driven by some very effective technology that enables them to underwrite efficiently, but also brokers to be able to go onto a platform and pull down quotes for many different products.”

He says the businesses are also culturally a “great match”.

“We’ve got that service-oriented culture which they have; we’re entrepreneurial and they’re entrepreneurial; we’re innovative and they’re very innovative.”

At the moment, XL Catlin is determining which products it can provide Brooklyn to take to market.

“They have a fairly extensive product range already, but we have a much broader range that we can draw on and offer to their SME broker and client base, further expanding our reach in the Australian market,” he says.

Johnson tells Insurance Business the acquisition also demonstrates the insurer’s commitment to expanding its broker base.

“We have very strong relationships with the global brokers and we’re looking to build new relationships,” he says.

“We are open to all brokers, but we are looking to actively seek out smaller brokers, independent brokers, and work with them on specialty products.”

Next year, XL Catlin will launch its expanded accident and health business and political risk and trade credit products in Australia. So, what else is on the cards?

“We’ve made some substantial investments in geography and product and we will be focusing on making those investments work,” Johnson says.

“It seems to be being very well received by the market and, hopefully, it continues to be.”

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FEATURES

BROKERS ON UNDERWRITING AGENCIES

BROKERS ON UNDERWRITING AGENCIES Back for a second year, this Australian-first survey asks brokers around the country to name the best of the best in the underwriting agency space THIS TIME last year, the Insurance Business team was excited to bring you the inaugural Brokers on Underwriting Agencies survey.

We’re now delighted to deliver the results of our second annual survey, again striving to recognise the underwriting agencies receiving the strongest endorsements from brokers across Australia.

We received a wealth of feedback on last year’s survey and, in response, we’ve made a number of changes. Notably, we’ve added an additional five product categories, allowing a wider range of agencies to receive well-deserved recognition from their broker colleagues. We’ve also removed assessment of written submissions from the process of determining our medallists, which means the results that appear on the pages that follow are based solely on brokers’ votes.

I’d like to congratulate all the businesses that have been singled out by brokers for recognition.

There can be no denying the tremendous work that continues in Australian agencies.

Tim Garratt, editor

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FEATURES

BROKERS ON UNDERWRITING AGENCIES METHODOLOGY

$3.5bn

The approximate value of the underwriting agency sector’s annual GWP in Australia

2,700

The number of people employed by underwriting agencies in Australia

How did we come up with the final Brokers on Underwriting Agencies results for 2016?

Using our online newsletter and Twitter, we invited brokers to complete a survey on our website, asking them to nominate the top three underwriting agencies in 11 product categories.

The product categories chosen were those deemed by the Insurance Business team to have the most significant number of market participants in the Australian agency space.

Our 409 survey respondents were also given the opportunity to name the best insurance product provided by an agency in the past 12 months. In doing so, participants were not restricted to a finite list of product lines and agencies. Responses to that free-form question were used to determine medal winners in our Brokers’ Pick category.

Additionally, survey respondents were asked to share their thoughts on those aspects of their dealings with underwriting agencies of most importance to them, and the impact of any technological improvements on their dealings with agencies.

BROKERS ON TECHNOLOGY We asked surveyed brokers to share their thoughts on the impact of technological improvements, including broker platforms, implemented by underwriting agencies.

Here are some of their thoughts:

The introduction of new broker platforms has greatly improved the overall services and has proved to be much more beneficial in winning business Online systems that capture sufficient underwriting information (without being too onerous) are a great advantage to underwriters/ underwriting agencies and brokers alike The advent of faster internet and cloud-based services improves efficiencies Electronic delivery platforms … have improved turnaround times but also free up the staff to help/discuss on technical aspects of the policies being provided Online portals are great for indicative pricing and capturing of basic information. Underwriting backup to this process is critical Technology has improved across all areas, but there is always a need for personal service and relationships in insurance

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FEATURES

BROKERS ON UNDERWRITING AGENCIES WHAT BROKERS WANT important to take away from the results is that the final average score for six of the seven categories was well above four/five. While some categories were widely considered more important than others, all of them were ultimately important to brokers, and agencies should accordingly strive for the best on each and every one of those fronts.

WHAT’S IMPORTANT TO BROKERS? Coverage 4.73

New business turnaround times 4.54

THE CLAIMS EXPERIENCE

Overall service levels 4.51

We asked brokers to tell us whether underwriting agencies’ turnaround times for claims and new business quotes improved or worsened during the past year.

Claims turnaround times 4.50

50% Broker support 4.48

42%

40%

36%

30% Premium stability 4.39

20% 10% 0%

Commission structures 3.80

0

1

2

3

4

5

Note: Categories were individually scored between one and five, where five equates to very important Insurance Business asked those who took part in our Brokers on Underwriting Agencies survey to tell us what aspects or attributes of their dealings with agencies are of the utmost importance to them.

Unsurprisingly, the coverage itself that an agency offers took out top honours for the second year in a row. It’s an obvious statement that, more than anything, brokers want an agency to deliver a product that constitutes the right fit for their client’s needs.

Somewhat more surprising was the movement of new business turnaround times up to second place, having ranked fourth in 2015. However, only 0.04 separated second from fourth; overall service levels having taken third and claims turnaround times coming in at four.

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The message is clear: brokers demand the best for their clients, and that means broker interactions with their agency counterparts must be easy, efficient and facilitate a process that’s as hassle-free as possible for their insured clients.

Those working to provide a best-in-class service experience are likely to reap the rewards.

Close behind in fifth place was broker support, followed by premium stability in sixth. And right at the tail end of the table – and, interestingly, by some margin – was commission structures.

It’s the same position it occupied last year, and a similar result to that in our Brokers on Insurers survey, in which commission structures consistently finds itself towards the bottom of the ladder.

Once again, however, what’s perhaps more

13%

Improved Improved No significantly difference

8% Worsened

Around 55% of respondents reported some improvement or even significant improvement.

One participant told us that “underwriting agencies are much more responsive than insurers”.

Another said: “With so much competition, they realise that the major point of difference is customer service.”

A third survey participant said: “We find that the majority of underwriting agencies we work with are more flexible, willing to find common ground regarding coverage and pricing. They are more willing to support in order to secure business for all parties.”

On the other side of the coin, one broker told us that they were generally finding it was taking too long to get quotes. And another broker reported, “When underwriting agencies use London, turnaround times are extremely slow.

Also, I find that unless you do regular business with certain agencies, you do not receive any service at all.”

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FEATURES

BROKERS ON UNDERWRITING AGENCIES ACCIDENT AND HEALTH

AFA INSURANCE

ACCIDENT AND HEALTH INTERNATIONAL

The first award in Insurance Business’ 2016 Brokers on Underwriting Agencies report recognises agencies that offer coverage in the highly competitive accident and health space.

In last year’s inaugural survey, it was Accident and Health International that walked away with the gold medal and, in 2016, the brokers have spoken and their combined votes have delivered AHI its

Construction is the first of five new categories Insurance Business has introduced in 2016, in response to feedback we received on our inaugural survey.

Taking out our first gold medal for construction, as determined by broker votes, is MECON Insurance. Several survey respondents shared hugely positive feedback about the Sydney-based agency and its staff, one broker telling us: “The MECON underwriters really know their product. They are industry experts.” Another broker similarly commented on the expertise of MECON’s underwriting team and said the agency offered “competitive premiums”, and also “superior cover”. In addition to recurring comments praising the MECON team, several brokers also reported a highly positive claims experience with MECON. It is hardly surprising, therefore, to see the agency emerge a clear victor in our construction category for 2016.

Scoring silver is Pen Underwriting, one of

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DUAL AUSTRALIA

second consecutive win in this category.

