It’s been a quiet year for catastrophes, but our 3000+ articles reveal an industry grappling with a heap of issues and celebrating expansive deals

By Harris Pozderovic

Between 2020 and 2022 some 12 insurance catastrophes were declared by the Insurance Council of Australia as the nation was whacked by bushfires, covid, and record-breaking floods. 2023, by contrast, has been quiet on the weather front, although there are strong signs the benign period is rapidly coming to a close.

By early December 2023 not a single catastrophe had been declared, with just the Newcastle hailstorm in May named a significant event (25,000 claims at a cost of $291 million). It was, of course, a very different story in New Zealand.

That’s not to say nothing happened in 2023 – far from it. The Insurance News team compiled more than 3000 articles during the year, including 12 major Breaking News bulletins.

While the catastrophes have slowed, the debate around the claims from earlier years hasn’t. The fallout from the floods of 2022 is still with us, with the industry’s response and a renewed focus on affordability emerging.

The Quality of Advice Review final report was a key development, as was regulatory action around pricing promises, and the long-awaited commitment to reform the New South Wales Emergency Services Levy.

Insurers and brokers have been kept very busy, with no sign of mergers and acquisitions activity slowing and innovation and technology still top of mind. Recruitment and staffing issues continue to bubble, with our own Wellbeing Survey identifying staff burnout as a major concern.

Below we reflect on some of the twists and turns Insurance News has reported on during an eventful year. All insuranceNEWS.com.au articles and previous editions of Insurance News magazine are available – free, of course – online.

January

While Australia emerged from the sometimes catastrophe-prone summer holidays relatively unscathed, the same could not be said for New Zealand.

Extreme flooding in and around Auckland in late January killed four people and resulted in thousands of insurance claims. The Insurance Council of New Zealand said it was “the largest single extreme weather event” the country had faced.

(There was more to come – see February).

Insurance News also reported on a major court victory for JLT, as the NSW Supreme Court dismissed a long-running class action mounted by Richmond Valley Council in New South Wales, along with several other councils. They alleged JLT breached its duties by recommending property and liability cover from only one Statewide mutual scheme and failing to advise on lower premiums available on the market.

However, some 11 months after hearings that lasted four weeks, Justice Kate Williams found JLT had not breached its fiduciary duties to individual councils and that there had been no conflict of interest.

The Underwriting Agencies Council appointed experienced industry manager Jenny Bax its first-ever chief executive, following the departure of long-serving general manager William Legge. Ms Bax’s previous experience includes senior positions at Allianz, where she served as its Underwriting Agencies GM, and at QBE as its South Australian Regional Manager.

February

January’s Auckland floods were unprecedented, but they were swiftly followed by another catastrophic event in February as the remnants of Cyclone Gabrielle smashed into the country.

Combined insured losses from the twin catastrophes have since been estimated at $NZ3.5 billion, with insurers having paid out more than $NZ2 billion from 112,000 claims at the time of writing.

Meanwhile, lawyer Michelle Levy delivered her final report on the Quality of Advice Review, offering 22 recommendations to address “serious defects” in the current regulatory setup.

The report included calls to expand the definition of personal advice to provide further clarity to clients and to retain exemptions to the ban on conflicted remuneration for general insurance brokers and financial advisers.

National Insurance Brokers Association (NIBA) CEO Phil Kewin told insuranceNEWS.com.au he was “impressed” by the report’s recognition of the value of brokers.

Late in February the NIBA board appointed JLT’s Gary Okely as President, after Dianne Phelan’s term concluded.

And underwriting agencies incubator Rhodian, co-founded by Simon Lightbody, launched with US-based specialty wholesale distributor Amwins taking a minority stake in the business.

March

Insurer Youi announced that Nathaniel Simpson would take over as chief executive from July, with Hugo Schreuder retiring from the top role after a 15-year tenure. Mr Schreuder will join the Youi board next year.

Australian and New Zealand Institute of Insurance and Finance (ANZIIF) Chief Executive Prue Willsford announced her departure after nearly a decade in charge. (Later in the year ANZIIF announced Ms Willsford will be succeeded by former Financial Advice NZ chief executive Katrina Shanks, who will officially assume the role in January 2024.)

And Renato De Maria, a Melbourne-based insurance broker, was charged with 17 criminal offences after the Australian Securities and Investments Commission (ASIC) accused him of misusing $35 million of client monies. A committal hearing will take place at Melbourne Magistrates Court on April 22 next year.

April

A well-known industry figure returned to these shores, as AIG appointed Chris Colahan its new Asia Pacific Regional President, with responsibilities including Australia. Mr Colahan set up Berkshire Hathaway Specialty Insurance in Australia and New Zealand before moving to London as the company’s President of UK & Europe. (In July, AIG named Grant Cairns as its Australia Chief Executive to replace Nigel Fitzgerald after his departure to Steadfast.)

Meanwhile, the Code Governance Committee reported a record 58,104 breaches of the General Insurance Code of Practice – a 40% rise from last year’s findings. The committee acknowledged the impact of a significant uptick in claims due to 2022’s major floods, but said insurers must adjust their business models to the increasing frequency and severity of natural disasters.

ICA welcomed the new NSW Labour Government’s confirmation that it would not proceed with a project to raise the height of the Warragamba Dam wall. ICA had previously backed the scheme, but later decided other mitigation options would offer better long-term protection in the Hawkesbury-Nepean Valley.

May

May’s big news was the announcement by Catholic Church Insurance (CCI) that it would go into run-off after failing to secure additional capital from its shareholders.

