Insurance Business 3.05

insurancebusinessonline.com.au Issue 3.5

INTO THE STORM EXCLUSIVE INVESTIGATION EXPOSES REGION AT RISK UNCHARTED WATERS MARINE INSURANCE BROKERS CHART COMMODITISATION COURSE

DAVID HOSKING

Allianz’s new broker boss on the outlook for intermediaries

4 1 0 2 S E G A R KE O R B E C N A R U TOP 10 INS eading insurance businesses Australia’s l

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CONTENTS / 3.5

COVER FEATURE

20

The best insurance brokerages in Australia named

2014

NEWS

FEATURES

6 | Round-up Calliden deal heralds ‘balance of power’ shift

34 | Uncharted waters Marine insurance brokers set sail into uncharted seas of commoditisation

8 | Analysis Taking on the aggregators

38 | Brave new world Wotton + Kearney charts shift in employment practices liability claims

52 | Social life Brokers get busy at the NIBA Convention and celebrate at ANZIIF’s night of nights

BROKING INTELLIGENCE

55 | Favourite things Elantis Premium Funding’s Jurgen Rammesmayer

16 | Investigation Into the North Queensland storm before the next big blow

40

Finding your inner SEAL An ex-Navy SEAL’s guide to success in tumultuous times

44 | Inspired leadership Taking your leadership skills from ordinary to visionary 46 | Personal branding Taking your personal brand from ‘now’ to ‘wow’

50 | Stats How profitable are the insurers? The latest broker market numbers crunched

INSURANCE INSIDERS

56 | The last word Claims Central’s Darren Trott on old(er) dogs and new tricks

49 | Seven deadly sins Doing the wrong marketing can land you in an eternity of business pain

12

THE BIG INTERVIEW

David Hosking Allianz’s new broker boss details the insurer’s plans for intermediaries

issue

3.5

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EDITOR’S LETTER / 3.5

WINNER TAKES ALL?

Ben Abbott

At the recent NIBA Convention in Adelaide, a panel of eminent broker industry chiefs were sat down and asked a very pointed question. Looking ahead to the year 2024, who would be the winners and who would be the losers?

Arthur J. Gallagher CEO Andrew Godden told brokers he expected that whoever was able to own and control insurance distribution would be the ‘winner’. He said while brokers had done this effectively for some time, other contenders included insurers, who were leveraging significant investments in technology to corner customers through direct channels, and even the likes of Coles and Woolworths, players who could leverage their streams of foot traffic to cross-sell new products.

Later, the vast data repositories – and potential threat – of Google and Facebook were mentioned.

In such an environment, brokers will need more than ever to demonstrate ‘what they bring to the table’, Godden said, rather than just expecting to ‘clip the ticket’.

It was Mark Searles of Austbrokers who crystallised this idea by saying that, essentially, brokers need to remain ‘relevant’ to the customer, and evolve their value propositions to ensure they remain at the forefront of this distribution battle.

In this issue of Insurance Business, we name our Top 10 Brokerages for 2014. What readers will find is that all of these exemplary businesses have done exactly that: focused on the value their provide their clients – and reaped the rewards.

Whether it is enhancing their value proposition for niche insurance markets, innovating in the way their deliver their services, or even investing in data to better serve customers, our Top 10 Brokerages are at the vanguard of what it means to provide value.

And their different approaches to the market also contain a deeper lesson. So long as the customer remains paramount, there is more than one way to ‘win’. It doesn’t have to be about a focus on ‘winner takes all’ in the insurance or broking industry, but instead about how brokers can play a part in seeing their customers win.

COPY & FEATURES EDITOR Ben Abbott CHIEF REPORTER Chinwe Akomah CONTRIBUTORS Kevin Eddy, Darren Trott, Karen Gately, Nikki Heald, Jamie Thomas PRODUCTION EDITORS Roslyn Meredith, Moira Daniels

ART & PRODUCTION DESIGNER Joenel Salvador DESIGN MANAGER Daniel Williams

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

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

Ben Abbott, editor, Insurance Business

CONNECT

Contact the editor:

ben.abbott@keymedia.com.au

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

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NEWS / ROUND-UP

BY THE NUMBERS

11%

The average annual saving on strata premiums for 3,000 of CGU’s North Queensland customers, following a 2014 initiative to conduct 100 building assessments

50%

The amount Standard & Poor’s suggests that reinsurers around the globe might be underestimating their exposure to CAT losses due to climate change

-9.7%

The predicted change in premium at renewal for global property insurance during the third quarter of 2014, according to Aon’s latest Insurance Market Update

8.3%

The annual growth in insurer profits during the last financial year, according to KPMG

STEADFAST’S CALLIDEN DEAL EVIDENCE OF ‘BALANCE OF POWER’ SHIFT The broking industry has undergone a shift in the ‘balance of power’ between insurers and brokers, it has been claimed, with broking groups rising to seize the upper hand.

Following the announcement of an agreement that will see broking powerhouse Steadfast acquire the Calliden Group, CEO of Calliden Nick Kirk has told Insurance Business the transaction is part of an industry ‘transformation’ over the last five years.

“We’ve now got large national broking groups compared with having many, many smaller broking groups in the past, and each one of those large national broking groups has got their own pretty well developed underwriting capability,” Kirk said.

However, the market consolidation of recent years may not continue indefinitely. “There is always a tendency to think that whatever is happening today is going to dictate what is going to happen in the next few years. I’m not so sure about that,” Kirk said.

Kirk said other markets around the world have had similar waves of consolidation to the one Australia is now experiencing, but this was not necessarily the end of the story. “You get one wave going through, but you

get a second wave which changes it again,” he said.

He predicts that a number of larger individual brokers that sit below the dominant national groups at the moment could soon rise to take on their larger competitors.

“My guess is within the next five years a number of those are going to come up and grow to be quite

What’s the deal?

• Steadfast has entered into a scheme implementation deed with Calliden Group to acquire all the issued shares of Calliden by scheme of arrangement • Steadfast will immediately on-sell the general insurance operations and part of the agency operations to Munich Holdings of Australasia, a subsidiary of Munich Re • Should the deal proceed, Steadfast will own the remaining agency businesses ARGIS Farmpack, Builders’ Warranty, Calliden Home, Dawesmotor, IUA Business Interruption, Mansions and Accident and Health and 50% of QUS strata • The scheme has been endorsed by Calliden’s board ahead of a shareholder meeting in late November, and will likely be implemented in December this year

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INSURANCEBUSINESSONLINE.COM.AU

“There is always a tendency to think that whatever is happening today is going to dictate what is going to happen in the next few years. I’m not so sure about that” substantial entities in their own right,” he said.

Kirk has similarly bold predictions for the future of insurers. He expects the future will likely see a smaller number of insurers dominated by names not at the top today.

“My prediction would be that today’s top five will not be the top five in five years’ time,” he said. “There is a lot of capital moving around worldwide, there are a lot of international insurers out there, and I think they will grow their share of the market in this market. Some of that is going to be driven by the breaking down of this sort of oligopoly in personal lines, and I think that will attract new and different leaders,” Kirk said.

One of those could spawn from the Calliden deal itself. Part of the deal involves the agreement by Steadfast to sell Calliden’s general insurance operations and the business package and middle market agency portfolios to Munich Re Group. Great Lakes Australia already underwrites the portfolios, and could be a new force in the industry.

“The transaction brings in the Munich Re Group through Great Lakes to become quite a mainstream player,” Kirk said. “If you think of all the money and time the major insurers have put into consolidation and growing their market share in that way, suddenly there is this new, very well capitalised and professional company right in the mainstream again.”

Kirk said he and the senior management team are focused on achieving the full year targets, rather than what they will do once Steadfast has acquired Calliden Group.

“From my point of view, I have no idea and I have not even thought about it as yet. My job is to maximise value for our shareholders so I am not even thinking about that at the moment. The focus of the senior management team is very much business as usual. We have to still achieve our targets for the year.”

Kirk said it is understood the Calliden teams will move with the operations that are being acquired by Steadfast and Munich Re. “It’s very early days but our understanding is that the teams will go to where the business is going. For both Steadfast and Munich Re it is a feature of the proposal that they need people in order to run those businesses. We need to firm that up in the next few months.”

THE FORUM

Brokers back Trade Risk after content theft claims A broker’s frustration over incidents where competitors have blatantly plagiarised his website content for their own sites has resulted in brokers coming forward to support his complaint.

Shane Moore, director of insurance brokerage Trade Risk, an AR of Westcourt General, told Insurance Business that brokers were being “too lazy” to find their own way to keep up with the digital consumer, and were taking the quick and easy plagiarism route hoping no one notices. Over the years, Moore said he has witnessed countless competitors copy his content on their websites, and while often smaller brokers, he blamed a well-known aggregator as well.

JOHN ELLIOTT ON 25/09/2014 10:05:12 AM

“Content creation is not a cheap exercise, whether you create it yourself or outsource it! We engage third parties to create content for our online brands at a considerable cost, so when you see it duplicated it can be a frustration! But as more and more people jump on the bandwagon with trade quotes trying to cash in on others’ online ideas, it’s ok, just try to be one step ahead Shane and already be planning the next online idea that they haven’t thought of mate! Keep kicking butt and making news mate, you’re well ahead of most out there Shane!”

JUST AN OBSERVER ON 25/09/2014 10:35:50 AM

“Copying what others do has been something the insurance industry has been doing for decades. Years ago it was copying others’ policy wordings and policy features and benefits. Or even exclusions.

Copying web content is really just the modern version of what was done decades ago. The real problem is the insurance industry is full of people who find it easier to follow rather than lead let alone be innovative. I can understand Shane’s point and something should be done about it. But given the big boys are past masters at copying or mirroring what others are doing it, means nothing will happen.”

STUART REDMOND ON 26/09/2014 12:01:03 PM

“As many marketing entities will say, simply continue to build your brand. That is your strength. Keep thinking of updating and changing your content regularly. Best of all, be yourself in business as no one can replicate that, and be the person that everyone goes to.

We have also been on the receiving end of this but make changing our website regularly part of business practice. Keep up with it Shane and know you are not alone!”

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NEWS / ANALYSIS

TRUMPING THE AGGREGATORS Insurance aggregation businesses may not be the threat to brokers that they have been made out to be, writes Chinwe Akomah Like it or not, price comparison sites are here to stay.

In recent times, more insurance brands have been distributing their products via aggregator web services, while the aggregators themselves are expanding their offerings.

Even the Federal Government is warming to the idea of the importance of aggregation for competition, and is considering introducing a North Queensland strata insurance comparator.

However, the growth of aggregators means more competition for insurance brokers, and Elliott Insurance Brokers director John Elliott says brokers need to rise to the challenge.

“We cannot resist the fact that more and more consumers want to research and make their own decisions on personal lines and SME insurance products,” Elliott says.

“Brokers can either stick their heads in the sand and keep trying to do things the same way as they always have, or they can listen to what the consumers are telling them they want and adapt their products and services in order to capture this segment of the market.”

DOING THINGS DIFFERENTLY John Elliott’s business launched one of the first insurance aggregators – Zippy.com.au – back in 2008 after extensive research on the UK insurance market.

Providing online home insurance quotes, the site was sold last year and is now a discount voucher site.

Today, his brokerage distributes several commercial insurance products online, including business insurance, PI, public liability, trade package insurance and travel cover. “It involves simple online solutions for our clients with the back-up of a professional service from a qualified insurance broker for those who are identified by our online quoter,” Elliott says. “One of our sites is writing over $2m a year in new business, and that’s growing.”

Indeed, it may be that brokers stepping into the online world will rise to the aggregation challenge, and that this model can work together with traditional broking.

Michael Gottlieb, director of online commercial insurance marketplace BizCover, says BizCover works in partnership with a large number of brokers that utilise its platform to access products like PI, public liability, management liability and cyber insurance. SMEs can also access the offerings.

“I don’t see an adversarial approach between brokers and players like BizCover,” he explains.

“We enable brokers to enter data in once and get multiple quotes. Therefore they can provide their client with choice and transparency as well as advice and advocacy.

“They are providing a better service, gain more efficient processes and achieve a positive margin as a result. Brokers would improve their margins and satisfy their clients’ needs better if they worked with businesses like BizCover or online quoting systems.”

“There are two segments in the market – there is the segment that requires and wants advice and advocacy and the segment that would prefer an information and transaction service only” Michael Gottlieb, BizCover 8 | OCTOBER 2014

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NEWS / ANALYSIS

Gottlieb suggests there is room in the market for both aggregators and brokers. “There are two segments in the market – there is the segment that requires and wants advice and advocacy and the segment that would prefer an information and transaction service only. It is important to understand what their needs are and how to add value to them.

Adding value to this segment is not necessarily providing a face-to-face service with advice and advocacy. Comparison sites serve that segment.”

A REAL THREAT? There are others who think brokers are well placed to deal with aggregator competition. Austbrokers CEO Mark Searles, for one, doesn’t think these aggregator players are a huge threat to commercial insurance brokers. He says that as aggregators predominantly play in the personal lines space and brokers in the commercial space – where risks cannot necessarily be commoditised – comparators are a bigger threat to direct insurance players.

“When we think about if aggregation is a threat to the broking fraternity, my argument would be aggregators are more a threat to the existing direct insurer player rather than brokers because the broker’s value proposition is around relationship and advice.”

