Covernote June 2013 by mediaweb

MARINE INSURANCE: ISSUES AND TRENDS P13

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covernote June 2013 ...for insurance professionals

HOW

JUNE – AUGUST 2013

CHANGES INSURANCE PLUS

IBANZ 2013 FORUM P29 IBANZ COLLEGE P42

www.ibanz.co.nz

NZ5861 03-13

Leading the change. It’s our rule of sum. The move to Sum Insured policies is big for our industry and we’re working hard to ensure a smooth transition. In fact, we’re front-footing this move through practical communications with our broker partners and their clients, and for good reason: to ensure the change is a success from the word go.

Photo: thinkstockphotos.com

covernote ...for insurance professionals

PUBLISHER AND MANAGING EDITOR Toni Myers EDITOR Christina Wedgwood PROJECT MANAGER Rod Myers, rodm@mediaweb.co.nz CONTRIBUTORS Crossley Gates, Bill Bennett ADVERTISING MANAGER Kelly Davison, 09 529 3000, 0275 204 507 admanager@covernotemag.co.nz DESIGNER Melissa McGregor PRODUCTION MANAGER Fran Marshall, franm@mediaweb.co.nz SUBSCRIPTIONS subs@mediaweb.co.nz

Phone 09 529 3000, Fax 09 529 3001 enquiries@mediaweb.co.nz www.mediaweb.co.nz PO Box 5544, Wellesley Street, Auckland 1141

Covernote is the official publication of IBANZ and is distributed FREE on a quarterly basis (March, June, September, December) to members throughout New Zealand and associated companies. Additional copies are available at a cost of $7.50 per copy, or 12 month (4 issue) subscriptions at $30.00 inclusive of postage and packaging. The articles or opinions featured within this magazine are not necessarily the opinions of the publisher or IBANZ, and they do not accept responsibility for the content of articles featured within the publication. Copyright © 2013: Mediaweb Limited. All material appearing in Covernote is copyright and cannot be reproduced without prior permission of the publisher. The publisher does not accept responsibility for loss or damage to unsolicited photographs or manuscripts. Editorial contributions are welcomed. Letters to the editor are also welcomed, but pen names are not acceptable. Covernote is printed by PMP. Subscriptions: One-year NZ subscription (4 issues) $30.00 (GST incl). IBANZ Enquiries should be made to; Gary Young, Chief Executive, IBANZ. Email: gary@ibanz.co.nz IBANZ National Office located at: Level 5, 280 Queen Street, Auckland 1010 (PO Box 7053, Auckland 1141) Telephone 09 306 1732 Website: www.ibanz.co.nz

WELCOME

here has been much debate recently over the importance of continuing professional development (CPD) including what constitutes quality CPD, why it should be a requirement for brokers and how much is appropriate. The answer lies in the word ‘professional’. Most, if not all, professions see that maintaining currency of knowledge is absolutely essential. Professional associations demand it of their members as they seek to set a standard for their profession. Even if no benchmark were to be set by an association a true professional would take personal responsibility to ensure they have the knowledge and skill for their role and that these remain current and, in fact, grow as their career develops. Change, as they say, is constant – it cannot be ignored no matter how many years of experience you may have. In acknowledging that CPD is vital for members, IBANZ has the responsibility of giving some guidance in answering questions on what constitutes quality CPD and how much is appropriate. In doing so, we realise that the guidelines should not be overly prescriptive, as the needs between individual members can vary widely. We therefore encourage all of our members to follow the IBANZ Code of Practice and develop an annual plan to identify gaps in knowledge or areas that need updating. By identifying their own specific needs they can then ensure CPD is correctly focused. IBANZ, like most professional associations, sets what it believes is a minimum level of CPD. This is based on best practice and reflects what those in the profession – and those who regulate it – see as appropriate. One of the pitfalls in meeting annual CPD requirements is to place too great a focus on the number of hours or points that have been specified. It should not be about points, but instead about the quality of the training and its relevancy. The regulators have given a clear indication of their expectations. Taking a minimalistic approach is not considered appropriate; failing to formally identify needs is not acceptable. Training must address the needs identified each year in a personal plan to be considered relevant. In the end, it is not IBANZ that decides if a member has the skill to do their job. The professionals’ own clients or the regulator will do that. Our role is to give clear guidelines as to how a member should ensure they meet expectations. We set a standard we believe is appropriate for someone giving advice on risk management and general insurance. We know that our members benefit from the value that comes with meeting our professional standards. Gary Young CEO, IBANZ

June 2013 | covernote

PUBLISHER’S MESSAGE

INDUSTRY MOVES TO FUTURE FOCUS

insurance rates rising slowly and predictions of one million new policies written in NZ this year (p6). AIG’s cyber risk app (p4) points to the changes in the way we work and the risks they bring , while a KPMG report (p10) calls for a common global insurance framework and international standards. You can get a taste of what’s to come in the preview of the IBANZ forum on page 29. In a show of support for Christchurch, the forum will be held in a brand new conference facility at the Wigram Air Force Museum on August 22-23. And sticking with a focus on recent disasters, there’s a marine insurance feature on pages 13-18. The Rena grounding has certainly focused attention on the risks of sea transport. This issue’s cover story explains ‘big data’ – this year’s buzz words from the technology sector. Big data offers huge potential for the insurance industry, in particular in detecting potential fraud. We hope you enjoy the read and don’t forget to add the IBANZ forum dates to your diary. We look forward to seeing you there. Toni Myers

n his thoughts on the year ahead, back in January of this year, AIG’s New Zealand CEO Cris Knell remarked that “A period without any major upheavals either here in NZ or abroad would be welcome!” He was commenting on the fact that the degree of stability in the macro environment would have a major impact on the performance of the insurance sector and business in general. AIG’s own move last year to pick up the All Black’s sponsorship and move into new strongly-branded premises suggests an industry on the front foot after a period of being in response mode. I’m hesitant to tempt fate but after several years of major natural and man-made disasters it’s starting to feel as if things may have settled a little. One of the upsides, from this industry’s perspective, is a greater awareness of risk and the consequences of under-insuring or inappropriate insurance. Insurers and clients alike have had time to respond to the major events and changes in risk from altered economic and trade patterns – developing new products and extensions, and for clients, developing more robust risk-management strategies . There are signs of a slow climb out of recession with global

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CONTENTS

COVER STORY

20 HOW BIG DATA CHANGES INSURANCE Harnessing predictive power for insights and smarter business

FEATURES 11 AIG’S PRE-MATCH WARM-UP AIG celebrates first test on home turf and the AB’s come up trumps.

13 MARINE INSURANCE A look at trends and the impact of major events on this specialist insurance niche. 29 IBANZ FORUM PREVIEW Are you ready for a challenge? The 2013 Forum looks how the Canterbury earthquakes have changed the face of the insurance sector.

REGULARS 1 4 11 34 35 36

View from the CEO News & Analysis Out & About ISO Case Summary FSCL Case Summary Legal: Crossley Gates

38 40 42 48 49

Ask an Expert Technical Insight: VERO IBANZ College IBANZ Contacts IBANZ Corporate Company List

Responsive and a little different.

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So why not give us a call - you can always expect an answer! *IUA does not provide financial advice, is not a broker and as such is not registered on the Financial Service Provider’s Register. IUA is not a member of a dispute resolution scheme. IUA acts as an agent for certain insurers and Lloyd’s underwriters. IUA is not an insurer and no name, title, trade mark, style, designation or description on this advertisement or in any documentation should be taken as representing or implying that IUA is acting as a licensed insurer.

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Auckland 09 914 6440 Christchurch 03 313 8435 www.iua.co.nz

3:41 PM3 June 2013 | 2/27/13 covernote

NEWS & ANALYSIS

Steadfast takes Rothbury stake A

ustralian broking network, Steadfast, has taken a 30 percent stake in Rothbury, New Zealand’s largest independently-owned brokerage. The move makes Rothbury the first New Zealand member to join Steadfast’s Australian broking network. The 30 percent stake is made up of 17 percent in cash and 13 percent in Steadfast shares, dependent on the company listing, which is expected to take place in the coming months. Roger Abel, Rothbury managing director, says his business needed an international partner to enable them to provide better technical support and resources to brokers. The move will help the company grow as the largest New Zealand majority-owned broker. Rothbury’s goal is to have 300 staff and more offices around the country by March 2017. Abel says natural disasters have made it harder to find well-priced insurance cover: “Membership of the Steadfast network will plug our brokers into more insurance options.” He’s pleased that joining Steadfast gives Rothbury access to client services and professional development including Steadfast Campus online learning and its convention, the biggest general insurance conference in Australia. It also means access to resources such as tailored product packages and compliance tools.

Roger Abel, Rothbury (left) and Robert Kelly, Steadfast.

Rothbury will continue to operate under its own brand. As Abel states: “Aside from accessing a multitude of resources, professional development and customer service benefits it will be ‘business as usual’ for our staff, clients and suppliers.” Currently, Rothbury is New Zealand’s fourth largest brokerage. It has 15 branches and its 190 staff service a total of 50,000 clients. Steadfast is Australia’s largest broking network with more than a million customers. The network’s brokers account for almost a quarter covernote of the total Australian broking premiums. ...for insurance professionals

Photo: thinkstockphotos.com

IG has launched an iPad app featuring news about the latest risks and data breaches, saying the CyberEdge app is the first iPad app of its type. The app was developed as a response to research showing there’s a need for better information about online threats and how to respond. AIG surveyed 258 business decision-makers about risk across a number of areas including income loss, property damage, and investment risk. More than 85 percent of those asked said they were either “very” or “somewhat” concerned about cyber risks to their organisation. 80 percent of the survey sample told AIG they found it difficult to keep pace with the subject because it is evolving so quickly while 69 percent believe the risk to reputation from a cyber-attack is greater than the financial risk. AIG Insurance New Zealand Limited’s CEO, Cris Knell, says that the country ranked fourth in the world for cybercrime. Ian Pollard, AIG vice president of regional professional liabilities for Asia Pacific says: “The financial cost of cyberattacks can be enormous and includes lost productivity, legal intervention, lost intellectual property, and reputational damage, coupled with the loss of customer confidence”. In addition to news and real-time information about threats, the app includes a calculator to help estimate the cost of breaches, an events calendar and a glossary covernote of cyber terms. ...for insurance professionals

4 covernote | June 2013

Photo: thinkstockphotos.com

AIG launches cyber risk management app

insured.

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NEWS & ANALYSIS

NZI updates website

to refer business N

ZI has updated its website to match the company’s current branding. The www.nzi.co.nz site has a new look and feel along with two new features: a contents calculator and a tool to help customers find a broker. The company says the focus is on referring customers to their broker if they have one or helping them find a new one via the tool. The ‘find a broker’ tool includes an interactive Google map showing a broker’s location. There is space to add broker logos and a few words summarising the business. This can be used to help direct customers who are searching for brokers specialising in particular types of cover. Donna Williams, NZI’s marketing and communications manager says her company wanted to reflect its relationship with its broker network. She says: “You’ll notice the content remains high level and

doesn’t delve into technical detail, which is deliberate, as that’s the point where brokers can add value.” Further changes are on the way which will bring more functionality and improved usability along with a new look and feel for the broker covernote portal. ...for insurance professionals

Global insurance rates climbing slowly: Marsh

A million new policies this year

6 covernote | June 2013

Photo: thinkstockphotos.com

igures released in Marsh’s latest Global Insurance Market Quarterly Briefing show global insurance rates are climbing even if the pace is slow. In the first quarter of 2013, Marsh reports most US insurance lines saw rate increases of between two and four percent. This is balanced by a decline of around one percent in markets outside the US. The first quarter saw the Marsh Risk Management Global Insurance Index inch up from 101.2 to 101.3. The index measures the rate of change in activity over the preceding four quarters. This was the fifth consecutive quarterly rise in the index which was established with a base of 100.0 in the second quarter of 2012. Marsh says overall rates renewed with an increase of 0.3 percent in the first quarter of 2013. This follows an increase of 1.2 percent in the fourth quarter of 2012. Property rates are down slightly while financial and

professional product lines increased by 0.8 percent on revenue and 0.7 percent on casualty insurance. Although the rise is small, Marsh says the underlying trend sees strong capacity and increased support for business among global insurers for both catastrophe and noncovernote catastrophe exposed property risks. ...for insurance professionals

ew Zealanders intend to buy more than a million new insurance policies over the next 12 months, according to a survey from polling company, Horizon Research.The research says customers will also increase their cover on 695,000 existing policies and cancel 94,000 policies. Horizon surveyed 2,103 New Zealand adults in March of this year, discovering that there are significant market opportunities for the industry to improve sales and retain customers. Grant McInman of Horizon says the survey’s findings underline earlier reports showing the industry is recovering from recession.The Financial Services Council’s quarterly risk measure showed premiums rose $120 million last year to reach a total of $1.96 billion. The main growth potential is in home and contents insurance with 194,000 people intending to buy. Closely behind that, 188,000 covernote people intend to purchase vehicle cover. ...for insurance professionals

NEWS & ANALYSIS

Fraud adds risk to China business

ne of the risks facing companies doing business in China is falling foul of corruption and bribery laws in their home countries. That’s the message from the US risk management association conference that took place in Los Angles in May. Experts told delegates that corruption is endemic in China and that means they have to face the risks. Lawyer James Chapman says: “Sometimes it is opportunistic, sometimes it is more systemic. There is a cultural mindset there that makes people feel that there are no consequences for their decisions and actions, especially when they are taking advantage of foreigners.” Often the problems are with business partners, including joint ventures with local firms. The conference was also told local employees can be a problem. Chapman told the conference a particular risk is allowing a locally-hired general manager to select the financial manager – this increases the risk of fraud collusion. Chapman says people doing business in China often come up against practices that would be frowned on at home – but are required. For example, gift-giving is normal and there are often requests for ‘training trips’ which are nothing more than disguised tourism. Other risks in China include having intellectual property stolen and, for US companies, a negative impact on relations with the government. Another issue is insurance – coverage can only be purchased from a company that is formally established in the country. On the other hand, Chinese insurers tend to offer better rates because of covernote the intense competition. ...for insurance professionals

INDUSTRY VERSION

Photo: thinkstockphotos.com

Rothbury and Steadfast connect to create a powerful new network Rothbury and Steadfast are joining to form Australasia’s largest insurance broker network with:

The connection extends Steadfast to New Zealand and will give the Rothbury team unparalleled access to:

• • • •

• Client service tools (e.g. Broker Assist) • Professional development (e.g. Steadfast Campus online learning and Steadfast Convention, Australasia’s biggest general insurance conference) • Resources (e.g. tailored product packages).

Over 420 insurance broker offices 60+ insurance partners More than a million business clients Approximately AU$4.2 billion in premiums.

Rothbury’s name, our people, and our local service will remain unchanged – as will our commitment to protect what matters to our clients’ businesses.

