Insurance Business 6.06

insurancebusinessonline.com.au Issue 6.06

THE YEAR AHEAD

Top industry leaders talk insurance and 2018

BUSINESS INSIGHT

Honan Insurance Group’s Singaporean acquisition

CYBERSECURITY: WHY THE INDUSTRY IS PART OF THE PROBLEM Local leaders highlight crucial issue

THE NEXT CHAPTER Melanie Slack talks about taking the reins of Swiss Re Corporate Solutions in ANZ

BROKERS ON UNDERWRITING AGENCIES Naming the top agencies in the country, as voted by brokers

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ISSUE 6.06

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CONTENTS

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UPFRONT 02 Editorial

A sense of deja vu

FEATURES

42

BROKERAGE INSIGHT

BROKERS ON UNDERWRITING AGENCIES SPECIAL REPORT

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Honan Insurance Group’s recent Singaporean business acquisition is the latest outward indication of its continued growth in South East Asia

PEOPLE

LEADING CORPORATE SOLUTIONS

06 Head to Head

Can traditional insurers compete with insurtech in the sharing economy?

08 Opinion

NIBA president Tim Wedlock discusses working to maintain adherence to high professional standards among brokers How telematics is pushing the insurance industry forward

12 Intelligence

FEATURES

45

THE YEAR AHEAD Industry leaders in Australia single out the highpoints of 2017 and speculate about what’s on the horizon for general insurance

Aon works to cement itself as the preeminent North Queensland broker while Suncorp streamlines its senior leadership team

14 Insurer update

A recent survey by EY has sought to understand the future relationship between brokers and insurers

16 Underwriting agencies update

Solution Underwriting updates its accident and health suite in response to market feedback

PEOPLE

56 Career path

Brent Lehmann is a long-time insurance industry professional who has recently launched his own start-up

Insurance Business sits down for an exclusive interview with Swiss Re Corporate Solutions’ recently appointed CEO for its Australian and New Zealand operations, Melanie Slack

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A report reveals underwriting agency executives are generally sanguine about the future of the space, but concerns persist around the threat of new entrants

10 News analysis

BROKERS ON UNDERWRITING AGENCIES For the third consecutive year brokers have voted and, based on those votes, we now name the Australian agencies that made the best impression in 2017

04 Statistics

FEATURES

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CYBERSECURITY PROBLEM

What more should the industry itself be doing in efforts to address the growing cyber risk?

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UPFRONT

EDITORIAL

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A sense of déjà vu

W

e are now approaching the final weeks of 2017 and, at the risk of sounding like a broken record, it is difficult to believe another year has almost gone.

At the time of renewals mid-year, we began to see indications of the market (or, at least, pockets of it) beginning to harden. Precisely how the tide will continue to turn remains to be seen.

One of the most dramatic events the industry experienced in 2017 was the NSW Berejiklian Government’s decision to defer the removal of the emergency services levy on insurance policies. It was a move described at the time by the Insurance Council of Australia’s Campbell Fuller as “a blow to NSW property owners, householders, businesses and the broader state economy”.

Earlier in the year, the passage through Federal Parliament of the Privacy Amendment (Notifiable Data Breaches) Bill 2016 saw Australia finally get its own mandatory data breach notification scheme. Eyes will be watching closely when

It genuinely remains a privilege to report on the activities of the indispensable insurance industry …

I look forward to continuing to do so the legislation comes into effect early in 2018 to follow its impact on the uptake of cyber insurance.

More recently, we watched as the United States faced a deadly hurricane season, as Hurricane Harvey and Hurricane Irma wreaked havoc on the mainland, while Hurricane Maria decimated Puerto Rico. The ultimate cost of these catastrophes to the global industry is yet to be ascertained.

On a lighter note, Lloyd’s hosted its biggest Australian Dive In Festival to date and launched the industry-first Insurance Industry Diversity Survey. Elsewhere, M&A activity continued, and major leadership changes occurred (John Neal exited QBE, replaced as group chief by Pat Regan; Niran Peiris secured an appointment to the board of management of the global Allianz Group; and Suncorp unveiled a streamlined senior leadership team).

What remained consistent throughout 2017 was Insurance Business’s unwavering commitment to making readers aware of each development that transpired. It genuinely remains a privilege to report on the activities of the indispensable insurance industry and, alongside the rest of my team, I look forward to continuing to do so. I wish you all the best for the remaining weeks of the year, as well as a happy and healthy 2018.

Tim Garratt, editor

EDITORIAL Editor Tim Garratt News Editor Jordan Lynn Writers Libby MacDonald, Lucy Hook, Nicola Middlemiss Production Editors Roslyn Meredith, Jo Crichton

CONTRIBUTORS Tim Wedlock, Lyndon Broad

ART & PRODUCTION 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

A WORD FROM THE CEOS

2017 2016 100%

Underwriting agency executives reveal their thoughts on the future of the space and its challenges GLOBAL SOFTWARE provider Gratex International has released its fourth annual Underwriting Agencies CEO Survey.

The survey quizzes senior executives of agencies in Australia and New Zealand about the work currently being undertaken within these businesses and the obstacles its leaders see lying ahead.

2015 2014

80%

“Following years of investment in operational efficiency and process automation, agencies are looking to reap the benefits of efficiency gains, particularly taking advantage of data insights,” said Peter Dovhun, Gratex’s managing director.

“At the same time, the industry continues to be concerned about the challenges posed by new entrants and business models.”

60%

40%

20%

43%

28%

of respondents reported satisfaction with their current core underwriting systems

of respondents reported they are considering upgrading their underwriting systems

85%

of respondents cited staff expertise as their most important business enabler

0%

90% 89% 84% 89%

0%

of respondents cited cost cutting as having impact as a business enabler

We feel very optimistic about the future of our business

Source: Underwriting Agencies ANZ CEO Survey 2017

CHALLENGES – TODAY AND TOMORROW

WHAT MATTERS MOST

Respondents this year continued to cite an increasing number of new entrants as underwriting agencies’ greatest challenge.

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

Fierce competition (new entrants) Performance and loyalty of our broker channel Access to skills, lack of qualified people in the market New business models entering the market Implementing regulatory change Insurers’ strategy to service direct to the market Cost and complexity of digital online customer service Identifying clear opportunities for operational cost reductions Uncertainty of economic outlook

60%

How important are the following business aspects to your agency?

100% 80%

53% 50%

60%

43%

40%

35%

20%

20%

0

20% 15% 5%

0%

10%

20%

30%

40%

50%

60%

Source: Underwriting Agencies ANZ CEO Survey 2017

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The survey revealed that agencies have become increasingly interested in launching new products in existing markets; however, it also showed that underwriting agencies are more reluctant to venture into new market segments.

90% 81% Operational systems to improve flexibility/ scalability

88% 87%

78% 84%

Improving our Proactively partner network grow our market performance share and scale and loyalty our current (brokers) business

70% 76%

58% 46%

45% 46%

30% 32%

Operational efficiency to reduce costs

Taking new products to our existing markets

Entering new market segments

Build the value of our business for potential mergers/ acquisitions/ divestment

2017

2016

Source: Underwriting Agencies ANZ CEO Survey 2017

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AGENCIES AND THE MARKET The survey shows that, after a three-year downward trend, agencies this year reported a 10% increase in their perception of growth potential in the marketplace.

HOW DO YOU PERCEIVE THE ROLE OF UNDERWRITING AGENCIES IN THE MARKET?

88% 78% 82% 83%

80% 76% 71% 64%

78% 87% 82% 64%

73% 62% 66% 62%

55% 54% 55% 47%

We see growth potential in the markets where our agency operates

For insurance companies, underwriting agencies have an important role in their business strategy

Underwriting agencies, thanks to their flexibility, are a catalyst for insurance market growth and innovation

Our business model enables us to manage costs of operations and keep a healthy bottom line

Fierce competition makes our business difficult, forcing us to look for ways to protect our business Source: Underwriting Agencies ANZ CEO Survey 2017

ONLINE SERVICE Among the key findings of the survey, it was revealed that, for 40% of respondents’ agencies, direct broker connectivity is either not planned or not applicable.

What is the current status of your online service capabilities for brokers?

Fully implemented We plan to evaluate Planned for next 12 months Planned for next 24 months This is not part of our strategy Not applicable as we distribute directly to end customer

35%

THE BROKER’S ROLE Most respondents were equally divided into two categories: those who foresee no change to the role of brokers, and those who believe brokers will need to adjust their services to suit end customers.

How do you imagine the role of brokers changing in your business in the next 5 years?

30% 25% 20%

No change to role

15%

Change required – brokers will continue to have similar importance

10% 5% 0

Online full policy life cycle management for brokers

Online quote and bind process for brokers

Online full policy life cycle management for brokers

Online renewal for brokers

Online claims lodgement and management for brokers

Easy online access Integration of your to broker’s policy underwriting system portfolio with broker and reports systems – to minimise double keying of data Source: Underwriting Agencies ANZ CEO Survey 2017

Reduced importance due to changing end-customer buying behaviour No role for brokers in our future business

Source: Underwriting Agencies ANZ CEO Survey 2017

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UPFRONT

HEAD TO HEAD

Can insurance meet the sharing economy’s needs?

Are traditional insurers equipped to pivot their products – or will insurtech get there first?

Andrew Boldt

Adam Jones Head of innovation Altus Consulting

Executive general manager, innovation IAG

Insurtech start-ups entering the industry offer both consumers and the creators of peer-to-peer platforms access to customisable insurance that allows on-demand cover. Taking home-sharing as an example, traditional insurers view having paying guests as a commercial activity, and thus not covered by residential policies; accordingly, it is standard for a home insurer to remove various covers (accidental or malicious damage and theft, for example) from the policy.

What insurtechs are doing is filling gaps in coverage left by traditional insurance providers. The new insurtechs understand sharing transactions and are creating products that fit all kinds of sharing.

The sharing economy was definitely not anticipated by incumbent insurers, who have typically created policies that focus on an individual owning and using something exclusively. While some moves have been made towards episodic insurance by known brands, most have been slow to respond to the fundamental change in the nature of use and ownership.

A number of insurtech start-ups are trying to solve this problem by designing products from the ground up, focused on providing cover for home-sharing and ridesharing, which can be tailored to fit individual needs. Airbnb itself has introduced its own Host Protection Coverage.

The rise of the sharing economy is creating new challenges and opportunities for insurers. Businesses must be more customer-centric and data- and digitally driven to meet changing consumer preferences – like the sharing economy.

The businesses that thrive will be the ones that use these capabilities to proactively listen to and engage customers. They’ll also have the culture to move quickly to design and deliver the experiences customers want and need.

This is not a static shift. If insurers want to keep ahead of the game, they must continually look for new opportunities, partner with emerging platforms and collaborate openly.

Co-founder Guardhog

James Orchard

BUILT TO SHARE The advent of the sharing economy has brought benefits for insurers, including greater use of underutilised resources, lower overheads and customisable products, but a new report from the Insurance Institute of Canada suggests that insurance providers may have been caught flat-footed by the changing nature of the paradigm. “Many sharing platforms and their providers have expressed concern about the difficulty in securing insurance products that meet their unconventional needs,” the report said, offering the example of commercial hotel coverage for users of services like Airbnb. “If the industry does not demonstrate a capacity to respond to the needs of sharing platforms and providers, it should not be a surprise if new competitors target this segment of the market.”

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UPFRONT

OPINION

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

STANDING TALL AS A PROFESSION Tim Wedlock discusses NIBA efforts to help brokers maintain high professional standards ’BOUQUETS’ FROM the regulators – representatives from ASIC, FOS and the Insurance Brokers Code Compliance Committee (IBCCC), who all spoke highly of the insurance broking profession at the recent NIBA Convention – were welcomed, but we, as a profession, will not be resting on our laurels.

The financial services sector is copping a lot of criticism and regulatory scrutiny at present.

There are inquiries into product manufacture and distribution, the external dispute resolution framework and banning executives in the financial sector, to name a few. There was a Senate inquiry into the general insurance industry earlier in the year.

But the insurance broking community is not under the spotlight. These inquiries might impact on us – and NIBA is doing its utmost to represent the views of brokers – but, importantly, they are not about us. There is no evidence of systemic poor advice by insurance brokers.

For that we have the continued professionalism of our broking community to be proud of.

In fact, it is worth noting that in 2015/16 there were 6,500 FOS complaints against insurers and only 344 against brokers; and in 2016/17 the number of complaints against insurance brokers reduced to 216, the majority of which were resolved without determination. This is a position we must be proud of; it lets NIBA stand tall as our association.

It means that when NIBA is representing insurance brokers to regulators and governments,

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we can say hand on heart that our members act with integrity and are trusted professionals.

But our work is not done. It’s vital that we uphold this professionalism and make sure all insurance brokers are highly trained and qualified to provide risk advice, and that the younger generation of professionals coming through maintain these standards.

professionalism, showing the community that this insurance broker acts with the highest standards of ethics and integrity.