Searles says even if aggregators did penetrate commercial insurance, brokers would still have the upper hand. In the commercial space, he says the risks are higher than in personal lines and businesses do not always want to take unnecessary chances.

“A small business owner’s income pays the mortgage and feeds the kids. At the end of the day, do they want to take the risk by buying online?” he says.

“The client is not a risk expert – that is the role of the broker. The role of the broker is around advice,

“A small business owner’s income pays the mortgage and feeds the kids. At the end of the day, do they want to take the risk by buying online?”

Mark Searles, Austbrokers

relationship and protecting the client. You will never get away from that core role.”

NIBA CEO Dallas Booth says the best way brokers can compete with aggregators is to do what they do best: matching client risk profiles to what the market has to offer – something, he says, aggregators cannot do in a “comprehensive and informed manner”.

Booth notes that aggregators work well in distributing commodities such as airline tickets but not necessarily insurance. “Risk is not a commodity and it is not homogenous,” he says.

He explains that there are three core components in insurance: risk profiles and insurance needs, an insurance market that provides solutions to those risks, and the price. “Aggregators don’t do those three things in an informed and comprehensive manner, and that is where the opportunity for brokers lies – finding insurance coverage that meets the risk profile of their clients at the best price the market can offer.”

The UK experience backs up these positions.

There was concern that aggregation would move across from personal lines into commercial lines, but Searles says that never happened. “That is for a very good reason,” he says. “Unless you can commoditise the risk really simply and people get an appreciation of risk themselves as a client, people will want an expert to help them to assess their level of risk. It costs nothing to go to a broker.”

Searles advises brokers to “promote their value proposition around the concept of advice, support, help, and really make sure their client is covered”.

ADVISE AND SUCCEED The Australian Competition and Consumer Com­ mission (ACCC) recently made it crystal clear that one of its top priorities is dealing with misleading advertise­ments by aggregators. It handed Compare the Market a $10,200 fine after the aggregator claimed that it could compare more health funds than anywhere else. The ACCC said this was simply not true.

Actions such as this suggest that some aggregators are less harmful to broking businesses and much more detrimental to themselves and the consumers using them.

“Aggregators are not delivering their offering to the community in an open, informed and transparent manner,” Booth says. “They are not doing their job properly, so yes, they are a threat [to the industry], but at the moment they are mostly a threat to themselves.” the ACCC said.

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THE BIG INTERVIEW / DAVID HOSKING

SAFETY FIRST

Allianz’s new chief general manager of broker and agency, David Hosking, will not be making his mark with any ‘bold plays’. Instead, he tells Insurance Business he’ll be leveraging his ex-CFO credentials to build trust and strong broker relationships Insurance Business: You’ve recently shifted across from a role as CFO at Allianz to head up the insurer’s broker and agency operations in Australia. What are your ambitions over the next few years?

David Hosking: To build on the great work done to date. Don’t expect anything too bold. History has not been kind to general insurance executives that have gone for the bold play.

Over the last few years at Allianz we’ve really focused on being a leader in sales and distribution and being seen as a great underwriting company.

Our segmentation model, both at a customer and profitability level, has been supported by significant investment in our people and systems. These initiatives, combined with the ability to bring the best of our unique ‘One Allianz’ capability – that is, the coordinated provision of a wide range of products, client support and expertise from across Allianz Australia and the global Allianz Group – has seen us outgrow the market profitably.

There is still room for growth and there is always room to ‘be better’ in our service proposition and the way we engage the market. The goal is to be the leading insurer in the broker market. I’m also looking

DAVID HOSKING TIMELINE XXXX Commenced career in chartered accountancy (he also holds an MBA from Sydney University).

forward to meeting and forming strong relationships with all our key broking partners.

IB: How long have you been involved in insurance, and what are some of the ways you’ve seen the broker market change during that time?

DH: I’ve been working in insurance for 20 years.

Most recently, I’ve led the development of our underwriting agency strategy.

The broking market has seen some change in that time. It is more automated and certainly more sophisticated and concentrated than 20 years ago.

However, the commitment of the brokers to their clients and the need for the underwriter to build and maintain strong relationships has not changed.

IB: Can you update brokers on how your recent divisional reshuffle is progressing internally?

DH: There was no major restructure. Two years ago, Allianz Australia brought our two distribution divisions of Brokers & Agency and the Retail Distribution under Jonathan Poole to capitalise on Jonathan’s extensive experience in both areas.

Following Jonathan’s retirement, the two divisions

February 1995

February 1999

May 2008

Launched career in the insurance industry with a decision to join FAI Insurance following a career in chartered accountancy.

Moved across to join NRMA Insurance (Insurance Australia Group), where he held a variety of senior roles including CFO of NRMA’s Asia operations, head of the Australia Financial Services business, and Group Management Accountant.

Commenced with Allianz Australia.

July 2009 Appointed chief financial officer at Allianz.

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“With my experience in chartered accounting - but also being the son of a small business owner - I know that when revenue dries up, focus becomes critical” TRACKING THE TOP LINE IB: What is one trend you’ll be watching in the insurance broking market?

have just reverted back to the traditional structure.

The new heads of the two divisions – myself and Michael Winter – are internal candidates, who have been involved in Allianz’s strategy development over many years. This ensures a strong degree of consistency in our approach as the company continues its journey to being a leader in sales and distribution. Splitting the role Jonathan recently held will provide a renewed focus at the most senior level on the Broker & Agency division, allowing me to be even more visible and accessible to the market.

IB: Is there anything that Allianz’s broker & agency business is focusing on at present that you could

August 2014 Moved into the role of chief general manager, broker & agency. Hosking is now responsible for all of Allianz’s Australian and New Zealand broker & agency business, including Hunter Premium Funding.

Outside insurance

David Hosking is married with three children (twin girls and a boy) and enjoys sports, keeping fit and live theatre. He holds an MBA from Sydney University.

highlight, particularly any changes that may impact brokers?

DH: Last year we did a lot of work aligning our mid to large corporate offering. This was an important step in helping our global broking clients better understand the value proposition between Allianz Australia and Allianz Global Corporate & Speciality.

This will allow us to continue to refine, improve and better coordinate the offering of both businesses.

In our local broker offering, we have been focused on developing expertise in our specialty lines.

Recently, we brought the management of our underwriting agencies together with our commercial broker management. This enables greater alignment of our ‘One Allianz’ offering to the broker market.

We’ve just announced two new avenues to market.

Firstly, there is AFA, a leading provider of accident and sickness insurance and secondly, we have Strata Community Insurance, which will specialise in the growing strata insurance market. These complement our growing stable of specialist agencies including Global Transport, Allianz Marine and Transit Underwriting Agency, Club Marine and Primacy.

Finally, Allianz globally is strongly committed to the broking channel and there are some really interesting best practice initiatives which we are

DH: Over the next few years, brokers may have to contend with a falling top line if a continued soft market delivers, at best, flat average premium growth.

When growth is tough, Allianz needs to be as focused as ever on our relationship management, service offering and responding to our clients’ needs.

Further, where there is consolidation, we want to be on the right side of it by having the strong relationships with the brokers that are in acquiring mode.

We also need to be innovative in working with brokers on some alternative product offerings for their clients so they can maintain their top line.

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[H

IB

DH .

THE BIG INTERVIEW / DAVID HOSKING

“There is still room for growth and there is always room to ‘be better’ in our service proposition and the way we engage the market” TWO INSURANCE MARKET TRENDS DAVID HOSKING IS WATCHING

1

The technology explosion The ‘personal digital age’ has given insurers more data than they’ve ever had access to, which when combined with investment in data and analytics, gives them the chance to improve their customer value proposition.

2

Flat to declining premiums With ample capacity globally combined with a near-term outlook of low and flat investment returns and low inflation, insurers will need to be disciplined, with little prospect in the short term of hardening premiums.

now sharing amongst all Allianz entities. I am looking forward to adapting some of these to the Australian market.

IB: What do insurers in your view need to do in terms of their interactions with insurance brokers in order to grow and succeed in the current market?

DH: Over the last couple of months, I’ve been able to speak to a lot of brokers and the Allianz Broker & Agency staff in Australia and New Zealand. The recurring theme is the relentless focus on the value of relationships. Price and product is not a sustainable competitive advantage, however, client service and relationship management are the real ways an insurer can differentiate itself. This requires listening, understanding and acting.

IB: You come from an interesting background as CFO of Allianz. Can you outline one satisfying experience you had during your tenure?

DH: One really satisfying experience was in 2012 when Allianz Australia had its internal capital model accredited by APRA for use in setting regulatory capital. This was an Australian first in the insurance industry and as far as we know a first in the world for a property and casualty insurer.

This was the culmination of a lot of hard work by a number of people in Allianz. There was a direct benefit as we were able to reduce our capital by the full 10% allowed by APRA under its ICM regime.

This means we can invest in all our channels,

whether it is in a pricing advantage, systems developments or many other initiatives. What was also satisfying was that, by being a part of that journey, all our senior leaders now fully understand the risk-reward equation and how their decisions impact capital and vice versa.

IB: What about challenging experiences?

DH: The biggest challenge was taking over the role as CFO immediately following the GFC and the resulting collapse in investment yields. This required an immediate response to ensure our profit margins didn’t also collapse. Not far behind this was helping steer the organisation through the 2011 natural catastrophes. Whilst the Australian CATs had precedents, the Christchurch earthquake was without precedent.

IB: As a former CFO, is there anything you think insurance brokers as business owners could do better in terms of the management of their brokerages?

DH: As previously stated, we are in a soft market.

With my experience in chartered accounting, but also being the son of a small business owner, I know that when revenue dries up, focus becomes critical.

In a tough market, focus on the customer, focus on your people and focus on expenses and cash-flow are more important than ever. You also need to keep your mind open to new ways of doing things and be prepared to change.

IB: You’ve had a long background in business.

What are three aspects of your character or your business approach that have made you a success in insurance?

DH: I’d like to think I’m approachable and personable. This is a relationship business. People like doing business with people they relate to, so these traits are important.

I’m also knowledgeable and passionate about general insurance. Whilst insurance will always have its ‘knockers’ we are always there to help people manage their risks and rebuild their lives, houses, businesses and even their bodies when the unexpected occurs. I feel a great passion due to this.

Finally, I’m professional, trustworthy and reliable.

This is important, Allianz provides its formidable strength and balance sheet, and brokers need to trust that we’ll be there with great service when their clients need us.

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EXCLUSIVE INVESTIGATION / FAR NORTH QUEENSLAND

The perfect storm

Queensland’s tropical north is still reeling from the impact of successive huge cyclones. Kevin Eddy asks brokers on the ground if the situation can be resolved before the next big blow Mission Beach in mid-2014 is a slice of paradise.

But nearly four years ago it was very different. The Category 5 cyclone code-named Yasi had decimated the Cassowary Coast resort area made up of ‘Mission’ and nearby towns Tully and Cardwell, and wreaked havoc across the Far North of Queensland.

The land has healed and properties have been rebuilt, but the financial scars still mark the region.

Property insurance premiums – especially home and contents cover and strata insurance (see boxout, p18) – have rocketed, with horror stories of strata premiums increasing by 400% and pensioners receiving $20,000 renewal notices.

Anger is rife, with insurers labelled as pricegougers by politicians and the media, while the industry’s attempts to defend itself seemingly fall on deaf ears. Meanwhile, while the shouting continues, the cyclone season crawls ever closer.

PRICES GO UP, COVER GOES DOWN The $20,000 home insurance renewal letter may be an outlier, but there’s no doubt that home and

contents premiums – as well as commercial property premiums, to a lesser extent – have increased by between 50% and 100% since Yasi.

“That increase has affected family budgets,” says John Devaney, broker at Joe Vella Insurance Brokers (JVIB) in Cairns. “Insureds are having to find an additional $1,500–$2,000 a year, which is money that has gone out of the local economy.”

The cause for the sharp increase is a vicious circle of reinforcing factors, says Allianz spokesperson Nicholas Schofield. He says: “2011 was the straw that broke the camel’s back. The two huge events in 2011 – the Queensland floods and Cyclone Yasi – on top of the large events of previous years produced a significant response from the reinsurance market.

There was a big adjustment, especially in relation to cyclone and flood risk.”

It’s the double whammy of flood risk and cyclone risk that many Far North properties are subject to that has produced the worst premium increases.

Combine this risk repricing with the relatively small population of the north of the state, and

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there’s only one way premiums could have gone.

The good news for policyholders is that home and contents premiums are finally stabilising, and the commercial market is even softening. Still, it’s too little too late for many retail customers.

“It’s gotten to the point where prices have risen so much that consumers are just saying no,” says ACME Insurance Brokers director Karen Hardy.

“They’re either not insuring or underinsuring.”

Indeed, brokers across the region are seeing clients take drastic action to reduce premiums, including: • moving policies to ‘budget’ direct insurers, with little regard to coverage offered • deliberately underinsuring, dropping contents cover, or increasing excesses to high levels • abandoning policies altogether and choosing to self-insure “We’re seeing underinsurance every day,” says Joe Vella of JVIB. “We’ve seen a solid reduction of $90,000 to $120,000 in retail premiums per month – and that’s about 15% of our portfolio. It’s a concerning number for us, and we are looking at options at the moment to try and address that.”

It’s tough enough for ordinary homeowners and business people, says Hardy, but the real worry is vulnerable communities – particularly seniors – who simply can’t afford cover.