Learn more at www.rothbury.co.nz and www.steadfast.com.au June 2013 | covernote

NEWS & ANALYSIS

Breeding them young Y

oung Insurance Professionals Australia and New Zealand (YIPS) is an innovative new group for young professionals in the industry focused on career development and business networking. Started in Melbourne in late 2010, the group grew from 150 to 1000 members in less than two years across Sydney, Brisbane and Perth with overall members are now sitting at 1500. Thursday July 4, 2013 will see the official launch of the New Zealand branch at a much-anticipated event in Auckland. The mission of YIPs is simple: to create and foster an inclusive, dynamic community and network of insurance professionals, including those new to the industry, those establishing themselves in the industry, potential entrants to the industry and those who want to reinvest in the future of the industry. Formed by a dynamic group of passionate industry professionals, the association aims to provide the platform and opportunities for young insurance professionals to build enduring, genuine professional relationships – attracting, developing and retaining young professionals within the New Zealand and Australian insurance industry. “YIPs was formed to provide career development and other

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YOU’RE INVITED…

s a younger insurance professional, we invite you to save the date of 4 July, 2013 to celebrate the highly-anticipated launch of YIPs’ New Zealand branch. Where: Tabac Bar, Mills Lane (behind the Stamford Plaza) When: From 5:30pm, Thursday 4 July, 2013. Earlybird registrations for this event will open in a few days on www.yips.org.nz exclusively for YIPs members, so stay tuned and make sure your contact details are current. Ticket numbers are limited. There will be simultaneous events held in both Melbourne and covernote Sydney, with events in Brisbane and Perth to follow. ...for insurance professionals

resources, which are not provided by any other industry organisations, to young insurance professionals,” says Myriam Mitchell, associate at Fortune Manning. “This includes especially the content of the YIPs website which was developed from scratch, and which provides information to people who are considering changing careers to enter the insurance industry or are new to the industry, as well as resources for those already in the industry who are looking at what their careers can achieve.” It’s a popular innovation too, with latest figures showing that the website has received an outstanding 37,000 page views since its launch in May 2012. “We feel this reflects the high level of interest levels and engagement with our target market,” says Myriam. YIPs also have a very strong social media presence on Linkedin, Facebook, Twitter and Google+. Completely independent and run by young professionals, for young professionals, YIPs organises business networking functions, and hosts events run jointly with other relevant industry bodies like the Institute of Chartered Accountants and the Association of Financial Advisors’ GenXT programme. The networking potential here is huge, as attendees from those organisations provide tremendous direct business opportunities and potential referral sources for brokers in particular. With more events aimed specifically at young professionals on the YIPS calendar than any other industry organisation, many YIPs events have sold out and more are well attended with over 200 registrations each time. Currently YIPs are planning CIP/CPD educational seminar events for the second half of 2013 which will address non-mainstream industry topics identified as being of interest to our members. Always forward focused, YIPs are also looking for Australasian sponsors on an annual basis, as well as for specific events, including the New Zealand launch event, which is set to take place early July. Contact Myriam directly via 09 915 2960 for an outline of benefits offered to sponsors. For more information, visit the comprehensive website: covernote www.yips.org.nz ...for insurance professionals

8 covernote | June 2013

NEWS & ANALYSIS

NZI’s heavy vehicle portfolio just got a whole lot heavier

ZI has taken over the New Zealand customer base of transport insurance specialist NTI and, with this, is building up their capability in the commercial motor market. The introduction of a dedicated motor claims department means that NZI provides a onestop shop and an all-encompassing value proposition for brokers’ heavy vehicle clients. “We understand that clients’ needs in the heavy vehicle sector are changing and we need to adapt to this”, Dion Herdson, NZI’s national commercial motor portfolio manager. “Fleet operators are more aware than ever of risk and they understand the need to partner with an insurer that can provide more value than just a policy. Being off the road unexpectedly, in such a competitive environment, can be the difference between business survival, or not, and accident prevention is becoming more of a focus.” Bringing expertise in-house

To help expand the capability of its assessing team, NZI retained the services of NTI’s specialist heavy vehicle assessor, Phil Duck, to carry out assessments that involve primarily heavy trucks and machinery.

Phil has been around heavy vehicles and machinery all his life. Phil started assessing heavy motor and plant for GAB Robbins in 2006 before moving to NTI two years later as their nationwide repair manager for heavy motor and plant. Over the years Phil has developed close relationships with clients, repairers, parts suppliers, and brokers alike. The heavy vehicle losses Phil sees and deals with are everything from bent bumpers through to major truck and plant rollovers. He is able to assess all types of heavy commercial vehicles, as well as plant and forestry equipment. He sees the most important aspect in any commercial motor or plant loss is minimising the downtime, or time off the road. “To have the in-house capability of a specialist team that understands the industry is a real and tangible addition to NZI’s already strong proposition,” added Dion. “Many of our brokers who write commercial motor risks will know Phil and both the experience he brings to assessing, as well as the importance he places of building and maintaining great relationships.” Phil is currently based in Takapuna, however he has the ability to covernote deal with claims on a nationwide basis. ...for insurance professionals

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NEWS & ANALYSIS

Photo: thinkstockphotos.com

KPMG calls for

global regulatory reform S

ignificant regulatory and commercial change is on the way for the insurance sector according to KPMG International. In a report, Evolving Insurance Regulation 2013 the company sets out the regulatory change agenda saying there’s a need for increased growth, profitability, capital returns and cost reductions. In the report, KPMG looks at the current consultation on financial resolution for global insurers describing it as an important step towards global convergence. Jeremy Anderson, KPMG’s chairman, Global Financial Services says: “The current consultation on systemic risk is at a crucial stage for global insurance groups as the international policymakers consider the position regarding systemic risk and the possibility of living wills for insurers. This

10 covernote | June 2013

may be the last chance for the insurance sector to get a position on insurance resolution which is right for the insurance sector ahead of expected international proposals.” Anderson wants to see a global framework developed between insurance supervisors. He warns this framework will have many knockon effects to existing supervisory structures. Rob Curtis, KPMG’s UK-based Global Insurance Regulatory lead, says: “The International Association of Insurance Supervisors (IAIS) is working to identify those insurers whose distress or disorderly failure would cause significant disruption to the global financial system or economic activity.” “KPMG’s submissions to the EC and IAIS urge them to consider an integrated global approach to insolvency structures

and requirements. We called on the EC to continue taking part in global activities and not develop any EU-specific requirements that might constrain insurers from operating internationally. And we encouraged the IAIS to pursue the creation of a globally accepted covernote common framework, or ComFrame.” ...for insurance professionals

AIG | OUT & ABOUT

1 Liam Pomfret, Lee Gornall and Mark Koschak (AON) with hostess Felicity. 2 Courtney Wakelin (Senior Underwriter, SME, AIG) and Peter Hailes (Crombie Lockwood) with the Rugby World Cup. 3 Ryan Clark (Manager, Financial Lines, AIG) with Kate Fryer (Marsh). 4 Stephen Price and John Kimber (AON) with Murray Snell (JLT). 5 Kim-Maree Young (Marsh), Luke Scott (Senior Underwriter, Property & Energy, AIG), Fraser Walker (Senior Underwriter, Marine, AIG), Claire Mitchell (Marsh), Grant Sheppard (Regional Manager, Marine, AIG), John Sabalis (Claims Manager, AIG). 6 AIG Senior Executives with Prime Minister John Key and All Black Richie McCaw ahead of the first All Blacks vs France test in Auckland. 7 Prime Minister John Key and Cris Knell CEO, AIG Insurance New Zealand Limited.

AIG’s pre-match warm-up

he All Blacks came up trumps for AIG in their first match on home turf since AIG’s major sponsorship was announced last October – winning their first of three tests against France. AIG celebrated the occasion in fine style, inviting key brokers, friends and VIPs – including the Prime Minister, Sir Stephen Tindall and local MP and Youth Minister Nikki Kaye – to a pre-match function at AIG’s New Zealand headquarters in Shortland St, Auckland. All Blacks Tony Woodcock, Stephen Luatua and Matt Todd greeted guests on arrival, and hostesses were on hand to ensure that every guest had a great time, rugby fan or not. Former World Cup winning All Black AJ Whetton entertained guests as MC at the function, with speeches from AIG Insurance New Zealand Limited CEO, Cris Knell and the Right Honourable John Key preceding a Q&A with Richie McCaw. Cris Knell, CEO, AIG Insurance New Zealand Limited, told guests of AIG’s global search for a sponsorship that matched AIG’s values, and was a good brand alignment for AIG as it re-established itself as one of the world’s largest insurance companies. He said the sponsorship offered “unmatched global profile”. Prime Minister John Key commented that he thought the sponsorship was a very smart move on AIG’s part. And assembled guests were relieved to hear from Richie McCaw, who expects to be match-fit and playing again – firstly with his home team – in a few weeks. McCaw spoke at length about his sabbatical, prompting Whetton to joke about the coach’s wisdom in allowing his star player on the ski slopes. Guests were then bussed straight to Eden Park to watch the match from the stand – treated to drinks and pies (a night at the footie wouldn’t be the same without them) and blankets to ward off the chill. At the conclusion of the game, guests continued on to Britomart’s 1885 for post match celebrations.

4 5

7 June 2013 | covernote

OUT & ABOUT | NZI

NZI Top Broker Conference

5 2

7 4 1 The NZI executive team celebrating Top Brokers’ 10th Anniversary. 2 From left to right; Rex Madden, Helen Crick, David Crick, Mike Garner, Robyn Garner and Adrienne Madden. 3 Karl Armstrong welcomes guests and introduces the conference theme. 4 MC Andrew May facilitates the audience’s questions to the panel. Left to right; Jacki Johnson, Karl Armstrong and Nick Hawkins. 5 From left to right; Nick Hawkins (IAG New Zealand CFO), Jacki Johnson (IAD New Zealand CEO), Karl Armstrong (Executive General Manager NZI). 6 Learning some practical tips for getting the stress/recovery balance right in order to be 100% on the job. 7 Brokers spending some quality time with Steve Price. 8 Listening to Kim Phuc’s story of survival through the Vietnam War.

12 covernote | June 2013

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FEATURE | Marine Insurance

By John McKelvie, Vero Marine, Underwriting & Risk Manager

INSURING THE FUTURE OF A KIWI ICON

Photos: thinkstockphotos.com

espri, New Zealand’s single desk kiwifruit exporter is one of Vero Marine’s largest export clients. Exporting fresh, chilled kiwifruit from New Zealand to overseas markets takes considerable organisation to achieve efficiencies of scale. Zespri is involved in all aspects, from working alongside Plant and Food Research (principally at their Te Puke location), to marketing ripe kiwifruit in Asia and Europe. Zespri often invites insurers to Mount Maunganui for a glimpse at their diverse operation. Because of our close working relationship with Zespri’s insurance and shipping teams through brokers, Aon, Vero Marine – as marine insurers – takes particular interest in both the fruit, the conditioning of the harvest in coolstores and the transportation. Often our visits coincide with vessel loadings – Zespri’s volumes make it economic to ship kiwifruit in bulk on refrigeration ships (known as ‘reefers’). These ships are usually painted white to reflect heat and include holds that have decks with circulating cold air. This year however, we visited the Port of Tauranga (PoT), to see the new developments at Sulphur Point. With the increase in the size of container ships, PoT will quite likely become the North Island’s deep-water port with dredging permits now through the Resource Management Act. Zespri and the New Zealand Government both contribute to a large-scale and intense research programme at Plant & Food Research and horticulturalists are excited to be working in such a new field, which is only beginning its journey to commercialisation and standardisation. By comparison, apples, pears and oranges have been cultivated for hundreds of years, and now have little reference back to their original forms. Zespri and Plant & Food Research are selectively breeding to achieve desired characteristics, such as taste and tolerance against diseases. Zespri also needs fruit cultivars that travel and store well. With the advent of PSA reaching New Zealand, the 2013 season volume is slightly down. PSA is a common bacterial canker disease with the kiwifruit

14 covernote | June 2013

strain prevalent in most kiwifruit-growing regions of the world. The disease affects vine productivity by causing damage to the fruit canes and, if left untreated, may eventually lead to vine collapse. PSA has had the greatest impact on Gold ‘Hort16A’ kiwifruit, while our ‘traditional’ Hayward Green and some of the new Gold3 and Sweet Green cultivars are more tolerant. To see how some of the orchards were faring, we went to Te Puke, New Zealand’s kiwifruit capital. There we saw an orchard of the newer Gold3 and Hayward. Showing more tolerance to PSA, Gold3 is the key plank in the industry’s PSA recovery pathway. Another advantage Gold3 has over Hort16A is that it doesn’t have a ‘beak’ at the base of the fruit like Hort16A, which can cause puncture damage to other fruit in the sorting and packing process. During our visit we saw the early cultivars of tiny green, bean-sized kiwifruit – ones that may eventually have skin that’s edible – and tasted a kiwifruit that was as hot as a red chilli. According to one of the scientists, this variety makes brilliant chutney! These cultivars are created through classic plant breeding, selectively pollinating female flowers with male pollen to develop particular characteristics. Vero Marine leads the Zespri marine insurance programme, and has been involved since the mid-2000’s, soon after the introduction of Zespri Gold ‘Hort16a’. Since then we have been involved with both the main New Zealand and European export programmes, via refrigerated ships and containerised shipments to Asia and Europe. We also lead the export programme for Zespri overseas, for Italian and French kiwifruit, as Zespri maintains kiwifruit’s profile in the main supermarket chains all year around. We’re thrilled to also be involved in the insurance protecting the export of their new varietals for overseas market tests and transport technique experiments, which may be lower volume but involve higher risk. At Vero, we get involved in understanding our clients’ businesses and threats. Because of this, we’re ideally placed to provide Zespri and other marine clients with informed insurance and risk management solutions, specific to thecovernote industry. ...for insurance professionals

FEATURE | Marine Insurance

A GLOBAL PERSPECTIVE

s a world leader in insurance, AIG knows more than a thing or two about the marine industry. It is their opinion that, in an ever more complex world, an established Insurer with a trusted global network of claims examiners, assessors, and surveyors, who can react quickly on the ground – in almost any jurisdiction in the world – is essential. Taking marine insurance to the world Encompassing various classes of business, major marine insurance protections – by nature – cover global business and international trade. Because marine insurance policies typically cover exposures that transcend different borders, customs, languages, and local practices, it’s important for a marine insurer to have a truly global perspective, together with local knowledge. This unique blend ensures that risks are fully appreciated and carries the implicit understanding that business conducted in one territory raises very different issues to business conducted in another. The by-product of this knowledge facilitates tailored customer offerings that blend global risks and protections, not just New Zealand wide exposures. Clarity drives the customer experience Keeping pace with changing exposures and learning from best practice, across a wide range of countries, is tough to achieve but ultimately results in higher standards of customer service. For example, AIG believe that creating more ‘user-friendly’ documentation, aligned to more transparent coverage, is essential. Understanding the coverage and also appreciating what is not covered in a marine contract will assist all parties in the event of a loss. Having access to expert guidance with broad experience is a key enabler to a better customer experience. Often we hear that marine underwriters are asked to explain how a policy term will affect their Assured – but in plain English. Indeed, common

16 covernote | June 2013

FROM AIG

exclusions from Marine Cargo policies can sometimes seem vague and cause confusion for an Assured. Even some brokers voice concerns about the complexity of the language and the need to ”walk through” a difficult explanation, to ensure the their customers understand the product more fully. One such topical example is that of ‘Inherent Vice’, which often causes misunderstandings and can potentially result in post-loss conflict between the Insurer and their Assured. There are numerous other well-known examples, but it’s clear that any strategies that can reduce confusion will have a positive outcome. Our challenge is to take the mystique out of the language and ensure that transparency and clarity are at the forefront of our customer experience. The impact of major marine events Major events, like the recent Rena disaster, have made marine insurance buyers more aware of the perils of consequential and financial losses to their businesses. This has led to a reassessment by many as they recognise gaps in their existing cover and the potential to literally be left ‘high and dry’. Acknowledging this and responding to new exposures is the kind of innovation that AIG thrives on. In response, AIG are promoting extensions on their marine covers to ‘patch up’ gaps that could result in a business interruption situation. These extensions offer more comprehensive protection as they can cover a financial loss due to a reduction in turnover and/or an increase in operational costs (costs of working). This cover may be triggered by the loss or damage to goods in transit, or even upon experiencing a delay in the delivery of their goods. Whilst these protections are not new and have been available in the past, the advent of the recent Rena loss and the New Zealand meat left sitting on Chinese quaysides, highlights why these kinds of protection are now sought after and taken morecovernote seriously. ...for insurance professionals

Photos: thinkstockphotos.com

By Fraser Walker, AIG Marine, Senior Underwriter

Move forward with confidence.