According to its website, AHI’s mission is to strive to be the best provider of accident and health business, and our surveyed brokers seem to agree that the agency is on the right track. One respondent named AHI’s corporate travel policy the top product provided by an agency in the past 12 months, citing the level of service provided as the reason for that

nomination. Another respondent singled out AHI’s voluntary workers’ policy and similarly reported having received “exceptional service”.

Securing the silver is another agency that’s no stranger to our Brokers on Underwriting Agencies report. Sydney’s AFA Insurance walked away with the silver medal last year and, by a convincing margin, they’re taking home the same medal in 2016.

One surveyed broker told us: “AFA looks after the client at all times and helps the injured worker at claim time.” A second respondent named AFA’s personal accident and sickness insurance their top agency product of the year on the basis of “excellent service” and the “reasonable price” of the coverage. Further, one broker said in respect of the agency’s personal accident and sickness insurance that the “cover and acceptance levels are the best in the market”.

Finally, bronze has been won for the second year in a row by the organisation said to be Australia’s largest independent underwriting agency, DUAL Australia.

CONSTRUCTION

PEN UNDERWRITING

MECON INSURANCE

our multi-medal recipients in last year’s report. One broker described Pen’s contract works policy as a “tailored, industry-specific product with exceptional benefits”. Another survey participant nominated Pen for the top product of the year based on both the broadness of the coverage offered and the

ATC INSURANCE SOLUTIONS

approachability of the agency’s staff.

In third place, taking bronze, is ATC Insurance Solutions, who recently welcomed Sampath Soysak, the former Young Insurance Professionals Australasia president, to its team. Congratulations to ATC, Pen and MECON for winning broker votes in 2016.

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FEATURES

BROKERS ON UNDERWRITING AGENCIES CYBER AND INFORMATION TECHNOLOGY LIABILITY

BROOKLYN UNDERWRITING

DUAL AUSTRALIA

This year, cyber risk has been a product line on which Insurance Business has reported with great frequency. Globally, discussion continues as to what represents the most effective mode of addressing the emerging risk and, in Australia, take-up of coverage remains far from where it should be.

The brokers have voted and have told us that DUAL Australia is the agency currently leading the way on the cyber front. Comments from respondents applauded DUAL for the

As Patrick Boardman and Dean Pinto of insurance law firm Wotton + Kearney told Insurance Business readers in an article earlier this year, company directors and officers have “ever-increasing duties and obligations resulting in ever-increasing liability exposure”.

According to Aon’s 1H 2016 Insurance Market Update, Australia has become the most likely jurisdiction outside of the United States in which a company will face significant class action litigation – a salient reminder of the need for company directors and officers to have comprehensive and up-to-date D&O liability protection.

Last year, it was the team at DUAL Australia who took out top marks for D&O and, this year, they have succeeded in achieving the same again. And just as the case in 2015, it is a very clear first-place finish for DUAL. Taking the silver is Miramar Underwriting

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EMERGENCE INSURANCE GROUP

quality of its coverage, the policy being easy to comprehend, and the level of service provided by the DUAL team. But it must be remembered that, in this category, brokers have also been asked to vote for excellence in the information technology liability space, and survey comments also spoke to the strength DUAL has shown on this front.

“The quoting is very easy and the policy was tailored for the client,” one broker said, adding, “The coverage is very comprehensive

and the underwriter was very knowledgeable.”

Taking the silver medal is Brooklyn Underwriting, the Sydney agency recently acquired by global insurance giant XL Catlin.

One broker nominated its cyber offering for top product of the year, based on the educational materials provided and broker support, also noting that they were impressed

by Brooklyn’s willingness to “consider more out-of-the-box placements”.

On the IT liability side, one broker nominated Brooklyn’s offering for the top product accolade, saying it was a “quality product” provided by “understanding underwriters” who offered “excellent service”.

Our bronze medallist is Emergence Insurance Group, an agency still in its infancy, having launched in early 2015. One broker was especially glowing in his feedback for Emergence’s Cyber Event Protection policy: “They spend an enormous amount of time educating the broker fraternity … on how to sell the product/position the cover with clients. They understand cyber and are clear and concise in their coverage. They have changed the market.”

DIRECTORS AND OFFICERS LIABILITY

MIRAMAR UNDERWRITING AGENCY

DUAL AUSTRALIA

Agency, a first-time Brokers on Underwriting Agencies medallist. One broker respondent told Insurance Business that Miramar “always provides a competitive solution with the right product”.

Very closely following Miramar with bronze is Melbourne’s Solution Underwriting

SOLUTION UNDERWRITING AGENCY

Agency. It’s the same medal the Solution team received for its D&O liability offering last year, and one of three medals earned in the inaugural survey.

Congratulations to DUAL, Miramar and Solution for taking podium positions for D&O liability.

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FEATURES

BROKERS ON UNDERWRITING AGENCIES MANAGEMENT LIABILITY

SOLUTION UNDERWRITING

PRORISK DUAL AUSTRALIA

Of course, when it comes to the protection of companies against their insurable exposures – in addition to those faced by their directors and officers – management liability insurance coverage is paramount for a broad range of organisations. Fortunately for those organisations, there are several players in the

Not-for-profit organisations face their own risks, ranging from damage to equipment and property, to liability arising from injury of third parties. There’s consequently a critical need in the Australian community for underwriting agencies specially versed in providing coverage for such organisations.

Given the number of players in the sector, Insurance Business decided that not-for-profit should become one of five categories added to its Brokers on Underwriting Agencies report in 2016. Brokers have voted for those they consider the top players in the space and, in what was ultimately an extremely close contest, Community Underwriting was voted the inaugural winner.

Community Underwriting is a Sydney-based agency formed in 2014 and is said to be Australia’s only insurance provider for not-forprofits that is owned by its own clients. The agency provides insurance to a substantial range of charities, not-for-profit and community sector organisations across Australia. Congratulations

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market offering this protection.

When it came to awarding gold for management liability coverage, the brokers’ choice was clear, with DUAL Australia easily finishing first, once again. One survey respondent nominated DUAL’s management liability offering top product because of

“excellent claims and underwriting service”.

Another commented on the agency’s “helpful” underwriters, and the ease of transacting for coverage on DUAL’s online platform; a third broker mentioned “competitive prices”.

Solution Underwriting adds to its medal tally with a silver for management liability.

One broker commended Solution’s management liability offering because of its team’s “effective response to quotations”, as well as the “reasonable premium”, adding that its “terms provided for difficult/different client circumstances that do not fit into the slot of most of our general insurers”.

Rounding out the top three is ProRisk, meaning the medallist podium is identical to that for management liability in 2015.

One broker nominated ProRisk’s management liability offering as top product, telling Insurance Business of the coverage’s “good wording” and “competitive pricing”.

Another broker referred to the “dedication and service” of one particular ProRisk underwriter, whose service, according to the broker, is simply “the best”.

NOT-FOR-PROFIT

DUAL AUSTRALIA

COMMUNITY UNDERWRITING AGENCY

to first-time Brokers on Underwriting Agencies medallist Community Underwriting for a most impressive gold-medal finish.

The silver medal for not-for-profit coverage goes to DUAL Australia. Earning the bronze, we have another first-time medallist: ASR Underwriting Agencies, in third place. Founded

ASR UNDERWRITING AGENCIES

10 years ago, today ASR is among Lloyd’s top 10 coverholders in Australia.

A shout out to all three medallists, as well as the other participants in the not-for-profit space, helping those who often don’t appreciate their exposures to ensure that they are all adequately protected.