Third, we must learn from the Insurance Brokers Code of Practice. Its purpose is to build “professional competence and consumer confidence” in insurance broking. The code is a clear statement of the industry’s commitment to its clients and what clients can expect from an insurance broker who is a member of NIBA. Our Code of Practice is independently monitored and administered by the IBCCC. At the NIBA Convention, IBCCC independent chair Michael Gill urged all brokers to be proud of the code and learn from it. Importantly, he said one of the earmarks of a profession was to “impose upon itself standards of performance that are higher than can be imposed from outside”.

Professionalism is about continual improvement and doing more than the bare minimum, or even going beyond the code. There’s nothing stopping individual brokerages from having their own customer charter – something that sets out the culture of the organisation.

At the heart of all this, we as a profession want

We can say hand on heart that our members act with integrity and are trusted professionals First, more work must be done to maintain minimum levels of education. While a university degree is not required for insurance brokers at present, NIBA believes we need to raise the minimum education standard, as frankly Tier 1 advice is not enough for the complexity of advice brokers give their clients. It was great to see support from those present at the convention for raising the level of minimum education to a diploma in insurance broking. This is something the NIBA Board is keen to pursue. All it takes is a few unprofessional businesses to bring our whole profession down. We need to work together to ensure that doesn’t happen.

Second, we want to raise the profile of our Qualified Practising Insurance Broker (QPIB) designation. Our QPIBs at least have a diploma, a minimum of four years’ experience as insurance brokers, and participate in continuing professional development. A QPIB designation is the mark of

to do the best for our clients. The insurance industry has a pretty poor reputation in the community. It is always known for the small percentage of claims that are not paid – because bad news sells – not the majority that are. But the community deserves good risk advice and insurance cover, and brokers provide that role, protecting their livelihoods and their futures.

That is why NIBA is being proactive in reviewing the Code of Practice and raising the profile of QPIBs. We want to work together with brokers to ensure they continue to be well regarded as trusted professionals.

Tim Wedlock is managing director of Austbrokers AEI Group and is currently president of the National Insurance Brokers Association.

His experience in the insurance industry spans three decades.

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UPFRONT

NEWS ANALYSIS

In the driver’s seat The global pendulum is swinging towards data-led insurance solutions, and automotive telematics is leading the way

THE DEMAND for auto telematics continues to grow. Last year, an estimated 33 million light vehicles equipped with some form of telematics were produced globally, and production of telematics-enabled vehicles is expected to grow by 11% annually, topping more than 66 million automobiles by 2023.

Alongside the new breed of connected vehicles, many insurers are also offering their customers telematics solutions via mobile phone apps.

In addition to monitoring driver behaviour, today’s telematics platforms enable insurance companies to provide more accurate pricing, and can even provide safety and security features such as roadside assistance and stolen-vehicle tracking.

liability and compensation in order to process claims quickly.

It’s clear that telematics is big business: reports suggest that in the next decade nearly every vehicle on the road will be a connected one. By 2025, a whopping 88% of new cars produced globally are expected to be equipped with integrated telematics, and in the race forward, key players are pumping resources into coming up with new usagebased insurance (UBI) solutions.

In October, brokerage giant Willis Towers Watson announced that global telematics provider Octo Telematics was acquiring its UBI division, and the two firms would be partnering on insurance-related products going forward. A number of key personnel

“Customers’ lives are becoming more convenient … [and] they’re looking for the same thing with their car insurance” Oliver Baxter, By Miles For insurers, telematics is also helping to increase the accuracy and efficiency of the claims process. Data that can be instantly transmitted to an insurer includes the date and location of a crash, the speed and direction of travel, and even weather details, allowing adjusters to more easily determine

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from Willis, including global telematics leader Geoff Werner and his team, moved over to Octo as part of the deal.

“With telematics, it’s very much about how quickly this is going to happen, not if it’s going to happen,” says Jonathan Hewett, chief marketing officer at Octo. “Everything

is being used now – from apps to traditional black boxes and connected car platforms, they are all helping to fuel the growth in the market. Frankly, it works because insurers get a better financial result and improve their loss ratios by pricing risk better and being more efficient with claims, and consumers get a better deal.”

Telematics adoption has also surged as a response to a fundamentally unchanged motor insurance market, according to Oliver Baxter, head of brand and communications pay-per-mile start-up By Miles.

“The car insurance industry hasn’t changed for decades, so much like any other sector it’s ripe for disruption,” Baxter says. “People are quite embedded into the way it works. It’s a necessity – people have to pay for it, and they expect to pay for an annual policy. It’s been

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TELEMATICS: THE LATEST NUMBERS

11% Rate at which production of light vehicles equipped with some form of telematics is expected to grow annually

88% Percentage of new cars that will have integrated telematics by 2025

16 MILLION Number of new cars in the US that will have integrated telematics by 2025

31% working for so long – for those businesses it’s working for, why change? And for customers, they don’t know anything else.”

convenient, more flexible and more tailored to them,” he says, “they’re looking for the same thing with their car insurance, and they

“Clearly the market of the future is going to be defined by dynamic data, as opposed to the old world of static data” Jonathan Hewett, Octo Telematics In contrast to traditional motor policies,

By Miles offers a pay-per-mile policy that it says is much fairer to customers, the majority of whom are currently subsidising highermileage drivers, Baxter points out.

“In the same way that all sorts of other areas of customers’ lives are becoming more

don’t understand why it doesn’t exist yet.”

Hewett agrees that consumers are increasingly demanding a fairer deal, which has spurred new concepts in insurance. “The idea of ‘paying as we consume’ is a broader macro factor that’s driving the market,” he says.

While auto telematics is already in the

Percentage of policyholders who expect to get a discount of 20% or more by using telematics Sources: IHS Markit, EY, Deloitte

mainstream, connected devices are now starting to make their way into the home for a similar purpose. Indeed, as part of their partnership, Octo and Willis Towers Watson plan to cast their net wider than just auto.

“The team that we’re acquiring brings increased capability to interpret and analyse ever-increasing amounts of data in all different contexts,” Hewett says, “be it a car, be it a home, anything that can be connected. Big data is one thing, but smart insights and being able to make smart business decisions is quite another. Clearly the market of the future is going to be defined by dynamic data, as opposed to the old world of static data.”

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UPFRONT

INTELLIGENCE CORPORATE ACQUIRER

TARGET

PRODUCTS COMMENTS

Aon

Mark Kelly Insurance and Financial Services

The acquisition was finalised on 31 August 2017

Honan Insurance Group

NGA Benefits

NGA Benefits is an employee benefits consulting, insurance intermediary and benefits administration company that operates throughout Singapore and Malaysia

The Warranty Group

IAG’s Retail Warranty business

The Warranty Group is a leading provider of warranty solutions and underwriting services.

This transaction makes The Warranty Group one of Australia’s largest retail warranty insurers

DAC Beachcroft

Wotton + Kearney and DAC Beachcroft have integrated their Australian and New Zealand operations to further strengthen their regional focus. Two offices in Auckland and Wellington, previously part of DAC Beachcroft, have now become Wotton + Kearney in New Zealand

Wotton + Kearney

EML DEVELOPS TOOL FOR WORKERS’ COMP INDUSTRY

Personal injury insurance specialist EML, in collaboration with global technology company Pitney Bowes, has developed an innovative video to help people navigate the often-complex world of workers’ compensation. It outlines the claims process step by step so workers can learn what to expect and what they need to do. Key topics include returning to work, calculating weekly payments, and medical treatment options. “The video is personalised with information about their claim and their case,” said Helena Swindells, EML’s customer experience manager, Victoria.

BROOKLYN’S CYBER POLICY GOES ONLINE

AON ACQUISITION STRENGTHENS NORTH QUEENSLAND PRESENCE

Aon has acquired Mark Kelly Insurance and Financial Services, located in Ayr, Townsville and Ingham. The deal is part of the global insurance giant’s efforts to cement itself as the pre-eminent North Queensland broker.

Lambros Lambrou, CEO of Aon Risk Solutions in Australia, said Mark Kelly Insurance and Financial Services was “carefully chosen” for acquisition because of its alignment with Aon’s strategy to expand and enhance its footprint in the region.

“The acquisition means we are now ideally positioned to build on the great work and experience we have established in North Queensland,” he said.

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Brooklyn Underwriting has made its Cyber Data Protect policy available online. Damien Stephen, manager, digital liability solutions, at Brooklyn, told Insurance Business that the move was made with brokers in mind. “Our brokers have always been keen on seeing our products move online,” he said.

“It will improve their productivity as well as ours.” The Brooklyn product offers business interruption cover with a 12-hour retention time, up to a $500,000 limit on crime, a 24-hour incident response hotline, and capacity up to $20m. The cover also includes cyber extortion and terrorism.

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8/11/2017 11:17:27 AM

CHUBB LAUNCHES NEW PACKAGE FOR SMEs

Chubb has launched a new package solution for Australian SMEs. Chubb Business Pack Insurance aims to provide broad coverage for property and liability exposures, in order to assist business owners in protecting against a range of operating risks. The solution includes standard coverage for business interruption, general property damage, public and products liability, machinery and equipment breakdown, theft, money and tax audits. It also includes protection from cyber and environmental liability. Chubb Business Pack Insurance is especially tailored for businesses with a turnover of up to $10m and serves occupations across office and professional services, healthcare and medical surgeries, retail and trades, and services. It’s available only through the broker distribution network.

VERO PRODUCES NEW BROKER TOOL

Vero’s new Contingency Planning Tool is designed to help brokers assist SME clients in preparing for the unexpected. The tool looks at different scenarios of what could happen, what SMEs can do in response, and what they can do to plan ahead. It also gives SMEs an insight into how their brokers may be able to provide advice. “We developed the tool to assist brokers … [to] demonstrate the value and service they provide beyond offering business insurance advice,” said Anthony Pagano, Vero’s head of commercial intermediaries.

ICARE EXTENDS MSP PILOT INITIATIVE

The success of icare’s pilot program to significantly reduce treatment approval time frames for injured workers within the NSW workers’ compensation scheme has led the insurance and care provider to extend the 12-week initiative to mid-November to benefit more workers. icare’s Medical Support Panel (MSP) pilot initiative, launched in May, successfully slashed the average treatment and medical causation time frames for injured workers referred to the MSP from six weeks to less than six days. icare will work with industry stakeholders to gather feedback and input on the direction of the MSP program.

PEOPLE NAME

LEAVING

JOINING

NEW POSITION

Donna Walker

IAG

Allianz Australia

Chief technical officer

Jarrod Morey

Sportscover Australia

ATC Insurance Solutions

Senior underwriter – sports, leisure and events

Andrew Taylor

n.a.

Chubb

Cyber underwriting manager, Asia Pacific

John DePeters

n.a.

Chubb

Cyber underwriter, Asia Pacific

Rebecca Capes

Hunter Premium Funding

Elantis Premium Funding

QLD state manager

Andre Eisele

Swiss Re

Guy Carpenter

CEO, Pacific

Heinrich Eder

n.a.

Guy Carpenter

Member of Advisory Board, Pacific

Nick Harris

n.a.

JLT

CEO, Australia and New Zealand

Pat Regan

n.a.

QBE Insurance

Group CEO

Gary Dransfield

n.a.

Suncorp

CEO insurance

Mark Reinke

n.a.

Suncorp

Advisor

Pip Marlow

n.a.

Suncorp

CEO customer marketplace

Bill Callan

n.a.

Willis Towers Watson

P&C leader – Qld

Michael Baker

n.a.

Willis Towers Watson

P&C leader – NSW

Max Broodryk

Allianz Global Corporate and Specialty

XL Catlin

Product leader, cyber risk, international financial lines – Asia Pacific

John Mulcahy

n.a.

Zurich Australian Insurance

Non-executive director

Kevin Wright

n.a.

Zurich Australian Insurance

Non-executive director

SUNCORP ANNOUNCES STREAMLINED SENIOR TEAM

Suncorp has streamlined its senior leadership team to fast-track delivery of its strategy, according to an ASX announcement. Among the changes, Gary Dransfield is now CEO Insurance, replacing Anthony Day, who has left Suncorp after almost 10 years. Customer Platforms, Customer Experience and Strategic Innovation have been combined into a single function entitled ‘Customer Marketplace’, led by Pip Marlow. Mark Reinke has moved to an advisory role reporting to group CEO Michael Cameron, while CFO Steve Johnston takes responsibility for Legal and Company Secretariat.

REGAN IS QBE’S NEXT GLOBAL CEO

John Neal, QBE’s group CEO, is stepping down from the role after five years. Pat Regan, who is currently CEO of QBE’s Australian and New Zealand Operations (ANZO) and was previously group CFO, will succeed Neal on 1 January 2018.

Regan joined QBE in 2014, having amassed extensive global experience in the insurance sector. Before arriving at QBE, he was CFO at Aviva plc and prior to that he was group COO and CFO at Willis Group Holdings, and group financial controller at Royal & Sun Alliance.

Inder Singh, QBE’s CFO for ANZO, has been appointed interim ANZO CEO, pending the appointment of a permanent replacement.

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8/11/2017 11:17:35 AM

UPFRONT

INSURER UPDATE

WHAT A BROKER WANTS A recent survey has sought to understand the future relationship between brokers and insurers

third party products (78%) were other high priorities. Quality online and digital tools have a significant impact on business: 78% of brokers said the quality of these tools directly impacted their choice of insurer.