“We’ve got quite a few pensioners who starved themselves for six weeks to pay their insurance last year. A $400,000 house with $30,000 contents can cost anything from $2,500 to $7,000, even with a pensioner discount,” she says. “The elderly are letting their insurance go, which is frightening.”

THE EDGE OF AFFORDABILITY The real question revolves around what happens when another major cyclone hits the region. If there’s the same price response as there was after Yasi, we could easily see the price of insurance cross the edge of affordability for domestic and business clients alike.

There has been no shortage of ideas from the community, government and insurers alike. The issue is that it’s been nigh on impossible to find consensus on any serious measure, whereas some ideas, like a live price aggregator website, could even do more harm than good (see boxout, right).

One controversial proposal that refuses to go away is the one that insurer Allianz has been lobbying for since 2011 – a national disaster reinsurance pool.

While the design of such a pool remains vague, the general principle is that it would act as a backstop to conventional reinsurance and would be selffunded by a modest levy on home and/or commercial property policies, perhaps loaded according to risk to ensure price signals are still sent to the market.

Reinsurance-style pools have been adopted in other countries such as the US and UK (for flood risk), and in New Zealand (for earthquake risk) – although the way these schemes operate is very different. There’s precedent for such a scheme in Australia too, with the Australian Reinsurance Pool Corporation’s terrorism pool.

However, the Allianz plan is not without its issues – not least the amount of money required, and the reminders of the deeply unpopular Victorian Fire Services Levy that it might bring for some. There is also little appetite in Canberra for setting up a catastrophe reinsurance pool, nor is there much enthusiasm from other insurers or the Insurance Council of Australia (ICA).

The ICA has argued since 2011 that the establish­ ment of a reinsurance pool would only create another

The affordability crisis solved?

“We’re just one cyclone away from the lid blowing off the whole thing – both politically and in terms of insurance reputation” Nicholas Schofield, Allianz

Micropolicies Provide bare-bones, low-cost policies to insure against the most severe risks.

Set up a government disaster reinsurance/relief pool Set up a reinsurance or relief pool to help reduce premiums or provide assistance in the event of a major catastrophe.

A live price aggregator website Set up a website that enables consumers to obtain and compare live quotes from all insurers in the market. Insurers would be compelled to provide price information.

Make selected insurance lines tax deductible Change tax law so that home and contents insurance and/or strata insurance are tax deductible in cyclone zones.

Remove taxes on insurance products Remove federal and state taxes on insurance products. These currently total 19% in Queensland, so in theory would cut insurance premiums by a fifth.

285km/hr

Estimated maximum wind gust near the centre of Cyclone Yasi Source: Bureau of Meteorology

2,500

The number of claims that ACME Insurance handled in the wake of Cyclone Yasi – at an estimated value of $90m Source: ACME Insurance

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EXCLUSIVE INVESTIGATION / FAR NORTH QUEENSLAND

Strata stress Strata was the insurance line that saw the largest premium increases in the wake of Yasi, though the Australian Government Actuary termed this “a correction the market had to have”.

Strata expert Lisa Ryan of Joe Vella Insurance Brokers argues that strata is actually relatively affordable when compared to home and contents insurance.

“If you get a strata quote, divide it by the number of units in an apartment block and compare it to house insurance prices, it is far less ‘expensive’,” she says.

Rates are also falling from the post-cyclone peak. “We’ve seen a softening in the market of 20–25%,” says Brooklyn Underwriting managing director David Porteous.

He highlights the increasing use of risk engineering advice as a key measure that may keep a lid on rates in the future; that is, depending on future cyclone seasons.

“If we have a quiet cyclone season, rates will continue to drop – could be another 25% down from last year,” concludes Porteous. “If it’s bad ... who knows what could happen?”

Karen Hardy with the ACME Insurance Broking team

layer of government bureaucracy. It also suggests that policyholders and taxpayers should not be forced to pay for a pool when there are better remedies. These include direct premium subsidies from state governments, or the removal of taxes on insurance products – currently 19% in Queensland.

TAPING UP THE WINDOWS

Kevin Eddy is editor-at-large of Insurance Business

In the meantime, professionals from all parts of the industry are preparing for the next big blow. The ICA has a wealth of projects in progress to help affordability in catastrophe-prone areas, such as the Property Resilience and Exposure Program for local government, and development of the National Flood Information Database and the ICA Data Globe hazard mapping system. It has also engaged James Cook University to design an engineering inspection scheme for strata-title properties in North Queensland.

Broking firms like ACME and JVIB are working closely with business and domestic clients to strike

a balance between affordability and cover.

“We tailor policies as much as we can,” says Hardy. “We increase excesses, delete glass exposure, drop electronic breakdown cover, theft. We push to retain a decent level of what a building is worth – if you can have 20% underinsurance, let’s insure for 85%. And all of them get a disclaimer stating they have chosen to underinsure in the event of a claim.”

Better coordination in the immediate aftermath of a cyclone is also essential, with both ACME and JVIB highlighting coordination of claims assessment immediately after Yasi as a major area for improvement. Better training for assessors, using common forms and pooling assessors were all suggested as helpful measures. Bringing brokers into the mix would also help immeasurably, says JVIB’s Lisa Ryan.

“Insurers need to rely more on people like us for smaller end claims – claims under $10,000, for example. Let us get involved with those,” she says.

Mission Beach may appear to have recovered from Yasi, but mention the word ‘insurance’ to locals and the typical response is anger, frustration and resignation (often all three).

No one is arguing that living in Far North Queensland doesn’t carry some risk – least of all those who live here. The people of this region are well used to picking up the pieces and carrying on after cyclones blow through. The question, however, is whether it’s fair for the people of the Far North to carry the cost of this risk in its entirety, or whether there should be some level of subsidisation throughout Australia.

Do those of us in Sydney or Melbourne have a responsibility to help those who live in an area we visit on holiday or for a conference perhaps once every two years?

While these questions are debated, the people of Far North Queensland are stuck in a downward spiral of rocketing insurance costs every time a big storm hits. At the very least, the insurance industry, regulators and politicians must be able to find some kind of workable solution to make the cost of insurance in this part of the country sustainable, if they can step away from ideologically entrenched positions.

Otherwise, as Nicholas Schofield puts it, we risk being “one cyclone away from the lid blowing off the whole thing, both politically and in terms of insurance reputation”.

The clock is ticking.

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SPECIAL REPORT / TOP 10 BROKERAGES

THE INSURANCE BUSINESS

Insurance Business has for the third year running ranked Australia’s top-performing insurance brokerages. Who came out on top this year as the best of the best?

Welcome to the 2014 Insurance Business Top 10 Brokerages special report.

For the third year running, Insurance Business has rated and ranked Australia’s independent brokerages to definitively establish who can lay claim to being Australia’s Top Brokerage.

For brokers, this task is only getting harder. With each year that passes, brokerages increasingly recognise the marketing power of appearing among the Top 10 Brokerages in the country, with competition now fierce to gain access to such a prestigious grouping.

Not only this, but some of the market’s leading brokerages now rate the Top 10 Brokerages report as an important metric with which to measure their progress against competitors.

Insurance Business’s approach to ranking brokerages – across a range of criteria and using a ‘handicap’ method of scoring – ensures that even smaller players find themselves on a level playing field against larger businesses, so that we can establish the true nation’s best.

I would like to congratulate our many entrants on their hard work, as well as the Top 10 Brokerages named in these pages. As their results show, the insurance broking industry is continuing to forge ahead, and for that the best deserve recognition.

2014 A WORD FROM OUR PARTNER Calliden is proud to sponsor the 2014 Insurance Business Top 10 Brokerages for the second consecutive year.

Well done to everyone who entered the competition this year, and special congratulations to the brokerages who made it into the top 10 ranking.

Calliden values the role played by brokers in our industry and is committed to supporting brokers and their customers through the provision of a range of commercial, personal and specialist insurance options.

Mike Hooton Group executive Calliden Agency Services For information on all Calliden products, please visit www.calliden.com.au

Ben Abbott, editor, Insurance Business

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INSURANCEBUSINESSONLINE.COM.AU

THE METHODOLOGY The Insurance Business Top 10 Brokerages ranking is an objective means of ranking the top-performing brokerages in the country across eight business-critical criteria, covering: • Total revenue • Policies written • Revenue per broker • Policies per broker • New clients per broker • New revenue per broker • Company growth • Client retention As in previous years, this year each brokerage was required to

supply their own details for the 2013/14 financial year to Insurance Business. Brokerages were ranked in each of the above criteria categories, and then all of their rankings were added up to get their overall score.

The Insurance Business ranking system ensures businesses are rewarded for business per broker rather than for pure critical mass, to ensure the very best brokerages are singled out.

TOP 3 BY CATEGORY Total revenue

New clients per broker

1

MGA Insurance Brokers

1

Mega Capital

2

NAS Insurance Brokers

2

Insure 247

3

Reliance Group

3

Reliance Group

Policies written

New revenue per broker

1

MGA Insurance Brokers

1

Mega Capital

2

NAS Insurance Brokers

2

Insure 247

3

Westcourt General Insurance Brokers

3

Allinsure - IAA

Revenue per broker

Company growth

1

Unity Insurance Brokers

1

Reliance Group

2

Scott Winton Insurance Brokers

2

McLardy McShane Insurance and Financial Services

3

IC Frith & Associates (WA)

3

Insure 247

Policies per broker

Client retention

1

Mega Capital

1

Westcourt General Insurance Brokers

2

MGA Insurance Brokers

2

Reliance Group

3

Insure 247

3

MGA Insurance Brokers

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10 “With the right people on board, this competitive market can be like shooting fish in a barrel for some brokers”

I have grown this company. However, I had the confidence in the guys and girls here that this was the right time to make this transition. Making my new role profitable and beneficial to the company is my next challenge.

Where do you think growth opportunities lie for brokers in the years ahead?

ELLIOTT AUSTRALIA GROUP LAST YEAR’S RANKING: 6 John Elliott, CEO What’s your reaction to making the Top 10 Brokerages list in 2014?

Once again it’s a rewarding feeling for the team here to be recognised following another year of hard work.

Sometimes we all get so absorbed in our own worlds that we fail to benchmark ourselves on others out there. To find out again that we are continuing to improve and grow the business amongst the Top 10 Brokerages in Australia is a very rewarding feeling.

What is one thing you did differently this year, and why?

We brought our focus back on our systems and service. We are growing at such a rate that you must ensure that the service offering you have and the systems in place are faultless. We want our clients to be our best advocates of our remarkable service offering, and this requires a team prepared to go over and above for every client interaction we have.

What would you say was the biggest challenge of the last year?

This year I handed the last of my clients to the team here in order to focus on management and direction of the company. It was a very hard decision to make, as dealing with clients and bringing more on is how

Acquisition, People, Online. Our three focuses over the last five years have worked well for us. We have invested highly into these three areas and it has paid off well, and we will continue to do so. We are currently open for our next acquisition for a brokerage up to two million income. As much as we are faced with extremely competitive markets, there is as much business to be won as there as lost. With the right people on board this competitive market can be like shooting fish in a barrel for some brokers. Taking business from complacent brokers and direct insurers that just roll the arm over each year is rife!

Is there a philosophy or practice that you feel sets your brokerage apart?

We feel the responsibility of running a good profitable business is ours, not the client’s. Profit can be found inside your business without having to simply charge your client more in order to keep up with rising business expenses. We are consistently trying to automate, improve and create systems and procedures that enable us to offer a great service but at a very affordable price. This is one of our major points of difference.

Is there something the industry need to change so it can better service clients?

I think the industry needs to stop living in the past.

The definition of insanity is to keep doing the same thing expecting a different result. If brokers try to stick to tradition they will lose the battle against direct insurers and other models. It’s up to our industry to be leading the way, in technology, systems and support for our clients.

Elliott Australia Group on …demonstrating value

$410,945 Average Insurance Business Top 10 Brokerages revenue per broker

“By listening and collating data on the way our clients deal with us, we are able to eliminate guesswork out of the services we develop for them. A lot of businesses will put together a product for a client and a distribution method out of guesswork or consulting with a firm. We instead use the data from the way our clients interact with us to ensure our offering is in line with what they are wanting and or asking for.”

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9

IC FRITH & ASSOCIATES (WA) LAST YEAR’S RANKING: 5 Rick Purslowe, managing director What’s your reaction to making the Top 10 Brokerages list in 2014?

It is a massive honour to be recognised for this award for the second year in a row. We are truly humbled as we believe our actions are not a concerted effort to win awards but rather an ongoing effort to service our clientele the best way we know how.

What is one thing you did differently this year, and why?

IC Frith (WA) on … insurance broking growth opportunities “Individuals will seek more from their broker as we compete with low-frills online insurance. We need to deliver more service offerings as we compete in a price-driven market.

We also need to articulate the unique value of our firms.

Those brokers that can achieve both these things will win and retain clients.

Brokers will also need to take advantage of the trends within the world we live in and be first to market and brand their businesses as experts in that field – for example, cyber insurance.

Consolidation will also present opportunities.”

This year we focused on our people and our core values. A great deal of time and resources were spent organising our management team so they could inspire and communicate with staff to make sure everyone was aligned with our core values. ... We are now experiencing the benefits of this.

Are there any metrics that you are particularly proud of?

We increased new client acquisition by around 100% over the last insurance period, yet we still have many long-standing clients who have been on our books for over 20 years. We have supported local communities for 30 years, and in many cases serviced families for three generations.

