ARDONAGH SWOOPS FOR ENVEST
The UK’s largest independent broker, Ardonagh Group, has agreed to acquire Australian insurance investment and distribution business Envest for $482 million.
Brisbane-based Envest includes the broking network Aviso Group – which has itself expanded rapidly in recent years to manage $405 million in gross written premium – and 10 underwriting agencies.
The combined portfolio has more than 550 employees and recorded $76.7 million in revenue for the year ending June 30 last year.
Envest will be acquired by Ardonagh Australia, which will trade locally under the Envest name and be led by current Envest MD Greg Mullins. It will operate as part of Ardonagh Global Partners, which is led by CEO Des O’Connor.
Ardonagh says its other Australian assets – Resilium Insurance Broking and Epsilon Underwriting – will operate as normal and continue to be led by their existing management teams.
Adrian Kitchin, Ethos Broking Australia CEO and Executive Director of Resilium and Ardonagh Australia, will become part of the executive team within Envest. Paul Lynam will continue in his role as Chairman of Ardonagh Australia.
“This is a hugely complementary acquisition, aligning neatly with our group’s footprint both globally and in the Australian market, which has grown substantially since our maiden investment in Resilium in February 2021,” Mr O’Connor said in a statement.
“It provides a proven platform to accelerate our growth ambitions in the region.”
ALLIANZ FIRST TO JOIN POOL
Allianz Australia has become the first insurer to announce that it’s joining the cyclone reinsurance pool, advising that it will transition its householder portfolio into the Federal Government-backed scheme by the start of January.
The transition of residential strata and small business property will take place during next year, Allianz says in a submission to the Federal Parliament Joint Select Committee on Northern Australia.
“During 2023, Allianz also expects to look at options to grow market share in Northern Queensland and Western Australia, which will inject greater competition into these markets,” the insurer says.
Large insurers are required to place their cyclone-related risks into the pool by the end of next year, while smaller firms have an additional 12 months. The pool, run by the Australian Reinsurance Pool Corporation (ARPC), was launched at the start of July, but no insurers have joined to date.
Queensland-based RACQ says it is concerned that the pool will fail to meet the expectations of its 300,000 members in the north, even after examining more specific information released by the ARPC in recent months, and the pool needs a redesign if there is a serious intent for it to work properly.
Meanwhile, estimated premium savings set to be delivered to consumers by the pool have dropped after recalculations based on new data.
As insuranceNEWS.com.au has reported, the previous Coalition government flagged projected savings of up to 46% in home, 34% for SMEs and 58% for strata.
Following the federal election the Labor Government released different figures based on analysis by Finity. This showed average savings in the highest risk areas of 38% for home, 28% for SMEs and 18% for strata.
In October, however, the analysis was updated after insurers provided more data.
Finity’s report now shows average savings in the highest risk areas of 32% for home and 13% for SMEs. There is insufficient data to show an equivalent figure for strata.
COMMISSIONS ‘CAN STAY’
The Quality of Advice Review has proposed keeping general insurance commissions exempt from the ban on conflicted remuneration, with an additional layer of protection for consumers requiring brokers to first obtain written consent from retail clients for commissions.
The Review acknowledges the existing commission model in some cases does lead to a “conflict” for brokers and that this “conflict creates a real risk” that the quality of the advice provided is not as good as it would be if a client had paid directly for the advice.
But the Review says the risk that consumers may not be getting quality advice from brokers who are paid commissions has been “diminished” by a number of recent changes to the law.
The changes – made after the Hayne royal commission’s final report in 2019 – include measures in relation to anti-hawking, deferred sales of add-on insurance, design and distribution obligations, and the commission caps on consumer credit insurance.
“The general insurance industry is changing, voluntarily and in response to recent changes to the law,” the Review says in its newly published Conflicted Remuneration Paper.
“We have been told that, as a result of these changes, many of the key contributors to the misalignment between industry incentives and consumer interests such as volume bonuses and junk products have ceased or will shortly cease.”
The Paper says requiring brokers who provide personal advice in relation to general insurance products to have approval from clients that they can be paid a commission will help consumers make “informed” decisions.
The consent – which applies only to retail clients – must be in writing, stating the insured is aware the broker is getting a commission and other benefits from the product issuer for arranging the insurance.