Ahmed also said insurers needed to up their game with respect to the online tools they provide to distribution partners. “For customers to have a positive experience at every touch­point, sales and service channels need to be integrated seamlessly and brokers are increasingly

“Brokers are increasingly recognising the importance of digital channels as part of their business models” Brokers want better communication and digital innovation from insurers, a new report from EY has found.

Entitled The Broker of the Future – Australia, the report found that 43% of brokers are currently unhappy with the consistency of their interactions with insurers, while three quarters believe that product innovation around bundling could help grow their businesses.

Imran Ahmed, Oceania insurance customer and growth solution leader at EY, says the value of the broker-insurer relationship is still important, despite rapid change in the industry.

NEWS BRIEFS

“Brokers see some of the pressures in the marketplace and they are also very keen to respond, and they recognise, from a smaller broker perspective, they can’t do it all on their own,” Ahmed told Insurance Business. “They are looking to their insurance partners to see how they can help support this.”

Brokers believe insurers should provide better online access and tools to support the broker channel: 73% surveyed would value improved digital tools from insurers, while increased support for policyholder servicing (71%) and improved platforms and access to

Insurers looking to raise prices in broker segment

According to the 2017 Optima Report released by Finity, insurers are pushing up prices on intermediated business pack products.

“We expect profitability to improve over the coming years as insurers continue to push through rate increases, particularly in the intermediated segment,” it says.

“The soft market environment appears to be turning, so we expect to see premium rates continue to increase, but only by a small percentage each year.”

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recognising the importance of digital channels as part of their business models.”

Just as Vero’s latest SME Index revealed that more clients are seeking bundled products, EY found that brokers are seeking support from insurers to develop bundled products. More than 80% of those surveyed said they expected more support from insurers around product customisation, with 75% specifically targeting bundling to help drive growth.

Ahmed stressed that other research has found that clients with bundled policies are also “stickier”, as they have multiple ties to a company. “They are more likely to stay with you, which benefits everybody really,” he said.

Suncorp using AI tech for motor claims

Suncorp has announced the successful integration of IBM Watson artificial intelligence technology into its online claims process. It enables claims to be lodged, excess paid (or waived based on the decision) and repairs booked within five minutes. “This technology augments our claim consultant’s knowledge and expertise, providing data-driven insights and instilling greater confidence in our liability decisions,” said Gary Dransfield, Suncorp’s CEO Insurance.

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Q&A

GLOBAL RISKS Giles Crowley Head of commercial ZURICH FINANCIAL SERVICES AUSTRALIA

Fast facts The recently published World Economic Forum Global Risks Report, produced in collaboration with Zurich Insurance Group and Marsh & McLennan Companies, highlighted the five greatest risks of doing business in Australia in 2017. It revealed that ‘energy price shock’ and ‘asset bubbles’ are the risks of highest concern among local executives.

Energy price shock shot up the risk rankings into first spot in Australia. What do you put this down to?

from IT and legal experts through to PR and even ransom negotiators that we can coordinate on behalf of the client.

The results were undoubtedly influenced by the prominence of the debate around energy policy, supply and prices. For many large businesses security of energy supply and affordability are huge issues, so it’s not surprising that these concerns came through in the results.

Climate change adaptation also made the 2017 rankings. Does the insurance industry need to take a more active role in helping clients address their climate risk?

Large cyberattacks held their place at third in the ranking. Is the insurance industry doing enough to meet this risk, or could more be done to help protect clients and boost the uptake of cyber insurance and cybersecurity measures?

The battle for awareness around cyber issues has been won, and the next step is converting that into sustained action and improvement. Zurich research shows, particularly amongst small and medium enterprises, the awareness is there, but by their own admission the majority of SMEs are not doing enough to protect themselves.

Insurance companies absolutely have a role to play in raising awareness around cyber, and in not only providing policies but holistic solutions around how cyber incidents are handled.

For example, when we have a customer who has been subject to a significant cyber incident, they can call a 24-hour global hotline, where they will get access to a dedicated incident manager who will coordinate experts and act as the main point of contact until the issue is resolved. We have a panel of trusted providers ranging

QBE announces $600m disaster impact

QBE has announced that the recent spate of natural disasters in the northern hemisphere will have a pre-tax impact on earnings of approximately $600m. Noting that 2017 could be the costliest year in the history of the global insurance industry, the insurer has increased its 2017 allowance for large individual risk and catastrophe claims to $1.75bn, including allowances for large risk and catastrophe claims in the final quarter of 2017.

The industry has traditionally been very good at encouraging clients to scan for, manage and mitigate risks, wherever they may be coming from. There’s always more than can be done; that’s why we need to remain vigilant for new and emerging risks, and keep communicating. When you break climate risk down into how it might play out on the ground, for example via flooding or extreme weather events, the industry at large is doing well in terms of raising awareness.

What role can brokers play in educating their clients around climate risk?

Brokers have a significant responsibility in terms of educating and helping their clients scan for all forms of risk, climate risk included. Talking to clients about their strategies to mitigate climate risk, and bringing global insights and research to the table, is hugely valuable.

It’s also important to remember that events like floods don’t just affect individuals and businesses – they affect communities. Flooding specifically affects more people globally than any other natural disaster; that’s why Zurich has a program focused on flood resilience which is aimed specifically at helping communities prepare for, manage and recover from flood events.

CGU, Willis Towers Watson announce Australia-first

Willis Towers Watson and CGU have announced the launch of an Australia-first chatbot service through their joint venture, Startup Cover. The service, called Jamie, is the first in the country to run on Facebook Messenger and is designed to give start-up clients access to information and advice around the clock, as well as being able to provide an indicative quote within five minutes of receiving the customer’s message.

IAG hits brakes on Asian growth ambitions

At its AGM, IAG announced that its Asian growth ambitions are on hold. “As shareholders know, over the last 12–18 months we have been looking for opportunities to increase our investment in our key markets of Thailand, Malaysia and India,” said CEO and managing director Peter Harmer.

“We have not been able to find the right circumstances, however, so it is unlikely we will make further investments in Asia in the short term.”

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8/11/2017 10:36:53 AM

UPFRONT

UNDERWRITING AGENCIES UPDATE NEWS BRIEFS SURA adds agency to family

Underwriting agency group SURA has added SURA Australian Bus and Coach to its group. Previously ABC Underwriting, SURA Australian Bus and Coach offers insurance to bus and coach owners and operators for their vehicles, depots and businesses. Angie Zissis, SURA managing director, described SURA Australian Bus and Coach as “a welcome addition to the growing family of SURA-branded agencies”.

“SURA Australian Bus and Coach’s specialist team, industry-specific products and commitment to service is absolutely second to none, and we’re proud to bring them into the SURA fold,” Zissis said.

AHI announces ‘sustainable’ price rises

Accident & Health International (AHI) has announced that it has increased prices across its portfolio by close to 9%. The price hikes come as medical costs continue to skyrocket and claims increase in both size and frequency. Danny Byrnes, CEO of AHI, said the firm needed to ensure that it was doing business “in a sustainable way”. “Pricing and portfolio profitability is a key aspect to ensuring a sustainable future,” he said. “By taking action on pricing now, we can manage price increases in a measured way that is more manageable for our brokers and customers.”

NTI raising truck fire awareness

As summer approaches, NTI is working with transport operators to raise awareness of the heightened risk of truck fires.

According to CEO Tony Clark, NTI is working with industry to minimise preventable fires through planning and strict maintenance schedules. “Our latest NTARC research report shows

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non-impact truck fires account for one in 10 large losses, most commonly from electrical failure, engine fires, and tyre or brake fires. Unfortunately, a large number of these could have been prevented with better maintenance and inspections,” Clark said in a statement.

“NTI encourages all truck owners and operators to spread the word of truck fire risks with their peers and continue making safety the number one priority for themselves and their businesses.”

Strata scheme underwriter offers warning

Strata specialist CHU has warned it may refuse to provide cover or make insurance too pricey for apartments in Australian buildings with cladding that does not meet the building code. The agency said that while it was yet to refuse cover based solely on non-compliant cladding, it had already priced the risk in some buildings as too high for the insurance to be useful. According to the Australian Financial Review, the move marks the start of a shakeout in the high-rise sector that could prompt owners and banks across the country to re-evaluate their apartment stock.

Dive In will return in 2018

This year’s global Dive In Festival involved over 7,000 attendees at more than 90 events, which were held in 32 cities across 17 countries. “The collaboration and commitment that goes into putting on a Dive In Festival on this scale internationally reflects the support for modern, inclusive workplace cultures where talent thrives,” said Dominic Christian, chair of Inclusion@Lloyd’s, Aon UK chief executive, and president of the Insurance Institute of London. “Our research shows that there is still work to be done, so it’s great that Dive In 2018 is confirmed.”

SOLUTION UPDATES A&H PRODUCT SUITE Underwriting agency director says the new offerings are in response to broker requests Solution Underwriting has announced the release of four new products as part of its accident and health offering.

The underwriting agency has added cover for journey accident, voluntary workers, individual personal accident and sickness, and group personal accident and sickness to its A&H stable.

Anita Lane, director of Solution Underwriting, said the expanded suite followed the launch of Solution’s corporate travel cover earlier this year as the firm had been “asked by several brokers to create an SME solution for the other A&H products”.

“We have spent time developing relevant, competitive and attractive policies for our brokers’ clients,” Lane told Insurance Business.

Journey accident cover is designed to protect employees on their commute to work across Australia, excluding the Northern Territory, and offers a lump sum benefit or weekly accident benefit to insureds not covered by Workcare, Lane said.

The voluntary workers policy offers personal accident cover for all declared voluntary workers while they are engaged in voluntary work, and covers a broad range of activities. According to the ABS, 31% of Australians engage in voluntary work each year. The Solution cover offers a student tutorial benefit, should the volunteer be of school age, and domestic help benefit for elderly volunteers injured at work.

Lane added that the development of the

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individual personal accident and sickness policy, alongside the group personal accident policy, saw the firm look to provide “comprehensive and competitive” coverage.

“Although underwritten differently, the philosophy of insuring an individual or a large group is the same,” Lane said. “We are mindful that we are intending to insure a life in an event of accidental death, lump sum benefits in the event of injury, and offer a weekly benefit in the event of injury or sickness. This impacts people’s lives, their livelihood and their ability to look after their families.”

For brokers, Lane said the A&H market

“We have spent time developing relevant, competitive and attractive policies for our brokers’ clients” provided an opportunity to get closer to clients in an educational role as more businesses look to offer company benefits to attract and retain staff.

“With a very strong direct market presence, it is critical that brokers understand the benefits on offer and how they differ from some ‘thrown in’ products that some credit card facilities offer their customers,” Lane said.

Q&A

Paul Robinson Managing director SURA PROFESSIONAL RISKS

Fast fact Paul Robinson has 30 years’ financial services experience spanning senior management roles, general insurance broking and professional risks underwriting

PROFESSIONAL INDEMNITY Where do client misunderstandings commonly arise when it comes to professional indemnity (PI) policies?

Clients, understandably, are concerned about price, and this can influence the cover they receive through the insurance broking channel. However, what we have noticed is that the most successful brokers we deal with have taken the time to understand the nuances of our PI policy wordings to ensure their clients’ cover is fit for purpose. For example, they understand and communicate to clients the difference between a ‘full civil liability’ wording and an ‘errors and omissions’ version, and why a bespoke wording specific to a particular profession can meet their clients’ needs better than a one-size-fits-all offer that needs a myriad of endorsements and exclusions to get the end result. They also understand the importance of partnering with underwriters that will work with them in the event of a claim to ensure client expectations are met.

When it comes to the coverage level a client requires, where do clients (and their brokers) most commonly get things wrong?

Many clients stick within the limits of indemnity stipulated as the minimum to comply with the bylaws and regulations of their professional associations or, in the case of financial planners, RG126. They don’t adequately factor in their size, the complexity of the advice they give and the quantum of the investment, business, project or balance sheet they are dealing with. They often fail to factor in the point that the costs to defend a claim may be significant, and that in some cases the policy limit could be eroded by those costs. If the Limit of Indemnity fails to afford the necessary level of protection, then the client legally is still on the hook for the balance of the determination against them. The question then becomes, ‘Is the risk worth it?’

How important is it that brokers have an ongoing dialogue with clients after insurance has been secured, in order to ensure the coverage remains adequate?

Very important. Brokers need to keep well informed of any changes within their clients’ organisations and adapt the insurance cover provided so that they continue to provide appropriate protection for their clients’ changing needs. It is also a fantastic way to lock their clients away from their competitors; for example, I would think the press surrounding cyber breaches and pending legislation, both here and in Europe, presents the perfect opportunity to pick up the phone and talk about our soon-to-be-released SURA Professional Risks Cyber Policy. Likewise, the ramp-up in D&O and management liability premiums also delivers the perfect excuse to call. Finally, brokers shouldn’t be afraid to introduce the underwriter into the conversation where they think it will increase the impact of the message, and at SURA Professional Risks we are happy to support our brokers in this way.