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FEATURES

BROKERS ON UNDERWRITING AGENCIES PRODUCT LIABILITY

MIRAMAR UNDERWRITING AGENCY

HIGH STREET UNDERWRITING AGENCY

PEN UNDERWRITING

Product liability insurance is a must-have for those involved in the sale, supply or delivery of products to the general public.

Recently, Samsung has faced enormous technical issues with its Galaxy Note7 smartphones, and reported instances of the phones smoking and catching fire. According to the US Consumer Product Safety Commission, Samsung (as of mid-October)

had received 92 reports of the phone’s batteries overheating in the United States.

From those cases, there were 26 reports of burns and a further 55 reports of property damage. Samsung ceased production of the phone, although what the ultimate impact on its reputation will be remains unclear.

Financially, it’s said the recall could cost the company more than $13bn.

In its 1H Insurance Market Update 2016, Aon reported a global trend towards flat rates in the professional indemnity market. The report also said all signs in the local market point towards a continuation of flat renewals in times ahead. Capacity, it said, remains as high as ever, but the level of competition is creating a “best-practice environment”, in which players are being compelled to provide the best wordings possible in order to compete.

For the second year in a row, our broker readers were asked to name the top PI player in the agency space in Australia and, once again, DUAL Australia has come out on top.

Commenting on DUAL’s PI offering, one survey respondent said DUAL “caters for the majority of occupations at competitive prices, underwriting staff are helpful when needed and they also listen to feedback”.

Certainly, a business will win respect from its clients when it demonstrates its effectiveness in taking on board their comments.

High Street Underwriting Agency picks up

PROFESSIONAL INDEMNITY

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HIGH STREET UNDERWRITING AGENCY

It’s one highly publicised set of events that reinforces the essential need for manufacturers to be appropriately protected against the exposures that arise due to the supply of their products.

Last year, brokers awarded High Street Underwriting Agency the gold medal for product liability in a close contest, but this year High Street have emerged victorious by a clear margin. Many brokers nominated the agency’s liability products, including product liability, as their top products of 2016.

“High Street is always fast with turnaround times, has great rates and is always very helpful,” one survey participant told Insurance Business. Another broker described High Street as “easy to deal with” and commended the business for its “fast response with hardto-place occupations”.

Others similarly commented on the speed of turnaround times, competitive pricing and broad coverage offered.

Coming in second is Miramar Underwriting Agency, and finishing third is Pen Underwriting.

DUAL AUSTRALIA

a second medal here, taking silver. One surveyed broker told Insurance Business about an interaction they’d had this year with the agency, at which time they were looking to organise both PI and public liability coverage for a client.

“This was a hard-to-place account … and no one wanted to quote,” the broker said.

“However, High Street came to the party and delivered the quotes, bound the cover, plus did

SOLUTION UNDERWRITING AGENCY

all the endorsements requested ASAP. The company has grown and so has the policy, but High Street is always happy to help.”

In bronze is Solution Underwriting, which also received its own strongly positive feedback, commended by one broker for “excellent service and staff available to discuss and review, and who go out of their way to try to assist with clients’ requirements.”

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FEATURES

BROKERS ON UNDERWRITING AGENCIES PROPERTY

MIRAMAR UNDERWRITING AGENCY

AXIS UNDERWRITING SERVICES

Property is the fourth new category in Insurance Business’ Brokers on Underwriting Agencies report for 2016. At the current time, the property space remains fiercely

Last year, High Street Underwriting Agency took out the gold medal in both the product and public liability categories. And, in 2016, the Brisbane-headquartered agency has done it again.

Brokers were forthcoming with praise for High Street when it came to naming the top product of the year.

“High Street provided fast and efficient service, as well as premiums that are competitive with the market,” commented one surveyed respondent. Another singled out the agency because of the range of roles for which it provides public liability coverage, telling us that High Street “will always look at different occupations and try to assist with cover.”

A third broker similarly commended the agency on the wide range of business types covered and described its staff as “easy to deal with”. A number of brokers also complimented High Street on “good” or “competitive” pricing, and some praised the agency’s quick turnaround time on quotes. Finally, one broker told us that High Street will “always quote and finds solutions”. It’s easy to see why High Street has earned a first place finish in public liability.

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PEN UNDERWRITING

competitive and, according to Aon’s 1H Insurance Market Update 2016, the Australian market is widely regarded as “the most aggressive and competitive in the world”.

When our broker votes were tallied, it was Axis Underwriting Services that emerged victorious in the property category.

The agency specialises in high-hazard and hard-to-place property risk, and its first-place finish here in our property category is a strong vote of confi dence from broker readers.

One surveyed respondent, in nominating Axis as top of the pack in property, commended the agency for “always looking to help with solutions”.

Ranking second in the property category is Miramar Underwriting Agency. This represents their third medal (and, in fact, their third silver medal) in our 2016 report.

Third place in property goes to Pen Underwriting, whose underwriting expertise encompasses commercial property, to manufacturing and industrial manufacturing risks, to specialised niche occupation groups.

Congratulations to all our inaugural property medallists.

PUBLIC LIABILITY

STERLING INSURANCE HIGH STREET UNDERWRITING AGENCY In silver is another agency that featured in last year’s inaugural Brokers on Underwriting Agencies report. Sterling Insurance has ranked a very clear second.

One broker named Sterling’s offering here the product of the year and commented on both the breadth of coverage and the capacity available.

ASR UNDERWRITING AGENCIES

The third clear choice of our broker readers for public liability is ASR Underwriting Agencies. One broker who nominated ASR’s public liability coverage for top product singled it out for both quality of coverage as well as the competitiveness of its pricing.

Our congratulations go to all of our public liability medallists.

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FEATURES

BROKERS ON UNDERWRITING AGENCIES STRATA COVER

STRATA UNIT UNDERWRITERS

QUS CHU UNDERWRITING AGENCIES

Our final category, as well as the fifth new category introduced for 2016, is strata. Winning the category convincingly is CHU Underwriting Agencies, a business that bills itself as the strata insurance specialist. Based on our survey results, it appears that brokers are backing that claim.

We received a plethora of comments from brokers praising CHU on its strata coverage. One broker described CHU as “the best in the

industry!” The same broker commended CHU’s staff on their efficiency and genuine helpfulness.

“That’s what underwriters should aim for – a top product and first-class service all the way,” the broker said.

A second survey respondent told us, “CHU assisted where no other insurer would consider the risk based on the tenant in occupation.”

A third told us that CHU “continues to be

the premier agency and continually meets the market”.

A number of broker participants commented on CHU’s “excellent” service levels, including its claims service.

“CHU provides excellent service and support to our brokerage,” said one broker. One respondent, speaking about CHU’s residential strata coverage, told us, “CHU is always fluid in their approach to enhance this product [in order] to be market leaders.” Another simply used four words as the reason for their nomination of CHU: “Consistency, integrity, commitment and fairness.”

Taking the silver is Strata Unit Underwriters, singled out by one broker for its “great online portal” and “an exceptional state manager” in New South Wales.

Taking bronze is QUS. “QUS has a great product, with immaculate service and price,” one respondent said. “For a broker they really perform, especially when we have short time frames to work with.” Another respondent commended QUS for being broker-focused, and another was grateful for the agency’s “excellent rates and product” which, the broker said, had helped them “pick up some good accounts this year”.