Reviewer Michelle Levy will provide a final report to government by December 16.
RACQ APPOINTS INSURANCE LEADER
RACQ has appointed Trent Sayers, pictured, as Group Executive Insurance after he took up the position in an acting capacity mid-year following the departure of Tracy Green.
Mr Sayers, who joined RACQ in January as GM Claims, has more than 25 years’ experience in the financial services and general insurance industries. Previously he was RACT Insurance CEO and held various positions at AAMI.
“Trent brings a wealth of experience from across multiple insurance functions including claims, product, pricing and distribution,” RACQ CEO David Carter said.
“His passion and commitment for our members is clear, having supported many of them during one of the worst natural disasters in our club’s history earlier this year.”
Mr Carter says Queensland continues to face an increasing threat of more frequent and severe natural disasters and ensuring insurance remains affordable and accessible is a core focus for RACQ.
ASIC WARNING ON SUMMER CLAIMS
The Australian Securities and Investments Commission (ASIC) has written to insurers warning they should be prepared, proactive, transparent, consumer-centric and responsive in dealing with claims as they face a summer that’s likely to continue the recent heightened pattern of severe weather events.
The letter to directors says this summer is set for a continuation of La Nina conditions, with severe weather increasing in severity and frequency.
“As these events are expected to lead to increased claim numbers, it is an appropriate time for ASIC to restate our expectations in this area,” Senior Executive Leader, Insurers Rhys Bollen writes.
Expectations include that insurers will have adequately resourced and trained teams of claims handlers, complaints managers, assessors and other service providers.
Insurers should inform consumers about their policy coverage, including exclusions or optional benefits, when they lodge a claim or make an inquiry, explain the process, provide realistic expectations about progress, facilitate communication between consumers, experts and tradespeople and provide regular updates, it says.
ASIC expects insurers will review and refine response processes, continue to invest in systems to accurately record claims information and continue to invest in increased capacity and resources to deal with severe weather events.
The regulator says significant pressures in claims handling and dispute resolution appear to be a widespread and ongoing issue following a series of natural catastrophes and insurers should consider whether “a permanent uplift” in
resourcing is needed.
REINSURANCE RENEWALS ‘CHALLENGE’ AHEAD
Reinsurance prices are set to continue to rise and retention levels will also increase in upcoming renewals following more challenging market conditions in the wake of Hurricane Ian and Australian flooding, Swiss Re says.
The majority of Australian insurers renew reinsurance programs at the start of July but Head of Property & Casualty Underwriting, Asia, Australia and New Zealand Mark Senkevics says market drivers affecting pricing and retentions will be felt at both the January renewals and into the next mid-year period.
“It’s often been said that Australia’s in the eye of the storm when it comes to climate change and we’re seeing that play through,” Mr Senkevics tells insuranceNEWS.com.au. “I would sense that the reinsurance market will see some significant change in the coming year.”
Since the reinsurance rendezvous event in Monte-Carlo in September, the global reinsurance market has experienced Hurricane Ian, while loss estimates for the Australian flooding earlier this year have continued to climb, he said while attending the Singapore International Reinsurance Conference (SIRC) this week.
“The people I’ve spoken to here at SIRC are suggesting that the structure of the market needs to change in order to make it sustainable,” he said.
Reinsurers are also affected by reduced retrocession availability, with Hurricane Ian contributing to trapped capital in collateralised markets, while inflation pressures remain a persistant factor across the insurance sector.
ICA RELEASES EMISSIONS ROADMAP
The Insurance Council of Australia (ICA) has released a roadmap for insurers to meet emissions reduction targets and says it will advocate on behalf of members and their customers for policy settings that accelerate Australia’s transition to net zero.
The roadmap, launched at the ICA annual conference in Sydney, outlines pathways for insurers to achieve net zero emissions for their operations by 2030 and across underwriting, claims supply chains and investment decisions by no later than 2050.
“Insurance is a foundational component of the Australian economy with billions of dollars invested in industries globally, and coverage of millions of Australian homes, businesses and assets,” ICA CEO Andrew Hall said.
“This roadmap will play a critical role in enabling our industry to do our part in reducing emissions and achieving the goals of a net zero economy.”