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8/11/2017 10:37:27 AM

PEOPLE

THE BIG INTERVIEW

LEADING CORPORATE SOLUTIONS Swiss Re Corporate Solutions’ Melanie Slack talks about business priorities, risk engineering, and progressing through the ranks of insurance THREE MONTHS ago, Canadian (re)insurance industry veteran Melanie Slack took the reins of Swiss Re Corporate Solutions’ Australian and New Zealand operations.

Having recently relocated from Hong Kong to Sydney, Slack tells Insurance Business that she’s loving life in Australia.

“It’s brilliant,” she says. “I love riding the ferry and looking at the Harbour Bridge every morning as I come into Barangaroo” (the location of Swiss Re Corporate Solutions’ spectacular Sydney office).

On the business side, she’s spent substantial time establishing relationships with the local team.

“What I’ve encountered is that we have a lot of folks on the team with a strong personal brand, who’ve been around for many years.

And then there are equally a lot of new folks who have joined the growing business over the past 18 months,” she says. “It’s a very diverse crowd.”

Slack’s tenure with the wider Swiss Re Group began 15 years ago. Since that time, she’s amassed experience in several senior management positions across Asia, Europe and the US. Before taking on her current role, she was the head of life and health products for Swiss Re Asia.

Slack discusses what she believes are the major challenges currently facing Corporate Solutions in the ANZ region.

“I’ve landed in a non-life insurance company, and now I’ve heard all about hard and soft markets,” she says.

“The interesting thing that I’ve observed is …

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when we talk about soft markets, people think about price, but it’s also conditions. Making a small change in the wording in a policy sometimes can have quite an impact on the profitability and sustainability of that product.”

Slack mentions the challenge of having teams made up of employees who have never experienced life in a hard market.

“Whether you’re an underwriter or a broker, right now you should be asking yourself, ‘How am I going to ride that next hard cycle?’” she says.

strategic priorities for the region, Slack discusses its shifting focus from the excess space to the direct commercial space, singling out its Single Carrier Property Initiative.

“Essentially, that’s just doing insurance in property,” she says, “where we can and do write 100% of the risk.”

In August, Corporate Solutions launched 11 new policies across casualty and professional lines, including professional indemnity, directors’ and officers’ liability insurance, crime and general liability.

“Swiss Re Group has a lot of institutional knowledge; we have a lot of information around managing risk. So, by ramping up our risk engineering services, we’re tying into this overarching vision around risk management” “I think it’s a challenge and an opportunity.

I’ve been saying to the younger members of the team, ‘It’s time to get ready, hone up your skills’. Sooner or later, we have to end up in a hard market.”

The priorities Swiss Re Group established its Corporate Solutions business in 2010. Today, it has over 50 offices across the globe, including its Australian offices in Brisbane, Melbourne and Sydney.

Outlining some of the business’s key

“That’s something we’re very excited about because, previously, our focus was on the excess space. Now, we have our own policies so we will be looking to develop a primary portfolio in these lines,” she says, adding that the rollout of the new products has involved the business ramping up its teams in both Sydney and Melbourne.

Slack also talks about the business’s 2015 acquisition of the aviation business of general insurer Assetinsure.

“A priority has definitely been to grow an existing aviation portfolio into an even bigger

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PROFILE Name: Melanie Slack Company: Swiss Re Corporate Solutions Title: CEO, Australia and New Zealand Year joined Swiss Re Group: 2001 Fast facts: Prior to taking on her current role, Slack was head of life and health products for Swiss Re Asia, managing a large team across eight locations in Asia-Pacific, including Australia

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8/11/2017 10:38:07 AM

PEOPLE

THE BIG INTERVIEW

“We see a lot of clients insuring their property but not giving enough consideration to what will be their business interruption risk relevant to that” and stronger one,” she says. “They’re doing very well. We’ve hired another underwriter … so that team continues to grow.”

Another growing area of the business is agriculture. Slack mentions Corporate Solutions’ hiring of John Mottram last year, who joined the business as senior originator in the food and agriculture team, following many years spent in the banking industry.

“In addition to the standard crop coverages, the team is looking for solutions using parametric cover, and that’s an area where we need to be very creative to try to help farmers manage their cash flow in the event of weather catastrophes.

“I’m personally fascinated with agriculture; I’ve worked on it in the past when I was involved in a micro-insurance initiative in Central America.”

Similarly, Slack is excited talking about

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Corporate Solutions’ One Construction initiative, which offers business clients – and their brokers – a single point of contact for all insurance needs across the life cycle of a construction project. She stresses that what sounds like a simple concept is not, in reality, happening everywhere.

“Often, the broker is placing different covers with different markets or different players …

We’re writing policies where we’re one point of contact for that company across all lines, which serves to remove potential coverage gaps which can arise,” she says.

“I see real potential to do that in everything we do … That’s a huge opportunity, for me.”

Slack is also determined to ensure the team maintains its strength on the claims front, as its move across to the direct insurance space continues.

“Our claims commitment is essentially being

responsive [and] reliable,” she explains. “I was talking to a broker yesterday who said, ‘If I don’t trust your claims, that’s the non-starter’.

Fortunately, we have a strong reputation there … As part of my onboarding talking to brokers, I’m getting really good feedback on that.”

Resilience building Corporate Solutions is also undertaking significant activity in the risk engineering space.

“We have grown the team from one risk engineer to five, and we have added support from our partner Paragon Risk Engineering. It really plays well to the overall Swiss Re vision of being a knowledge company,” Slack says.

“Swiss Re Group has a lot of institutional knowledge; we have a lot of information around managing risk. So, by ramping up our risk engineering services, we’re tying into this overarching vision around risk management.”

Slack sees risk engineers playing an integral role, in conjunction with underwriters, in adding value for Corporate Solutions’ insureds.

“It’s not just about price and putting a policy in place,” she says. “These guys are helping our clients mitigate risk. And what’s really cool for me, coming in as a newbie, is seeing these risk engineers at the front line with the client.

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They’re kind of the face of our company, promoting our brand and definitely creating value for the client.”

Emerging risk and the protection gap When it comes to the subject of the emerging risk landscape, Slack raises business interruption insurance.

“We have a strong property portfolio, so we see a lot of clients insuring their property but not giving enough consideration to what will be their business interruption risk relevant to that,” she says.

“Australia is the world’s ninth-largest commercial insurance market – in 2016, the commercial insurance market was [worth] US$12bn. But if you look at the global commercial insurance market, Australia’s penetration – say compared with the US or UK – is really low. There’s a huge protection gap there, and from that protection gap I think business interruption is the big one to talk about.”

Slack believes business interruption is a subject the business will be increasingly talking about, and given the statistics that point to the significant protection gap specifically in the mid-market space, it’s no surprise that this segment is becoming increasingly important to Corporate Solutions’ business.

“There’s a protection gap there, [and] that’s what we’re trying to go after – those mid-market clients,” she says.

Diversity and inclusion Today, Slack is the only female CEO of a major general insurer in Australia. But while women are yet to be adequately represented at management levels in the general insurance space, she says this was not her experience in the life and health sector of the industry.

“It’s true that the insurance industry has a long way to go, but there are definitely at least a handful of senior executives in Australia in the life and health space,” she says.

“Then that raises the question: why are there more women in life and health than there are in P&C?” Slack says it comes back to the fact that the

vast majority of industry employees arrived in the industry by accident, that their pursuit of a career in insurance was unplanned.

“So, what are the filters that bring people into insurance?” she says. “If you think about life and health, people are coming in from the life sciences. They come in from a background in biology or nursing or medicine, whereas the feeders, say, to the P&C world are coming from engineering [and] from heavy industry.

“If you drill down from insurance and say, ‘What is the system that’s feeding insurance?’ it’s actually industries that don’t have a history of producing a lot of women in those roles. If I try to understand why there are gaps, then that’s one of the drivers.”

Asked about any advice she has to share with other women in the industry, Slack emphasises the importance of having self-awareness, as well as looking for mentors and sponsors.

“All of that is valuable whether you’re a man or a woman,” she adds.

“Swiss Re has a lot of internal programs around talent development. About a decade ago, I was put into a group-wide management development program that really switched things on for me, in terms of learning skills around management and understanding how to navigate my career.”

Slack refers to the business’s own ongoing focus on helping employees to establish their career paths.

“What we really focus on at Swiss Re, and what I try to do as an individual, is make sure that everyone on the team has a really meaningful career conversation on a regular basis, so that everyone has a chance to be talking about where they’d like to go, what are the gaps, and how will we get you there,” she says.

“On a personal level, I think that if I were to give any one piece of advice to anyone, but especially women, it’s to find the right support.

Male or female, you can’t really focus on a career if you don’t, when you go home, have the right kind of backing. It’s just making those decisions to make sure that you’ve got someone who has your back and is supporting you as you go through your career.”

SWISS RE CORPORATE SOLUTIONS

FOUNDATIONS Corporate Solutions is one of three business units of the Swiss Re Group, which was founded in Zurich in 1863 and is currently the world’s second-largest reinsurer

PREMIUMS Swiss Re announced in its 2016 annual results that net premiums earned by Corporate Solutions for the year totalled US$3.5bn

STRENGTH Swiss Re Group’s ratings include AA- (Very Strong) from Standard & Poor’s, Aa3 (Excellent) from Moody’s, and A+ (Superior) from A.M. Best

PRESENCE Corporate Solutions has more than 50 offices around the world in over 20 countries

PRODUCTS With a focus on customised solutions, Corporate Solutions offers more than 40 insurance products

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8/11/2017 10:38:16 AM

Friday 4 May 2018 • The Westin Sydney

NOMINATIONS NOW OPEN The inaugural Insurance Business Awards will bring together industry leaders to celebrate excellence in insurance, recognising leading brokers, brokerage businesses, insurers and underwriting agencies in Australia for their contribution to the industry over the past 12 months.

Start preparing your nominations today for the opportunity to be recognised as the best of the best.

Organised by

ENTRIES CLOSE 9 FEBRUARY WWW.IBAWARDS.COM.AU 22

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1:42 PM

SPECIAL REPORT

BROKERS ON UNDERWRITING AGENCIES

BROKERS ON UNDERWRITING AGENCIES Returning for its third year, our Australianfirst survey asks brokers which businesses are best-in-class in the underwriting agency space

SINCE 2015, Insurance Business has called upon its broker readers each year to single out the standout underwriting agencies in Australia and tell us what it is that puts them ahead of the pack.

In 2017, I am excited to present to you the results of our third annual Brokers on Underwriting Agencies survey – a report that represents an integral component of our ongoing efforts to recognise the top players

in the local industry.

As was the case in 2016, Insurance Business gave brokers the chance this year to provide feedback on agencies across 11 product categories, with medallists determined solely by tallying their votes. And in addition to giving them the chance to name the best businesses, we also provided brokers the opportunity to single out their favourite products from the agency world.

I would like to congratulate all businesses and products that brokers have nominated for recognition in 2017. Underwriting agencies play a pivotal role in the Australian insurance market, and the positive feedback provided by brokers attests to the high quality work that continues to be undertaken in the space.

Tim Garratt, editor

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SPECIAL REPORT

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 2017?

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 Insurance Business to have the most significant number of market participants in the Australian agency space.

Our survey respondents were also given the opportunity to name the best insurance product provided by an agency in the last 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 to let us know what agencies can do to win more of their business in the next 12 months.

MAXIMISING BROKER BUSINESS We asked brokers to tell us how underwriting agencies can win more of their business. Here is a selection of their responses:

Provide specialist product information in a simple format, be flexible to individual client requirements, provide efficient turnaround times, and be available Do the same as we do with our clients - that is, form lasting relationships rather than just selling a commodity Don’t tell us that you have an appetite for an industry and then decline to quote when we approach you Our main indicators for a preferred underwriter [are] turnaround on quotes, the ability to issue urgent terms, having experienced underwriters able to answer the out-of-the-box questions, straightforward claims notification and efficient claim settlements An underwriting agency needs to provide brokers with not only competitive premiums, products and service, but material and education to work with us in order to sell and recommend their product. I believe it needs to be a collaborative effort, in order to provide the best advice and ultimately develop new business

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8/11/2017 10:39:41 AM

SPECIAL REPORT

BROKERS ON UNDERWRITING AGENCIES

WHAT BROKERS WANT

THE CLAIMS EXPERIENCE We asked brokers whether underwriting agencies’ turnaround times for claims and new business quotes improved or worsened during the last year.

Coverage 4.68 New business turnaround times 4.54

Improved significantly Improved No difference Worsened Worsened significantly

Claims turnaround times 4.53

4.50

2% 16%

Overall service levels

11%

31%

Broker support 4.49 Premium stability 4.30

39%

Commission structures 3.56 0

1

2

3

4

5

Note: Categories were individually scored between 1 and 5, where 5 equates to ‘very important’ In completing our Brokers on Underwriting Agencies survey, we asked those who took part to indicate which aspects or attributes of their dealings with agencies are of most importance to them.

It will come as no surprise to reveal that, for the third year in a row, brokers ranked the coverage offered by the agency as the most important attribute. At the end of the day, a broker can only deliver for their client if they are able to secure insurance solutions that properly address their client’s unique risk exposures. Nothing is more important than the coverage itself.