When it comes to an insurance brokerage, is bigger better, and why?

We can say with absolute certainty and confidence: bigger is not better – not when it comes to insuring our clients. Whether it’s a university student with a single car policy or a corporate client with 40 plus policies, we treat everyone with the same amount of attention, professionalism and respect. With three branches in regional WA, we enjoy the fact our local clients get the personal attention they deserve, that they may not necessarily receive from a large firm in the city. ... Our clients are treated like people, not like numbers.

necessity in this volatile environment. We also have to stay focused on keeping our clients abreast of changes and reforms, both local and national, ensure they are aware of the insurances required and that we are providing an informative risk assessment for their business and industry. New concerns include ... educating clients around various new technologies and social media based insurances.

“If we can communicate the fact that, by paying the brokerage fee, customers have access to personalised attention and cover when they most need it, then we benefit as a collective” Is there a philosophy or practice that you feel sets your brokerage apart?

Being family-owned and operated, we are a strong believer in relationships and customer service. We treat every member of staff as if they were family and our clients as extended family members. With this practice at the forefront of our minds, we aim to deliver exceptional personalised service. It is our commitment to deliver what is expected by the client in a timely and professional manner not just on one occasion but each and every time.

What would you say was the biggest challenge of the last year?

The economy for the mining and construction industries has softened. This has impacted many ancillary businesses. As a result, many firms have gone out of business or reduced operations. Strategic efforts to maintain and grow your business are a

Ross, Rick and Greg Purslowe

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7

=

MCLARDY MCSHANE INSURANCE AND FINANCIAL SERVICES LAST YEAR’S RANKING: NEW ENTRY Don McLardy, managing director What is one thing you did differently this year, and why?

I’m not sure it’s different, but our success continued in partnering with likeminded insurance professionals.

What would you name as the biggest challenge of the last year?

Probably just managing our growth. We have expanded in a few areas pretty quickly, but we are very conscious of keeping our core values.

900

Average number of policies written last financial year by a Top 10 broker

7

=

Where do you think growth opportunity lies for brokers in the years ahead?

Online presence will continue to grow momentum so it’s imperative to maintain the high level of relationships we pride ourselves on as well as commit to the online space. We still think there are plenty of opportunities in the traditional medium-size broker market.

ALLINSURE – IAA LAST YEAR’S RANKING: NEW ENTRY Peter Chamberlain, director What’s been the highlight of the last year for your business?

What is one thing you will do differently in the next year and why?

We’ll continue to refine our current business model, but we have a clear strategy and remain focused on achieving our objectives to grow McLardy McShane General Insurance, McLardy McShane Financial Services and Empire Insurance Services. This will entail not only building a statewide branch network, but also hopefully attract more competent ARs who have the same values that we do.

What is the key way that you go about demonstrating value for your clients?

We encourage our clients to ‘Expect more from insurance’. We strive to deliver a tailored and relevant client experience and involve our clients in our community support. The response from our clients is extremely positive.

Is there something the insurance industry needs to change so that it can better service clients?

From a broking perspective, our greatest asset is professional, personal advice. As an industry we need to make sure our potential clientele realise the value of a broker to a business.

policies, despite the current market. We were able to achieve this by taking on our new approach of a whole risk management solution for both new and existing clients, via partnering with clients and our key insurers.

The highlight has definitely been transitioning the business to a high-end service and advice-oriented team. This has also involved seeing the growth and enthusiasm of both junior and senior staff embracing the change and wanting to succeed.

What would you say was the biggest challenge of the last year?

What is one thing you did differently this year, and why?

Being able to continue to grow the brokerage despite the loss of clients through financial hardship, liquidation and administration.

We introduced a structured support team and were able to create a successful niche product and market.

Are there any metrics that you are particularly proud of?

The high level of revenue generated from new

What is it that makes building an insurance business exciting for you?

The thrill of the win, whether it be winning a new client or resolving a claim, but, most importantly, assisting other businesses in achieving their success.

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6

INSURE 247 LAST YEAR’S RANKING: NEW ENTRY Stephen Sloan, AR - Ausure What’s your reaction to making the Top 10 Brokerages list in 2014?

The Insure 247 team are excited to make the Top 10 Brokerages list. We knew what we are doing here is unique, but to understand where we fit into the industry is a great motivator.

What’s been the highlight of the last year for your business?

Steve and Adam Sloan

Adding so many new clients this year has been a highlight. Also, when we received recognition from our licensee Ausure as a finalist for the group’s fastestgrowing branch award (in what is a fast-growing group overall) we were also extremely satisfied.

Are there any metrics you are particularly proud of, and how did you achieve them?

Starting day one without a single customer, we decided that our growth should come through the internet, not a book purchase. This has been validated by the growth in our client list.

What would you say was your biggest challenge in the last year?

Getting insurers to understand consumer expectations in the internet age. Consumers want access to multiple insurers in one place ‘now’. Steadfast SVU has been a game changer for our model.

Where do you think growth opportunities lie for brokers in the years ahead?

Brokers need to educate, empathise with and engage the client, providing comparisons with the direct insurers that will result in new clients for the brokers.

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5

Scott Winton Insurance Brokers on … whether bigger is better SCOTT WINTON INSURANCE BROKERS LAST YEAR’S RANKING: 8 Ron Tatarka, managing director What’s your reaction to making the Top 10 Brokerages list in 2014?

I am honoured, excited and extremely humbled to be recognised as one of the Top 10 Brokerages for the third year running. It serves to reaffirm our ‘people before profit’ approach and our genuine commitment to our valued clients and their individual needs.

What is one thing you did differently this year, and why?

173.5 years The total combined years in operation of this year’s Top 10 Brokerages

4

“Bigger is not always better. As a medium-sized business we are able to focus on the individual customer and provide a unique level of service.

Our clients enjoy being part of a family-oriented business; it provides confidence and inspires trust.

We’re big enough to offer the expertise of a large organisation but small enough to show them we care. That’s what truly sets us apart.”

Are there any metrics that you are particularly proud of?

The increase in revenue from our sales team, as well as the whole team’s general commitment and continuous drive towards obtaining new business.

This past year we were able to not only retain existing clients [but] substantially increase our client portfolio as well as increase referrals from existing clients.

This year was all about deepening our expertise and promoting value to our clients by improving the quality of our service and adding value to the industry as a whole. This involved focusing on the development of our staff, in particular increasing their product knowledge, as well as demonstrating innovation through a number of new initiatives and schemes and creating tailor-made policies to suit the specific needs of different industries. We also made contact with past clients, offering to requote their business.

What was your biggest challenge last year?

WESTCOURT GENERAL INSURANCE BROKERS

continue to receive a high level of service and our staff have the resources they require to do this.

LAST YEAR’S RANKING: 7 Jeff Hollands, managing director

Is there a philosophy or practice that you feel sets your brokerage apart?

What’s been the highlight of the last year for your business?

Getting recognition within the industry. We had six ARs place in the Insurance Business Elite Broker Top 30 this year, and Westcourt General placing in the Insurance Business Top 10 Brokerage two years in a row has been icing on the cake.

What would you say was the biggest challenge of the last year?

We have undergone a significant period of growth over a short period of time, which has been exciting but has also presented a new set of challenges. As a result, over the past 12 months we have been reviewing the way our business operates to ensure our ARs

The increasingly competitive market made this a tough year. We had to work a lot harder to retain customer loyalty.

Is there something the insurance industry needs to change to better service clients?

We need to improve the standing of brokers in the public mind ... find innovative ways to stress the benefits and importance of using a broker.

[We are] often told our company has a ‘family feel’ – joining our network seems to make people feel like they are joining the Westcourt family. Part of this is due to our company having an active AR committee that has a nominated representative from each state.

Westcourt General on … what the industry needs to change “More needs to be done to promote the benefits of insurance brokers to the general public. I believe in general the media paints insurance brokers in a negative light. A lot more needs to be done to promote the good work that insurance brokers do for their clients.”

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3

MGA Insurance Brokers on … plans for the year ahead

MGA INSURANCE BROKERS LAST YEAR’S RANKING: 2 Paul George, general manager What’s been the highlight of the last year for your business?

This would need to be moving into new territories.

During the last financial year, we completed operations in Canberra and Caboolture in Queensland, and we are in the process of completing a new joint venture in Shepparton. In addition to this, we officially opened our new Asia operations in Phnom Penh.

The other highlight has been the release of our new ‘pay by the month’ initiative for small retail business. This is an in-house initiative and the early take-up has been quite significant. It has been two years in the making, so it was nice to see it released in mid-June.

$111,228,912 Total combined revenue of the Insurance Business Top 10 Brokerages

What is one thing you did differently this year, and why?

Operationally, we are working towards a refreshed document management solution, which includes policy wording management. This is a major project.

We are also busy working through our enhanced training platform. From a broking perspective, preparing for changing conditions is something which needs to be done effectively. I am confident that we are well prepared.

When it comes to an insurance brokerage, is bigger better, and why?

191,705 The total combined client count of the Insurance Business Top 10 Brokerages

In recent years we have seen improved services in all corners of our business through the collective group rather than the individual offices. Some do this better than others, and we are seeing some real benefits come through now. This is a significant benefit of size.

“We will be ramping up our marketing and encouraging new referral partners. We found after the Financial Services Reform changes that many of our spotters disappeared (partially through some pressure on our part). We are seeing a resurgence in spotters over the past 12 months, which is pleasing.

I believe that we need to work on a ‘new lead pipeline’, with qualified referrals as part of our business going forward and not just a single campaign. This needs to be ‘switched on’ all the time to add true value for our brokers.”

The other challenge is the scalability of your business model. I think having a medium-sized team working within a larger group is where it’s at. There are significant benefits to being agile and nimble in the market, while relationships are still key and allow important leverage from scale. I think this is the magic combination, the ‘Holy Grail’. This can probably be encapsulated by the Austbrokers mantra, “National Strength, Individual Commitment”.

What would you name as the biggest challenge of the last year?

You would have to say that market and economic conditions were quite volatile and probably represented the biggest challenge. We saw a lot of merger/acquisition activity of some large accounts as well as a fair share of failure of some businesses as well. Things which are outside of our control, compounded by soft market conditions, create new challenges and opportunities. It’s how we deal with these challenges today that defines our future.

Where do you think the growth opportunities lie for brokers in the years ahead?

I think there is plenty of opportunity in the SME and middle-market space – this really is our sweet spot, and properly serviced I believe it will continue to thrive. It’s the area where our value is most recognised and will continue to be. At the lower end of SME, we need to get smarter with distribution.

I don’t see us as competitors to the direct markets.

As brokers, provided we have the best solution and networks, we will not only maintain presence but grow as well.

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2 “I believe that growth comes from being connected and relevant to the insurance buyer, which requires an under­ standing of their business and needs”

RELIANCE GROUP LAST YEAR’S RANKING: NEW ENTRY Andrew Donnelly, CEO What’s your reaction to making the Top 10 Brokerages list in 2014?

Great news! We are delighted to be recognised for the hard work that our broking staff and partners put into building a strong business every day. This also acknowledges the commitment of the Reliance Group team to our expanding client base by providing exceptional service and the right insurance solutions for each of them.

What’s been the highlight of the last year for your business?

The expansion of all aspects of the Reliance Group business, which includes the Australian Reliance and Reliance Partners Network. Australian Reliance has continued its success and strengthened its reputation as one of Australia’s leading corporate brokers, while Reliance Partners, servicing the SME market, has experienced the rapid growth which was forecast in its first year. Our Reliance Partners are local specialists currently found across WA, Qld, Vic, NSW and NT, and we are excited to continue the rapid growth across the country this year into SA, Tas and ACT.

What is one thing you did differently this year, and why?

During the year we were able to move into the growth and acquisition phase of our Reliance Partners business. This has enabled us to provide more resources to the SME market, and ensure local specialists are in place to service the local businesses, providing exceptional service and leveraging the Reliance Group’s brokerage size.

Are there any metrics that you are particularly proud of?

184

Average number of new clients won by a single Top 10 Brokerages broker

The growth of the Reliance Partners Network in 2013–14 was a key focus. The success to date of the network can be seen through last year’s growth in the number of branches, which was achieved after strategic reviews of our business and the market’s needs.

When it comes to an insurance brokerage, is bigger better, and why?

The Reliance Group is focused on providing

personalised service and support for our clients.

Utilising the expanding scale of the Reliance Group and our team – which includes senior industry experts and local specialists (our Reliance Partners) – collectively we are able to design and deliver the right insurance solution for each of our clients.

Supported by our national claims and support teams we believe the Reliance Group provides exceptional service to all clients, regardless of their size, industry or location.

What would you say was the biggest challenge of the last year?

Acquiring relevant businesses in areas that we are not currently established in.

Where do you think growth opportunities lie for brokerages in the years ahead?

I can’t answer on behalf of the industry, but I do believe that growth comes from being connected and relevant to the insurance buyer, which requires an understanding of their business and needs.

What is one thing you will do differently in the next year and why?

The Reliance Group will continue to maintain the high standards we have set to complement our vision and achieve our strategic and operational goals.

We will continue to refine our identification and selection process for new Reliance Partners and ensure that new partnerships complement our services and allow us to provide better solutions for our clients. We will also continue to build our niche areas, which include mining, energy, construction, marine and professional risk.

Reliance Group on … building through integrity “Our people and our integrity are two foundations of our business and success. By attracting the experts, across industry and at a local area level, we are in touch with the needs of our clients and any challenges that may be faced by an industry.