INVESTMENT LOSS KEEPS PROFITS LOW
The insurance industry has made its first loss on investments in at least two decades leading to another year of low profitability as strong claims inflation also impacted results, the annual Finity Optima report says.
After a pandemic-induced collapse in return on equity (ROE) in the past two years, the outcome in fiscal 2022 was only marginally better at 3%, the report says. The result marks the third year in a row of returns below 5%.
The investment loss of more than $2 billion is the first since the Australian Prudential Regulation Authority began keeping records and reflects an unexpectedly rapid rise in interest rates and resulting paper losses on bond values as well as volatility across financial markets.
“It’s been quite an extraordinary year for investments, with an assault on all sides and that’s affected insurers’ investment performance,” Optima lead author and Finity Director Andy Cohen told insuranceNEWS.com.au. “The good thing is we don’t expect a repeat of this investment performance next year.”
Finity says in the report released today that it anticipates ROE will improve to 7.5% with the investment result expected to swing to a $3 billion profit. Premiums will continue to increase as insurers respond to the inflationary pressures and further correct past under-pricing in some areas.
“We are forecasting a bit of a bounce back in return on equity, but it’s still below target, and it’s very contingent on those investment markets behaving themselves, and getting back to a more normal outcome without the wild swings we’ve seen,” Mr Cohen said.
2022 has been a year like no other. War in Europe, China’s increasing belligerence and lockdown mania, the threat of a global recession, inflation, restless cities, natural catastrophes worldwide…the list is long and in an interconnected world the impacts are vast.
Not least, of course, for Australia. Cracks are appearing in the wall of Australia’s insurance dam. Massive rainfall totals and resulting floods during 2022 have caused reinsurers to think twice about Australia’s place in the reinsurance sun as a small but stable and predictable market, where natural catastrophes occasionally happen in small pockets of the country. The sheer amount of territory consumed by these floods will inevitably result in property insurance premiums continuing to rise.
Our cover article in this edition of Insurance News features QBE Group Chief Executive Andrew Horton, who warns of an imminent crisis in the industry as reinsurance rates rise and availability falls. He sees capacity shortages intensifying as the reinsurers scramble to keep up with the rising cost of record wildfires, floods and windstorms around the world.
This is going to put brokers on their mettle, and we are quite likely to see some new approaches to transferring risk emerging to deal with the lack of local capacity. Necessity is the mother of invention, and this time around we certainly need innovation and more thinking outside the traditional box.
Out of adversity there is one glimmer of positivity: insurance and climate change-related issues and options are at last being openly discussed and debated.
The federal and state governments now appreciate the need for action to ensure Australians, their property and their businesses, are able to secure affordable insurance.
After so many years of blinkered conservative politicians and bureaucrats ordered to silence, the emergence of a new attitude to climate change is very positive. But it won’t bring back cheap property insurance; climate change means severe weather risks are here to stay.
While this has been the kind of year that the late Queen Elizabeth once so aptly dubbed an “annus horribilis”, we’re at the time of year where the sun should shine and many Australians can relax. Not so much in the insurance industry, however, where the scale of the disasters being handled are likely to keep many seated at a keyboard. To them and our thousands of readers, the team at Insurance News extends to you the compliments of the season. Enjoy, and stay safe.
— Terry McMullan
Andrew Horton has QBE heading in the right direction, but warns the road ahead for insurers could be difficult
By John Deex
When Andrew Horton took up the Sydney-based role of QBE Group Chief Executive in November last year he was fulfilling a long-held ambition. While he has travelled widely, the Cambridge-educated Brit had never previously worked outside his homeland.
Landing in Sydney last year followed a few covid-related complications, but since he started with Australia’s largest international insurer he hasn’t looked back, enjoying the outdoor lifestyle (despite the record rainfall) and watching the QBE-sponsored Sydney Swans AFL team instead of his beloved Manchester City soccer team.
Apart from having a deep understanding of the global industry and its many pressures, the former chief executive of UK-based insurance group Beazley has also brought QBE a clearer culture and identity.
He’s stabilising the US division – too often a drag on the wider group – and has outlined the priorities for QBE’s key Australia and New Zealand business, too.
But while he has focused on the group’s far-flung enterprises and the development and retention of high performers in his workforce, he also maintains a weather eye on a “macro-challenge” that’s bubbling up. It’s all about the capacity, or lack of it, on the underwriting side of the industry.