For the second year in a row, turnaround times for new business quotes finished in second place. Following closely behind in third, fourth and fifth were claims turnaround times, overall service levels and broker support respectively.

Despite some minor movement in the ranks, survey responses have told a consistent story across the three years of its life: brokers are

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firmly focused on getting the best for their clients, which encompasses not only finding the right product, but ensuring quotes are provided expediently and that, when the day comes when a client must call upon the agency’s promise to pay, the process of obtaining that payment is efficient and easy.

At the other end of the ladder, brokers ranked premium stability sixth and, right at the tail end – and, once again, by a fair margin – was commission structures. In fact, commission structures has been rated the least important aspect by brokers in each of the three annual surveys Insurance Business has conducted.

What is arguably the most important takeaway from the responses to this question is that the final average score for six of the seven categories was, once again, well above 4/5. And so, while we were able to assign all seven attributes a separate rank, each is patently of significant importance to our broker readers, and agencies should therefore strive to excel in all of these seven areas.

This year, half of our survey respondents reported at least some improvement when it comes to underwriting agencies’ turnaround times for claims and new business enquiries.

One broker said agencies “go out of their way to provide quality service that exceeds targets and service level agreements”, while another reported that “turnaround times for claims has jumped substantially in the last three to four months”. A third broker told us of having received “great support” from specific agencies, adding that “they are often contactable after ‘normal business hours’, understanding that our clients don’t work 9–5”. Elsewhere, a broker shared their observation that “everyone seems a bit hungrier”.

Conversely, 18% of respondents noted some worsening when it comes to turnaround times. One broker said, “Claim turnaround times have dropped significantly, communication has dropped, [and] new business underwriting has become inflexible and unwilling to consider things outside the box.” Another broker reported that “many agencies are now taking up to three weeks to get back to us on enquiries unless you continually hassle them for a response”. Meanwhile, another comment read: “Electronic delivery systems have generally increased efficiency, but for any risk that doesn’t match the hatch, response times are poorer.”

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SPECIAL REPORT

BROKERS ON UNDERWRITING AGENCIES ACCIDENT AND HEALTH

ACCIDENT AND HEALTH INTERNATIONAL

DUAL AUSTRALIA

ENT & HEA L CID

TH

AC

AFA INSURANCE

Kicking off the awards announcements for 2017, Insurance Business first recognises agencies that have won the most broker votes in the accident and health space.

For the third consecutive year, Accident and Health International (AHI) picked up the gold medal in this category. It’s been a big year for the business, which welcomed

In 2017, MECON Insurance has been named top construction agency by a substantial margin.

One broker singled out MECON “because of the professionalism, reliability, and absolutely brilliant service provided throughout the entire process - from new business quotation right through to policy issue, then ongoing servicing through the life of the policy”. Another broker characterised MECON’s turnaround time as “absolutely exemplary”, adding that “MECON make us look good and they are a pleasure to deal with”. On top of that, a number of brokers singled out MECON’s NSW state manager, Simon Marr, with one broker describing him as “exceptional” and someone who “goes way above and beyond”. This is the perfect example of how significantly people make a difference to a customer’s impression of a business.

Taking silver in construction is SURA Construction, which specialises in purpose-built cover for the sector, and the bronze medal this year goes to eSentry Underwriting.

One broker, nominating eSentry’s annual

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industry veteran Danny Byrnes to the organisation in May as its new CEO. One respondent singled out AHI for commendation based on “claims experience and innovative app experience”. A second broker praised the agency for “easy to obtain online quotes”, “response time” and “competitive premiums”.

Taking the silver medal in this category is

the same organisation to have received silver in both the 2015 and 2016 surveys – Sydney agency AFA Insurance. Not only has the business once again walked away with silver, but it’s again secured its medal by a considerable margin. One respondent nominated AFA’s Agreed Value Personal Accident coverage as the top agency product of the year, based on the fact that “financials [were] not required at [the] time of claim”.

Rounding out the medallists for accident and health insurance is an agency far from a stranger to the winners’ podium in the Brokers on Underwriting Agencies survey.

It’s multi-award-winning agency DUAL Australia, said to be the nation’s largest independent underwriting agency as well as Lloyd’s largest coverholder in the country.

One broker nominated DUAL’s corporate travel policy as the top product of the year, doing so on the basis of “very expansive coverage, [and] great claims service and support team”. Like our gold and silver medallists, DUAL has taken bronze in each of the three years of this survey.

CONSTRUCTION

SURA CONSTRUCTION

MECON INSURANCE

contract works policy as the top insurance product of the past 12 months, had a good news story to tell. “eSentry have worked with us in the past 12 months, working on claims [and] negotiating renewals,” the broker reported.

“A senior executive, an underwriter and a claims manager all made the effort to visit a

eSENTRY UNDERWRITING

large builder prior to renewal to discuss their plans for the next 12 months, to get a better feel for the client so that they could appropriately price their renewal and inclusions of cover to meet the client’s needs for the next 12 months.

This exceeded my expectation and the client’s expectations.”

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SPECIAL REPORT

BROKERS ON UNDERWRITING AGENCIES CYBER AND INFORMATION TECHNOLOGY LIABILITY

EMERGENCE INSURANCE

DUAL AUSTRALIA

For the second year in a row, DUAL Australia has taken the gold for cyber and information technology liability insurance.

“The cover, premiums and deductibles have remained competitive and on top of the market,” said one broker, who voted for DUAL’s cyber liability and privacy protection as the top product of the past 12 months.

There’s been much discussion of late regarding the D&O market in Australia and, more specifically, the impact of Side C claims.

In the previous issue of Insurance Business magazine, Tanya Stevenson and Tracy Grant of Willis Towers Watson penned an article on the subject, describing the outlook for Side C cover as “very challenging”. “The proliferation of class actions [in Australia] … has changed the landscape,” Stevenson and Grant wrote. “Since 2010, securities class action settlements have exceeded $925m from 17 separate actions … the average settlement of a shareholder class action is approximately $62m.”

It continued: “This substantial deterioration in the claims environment, particularly in the last five years, is occurring in an Australian D&O marketplace that only has a premium pool of an estimated $250m.”

Similarly, in another recent issue, Swiss Re Corporate Solutions’ Jeremy Scott-Mackenzie warned of the damaging effect on the D&O market caused by the substantial increase in

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BROOKLYN UNDERWRITING

“Product information, stats, claims scenarios and education have also been very good. The online quoting portal is excellent.” Meanwhile, one broker nominated DUAL’s information technology liability policy for the same honours. “Great combined coverage, easy to deal with, and pricing is relevant to risk,” the broker noted.

In silver is Sydney-based specialist cyber underwriting agency Emergence Insurance, stepping up from their bronze finish in 2016.

“In this day and age, where cyberattacks are becoming more and more frequent, the insurance industry should really be stressing the importance of cyber insurance to their clients,” one surveyed broker said. Specifically commending an Emergence cyber offering, another broker said, “It is appropriate to needs, well thought out, well explained and, importantly, the people at Emergence understand their product thoroughly …

Equally importantly, the service is exceptional and the pricing is appropriate.”

Finally, Brooklyn Underwriting has won bronze in the cyber and IT liability insurance category. “They have fantastic turnaround times, product and risk knowledge,” one broker said of Brooklyn’s IT insurance coverage. “[The] policy is broad, premiums are competitive … an all-rounder.” Further, another broker described the same offering as “very good cover, easy to quote online and cost effective”.

DIRECTORS’ AND OFFICERS’ (D&O) LIABILITY

LONDON AUSTRALIA UNDERWRITING

PRORISK DUAL AUSTRALIA

securities class actions. He said the risk needs to be shared across the market and advocated a co-insurance approach.

D&O liability remains a crucial product, and in 2017, DUAL Australia has romped home, winning its third gold medal in this category. One

broker praised DUAL’s D&O offering as “accessible with fast turnaround times, highly customisable and generally well priced”.

This year, silver has been taken out by Sydney’s London Australia Underwriting, as well as Melbourne-based agency ProRisk.

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SPECIAL REPORT

BROKERS ON UNDERWRITING AGENCIES MANAGEMENT LIABILITY

HIGH STREET UNDERWRITING

DUAL AUSTRALIA

Management liability insurance represents essential coverage for a vast variety of business types.

Taking out its third consecutive gold medal in this category – as well as its fourth medal so far in 2017 – is DUAL Australia, which was the clear choice of surveyed brokers when it comes

The next award is in recognition of agencies providing insurance solutions to the vital not-for-profit sector.

Again in 2017, there was a close race to the finish line between first and second, but once again, Community Underwriting has walked away with the gold medal. The agency has been working with not-for-profit organisations since it was founded in 2014. It is Australia’s only insurance provider for not-for-profits that is owned by its own clients. Community Underwriting’s wide range of clients includes animal welfare organisations, community education groups, community health centres, disability services, neighbourhood centres, senior citizens groups, and veterans affairs groups.

One surveyed broker singled out Community Underwriting for providing “competitive prices and comprehensive cover”. A second broker commended the business and its not-for-profit packages, specifically praising the business for “good service, competitive premiums and fantastic turnaround times”. Congratulations

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SOLUTION UNDERWRITING

to management liability insurance. One broker described DUAL’s management liability coverage as “easy to quote and bind”. Similarly, another characterised the product as “easy to place, good cover”, and a third praised the “overall scope of cover”. A fourth broker surveyed commented that the “policy wording is excellent” and that

“transacting renewal and new business is a breeze”. Additionally, one broker singled out DUAL’s management liability offering for its “excellent cover …, easy to obtain quotes, [and] approachable and responsive underwriters”. A further respondent praised DUAL for its webinars which, according to the broker, “have been really useful”.

Securing silver for management liability is High Street Underwriting, another agency to have chalked up impressive results across a number of categories in both of the past two surveys. A Lloyd’s Coverholder specialising in the placement of obscure risks across many areas of insurance, the Brisbaneheadquartered High Street is led by managing director Alan Whittle.

Taking the final medal for management liability insurance is Solution Underwriting. In telling us how agencies could win more of their business, one broker suggested businesses “be more dynamic”, adding, “I think Solution Underwriting has been excellent at this over the last 12 months.”

NOT FOR PROFIT

DUAL AUSTRALIA

COMMUNITY UNDERWRITING AGENCY

to Community Underwriting for back-to-back wins in this category.

The silver medal for not-for-profit coverage has gone to DUAL Australia for the second year in a row. And taking the bronze in 2017 is a first-time Brokers on Underwriting Agencies medallist, Hostsure Underwriting. An agency

HOSTSURE UNDERWRITING

that has been underwriting specialist niche products for businesses for more than two decades, Hostsure is based in Sydney’s CBD. Congratulations to all three medallists who continue to work to ensure that not-for-profit entities are cognisant of the varied – and often significant – risks facing their operations.

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SPECIAL REPORT

BROKERS ON UNDERWRITING AGENCIES PROFESSIONAL INDEMNITY

SOLUTION UNDERWRITING

DUAL AUSTRALIA

Professional indemnity insurance came into the spotlight recently, with ASIC completing a review of PI in August to ascertain whether the majority of small companies with Australian financial services (AFS) licences

High Street Underwriting has received top marks from brokers for product liability for the third year in a row.

One surveyed broker praised High Street for “superior policy wordings and competitive premiums”, while a second similarly commended the agency for “excellent wording”. Speaking about its combined public and product liability coverage, a third broker described the product as “extremely comprehensive” and also offered praise to High Street staff. “Their service overall as a team is outstanding,” said the broker, adding that it “matches their turnaround times”.

Another broker again commented on the quality of their communications with High Street, referring to the “good local staff response”.

Another broker told Insurance Business that High Street provides “great broker support to help win new business. They have a fast turnaround time – I normally hear back from one of their friendly underwriters within a few hours … It is important to have a fast turnaround time [because] otherwise [the clients] go elsewhere.”

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HIGH STREET UNDERWRITING

had insurance that complied with regulatory requirements (the good news is that ASIC’s conclusion was a response in the affirmative).

In the 2017 Brokers on Underwriting Agencies survey, respondents have given

DUAL Australia its third consecutive gold medal for professional indemnity insurance.

It represents their fourth gold medal (so far) in this year’s survey. One broker described DUAL’s PI offering as “good cover with competitive prices” and added that the agency’s web rater “makes it easy to get quotes”.

In second place for PI is another multimedal-winner, Solution Underwriting. A broker cited Solution’s PI offering as the top product of the last 12 months based on quick turnaround and “excellent claims experience”.

Another commended the business for a “great product and great service from the agency”.

A further broker reported a “quick turnaround with quote requests”. Solution also received praise for Solution One, which combines professional indemnity with general liability and management liability insurance. “A nice easy combination product” was one broker’s description of the offering.

PRODUCT LIABILITY

PEN UNDERWRITING

HIGH STREET UNDERWRITING

It’s unsurprising that so many brokers have singled out agencies on the basis of interactions with staff, since so many made reference to service quality when asked how agencies can win more of their business over the next 12 months. Again, it attests to the fact of good people making a big difference.