STANDING OUT FROM THE PACK Insurance Business asked surveyed brokers to tell us how underwriting agencies can win more of their business in the next 12 months. Here’s a selection of their comments:

By adopting better technology to ensure a faster turnaround time on new business quotes, and a self-service approach to endorsement/claims basic underwriting Turnaround times – I estimate for 80% of new business, time sensitivity is just as important as price Listen to broker thoughts on policy improvements and coverage Improved service, trading platforms and continued product development and diversification

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Provide us with access to experienced, specialist underwriters and work with insurers to take over the underwriting of more of their products Be proactive, competitive and prepared to write the smaller risks as well as the big risks We need visits to our office and training in the products and their application Provide market-leading products, quality service and become an educational partner and resource on the product offering and niche market they are operating in

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FEATURES

BROKERS ON UNDERWRITING AGENCIES

BROKERS’ PICK As well as asking brokers to vote for the top underwriting agencies across 11 product lines, Insurance Business asked brokers to name the top insurance product provided by an agency in the past 12 months. Here are the Brokers’ Pick award recipients for 2016 CHU Underwriting Agencies – Residential Strata Insurance Plan Having been in the space for 38 years, it’s unsurprising to see CHU Underwriting Agencies acknowledged for expertise in strata.

One broker nominated CHU’s Residential Strata Insurance Plan on the basis of CHU’s service levels and willingness to go the extra mile in assisting brokers and their clients. Another broker nominated the coverage on the basis it “addresses the prime issues with relevant and appropriate levels of coverage”. A third broker told us, “It is a broad cover that allows us to cover the majority of all strata scenarios that we are asked to quote on. I like the flexibility of the product.”

DUAL Australia – Cyber Liability and Privacy Protection DUAL was the subject of considerable broker enthusiasm in both this year’s and last year’s surveys, and its Cyber Liability and Privacy Protection coverage was given the thumbs up by our broker readers in 2016. One broker described the product as a “broad policy”, as well as being “easy to understand”. In addition to the positive feedback offered for the product itself, a number of respondents extended their praise to the process associated with organising the coverage. “Good online binding system,” was the comment of one broker, while another explicitly voted for the product because of the “online quoting and binding of cover”.

“High Street provides fast and efficient service, as well as premiums that are competitive with the market” High Street Underwriting Agency – Public and Products Liability This is the second year in a row that High Street Underwriting has finished first in both the product liability and public liability categories, so it makes sense that many brokers nominated the agency’s combined product and public liability offering as their pick of the bunch for the past 12 months. One broker said the cover is “broad and pricing is good and stable”, while another told us the agency, in offering coverage, “will look at most occupations/risks”. That broker also commended High Street for quick turnaround times and “sharp pricing”. Similarly, Insurance Business was told, with respect to the agency, “High Street provides fast and efficient service, as well as premiums that are competitive with the market.”

MECON Insurance – Annual Projects MECON Insurance is our final medallist for 2016, adding to its medal tally with a Brokers’ Pick nod. While several brokers nominated the agency’s specific offerings for top product of the year, respondents were just as keen to praise MECON for all aspects of their dealings with the organisation. “Fantastic staff and fantastic claims service,” one broker told us. “They are innovative and looking at ways to expand their policy.” Another told Insurance Business they were impressed by “great service and turnaround times within the hour”, adding that the price of the policy was “very competitive”. A third broker commended MECON for “great service, a quick response and flexible cover options”.

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FEATURES

LIABILITY INSURANCE

UNDERSTANDING YOUR LIABILITY Craig Walker of GARD Insurance talks about the vital importance of liability coverage and where companies can find themselves especially exposed

IT WAS an event that shocked the country like few others in recent memory.

On October 25, four people lost their lives at Gold Coast theme park Dreamworld while on the Thunder River Rapids ride. Their deaths, it appears, resulted from the ride malfunctioning.

At the time of publication, the park was yet to announce a reopening date (according to the Australian Financial Review, it’s losing approximately $300,000 a day while closed) and the incident has prompted a major crackdown by workplace health and safety authorities on the operation of rides at Dreamworld and several other Queensland theme parks.

From a business perspective, the incident at Dreamworld also illustrates the imperative need for companies of all kinds and sizes to have general liability insurance coverage.

“It’s tantamount to being able to conduct business, having a liability policy,” says Craig Walker, an industry veteran of more than 25 years.

Walker has extensive experience in underwriting liability lines and is underwriting manager for liability at GARD Insurance, a

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North Sydney-based agency specialising in the provision of public and products liability cover.

In the Dreamworld case, the extent of thirdparty claims the theme park will face is yet to become clear, but it’s assumed the public liability insurance held by its owner, Ardent Leisure, will cover much of those costs.

Discussing the level of business appreciation of the importance of liability insurance, Walker tells Insurance Business take-up is “pretty well 100%”.

“Whether contractually they’re required to hold a liability policy by their trading partners or their parents, or just generally riskmanagement wise, companies understand that they’ve got unquantifiable losses that could happen from transacting their business,” he says.

But are there underappreciated exposures when it comes to general liability or, perhaps, common misconceptions by businesses as to the level of coverage they’ve obtained?

Walker says that, sometimes, when a company has to satisfy a contractual requirement to obtain a liability policy, potentially disastrous mistakes can be made.

“What they try to do is buy covers that

conform with contractual requirements to hold a policy, but they’re not given the covers that they need,” he explains.

“Say they’re a manufacturing company.

They’ll just do a small property owner sort of liability policy to say they’ve got a PL policy on foot and not actually cover [themselves] for what they’re doing sometimes.”

Of course, short-term savings achieved through taking that course may be negated later on, in the event liability arises and the policy doesn’t respond.

“The other major issue is purchasing policies without any cover for contractual liability,” Walker adds. “One of the biggest exposures these

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brought to you by

GARD INSURANCE GARD Insurance provides public and products liability insurance to a diverse range of businesses from small and medium enterprises, through to multinational businesses.

Our experience in this line of business enables us to tailor liability programs suitable to your client’s needs.

As a new entrant to the market, we will utilise decades of experience to challenge the traditional way insurance operates and provide a fresh outlook to complex risks.

GARD is an independent agency, backed by the financial strength of Lloyd’s of London, and prides itself on responsive service. We will focus on: • Broadform Public & Products Liability – $50m limit • Incidental Professional Indemnity (when written in conjunction with Public & Products Liability) – $10m limit • Umbrella Liability (either stand-alone or following GARD primary Public & Products Liability policy) – $50m limit • Excess Liability – $50m limit • Errors & Omissions Liability (when written in conjunction with Public & Products Liability) – $10m limit • Goods in the Custody or Control of the Insured – $250,000 standard sublimit to a maximum $50m limit • Blanket Contractual Liability

days is covering their contractual exposures.”

Companies obtaining liability coverage must appreciate the significance of contractual liabilities exclusion, and a broker needs to ensure that the extent of this exposure is brought home to those clients. These types of exposures are a specific focus for Walker and GARD. Much of the time, liability insurance policies won’t extend to voluntary assumed liabilities to the extent those liabilities exceed that party’s liability under the general law, in the absence of that additional liability imposed under the contract. In other words, liability products tend not to cover liabilities assumed above those that exist under the law of tort, statute and

“Purchasing policies without any cover for contractual liability is one of companies’ biggest exposures these days” Craig Walker, GARD Insurance breach of basic contractual obligations.

“The size of the companies that I look at traditionally will have someone internally that goes through the contracts and, often, the [parties] that they’re contracting to are more powerful, so they’re unable to change the

contract. They’re left with a liability that they couldn’t traditionally cover,” Walker says.

He says this has been an issue he’s seen over the last decade, particularly in the mining sector.

“A medium-sized contractor will be contracting to someone like BHP. BHP will say,

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FEATURES

LIABILITY INSURANCE brought to you by

THE LIABILITY OUTLOOK

PREMIUMS

In late July, Finity Consulting and Deutsche Bank’s annual Pendulum report was released. It highlighted the continued market softness in the liability space, and an abundance of capacity going into 2016/17. According to the report, rates fell by 7% in 2015 and are expected to continue falling through this year and 2017.