Meeting Insurance News at the group’s new George Street headquarters in central Sydney, He outlines a developing situation where insurers’ capacity constraints will fall short of the demand for cover.
Underwriters earn less return on capital than brokers, and with natural catastrophes taking place with disturbing regularity the risks are rising – and so are the values of assets requiring cover.
For local clients out of luck with domestic underwriters, seeking capacity overseas only works for so long. And after a spate of devastating bushfires and floods, reinsurers are looking at Australia in a different light.
Demand for cover is going one way, and the appetite to provide capacity is heading in another, Mr Horton says.
“I remember in 2004, it was a year of four hurricanes and everybody worried about it a lot, but not one of them cost more than $5 billion or $6 billion,” Mr Horton tells Insurance News.
“Now a hurricane is $50 billion, or $60 billion. That’s a massive amount, and the insurance industry’s capital has not increased tenfold in that time.
“So the quantum of these losses is so much greater than it was, but is the capital keeping up with that?
“From a reinsurance point of view Australian capacity was highly thought of a few years ago because it was a great diversifier. Now we’ve had a number of years of relatively large losses and people are questioning, ‘is this as good as we originally thought?’
“Reinsurance renewals on January 1 are going to be interesting.”
Mr Horton recently attended a major insurance conference in the US, where the industry is reeling from the impact of Hurricane Ian, the most destructive windstorm to hit Florida since 1935.
“Reinsurers are talking about reducing their capacity for catastrophe business,” he says. “Not cat business there, or there, or there – cat business in total, in 2023.
“And the demand from the clients and brokers is [that] more is needed, because values have gone up and people continue to build. So we have this crunch coming.
“If the reinsurers give insurers less supply, how can we possibly write as much? I’m worried about this.”
Mr Horton is “a great fan of brokers”, but says it’s no good intermediaries complaining about a lack of capacity while insurer returns are so low.
“There is the challenge of whether people will put more capital into the underwriting industry, which generally doesn’t earn as much as the broking industry.
“I think we’ve got to think through that with our broker partners. Are we were going to rebalance returns between brokers and insurers at some point? I don’t know. I think at some point that needs to happen.”
While Mr Horton believes the industry needs to “tempt more capital” into the underwriting side, he says that isn’t going to be easy, or immediate.
“To do that, we need to show that we can deliver a higher return. That’s not going to be this year. That’ll be maybe next year or the year after. But the crunch is coming before that.”
QBE is working hard to deliver a better return for its shareholders, but its options are limited. With rates rising, property cover looks to be an opportunity next year.
But it’s volatile, and while rates are rising, so are claims costs.
“Every time we put the rates up, the claims have actually more than moved up with them,” Mr Horton says.
Claims inflation is adding to the pressure, with supply chain issues and a lack of tradesmen making everything tougher.
“The claims are being settled higher than people originally thought. And that has to be built into the price, which of course then leads to an affordability issue.
“There is a gap coming. There are a number of elements. Is the reinsurance capacity going to be there? My feeling at the moment is [reinsurers] are not going to be growing it.
“If anything, they would like to shrink it. If they shrink it, can the primary insurers hold their position? Or will they have to shrink accordingly?
“Then there’s claims inflation. If claims are settling higher, that has to feed into pricing in some way. Then there’s the affordability issue. Will people retain more because they can’t afford to buy as much coverage as they’d like?
“That’s not a great chain of events that could possibly happen.”
On the QBE front, Mr Horton’s number one target when he joined was to stabilise the team – noting high turnover at senior level, which crucially includes his own role. Long-serving chief executive Frank O’Halloran retired from the job in 2012, but his successor John Neal left in December 2017 and his replacement Pat Regan was gone by September 2020.
For Mr Horton, the initial challenge at QBE was coming up with a new purpose and vision, with priorities that “make sense to everybody”.
He says consistency around the company’s mission, and how people can contribute, is reaping rewards already.
“Ideally, clients, investors, brokers want to see the same people year in, year out. If people do leave, we need to ensure we have more internal succession.
I’d like people to progress through the company.”
His second major focus was the US business.