Our team will always provide honest advice and source the appropriate alternatives for our clients, who can expect exceptional service and tailored insurance solutions.”

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1 “It has been encouraging to see more brokerages embrace a digital business model which will give Australian businesses more confidence in transacting online”

MEGA CAPITAL LAST YEAR’S RANKING: 1 Michael Gottlieb, managing director Number one again! How does it feel to be number one for the second year running?

Absolutely brilliant. Once is terrific recognition, but to do it for the second time and in consecutive years is incredible. We’ve actually been in the top two for the third consecutive year as we came second in 2012.

We have an amazing team that has successfully executed on what we feel is a unique business model that combines a financial lines specialist providing a high level of advice in Mega Capital, and an SME service, BizCover.

What’s been the highlight of the last year for your business?

Operating as the top-ranked broker in Australia!

It has been an exciting year for us as our first in the Steadfast family. It has also been encouraging to see more brokerages embrace a digital business model which will give Australian businesses more confidence in transacting online. The slow but steady increase in consumers willing to transact online is providing opportunities for brokers to innovate and differentiate themselves from the pack.

What is one thing you did differently this year, and why?

For us it is more of the same. At Mega, it is about providing quality advice and brilliant customer service to our financial services clients. At BizCover

it is about continuing to make it easier for SMEs to self-serve or for brokers to service their SME clients.

Are there any metrics that you are particularly proud of this year?

Our staff retention has been excellent. It is a highly competitive labour market and every year we look back on the business and ask ourselves, “How many staff that we would have preferred to keep did we lose to our competitors?”

What would you say was the biggest challenge of the last year?

Our Mega Capital business faced an extremely ‘hard’

Mega Capital on … the growth opportunities of the future “The insurance industry is mature, and therefore it is important that we continue to look for ways to expand the size of the market. We believe the two key areas to achieve this are:

1

Insure the underinsured or uninsured.

There are a significant number of businesses that do not purchase insurance. There are several reasons for this but one is likely because the process is too difficult and time-consuming.

We believe the solution to this is technology.

2

Look to provide insurance solutions for new risks not previously insured.

Examples of this include cyber insurance. Currently I feel brokers and clients do not appreciate the significant exposure businesses face when their networks are interrupted. I always believe that you should insure those risks where the consequences of not insuring are too significant to withstand, irrespective of the probability of the risk occurring.

We believe the solution is to take a knowledge leadership position in this class of insurance.”

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1 “Whatever the growth strategy, focus, specialisation and repetition will substantially increase the likelihood of success”

278,618

The total combined number of policies written by all Top 10 Brokerages

insurance market, with our large book of financial planners. Broking these risks was probably the most difficult we have seen since the hard market of 2012.

On the other extreme, BizCover is facing a challenging environment of an incredibly ‘soft’ insurance market

INSURANCE BUSINESS TOP 10 BROKERAGES 2014 Overall rank

Brokerage

1

Mega Capital Pty Ltd

2

Reliance Group

3

MGA Insurance Brokers

4

Westcourt General Insurance Brokers

5

Scott Winton Insurance Brokers

6

Insure 247

=7

McLardy McShane Insurance and Financial Services

=7

Allinsure - IAA

9

IC Frith & Associates (WA)

10

Elliott Australia Group Pty Ltd

in the SME segment that has seen significant increase in competition and discounting from insurers.

Is there a philosophy or practice that you feel sets your brokerage apart?

Appreciating that to remain relevant we need to always add value. It is not enough anymore to only provide a transaction or information service. We need to understand how our clients define value, and ensure we deliver this.

Is there something the insurance industry needs to change to better service clients?

I believe the industry needs to listen to our clients more and ensure we are developing solutions that are in line with our clients’ expectations. In my view, clients are looking for strong levels of advocacy and advice, different distribution channels with the ability to self-serve, transparency and consistency with our pricing.

And finally, will you be making it a third year running next year?

The Insurance Business Top 10 Brokerage Awards have become a key KPI for our business! We certainly aim to be on top of the list again next year.

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FEATURE / MARINE INSURANCE

UNCHARTED WATERS

Marine insurance may not have changed much in principle, but as Ben Abbott finds, the modern client is driving commoditisation and competition is likely to see some insurers stay the course - and others haul anchor Oceanic Marine Risks managing director Maria Dwyer has seen many changes to the marine insurance broking business in recent decades, since the business was founded in 1986.

With offices in North Queensland and Brisbane offering specialty broking services in commercial hull and marine liabilities, Dwyer has recently benefited from a buoyant period in her market niche in the region, and seen fairly consistent rates for clients at renewal.

“This may be because the commercial tonnage in Australia has increased because of the oil and gas projects in Gladstone and the North West Shelf WA. Like any other commodity, the supply and demand relationship holds up,” Dwyer says.

However, things are set to change for her business in the near future. Given much of the oil and gas work has been completed, Dwyer is expecting commercial fleets to reduce their vessel numbers over the next 12 months, and this has already started to some degree.

“As a broker who has enjoyed growth in this time due to the oil and gas projects, we are mindful that many of our clients will probably be

downsizing in the near future,” she said.

Surprisingly, this is not the greatest challenge Dwyer’s business is facing. Instead – just like many other segments of the broader insurance market – it is commoditisation she is watching, pushed by the fast-changing expectations and demands of the modern client.

Dwyer’s experience reflects trends in the marine insurance sector more broadly, where both brokers and insurers are feeling the powerful currents of a number of market dynamics. With ample capacity chasing business and strong competition from insurers and agencies – as well as the forces of commoditisation encroaching on new areas of the market – brokers and product providers alike are having to find their way in uncharted waters.

THE COMMODITISATION WAVE Some products in the marine sector have been commoditised for some time, with small transit cargo in particular a vanilla risk long-since the domain of electronic platforms. The SME marine insurance market is also fast becoming commoditised, while the pleasure craft segment is

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bowing to the same tech-driven trend.

However, brokers are asking the question – why would this trend stop there?

“We can see that cargo has been commoditised for years, and marine liabilities are going that way as we speak, so next it will probably be commercial hull,” Dwyer says.

Commercial hull? A high value, complex risk, commercial hull has always been seen by most – including Dwyer – as a strong ‘last bastion’ against commoditisation’s advance.

While that is still the case, how much longer will it stand? “If you’d said five years ago you could commoditise marine liabilities, I would have been sceptical. But we are. So why not the rest? Our clients are dictating our approach, and we have to listen to them,” Dwyer says.

Suncorp Commercial Insurance national manager of marine underwriting, Mark Williams, says he has not seen commoditisation develop in the commercial hull market – though he says this does not mean it couldn’t happen.

Factors that count against it, however, include the size of the market segment, the small number of clients, and the subsequent cost effectiveness up and down the supply chain.

However, Dwyer says on the broker level, it is already being conceived. “We are thinking about it now, so it must be,” says Dwyer. “We are thinking about ways to reduce our workload, to spend less time in the office and more time with the client. In a more meaningful way insurers and underwriters feel the same, and are doing the same at their end.”

The question commoditisation raises is, what happens to the insurance talent and jobs?

“Our role is already changing to one of being an integral part of the client’s advisory network,” Dwyer says. “Unfortunately, the commoditisation process will probably mean less jobs in the marine insurance industry as it improves efficiencies, reduces duplication and streamlines processes.

Will commoditisation turn brokers into processors?”

National underwriting manager of CGU Insurance’s marine business, Oliver Miloschewsky, says commoditisation is “the biggest question” facing the market over the next few years.

“While this clearly drives efficiencies, it also

The problems with platforms In an age of increasing commoditisation, an insurance broker’s ability to identify when it is appropriate to use an online platform and when to arrange more tailored cover can “save their client from disaster”, according to Mark Williams.

Suncorp Commercial Insurance’s national manager of marine underwriting, Williams says brokers need to be mindful when it comes to the likes of marine cargo cover.

“They [platforms] are quick, convenient and effective tools, but they are not meant for complicated risk profiles,” Williams explains. “The international nature of trade will sometimes introduce risk elements, restrictions or compliance requirements, which only become apparent as knowledge of the shipment or trade is investigated.”

He gives the example of many countries requiring that domestic cargo movements be covered by a locally licensed insurer on an ‘admitted policy’.

“If, for example, a client is exporting to China and their goods have completed the export shipment, they may still need a local insurer to cover them for their cargo being moved within China,” Williams says.

“Although the policy may offer the ability to cover the goods until final destination as part of an export shipment, all parties need to be clear on what the final destination is otherwise it may render the policy non-compliant with Chinese law.”

Clients may also be in breach of local regulations if their non-admitted policy by a foreign insurer does not account for the payment of local taxes and charges.

Likewise, platforms fail to take into account the existence of embargos and trade sanctions, meaning clients could break the law and not be covered by insurance. “Recent examples of countries affected by sanctions include Russia and Iran,” Williams said. “The critical message to brokers is to be asking these questions for their client. Brokers need to understand exactly how their client’s business is operating and what other external influences or risk aspects may influence the coverage they can obtain,” Williams concluded.

“Marine insurance, as one of the most international classes of insurance, is often seen as a comparatively easy class to deploy capital and expertise” Oliver Miloschewsky, CGU Marine

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FEATURE / MARINE INSURANCE

Swimming with the tide Though climate change has dropped down the political agenda in Australia, it is the business of marine sector insurers to know the risks the climate data is revealing.

Sunderland Marine - which sees future growth in its business coming from the niche market presented by the aquaculture industry, in addition to its traditional fishing vessel strength – says climate change risks are critical to marine insurers.

“We have our own risk groups, and we monitor things like climate change very closely,” says Sunderland Marine Australian branch manager Chris Kennedy.

“It’s definitely an area of interest for us, because not only does it affect aquaculture, but also the fishing side of things as well; it impacts things like wild fish stocks, and the risk of flooding and damage in areas such as marinas and ports, for example.”

With growth in the fishing industry currently static, Sunderland sees increased business flowing from the increased demand for farmed seafood.

“The principal cause of loss is disease, followed by environmental conditions; that can include things like natural algal blooms or simply storm damage.”

removes the training ground for our future underwriters and it will have a significant impact on succession planning and talent management,” he says. “How are we going to train up-and-coming underwriters in an environment where an electronic platform takes care of all SME business and a senior underwriter position is the new entry level role for specialty lines such as marine?”

Dwyer argues commoditisation can be good if it eliminates duplications and increases efficiencies, but providing career paths for staff will increasingly be a challenge.

CURRENTS OF COMPETITION Marine insurance is not immune from the other hallmark trends of the current market.

“Marine insurance, as one of the most international classes of insurance, is often seen as a comparatively easy class to deploy capital and expertise,” says CGU’s Miloschewsky.

A low interest environment and a still comparatively attractive Australian dollar has led over the last couple of years to a “high degree of fragmentation and abundance of capacity” in marine insurance, Miloschewsky says.

Suncorp’s Mark Williams agrees. “The marine market has had very high levels of capacity for some time. As is the case with any insurance market with excess capacity, this is resulting in some insurers severely cutting prices in order to chase

market share.”

Miloschewsky says some capacity is “purely opportunistic”, and that there is not a lot of longevity in such propositions, or the desire to build and lead the Australian market.

Williams argues that cutting prices is having a negative impact on the profitability of some players, and may lead them to change their risk appetite and exit product classes.

“The market has already seen some significant insurers exiting certain marine products, Williams says. “Well-established players with a broad range of covers and sustainable pricing are best placed to see through the coming period of realignment.”

Such conditions are a challenge, as much as they are an opportunity. “As a market, we need to be able to offer more than capacity and, in an environment where more and more operations are moved offshore, we believe there is a need and opportunity for renewed leadership and to capitalise on local expertise and service,” Miloschewsky says.

The pattern is much the same in the pleasure craft market. Club Marine CEO Simon McLean says the business is currently seeing aggressive competition driven by a few new entrants.

“This will likely have the impact of placing downward pressure on pricing in the short term as newer competitors attempt to establish market share,” McLean says.

The competition is at times erratic. “We are seeing a real mix of strategies in the market from our competitors, with some withdrawing from certain classes altogether – such as swing moorings and older vessels – yet others are pricing very aggressively in the same classes.”

McLean says competition, in combination with a lack of significant catastrophes over the past 12 to 18 months, will mean the strong possibility of a continuation of large price variances in some pleasure craft classes. However, he says that “a few significant events” could change this situation quite quickly, especially for those with offshore security.

“Club Marine is focused on long-term sustainability, not short-term growth, and our pricing will reflect this moving forward,” McLean says.

Miloschewsky says what is lacking in the aggressive push for new business is the resourcing to service the needs of brokers and insureds from an underwriting and claims point of view.

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FUTURE ASSURED? For Oceanic Marine Risks’ Dwyer, the future of marine insurance broking will be almost fully shaped by those she spends her time focused on – her clients.

“My future challenges are not coming from the marine insurance market, they are coming from the marine insurance client,” she says. “I am not overly worried about premiums increasing or capacities being reduced. I am more concerned about making sure my business model can enable me to meet my clients’ expectations, increase efficiencies and provide career paths for my staff and ultimately grow the business,” she says.

However, in CGU’s view at least, the broker offering is clearly here to stay in the marine segment. “We very much believe that there will always be a role for specialist brokers who understand their client’s business and service them well,” says Miloschewsky.

