Our annual list of the people who influenced the insurance industry in the past year, and the factors that are guiding us into the future
By Terry McMullan
Welcome to the 2022 edition of the Insurance News Top 20 Influences and Influencers, a not-very-scientific annual list that chronicles the people and events who are making a difference in insurance.
Our tongue-in-cheek list began in 2009 when we assessed the people we believed had real influence in the Australian insurance industry. It wasn’t intended to become a regular feature, but the Top 20 list immediately became a hot item inside the industry.
Fair enough – it was our assessment of who and what we get to write about during the year. We talk to hundreds of insurance people every year, and there’s usually a fair bit of small talk from all sorts of insurance people that help us compile our list. There are no award events and absolutely no prizes.
About 10 years ago we added “influences” to clarify the environment the “influencers” were working in, and perhaps also out of fear the same influencers would always feature. Take a bow Robert Kelly, whose creation and rapid growth of the Steadfast behemoth, and his impressive influence across the insurance industry and farther afield, put him atop the list or always close to it.
But the Top 20 list is also a very good way to look back at who and what were top of mind during a 12-month period. Previous Top 20 articles in December/January editions reveal that the industry changes far more rapidly than we think. Many of the people we judged to be the top industry influencers as little as 24 months ago are no longer with us, and the cause of most of those departures had nothing to do with mortality.
This year the Insurance News editorial team was charged with naming the “people whose decisions and profile impact on the industry’s fortunes and direction and the factors/issues/events that dominated the industry over the past year”.
The assignment included a rider: “Think outside the insurance box” – in other words, look past the usual people.
So they did, and here’s the result:
Eighteen months before inflation became the in word, insurance-buyers were already complaining about significant rises in their premiums. Social media and consumer advocacy groups around the world are forcing governments to make their financial services sectors more customer-friendly. Put that alongside a growing cohort of householders unable to afford to insure their homes adequately and claims inflation lowering the real value of the sum insured, and you can see the regulators’ focus on insurance isn’t going to go away. The customer has never been so demanding.
2 Andrew Hall, Chief Executive, Insurance Council of Australia:
In interviews with Insurance News the head of the industry’s peak body sticks closely to the industry line. So we really don’t know much about Hall, and what he really thinks, but we still like what this former National Party apparatchik and senior corporate player is doing for the insurance industry at a tough time in its history. Hall has taken the industry into issues (like the controversial plan to raise the Warragamba Dam wall) that the industry should be talking about but in the past rarely has. Hall and his team are also capitalising on the arrival of a federal government unafraid to address climate change issues, and along the way the politicians seem to have gained a more sophisticated understanding of the hurdles the industry is facing at present. Being part of the solution is always better than being seen as part of the problem.
3 Anthony Albanese, Prime Minister of Australia:
4 Robert Kelly, Managing Director and Chief Executive, Steadfast:
5 Mike Emmett, Chief Executive and Managing Director, AUB:
6 Phil Kewin, Chief Executive, National Insurance Brokers Association:
7 Insurance people:
8 Michelle Levy, Quality of Advice reviewer:
9 Richard Joffe, founder of Honey Insurance:
We’ve talked a lot over the past six or so years about the threat to established insurers of disruptors using technology to simplify insurance. Joffe is the sort of innovator-disruptor the insurance industry needs to know. Honey is the latest of a slew of projects he’s started, focusing on homeowners, renters and landlords cover. It’s early days, but Joffe is following the trend towards collaboration with an established insurer, having RACQ Insurance on board as an investor and underwriter. He has attracted some powerful big-name backers and key distributors. It will take time to see how much success Honey derives from its technological edge and what Joffe calls “truly modern smart insurance”. The established insurers in his chosen niches aren’t exactly wallflowers.
10 Suncorp EGM Digital Distribution Katherine Carmody:
We were planning to include Suncorp Chief Executive Steve Johnston in our Top 20 list for selling the group’s bank and embracing “pure” insurance. But we decided instead that Carmody’s team at Suncorp deserved attention for demonstrating that insurers are well into the tech revolution. Carmody has won several digital leadership awards before, but the recent win for “Best use of technology to revolutionise customer experience” is the one that tipped the scales. The Suncorp Digital Distribution team claimed an industry first by using artificial intelligence to crunch images of 9 million Australian homes, cutting in half the questions normally asked about each property’s characteristics. That’s just one way that teamwork and technology is changing our working lives. We know Steve would have been pretty happy with that, too.