QBE’s US presence grew rapidly through acquisitions – more than 80 of them – but after the financial crisis it became too complex and unpredictable.
Many businesses have been “culled”, and QBE’s US workforce has shrunk from 10,000 to about 2500.
“[US Chief Executive] Todd Jones has done a great job,” Mr Horton says. “He’s shrunk it down to something which is much simpler, and I think now it is in a great place to grow profitably from this point in time.
“We have a limited number of products, good leadership in those, and a more attractive platform for other people who want to join.
“Now we can tell brokers that we are going to be more consistent, because the broker community has seen a pretty inconsistent QBE over the past 10 years in the US.
“It’s a massive market, and no one dominates it, so it’s a great opportunity for growth. But you need to be very stable and consistent in the US market.”
Growth in the much smaller Australia and New Zealand markets may be harder to come by, but Mr Horton is confident that QBE’s history and reputation stand it in good stead.
It holds 13% of the personal lines market but is much stronger in commercial. Technology will be key as the insurer launches a renewed push to grow its SME business through improved tech for brokers, and offering platforms complementary to existing broker channels.
“That’s our heartland, so that’s what we’re focusing on investment in. How we can use technology to access the smaller side of SME, which I think is a good area to play because that’s more closely aligned with what we do, rather than the large corporate.
“It could be a platform play – setting up a platform where smaller companies would buy their insurance along with other things, which I quite like the concept of. We need to find partners to do that.”
Across the business, claims performance remains vital, and Mr Horton believes the Australia team has responded admirably to the recent floods.
He says it’s impossible to resource for peak claims, so QBE reallocates staff within the company and then brings in temporary workers.
“This is the most important thing for the insurance industry,” he says. “Clients are going to stay with you forever if you treat them really well on the claims.
We’re not selling insurance policies, we’re selling claims, that’s what everybody is buying. And genuinely, the feedback is good.”
That doesn’t mean the feedback when it comes to mainstream media coverage of claims is as positive. Mr Horton believes the industry is treated unfairly.
“The problem, which I think is unfair, is the industry gets flagged when a handful of claims don’t work.
“The broader media flags every claim that goes wrong, and it doesn’t talk about the zillion claims that went well.
“We are trying to make sure every claim works well. But it’s hard to do that when you’ve got a catastrophe and there are so many of them in one go.
“It’s always a pretty sad event for me, for all of us working in the industry, when we are working our socks off getting around as many claims as possible; and anything that goes wrong, gets high profile. So, we are held to a very, very high bar.”
Mr Horton believes insurance can be a positive force, and he’s working hard to make sure that QBE fulfills this potential, and remains relevant.
But at the same time he’s not afraid to push for the returns that are required, to encourage capacity into the industry and enable insurers like QBE to provide the cover that is very much needed all around the world.
People-focused: Mr Horton has targeted retaining key staff
‘I chose insurance’
Andrew Horton hates the over-used industry cliché that people “fall into insurance”, because he thinks it devalues a remarkable industry that is such a force for good.
Like so many others he didn’t initially aim for a career in insurance, but when the chance arose he snapped it up, and believes it’s “one of the best things” he ever did.
His degree from Cambridge University was in chemistry, but after unsuccessful efforts to join the chemical industry he trained as an accountant.
The experience gave him great insight into a range of industries, and opened up a move into banking. Three banks later, in 2003, he was given the opportunity to enter insurance as Beazley chief financial officer.
“Andrew Beazley, who set up the company in 1986, was a very charismatic individual, and willing to take a risk on someone with no insurance experience,” he tells Insurance News. “The only insurance experience I had was buying my own policies.
“He was just fascinated in bringing in people from outside the industry.”
Mr Horton took over as chief executive in 2008 when Mr Beazley stepped down after announcing a battle with cancer, which would claim his life two years later.
After “12 great years”, he secured the move to QBE and relocated to Australia.
“I was attracted to the role because of the wide footprint of products and global geography, where I could work outside the UK,” he says.
“I was equally impressed with the people I met during the interview process, which made the decision to join easy.”
Mr Horton says he enjoys building relationships, even with competitors, and believes insurance is a “force for good”.
“Everybody needs it. It’s difficult to operate any business as an individual without buying some form of insurance.
“So I’ve really enjoyed that force for good, the relationship aspect of it, and trying to promote it as something people should want to be part of.”