“[The aggressive competition] will likely have the impact of placing downward pressure on pricing in the short term as newer competitors attempt to establish market share” Simon McLean, Club Marine “Over time, the challenge for brokers will be to ensure they continue to deliver value to their clients who become more and more tech savvy and who have ever-increasing access to insurance solutions driven by commoditisation.

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FEATURE / MANAGEMENT LIABILITY

A BRAVE NEW WORLD? In association with

A radical shift in the assessment of damages in employment practices liability claims may be on the cards, writes Wotton + Kearney partner Cain Jackson and senior associate Bhrig Chauhan

A key characteristic of most management liability insurance policies currently available in the market is Employment Practices Liability (EPL) cover.

This cover generally provides both an indemnity for legal costs incurred in the defence of EPL claims (such as workplace discrimination, harassment and bullying under State and Federal legislation and “adverse action” under the Fair Work Act 2009) as well as any compensation payable by an insured employer in respect of such claims.

Compensation payments in this area have been traditionally low, meaning that the primary value attached to EPL cover has been in respect of legal costs.

However, this assessment may change in light of a recent Full Federal Court decision in Richardson v Oracle Corporation Australia Pty Ltd [2014] FCAFC 82.

The recent decision involved a claim under the Sex Discrimination Act 2008 (SDA); the decision signals a potentially radical shift in the assessment of damages for sexual harassment cases and EPL claims at large.

FACTS Ms Richardson, a consulting manager at Oracle Corporation Australia Pty Ltd (Oracle), claimed she was sexually harassed over a period of seven months by a male co-worker (a sales representative).

The alleged sexual harassment involved Ms Richardson being “subjected to a humiliating series of slurs, alternating with sexual advances, from [the coworker] which built into a more or less constant barrage of sexual harassment”.

Ms Richardson eventually complained to her

employer, who subsequently carried out an internal investigation during which the co-worker was reprimanded with a first and final warning and in turn issued a written apology to Ms Richardson for his actions.

Ms Richardson resigned a short time after the events to take up a position at another organisation but suffered from a “chronic adjustment disorder with mixed features of anxiety and depression” which was said to have arisen as a result of the co-worker’s unlawful conduct.

THE DECISION AT FIRST INSTANCE At first instance, a single judge of the Federal Court found Ms Richardson had been sexually harassed by her co-worker and that Oracle was vicariously liable for his actions because its policies did not clearly state that sexual harassment was unlawful or refer to relevant legislation.

The Court ordered Oracle to pay $18,000 in general damages (being compensation for Ms Richardson’s pain, suffering and loss of enjoyment of life) and rejected Ms Richardson’s claim for economic loss. This amount was marginally higher than what Oracle had submitted was an appropriate award for cases of this nature if it was found liable to Ms Richardson.

Ms Richardson appealed, relevantly, on the basis that the general damages awarded was “manifestly inadequate”.

THE DECISION ON APPEAL On appeal, the Full Court of the Federal Court agreed with Ms Richardson and increased the award of

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general damages in her favour to $100,000 (as well as awarding her damages for economic loss of $30,000).

Significantly, the Court accepted Oracle’s submissions that the historical range for damages in sexual harassment cases of the nature of Ms Richardson’s was between $12,000 and $20,000, as evidenced by previous judicial decisions.

However, the Court rejected that range as in any way binding or persuasive. Rather, the Court suggested that the historical approach to fixing damages in what is a relatively new and difficult area of the law has been uncertain and overly cautious. It reasoned that the guiding principle was to fairly compensate a victim by reference to prevailing community standards. In this context, the Court noted that the community’s appreciation of the value of the loss of enjoyment of life and compensation for pain and suffering had increased significantly in recent years. The Court concluded that this was evidenced by a series of recent decisions in respect of damages for personal injuries.

Accordingly, the Court rejected the established range for damages of $12,000 to $20,000 in similar cases and awarded Ms Richardson $100,000 for general damages.

IMPLICATIONS

“What has traditionally been regarded as the likely ‘range’ for damages in relation to sexual harassment - or, by extension, any other form of unlawful conduct in the workplace causing hurt, humiliation and, potentially, psychological injury - may no longer be applicable”

The decision is potentially significant for both management liability insurers and employers.

The decision suggests that what has traditionally been regarded as the likely “range” for damages in relation to sexual harassment (or, by extension, any other form of unlawful conduct in the workplace causing hurt, humiliation and, potentially, psychological injury) may no longer be applicable.

It follows that the exposure of employers and their management liability insurers could increase dramatically as cases which could previously be managed in the “under $20,000” category now must be assessed as potentially worth far more.

It also follows that the value of EPL cover is reinforced.

Wotton + Kearney partner Cain Jackson is a leading financial lines insurance lawyer who acts for some of Australia’s largest management liability insurers.

Bhrig Chauhan is a senior associate in Wotton + Kearney’s financial lines insurance practice

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BUSINESS STRATEGY / SEAL TRAINING

Y A W E E H T F TH L

A E S

Comparisons between the business world and the life and death situations faced by elite military units may seem tenuous – but there are fundamentals common to both.

Who better to coach leadership and human performance than an ex-Navy SEAL?

After a brief career as a CPA for the ďŹ rm that is now PricewaterhouseCoopers, Mark Divine left the corporate world to follow his dream of becoming a Navy SEAL officer. At 26 he graduated as honourman of his SEAL BUD/s (basic underwater demolition school) class 170. He retired as a Commander in 2011 and embarked on his entrepreneurial career, founding a number of courses for business leaders and athletes alike, tapping into his expertise in human performance, mental toughness, leadership and physical readiness. Here, he answers questions about how business leaders can tap into the training and knowledge used by SEALS to better lead their own teams.

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IB: How do SEAL commanders gain loyalty and respect from their troops and how can this be translated to the business world?

Mark Divine: SEALs must lead the most dangerous and complex special operations missions in the world. To succeed they must gain the loyalty and respect of their team. This trust starts as SEAL leaders endure the exact same training as their troops. They must perform side by side with the troops, meeting the same physical and mental toughness standards, while exceeding the academic standards.

Assuming the SEAL officer makes it through the arduous 45 weeks of training (and little more than 20% of all SEAL trainees do) then they have proven to their troops that they can walk their talk. This gives them the initial bank account of professional respect. They build upon this respect and further develop the trust and loyalty of their team by continuing to lead from the front during their careers.

Business leaders can use this same approach by getting their hands dirty and by being willing to do everything they ask of their teams. They can show that they are willing to prove their mettle against the standards and share in the bonding experience.

In this manner, respect and loyalty are earned every day in the trenches rather than conveyed by the privilege and power of the position.

“Business leaders can gain respect by getting their hands dirty and by being willing to do everything they ask of their teams. In this manner, respect and loyalty are earned every day in the trenches rather than conveyed by the privilege and power of the position” IB: I imagine being a SEAL requires a degree of conformity. How do you know when to conform and when to be unconventional? Does the ability to choose wisely come from training or intuition and natural ability?

MD: Unconventional methods and conformity are not mutually exclusive. SEALs follow orders but those orders allow for flexibility of thought and action uncommon in other military units (including other special ops units). This way of thinking is trained starting in BUD/s and continues at the team level. The freedom allowed for field level decisions requires that SEALs develop deep intuition to guide their decision-making.

IB: In your experience, can anyone be a leader?

MD: No, not everyone can be a leader. The most important element of leadership is character. The character to lead is a combination of natural and acquired talent. Natural talents associated with leadership include the ability to accept unusual risk, and a burning desire to learn and grow.

Assuming one has the natural talent to lead, then competence is developed through a willingness to embark upon a daily effort to master the many skills required to lead well: communication, trustworthiness, consensus building, visioning, planning, as well as the tactical skills and knowledge of one’s particular domain of leading. Not everyone is willing to work that hard to be an exceptional leader, which is why it is rare to see it in action.

Mark Divine (back, centre) on active duty with fellow SEALs

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BUSINESS STRATEGY / SEAL TRAINING

Participants at the SEALFIT 50-hour Kokoro Camp

Deep intuition is acquired through repetition and mastery of the requisite skills so that they are done with an unconscious competence. In addition, the level of risk and intensity of the missions that SEALs take on deepens intuition naturally.

IB: How can business leaders conquer their fears in business situations, just like SEALs do?

MD: Fear is nothing to fear. SEALs learn that fear

Mark Divine is the founder and CEO of SEALFIT and NavySEALs.com, and creator of Unbeatable Mind. After working with thousands of special ops candidates and professionals developing mental toughness, Mark self-published his first book Unbeatable Mind in 2011 and launched the at-home study program unbeatablemind.com. He is also the author of the WSJ bestseller The Way of the SEAL, published by Readers Digest, and the NYT bestseller 8 Weeks to SEALFIT, published by St. Martins Press.

can be managed and be used as a focusing energy.

On the other hand, the absence of fear can indicate burn out and lead to hasty decisions that negatively impact mission success (or worse, your life).

Business leaders can learn to control fear and use it to their advantage. They must lean into things they fear and learn from it. The more one takes bold action with those things they fear most, the more they are able to transmute the fear energy into determined, focused action.

IB: You’ve previously talked about Front Site Focus, where a SEAL must engage one target at a time. Yet in the business world there is an emphasis on multi-tasking. What’s your view on multi-tasking... is it productive or not?

MD: It is ok to multi-task when conducting simple tasks that one can train to do without much cognitive energy. A healthy example of this includes walking on a treadmill while talking on the phone. However, the way multi-tasking is done in the business world leads to many mistakes and misunderstandings. For instance, holding an

important phone call and checking email at the same time will lead to both being done poorly.

So I am not a fan of multi-tasking and believe that we can only do one thing at a time with excellence. Major performance and productivity gains are found when a business leader can learn to focus on one thing at a time, and do it with excellence. The key to this skill is to learn what things are the right things to focus on. This is the essence of my Front Sight Focus concepts that I teach in my book The Way of the SEAL.

IB: How do SEALs deal with conflict in the ranks? And can this translate to the business world?

MD: Though conflict can be uncomfortable it is not necessarily bad – it is an opportunity to grow and learn. Conflict is feedback that a system is in need of upgrade, or that a person or persons do not share the same view of reality. In both cases it provides an opportunity to come out of the situation stronger and wiser. In the SEALs, conflict is dealt with head on, and immediately. It is not done through secretive back channel communications. Rather, it is dealt with directly, immediately and all team members are expected to have the emotional resilience to deal with the feedback even if it’s about a personal failure.

Perpetual growth accrues to those who constantly challenge their own beliefs and the systems they operate within, by accepting their own limitations and stepping up to make positive changes.

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“Fear is nothing to fear. Business leaders must lean into things they fear and learn from it. The more one takes bold action with those things they fear most, the more they are able to transmute the fear energy into determined, focused action” IB: If business leaders reading this were to choose between honing their minds or their bodies for business success, which should they choose?

MD: Both. When you hone your body you are

are advanced skills learned by SEALs in training and which I teach in the Unbeatable Mind program. I refer to the core skills for this level of thinking “the big four of mental toughness”.

developing mental control, focus and resilience.

Training your mind without training your body is like tuning your car’s engine daily while letting the body rust and decay. Eventually the mind will be destroyed by the failing body. My students in my online study program, Unbeatable Mind, tell me that they are operating at a much higher level of effectiveness as they train their body, mind and spirit in an integrated fashion.

IB: When is the risk worth the reward?

MD: A risk is worth the reward when you have

IB: How do you think clearly when things go wrong?

MD: By controlling your breathing and then learning to focus your mind under pressure. These

trained for victory so that you see it happen in your mind clearly and convincingly before you execute the mission. To achieve this level of confident execution you must train relentlessly at a level of risk near or equal to the risk involved in what you seek to achieve. The chances for success must be high or else you are gambling and the project should be avoided if possible. SEALs train relentlessly for mission success and are able to take on projects with a risk level inconceivable to most. They succeed because their level of competence meets the level of challenge.

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BUSINESS STRATEGY / LEADERSHIP

INSPIRED ORDINARY

The real cost of poor leadership Without strong leadership, your business will continue to sit on top of a wealth of untapped potential.

Karen Gately reveals how to inspire the best in your staff

Read any research on employee engagement and you are likely to find a similar story. Global statistics show only 30% of people are actively engaged at work. Active engagement means that people feel a sense of emotional ownership and are committed to achieving the objectives of their role.

These statistics show the vastness of the untapped potential sitting in most organisations.

The unfortunate reality is that at the heart of the issue is poor leadership. The most important things you can do to inspire your own team and support business leaders are explored below.

STRIVE FOR EXTRAORDINARY Leaders who bring an uninspired, lethargic, conservative or cautious approach undermine the ambition and confidence of their team. Hesitant and reserved leadership diminishes the belief people have in their own potential and drains the team of vital energy needed to succeed. Without confidence and energy people are unlikely to strive.

Thriving people and teams are ambitious and push beyond safe boundaries to give new or challenging things a go. They work hard to achieve results and take the opportunities that come along.

Leaders who accept mediocre fail to inspire other people to reach beyond ordinary standards of performance. Equally they struggle to inspire people to be committed to the organisation and excited about their future. Aiming for easily achievable goals is only ever likely to inspire ordinary levels of engagement and outcomes. The real cost of this approach to leadership can be seen in suboptimal operational performance, customer satisfaction, staff loyalty and engagement.

PLAN TO SUCCEED The starting point of any successful endeavour is understanding and articulating the specific outcomes you want to achieve. Laying out your plans and what you need from each person is fundamental to your ability to leverage the talent and energy of your team to drive optimal results.