Wherever your freight goes, we go further As more goods move across sea, land or international borders in todayâ&#x20AC;&#x2122;s global marketplace, the risk of theft or damage continues to rise. AIG understands the harm that failure to deliver can do to your business relationships. We combine local expertise and knowledge with the quality and responsiveness of our unrivalled international network to reduce trade and transportation risks and minimise costly delays, ensuring the best possible protection for your assets and business reputation. Learn more at www.AIG.co.nz

Bring on tomorrow Insurance products and services are provided by member companies of American International Group Inc. New Zealand insurance products and services are underwritten by AIG Insurance New Zealand Limited. For additional information, please visit our website at www.aig.co.nz.

FEATURE | Marine Insurance

MARINE INSURANCE

…IT’S NOT JUST ABOUT BOATS

By Mark Roelink, NZI Marine Manager

arine insurance is a multi-disciplinary, multi-layered business with product classes varying from the recreational realm of Pleasurecraft to Cargo, Commercial Hull, Marine Liability and Carriers Liability – and within each class lies an array of risks with their own characteristics. For example, the requirements for milk powder exported to China by sea are markedly different to those of cut flowers imported from Brazil. Cargo insurance carries a greater level of exposure than other classes. Along with the risks faced on land (such as fire and accidental damage), marine cargo is exposed to all the perils of the sea, and additional liability (such as General Average and Salvage). Implications of technological advances The implications of advances in container ship technology and construction are a major issue for marine insurers. Vessels being built today are getting larger and more energy efficient, and can provide better economies of scale. The CMA CGM Marco Polo, currently the largest vessel in the world, can carry the equivalent of 16,020 twenty-foot containers. However, this will soon be superseded by the Triple-E Class, holding up to 18,000 twenty-foot containers. Although these vessels currently ship between Europe and China, the upward trend in vessel size will have an impact on the New Zealand marine insurance industry. Our ports can only take vessels with about 5000 twentyfoot container equivalents, but Tauranga has started expansion plans to allow vessels up to 8000. If these larger vessels can’t come into New Zealand ports, they will need to ‘hub’ through Australian ports. This increases the accumulation risk, with more loading and unloading of stock, and stock sitting in storage in ports and at sea for longer. Chilled and temperature-sensitive products will be particularly vulnerable. International politics, sanctions, trade disputes or documentation issues, demonstrated by the recent entry refusal of New Zealand meat into China, can throw up other unique challenges also. The impact of major events on marine insurance We’ve experienced a major marine event first-hand in New Zealand waters recently, with the Rena disaster off the Tauranga coast in 2011. The container ship’s grounding was one of our worst maritime losses. Overall estimated losses for marine insurers worldwide are in the region of US$400 million and will undoubtedly result in increased reinsurance costs for New Zealand. Aside from the environmental damage and clean-up cost, New Zealand exporters have experienced significant economic loss. In addition to loss of, or damage to, cargo on board, exporters were also exposed to potential liability costs in the form of General Average and Salvage charges.

18 covernote | June 2013

Faced with a maritime loss of this size and complexity, exporters need to understand their rights, responsibilities and exposure to risk. Issues raised by the Rena incident included: • Determining whether exporters or importers had insurable interest at time of loss • The rights of unpaid exporters where risk had transferred to the buyer before loss • Constructive total loss and abandonment of voyage • Liability for General Average (if declared) and Salvage contributions • Signing of salvage guarantees • Removal of debris costs, and on forwarding cost Keeping up with industry issues Staying on top of the wave of marine industry development and major issues is crucial. Marine underwriters with the required knowledge and broad experience are hard to come by, so it’s essential we invest a lot in our people. At NZI Marine, staff undertake an agreed development programme., the academic aspects of which involve training both internally and through the Maritime School of New Zealand and ANZIFF. Practical experience includes visiting vessels and ports, touring client operations and attending surveys. NZI Marine offers CPD-rated training modules to brokers, ranging from an introduction to Cargo insurance to specific topics such as Incoterms and case studies like the Rena. Brett Down, Tauranga branch director at Crombie Lockwood, says: “Unlike property for example, most brokers are not touching marine insurance on a day-to-day basis. In the wake of Rena, NZI has run several in-house training sessions for us, which have really assisted with keeping our people on top of the marine game.” If brokers are interested in attending a CPD-rated training session, they should contact their NZI Marine account manager. Brokers are also supported by our tripartite approach, where we get in front of clients, talk to them and take the opportunity to learn about their business. This helps us understand all of their marine insurance requirements and offer the best solution, as well as assisting brokers on those complex jobs. At NZI we recognise that Marine is an international class of business. Any change to standard wordings (e.g. Institute Clauses) or new legal conventions such as the Rotterdam Rules has potential impact on our clients, so we work hard to keep up to date with developments. We play an active role in the Insurance Council of New Zealand’s Marine Committee and attend various seminars and conferences through the Marine Law Association of NZ and Australia and the International Union of Marine Insurance. Working closely with NZI’s branch network, allows us to provide a fully integrated approach and see the bigger picture in terms of the clients’ needs, meaning we can offer insurance solutions across all lines ofcovernote business. ...for insurance professionals

ADVERTORIAL

NEW FACES AT CLUB MARINE NZ

ith Club Marine New Zealand manager, Emily Malthus, now on maternity leave, Brent Denny has been appointed manager in the secondment role. Denny’s previous role as business development manager (BDM) with Club Marine’s Auckland office for the last two years makes him ideally suited for this leading position. “My aim is to carry on Emily’s good work and continue to develop Club Marine’s relationship with our many and varied intermediaries, while continuing to grow Club Marine in New Zealand to be the leading pleasurecraft insurer in the country,” said Denny. Coming onboard in the role of Club Marine New Zealand BDM now is Ryan Edwards. Edwards’ previous roles within Club Marine’s parent company, Allianz, have been numbered, including a stint as a Financial Institutions BDM based in Adelaide, Australia, before spending the past 18 months in Allianz’s Broker and Agency division in New Zealand. “While I’m relatively new to the boating scene, I am hugely passionate about the great outdoors and look forward to working with Club Marine and the wider pleasurecraft community – and I can’t wait to get out on the water and enjoy all that the NZ boating scene has to offer,” said Edwards.

Left to right: Brent Denny and Ryan Edwards.

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28/05/13 9:43 AM

June 2013 | covernote

COVER STORY | Technology

HOW

BIG DATA CHANGES INSURANCE

by Bill Bennett

Photo: thinkstockphotos.com

20 covernote | June 2013

Technology | COVER STORY

Photo: thinkstockphotos.com

oday’s computers are getting much better at spotting insurance fraud. In many cases they can now do a better job than expert humans. This has come about not so much because computers are suddenly smarter but because of new predictive techniques that pull in huge amounts of data from a wide range of sources to spot patterns and reach better conclusions. Collectively these techniques go by the name ‘big data’; a technology commonly used by retailers and consumer companies to predict how customers will behave, in some cases with spooky accuracy. Now these tools are being used by insurance companies to spot fraudulent claims. Insurers have long used business rules to help detect suspicious claims. Big data takes this a step further. It can look at patterns in historical claims and find out more about the claimant – for example is he or she a known close associate of someone who previously made a similar claim? Or it may be able to determine conditions described in a claim were not present at the time of an accident. But perhaps big data’s greatest contribution is its ability to make predictions. Predictions, insights The words prediction and insight come up a lot when talking about big data. Big data encompasses a set of technologies that are changing the way the world turns information into knowledge. Like many ideas that come from the technology industry, big data is part marketing term, part buzz-word and part shorthand for a series of trends that pave the way to a new understanding of the world. It’s a better way of making decisions. Nate Silver, a blogger working for the New York Times famously used big data to correctly predict Barack Obama would win the

US presidential election when many opinion polls pointed in the opposite direction. Physicists at CERN used big data to process results from the Large Hadron Collider to determine that they found the missing Higgs Boson. And companies regularly use big data to analyse huge piles of seemingly useless data to optimise their supply chains, find new opportunities and shore up customer relationships. In the past, managing and storing data was expensive, so much of it was thrown away. And it was difficult to combine information locked up in corporate computer systems with data from other sources. Things are changing fast. Today, it costs about $20 to store a terabyte – that’s 1,000 GB, roughly the amount of storage in a laptop. By 2020, it will cost the price of a latte, say $5, to store a petabyte of data – that’s a million gigabytes. Commodity hardware makes big data possible; software like Hadoop, a new kind of database that can process streams of data in real time – makes it practical. Think of big data as a way of sifting through hundreds of haystacks to find golden needles. Make that sifting quickly and repeatedly through your own haystacks and the publicly available ones in your neighbourhood, to find more and more golden needles before a competitor gets there. Beyond everyday data Purists define big data in terms of dealing with collections of data that are so large and complex they can’t be manipulated using everyday database management software and analytical tools. One definition says the term applies to any data project that takes computing professionals out of their comfort zone. But these are not the only definitions. Wellington-based Deloitte partner Thorsten Engel emphasises big data isn’t one single, simple idea. He says: “It is a bundle of concepts. June 2013 | covernote

COVER STORY | Technology

BIG DATA MEANS SMARTER NETWORK SECURITY

It usually refers to sifting through a large number of data points and coming up with non-obvious conclusions.” Central to this is the idea of “jumbling disparate data sets together to get new insights.” Matt Lythe who manages Eagle Technology’s Graphical Information Systems (GIS) business, says big data is: “A way to access intelligence from a plethora of information.” Insurance uses Engel offers examples of how Deloitte Analytics used big data in insurance projects. In one case a client wanted to move from zone level pricing to property level for its home and motor insurance products. This meant looking at data like the proximity to natural risks, transport infrastructure and points of interest which could mean things such as social risk. Another Deloitte client used big data to examine gaps and opportunities in its existing risk models. The solution saw the client reduce their insurance exposure and adverse selection from customers. A third client used big data to validate its pricing model finding products that were significantly over or under priced.

Photo: thinkstockphotos.com

This year’s model Not surprisingly big data is on everyone’s lips. Gartner, an American technology trend research company, says after a few years of experimentation and early-adopter success, 2013 is the year when large organisations around the world will invest in big data. The analyst firm says 42% of the IT leaders it interviewed either already have big data projects or will have them by the end of the year. It’s not just large companies though. You don’t need to be big to use big data techniques, you just need access to vast amounts of digital information. And it doesn’t need to be your information. Some of the 22 covernote | June 2013

here’s more to big data than commercial insights. RSA general manager Shaun McLagan says his company is using big data techniques to make datacentres and online commerce safer. McLagan says, historically, computer security has been all about imposing a series of controls at various points. He says: “That worked fine in the past when everything moved Shaun McLagan. at a slower pace. But the drive towards putting more and more online has changed the dynamics. Now, instead of using controls to look for security problems, we’re using a big data approach.” This works, in part, because big data techniques allow security experts to anticipate where systems will be attacked and to recognise the behaviour patterns that indicate something untoward is going on. McLagan uses the analogy of a team of robbers ‘casing the joint’ before a bank raid: “Just as they’ll go into the bank many times before the raid, criminals will show patterns of activity before hitting an online target.” Big data is both an opportunity and a threat to systems security specialists. McLagan says while his company’s software can deal with security, there is always the possibility of criminals using big data techniques to collect data they can then use to crack passwords, for instance.

solutions Deloitte has been involved in can listen in to millions of social media messages on services like Twitter and Facebook to pick up clues about disgruntled customers thinking of moving their accounts. That information is freely available to everyone. Gen-i project marketing manager of networked ICT products, David Reiss, says companies can get big data results by using their existing tools in innovative ways. Reiss says the techniques, tools and thinking used to deal with huge datasets can all scale down to a level where they are useful for mainstream New Zealand businesses. Like most other local technology specialists, Reiss is keen to emphasise big data is as much a state of mind as it is about petabytes or exabytes – that’s a billion gigabytes. He says even smaller businesses need to make sense of their data. Beyond business intelligence In some ways big data resembles earlier ways of sifting information from raw data. It uses some ideas from Business Intelligence (BI),

COVER STORY | Technology

VOLUME, VELOCITY, VARIETY

analytics and data-mining, but the way it employs those ideas and the information it delivers make for a radical departure. Gen-I’s Reiss says there’s an important way big data differs from established analytical approaches such as BI. He says typically, business intelligence develops a specific report to order, usually for a CEO or senior manager. In other words, BI sets out with a clear agenda to find something specific. But often executives don’t know what they will find when they employ big data techniques – it often uncovers unexpected insights. To illustrate this Reiss talks of a project his company ran with a logistics organisation that installed a fleet-management system in its trucks. Once the system collected enough data the information was sifted for those un-obvious golden nuggets. One discovery was that the organisation’s trucks spent a large part of their time off the road network. This meant the organisation could pay lower road user charges based on the time actually spent on the national roads rather 24 covernote | June 2013

Photo: thinkstockphotos.com

en-i project marketing manager of networked ICT products, David Reiss says three characteristics separate big data from everyday data: Volume: Many New Zealand companies collect large amounts of data that are difficult to store and move using everyday tools. He says it isn’t just data owned or generated by the company. The company can buy databases from external agencies and sift through social media records and similar widely available online material. Velocity: The rate at which data is generated and captured is important. Companies need timely information. Real time or near-real time processing means a marketing campaign can be changed if, for example, there’s a negative response to an early advertisement. It’s also important to have up-to-date competitive information. Variety: Big data typically pulls data from structured and unstructured sources; there can be tweets, blog posts, online comments and video as well as conventional relational databases. Increasingly, data is collected from connected devices such as smartphones, smart electricity meters or embedded sensors. All of these definitions suggest big data is less about the technologies and tools used to process large amounts of data and more about the approach to analysing the data to understand behaviours and to make better forecasts. Reiss says: “We get a lot of questions from customers about what big data is, but most of the conversations we have are more about what our clients are trying to achieve. The three Vs are widely understood in big data circles. Reiss likes to add a fourth V: veracity. He says there’s an issue of trusting the collected data: “One-in-three business leaders don’t trust the information they are given.” Traditional databases work on the assumption that all the data is clean and precise. When you throw social media feeds and other unstructured data into the mix, there’s a question mark over some of the data.