ASR UNDERWRITING AGENCIES

Winning the silver medal in the product liability category was Sydney’s Pen Underwriting, an agency that will soon see a new leader take charge, in the form of Arthur J. Gallagher’s Ken Keenan (current chief executive Gary Marshall is retiring at the end of the year). Rounding out the medallists, ASR Underwriting has received bronze.

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SPECIAL REPORT

BROKERS ON UNDERWRITING AGENCIES PROPERTY

MIRAMAR UNDERWRITING

AXIS UNDERWRITING SERVICES

According to Gallagher’s recently released Q2 Market Overview Report, underinsurance is an ongoing concern for commercial and small business property owners in Australia. The report cited extreme weather-related claims events and the increasing complexity of cyber as issues confronting property owners and

High Street Underwriting is the 2017 gold medallist for public liability. It means that in each of our three annual Brokers on Underwriting Agencies surveys, the agency has scored top marks for both its public and product liability products – an impressive achievement.

Many brokers singled out High Street’s public liability coverage as top agency product of the past 12 months. One broker commended the agency’s “great service and staff ”, while another commended its “very broad cover, able to include multiple occupations”. “Underwriters have great communication, know their product and can negotiate covers extensively,” another broker told us of their dealings with High Street. Meanwhile, another respondent was impressed by High Street’s public liability insurance on the basis of “sharp premiums and a broad risk appetite, friendly processing team and quick, helpful underwriters [who make] quoting easy, especially with their online system”. In addition to that feedback, one broker said High Street Underwriting “helped

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PEN UNDERWRITING

tenants, whose business interruption risk will be heightened in either of those events.

Needless to say, property owners in Australia – and their brokers – demand excellent insurance products that effectively address the changing landscape. So, which of the underwriting agencies offering property risk transfer solutions

have impressed our broker readers most over the past 12 months?

Last year, the gold medal was won by Axis Underwriting Services, which specialises in hard-to-place property. And in a close contest, it’s Axis that has taken first place again in 2017.

One broker commended the agency for its “competitive premiums and [a] broad risk appetite”.

The property silver medal has once again gone to Sydney-based Miramar Underwriting.

One broker singled Miramar out on the basis of providing “market-leading cover”. The broker also acknowledged the “expertise of [Miramar’s] underwriters”, describing them as “easy to deal with”. On top of that, the respondent described Miramar as “flexible on coverage, terms and endorsements” and commented that “Miramar actually cares about brokers and works hard for us. [The team] understands if we do well, they do well”.

Taking the final place on the podium is Pen Underwriting, which has picked up its second consecutive bronze medal for property.

PUBLIC LIABILITY

BROOKLYN UNDERWRITING

HIGH STREET UNDERWRITING

us immensely with a tailored public liability for our clients in the building and construction industry, along with an online system that has been a game-changer for Trade Risk”.

Taking silver this year is a recent addition to the global XL Catlin family, Brooklyn Underwriting, a business that one broker

PEN UNDERWRITING

commended for its “knowledgeable staff, willing to help and [who] respond well when needed”.

Finally, the winner of the bronze medal for property is Pen Underwriting, a business that has found itself on the medallists’ podium three times in 2017.

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SPECIAL REPORT

BROKERS ON UNDERWRITING AGENCIES STRATA COVER

QUS

STRATA UNIT UNDERWRITERS

CHU UNDERWRITING AGENCIES

In our final product category, strata, CHU Underwriting Agencies has taken gold for the second consecutive year.

One surveyed broker nominated CHU as top strata agency on the basis of fast turnaround times, consistent premium and excellent claims service. A second told Insurance Business CHU demonstrates “excellence in all areas”. “I deal

purely with strata and CHU’s product and service is above the other agencies’,” a third commented. Another survey respondent said, “We have a large portfolio of strata and community groups. CHU is the largest strata agency in the market and is very supportive of our brokerage.”

And when one broker was asked to cite why

they nominated CHU as provider of the top insurance product of the past 12 months, their response indicated several strengths. The broker attributed the nomination to CHU’s prompt turnaround times on new business quote requests and queries, the fact of renewals being sent at least six weeks prior to expiry, and on the basis of CHU’s understanding of the broker’s “business and requirements”.

In a close contest, silver once again went to IAG-backed Strata Unit Underwriters, which has been providing strata insurance products since 1999.

And in a finish that has mirrored the 2016 result, QUS took the bronze for strata cover.

One broker commended the agency’s “exceptional customer service, competitive pricing and support for smaller brokerages”.

Another told Insurance Business that QUS offers “a comprehensive product and have extensive product knowledge [and is] always happy to help and very supportive”. Finally, a third broker described QUS as being “open to changes/endorsements to their policy, to cater for each client’s needs”.

BROKERS ON PRODUCTS Insurance Business asked surveyed brokers to tell us whether underwriting agencies’ product ranges and pricing improved or worsened over the last year.

Improved significantly Improved No difference Worsened Worsened significantly

“Generally speaking, I think product ranges have increased and pricing is still very sharp”

8%

2%

13% % 37

41%

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“Seems to be more agencies in the market, and their product offering has broadened” “New packaged solutions are helping avoid coverage gaps and assisting with the

efficiency of the transaction” “Across the board there have been a number of product improvements” “The product is the same and pricing seems to be still competitive in the market” “Prices have remained quite stable we have found”

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SPECIAL REPORT

BROKERS ON UNDERWRITING AGENCIES

BROKERS’ PICK Brokers were asked not only to vote for the top underwriting agencies across 11 product lines, but also to name the top insurance product provided by an agency in the past 12 months. The following are the ‘Brokers’ Pick’ award recipients

CHU Underwriting Agencies – Residential Strata Insurance Plan For the second year in a row, CHU Underwriting Agencies’ Residential Strata Insurance Plan is a ‘Brokers’ Pick’ medal recipient. One broker nominated CHU and the product on the basis of the support provided, telling Insurance Business that CHU’s underwriters “are amenable to supporting us on difficult to place risks”. A second broker nominated the coverage on the basis of “inclusion of flood cover”. Another broker said of the product: “It is such a broad policy wording that covers all aspects of the strata industry”, while a fourth said CHU has “made a noticeable effort to be more available to brokers and their service levels and speed of processing are not matched by any other agency”.

Emergence Insurance – Cyber Event Protection Sydney-based Emergence Insurance continues to impress brokers with its Cyber Event Protection product. One surveyed broker described it as a “fantastic product”, adding that “the policy wording is well set out and very clear to understand”.

Another broker complimented the product on its “simple wording but broad cover”. Some brokers, in nominating the product, were also keen to praise the Emergence team itself, with one respondent describing it as “a team that has excelled in service and delivery”, while another said, “they prove that an agency 100% focused on a specialised product is providing market leading solutions.”

High Street Underwriting Agency – Public and Products Liability High Street Underwriting has again picked up a ‘Brokers’ Pick’ medal for its combined product and public liability offering, on top of the gold medals it secured in each of those individual product categories. Talking about the combined offering, one broker described the product as “extremely comprehensive”, while another referred to “superior policy wordings”.

One broker commended the product on the basis of “coverage, premium stability and turnaround times”. Others also offered praise to High Street Underwriting staff members, with one broker calling its team “outstanding” and another reporting that “they listen to my needs and clients’ requirements at a quality premium”.

MECON Insurance – Annual projects MECON Insurance is another agency to receive broker praise not just for product offerings, but for those running the show. “They are exceptional, nothing is ever a problem” one broker said of the MECON team. Another commented on the high service level provided, as well as the “friendly staff ”. When it comes to insurance solutions, one broker said MECON’s products are “second to none”, while another termed one particular product the “best coverage”. Singling out its Annual Project product, one broker reported that the policy wording is “very easy to read” and the coverage is “very broad”. Another said MECON is “always looking to improve wording and be leading with the best policy wording”.

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FEATURES

BROKERAGE INSIGHT

HONAN INSURANCE GROUP Damien Honan talks about the company’s NGA Benefits acquisition – another milestone for the group as it focuses on becoming the leading independent insurance advisory business in Australia, New Zealand and Southeast Asia IN OCTOBER, Honan Insurance Group announced its acquisition of Singapore-based NGA Benefits, a leading employee benefits consulting, insurance intermediary and benefits administration company that operates throughout Singapore and Malaysia.

According to Honan, the acquisition is part of the company’s ongoing investment in Southeast Asia. In 2015, it purchased Singaporean brokerage MACS Insurance Brokers.

Damien Honan, CEO of Honan Insurance Group, gave Insurance Business an insight into the thinking behind the transaction, as well as the group’s endeavours in Southeast Asia.

IB: How did the deal come about?

Damien Honan: I really believe it was a direct result of two key things – Honan’s strong reputation, and our commitment to nurturing relationships.

Part of my role as CEO is to develop relationships in the insurance and employee benefits industries across the globe. We already had a good network in Singapore based on our earlier acquisition. This opened up the door to meeting NGA. I could immediately see the alignment to our culture and style of doing business – they are also very client-focused.

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IB: Why did Honan feel the need to strengthen its overseas business?

DH: Part of our growth strategy is to build our presence in a way that adds value to our clients.

We see Southeast Asia as an integral part of that value proposition. We also have a presence in the USA and in New Zealand.

IB: What does NGA Benefits bring to the group?

DH: NGA Benefits has some great talent under the direction of Rachel Wee. Their service culture and client philosophy are very similar to ours at Honan.

We’ve had strong organic growth in Australia due to our focus on people, partners and clients.

So, for me, those three things need to line up very closely.

NGA also has great capability in managing large multinational and local corporate clients.

They use a best practice platform and set a high client service standard. The Malaysian service centre will also provide a great leverage point; we are considering how we could potentially integrate this through the group.

IB: Since Honan arrived in the Asian market, how has the business fared in the wider region? Are you pleased with its progress so far?

DH: We’re very happy with our progress in the Southeast Asian market. It’s a competitive market, but we approached our first acquisition with the mindset to learn and grow. We invested in the opportunity by sending key executives to Singapore to help drive the business forward.

GOING GLOBAL Damien Honan has led Honan Insurance Group since 1993. Under his leadership, the group has expanded its footprint across Australia and the wider world. Since November 2001, the group has been a member of the Worldwide Broker Network (WBN), the world’s largest network of independent property and casualty brokers and employee benefits consultants. As a partner of the WBN, the group has the capability to advise and transact in more than 100 countries. In 2015, Honan Insurance Group (Asia) was officially formed, following its acquisition of MACS Insurance Brokers.

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FAST FACTS

Areas of specialty

Property/casualty

Financial lines

Employee benefits

Claims management Year founded: Honan Insurance Group was established in 1964

“I really believe we’ve geared Honan to create its own distinctive mark on the broking industry” I believe it’s increased our global footprint by facilitating inbound business. The outcomes have obviously paved the way for the NGA acquisition.

IB: Are you surprised that more Australian brokers haven’t ventured into the Asian market? It seems like a logical step for those with the right experience to branch out into the wider region?

DH: In truth, I’m quite focused on building our own path following a carefully thought-out strategy. I don’t invest a lot of time in

considering what other brokers are doing, or what has been done before us.

If I think about Southeast Asia, it’s a unique market. It takes a lot of commitment to make it work. You need to understand local customs and culture. You need to have your timing right, and a long-term strategy behind the decision.

IB: Are there any more deals in the pipeline either at home or abroad?

How does Honan expect to grow over the coming year?

DH: At this stage, we’re heavily focused on our

Number of offices: Six (Melbourne, Sydney, Brisbane, Perth, Auckland and Singapore) Headquarters location: Melbourne Number of employees: Over 180 Annual premium revenue: Over $200m Leadership: Damien Honan – CEO organic growth. We are investing in some of the incredible talent we have at Honan. We’re constantly trying to improve our product and service offerings to clients, and, of course, to refine our value proposition to the market.

When I sit back and think about it, we’ve had a fantastic growth journey over the past few years.

I really believe we’ve geared Honan to create its own distinctive mark on the broking industry.

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FEATURES

THE YEAR AHEAD

THE YEAR AHEAD

With indications that the soft market is finally starting to turn, what’s ahead for general insurance in Australia in 2018? Seven industry leaders share their insights

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FEATURES

THE YEAR AHEAD actually are being cyberattacked,” he says.

Kelly also talks about the need to work towards more efficiency in handling data.

“I’m seeing the whole industry is looking at how it can move data and how it can read and how it can get data to the consumer,” he explains.

“I’m convinced that if we could band together to move data more effectively, then we could reduce the cost of doing business, because a lot of the data that we’ve got now is manually handled and manually put together … We can reduce costs by not having people with their hands on that.”

Kelly remembers when motor insurers moved

“The more we can start to get data to work for us without people touching and fetching it, the better off we’ll be in 2018”

ROBERT KELLY Co-founder, managing director and CEO STEADFAST

In August, Steadfast announced its fourth consecutive year of growth, recording an increase in net profit after tax of 10% in FY17. Its GWP hit record levels, with $5bn placed by Steadfast network brokers during the year, representing a 9.8% increase on FY2016. Meanwhile, Steadfast Direct saw a 115% boost to its GWP numbers, when compared to last year.

Talking to Insurance Business, Robert Kelly mentions the major international deal Steadfast announced in June as another highlight.