It also notes that rate reductions are coming through in the corporate segment more than the SME segment.

CLAIMS

Pendulum reports that the general claims environment will remain benign in the near term. But it’s expected that certain emerging risks will impact pockets of the market. These risks – including latent sexual abuse claims (concerning business written many years ago) – will potentially impact reported profitability over the coming years. Also, report authors identify claims related to psychological injury as an area they are watching closely.

PROFITABILITY

The Pendulum report says that more interest-rate reductions during this past year have put more pressure on the target loss ratio for liability insurers.

The report’s authors opine that insurers need to achieve a loss ratio of 53% or better in order to produce a 15% return on equity. Additionally, it predicted that profitability will continue to worsen during 2016-17, given the level of competition and low returns on investments.

Source: Finity Consulting and Deutsche Bank, 2016 Pendulum report

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‘If you want to work for us, you’ve got to sign our contract.’ [The contractor goes] to try to change the contract to make it fairer, and they won’t be allowed to, because of the competition out there. So, they are left with this major contractual exposure.”

And, potentially, the cost for businesses in the event the exposure is realised can run incredibly high.

“Sometimes, it’s hard to envisage until the claim happens,” Walker says. “You get sucked into things that you don’t expect to, and it’s not really your fault, but because you’ve assumed the liabilities of someone, you’ve got their liabilities as well as your own.”

When it comes to emerging exposures on the

when they’re taking pictures. I think that needs to be addressed.”

Turning the topic to changes on the legal front, Walker mentions products liability.

“Products liability is becoming more and more American, where if there’s an injury, the claim will be paid, whether [the insured is] liable or not, and it’s just for the courts to work out in common law what sort of level that gets put to,” he says.

It’s a no-brainer that businesses should be purchasing liability coverage as part of a wider suite of insurance products. So, what else should these insurance products typically be packaged with today?

“I package PI and PL together,” Walker says.

“Products liability is becoming more and more American, where if there’s an injury, the claim will be paid, whether [the insured is] liable or not” liability landscape, Walker raises the issues surrounding the increasing use of drones, or remotely piloted aircraft, in commercial settings.

“Most liability policies exclude drones, and there’s an exposure downstream for those [aircraft] crashing,” he says, stressing that this is an exposure businesses need to be cognisant of before employing the use of drones in their operations. The potential for damage to thirdparty property or bodily injury is not insubstantial, and the reality of this risk will increase as more and more drones appear in our skies.

“A lot of farmers and landholders are using these drones without any cover at all,” Walker says. “There’s a manufacturer that has an exposure, and you’ve got the operator that’s often … a contractor who will come in and [operate the aircraft] for them.”

He adds, “There are privacy issues sometimes,

“Obviously, they’re both third-party liabilities.

Traditionally, the PI is excluded from a PL contract. But, often, companies that I look at, which have PL exposures, have contractual requirements to have a professional indemnity policy as well.

“Generally, they need their property; they need their liability; they need their PI; they need their motor; and they need their marine.”

It seems the consensus is that there is little change in sight to the liability market in the coming year, and in considerable part that is thanks to continued high levels of competition in the space.

As there are now so many businesses out there offering liability coverage, it’s incumbent on brokers to assist their corporate clients in understanding the available options and lead them towards a risk transfer solution that affords them precisely the protection they need.

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FEATURES

THE YEAR AHEAD

THE YEAR AHEAD Tough times persisted in 2016 in general insurance both at home and across the globe, but there were also many achievements to be celebrated. Ten industry leaders reflect on this year and share their thoughts on what lies ahead

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ROBERT KELLY Managing director and CEO STEADFAST

Talking about the year that’s been, Robert Kelly says he thinks NIBA’s advocacy to regulators on brokers’ behalf has been “outstanding” in 2016.

“I’ve been extremely impressed by the role that NIBA has taken on behalf of brokers in regard to any regulatory change, and the cooperation that they’ve had with the regulator for the propositions that they’ve put, in order to … inform and to give [the regulator] the ability to make a judgement based on facts, rather than innuendo around the industry,” he tells Insurance Business.

Kelly also raises the NIBA and ANZIIF education partnership.

“We’ve got the best of both worlds … and the two groups work to enhance the training mechanisms that are available for brokers. That’s been a real highlight to me.”

Another highlight, he says, has been major insurers “now starting to recognise that running a combined ratio in excess of 100% is not the way to run an insurance company”.

“I think that rationalisation is overdue. I think it should’ve come a year ago, but I’m grateful that it’s come now,” he says.

“We, as distribution, always want to have sustainable insurers behind us and we want to see price movements that are small, rather than knee-jerk reaction at large when balance sheets get eroded by years of poor underwriting.”

Kelly says a highlight for Steadfast in 2017 will be the continuing rollout of its IT platforms, INSIGHT and UnderwriterCentral – the culmination of a decade’s work. He also looks forward to continuing Steadfast’s strategic relationships both in Australia and in London.

“We’ve done a lot of work in the London market, in terms of rationalising our placements in that area, and also the fulfilment of some of our dreams within the Asian network that we have established,” he says. “Next year’s going to be a good year for us.”

Discussing challenges, Kelly says, “The challenges for the industry are always to inform

the regulators about issues that occur … and to work with the regulators to ensure that there is no knee-jerk reaction, but absolute engagement and rectification programs put in place to fix any issues that are seen to impact the public.

“Although [ASIC is] technically the policemen of what we do, they’re also rational about how you fix. I must say that, in my view, they are very cooperative in terms of how it can be rectified and accommodating to have discussions about the rectification process. I think that’s a huge thing to have – a regulated by legislation industry that you participate in, and a regulator who will work with you when issues arise.”

Kelly says it will be interesting to keep an eye on Suncorp, IAG and QBE over the next year as they work towards how they can interact with and enhance distribution, in terms of

their technical operating structures.

“I think that some of the work that’s being done by Peter Harmer will be interesting to see when it reaches fruition,” he says.

Kelly also mentions Pat Regan’s recent appointment as interim CEO of QBE’s Australian and New Zealand operations.

“He has the skills and the ability to move change quickly,” he says.

“And I think the way Suncorp has split its divisions and Michael Cameron’s view of how Suncorp should be involved with the market is yet to be proved, but it’s quite revolutionary.

“So, from my point of view, to watch those three people and how they manage the changes within their businesses and how they decide distribution should be treated is a work in progress and something I watch with great interest.”

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FEATURES

THE YEAR AHEAD RAJBIR NANRA CEO, general insurance, Australia and New Zealand ZURICH

It’s been a big year for Rajbir Nanra and the Zurich Australia team. Nanra tells Insurance Business that 2016 has been all about embedding the changes announced in the final quarter of last year.

“It’s been really good to see the progress we’ve made around that focus we had on the business,” he says.

“That led obviously to much more re-engagement of Zurich with the market – in particular, with our brokers – and that also obviously involved reinvesting in our frontline market-facing people.”

Nanra also mentions the rebuilding of Zurich’s executive team.

“We have announced during this year the bringing on board of Steve Ord as executive general manager, commercial, Hilary Bates as the new chief claims officer, and Stuart Farquharson as chief financial officer. That, for me, has been a huge success – being able to attract great talent to Zurich, even during times when we have been reinvigorating and turning ourselves around and re-engaging with the market.”

Nanra expects the impact of cyber risk on the evolving risk landscape will be one of the industry’s greatest challenges in the year ahead and it’s already a priority for Zurich.

In August, the insurer launched its DigitalResolve solution to assist businesses in managing cybercrime.

“I think, in particular in the SME sector, we are seeing a lot of questions around cyber risk,” he says.