David Reiss.

than on dirt tracks – an instant but unanticipated financial windfall. Geoff Beynon, country manager for SAS, an analytical software specialist, highlights another difference. He compares BI with looking in the rear view mirror. He says you can do that with big data, but you can also get predictive insights that give you the power to drive a business in new directions. Call me loyal This is what happens with one SAS customer, Loyalty New Zealand, the organisation behind Fly Buys cards. Beynon says the card transaction information picked up by point-of-sale terminals means Loyalty New Zealand has a huge, quickly growing dataset on member behaviour. It uses SAS software to profile, segment and analyse the data to build a complete understanding of customers, so it can make meaningful targeted offers based on what it has learnt about customer behaviour. He jokes this means Fly Buys isn’t going to offer a member a toaster if it knows that person recently purchased one. More seriously he says a pattern of buying paper nappies, baby clothes and high chairs indicates there is a new family member somewhere close to the card-holder. That could be an opportunity to sell more baby products, but there’s also potential to sell appropriate financial services or a getaway-from-it-all weekend break.

Technology | COVER STORY

Beynon says Loyalty New Zealand uses big data so it can make its cards ever more useful to customers. He says it’s important they can see the value in using the card. That way they’ll use the card more. Another SAS customer is the New Zealand Police. Beynon says they use big data analytics “to get a better feel for where crime is happening. This means they can better direct their limited resources to the right places.” He says in the past this resource allocation was left to an officer’s judgement and intuition, but basing decisions on evidence means the Police can do more with less. Time for big data While organisations have dealt with huge amounts of data for decades, big data is very much a creature of the 21st century’s second decade. Gen-i’s Reiss says it is closely linked to the two other big technology trends of our era: cloud computing and mobility. It relies on vast amounts of commoditised computing power and

massive storage arrays – usually tucked away out of sight in remote datacentres and delivered through the cloud. And then there’s the explosive growth in data being generated and collected. IDC, a technology research firm, says the total stock of data in the world is growing at 50% a year. As much new data has been created in the last two years as throughout the entire human history. Much of the data used for big data analysis will be immediately familiar to anyone who has spent any time in industry. But there are new streams of data as well. Big data specialists often work with data pulled from social media networks. They collect tweets from Twitter, Facebook updates and ‘likes’. They also monitor blog posts and feeds from news media. The internet of things Another source of the new information fuelling big data analysis comes from smartphones and tablets as well as remote sensor devices

LOCATION, LOCATION, LOCATION

edge as they compete with overseas online stores who can bypass New Zealand’s GST. Other applications allow wine-growers to look at micro-climates – conditions in one part of a winery may not be the same as in another part – and to deal with the precision placement of fertiliser. Lythe says that GIS systems already deal with huge amounts of data: “Typically, customers Matt Lythe. are using terabytes. With GIS there’s a direct link between more data points and increased accuracy.” As if today’s data volumes are not enough, he says there’s likely to be much more in the future, as farmers and others start working with UAVs – unmanned aerial vehicles or drones. Lythe says a UAV can fly the length of an entire road, capturing it in detail using LIDAR, a laser imaging remote sensing technology that can accurately measure distances.

Photo: thinkstockphotos.com

any of the questions and answers arising from using big data are linked to location. One of the fastest growing areas of big data involves location analytics. Matt Lythe, who manages Eagle Technology’s Graphical Information Systems (GIS), says adding maps to data often makes information understandable. He says: “Geography is a common reference point. You can use maps to look at data in an easily digested way. You can often see patterns and trends much more quickly than just scanning data in a table.” Traditionally geographic information systems have been used by councils, utilities and resource companies to map assets. Now, other organisations are moving to mapping technology thanks, in part, to the data being collected from mobile phones and other digital devices. This means that transactions can be tied to geography and the data then distilled to reveal trends. For example, companies can draw up maps showing the places their customers are most likely to frequent. Lythe says that in the past Eagle sold GIS technology separately from other services: “We don’t do that so much now.” He uses the example of a courier company. In the past, it may have used GIS to optimise routes. With big data now pulling information from traffic systems, the courier company can dynamically change fleet routes and respond better to traffic conditions at different times of the day. If vehicles are moving slowly on, say, Auckland’s Southern Motorway, drivers can be diverted around the hold-up. He says retail is an important potential market for GIS-linked big data. This is being driven by smartphone users signing on for proximal services which allow retailers to know when potential customers are near to a store: “It’s about bringing the digital world to the physical world.” Lythe sees these technologies giving local retailers a fresh

June 2013 | covernote

Photo: thinkstockphotos.com

connected to the cellular or terrestrial phone networks. That’s known in the trade as “the internet of things” and is sometimes referred to as M2M (machine-to-machine) communications. There are sensors in modern cars and public transport vehicles. Courier vans and trucks typically report a variety of information also. Sensors relay information from animals, shipping containers and utility meters. And then there are security devices and CCTV cameras. All of these send a constant stream of information regarding location, movement, vibration, temperature and humidity, as well as video and still photography. Traditional business data – the information stored in relational and transactional databases – is largely structured data. Most of the new streams are what computing professionals call unstructured data. This kind of data doesn’t easily lend itself to analysis with traditional database tools. Unstructured data faces its own set of challenges. It is often fragmented and stored in seemingly unrelated silos. And there is another problem. Not all the automatically collected data is useful, but it keeps on streaming. Often the inbound rubbish data just dilutes the good data. It needs to be sensibly organised, sorted and prioritised before it is handed over to the big data specialists. In the past, unstructured data was often ignored or overlooked because it is harder to make sense of. However, the last few years have seen huge advances in technologies such as pattern recognition, natural language processing and machine learning. All of these require plenty of computer power, but these days that has become a commodity. Pulling knowledge from streams of unstructured data, particularly 26 covernote | June 2013

when unstructured data is mixed with traditional data types, is something that only becomes practical with big data. Cloud computing Reiss says this is where cloud computing fits into the big data picture. He says few organisations possess the computer resources to manage all the processing needed to deal with both types of data: “So they shift to a cloud provider who can handle the load at peak demand.” He says cloud computing isn’t just about dealing with the amount of processing but it can also act in a timely manner: “Big data customers often need to get information in real time.” Deloitte’s Engel says much of the technology used for big data projects is invisible to the people doing the analysis: “Most of the computers used are commodity servers, so is some of the software. However, assembling a tangible big data solution is anything but a commodity skill.” He says orchestrating the data is also challenging. A new breed of specialist is emerging to deal with big data projects and large scale analytics. You’ll hear a variety of job titles including data consultant and data analyst. Engel says the job requires a very rare skill set, which sounds expensive. Big data, big budget? So is big data expensive to use? Engel says: “It can be. Mining companies spend lots of money on expensive diggers to mine gold, but the diggers make them money. A successful big data project can be just as valuable in terms of increased market share or finding ways to earn more money from existing customers.” He says customer retention – a key big data application – does a lot for a

Technology | COVER STORY

company’s profit margins. Engel says his experience working with a multinational corporation in Europe was that for every dollar the organisation spent on understanding its pricing strategy, it recouped $10. Is big data for you? Many large organisations have stayed clear of big data until now because they considered the technology too immature. That’s likely to change now with companies like Intel, IBM, Dell and HP stepping into the market. The other issue to consider before starting a big data project is whether your business has the skills to properly interpret uncovered information, and, if it does, are you able to act on that information quickly enough? People with big data skills are hard to find and are not cheap. A 2011 estimate from consultants McKinsey says the US needs an additional 1.5 million managers with the skills required to understand big data results. Perhaps the first step on your path to big data should involve getting the right skills in place. It’s probably best to avoid stepping into the big data world if you are naturally risk averse. Large-scale projects can involve high implementation costs and there is often no guarantee of worthwhile results. On the other hand, as the technology companies are keen to show, big data has produced stunning results for some early adopters. There’s still plenty of low-hanging fruit waiting to be plucked, some covernote of it sitting in your data archives. ...for insurance professionals

BIG DATA, BIG GOVERNMENT

ig data isn’t just about business. There are government applications too. Deloitte partner Thorsten Engel gives the example of the CCTV footage used in London to monitor thousands of vehicles moving in and out of the city each day. The main database uses number plate recognition to charge drivers who enter or leave central London. This information is also used as input for big data applications run by defence and security organisations, who can track dangerous individuals or locate stolen cars. Engel also talks of: “blending and blurring structured and unstructured data.” During a potentially troublesome demonstration a policing big data system might use structured data from a geographic system to monitor where officers are at any moment while also monitoring messages on the Twitter social media network to see if the crowd is getting angry or frustrated. They would be looking particularly for mentions of violence. This cross-referencing of known, structured data with more nebulous unstructured material is both an advantage and a risk with big data projects. Photo: thinkstockphotos.com

June 2013 | covernote 27

IBANZ Forum | FEATURE

Photos: thinkstockphotos.com

ARE YOU READY FOR A CHALLENGE?

THE 2013

IBANZ FORUM February 2011 saw a powerful earthquake severely damage Christchurch and kill 185 people. It was New Zealand’s most significant disaster in recent times. The earthquake changed the face of Canterbury and has implications for all New Zealanders. It was also the largest insurance event our industry has faced – things will never be the same again.

his year’s IBANZ forum will address the changes to the insurance scene as a result of the Christchurch earthquakes. Today’s clients have a new focus on protection, while insurers and reinsurers have new requirements. Instead of the usual conference format, the event will concentrate on giving brokers the vital information needed to navigate through the postearthquake landscape and thrive in the new environment. The 2013 IBANZ Forum will be held in Christchurch from August 22-23 in a brand new conference facility at the Wigram Air Force Museum. Thursday August 22 will see a full day of forum sessions delivered by experts with first-hand experience of the earthquake and its consequences, while Friday August 23 will afford delegates the opportunity to see the damage with a series of optional field trips. There is also a comprehensive workshop programme throughout.

Roger Sutton, CERA’s chief executive.

June 2013 | covernote

FEATURE | IBANZ Forum

Photo: thinkstockphotos.com

Peter Townsend.

Richard Johnstone.

Keynotes Canterbury Earthquake Recovery Authority (CERA) chief executive, Roger Sutton, will provide the keynote session, talking attendees through what can be learnt from the management of the aftermath. He will share his own learnings and provide a broader view of disaster management and recovery to ensure the best possible outcomes. CERAâ&#x20AC;&#x2122;s mandate is to rebuild Christchurch as a thriving city. Prior to his CERA appointment, Sutton was the CEO of Orion, the Canterbury power company that owns and operates one of the

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Driving Positive Change www.mgua.co.nz

Auckland | Phone: 09 377 4143 | Fax: 09 369 5493 | info@mgua.co.nz Global Transport & Automotive Insurance Solutions Pty Ltd ABN 93 069 048 255 (Incorporated in Australia) trading in New Zealand as Motor & General Underwriting Agency. Motor & General Underwriting Agency acts as the agent of the Insurer, Allianz Australia Insurance Limited ABN 15 000 122 850 (Incorporated in Australia) trading as Allianz New Zealand, Level 1, 152 Fanshawe Street, Auckland 1010.

30 covernote | June 2013

IBANZ Forum | FEATURE

Michael Dunning.

Tony Headland.

largest electricity distribution networks in New Zealand. Peter Townsend, chief executive of the Canterbury Employers’ Chamber of Commerce, will address the business perspective and discuss what businesses want from brokers. The Chamber has feedback from members about broker performance and will reveal what clients will expect from brokers in the future. Townsend has played an active role in earthquake recovery issues in the city. There will also be a legal perspective on the changes to insurance practices from Richard Johnstone, who is a partner at Wynn Williams Lawyers.

Plenary Sessions In The Challenge of Change, a geotech engineer, a valuer and a quantity surveyor will each discuss how their respective areas of expertise have changed since the earthquake. The session will give brokers a chance to learn about the drivers changing the insurance industry and will help them explain to clients why risk management and insurance programmes have changed. There will also be a panel session with key insurers discussing the different business landscape and addressing the ‘new normal’. Another workshop will look at Risk selection and pricing for natural disaster risks. The aim is to give insight for brokers to discuss the changes behind underwriting decisions with clients. The workshop will be led by Vero NZ manager of business insurance, Michael Dunning and Tony Headland, who is the NZ manager of Vero personal insurance. Phil North from Ferret will talk about the importance of document storage and recovery, while Lumley will provide a number of speakers who will discuss the changes to professional indemnity insurance forcovernote brokers. ...for insurance professionals

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June 2013 | covernote

THE FUTURE OF INSURANCE BROKING CEO, David Crawford.

nsurance brokers invest a huge amount of time and money into their IT infrastructure. Over the last decade, brokers have been effectively managing portfolios, ensuring that legal and regulatory requirements are met through automation and focusing on getting better information from their reports, however, there is still a lot of work to be done to ensure that brokers receive maximum value from their IT spend. Having used a number of “off-the-shelf” broking systems, Insurance Advisernet Australia (IAA) set out, several years ago, to develop their own broking system – a system that would actually work for brokers, as opposed to making brokers work for the system. Out of this development came iAdviser, which was subsequently modified to suit New Zealand. The result was iBroker. The backbone of Insurance Advisernet New Zealand’s broking business, iBroker is, first and foremost, a workflow based system. It’s easy to use, can capture a huge amount of relevant data and deals with compliance easily and effectively. “The great thing about iBroker is that it enables consistency of information collection, easy processing of renewals and endorsements and full disclosure of the basis on which the insurance has been arranged to all parties (insurer, insured and broker)”, says Bernie Kane of Meridian General Brokers in Wellington. Using the latest technology and a fresh modern approach, Insurance Advisernet provides users with 24/7 availability and the freedom to work anywhere that there is access to broadband internet. At home, at a client’s premises, overseas or even on the beach, brokers can have access to all of their client data. According to Ben Ruthe of Financial Independence Insurance in Tauranga, “iBroker is a complete document management tool for our business. iBroker provides the range of reporting required, quickly and easily, and is very intuitive. iBroker is accessible online and enables us to access clients’ cover details by smart phone remotely, meaning we can respond to clients’ needs quickly.”