However, the hectic pace at which so many managers and teams operate makes achieving this clarity and focus difficult at times. With our minds occupied with here-and-now priorities there is often little energy and space created for reflecting on future possibilities. See planning as essential and forge the time needed to do it well.

Engage your team by not only sharing insight to your own thinking but by also allowing them to contribute. Allow people to be a part of the process you work through to determine where you are heading and how you plan to get there. Ask the people on your team to work with you to define the strategies, values, behaviours and capabilities needed to achieve more than ordinary outcomes.

Don’t underestimate the quality of contribution people can make irrespective of the seniority of their position in your team.

CREATE AN INSPIRING VISION OF THE FUTURE Every leader I have observed achieving extraordinary results has done so by first creating an inspiring vision of the future that people believed in. These managers have won buy-in by encouraging belief in exciting possibilities and in the team’s ability to succeed. However, all too often I meet leaders who know what they want the future to

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hold but fail to share their dreams with anyone else.

Other leaders I meet struggle to create a clear picture in their own mind and therefore fail to lay down the path for their team to follow.

Paint a picture of what you are aiming to achieve as well as the contribution you need each person on your team to make. Ensure vision isn’t limited to the ‘big picture’ view of your organisation’s ambitions; the vision each team has of their own future matters just as much in inspiring people to strive. Influence your team’s confidence that big things can happen but also inspire in them a passionate desire to strive to get there.

THINK BEYOND CONVENTIONAL WISDOM To achieve the best possible outcomes it’s essential that your team challenge conventional wisdom.

Limiting dreaming to within the boundaries of what is commonly understood or accepted is likely to lead to at best ordinary results. Being a leader in any industry takes a willingness and ability to think beyond what is typical – to have the courage to take the road less travelled, or even one that has never been travelled at all. Our history is rich with examples of the achievements of people who dared to think differently and give new things a go.

By promoting a creative culture you are more likely to continue to expand your own vision and realm of possibilities over time, and it is these expanded possibilities that will empower you and your team to reach the highest peaks of your potential. Your own ability to conceive of a bigger and brighter future matters, but so too does your ability to inspire that belief in others. Challenge limiting beliefs and make it OK for people to suggest and try things that haven’t been done before.

KEEP DREAMING Visioning is neither a one-off nor a once-a-year event. Looking into the future, dreaming about what might be possible and imagining the places you would like to go are crucial if a business or team is to achieve their full potential over time. Our ability to continuously grow and evolve depends on curiosity and the desire to keep exploring new and better options or approaches. Leaders who lack imagination and are happy to evolve slowly will struggle to inspire other people to strive for excellence.

Plodding along doing what you have always done is not necessarily going to serve you well in the future. Organisations who ‘stick to their

Top 10 reasons why people quit Forbes has listed the top reasons why your best employees leave. As the saying goes, ‘people quit their bosses not their jobs’...

1 You’ve overloaded your best people with too many responsibilities 2 You’re a micro-manager 3 You’re never around 4 You’re not in touch with how some of your hires or promotions are driving your best people nuts 5 You’ve never given your people a sense of where they can go with their careers 6 You run terrible meetings 7 You communicate that you care more about yourself than the team 8 You’ve never given them the big picture vision of where your group is heading or you are constantly changing the big picture Source: Forbes.com

knitting’ and fail to innovate are those most likely to be adversely impacted by change. Unless you inspire people to challenge what they do and how they do it you are unlikely to keep pace with the rapidly changing world in which all businesses operate. No matter the competitive advantage your organisation may have today, that can change quickly and you are wise to be ready to respond.

UPHOLD STANDARDS AND DEAL WITH POOR PERFORMANCE Inspiring a team to strive for excellence requires that leaders hold people accountable for the standard of contribution they make. It’s essential that immediate steps be taken to address mediocre through to inadequate performance. As poor performers drag down a team’s results, those who are making a positive contribution begin to lose motivation. Failing to deal with the issue will eventually lead others to give up, resigned to the fact that only ordinary is possible.

Among the most commonly reported reasons people leave an organisation is because they are unhappy with their manager. While it’s common for complaints to relate to the manager’s style, just as often people express frustration with their manager’s failure to deal with the poor performance or behaviour of their colleagues. Often when strong performers feel held back by their manager’s failure to hold some people accountable, they choose to move on.

Karen Gately is a leadership and people-management expert and a founder of Ryan Gately, a specialist HR consultancy practice.

She is also the author of ‘The People Manager’s Toolkit: A Practical guide to getting the best from people’ and ‘The Corporate Dojo: Driving extraordinary results through spirited people’. For more information visit www. karengately.com.au or contact info@ karengately.com.au

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BUSINESS STRATEGY / PERSONAL BRANDING

TAKING YOUR PERSONAL BRAND FROM ‘NOW’ TO ‘WOW’ When you Google yourself, what’s the first thing that comes up? Is this image consistent with how you want to be portrayed? Nikki Heald, managing director of Corptraining, explains the importance of consistent, personal branding

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DISCOVERING YOUR PERSONAL BRAND Today, it’s more important than ever for you to make your brand stand out. The term personal branding is certainly not new and has been bandied around for many years. Simply put, it relates to the way you market ‘you’ to the outside world. It’s about your professional profile and reputation. It’s about the value that others perceive you possess.

Branding incorporates reputation and credibility. It influences whether people will buy from you, do business with you or even want to associate with you. If you want to stand out from competitors and position yourself to win, then developing, fine-tuning or tweaking your current brand is the way to go. Yes, the good news is that you can shape and control your brand.

Personal branding should be an integral part of your overall marketing strategy and if you don’t particularly like the term ‘personal brand’, then substitute it for another term such as personal visibility, personal perception or professional profile. Ultimately, it doesn’t matter what you call it; the fact is, there is a proven link between projecting a professional image and success.

Celebrities are good examples of personal brand managers. They work tirelessly and consistently to promote their visibility in their fields of expertise.

They find ways to be unique and memorable.

However, you don’t have to be a superstar or celebrity to build a strong and unique brand proposition.

Whether you wish to market yourself for a new career, increased sales or diverse opportunities, it’s essential that your brand is genuine and promotes authenticity. How well you know yourself is vital.

Do you have a strong sense of your professional message? Do you know your brand story? Do you communicate your brand consistently using multiple sources?

Identifying what distinguishes you from others is no easy task, especially in the world of marked competition, but it’s unquestionably worth the investment. For those of you who own a business, perhaps you’ve spent loads of money on marketing campaigns to promote your business, but consider the last time you invested in you?

WHERE DO I START? The first step is to reflect upon your current brand and then determine whether this is your ‘ultimate’ or ‘desired’ personal brand. Ask others around you for feedback – clients, colleagues and your

“The reality is that you will lose control of how you appear online if you are not the one in charge of managing your presence.

Be mindful of what you publish or post”

management team. What words do they associate with you? What do they believe are your strengths?

What areas do they perceive you may be able to develop? What makes you different from others?

A clear understanding of what your brand looks like now as opposed to what you would like it to look like in the future allows you to identify those gaps that will require your attention.

Generally, the identifiable gaps will fall under one of the ‘Five Keys to Personal Branding’ that I have developed and use in my workshops: 1. Presentation – dressing to reflect your position and meet client expectations. Good grooming, hygiene and presenting an image that conveys credibility.

2. Communication – how you position yourself verbally, non-verbally and in written communication. Ensuring your online presence communicates the right messages.

3. Behaviour – how you conduct yourself at business events, meetings and day-to-day interactions.

Demonstrating courtesy, respect and correct protocol for the situation.

4. Skills – ensuring you keep your knowledge and competencies up to date. Be top of game in what’s happening in your profession through training, mentoring and coaching.

5. Service – providing an exceptional level of service to both internal and external parties. Do what you say you are going to do and find ways to delight your clients.

After careful analysis of these five core areas and discovering the gaps, the next step is to determine what action you plan to undertake to take your brand from ‘now’ to ‘wow’. Remember, this will take time, energy and effort; it won’t happen overnight.

SOCIAL MEDIA AND BRANDING The growth of LinkedIn, Twitter, blogs and Facebook has made it even easier for prospective clients to research you; and believe me, they will. In this digital day and age, people rely heavily on social media and what you post is of interest to them.

People are using Google personally and professionally on a daily basis.

The first thing to do online is to find out what is being said about you and what information comes up in searches. Google your name and see how you go. What do social media sites reveal about you?

Does the content support the brand or perception you wish to convey to others?

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BUSINESS STRATEGY / PERSONAL BRANDING

Could they be updated or improved to enhance your online image? The reality is that you will lose control of how you appear online if you are not the one in charge of managing your presence. Be mindful of what you publish or post.

“Whether you wish to market yourself for a new career, increased sales or diverse opportunities, it’s essential that your brand is genuine and promotes authenticity.

How well you know yourself is vital”

Nikki Heald is the managing director of Corptraining, established to provide dynamic and modern training solutions appropriate to the insurance and financial service industries. Nikki co-authored the book Views On The Way To The Top, publishes numerous articles and her input is sought from various media channels. For more information, visit www. corptraining.com.au

From a business perspective, LinkedIn’s powerful position in search engines will mean that your LinkedIn profile will probably come up first.

Make sure you have a professional photo that creates a great first impression (not a dodgy one taken after a few ales), provide all necessary contact information, customise your profile URL, load your summary, skills and work history, add recommendations and honours or awards you have achieved.

Social media is just one way to promote your visibility and whilst blogs, articles and LinkedIn assist with this, video is the future of personal branding. Take time to create some short videos (ideally, no more than 90 seconds) about who you are, what you do and the value you are able to offer.

Load them onto You Tube, your website, LinkedIn or other relevant sites for current or prospective clients to view.

BROADCASTING YOUR BRAND So after all the time, energy and effort you’ve invested into cultivating your ultimate personal brand, you need to do something with it, otherwise you’ve effectively wasted your time!

There are countless ways to communicate your

FIRST IMPRESSIONS...

DID YOU KNOW? From a career and social perspective, first impressions count. They also impact on your personal brand. It only takes a quick glance, for a few seconds for us to size each other up. While we may like to perceive ourselves as being nonjudgmental, unfortunately we are. With each new encounter we evaluate and are being evaluated, so it’s essential to generate the right impression, particularly from a sales perspective. Generally, people buy from people they like. Additionally, how you are perceived internally is important if you want to progress in your career or be exposed to new or exciting job opportunities.

Reflect on your current brand and the impression you would like to convey to others. Consider your clothing and general appearance. Do you dress to reflect your role and meet your clients’ expectations? We know that not every situation in business requires full corporate garb; however, being well groomed and appropriately attired puts you one step ahead. Be mindful of your non-verbal cues and build on your first impression with a warm handshake and smile. We’ve all received the wet-fish or limp handshake at some point and never remember it favourably. Finally, ensure that your verbal communication backs up your professional image and demeanour. Use language that is suitable, professional and free from any technical jargon or slang. Three simple tips to get your impression right: 1. Immaculate presentation and grooming 2. Open and approachable body language 3. Appropriate and friendly speech

value to both internal and external markets; don’t be shy – it’s your time to shine and get your name out there. Here are a few ways that you can build your presence: sponsorship, community involvement, networking, hosting an event, chairing a meeting, getting involved in committees, writing articles, newsletters or a book, producing a white paper or speaking at events.

Remember, discovering or enhancing your personal brand is not difficult and impacts significantly on sales and career advancement.

Your individual marketing campaign is essential to building credibility and confidence but must be backed up by consistent, day-to-day action. Have fun!

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THE 7 DEADLY SINS OF MARKETING The ability to effectively market your business is key to delivering a stream of qualified leads to your door and ultimately determines the level of your business success, but the challenge to be heard above all others increases daily. In such a crowded space costly marketing mistakes will inevitably occur. So for all you sinners out there, here are the Seven Deadly Sins that every business owner commits. How many ‘sins’ are you guilty of?

SIN #1: LUST... PLEASING THE MASSES (OR GETTING INTO BED WITH EVERYONE) ‘If you try to be everything to everyone, then you’re nothing to no-one!’ Too many business owners still target the mass market with too general a message.

The misguided belief is that a wider reach with a broader message should end with better results. Cast your ‘net’ wide and reap the rewards?

Today the smarter strategy requires targeting a specific market niche that shares similar needs and wants. By selecting targeted channels where your best customers are more likely to listen, you’re able to create messages that speak directly to and solve your customers’ problems. The big picture goal? Dominate the market gradually and build up your niches.

SIN #2: GLUTTONY... OVERDOING IT WITH YOUR CONTENT Content is the new king. Business owners who understand how content marketing can help build their business’ profits are often guilty of over-indulging on the type of content generated as well as the quantity of platforms they use and the frequency of postings online.

Resist the temptation to create content for content’s sake while blitzing your client database.

SIN #3: GREED... OR PUT ANOTHER WAY, BEING SELFISH Are you always focusing on yourself, and never your customer? ‘Not knowing your audience’ is a business owner’s classic cardinal sin. Absolve yourself. Put yourself in your customer’s shoes and brainstorm campaigns that target their specific interests and problems. Don’t be greedy and just promote your product or services. Share your unique ‘IP’ in a way that resonates with your audience. Entertain and educate first, then learn about the best ways to reach your audience.