1 Climate change:
The change of federal government has given the insurance industry a moral boost as long-debated emissions reduction plans come into play. While the Government may fall a few percent short of its aim to reduce emissions by 40% by 2030 – only eight years away – the central role of insurance in protecting property has previously been compromised by a range of factors, including political reluctance to engage. The influences that make up the second part of our Top 20 list highlight the challenges the industry faces as we race towards an uncertain future.
2022 will go down in history as the year it didn’t stop raining. Record rainfall through much of the year, influenced by an unusually long La Nina effect, resulted in a significant number of communities in eastern Australia being inundated as river systems broke their banks. The crisis was continuing as this edition went to print. The February-March floods cost more than $5.65 billion so far; the rainstorm that struck western Sydney in July cost $244 million; and the mid-October storms and floods in Tasmania, Victoria and NSW cost an estimated $477 million. Entire towns have spent weeks immersed in floodwaters, crops and infrastructure have been destroyed and the grim reality of flood-prone communities having no flood insurance – and the consequences of building on floodplains – is becoming clear. Less obvious is the impact claims are having on the industry’s bottom line.
3 Insurers’ profitability:
General insurers more than tripled their combined underwriting earnings to $6.1 billion for the year to September 30, but suffered investment losses of $3 billion. Industry-wide net profit declined 0.8% to $960 million. Now line that up with natural catastrophe claims over the past three years that total more than $12.3 billion.
4 Inflation of everything:
After a long period of low interest rates, international tensions and weakening national economies have forced a reckoning, with interest rates in Australia climbing rapidly through 2022 to combat inflation. For the insurance industry it means higher premiums as insurers scramble to raise premiums and reconsider their risk appetites. While much of the inflationary effect has so far manifested in higher claims costs, the international impact coming Australia’s way is equally daunting.
5 Global economy:
Many of the pressures impacting on the insurance industry have been local in origin, but the Australian insurance industry is very much part of an international system. Inflation is just one of the economic influences being experienced globally as economies contract. War, tensions between large countries and rapidly rising energy prices (in Europe particularly) are just a few of the factors behind the uncertainty spreading around the world.
Here’s where things are going to bite. Local insurers are among the biggest buyers of reinsurance – a reflection on the relatively small size of the local economy and the scale of our occasional natural disasters. Reinsurers are raising premiums to offset falling investment returns, with global reinsurance dedicated capital at June 30 this year standing at $US647 billion – down 11% from 2021. Although researchers say the reinsurance sector is maintaining its combined ratio in the mid-90% range, the likelihood of significant reinsurance premium rises and possibly capacity withdrawals for Australian risks will be a major problem for the industry and its customers over the next few years. The January 1 and June 30 renewals will indicate just how rough it might get.
Recent advances in insurance-specific technology and the emergence of disruptors who have either set up shop in some easy-to-control niches or found the going easier by collaborating with established insurers have helped to simplify processes. There have been no industry-wide revolutions, although the major transaction platforms –operated by Ebix Australia and Steadfast – keep the local industry well up and in some instances well ahead of the game when compared with other mature markets like the US and UK.
8 People problems:
As mentioned earlier, the industry must adapt to seriously compete with other financial services sectors for graduates to ensure its future. This is a long-standing problem exacerbated by the retirement of the Baby Boomers and a loss of mentoring opportunities, especially with “hybrid work” making human resources planning more difficult. We’ll hear more about this over the next year as the exodus of older workers (and younger workers who want a lifestyle change) makes staffing a more prominent issue.
9 International tensions:
The Russia-Ukraine war is affecting economies around the world as uncertainty about the impacts become more clear. The insurance implications are many, including rising risks around shipping, manufacturing, cross-border finance, currencies and energy.
10 The future:
It should be obvious by this point that the immediate future for the insurance industry locally is uncertain. Recent catastrophes around the world – fire, wind and rainstorms – have perhaps demonstrated that we should expect extreme events, and more of them. Whether we can blame climate change or not, the rising cost of weather-related disasters means the insurance industry has to place the “rare” extreme events into the “more common” basket. As La Nina hopefully fades over the next few months, will it be followed by another Australian staple – drought and bushfires. The industry’s future will be based around greater efficiency and innovation – possible thanks to technology – and a great deal of discipline. Insurance has been relatively cheap for the past 10 years, but the days of taking the availability of cover for granted are gone.