David Crawford, MD of Insurance Advisernet New Zealand says “Our brokers find iBroker easy to use. Many have said that the system is helping them to raise their game with client and risk data collection and storage. The feedback from insurers is that our documentation is the best in the market. We’re thrilled to be able to make significant changes to the back-end ourselves, as opposed to being dependent on a third party IT provider for a lot of this work.”

“OUR BROKERS FIND iBROKER EASY TO USE. MANY HAVE SAID THAT THE SYSTEM IS HELPING THEM TO RAISE THEIR GAME…” Having a good system is only one piece of the puzzle however. Looking to the future there are several other factors that will drive brokers and insurers to search out the very latest technology. The level of competition – Competing solely on price offers no extra value and is ultimately unsustainable. Brokers need to examine their whole delivery model from end-to-end and work out how to better add value for their customers, while reducing their business costs. After all, with no added value, why wouldn’t customers simply find insurance themselves? Customer demand – Technological development in the industry needs to support client requirements, particularly a shift towards self-service and the trend towards enabling customers to do more for themselves. You need only look at banking and travel as examples of encouraging customer self-service for the benefit of the business.

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Smart phone applications will be one of the keys to dealing with the next generation of insurance buyers. Clear decision processes – IT systems for brokers must provide data to support good decision making processes. This data should be compatible with data provided from third party sources for maximum effect. Whilst brokers collect risk based data for clients, there is very little evidence that meaningful information is being collected yet on buying habits, personal preferences and the like. “We have been working behind the scenes, looking forward 5-10 years, shaping our decisions on technology on future projected needs, not current requirements” says Crawford. “However, in the meantime we are making significant investments in technology that help our brokers punch above their weight in the market.” An example of this is the IANZ Extranet, a portal which includes a whole host of tools, information and resources for brokers and their staff. Monthly benchmark data provides meaningful analysis of business trends, while access to an online marketing resource helps brokers focus on some of the key drivers for growth – understanding your customers and how to attract more.

THE FUTURE “We are looking at how we collect more meaningful data about our customers and how we can make it easier for customers to interact with us,” says Crawford. “There are several projects on the go at the moment in this space and we believe it will provide our brokers with a significant technological edge over their competitors in the future.” Already, brokers with iBroker can access client data on their smart phone and even issue confirmation of cover remotely. “We have examples of clients finishing their call with the broker and two minutes later receiving a document from the system for their bank or lawyer – now that is real customer service.” Tomorrow’s customers will want 24/7 access to their own data and the ability to carry out simple tasks themselves. Already small customer interface systems are springing up to support clients in having greater access to the information they need. This has the added bonus of reducing the cost of transacting insurance buying. Improving customer interfaces and moving away from paper is also critical for the future success of intermediaries. “The frictional cost of dealing with a broker, from both a client and an insurer perspective, is still too high and needs to change,” says Crawford. “As an industry I think we produce more paper than we ever did and there is no need for this. The technology is there and people are trying but there are some issues that are blocking significant progress in this area.” In 20 states of the USA, legislation has been passed that allows a driver

JUST AS THERE ARE DRIVERS TO ENCOURAGE INSURERS AND BROKERS TO ADAPT TO THE LATEST TECHNOLOGIES, THERE ARE ALSO ISSUES THAT CAN BLOCK THE DEVELOPMENT AND UPTAKE OF RELEVANT, UP-TO-DATE SYSTEMS, INCLUDING: Complex legacy systems – As insurance product portfolios have developed, legacy systems have been endlessly tweaked in an effort to meet the complexity of today’s needs. These systems have become so complicated and drawn out that extracting useful data or implementing updates becomes time-consuming and effort-intensive. IT relationships – Technical environments tend to become closed off from the wider decision making process. It is often easier to explain the benefits of additional hardware than it is to have an honest conversation about why you should change core platforms. An excess of data – Although a copious amount of data can be produced from legacy systems, much of the time we don’t address the key question; “What will that data be used for?” Decision makers can find themselves drowning in volumes of data that doesn’t answer any specific questions or drive rational progress. A lack of benchmarks – There have been improvements in this area of late but there is still a lack of actionable data from benchmarking. Benchmarks should identify both problems and potential solutions.

to demonstrate that they have car insurance without carrying any paperwork, simply by using their smartphone. This example shows how technology is capable of smoothing out the insurance process. Given that smart card technology can be incorporated in mobile phones, it’s unlikely to be long before things like travel insurance and medical insurance will be accessible with the wave of a phone. Imagine going to hospital and instead of having to remember your card or paperwork, you just hand over your phone and let the hospital handle the rest! The benefits of these options are clear. They save money. They reduce the hassle. They improve productivity. They may even improve work-life balance. They are also clear selling points that appeal either to your clients or when you’re in the market for top talent. The journey to increased customer loyalty and higher profits doesn’t have to be an uphill struggle. iBroker and the IANZ Extranet are both excellent examples of how technology can make it easier for brokers to deal with and attract customers, and IANZ are proud of these systems. “Our technology really appeals to the younger and more progressive insurance brokers”, says Crawford, “and for those who are looking to improve their technology or change systems they need to talk to us. We are not the only solution, just the best!”

CASE SUMMARY | ISO

Home and contents insurance:

don’t let them read between the lines – the importance of walking clients through any changes

The policy versus the schedule At the time Ms C was arranging cover under the policy, the policy schedule included an amendment to the policy which “Includes Landlords contents $10,000 each flat.” The policy schedule did not contain a similar amendment in respect of the LOR. The broker had arranged the policy for Ms C and Ms C stated that she was unaware of any amendment the policy schedule made to the terms of the policy document. The Case Manager acknowledged that the policy schedule amended the landlord contents provision, because it increased Ms 34 covernote | June 2013

C’s cover, entitling her to $10,000 for each one of the flats, individually. Although the landlord contents provision and the LOR provision were similarly worded in the policy document, the landlord contents provision had been amended and the cover increased in the policy schedule, whereas the LOR provision had not been similarly increased. Consequently, the Case Manager believed Ms C was only entitled to one $20,000 limit for the flats, collectively. Moreover, the Case Manager believed that, although Ms C stated she was unaware of any amendment to the policy, because the broker was acting as Ms C’s agent, Ms C was bound by the policy the broker had arranged on her behalf. Was it one or two events? The policy defined “event”, as “any one event or series of events arising from one source or original cause”. The Case Manager believed Ms C would be entitled to two $20,000 limits if two separate “events”, triggering the LOR provision, had occurred. The Case Manager’s research indicated that the February earthquake was an aftershock, so therefore only one “event” under the policy had occurred. Subsequently, Ms C was entitled to only one $20,000 limit under the LOR provision. Ms C believed that, because EQC had made two payments to her, on the basis that the house contained two dwellings, the insurer should do the same. The Case Manager disagreed. Whereas EQC cover is determined by the Earthquake Commission Act 1993, private insurance cover is determined by

Photos: thinkstockphotos.com

Background In March 2009, Ms C arranged insurance for her rental property, consisting of two flats, with X (“the insurer”) through a broker. The policy contained a provision for loss of rent (“the LOR provision”), with a limit of $20,000 for “any event”. In September 2010, an earthquake struck Christchurch, causing damage to Ms C’s rental property. As a result, the tenant in the top flat moved out. Ms C made a claim for the damage and loss of rent from the top flat and the insurer accepted the claim. In February 2011, another earthquake struck Christchurch, causing further damage. As a result, the tenant from the bottom flat moved out. Ms C made a claim for the damage and further loss of rent and, once again, the insurer accepted the claim. In October 2011, the insurer made the final payment to Ms C under the LOR provision, because the claim had reached the $20,000 policy limit. Ms C believed that she was entitled to two separate $20,000 limits under the LOR provision, because the policy contained a landlord contents provision which was similarly worded – providing two separate $10,000 limits, one for each flat.

the terms and conditions of the policy, so a private policy won’t necessarily respond to loss in the same way as EQC cover. The result and learnings In this case, the complaint was not upheld and the Case Manager did not believe that Ms C was entitled to any further payment for loss of rent under the terms and conditions of the policy. As brokers, if the policy schedule contains changes to the policy or additional information which is important for your client to understand, it is essential to bring it to your client’s attention and document the details covernote of any explanation in a file note. ...for insurance professionals

The Insurance & Savings Ombudsman Scheme Inc is an approved dispute resolution scheme which resolves complaints between members of the ISO Scheme and their clients. For more information go to www.iombudsman.org.nz or call 0800 888 202.

FSCL | CASE SUMMARY

Material damage cover:

considering causation and a case for exclusion

The complaint: Two sides of the story AB Limited complained that although the accident occurred while testing was taking place, the water testing was not a cause of the accident and therefore did not contribute to the loss. The insurer claimed that ‘testing’ covered the period from when the pump was connected to cables and lowered into the well until when the pump was disconnected from the cables after removal from the well. It was the insurer’s view that it did not matter at which stage during the process the pump was damaged, because the pump was damaged in connection with testing, and therefore, the exclusion clause applied. The law: Setting the record straight AB Limited argued that the insurer had breached section 11 of the Insurance Law Reform Act 1977, which provides protection in relation to exclusion clauses if the policy holder can prove that the activity

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Background As an irrigation company who owned a number of pumps, AB Limited had material damage cover with their insurance company, (“the insurer”). In June 2012, AB Limited was using one of its pumps at a client’s site to draw water from a well, that was then going to be taken to a laboratory for testing. After the water sample had been extracted – when workers were in the process of removing the pump from the well – a cable and plug slipped, wedging both the cable and pump against the side of the well. AB Limited employed contractors to remove the pump at a cost of $2,800 and lodged a claim with their insurer to recover these costs (less $500 excess). The insurer declined AB Limited’s claim, relying on a section of the material damage policy which excluded cover for loss “caused by or directly arising out of or connected with testing”.

excluded did not actually cause the loss. This meant that if AB Limited could prove that “testing” was not a cause of the loss, the exclusion clause would not apply, and its claim would be covered under the policy. The review: Was ‘testing’ a cause of the loss? The key issue FSCL had to determine in this case was whether ‘testing’ had caused the loss. They determined that water testing to be performed at a laboratory after the water had been removed from the well did not increase the risk of loss to the pump used. In fact, testing had not even taken place when the damage to the pump occurred. Further, no part of the accident with the pump or the actions of the workers in removing the pump constituted ‘testing’. FSCL highlighted that just because one step in a process involves testing, or even if the end goal of the activities being undertaken is to allow for testing, it does not follow that every stage of those activities can be labelled as ‘testing’. In addition, FSCL decided that the pump was being used in a way which was no different from any other instance when the company used this equipment. If ‘testing’ at a laboratory was removed from the situation of this complaint, AB Limited’s loss would have been exactly the same. Lastly, FSCL highlighted that testing had only provided the ‘opportunity’ for loss to occur. By law, more than just a

mere opportunity must be presented by the activity in order for it to be said to have ‘caused’ the loss. If the pump itself was being tested, the exclusion clause may well have applied. However, based on the facts, FSCL decided that testing was not a cause of the loss and the exclusion clause did not apply. In this case, FSCL recommended that the insurer pay AB Limited’s claim. Lessons to be learned All insurance policies will contain clauses which specifically exclude cover for certain activities because – in the insurance company’s view – these activities carry greater risk. The key issue for insurance companies is to determine whether the activity described in that specific exclusion clause, is an activity which actually caused or contributed to the loss which is being claimed for. If the activity being excluded is not a cause of the loss, the exclusion clause cannot becovernote applied. ...for insurance professionals

Financial Services Complaints Ltd (FSCL) is an approved dispute resolution scheme under the Financial Service Providers (Registration and Dispute Resolution) Act 2008 and has over 5000 participants. For membership enquiries, call 0800 347 257 or email info@fscl.org.nz

June 2013 | covernote

LEGAL | Crossley Gates

You owe a duty of care to your clients There are few cases that come before the New Zealand High Court that centre on whether an insurance broker has breached his duty of care to his client. However, this occurred last year in the case of Marchand v Jackson (NZHC 2893) – unfortunately another sad tale arising out of the Christchurch earthquakes.

r Marchand and his fellow trustees owned a valuable 5-acre farmlet and family home south west of Christchurch, which they had insured with MAS for many years. In 2008, Dr Marchand was convicted of filing 57 fictitious general medical services claims in relation to his medical practice and was sentenced to 8 months home detention. Upon learning of this, MAS decided they no longer wished to insure Dr Marchand and cancelled his house insurance. Dr Marchand turned to Mr Jackson, an insurance broker, to arrange cover with someone else. Following Dr Marchand’s completion of a questionnaire, Mr Jackson submitted this to NZI, who quoted terms. It all seemed like a smooth process, however, for reasons that Mr Jackson was not able to properly explain, he never arranged the cover with NZI. Even worse, he subsequently confirmed to Dr Marchand, on a number of occasions, that he had done so. As many of us now have ingrained on our Kiwi psyche, the Christchurch earthquakes then occurred. Alongside many other Cantabrians, Dr Marchand’s house was substantially damaged. Subsequently, Mr Jackson submitted an application for insurance of the house to NZI on behalf of Dr Marchand, backdated to a date before the earthquakes. Unsurprisingly, NZI rejected it. Dr Marchand learnt of his fate and his uninsured house and, subsequently, sued Mr Jackson. The onus is on you In the judgment, the High Court restated the law of agency as it applies to insurance brokers, saying: “An insurance broker is normally the agent of the insured. Usual legal principles of agency govern that relationship. It all depends on the 36 covernote | June 2013

instructions. Normally a broker’s instructions are to complete a proposal for clients, negotiate the appropriate contract of insurance on behalf of its client, and advise on the meaning of policy terms and the extent of cover. Part of that, as Mr Jackson accepted under cross-examination, is to advise on the importance of proper disclosure.” “Insurance brokers must act with reasonable care and skill. In doing so, they must diligently take all necessary steps to affect cover and protect the client. If they are unable to affect cover, then they must promptly report that fact to the client.” The High Court had little difficulty finding Mr Jackson had breached this duty. The real focus of the case then became whether this breach had caused any loss to Dr Marchand. Did the breach of the duty of care cause Dr Marchand’s loss? In his defence, Mr Jackson argued that Dr Marchand would not have been able to insure his house anyway because of his conviction, so therefore Mr Jackson’s negligence had not caused any loss. Each side had an insurance industry expert arguing their position. In the end though, both experts came to a similar final view – that Dr Marchand’s house was not uninsurable by virtue of his convictions. Although existence of the convictions may have led to additional underwriting scrutiny and perhaps non-standard terms or premium, he was likely to obtain insurance of some sort for his house that would have covered him for the earthquake damage. That dealt succinctly with the causation issue, with the outcome: But for Mr Jackson’s negligence, Dr Marchand’s house would have been insured for the earthquake damage that is later suffered. What we stand to learn In the course of considering this issue, the

Crossley Gates DLA Phillips Fox

High Court made an interesting observation that insurers should be aware of. NZI did not accept the backdated application, so nondisclosure of Dr Marchand’s conviction was never an issue. However, NZI did become aware of the fact of the conviction as they were already insuring Dr Marchand’s medical practice assets under their commercial policies. The High Court noted that, in full knowledge of the conviction, NZI took no action and renewed that policy. There is nothing necessarily wrong with that but the High Court took this as evidence of the fact that Dr Marchand’s conviction was not fatal to him obtaining insurance for his house also. The lesson to be learnt from that is that if an insurer wishes to take a non-disclosure point based on the insured’s moral hazard, it needs to take the point across all the policies held by that insured, not just the policy that is subject to the claim under consideration. The lack of consistency may prove fatal to avoiding the policy in question and the reality is that an insurer cannot merely ‘blow hot and cold’ in relation to the same material fact. They must choose one standpoint or another and stick to it. Why it pays not to breach your duty of care to your client Unsurprisingly, Mr Jackson was found fully liable to Dr Marchand. Amidst the turmoil that followed the Christchurch earthquakes, this was a somewhat extraordinary case, but one that helpfully restates the duty of care covernote that insurance brokers owe to their clients. ...for insurance professionals

Crossley Gates has written for Covernote for many years and is a partner at DLA Phillips Fox. He can be contacted directly on 09 300 3823 or emailed at crossley.gates@dlapf.com

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ASK AN EXPERT | Your Questions Answered

Equal liability – different coverage pay party A $1,500. There is obviously a net transfer of $1,000 from one to the other. In other words the ref is saying that if you are 50% liable for the event, so should pay 50% of the total claim costs. The net loss to each party is thus $2,000.