“That’s one area in particular we will look at, and make sure that we work closely with our brokers to ensure that our customers and consumers are well educated around the threat of cyber and have the appropriate coverage and risk management put through the business to minimise any disruption.”

While 2016 has been about re-engagement,

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MARK SEARLES CEO and managing director AUB GROUP

“2017 is about further building our presence in this market, and ensuring that our broker distribution partners see Zurich is back in the market to support them” Nanra says next year’s focus will be around building upon this.

“2017 is about further building our presence in this market, and ensuring that our broker distribution partners see Zurich is back in the market to support them.”

Mark Searles says one of the most exciting things for him this year has been AUB Group’s ability to execute against its strategy to be the leading provider of total risk solutions to clients.

Next year, Searles hopes to see the “rational” upward movement of premium rates.

“We’re seeing the green shoot – the intent of insurers to basically price appropriately,” he says.

“We’re starting to see that happen now and I would expect, I would like to see, that continue.”

Searles adds, “What I wouldn’t want to see is a massive swing in the other direction as well, because the poor old client’s going to get really confused at the end of the day.”

And what is his advice to brokers for the year ahead?

“It’s to do what they always do – be really client focused … they’re brokers at the end of the day, prepared to advocate for their clients. We would say that should never change … it’s really the nature of broking that has to change over time.”

Searles mentions the concept of a risk adviser.

“Insurance broking, as a label, says two things: it’s general insurance and it’s broking, which can mean the cheapest price. That’s not what we’re about. What we should be about is supporting clients, assessing their total risks appropriately and finding solutions for them.

“So, this concept of risk advice and the risk consultant is really key to us moving forward.”

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ANDREW SPURR Head of casualty, Australia BERKSHIRE HATHAWAY SPECIALTY INSURANCE

While its name has been synonymous with insurance for some time, Berkshire Hathaway Specialty Insurance (BHSI) is still a new force in the Australian marketplace. It was April 2015 when it first opened its doors in Sydney, its Australian presence quickly expanding to Melbourne and Brisbane. Andrew Spurr has been on Chris Colahan’s leadership team since day one.

Talking to Insurance Business about 2016, Spurr mentions BHSI’s gold medal win for turnaround times on new business quotes in our Brokers on Insurers survey.

“One of the key drivers for the BHSI model is service and responsiveness,” Spurr says. “To attain [the gold medal] in the first year, or even within the first year, is … certainly an exceptional acknowledgement. Our entire team is committed to maintaining that for next year and [to] expand on it into other categories.”

JARED KING Head of client and broker engagement – Australasia AIG

Reflecting on 2016, Jared King says AIG is currently undergoing significant transformation, in the process creating a “leaner, more profitable and focused” organisation.

Speaking to Insurance Business last year, global president and CEO Peter Eastwood talked about the P&C insurer’s long-term strategy for building its business in Australia, emphasising that everything done within the organisation has a long-term perspective around it.

“We’ve pretty much stuck to our guns with brokers and customers and supported that strategy,” Spurr says.

Turning conversation to times ahead, like many of his industry colleagues, Spurr expects underwriting profitability to be the biggest challenge for the industry in Australia in 2017.

“I’ve been in this for a while and, every year, I keep thinking that pricing can’t get lower. But every year, it seems to astound us because it does … certainly, with BHSI, knowing when to walk away is probably the most critical aspect for longevity and ultimate profitability.”

Spurr will be keeping an eye on trends in claims handling and claims management, anticipating that those who excel on this front will reap the rewards.

“I believe that those insurers that do provide exceptional underwriting and claims service should thrive and obviously make it compelling for clients to maintain their business.”

“Our focus and execution in Australia has predominantly been on underwriting improvement that is matching pricing with risk exposure,” he says.

“We also announced two further managing general agent agreements with Nautilus Marine and MECON … this is breaking ground for AIG in Australia, and we are really excited and encouraged by the level of professionalism and leadership of these underwriting agencies.”

In 2017, King says AIG will continue to focus on its intermediated distribution sources and partnerships as it expands its footprint into SME and middle-market commercial businesses.

“We have some exciting opportunities on the horizon and the key for us will be to execute these in a timely manner, whilst improving processes and efficiency, and above all provide a level of claims service that is valued by brokers and clients alike.”

Turning discussion to challenges, King says, “I think the industry will find it challenging to

achieve financial targets with increasing shareholder expectations of acceptable profit margins accompanied by sustainable growth and reduction in management expenses.”

King believes organisations that make innovation a business priority, while recognising new entrants or disruptors, will possibly set themselves up for greater success down the track.

Still on challenges, King says, “I believe the pace at which the digital world is moving … is challenging us all to be flexible in our thinking, and what the world offers tomorrow will be very different to that today. Whilst most of what we see so far might have more relevance to consumer buyers, the evolution of sharing economies may [impact] how SME business is traded in the not too distant future.”

He adds, “Regrettably, cyber-risk threats and exposures to consumers and businesses alike will continue, so there is an increasing need for awareness, resilience and a strategic risk management plan.”

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FEATURES

THE YEAR AHEAD

THE LEGAL PERSPECTIVE

DAVID KEARNEY Chief executive partner WOTTON + KEARNEY

For David Kearney, the head of specialist insurance law firm W+K, the firm highlight of 2016 has been the growth and development of W+K’s pro bono and corporate social responsibility program, and its partnership with So They Can, a charity empowering communities in Kenya and Tanzania to break the poverty cycle through education.

“We collectively raised in excess of $100,000 for So They Can and I felt personally privileged to be part of a small group of lawyers who travelled to Kenya to assist with their community

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projects,” Kearney tells Insurance Business.

He shares the view of many of his industry peers that diversity and inclusion remains a significant issue for the insurance sector.

“With the pace of change showing no signs of lessening, diversity of thought will become increasingly important in responding to both opportunities and threats that emerge from this change,” Kearney says.

“Of course, the corollary of a more diverse industry is that Generation Next is likely to be more attracted to the insurance industry, which has historically fared relatively poorly in attracting talent.”

Our discussion then turns to challenges of times to come that could be brought about by cyber threats.

“I believe there is a form of perfect storm

developing from a confluence of our plaintifffriendly class-action regime, the plethora of litigation funders in the market and the potential liability exposure of directors from either claims by customers/victims of any breach of privacy/ data incident, or claims by shareholders for financial loss following a cyber incident,” he says.

“D&O insurers will need to ensure the wording and price of their policies account for these ever increasing exposures. This point will have even greater force in the likely event that proposed federal legislation creating mandatory reporting obligations within 24 hours of a cyber breach is introduced.”

Kearney also sees a possibly significant issue manifesting in the general liability space.

“I believe there is the potential for the opening of Pandora’s box in the area of delayed onset brain injury related to contact sports, particularly if the US experience is any guide,” he explains.

“Whilst underwriters in this space will be individually addressing the scope and pricing of cover provided to sporting bodies, there must be an opportunity for the industry to collaborate in communications with sporting bodies to discuss how they propose to educate about new rules and protocols relating to brain injuries at all levels of participation.”

And are there issues in the insurance space to which Kearney will be paying particularly close attention?

“The pace of technological change, increased competition from new market entrants, changing consumer preferences and increased cyber risk and how to cover it, are all important issues … to keep a close eye on,” Kearney says.

“However, perhaps a little left of field, I’d suggest insurers [and brokers] keep a close eye on the development of blockchain technology which, by its nature, has the potential to revolutionise the industry. Blockchain simplified is about trusted and immutable record sharing across parties through a tamper-proof network, which potentially reduces costs, increases automation and reduces manual processing.