“We took a non-controlling interest in unisonSteadfast, which expands our international footprint into 130 countries and 200 broking operations,” he says.

So, what does Kelly expect for the insurance space next year?

“I think 2018 is going to be a stabilising year in the industry because of the recognition that prices have to go up,” he says.

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“I think the thing for 2018 we’ll be watching is to see what impact profitability has on underwriting flexibility.”

Kelly discusses the need for greater awareness of the cyber threat.

“I think there’s no doubt that the lack of understanding of cyber and its impact on the world is grossly underestimated and grossly misunderstood by the small to medium enterprise clients, which make up the vast majority certainly of our client base,” he says.

Kelly is hopeful that when the new mandatory data breach notification regime comes into effect shortly, it will heighten concern about the cyber threat within the wider community as businesses begin to understand the level and frequency of cyberattacks.

“I think that some of the larger financial institutions may absolutely scare the pants off people when they see how [those institutions]

from paper claim forms to telephone notification in their efforts to expedite claims.

“There was an uproar in the industry, where people said it wouldn’t work,” he recalls. “And now I can tell you, at any broker forum that I run, if I was to say, ‘We’re going to go back to paper claim forms’, there would be an uproar.

“I think the more we can start to get data to work for us without people touching and fetching it, the better off we’ll be in 2018.”

And as for trends he’ll be watching next year, Kelly says: “I believe that we’re always in a transitional time. You can’t look at the way we’ve done business and keep saying that’ll endure for another 20 years. We have to continue looking at what is motivating people to buy and how they are buying, and on what basis do they seek and get information and use information.

“That’s probably what I think we must do as an advice-based intermediary network, is to actually be well aware of how people wish to buy the products that we give advice on. We have to be there with them and we have to be ahead of the game …”

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DAVID KEARNEY Chief executive partner WOTTON + KEARNEY (W+K)

Last year, David Kearney talked to Insurance Business about the significance of diversity and inclusion as an industry issue.

“I’m pleased to see how the industry has embraced the topic by supporting the Lloyd’s Dive In Festival, and delighted that W+K could assist in sponsoring the first-ever Melbourne event in conjunction with SURA and Liberty International Underwriters, where we aimed to raise awareness about unconscious bias in insurance through an afternoon of interactive workshops and keynote speakers,” he says.

This year, W+K celebrated its 15th anniversary as a law firm singularly focused on insurance.

“In the last 12 months, we have had two significant developments in recognition that insurers, brokers and their customers are not confined by national borders,” he says.

The first is the establishment of Legalign, a global alliance of best-in-region insurance law firms that includes W+K, Wilson Elser (US),

DAC Beachcroft (UK and other territories), and BLD Bach Langheid Dallmayr (Germany and connected into Europe).

The second, he adds, is W+K’s move from a national four-office presence to a regional sixoffice presence, with the opening of offices in Auckland and Wellington.

“With the increasing number of global issues flowing from cybercrime, securities class actions, product recalls, concussion in sport, and autonomous vehicles (just to name a few), I’m looking forward to utilising the breadth of our new alliance and now regional presence to deliver high-quality solutions to the insurance industry and their customers doing business in our region,” Kearney says.

In 2018, W+K will increasingly focus on thought leadership.

“We aim to share with the insurance market – including the broker market – trends we are witnessing from the claims resolution coalface

and how those trends impact on future exposures,” Kearney explains. “Two examples of that are the rapid changes we are witnessing in the world of financial services through fintech advances, and the increasing exposure of employers across all industries to employment practices claims.”

Discussion moves to the greatest legal and regulatory challenges for the industry in 2018.

“With the pace of change we are experiencing, there are a number of challenges coming thick and fast,” Kearney says. “Some of the more obvious are the challenges around regulating autonomous vehicles as they move from theory to reality, the regulation of drones as the property market better understands their true potential, and legal and regulatory challenges from the increased use of artificial intelligence. As to the latter, it will be important that regulation does not act as an inhibitor of innovation.”

Asked if there’s a legal or regulatory issue on which he thinks the industry should be working with other stakeholders to find a solution, Kearney cites what he describes as the “perfect storm” in the class action space, created by the rise of litigation funders, the plaintiff law firm business model, and a “class friendly” legal environment.

“Such a solution must maintain access to justice for aggrieved plaintiffs but not put at risk the ability of corporates to transfer risk in a way which is conducive to assisting a growing, thriving economy,” he says.

Talking trends that W+K will pay particular attention to, Kearney says there are two horizon themes the firm will be watching closely.

“The first is emerging technologies and the implications for insurance coverage and claims in areas such as medical malpractice, cyber breaches involving the internet of things, and autonomous vehicles,” he says. “The second is insurtech and the way it is likely to disrupt the insurance market if the major players can’t find a way to implement solutions that can interact with all of their existing stored data and legacy systems.”

Kearney, like many of his industry colleagues, believes the pace of change in the industry is only likely to increase.

“However, with change comes opportunity and W+K looks forward to working with the industry to effect positive change in a way that benefits insurance industry participants and their customers.”

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FEATURES

THE YEAR AHEAD

RICHARD FELEDY Deputy managing director ALLIANZ AUSTRALIA

Allianz Australia this year took out both ANZIIF’s and AB+F’s General Insurance Company of the Year awards, as well as Insurance Business’s Insurer of the Year. Richard Feledy is extremely proud of these accolades.

“It’s recognition of the great work that 4,500 employees at Allianz wake up and deliver for our customers and partners on a daily basis,” he tells Insurance Business.

Reflecting on 2017, Feledy is also proud of the industry’s response to Cyclone Debbie, which has so far resulted in insurers receiving more than 72,000 claims and racked up a damage bill in excess of $1.6bn.

“We’re getting much better at serving our customers during events like Debbie, and with claims finalisation rates now running significantly ahead of similar events, I think it’s a real testimony to our industry,” he says.

On 1 January, Feledy takes over the role of

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“It’s critical that we start to almost replicate, I think, what’s been done in the online banking community” managing director of Allianz Australia, replacing Niran Peiris (who joins the Allianz SE Board of Management). He’s looking forward to continuing to deliver on the key pillars of Allianz’s strategy, including enhancing its customer focus.

“There’s a real opportunity for us and our industry to simplify our products and make sure that we’re always on, so that they are able to

connect with us and deal with us in a manner that suits them,” Feledy says, stressing the need to embrace technology.

“It’s critical that we start to almost replicate, I think, what’s been done in the online banking community. It wasn’t that long ago when people would give up their lunch hours to go and stand in a bank queue in order to do their banking, whereas now you can do it when it suits you – walking down the street, sitting at home – and at whatever time and hour.

“I think there’s a fantastic opportunity for us with our partners to ensure that we deliver those types of capabilities.”

In recent times, Allianz has substantially invested in redesigning and rebuilding its SME platform, Allianz Alive, and has received highly positive feedback on its changes.

“I think that’s a great example of some of the investment that we are making to hide some of the complexity in the business and ensure that we continue to interact in a productive way,” Feledy says.

“We’re also looking to further enhance Allianz Alive by rolling out instalment billing and looking at what other product offerings we could make available, leveraging off the experience we’ve had to date.”

Asked to cite the biggest challenge facing the industry, Feledy mentions the fact that change is the only constant.

“It doesn’t matter whether we’re talking about the economic landscape, technology, climate change, increasing regulation, or changing customer expectations, we need to ensure that we embrace and respond to that change,” he says.

“You can see change and you can fear it, or you can see it – as we do at Allianz – as a fantastic opportunity to continually improve what we do and, more importantly, how we do it. Product simplification and providing better value and clarity to our customers is absolutely one of the areas of focus.”

For Feledy, right now is an exciting time to work in insurance.

“Everyone is looking for the best ways to be able to provide the products and services in a way that customers are looking for, and I think it’s a challenging landscape but full of opportunity – a very exciting year ahead!”

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“We have always and will always have a business model that is here to talk to, speak to and see people”

BEN BESSELL Executive general manager, business distribution, and Group executive INSURANCE AUSTRALIA GROUP (IAG)

As has been widely reported, IAG is currently implementing major structural changes.

“That’s about setting us up for the future,” Ben Bessell tells Insurance Business. “We’re hopefully going to finalise the bulk of our restructuring activities by December.”

Looking back on 2017, Bessell is proud of how IAG has handled the commercial market cycle.

“When we started to move on rates, we did so in a very considered fashion and with engagement with our partners,” he says. “I think that’s been good for them and for us that we’ve been able to achieve measured rate increases in a way that we’ve held retention levels to a good percentage, and we’ve been able to pick up some new business as well. I think that’s been a testament to the way we have worked with the market to ensure we’re getting back to a sustainable pricing position, but in a way that customers can understand.”

Talking 2018, Bessell highlights the opportunity

for the industry to promote greater awareness of available services around risk mitigation and prevention.

“I think if we’re consistent with our group purpose in making the world a safer place, that refers to mitigation and prevention as well as recovery, and creating an environment where a customer can experience all of those things as part of their insurance transaction is very exciting and something that aligns nicely with the company’s purpose, but also it aligns nicely to the needs of the community and our customers.”

Talking about the digital space, it’s patently clear Bessell is excited about the organisation’s work to enhance its own customers’ experience.

“We really think there’s an opportunity for us to stretch our lead in the SME market in Australia by creating greater customer experiences, and the digital interface is going to be really important for that experience to be improved,” he says.

“We know there are changing demographics [in the SME segment], we know more and more small business owners are comfortable engaging online and would prefer to interact digitally where they can. If we can provide a service, a value proposition and products that meet their needs … [and] they can transact with us in a way that’s more aligned to other digital interactions they’ve experienced, that provides a more holistic experience for those customers in a way that’s contemporary and consistent with how they like to trade and transact and undertake their own business.”

Addressing the subject of new entrants, Bessell says the industry shouldn’t be afraid of disruption because it is simply indicative of the evolving needs of customers.

“I think you have to look at it in a positive way,” he says. “We’ve got to leverage the assets that are at our disposal really efficiently, we’ve got to test new things, we’ve got to look outside of insurance to see what works really well, and we’ve got to make sure that we don’t come up with ideas or notions that aren’t designed from the customer’s perspective.

“That’s how we’re positioning ourselves – to embrace the change, embrace the fact that needs and demands are changing, embrace technology and the accessibility of data, and evolve the way we look after our partners and customers.”

But the future, he emphasises, won’t be all robots and digital interaction.

“We have always and will always have a business model that is here to talk to, speak to and see people … Sure, we can improve and create interactions that are more efficient, but we actually need to make sure we still treat people like human beings.”

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FEATURES

THE YEAR AHEAD “We’re exploring a number of options to speed up the process and remove speed bumps and road blocks within the claim settlement piece,” he says.

Mackinnon confirms the return of the Dive In Festival in 2018. This year, 1,400 people attended 10 events in Australia across three cities.

“Early indications are that we will be expanding the festival further in 2018. We’ve got plans already in place to look at including events in both Adelaide and Brisbane in 2018 for the first time.”

Mackinnon talks about the challenge facing the industry in the form of the introduction of the mandatory data breach notification regime.

“I think that’s going to be a real turning point for Australia as a country, in terms of what we’re doing with cyber and cyber risk, but also a huge opportunity for the insurance market,” he says.

“The challenge … is we need to consider how we as an industry can deliver products and services that customers can actually understand, and also we need to address how we’re going to manage the risk of aggregation of cyber exposures. If you look at cyber, and as an SME or a middle-market business you try to buy a

CHRIS MACKINNON General representative, Australia LLOYD’S

Like Allianz’s Richard Feledy, Chris Mackinnon sees the industry’s performance when catastrophe struck as a highlight of 2017, specifically during Cyclone Debbie.

“We get a lot of pressure on us from the media and politicians around how we perform post-disaster,” he says. “Criticism we get from various quarters, I think, is totally unfounded, and we should all be incredibly proud as to what we’ve done and the difference that those payments will make to communities and people’s lives and livelihoods. That’s a really good example to me of why we do what we do.”

The other highlight Mackinnon identifies is the reasonably strong indication that the market is turning.

I think that that allows us to carry on doing what we do well and again see the industry approaching underwriting and pricing on a rational and considered basis,” he says. “There’s been a uniform approach to that, from what I can see.

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“We need to consider how we as an industry can deliver products and services that customers can actually understand” Looking at next year, Mackinnon is excited to continue work on market modernisation.

“We are changing very quickly within the Lloyd’s market,” he says.

“There are a number of new projects and/or evolution of existing projects that we’re working on at Lloyd’s, where we here in Australia are hopefully going to get the opportunity to pilot some of the new strategies and ideas, which I’m really excited about.”

Mackinnon says there’s a focus on data handling and facilitating transactional business into London more effectively. He also says Lloyd’s is looking at significant enhancement of the claim settlement process.

cyber product, you’ve got a myriad of products to choose from, and none of them are using consistent language or definitions. How on earth is Joe Public expected to understand whether these products are fit for purpose for their own particular risk, and how are brokers supposed to get their heads around what all the options are, because there is not a lot of case precedent, not a lot of products have been tried and tested.”