Q MOTOR Comprehensive vs Third Party cover Our Client is insured for Third Party only, while the third party is insured comprehensively. Both Insurers are in the K4K, both agree that 50/50 negligence should apply. We said they should settle 50% of each other’s loss, because otherwise our Insured misses out. They didn’t agree, they decided to apply “let losses lie etc...” Our Insured is left out in the cold, but we’re sorting that out in due course. I thought you could not apply “let losses lie...” unless both parties were comprehensively insured, or unless the cover was the same and both Insurers are in the K4K. On a separate occasion we had a similar enquiry, except that this time they wouldn’t let losses lie because there was no damage to our Insured...they pick and choose. This time our Insurer is happy to let losses lie to save them paying 50% of the other party’s repairs, and the third party’s Insurer is happy to let losses lie because it saves him some ‘work’... Would you agree with these decisions?

A Response from Crossley Gates, DLA Phillips Fox, Auckland My (distant) recollection of the K4K is that it only applies if both parties are comprehensively insured; in this case they are not. If liability is agreed at 50/50, then your client is liable for 50% of the cost of repairing the third party’s car. This is covered under your client’s TPO policy. The third party is liable for 50% of the cost of the repairs to your client’s car. Your client should receive that from the third party’s insurer. Response from Paul Lightfoot, Auckland In this situation, the K4K does not apply at all. It is simply about apportioning liability. There are two parts to that: liability and quantum. In this case, the basic assumption is that both parties have suffered relatively equally, therefore if liability is 50/50, both parties are at fault, no one can be sued for damages and we “let losses lie” (nothing to do with K4K). This is a nice tidy result for the insurer. However, quantum is often not that obliging. Say party A suffers $3,000 worth of damages and party B only $1,000. Even though liability is 50/50 one party has in fact suffered more of a loss than the other. When these cases go to D/T, often the ref will apply the 50/50 doctrine but base it on the total cost of the damage for all parties. In this case, party A would pay party B $500, and party B would

Q PROPERTY Purchaser Insurance I was under the impression that a purchaser could insure a property before settlement if they would like to and can find an insurer that will do it. My understanding of the Insurance Law Reform Act is that it allows for double insurance (vendor and purchaser having insurance on the same property concurrently) and that this can’t be a defence used by an insurance company.You don’t have to have an insurable interest at the time you insure the item you just need to have suffered a loss at the time the loss occurs. I have been told by one insurer that they won’t provide this kind of cover because of the Act – which is ridiculous, as the Act says nothing of the sort. I understand insurers not wanting to touch a mortgagee sale, but with a standard sale where there are not the same issues.

Response from Crossley Gates, DLA Phillips Fox A I agree with your frustrations. In the hope that there are some underwriters out there reading this, I set out the legal position. Most purchasers sign an Agreement for Sale and Purchase (AS&P) that is conditional on finance. The purchaser cannot use it as a mechanism to get out of the purchase if he or she simply wishes to change his or her mind. Once the condition is met, or if the AS&P was always unconditional, the purchaser MUST buy, even if the house is a burnt out shell. The law refers to a purchaser before settlement as having equitable ownership of the house. Once settlement occurs and the transfer is registered, the purchaser has legal ownership of the house. It makes sense for the purchaser to insure his or her interest in the house, even when he or she first enters into a conditional AS&P. The purchaser has the same financial exposure as a legal owner has at this point. It is hard to see what problems this poses for an underwriter – the physical hazard is certainly unaffected. I would have thought the underwriting business is hard enough without turning away good covernote business. ...for insurance professionals

DO YOU HAVE A QUESTION FOR OUR EXPERTS? If so, visit iNavigator, www.inavigator.co.nz or the

IBANZ website, www.ibanz.co.nz and let us know (iNavigator experts offer free assistance to IBANZ Members via the IBANZ website).

38 covernote | June 2013

ADVERTORIAL

s the leading consumer electronics and software provider to insurance companies in Australia and New Zealand, JB Hi-Fi Insurance Division is doing things differently. Winners of the Services Provider Award at the 2012 New Zealand Insurance Industry Awards, JB Hi-Fi are proving themselves as so John Shipman much more than just a strong retail brand. “The key, in both sides of the business, is that personal experience – that’s what we’ve mastered,” says John Shipman, Insurance Manager for JB Hi-Fi Australia and New Zealand.

Why JB Hi-Fi? Removing restraints

The JB Hi-Fi difference: music to our ears While a low-cost operating model means that JB Hi-Fi can offer great pricing on replacements in this category, where they really come into their own is in minimising the hidden costs involved in processing a claim and offering a positive personal experience to both insurers and your claimants. “We always say yes before we say no,” supplies John. “We also understand that the retail and insurance industries are different. Someone walking into our store, just off the street, is in a very different space to one who has just faced a burglary, fire or other disaster, so we treat them differently. They’ve bought a promise from their insurance company and it’s our job to help the insurer fulfill that promise. We act as an extension of your team and give them a great experience.”

“Our JB Hi-Fi Insurance Replacements team strives to exceed customer expectations.”

The cornerstone of JB Hi-Fi’s innovative approach to insurance has come from speaking directly to the industry, building strong relationships and researching what insurers need to make their jobs easier, more cost-effective and more efficient. “Over muffins and donuts, we’ve asked insurance companies what restrains them,” explains John. “From there, it’s about doing what we need to do to help them.”

Claiming back time on claims The practical learnings that JB Hi-Fi has gathered have been put to use in helping insurers to shorten the claim life cycle and combat the hidden costs involved. They understand that the time that a claim is open is one of the most significant factors in overall cost, so they’re setting new industry standards for the time it takes to quote on replacements. “We’re always within half an hour,” says Mark Palmer, Customer Services Manager for JB Hi-Fi Insurance Division in New Zealand. “On many quotes we’ve got it down to between 5 and 10 minutes and for some products, you’ll have your answer within a minute.” In other cases, you need not even ask, as JB Hi-Fi supply a price matrix that is updated monthly, arming insurers with the best possible price and cutting down on the touchpoints (and people resource) it takes to process a claim.

Defense against being duped

Photo: thinkstockphotos.com

The Insurance Council of New Zealand estimates insurance claim fraud to sit between $150 and $330 million per annum. Through upskilling insurers on products, JB Hi-Fi’s ‘Like for Like’ Replacement Guide is arming staff with the knowledge to ask the right questions of claimants. Recently launched electronic Gift Cards are also helping in the battle against fraudulent claims. With 34% opting for a cash settlement, the instantaneous E-Card means insurers can replace a stolen laptop with the ability to buy a new one, meaning less claim pay-outs are ending up on the shores of Bali or other holiday destinations.

WE CAN OFFER… NATIONWIDE COVERAGE • DEDICATED INSURANCE TEAM • STRONG RELIABLE BRAND • HUGE PRODUCT RANGE • ACCURATE LIKE-FOR-LIKE REPLACEMENTS

Ph: 0800 221 144 claims@jbhifi.co.nz

www.jbhifi.co.nz

TECHNICAL INSIGHT | Vero

“

A highly accurate knowledge of location now enables Vero to refine our assessment of risk.

”

Location, Location, Location

Mark Bentley Vero

Location matters. We all know this is true when buying real estate and it’s even truer when assessing insurance risk. Colloquially, finding where risks are located is called “geo-coding”. This refers to a variety of approaches used to get a numerical identifier of where risks are located on a map.

ero has just completed a two year programme of work to improve our understanding of exactly where the risks that we insure are located and the associated risk profile of that property. In many cases we can now paint a big red dot on the roofs of the buildings that we insure. The project objective was clear, to provide pricing reflective of the insured risk and simplify the process of obtaining this information for our broker partners. When researching this initiative, we realised that the commercial solutions on the market to undertake such a task were inadequate so, at Vero, we built our own system. The process was far more complicated than we first anticipated and classifying six hundred thousand unique addresses was equivalent to eating an elephant twice! An accurate risk address is the street number, sub unit (where there is one), the street name together with the suburb, town/ city and postcode. A highly accurate knowledge of location now enables Vero to refine our assessment of risk. We now know things such as the drive time to the nearest fire station, whether a property has reticulated water, how severe earthquakes are likely to be (and sometimes it does make a difference what side of the street a building is on), how prone to flooding a location is, the type of construction of buildings, risks that might arise from neighbouring properties and many other characteristics. It’s from this wealth of information that benefits flow. Premiums can be more tightly aligned to a policyholder’s personal circumstances. In the past premium rating 40 covernote | June 2013

will be positively reflected in reinsurance expenses to the benefit of all of Vero’s stakeholders.

zones had to be simplified and the number of questions asked of a policyholder kept to a minimum. In a geo-coded world, dozens or even hundreds of questions can be answered by simply asking “what is the risk address?”and premium rating zones can now be as complex as they need to be to fairly reflect the risk. That means that, as a broker, you have fewer questions to ask your customers, speeding up the sales process. All of Vero’s stakeholders will also benefit from the increased confidence our reinsurance partners will have as they understand more accurately what it is they are reinsuring. In the past, reinsurers had to make assumptions about some of the characteristics of risks being underwritten by Vero. Now these assumptions will be replaced by facts and we expect that this

What does the future hold? We think the future holds a journey towards premiums becoming more and more bespoke to individual customers. This journey doesn’t mean more work for you or questions from your customers either; in fact, we think the opposite is true. As geo-coding technology gets rolled out across the industry, writing business will get easier. You won’t hear us ask you “how long does it take to drive from their nearest building merchant?” – we will know this automatically once we’re told the risk address. Parts of Vero’s Business Insurance and Personal Insurance business already has premiums bespoke to individual buildings where answers that used to be asked of the policyholder are now determined based upon the risk address alone. From now on you’ll notice that we’re particularly interested in getting an accurate risk address. Without this, none of the benefits here can be delivered. It’s plain to see that now more than ever, covernote location really does matter. ...for insurance professionals

By Mark Bentley Executive Manager, Pricing and Analytics – Vero Insurance New Zealand

ADVERTORIAL

Performance Bonds and Brokers – make hay while the sun shines! W

ith the recent removal of two major players (Mainzeal and Starplus Homes) from the local construction landscape, contractors are scrambling to win the increased number of projects available in the Kiwi market place. Some of the tenders that are submitted by these competing contractors can be very low in an effort to win business and keep their company alive. Meanwhile, the rebuild in Christchurch is a massive undertaking that is going to generate more projects and jobs. About $40 billion is going to be spent during the recovery, which will drive the construction and infrastructure business for the next decade or more. These factors, coupled with the higher cost of raw materials and lack of skilled labour, point to more contractor insolvencies on the horizon. Ronnie Tan from Creditworks explains, “Based on the information that Creditworks obtains exclusively from the major building suppliers, we are able to track the contractors that are moving from supplier to supplier, running up overdue payments as they strive to survive. Unless they can turn things around by winning high paying projects, then more insolvencies are inevitable.” But how does this affect brokers and their contractor clients? Bond beneficiaries, (such as government departments, city councils and large corporates) will be insisting on performance bonds for any project moving forward. These bonds provide a financial guarantee that money can be demanded by the beneficiaries should the contractor

become insolvent and unable to complete the project. Bonds are therefore a form of “self-insurance” for your contractor clients. Banks are the traditional providers of performance bonds in New Zealand, but the major requirement for these financial guarantees is a specific security agreement. So with a greater volume of projects up for tender – and the fact that many contractors are already “maxed out” on their current banking facilities – additional security may be required by your clients’ bank, which can be very difficult to obtain. This is a wonderful opportunity for insurance brokers in New Zealand to be asking their construction/infrastructure clients if new bonding facilities are required. Bonded New Zealand will be able to look after your client while also providing a new income stream for your business. The major benefit for your clients in dealing with Bonded New Zealand is that, in most cases, hard security is not required. Personal Guarantees are the usual level of comfort for a bond provider which translates to a lot more financial flexibility for your clients. With a bonding facility written outside of the traditional banking security arrangement, it can free up capital for your clients to invest in new staff and equipment, or in borrowing money to upgrade valuable plants and machinery.

So, make hay while the sun shines – and contact Chris Murphy (09-524 0960) or Tony Whyte (09-524 2100) at Bonded New Zealand.