“In any industry that often relies on multiparty information exchanges, it is not difficult to see the potential for tremendous efficiency improvements through the development of blockchain technology.”

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THE EDUCATOR’S PERSPECTIVE

PRUE WILLSFORD CEO ANZIIF

Prue Willsford is very excited about the feedback ANZIIF has received this year since launching its new Skills Units.

“We’ve worked with one of the big global insurers to collaborate and co-design an underwriting academy and, as part of that project, they did a global review of what is available in global insurance education,” Willsford says. “They came back to us and said that what we’re doing with our Skills Units is head and shoulders above anything else that’s available globally.

“It was amazing, and it’s really about how innovative it is and, also, how effective it will be as a component of their course. Getting feedback like that tells you that you’re on the right path.”

Willsford talks about the reinvention of ANZIIF over the past three years, and what it

DALE HANSEN CEO AUSTBROKERS COAST TO COAST

“I’ve never been more excited both about the insurance industry, per se, and the results that it’s delivering at the moment; and I have never been prouder and more excited and enthusiastic to be an insurance broker,” Dale Hansen tells

means for the organisation in 2017.

“What we’re finding … is that there are lots of people who have an idea of who we were, but don’t yet know who we’ve become,” she says.

“So, our real focus next year is on engaging industry so that they really understand how we can add value to them and really ensuring that they understand how we can really partner with them to assist in attracting, developing and retaining their people, and growing the insurance community.”

Willsford says ANZIIF’s objectives for next year include continuing to work closely with industry on “tailored learning pathways” and continuing to build out its Skills Units so that there’s a “real breadth and depth of relevant education for the industry”.

Willsford stresses the critical importance of quality broker education for sustainable business growth. “[Brokers] have really got to demonstrate that they add value both to the client and the underwriter. To do that, they’ve got to be really

focusing on quality, risk-based advice. To do that, they’ve actually got to have the skills that will enable them to be confident, to be productive and to be effective.

“We don’t just want growth. We want quality growth, and the broker’s role in that is really critical in terms of assessing and managing risk and writing good risk.”

Insurance Business.

It’s been a big year for Hansen and Austbrokers Coast to Coast. At the Australian Insurance Industry Awards, the business was named Small Brokerage of the Year in August, and then Hansen was named Broker of the Year at NIBA’s annual convention in September.

Next year, Hansen hopes to be able to have a positive influence in the wider industry.

“I’m looking forward to working with NIBA, promoting the role of an insurance broker, and promoting what insurance brokers do and our skillset and what we’re able to achieve to the greater community at large who, I think, to a large part aren’t actually aware of what we do,” he says.

Hansen would like to see the compliance and corporate governance regime tighten on businesses and brokers.

“I think all good businesses would welcome a tightening in corporate governance and compliance. I think that is something that is needed.”

He would also like to see lines between insurance brokers and authorised representatives

“un-blurred”.

“I don’t think they should be treated differently,” he says. “I think that’s causing great confusion in the marketplace with the industry at large and with customers. The same corporate governance and compliance regime should be applicable to all of us.”

Hansen speaks about the “absolutely fantastic” ARs out there who, he says, would also welcome such moves.

He also looks forward to watching QBE’s movements over the next five years.

“I really do think they’re a very strong business now and they’ve made some very brave, strong decisions that, I think, are really sound … QBE’s very important to our industry in Australia.

They’re such an enormous player and it’s very important to our industry that they’re strong.”

Hansen is not intimidated by disruptors.

He says it is all about concentrating on old-fashioned service.

“We just need to keep doing what we do well, as an industry, and we will prevail. I think it’s important that we all don’t buy into the doom and gloom.”

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FEATURES

THE YEAR AHEAD

THE ANALYST’S PERSPECTIVE

SHARANJIT PADDAM Principal DELOITTE ACTUARIES & CONSULTANTS

Sharanjit Paddam says the release of the Northern Australia Insurance Premiums Taskforce’s final report in March was a highlight of 2016 for the insurance industry.

THE ASIA PACIFIC PERSPECTIVE

KENT CHAPLIN CEO, Asia Pacific LLOYD’S

Looking back on this year, Kent Chaplin feels excited about the partnership between Lloyd’s and the Pan Asia Insurance and Risk Management Association (PARIMA).

“We are very proud that we’ve entered into an agreement with PARIMA as their platinum partner, in particular to deliver a professional development program … to foster the continued education and professional development of risk managers. It’s the first of its kind in Asia.”

Chaplin also discusses the “great success” Lloyd’s has had in India and Malaysia.

“We submitted our application to open Lloyd’s first ever onshore reinsurance branch in India … all things being equal, we hope to achieve our licence this year.”

He adds, “We also applied for an onshore

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The report backed mitigation as the best way to address the high-premium situation in the region.

“I think it basically said that the market is functioning well, and that, to me, is the bigger insight from that [report] – that it’s not a market failure that’s driving the cost up of insurance premiums in Northern Australia, but the cyclone activity itself and the risk that we have there,” Paddam says.

He’s looking forward to seeing the introduction of mandatory data breach notification legislation in the near future.

“It will firmly raise cyber risk in the minds of boards of directors of companies … potentially, next year could be a very busy year for cyber insurers.”

Paddam also raises insurers’ heightened focus on customers.

“We’ve seen restructures of IAG and Suncorp to have very large consumer-facing businesses and customer divisions, and the increasing focus on what are our customers’ needs and how do we improve the experience

for insurance customers,” he says.

“That trend, I think, is going to continue strongly through 2017. Insurers still have to focus on getting the right product, the right type of service and the right ways to access customers.”

Paddam singles out two organisations to keep an eye on. The first is Huddle Money.

“They’re very interesting because they’re not just selling insurance online. They’re much more about building up consumer education about risk, looking at ways that people can improve their understanding of what kinds of risks they carry or what kinds of insurance they might need,” he says.

“They have some interesting approaches to understanding their customers and meeting their customers’ needs.”

Paddam also mentions icare.

“I think they’re going to have a huge impact on the market next year, in terms of how they’re setting up their business and how they intend to run their business going forward.”

reinsurance licence in Malaysia. That’ll be our first onshore licence in Malaysia and will give us direct access to the insurance market in Malaysia, to allow us to bring complementary capacity and expertise into that market, specifically to write larger and more complex risks where there isn’t local expertise and capacity.

“Once our licences are obtained … next year will be about setting up the operations and then working with the managing agents in London to establish themselves onshore and create local businesses.”

He talks about the “very dynamic regulatory landscape in Asia”, where regulators across the region are at vastly different stages of evolution, in terms of regulation and legislation.

“There is a significant amount of work happening at ASEAN insurance level, looking to create a free-trade agreement among the 10 member states, with an ambitious view to liberalise the insurance and reinsurance industry at an ASEAN level.”

Chaplin is keeping a close eye on the

ASEAN free-trade initiative, which he says has made good progress in the manufacturing and trade sectors.

“The ASEAN Insurance Council has put in place positive measures for liberalising the natural catastrophe sector. We’re looking to work very closely with that. We’re very supportive of the efforts they’re making and we look forward to seeing the benefits of that free trade when it’s completed.”

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PEOPLE

CAREER PATH

CONSTRUCTING A CAREER MECON Insurance founder and CEO Glenn Ross has built his expertise in insurance over three decades, and his success story continues At 19 years of age, the promise of a company car led Glenn Ross to apply for a role at the Engineering Insurance Bureau in Auckland.

1978 A DRIVE TO ENTER INSURANCE?

1985 TRADES UNDERWRITING FOR BROKING After working as national engineering manager for NZI, Ross joined Bowring Burgess Marsh & McLennan as a broker for its largest construction client. In doing so, he had the chance to work with the late Hamish McKenzie, a man he describes as one of the doyens of the construction broking market. After McKenzie’s passing, Ross found himself juggling the accounts of both of New Zealand’s largest contractors.