It was a bitter blow for staff at the venerable insurer, which first began operations in 1911. It faced growing liabilities following legislative changes and inquiries into historic sexual abuse within the church. The company estimated outstanding claim liabilities of about $988 million for the year, nearly doubling from 2018.

“No decisions other than further injection of capital by the Catholic Church would ultimately have resolved the impact of the dramatic increase in claim volumes that have occurred,” CCI Chief Executive Roberto Scenna told Insurance News.

Meanwhile, AUB and PSC announced that they would not proceed with a retail joint venture involving UK-based wholesale broker Tysers. AUB Group CEO Mike Emmett said negotiations halted after PSC expressed a desire to gain full control of the business in the future. AUB agreed to acquire Tysers for $880 million in 2022.

IAG announced that Chief Financial Officer Michelle McPherson would retire by the end of the year, and that Chief Insurance and Strategy Officer Tim Plant would leave at the end of June. (IAG has since named UK-based William McDonnell as its new CFO.)

June

Significant regulatory action took place in June when ASIC issued an interim stop order on the sale of 67 pet insurance products issued by Hollard and its underwriting management agency PetSure.

The corporate regulator said it was the first time it had used its design and distribution (DDO) intervention powers on reported “deficiencies” in an insurance product’s target market determination. In this case ASIC said it was “concerned that the insurers failed to appropriately define the target market for these products using objective and tangible parameters”.

ASIC lifted the sales ban on July 3 after it confirmed Hollard had provided “revised target market determinations that addressed ASIC’s concerns”.

Marsh Head of Risk Management for Asia and Pacific Scott Leney announced he would leave his position after more than 37 years at the company, moving to Bermuda-based (re)insurer Everest Insurance as Head of Asia Pacific for its international division. (In September, Marsh announced Josh Roach as its new Pacific President to take over from Nick Harris, who took a new UK-based role.)

July

The Federal Government announced the launch of a parliamentary inquiry into insurers’ responses to significant flooding events across the country last year. Financial Services Minister Stephen Jones said the review aims to provide a “whole‑of‑economy view”, which will involve looking at consumer experience, insurer preparedness for future floods, and the impact of land use planning decisions.

The Government expects to deliver a final report on the inquiry in the third quarter of next year.

Meanwhile, the General Insurance Code Governance Committee said too many insurers are relying on maintenance or wear and tear exclusions after an inquiry revealed that 55% of home insurance claim denials related to the application of the exclusions. The committee said the findings were “alarming”, with 5108 out of 10,903 complaints regarding home insurance claim denials being resolved in favour of claimants. Overall, 42,956 home insurance claim denials were reported.

August

The Australian Competition and Consumer Commission (ACCC) rejected Suncorp’s $4.9 billion deal to sell its banking business to ANZ, with ACCC Deputy Chair Mick Keogh saying the regulator was not satisfied the acquisition would not substantially lessen competition for the supply of home loans nationally as well as banking enterprises in Queensland.

The Australian Competition Tribunal was due to hear appeal submissions from ANZ and Suncorp on December 4, with a decision expected by the end of February 2024. The parties have expressed confidence that the deal will go ahead.

Mega-broker Marsh announced plans to acquire 100% of local business Honan Insurance as it looks to expand its mid-market presence. A Marsh spokesperson told insuranceNEWS.com.au the deal will integrate two “highly complementary businesses”.

September

Following weeks of anticipation, the Bureau of Meteorology finally confirmed the onset of an El Nino and positive Indian Ocean Dipole (IOD), bringing drier and warmer conditions to many parts of Australia over the coming summer and beyond. The weather phenomena increase concerns over the risk of bushfires and droughts, with parts of Queensland, NSW, Tasmania and WA experiencing serious fires through spring.

US specialty insurer Markel launched in Australia, with Axa XL’s Head of Long Tail Lines Rory Morison moving across to lead its local operations. The insurer opened offices in Brisbane, Sydney and Melbourne as it noted growing demand for specialty commercial insurance, notably in casualty and financial lines.

October

Steadfast announced the $US55 million acquisition of US broker group ISU, one of the US’s largest privately owned independent insurance agencies, with network members in more than 40 states. The deal brought to a head Steadfast’s long-awaited expansion into the US market. CEO Robert Kelly says the deal will see the group enter a “long-term strategic partnership” with ISU to distribute and platform its services in the region.

A Deloitte review of insurers’ responses to last year’s record floods in Queensland and NSW reported systemic failures and inadequacies exposed by the scale and complexity of the event.

The report noted exacerbated delays, struggles to add new staff, policy term issues, and poor coordination between governments and insurers. ICA Chief Executive Andrew Hall acknowledged the findings and said the industry will consider and incorporate the report’s recommendations to help prepare for future events.

November

The NSW Government announced plans to remove the state’s insurance-funded Emergency Services Levy (ESL) following sustainability and cost issues. The industry welcomed the long-awaited move, following previously abandoned reforms in 2017, with NIBA and ICA saying the move will help ease underinsurance issues in the state. Premier Chris Minns said his government will consult with the industry and other stakeholders.

NSW is the last mainland state to continue using an insurance levy to help fund local and state emergency services.

Then Steadfast announced the purchase of a 70% equity interest in Queensland underwriting agency Sure Insurance, with Robert Kelly describing the deal as a “highly compelling acquisition opportunity”. The deal includes an upfront cash payment of $148.8 million, and was expected to be completed by the end of November.