For all contract performance bond enquiries. Also all bonds in lieu of retention, lease, bid, rehabilitation and builders warranties. Please call the specialists Tony Whyte - 09 524 2100 or Chris Murphy - 09 524 0960

www.bonded.co.nz June 2013 | covernote

Photo: thinkstockphotos.com

www.ibanzcollege.ac.nz CONTENTS: 42 News 43 Training without geographical boundaries 44 Technology supporting students 44 QBE Sponsored workshops 46 Sponsorship for workshops, Crash Management 47 Calendar of events

NEWS Partnering for your professional development

aking it easy to access quality professional development opportunities is – if you speak to both the PAA and IBANZ College – a nonnegotiable for any association committed to supporting its members. With this viewpoint in common, it simply made sense for the two associations to establish a partnership. Earlier this year, the PAA and IBANZ College began collaborating on a range of member training services; sharing expertise, course material and experience across both associations. The partnership delivers a number of key benefits for members: • Access to a greater number of professional development opportunities • Enhanced course material – a collaboration of both sets of expertise • Shared costs – where possible the associations can reduce the cost of training fees • Faster development of new course material as member needs are identified “Both organisations are preferred qualification and training providers, with huge knowledge banks of quality training material,” says Gené Bekker, IBANZ College Principal. “Collaborating means we have more resources and expertise to draw on to give members the best possible training opportunities.” As not-for-profit organisations, the professional development courses offered by IBANZ College and the PAA are purely focussed on member education. Unlike commercial training providers, courses are not developed with commercial objectives. “We have a shared ethos that training is solely developed for member benefit – it’s one of the reasons we work so well together,” says Jenny Campbell, General Manager PAA. “Many of our members have not been in a training environment for some time so it is important that we are able to 42 covernote | June 2013

CELEBRATING SUCCESS AT IBANZ COLLEGE Students of Excellence Lisa Williamson – Rothbury Insurance Brokers Northland Congratulations to Lisa who has successfully completed the Level 5 Certificate in Financial Services (Insurance). Lisa put in a lot of effort throughout her studies and it was evident in the high quality of work that Lisa produced. Stephen Wood – Rothbury Insurance Brokers Well done to Stephen for completing Set E of Level 5 as well as passing the Set B examination. Congratulations to the following students who have achieved the insurance specialist strand (Set E) within the Level 5 qualification. Ruth Steele – Certus Insurance Brokers NZ Ltd Catherine Tait – Willis New Zealand Ltd Stephen Wood – Rothbury Insurance Brokers Northland Jonathan Pond – The Insurance Brokers Ltd Excellent work from the following students who have completed set A within the Level 5 qualification. Daniel Lee – Allfinanz Risk Conrad Shanly – Wilkinson Insurance Brokers Ltd Congratulations to the following students who all successfully completed the legislation module (Set B exam), which is particularly challenging and a huge milestone to reach in the Level 5 qualification. Belinda Ireton – Insurance Advisernet NZ Ltd David Crawford – Insurance Advisernet NZ Ltd Paula Mills – Insurance Advisernet NZ Ltd Stephen wood – Rothbury Insurance Brokers Northland Susan Lyall – Cii Group Ltd Teru Time – Aon New Zealand

Students of the Month MARCH: Lisa Williamson – Rothbury Insurance Brokers Ltd APRIL: Eileen Nauman – Adams Trimmer Nauman Insurance Ltd covernote MAY: Stephen Wood – Rothbury Insurance Brokers Ltd. ...for insurance professionals

offer meaningful qualifications, in a manner that is friendly, co-operative and efficient.” “Between the two associations, we have around 4,000 advisers, and it is this scale that enables us to offer courses and workshops all over the country, at a very cost effective price.” The PAA and IBANZ look forward to releasing new courses designed in covernote collaboration, both for insurance advisers and residential property lending. ...for insurance professionals

Technology supported training | COLLEGE

TOO TIME-POOR FOR TRAINING? NOT ANYMORE Ongoing professional development in the insurance sector is no longer a ‘nice to have’; aside from regulatory changes, it’s increasingly what differentiates stand-out businesses from the average.

A technology journey worth taking Earlier this year, Rothbury installed TV screens and projectors in a dedicated room of each branch. In March the Professional Practice Series was delivered using the webinar solution across 15 locations, without a hitch.

“We knew the webinar was the way to go, but could we get it across the line? Without Gené from IBANZ, we would not have gotten so far with the roll-out,” says Christine. As the internal IT roll-out of the system was not a simple project, Gené Bekker, Principal of IBANZ College worked with Christine and her team to find an intermediary solution to launch the webinar training programme without delay. The pilot and subsequent webinars have been hosted at IBANZ Head Office in Auckland. “Gené is incredibly passionate – the industry is very lucky to have her. She goes that bit further to help and find a solution that works for the individual business.” Rothbury is on track to complete the roll-out of the webinar system internally by the end of the year, meaning all training and other video communication initiatives can be hosted from the business Head Office in Auckland. “Depending on your system, the roll-out requires someone to be an advocate for the project and work closely with IT to bring it to life. But it is most certainly a journey worth taking.” A breadth of business benefits After webinar set-up costs have paid for themselves through lower travel expenses and less adviser time out for face-to-face training sessions, the return on investment is projected to increase significantly with time. “Yes – there is an investment, but it’s worth it in comparison to the time and cost of taking people out of the business,” says Christine. “And that benefit will grow year-on-year.” Rothbury have also been quick to identify other business benefits of adopting the webinar platform within the business. “In the middle of May, we ran the first live, same-time, all-staff video communication. It was an important business announcement and it was amazing to have 15 minutes, engaging with all staff, delivering the news at one time.” Rothbury has a number of training initiatives planned; complementing the compulsory Professional Practice Series with technical skills and many other courses. “Working with IBANZ was an obvious choice. The course material is excellent; we were able to specifically tailor the content for Rothbury staff; and the webinar functionality provided a solution to a central business need.” “There is so much potential that the webinar solution will help us realise. It’s a great opportunity with someone like Gené and IBANZ covernote providing support,” says Christine. ...for insurance professionals

June 2013 | covernote

Photo: thinkstockphotos.com

ut how does a company realise the advantages that ongoing training delivers without disrupting business and incurring significant logistical costs? As Christine Varcoe, corporate services manager at Rothbury Insurance Brokers says, “For an adviser in Queenstown, there’s no such thing as one day out of the office for training at the Head Office in Auckland.” Ongoing professional development is Rothbury’s number-one strategic priority – and has been for many years. Meeting the demands of delivering on this strategic goal across a nationwide branch network and for advisers working out of 15 different locations however, is no small feat. “Changes in regulation have put a spotlight on professional development – something we support 100 percent. But the logistical and opportunity costs of running regular face-to-face professional development sessions was a barrier the business had to find a solution for, to fully realise the level and frequency of training we want to provide,” says Christine. “We had a vision to use video conferencing for training. The IBANZ Webinar programme made this a reality. There was no doubt – it was the only way to go.” In December 2012, Rothbury piloted the IBANZ webinar solution with two branches in the South Island, delivering the IBANZ Business Interruption workshop. The results speak for themselves: 74 percent of participants rated the webinar as ‘very good’ or ‘excellent’ and 89 percent felt engaged with the content, facilitator and other participants. “We were very aware that the pilot would be a new learning experience – taking people out of the traditional workshop environment is a real shift – they have to be open to it,” says Christine. “While we were hoping that staff would engage with this new method from the start, we were actually a bit surprised at just how positive feedback was.” As a new training experience, the webinar model has brought with it the need to adopt a few different ways to participate effectively. “It’s a journey. Staff need to learn how to use the technology and how to communicate in connected, yet geographically separate, environments. We’ve been adding simple interaction protocols to each webinar, and the quality of participation is getting better and better every time,” says Christine.

COLLEGE | Student support

ASSISTIVE TECHNOLOGY as competitive advantage for students

Text to speech • Speech to text • Voice recognition • Voice to text speech • Note attachers • Webinars

he above words are assistive technology buzzwords within the blended and online learning environment. Assistive technology aims to make life easier for the busy student. Imagine actually having the capability to study while you are waiting in traffic – now that is a productive and useful way to manage time. With the advent of text to Janine Kantor. speech technology, more and more students are finding themselves downloading the course materials and listening to them in the car, walking in the park or exercising at the gym. Text to speech (TTS) uses voice synthesis software to provide an oral reading of ordinary electronic text files of various file types, such as word-processed documents, text on webpages, and e-books. The TTS software analyses the text, using a system of phonics and other word-identification rules, and then reads the text aloud through voice synthesis. Reading speed can be adjusted according to the needs of the individual user. Visual based learners make up an astounding number of students and recent studies have shown that visual learners are far more adept at retaining knowledge when they hear it, rather than when they are presented with linear pieces of information. A programme

like text to speech enables the student to look at visuals of the information and hear it as well. On the other side of the coin, Speech to text (or voice to text) is a type of speech recognition programme that converts spoken words to written language. Specific programmes can decipher the average person’s speech without training, opening up possibilities for new applications of the technology, including interactive cell phone functions, such as voice-to-text message delivery and voice-to-text search, as well as conversion of audio content such as podcasts. Research shows that learning can be enhanced if students are taught to use additional computer-based materials such as a visual representation of text, note-taking tools, and an animated graphical presentation of key points. Sticky notes, stickies or gumnotes – virtual notes that you can ‘attach’ to any document on a computer – can help with that. Why not give this a try? Visit the IBANZ College website to download free text-to-speech software www.ibanzcollege.ac.nz. For more information about assistive technology and other student covernote resources visit the college student portal learning resources. ...for insurance professionals

Article by Janine Kantor (Student Liaison Officer and Tutor).

QBE SPONSORED IBANZ CPD WORKSHOPS QBE understands the importance of making opportunities for training and development available to the broking community. Throughout 2013 and beyond QBE will be providing a number of opportunities for continuing professional development through IBANZ College. We will aim to cover topics where there have been the most requests for additional training. QBE’s first series of workshops were held throughout May, covering Contract Works and presented by QBE’s contract works & engineering manager, Malcolm MacLeod and Russell Gill, QBE’s new national product specialist for engineering. There was significant interest in these workshops, which took place in Auckland, Christchurch and Wellington. The workshops covered both the theory and practice of Contract Works Insurance and provided a broad, but detailed, overview of Contract Works – including information on who

44 covernote | June 2013

arranges Contract Works insurance, standard forms of contract, types of policies, main causes of loss, exclusions, advanced loss of profits, underwriting submissions, defect exclusions and seismic strengthening. Participant comments: I got a lot out of the QBE Contract Works seminar. I liked the fact we did an activity based around understanding policy wording and application of such in a real life situation. This solidifies what we learnt. Case studies are so helpful. Thank you. Keep ‘em coming! – Mariana Phillips, Paradise Brokers Other workshops for 2013 include: Material Damage Workshop with Matthew Noy (3 CPD points) Matthew Noy is a business unit manager at QBE Insurance. This course covers both the theory and practice of Material Damage Insurance and provides a broad, but detailed, overview of the

industry and its component parts, players and products. Workshop on Professional Indemnity and Other Liability Issues for Contractors and Subcontractors with Mel Gorham (3 CPD points) Mel Gorham is a business unit manager at QBE Insurance and has 20 years industry experience, during which time she has held positions with insurers and intermediaries. This course covers the core essential insurance vs. contract issues faced by businesses in the construction industry. It looks at the Professional Indemnity and Liability aspects and how standard insurance policies respond. A number of our previous presentations are already available on the QBE Broker Xchange under the Knowledge Library. For more information about these workshops (including CPD points and fees) please go to the IBANZ Collegecovernote website. ...for insurance professionals

More than five years’ broking experience? Fast track your accreditation. Eliminate the need to redo or restart your qualification. Full Level 5 NZQA Insurance Qualification in only four days training*. IBANZ College is now offering experienced insurance brokers the Fast Track Qualification - Standard Sets A, B, C and E. The course is a great opportunity for advisers to gain the Full Level 5 NZQA Insurance Qualification insurance advice; law; professional practice; financial services; products and markets - within four to eight months, depending on your time availability. The Fast Track workshops will be run August to December 2013. Total cost for members only $3,640; Non-members $4,235 (plus GST)

Book your place today, or contact us to find out more about the Fast Track course structure. *Additional individual self study time is required to pass the exam and to complete the workplace assessment tasks

0800 306 173 • gene@ibanz.co.nz • www.ibanzcollege.ac.nz

Major Sponsor

COLLEGE | Scholarship opportunities

IBANZ College workshop

SPONSORSHIP ANNOUNCEMENT IBANZ is pleased to announce a 12 month sponsorship package from Crash Management, winners of the Insurance Industry Award 2009 for Innovation of the Year. IBANZ College can now offer a free workshop or short course to one lucky recipient every month for the next year. Many IBANZ members now work closely with Crash Management and enjoy the benefits of this relationship for their clients and for their own business. Crash Management’s managing director, Karen Knight said sponsoring IBANZ CPD workshops was a good fit with the company values of continuous improvement and lifetime learning. IBANZ College provides quality education that is specific to the NZ broking industry – delivering the knowledge, insights and tools to ensure your success

in this exciting, rewarding and constantly changing industry. An extensive range of course options and locations are offered, to provide maximum flexibility to fit with your busy professional life. You can view the full IBANZ College CPD offer and schedule at www.ibanzcollege.

ac.nz then go in the draw by clicking on the icon on the homepage. It’s simple to do so. We want to hear your views on Crash Management – you can tell us a story about how their service helped you or your client, comment generally, or ask any question. Each month, every valid response will go into a blind draw and the winner will be announced in next month’s IBANZ newsletter. The winner will also be notified individually, and you’ll have 3 months from that date to book the workshop or short-course of your choice. Courses can be forward scheduled, it’s just the booking that’s time critical. covernote Enter now. ...for insurance professionals

ENROL NOW! An opportunity to get qualified... Secure a successful career in financial services THE Set A workshop is designed to help all financial advisers (including insurance brokers) gain New Zealand recognised qualifications, this includes those with ‘legacy’ qualifications (ANZIIF Certs. & Dips., NZI and International Qualifications). THIS IS A FANTASTIC OPPORTUNITY TO: ✓ ✓ ✓ ✓

Gain credits on the NZ qualification framework Gain an NZQA recognised qualification Prove current competence 15 CPD hours on successful completion

MAKE IT A DATE AND REGISTER NOW!

Member Cost $965*+ GST Non Members Cost $1165* +GST. (Includes course materials, tutorials and workshop. * An annual administration fee of $50 may apply. Please see website for more details.) Workshop is subject to numbers and group discounts are available on request. NB: You will be required to read course materials and complete short answer questions prior to attending the workshop.

FINANCIAL MARKETS ADVICE AND PRODUCTS – SET A

WORKSHOP DATES AND VENUES Timing: 9.30am - 5.30pm

PART 1: Demonstrate Knowledge and Apply Professional Practice

1. Auckland: 23rd July - Level 5, 280 Queen St.

PART 2: Economic, Financial and Participatory Relationship

2. Wellington: 24th July- Level 7, 22 Willeston St.

PART 3: Stages of Personal Financial Advice and Products

3. Christchurch: 25th JulyATCANZ Ctr, 10 De Haviland, Chch Airport. 4. Dunedin: 26th July- Mercure Hotel, 310 Princes Street.

Level 5, 280 Queen Street, Auckland, 1010 46 covernote | June 2013

OVERVIEW OF THE DAY

www.ibanzcollege.ac.nz

Calendar of Events | COLLEGE

College Events Calendar 2013 Technical & Specialist

Business Skills & Interpersonal Leadership

Legislation & Compliance

JULY Understanding Personality Types

Tuesday

WELLINGTON

Business Interruption II - Appropriate Policy Specifications to Meet Client Need

Thursday

CHRISTCHURCH

SEPTEMBER

Thursday

WELLINGTON

Set B & Set C workshop

Monday

DUNEDIN

Tuesday

CHRISTCHURCH

Train the Trainer

Tuesday

AUCKLAND

Material Damage

Tuesday

AUCKLAND

Wednesday

WELLINGTON

Tuesday

CHRISTCHURCH

Thursday

AUCKLAND

Tuesday

WELLINGTON

Wednesday

WELLINGTON

Thursday

AUCKLAND

Monday

CHRISTCHURCH

BI Essentials

Wednesday

AUCKLAND

Set E

Tuesday

AUCKLAND

Set A

Tuesday

AUCKLAND

Wednesday

WELLINGTON

Thursday

CHRISTCHURCH

Friday

DUNEDIN

Set B & Set C workshop

New events are being updated on a daily basis so visit www.ibanzcollege.ac.nz for events in your area. * Workshops are subject to minimum participant number requirements.