I didn’t know what insurance was, certainly not in an engineering sense, and I couldn’t spell bureau. But I got the job

1978 LAYS THE FOUNDATIONS According to Ross, his time at the Engineering Insurance Bureau provided him with a solid grounding in insurance basics.

“It was an excellent learning environment because we surveyed mechanical equipment and refrigeration facilities; we underwrote the various risks that we surveyed; and we did all of the claim assessments for them. We did this for many different insurers.”

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1996

ENTERS RISK MANAGEMENT Ross worked as a risk manager for Fletcher Construction for several years.

“I absolutely loved the Fletcher company and the people. The diversity and the complexity of the contracts that those guys engaged in was the spice of life to me back then … I was also on a committee that produced the NZ Institute of Architects’ SC1 contracts … that, to me, was an invaluable experience.”

HEADS ACROSS THE TASMAN Ross relocated to Sydney to undertake a role with Lumley Insurance.

“I was brought to Australia by Roger Bostock … to manage and grow their engineering book, and that included starting construction from scratch for them. And, I guess, being competitive by nature, I set my sights on making Lumley the largest engineering portfolio in Australia. It took around seven years to achieve that.”

2016 BUILDING UP THE BUSINESS Today, MECON is highly regarded for its expertise in underwriting construction risk. Ross says the business continues to grow above even his team’s own expectations.

“We’re looking to expand our product range, but still with a construction focus. We’ve recently launched in New Zealand, and I think growth and acceptance in that market is going to be challenging, because it is, in effect, a new start for MECON … but it’s certainly an interesting and exciting prospect for all of us.”

2003 ESTABLISHES MECON Having achieved his ambitious goal at Lumley, Ross was looking for a new challenge, which ultimately led to him founding his own underwriting agency, MECON Insurance.

“I figured that if I could get Lumley’s book to grow from zero to significant in seven years, I could probably do the same for a company that I started, too. It was probably a leap of faith, but I guess failure never entered my mind.

It seldom does.”

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FEATURES

BROKER INSIGHT

GSA INSURANCE BROKERS Paul Hines, CEO of the successful Sydney broker, talks about challenging the status quo and working to do more for clients than finding coverage IB: What is GSA’s history?

PH: GSA has been in the insurance game for 26 years. GSA is known as the insurance broker who is working hard to change the space they are operating in. We challenge the way our clients view insurance through our unique approach, which is determined, energetic and surprising. In 2015 and 2016, GSA was nominated for Medium Broker of the Year, and proudly won this award in 2015.

IB: Can you talk about the office space in which GSA staff work?

PH: Based in The Rocks, our office is located within the Old Presbytery behind St Patrick’s Church. Bright blue reception walls, a zebra couch and a Martin Sharp eternity painting strike inquiry among guests and clients who visit GSA for the first time. As you continue through the building, every wall is painted in eclectic colours and adorned in Martin Sharp artworks. The office is far from your typical insurance company. The business development team sits in the creative room,

which has a tasteful combination of pink and green walls, a purple rug, open-plan desks and 10 Martin Sharp artworks.

IB: Can you tell us about how GSA has built its various specialty lines?

PH: For 26 years, GSA has serviced a multitude of clients from varying industries.

GSA is structured into divisions to best service client needs from general insurance, workers compensation, professional risks, trade credit, claims management, affinity and employee benefits.

IB: What would you say distinguishes GSA from other brokers?

PH: Our clients consider us as a new breed of insurance broker, who do more than just cover for loss. GSA are trusted to provide the right advice to help our clients and their businesses to prosper and grow. GSA brings a new era of accountability, performance, service and specialisation. That may sound

ATTRACTING AND RETAINING TALENT “We are passionate about employing staff who will grow and enrich our culture. Our average staff tenure is above eight years, 8% of our staff have been with GSA from the get-go, and 25% of our staff form our 10-plus year club. What this means is that everyone is engaged; we are invigorated each day and we have fun every day. GSA has built a reputation in the market as an innovative employer that attracts top talent and keeps them by providing membership to a culture that you do not want to leave.”

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surprising, but that’s what makes us different.

GSA has created a unique culture around creating value for our clients, staff and wider business network. We enjoy hosting client and industry events and enjoy sharing a good time with our network of clients, suppliers and supporters.

IB: Can you talk about the significance of GSA joining the Assurex Global partnership? What does it mean for the business?

PH: GSA is exclusively tied to Assurex Global – the world’s pre-eminent broking network.

GSA holds representation across six continents in over 600 locations.

This means that GSA is substantially equipped to assist our clients with their expansion into other regions by providing global programs that are managed seamlessly and expertly by GSA and our expert network of independent brokers around the world.

IB: Can you share any insights as to what’s ahead for GSA? PH: We are continuing to focus on our core business and that is GSA. At the same time, we are spending some time exploring new products, technologies and tools that enhance what we already offer.

IB: Can you tell us about GSA’s community involvement, particularly

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“We challenge the way our clients view insurance through our unique approach, which is determined, energetic and surprising” its association with KidsXpress?

PH: KidsXpress is a dynamic, expressive therapy program that offers a non-threatening and creative environment to children aged 4-14 years who are experiencing difficulty, loss, challenge or trauma. KidsXpress empowers children by providing an opportunity for self-expression through the use of music, art, dance and drama therapies.

As a founder and principal sponsor, GSA provides financial and managerial support to the dynamic KidsXpress charity, with Margo Ward, KidsXpress CEO. GSA... continues to provide significant support to this charity... through monetary contributions, allocation of staff resources and support of fundraising initiatives.

Beyond our own support, KidsXpress is hugely supported by the insurance industry at large, which we are greatly appreciative of.

FAST FACTS

GSA has experts in the fields of General Insurance

Employee Benefits

Professional Risks

Risk Management

Workers Compensation

Claims Management

Trade Credit

Affinity and Risk Advisory

Year founded: 1990

Number of employees: 55

Office location: The Rocks in Sydney’s CBD

Leadership: Paul Hines, Dr John Hewson, Peter Hogan, James Telford, Scott Curley and Nicole Mellick form the board of directors for GSA

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PEOPLE

OTHER LIFE

BALLASTS AND BACKWINDS Martin Blake hopes his long-held penchant for sailing will one day take him to the Greek Islands SAILING HAS been a passion for Martin Blake, KPMG’s Australian insurance sector leader, for the past 40 years, ever since he crewed on a yacht in Wales in his early teens.

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TELL US ABOUT YOUR OTHER LIFE Email ibo@keymedia.com.au

“I try to sail weekly on a 24-foot Triton yacht called Doubloon, which I own with friends,” Blake says. “We compete in Thursday twilight sailing at Middle Harbour Yacht Club during summer.”

Blake competed in the last two Sydney to Hobart Yacht Races on the yacht Brindabella, but hasn’t yet made it to Hobart due to breakages and gear failure.

He recalls last year’s race: “We had to retire Brindabella at 2:30am on the first night of the race on Boxing Day in the middle of a big southerly buster due to mainsail damage. It was a devastating finish for the whole crew, who worked very hard all year in preparation for the race.”

Blake returned to Sydney with bruised ribs, but it wasn’t all bad news. The crew raised over $14,500 for the Cerebral Palsy Alliance.

He hopes an opportunity lies ahead for him to finish the race.

1945

The year of the inaugural Sydney to Hobart Yacht Race

2001

The year of the closest finish in the race’s history (47 minutes separated the first six boats)

628

The race requires yachts to navigate a 628-nautical mile route

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