“A major challenge for us as an industry in 2018 is … making sure that we are seen to be a solution provider and a service provider that supports people in this time, rather than just another element of complexity and confusion around the whole cyber issue.”

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LAMBROS LAMBROU CEO AON RISK SOLUTIONS AUSTRALIA

Aon Risk Solutions took home ANZIIF’s Large Broker of the Year award for the fifth time this year and has had success on numerous fronts.

“2017 will be our fourth consecutive year of strong improved performance with improved organic revenue growth, higher client numbers, higher client retention, and obviously when we get to the end of the year we’ll be able to disclose those numbers formally,” Lambrou tells Insurance Business.

The Aon chief is excited about the forthcoming launch of the business’s new plan.

“Our new long-range plan, which will run for three years in Australia, gets launched on 1 January,” he says.

“If you were to think about where the industry was five years ago, a lot of the buzzwords were around big data and the way that big data was basically going to transform the insurance industry … A lot of the investment that was going into the industry was really around customer insights. If I think about a lot of what’s going on right now,

“When I think about the future over the next three, four, five years, for me it’s all about customer empowerment” it tends to be more around the customer experience. So, a lot of investment that particularly insurance companies and, to a lesser degree, risk advisers like ourselves are pouring into technology is very much around how we can create a much more tailored and better fit around that customer experience.”

Lambrou continues: “Then when I think about the future over the next three, four, five years, for me it’s all about customer empowerment. So it’s moving from that journey from customer insight

to customer experience to customer empowerment, and where customer empowerment is really going to be able to take the interaction between ourselves and the customer, from segmentation to personalisation to individualisation. Those are the buzzwords that you hear a lot around in the industry right now, and I fully support that move by the industry to make ourselves more relevant to our clients through that.”

Lambros also talks about mergers and acquisitions. “We have a very strong pipeline, we have a strong appetite to invest in adjacent capabilities and core capabilities to help our business grow inorganically, and we see lots of opportunity in Australia and the broader specific region to do that,” he says.

And there’s plenty going on elsewhere in Aon. “We are demoing a number of really exciting and innovative analytical tools with clients at the moment, where we’re getting a lot of really good feedback from them,” Lambrou says. “Next year, we’re going to be formally launching the prototypes of those tools for our clients in the Australian marketplace, which we feel really excited about.”

Lambrou also talks about change he thinks the industry needs to see next year.

“We need a mindset shift around the notion of partnerships,” he says. “What I mean by that is that I think as an industry we’ve grown up with this notion that we need to occupy all or key elements of a value chain, and we need to protect our position by owning every aspect of it. There are many good examples out there of where partnerships have helped companies be more proactive in thinking about the way to better serve key elements of a value chain and change the status quo that exists in value chains, rather than being reactive and protectionist around what they already have.”

Lambrou adds that it’s important to improve diversity in the industry’s talent base, and that continued investment in data and analytics is needed to better deal with emerging risks.

“We spend $350m a year on data and analytics, and we do that on behalf of our clients to understand how risks are evolving, how they’re behaving, and then obviously work with the insurance company and reinsurance company community to come up with more tailored solutions to meet the needs of our clients.”

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FEATURES

THE YEAR AHEAD He also discusses management liability.

“You’ve got all of the major providers of management liability singing from the same hymn sheet and saying that this is a really challenging class of business,” he says. “When you see that, you know that it’s something that brokers have got to be all over. It’s an essential product that is largely distributed by general insurance practitioners, not professional lines practitioners, and they’re complicated, they’re not standard, and they’ve got huge horizontal exposure.

“That leads to a lot of misunderstanding about cover, a lot of challenges in comparing one product to another, and therefore opportunity for brokers to understand the products better and be able to advise their clients on the need for them in what it is an already difficult market.”

Finally, McDonald Nye mentions medical

HAMISH MCDONALD NYE Executive director PRORISK

Hamish McDonald Nye, who recently joined the ProRisk team, tells Insurance Business about his first nine weeks in the new role.

“It’s been a really exciting, fast start,” he says.

“I’ve learnt an awful lot about the business very quickly.”

McDonald Nye cites claims management as a highlight for ProRisk in 2017, pointing to its annual survey that quizzes insureds who have had claims during that time.

“We had 100% of those surveyed renew a policy with us,” he says, adding that the figure includes insureds whose claims didn’t qualify.

“That is an extraordinary thing,” he says. “The credit is to Chloe Thomas, our new head of claims, and Lee Cooper, who was formerly head of claims in the business and continues to oversee in a role as operations manager.”

McDonald Nye says his main objective next year is to continue building ProRisk’s underwriting talent.

“My main goal is to continue to build a team

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and gear us up for our future growth,” he says.

Building up the ProRisk brand will also be a priority. “[We’re] looking for greater brand recognition in a crowded marketplace, where there are over 50 underwriting agencies and a lot of other capacity in the market.”

McDonald Nye says the business will also commence development of some technology solutions.

“The date for the release of those solutions is not established yet, but that’s something that we’re working around,” he says.

There’ll also be some new products.

“We’ll be releasing some new products to the market and looking at reviewing our current production solutions,” he says, adding that brokers can expect a commercial cyber offering, as well as a clinical trials solution.

On the subject of products that offer real opportunities for brokers to better educate clients, McDonald Nye singles out three products, beginning with business interruption insurance.

“[We’re] looking for greater brand recognition in a crowded marketplace” malpractice insurance, which he says is “really poorly understood by the general insurance market”.

“They’re low-value products from allied health’s perspective, and they [allied health professionals] often don’t understand where there is a solution for them, and they don’t understand the products effectively. It’s not something that most brokers commonly trade in.”

Asked about trends he’ll keep an eye on in 2018, McDonald Nye says: “It will be interesting to see what happens with commission levels, whether they can be sustained.”

He also refers to the attention the wider insurance industry has received from politicians and regulators in 2017, citing ASIC’s focus on the add-on insurance market as an example.

“I think the way politicians and governments and regulatory agencies deal with the insurance industry will be interesting moving forward.

There’s no reason to believe that there won’t be continued focus on our industry.”

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FEATURES

CYBER RISK

CYBERSECURITY: WHY THE INDUSTRY IS PART OF THE PROBLEM At a recent event in Sydney, leaders examined the question of what more the industry itself should be doing in its efforts to address the growing cyber risk RISK MANAGERS are ill-prepared to deal with the growing threat of cyberattack. While they need to get their houses in order, the insurance industry must also up its game to avoid being part of the problem.

These were the key findings when FM Global vice president Lyndon Broad chaired a cyber insurance panel at this year’s Risk Management Society’s Forum in Sydney.

As a broker, there’s no single product that meets the cyber insurance needs of a client. So there’s an opportunity to add value by bringing together multiple products to ensure they have effective coverage.

Cyber risk has never had a higher profile, with ransomware attacks like WannaCry and Petya racking up billion-dollar losses around the world.

There’s also a sense that the worst is yet to come.

of attacks is broadening, with risk managers facing real and wide-ranging implications.”

JLT Australia chairman André Louw says cyber risk is a complex problem. He’s concerned that it’s being handled in a disjointed fashion that exposes business unnecessarily.

“Executives believe the risk can be handled

Responses have been inadequate

within the confines of systems and firewalls,” he says. “This misses the point that risk is usually manifested through human error.”

Yet cyber risk isn’t usually part of centralised risk management. It’s still dealt with by IT departments that don’t value insurance. The insurance industry has done little to instil confidence with its wild policy variations and coverage gaps.

“We’re living in a world of digital damage,” FM Global’s Broad says. “The nature and variety

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comes into effect early next year.

Under the legislation, Commonwealth Government agencies and private organisations must notify the Australian Privacy Commissioner, as well as individuals affected or at risk of a breach.

Penalties for non-compliance will be as

“We’re living in a world of digital damage. The nature and variety of attacks is broadening, with risk managers facing real and wide-ranging implications” Lyndon Broad, FM Global

Mandatory disclosure will help Finance, legal and other heads of business departments will get a better view of cyber risk when mandatory data breach legislation

much as $360,000 for individuals and $1.8m for companies.

Legislation and the growing frequency of attacks like WannaCry, which cost organisations worldwide an estimated $4bn, is generating interest in cyber insurance.

These policies are designed to help organisations mitigate risk by offsetting the costs

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involved in recovering from a cybersecurity breach. Much work still needs to be done.

“The market for cyber policies is developing haphazardly,” Louw says. “There’s no other product within the insurance industry that varies so much in terms of price and coverage.”

Too many grey areas There are simply too many gaps in coverage, especially when businesses buy off the shelf. Louw says there’s a long way to go before cyber is managed in the same way as property or workplace health and safety risk.

Christopher Wallace is CEO at the Australian Reinsurance Pool Corporation, the government body that deals with terrorism-related insurance claims and protection. He says it’s not always easy to attribute attacks, which is one of the reasons why there are coverage gaps.

“There are three types of cyberattack – acts of war, terrorism and criminal. War and terrorism are excluded from policies. Acts of criminality are potentially covered, but this is still a grey area.”

Wallace says there are also difficulties in determining what’s covered. Does a policy cover the cost of forensic investigation, software

“There are three types of cyberattack – acts of war, terrorism and criminal. War and terrorism are excluded from policies. Acts of criminality are potentially covered, but this is still a grey area” Christopher Wallace, Australian Reinsurance Pool Corporation restoration or legal costs? What about crisis management, direct financial losses and business interruption? Or loss of intellectual property and reputational damage?

Building a plane in mid-air Andrew Bart is regional CEO of global claims management firm Crawford & Co. He says policies need to take a broader view, accounting for loss of market share and other factors beyond the period of interruption.

“The plane is being built as we fly it,” he says. “There are significant gaps in coverage and scenarios that haven’t even been

contemplated yet.”

FM Global has included cyber risk in its commercial property insurance policies for 15 years. Yet half of the claims it’s received have been filed during the past two years. Broad says businesses must include cyber within an enterprise-wide risk management strategy.

“Well-run organisations should apply the risk standards of fire, flood and worker safety to cybersecurity,” he says. “This means paying attention to small details, like preventing visitors from connecting to your internal network, but also considering big-picture issues like supply chain exposure.”

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PEOPLE

CAREER PATH

THE JOURNEY CONTINUES Brent Lehmann, general manager of commercial and affinity for Victoria at Willis Towers Watson, has recently launched his own start-up

Lehmann’s hoped-for career in Australian rules football came to an end at age 21 due to a medical condition, and he reluctantly accepted his need for a ‘regular’ career. Sun Alliance Insurance gave him an outstanding opportunity straight out of secondary school, which included funding his Bachelor of Commerce degree.

“I’m forever indebted to them for the introduction to insurance and the investment they made in me during the formative years of my working life.”

1991

LEARNS A VALUABLE LESSON Lehmann still reflects on an incident as a claims consultant where he advised a personal lines customer that they had coverage for their jewellery following a break-in, when in fact they did not. The outcome ate at him for days until he personally organised a bouquet of flowers to be delivered to the customer as an apology for the error.

BEGINS CAREER

1998

TAKES ON GREENFIELD INITIATIVE Caterpillar had recently launched an insurance division in North America and was very keen to expand into Australia. Lehmann’s role required him to merge his insurance knowledge with a very strong understanding of marketing techniques. A new entity within the Australian business of Caterpillar was created as a result.

“A definite career highlight.”

2003 ARRIVES AT WILLIS Lehmann was asked by Willis Towers Watson (then Willis) to bring his innovative thinking on board to create a different type of discussion with clients and prospects.

His roles since have included developing an emerging Customised Solutions Practice, leading the Australian Retail Practice, taking on a branch leadership role, and leading the region’s efforts in the commercial and affinity segment.

“Innovation excites me and keeps driving my focus to ensure the business, and the broader industry, is adequately prepared for what the future is likely to bring.”

2017 and beyond DEVELOPING AND IMPROVING Lehmann’s passion for personal development has this year resulted in the launch of his start-up business, ImproveMe.com.au, a web-based assessment program that provides users with the opportunity to actively embrace personal development and improvement opportunities.

“I’ve been able to apply many of our learnings from ImproveMe to Willis Towers Watson’s innovative developments, such as StartUp Cover, which has proved the power of social media marketing and seen us launch the insurance industry’s first ever chatbot using the Facebook Messenger platform.”

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1993

“Respect for everyone, particularly in the face of a bad outcome, was a great lesson learned”

2001

TAKES CATERPILLAR TO ASIA There was an opportunity to roll out a similar business model for Caterpillar across Asia. Lehmann travelled frequently, from Singapore to Japan, and the unique nature of every regulatory environment, as well as the business model needed to respond to it, was an outstanding learning opportunity.

2007 IMPACTS IN NOT-FOR-PROFIT SECTOR As chairman of The Gutsy Group from 2007 to 2009, Lehmann helped drive the single largest investment into Crohn’s disease and ulcerative colitis research that the Australian medical profession had ever received. He subsequently mentored an AFL player with the same medical diagnosis he had received 17 years prior, helping him prepare for life after sport. This sparked great interest within the sporting community and saw Lehmann become engaged with a Victorian AFL club. This continues today.

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PEOPLE

CAREER PATH

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