SIN #4: ENVY... IS SOMEONE DOING ‘BETTER’ THAN YOU? OF COURSE THEY ARE There’s always someone doing better than you. The likely reason they’re more successful is because they’re working smarter than you, that’s to say, you’re not ‘leveraging’ your time and bringing in qualified leads. A golden rule of marketing? Get your message out to the market. With only 24 hours in any day, duplicating your messages and attracting leads using new technology and practices is smart marketing. Don’t get left behind in Biblical times.

Get up to date!

SIN #5: SLOTH... LAZY, LAZY, LAZY YOU! Do you always play it safe? Do you adopt a ‘wait and see’ approach? Do you simply follow what every other business does? This only serves to help you blend in with the background. Get up and stand out! Be creative, make some noise and make a statement. How? Publish a unique video, look for a niche or create a unique online community. Get social or get forgotten. Calculated risks all come with a price but they’re usually the ideas that generate the most results and ROI. Get busy, get creative, get moving!

SIN #6: WRATH... ARE YOU ANGRY OVER A LACK OF LEADS? ARE YOUR CUSTOMERS ANGRY AT A LACK OF CLEAR DIRECTION? Aside from anger management classes maybe you’re simply not asking for the sale? Remember, always have a clear call-to-action for all of your marketing campaigns – tell customers what you want them to do next! Above all make your call-toaction stand out.

SIN #7: PRIDE... OR AS I CALL IT: ‘ME, ME, ME’ CONTENT Pride: the most common ‘sin’ or symptom of self-obsession. The guilty are easily identified by marketing copy that harps on about ‘Company XYZ has been around for 30 years’, or ‘we’re the market leader’ in blah, blah, blah.

Stress the benefits of what your business offers – focus on how you solve problems rather than telling customers how good you are.

Jamie Thomas believes everyone is a marketer. He is a brand and marketing specialist at ‘Synkd’, a Melbournebased niche marketing, brand, communications and design agency. He is also the co-author of ‘Self-Made – Real Australian Business Stories’ (Busybird Publishing). For more information visit synkd.com.au or contact info@synkd. com.au

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STATS GLOBAL INDUSTRY

INSURANCE

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A PICTURE OF PROFIT

KPMG’s General Insurance Industry Review 2014 neatly summarised the state of play for Australian insurers, and the news is good. With profits up, insurers are well placed to face that other threat on the horizon – competition The 12 months to 30 June produced a robust insurance profit of $4,958m for KPMG’s surveyed Australian insurers this year, representing an 8.3% increase on the previous year’s take of $4,580m. This was impacted by…

Earnings from premiums, which have continued to tick up, albeit at a slower rate than previous years

A benign CAT claims experience, with NSW bushfires the only event costing over $150m

Continued weak investment returns reflecting the low interest rate environment

The detail: Gross written premium increased by 3% to $32,583m according to KPMG, driven primarily by increases in an insurance broker staple – commercial lines insurance

The detail: With the growth in earned premiums and a stable claims environment thanks to lower catastrophe incidents, the current year loss ratio of 61.6% is at its lowest level in 5 years

The detail: Investment income was down to $1,657m from $1,975m.

This has pushed some insurers to seek investment returns elsewhere in equity and alternative asset markets

INSURER PERFORMANCE BY THE NUMBERS Performance measure ($m)

Total 2013/14

Total 2012/13

Gross written premium

32,583

31,634

Net earned premium

26,826

25,680

Underwriting result

3,290

2,617

Insurance profit

4,958

4,580

Loss ratio

61.6%

63.4%

Expense ratio

26.1%

26.4%

Combined ratio

87.7%

89.8%

Insurance margin

18.5%

17.8% Source: KPMG’s General Insurance Industry Review 2014. Results based on participating insurer surveys and KPMG analysis.

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STATS

TIME WILL TELL: KEY INSURER RATIOS OVER THE LAST FIVE YEARS 67.7% 67.6%

Loss ratio

63.4% 61.6%

74.7%

26.5% 26.4% 27.1% 26.4% 26.1%

Expense ratio

94.2% 94.0%

Combined ratio

101.8%

89.8% 87.7% 14.5% 14.6% 10.7% 17.8% 18.5%

Insurance margin

20

0 2009/10

40

60

2010/11

2011/12

TAKING ON THE CHALLENGERS

80 2012/13

100

120

2013/14

WHAT ABOUT THE MIDDLEMEN?

In a threat to the existing pillars of the insurance industry, challenger insurance brands are growing at a much faster rate, though off a much lower base

2014

859 of the 1,593 intermediaries licensed to conduct general insurance business placed business directly with underwriters during the first half of this year

YEAR-ON-YEAR GROWTH IN GROSS WRITTEN PREMIUM 25% 20%

During that half-year period, intermediaries invoiced $8.7bn in premium

$777m was placed with Lloyd’s underwriters and $7.4bn with APRA-authorised general insurers during the first half of this year. A further $529m was placed with unauthorised foreign insurers

Intermediaries placed $7.6bn in premium with APRA-authorised general insurers effective in the preceding six-month period, representing approximately 44% of the $17.5bn of direct premium written by APRA-authorised general insurers

This was up on the $8.5bn invoiced during the same period last year

Last year, $800m was placed with Lloyd’s underwriters, $7.2bn was directed to APRA-authorised general insurers and $564m went to UFIs

This was identical to the 44% slice of the market they accounted for during the same period last year, when intermediaries wrote $7.2bn, next to a total of $16.5bn of direct premium

15% 10%

Last year, during the same period, 873 of a total licensed pool of 1,556 placed business with underwriters

5% 0%

Challenger brands 2010/11

2011/12

Industry 2012/13

2014/14

Source: APRA statistics and KMPG analysis

2013 Source: APRA intermediated general insurance statistics, January to June 2014

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SOCIAL LIFE

NIBA BROKERS ‘OWN THE FUTURE’

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NIBA members hit Adelaide in September for the association’s annual convention, and the South Australian setting did not disappoint. In line with an “Own the future” theme, the conference rolled through a series of challenging sessions – including Rachel Botsman’s Monday-morning wake-up call warning brokers about the potential fate of ‘middlemen’, and an industry panel that sat rival Austbrokers and Steadfast chiefs side by side to outpredict each other over the industry’s future. It also delivered on those other key conference ingredients: networking and entertainment. Brokers were lucky to hear from keynote speaker Steve Waugh, who explained why leading the Australian cricket team is not all that different from a busy insurance brokerage.

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SOCIAL

ANZIIF HOSTS INDUSTRY’S ‘NIGHT OF NIGHTS’ There’s one awards night in the insurance industry that never fails to draw a who’s who of the nation’s insurers and brokerages – and that’s the Australian and New Zealand Institute of Insurance and Finance’s Australian Insurance Industry Awards. At the event honouring the achievements of companies and individuals, broker award winners this year included Parmia Insurance (since purchased by Arthur J. Gallagher), Planned Cover and Aon, while NTI and Allianz took home insurer awards. As always, the night was also a chance to mingle and celebrate – and if there’s one industry that knows how to do that, it’s the insurance industry.

VERO EXPO BRINGS KENNETT TO TOWN Vero’s broker expo rolled around the country in September, bringing former premier of Victoria Jeff Kennett and a host of businessfocused experts to the door of Vero’s intermediary partners, as it sought to give them tools they could use in their businesses. For most brokers, the highlight was Kennett’s keynote address, in which, while warning brokers that they should aim to ‘connect’ with their clients ahead of potential tough economic times, he also convinced most why they should also be grateful for something so simple that most people end up taking it for granted – just being alive. He gave insights into leadership and didn’t hold back when it came to sharing his views on the current political landscape.

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SOCIAL LIFE

AIG MATCHES BROKERS AGAINST THE ALL BLACKS

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A group of lucky insurance brokers were recently invited to take a break from the office to test their skills on the rugby field against the formidable might of New Zealand’s All Blacks. Held ahead of a Bledisloe Cup clash with the Wallabies in Sydney, the AIG-initiated “Train with the All Blacks” day gave brokers a true taste of an All Blacks training session, with All Blacks star Sam Cane saying he could see some brokers had handled a ball before – and others hadn’t. Regardless of their skill level, AIG CEO Noel Condon said it was a great way to thank brokers for their partnership, given they account for 95% of the insurer’s business.

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Favourite things...

Jurgen Rammesmayer CEO, Elantis Premium Funding Elantis’ Jurgen Rammesmayer recently finished a busy tour of the country speaking to Steadfast’s broker network. But what does he get up to when he’s not out in the market busily flying the premium funder’s banner?

Place to be: I love surfing, although with work and family commitments - coupled with crowded Sydney beaches - I don’t go as often as I would like. To make up for this, I try to go on a surf trip to Indonesia once every two years and my last trip was to Sumbawa island. It’s a great place to get away from the crowds and the Sydney pace of life and it has an untamed beauty that rejuvenates the spirit. The water is warm and the waves are spectacular!

Music: There are many musicians I listen to. This ranges from hip hop bands like the Black Eyed Peas, to chill out Café Del Mar tracks to rock bands like INXS.

Sport: Rugby union. There are so many different dimensions to the game from scrums, to rucks and mauls, line-outs and fast-flowing backline play. Nothing beats the passion of the Bledisloe Cup, although these days, there is an inevitability about the result – great if you are a Kiwi but frustrating for the rest of us!

Food: Japanese and in particular sashimi. I love the simplicity and freshness of sashimi, especially when it’s complemented by warm sake.

Vacation spot: Fiji with the family. The beaches are beautiful with something for everyone. The people are friendly, it’s safe for the kids to run around and do their own thing, my wife can get pampered at the hotel spa and there is good surf for me.

Movie: I’ve got a soft spot for Westerns. One of the best I’ve seen is Tombstone which is about Wyatt Earp, Doc Holliday and the gun fight at O.K. Corral. Val Kilmer plays Doc Holliday in probably the finest performance of his career.

Book: There is no particular book or genre that stands out for me, but over the past few months I’ve read a number of John Grisham thrillers which have been hard to put down.

Drink: A dry vodka martini with a big green olive. I still have not found a place that makes this cocktail as well as M-bar in the Mandarin Oriental Hotel in Hong Kong.

Best thing about working in insurance: The people. I work with a great bunch of people who all get along well together and who are passionate about delivering the best service they can for our clients. I also enjoy getting on the road to meet with our broker customers. They provide insurance for a diverse range of companies and have good insights into the economic conditions faced by businesses in the different industry sectors.

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THE LAST WORD

Old(er) dogs, new tricks There’s not much an ‘old dog’ like Darren Trott doesn’t know about making the most of change. Here’s his advice for ‘younger pups’ The pace of change in our industry continues to accelerate, with new technologies, the impact of social media, mergers and acquisitions of insurers and brokers, and the rise of challenger brands in the market.

I’ve been reflecting on some of the lessons I’ve learned during my 30 years in this industry and wondering how the next generation of insurance professionals will face the future insurance world.

I know there are hundreds of ‘older dogs’ like me in our industry who have similar career stories. So, what are some pearls of wisdom I can share with the ‘younger pups’ who are coming through our industry?

SEEK OUT THE RIGHT ROLE MODELS AND MENTORS There are many tremendous examples of leaders in our industry who are only too willing to share their experiences and to help develop the careers of the next generation. Seek them out and ask their advice.

Understand their values and observe their behaviours.

Turn to them for counsel on difficult problems.

UNDERSTAND DIFFERENT ROLES AND RESPONSIBILITIES Developing your knowledge of ‘who does what’ is essential to getting great outcomes and delivering excellent service to your customer. In many cases, processes have become so segmented individuals only get to see the one link they have responsibility for in the whole chain, without understanding how their role impacts the next part of the business. I know of a recent example where an insurer’s procurement team is focused primarily on driving cost reduction, which then impacts the ability of the supplier to afford more qualified staff, which then leads to poorer claim decisions. It has the potential to increase the overall cost of claims, but hey, the procurement team has hit their target!

Darren Trott is executive general manager of Claim Central

LISTEN TO YOUR CUSTOMER AND USE DISCRETIONARY SERVICE It’s so tempting to offer a solution before you’ve fully understood the issue. Actively listen to your

customer and ask clarifying questions. As an industry, we’re not good at adapting our processes to the customer’s needs and we’re quick off the mark to tell them what we can’t do, or to hide behind a ‘but that’s our process’ excuse.

Discretionary service is adapting what you can do to meet customer expectations.

GET OUT OF THE OFFICE AND HEAD FOR THE FRONT LINE In the office there are policy numbers and claim files, phone queues and triage processes, invoices, KPIs and budgets. The real action happens outside the office. Do whatever you can to visit the scene of a house fire and experience the impact it is having on the residents and wider community. Spend a day with a loss adjuster, seeing the challenges being faced by businesses struggling to survive after a loss.

BUILD YOUR NETWORK OF CONTACTS Our industry relies heavily on relationships and if you can bring together the right people at the right time, you can achieve some amazing outcomes.

Building trust with each other and understanding what skills and talents each party brings to the table is critical. The people you might be working alongside today could well be scattered across many different organisations in a few years’ time, which brings about opportunities to do business with each other once again in a different way.

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14

Key Media Accolades

TABBIES

APEX

MAGGIES

EXCELLENCE AWARDS

BELL AWARDS

2012, 2013, 2014

2014

2010, 2012

2011, 2012

2005, 2006, 2007

To find out more about Key Media’s domestic or international products, please visit keymedia.com.au or call us to find out more (02) 8437 4700

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