AUGUST Business Interruption II - Appropriate Policy Specifications to Meet Client Need

Thursday

AUCKLAND

Commercial Negotiation Skills

Monday

WELLINGTON

Monday

CHRISTCHURCH

Tuesday

AUCKLAND

Monday

DUNEDIN

Tuesday

CHRISTCHURCH

Wednesday

WELLINGTON

Thursday

AUCKLAND

Tuesday

AUCKLAND

Tuesday

WELLINGTON

Set E

Liability

Warrant of Fitness The Code

Tuesday

CHRISTCHURCH

Wednesday

CHRISTCHURCH

Wednesday

AUCKLAND

Wednesday

WELLINGTON June 2013 | covernote

CONTACTS | IBANZ Contacts

College Board 2013

IBANZ Board 2013

Tony Butson Rothbury Group Limited PO Box 1120 Queenstown 9348 Mob: 021 332 605 tony@butson.co.nz

Tony Butson Rothbury Group Limited PO Box 1120, Queenstown 9348 Mob: 021 322 605 tony@butson.co.nz

Richard Russell (Chair) Branch Director Crombie Lockwood NZ Ltd PO Box 34, Invercargill 9840 Tel: 03 218 8994 Fax: 03 218 8996 Mob: 027 258 8433 richard.russell@crombie.co.nz

Tony Bridgman (Vice President) Executive Director Marsh Ltd PO Box 2221, Auckland 1140 Tel: 09 928 3015 Fax: 09 309 9891 Mob: 021 873 399 tony.j.bridgman@marsh.com

Ruth Steele Brokerage Manager/ Commercial Broker Certus Insurance Brokers NZ Ltd PO Box 26621 Epsom Auckland 1344 Tel: 09 377 0951 Fax: 09 307 2386 Mob: 021 639 286 ruth@certusnz.co.nz Gary Young CEO, IBANZ PO Box 7053 Wellesley Street Auckland 1141 DDI: 09 306 1734 Fax: 09 307 0960 Mob: 027 543 0650 gary@ibanz.co.nz

David Crawford Chief Executive Officer Insurance Advisernet NZ Ltd PO Box 74557, Auckland 1051 Tel: 09 926 2062 Fax: 09 524 2226 Mob: 021 905 537 davidc@insuranceadvisernet.co.nz Nick Cressey (President) Director Insurance Brokers (International) Ltd PO Box 305019, Triton Plaza North Shore City 0757 Tel: 09 477 0277 Fax: 09 478 0277 Mob: 021 707 025 nick.cressey@ibi.co.nz

WISH TO RECEIVE YOUR OWN COPY OF...

covernote ...for insurance professionals

ach issue of Covernote is packed with vital information, news, commentary, and advice for the insurance industry from experts within the industry. To keep abreast with all the issues affecting New Zealand’s insurance broking industry just email robyn@ibanz.co.nz To advertise: Contact Kelly Davison admanager@covernotemag.co.nz 09 529 3000, 027 520 4507 Covernote is published quarterly by IBANZ, the Insurance Brokers Association of New Zealand. All correspondence should be addressed to: The editor, Covernote, PO Box 5544, Wellesley Street, Auckland 1141 or email editor@covernotemag.co.nz

Next issue is due out: September 2013 48 covernote | June 2013

Allan Daly Managing Director Avon Insurance Brokers PO Box 3923, CMC Christchurch 8140 Tel: 03 371 0301 Fax: 03 366 6589 Mob: 027 535 8128 allan@avoninsurance.co.nz Duane Duggan (Vice President) Head of Insurance Legal Crombie Lockwood (NZ) Ltd Private Bag 68910, Newton Auckland Tel: 09 623 9626 Fax: 09 623 9901 Mob: 021 833 286 duane.duggan@fmrrisk.co.nz Peter Lowe General Manager NZ Willis New Zealand Ltd PO Box 369, Auckland 1140 Tel: 09 356 9368 Fax: 03 358 3343 Mob: 021 909 148 lowepj@willis.com

Rieny Marck General Manager Marketing & Corporate Risk Aon New Zealand PO Box 1184, Shortland Street Auckland 1140 Tel: 09 362 9004 Fax: 09 309 2536 Mob: 027 446 7787 rieny.marck@aon.com Jason Smith Managing Director Property & Commercial Insurance Brokers PO Box 4, Feilding 4740 Tel: 06 323 8820 Fax: 06 323 8872 Mob: 027 293 8724 jase@pcinsurance.co.nz Ruth Steele Brokerage Manager/ Commercial Broker Certus Insurance Brokers NZ Ltd PO Box 26621, Epsom Auckland 1344 Tel: 09 377 0951 Fax: 09 307 2386 Mob: 021 639 286 ruth@certusnz.co.nz

IBANZ Staff 2013 Gené Bekker Principal IBANZ College DDI: 09 306 1735 Fax: 09 307 0960 Mob: 027 459 9804 gene@ibanz.co.nz Robyn Gosden Finance & Office Manager DDI: 09 306 1733 Fax: 09 307 0960 Mob: 027 275 2477 robyn@ibanz.co.nz Janine Kantor Student Support Officer IBANZ College DDI: 09 306 1731 Fax: 09 307 0960 janine@ibanz.co.nz

Karen Scard Membership & Secretarial Support DDI: 09 306 1738 Fax: 09 307 0960 karen@ibanz.co.nz Steve Wardley Technical Support DDI: 09 306 1736 Fax: 09 307 0960 steve@ibanz.co.nz Gary Young CEO DDI: 09 306 1734 Fax: 09 307 0960 Mob: 027 543 0650 gary@ibanz.co.nz

IBANZ 2013 Physical address: Level 5, 280 Queen Street, Auckland 1010 Mailing address: PO Box 7053, Wellesley Street, Auckland 1141 Website: www.ibanz.co.nz

IBANZ Corporate Company List | CONTACTS

IBANZ Corporate Company List Abbott Insurance Brokers Ltd Adams Trimmer Insurance 1992 Ltd Adams Trimmer Nauman Insurance Ltd Addex Ltd Advice First Limited Affiliated Insurance Brokers Ltd AJIB Insurance Brokers Ltd Albany Insurance Services Ltd Allfinanz Risk Anchorage Insurance Brokers Ltd Andrew Scragg & Associates AMP Services (NZ) Ltd Aon New Zealand Apex General Ltd API Insurance Ascot Insurance Brokers Ltd Atlas Insurance Brokers Ltd. Austinsure Ltd Aviation Co-operating Underwriters Pacific Ltd Avon Insurance Brokers Baileys Insurance Brokers Ltd Barley Insurances Limited Bay Insurance Brokers Ltd Benson Insurance Brokers Ltd Benton & Power Ltd Bill Boyd & Associates Ltd Boston Marks Group Ltd Bridges Insurance Brokers Limited Broker Direct Services Ltd BrokerWeb Risk Services (Auckland) Ltd BrokerWeb Risk Services (Bay of Plenty) Ltd BrokerWeb Risk Services (Hawkes Bay) Ltd BrokerWeb Risk Services (Manawatu) Ltd BrokerWeb Risk Services (Northland) Ltd BrokerWeb Risk Services (Southern) Ltd BrokerWeb Risk Services Limited Card Marketing International Ltd Cartwright General Insurance Limited CBA Insurances Limited Certus Insurance Brokers NZ Ltd Coastline Insurance Services Commercial & Rural Insurance Brokers Ltd Crombie Lockwood (NZ) Ltd Dave Fielding Financial Services Dawson Ins. Brokers (Whakatane) Ltd Dawson Insurance Brokers (Rotorua) Ltd Edward Ruys & Co Ltd Elders Insurance Limited Emerre & Hathaway Insurances Limited Executive Insurance Services Ltd Freedom Insurance Ltd Future Agency Co. NZ Ltd Gary Jamieson Insurance Brokers Ltd Glenn Stone Insurance Limited Graeme England Insurance Services Ltd Grayson & Associates Ltd Gregan & Company Ltd Harden & Hart Insurances Ltd Hawkeâ&#x20AC;&#x2122;s Bay Insurances Ltd Hazlett Rural Insurance Limited Hopkins Paton Ltd Hornibrooke Dolan Ltd Hugh Vercoe and Associates Ltd Hurford Parker Insurance Brokers Ltd Hutchison Rodway Ltd I C Frith (NZ) Ltd i2i Insurance Brokers Ltd Ian K Everett Ltd ICIB Limited ILS Insurance Brokers Inbroke Ltd Ingerson Insurances Ltd Insite Insurance

Christchurch Whangarei Dargaville Auckland Wellington Wellington Lower Hutt Auckland Lower Hutt Lower Hutt Auckland Auckland Auckland Auckland Manukau Whangarei Christchurch Auckland Wellington Christchurch Auckland Auckland Tauranga Christchurch Auckland Palmerston North Auckland Hamilton Christchurch Auckland Tauranga Napier Palmerston North Kerikeri Christchurch Auckland Wellington Ashburton Tauranga Auckland Thames Alexandra Auckland Auckland Whakatane Rotorua Hamilton Auckland Gisborne Auckland Wellington Auckland Thames Auckland Auckland Auckland Papakura Auckland Napier Christchurch Auckland Auckland Morrinsville Hastings Auckland Auckland Wellington Auckland Auckland Auckland Auckland Wellington Pukekohe

Insurance Advisernet NZ Ltd Insurance Brokers Alliance Ltd Insurance Design Insurance People (Fire & General) Limited Iremonger Insurance Brokers Limited James Forster Insurance Brokers Ltd Jane Cook Insurance Ltd JLT Holdings (NZ) Limited JRI Ltd Ken McNee Family Trust Lifetime Insurance Brokers Ltd Lloyd East & Associates Insurance Brokers Lowe Schollum & Jones Ltd Luxor Insurance Brokers Ltd MA Risk Solutions NZ Limited Mainprice King Chartered Brokers Ltd Malcolm Flowers Insurances Ltd Marsh Ltd Matt Jensen Insurance Brokers Ltd McDonald Everest Insurance Brokers Ltd Mike Henry Insurance Brokers Limited Montage General Insurance Ltd Multisure Ltd Neal P Sadgrove & Associates Ltd Nelson Bays Insurance Brokers Ltd (NIB) Neville Newcomb Insurance Brokers Ltd Nexus Insurance Brokers Ltd North Harbour Ins Services (1985) Ltd Northco Insurance Brokers Ltd Oamaru Insurance Brokers Oâ&#x20AC;&#x2122;Connor Warren Insurance Brokers OFS Insurance Brokers Ltd Omni Fire & General Ltd Paterson & Co NZ Ltd Penberthy Insurance Ltd Peter C Cranshaw Insurance Broker Ltd PIC Insurance Brokers Ltd Pinnacle Insurance Brokerage Ltd Presland Tocker Insurance Services Primesure Brokers Ltd Property and Commercial Insurance Brokers Protekt Insurance Brokers 2008 Ltd Provincial Insurance Brokers Limited PSC Connect NZ Limited Pulsar Insurance Agency Reid Manson Ltd River City Insurance Brokers 2000 Ltd RMA General Ltd Rosser Underwriting Ltd Rothbury Group Ltd Runacres & Asssociates Limited Seneca Insurance Brokers Ltd Sit & Blake Limited Smith Pitman Insurances Ltd South Pacific Insurance Bureau Limited Sweeney Townsend & Associates Ltd Thames Valley Insurance Ltd The Insurance Brokers Ltd The Stoneman Group Thorner General Insurances Ltd Towes Insurance Brokers Ltd Travel & Accident International Ltd Trevor Strong Ins Ltd Vision Insurance (S.I.) Ltd Waikato Insurance Brokers Limited Wallace McLean Ltd Wanganui Insurance Brokers Ltd Wholesale Insurance Brokers Ltd Wilkinson Insurance Brokers Ltd Willis New Zealand Ltd Yesberg Insurance Services Ltd Yongkim Consulting Co Ltd

Auckland Invercargill Warkworth Auckland Auckland Christchurch Auckland Auckland New Plymouth Christchurch Christchurch Auckland Hamilton Auckland Auckland Auckland Taupo Auckland Taupo New Plymouth Auckland Auckland Auckland Auckland Nelson Auckland Auckland Orewa Masterton Oamaru Tauranga Dunedin Auckland Auckland Auckland Levin Auckland Rotorua Cambridge Auckland Feilding Auckland Masterton Auckland Auckland Timaru Wanganui Warkworth Waipukurau Auckland Christchurch Auckland Auckland Wellington Auckland Rotorua Thames Auckland Wanganui Upper Hutt Te Aroha Auckland Auckland Ashburton Hamilton Auckland Wanganui Papakura Wellington Auckland Christchurch Auckland

June 2013 | covernote

Star Underwriting Agents Limited is...

New Zealand owned

available 24/7

behind NZ Brokers

privately owned

of claims settled by SUAL

focused on providing a professional and quick service

underwriting decisions are ours (we ask advice sometimes)

share holding by any insurance company or brokerage

Star Underwriting Agents network of products include

A specialist in the true sense of the word. Star Insurance provides specialist motorcycle insurance, knowledge and policy conditions specific to motorcycles such as helmet and leathers cover. When it comes to claims we have motorcycle specific assessors covering the country.

The unrivalled prestige motor insurer, Prestigio Insurance provides policy holders with exclusive benefits such as replacement vehicles, manufacturer’s parts, lifetime No Claims Bonus, medical expenses and other benefits you expect from a Prestige Motor Policy.

With a razor sharp focus on providing a policy wording that’s second to none, alongside an over achieving claims service. Camper Care’s aim is to be New Zealand’s leading specialist in motor home and caravan insurance.

Tailor Made Money provides credit card payment facilities, monthly payments, direct debits, and other payment services to insurance brokers of New Zealand.

24hour roadside solutions and emergency assistance for motorcycles, vehicles and fleet operators. From basic solutions such as flat tyre, to accident coordination, legal and medical advice. Journey On is designed to operate as an affiliate program allowing you to increase your income by providing added value to your clients, while maintaining client ownership.

Warranty Plus provides electrical extended warranties and service plans for both the consumer and electrical retailers. Our systems are set up to ensure commissions are paid for the original sale, and any future warranty repairs are directed to the original retailer.

For more information on how we can help your business call us on 09 250 6009 or email admin@sual.co.nz