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:
Seven months after taking over in Canberra from a long-running conservative government, Anthony Albanese is moving as quickly as possible to enact some dynamic policies. The previous federal government’s stance (or lack of one) on climate change – a mindset seemingly guided more by News Limited than opinion polls – was a constant frustration for the industry as it vainly argued that mitigation projects are the only way to counter flood, cyclone and bushfire risks. The federal budget in October was an “historic shift” (in the words of ICA’s Andrew Hall). It included a $22.6 million package of positive mitigation measures and formalised commitment of up to $1 billion over five years from 2023-24 through the Disaster Ready Fund. There will be plenty of gripes over the next couple of years about the affordability and availability of insurance, but at least the Government and the industry are speaking the same language.
4 Robert Kelly, Managing Director and Chief Executive, Steadfast:
The Top 20 list’s star performer isn’t resting on his laurels. Having grown Australia’s largest broking group, Kelly is still making deals, building his own transaction platform, buying brokerages (the most recent being Melbourne-based group Insurance Brands Australia), consolidating others and devising alternative underwriting options for an army of brokers. It’s worth noting that two global broker groups now making their mark in Australia, Howden and Ardonagh, have placed their local operations under the expansive Steadfast umbrella.
5 Mike Emmett, Chief Executive and Managing Director, AUB:
Like his counterpart at Steadfast, Mike Emmett is working around the low appetite for risk that prevails among Australian underwriters at present, with the $880 million acquisition of London-based specialist wholesale broker Tysers being hailed as a strong move that will boost the group’s earnings and diversify capacity sources for the group’s brokers. The Tysers deal, announced in May and finally settled in October, was capped by the acquisition in September by AUB’s Austagencies of Strata Unit Underwriters from IAG. The deal adds heft to AUB’s existing Longitude underwriting agency – which will continue to work separately – pushing AUB from fifth to second in the lucrative but occasionally chancy strata sector. Having bought back 360 Underwriting and its dynamic crew, Sydney-based AUB has interests in some of Australia’s best broking assets. Having brought AUB back to “pure” broking after a distracting foray into ancillary services, he’s now engaged in finding similar niche growth opportunities.
6 Phil Kewin, Chief Executive, National Insurance Brokers Association:
NIBA did well to bring Kewin across from the life industry, where he was CEO of the Association of Financial Advisers. Representing intermediaries at NIBA is the same, but also quite different. Kewin guided financial advisers through the minefields associated with new regulations flowing from the Hayne royal commission, and since he took up the NIBA role in August he’s proved a dab hand at balancing the varied (and occasionally passionately held) interests of general insurance brokers. So far his representations to the Quality of Advice review seem to have moved commissions closer to a reasonable conclusion, and while his updated code of practice stirred up some less flexible members, he moved quickly to implement a compromise and lower the temperature. A former senior Zurich executive on the life side and a financial planner to boot, he walked into the job fully qualified to lead NIBA members into the future.
7 Insurance people:
Blame covid for revealing to insurance industry employees that the office isn’t necessarily the centre of the universe after all. So-called hybrid working arrangements have evolved rapidly after the pandemic lockdowns of 2020-21 showed workers and managers that working at home and using technology to stay in touch has significant advantages, although parents living in cramped homes have plenty of reasons to disagree. Working from the office for two to three days a week is becoming the normal pattern, and larger companies are shedding office floors to reflect the new working reality. The lockdowns were mentally troubling for many insurance people, and the Insurance News Wellness Survey in October showed that for many, hybrid working especially isn’t all that wonderful. Meanwhile, the “great resignation” post-lockdowns saw some people opting for a totally new way of life. Competition for talented recruits and graduates is also heating up, and competing with the banks and other higher-profile industries indicate it’s time for the insurance industry to get its act together.
8 Michelle Levy, Quality of Advice reviewer:
Few people ever get the sort of assignment that gives you the ability be either Santa Claus or the Grinch. When Allen’s Partner and financial services legal specialist Michelle Levy took on the role as Reviewer for the Quality of Advice review, everyone expected more of the sometimes-indigestible medicine (“It’s good for everyone else, so drink it and shut up”) the regulators have been dishing out since the Hayne royal commission. While her final report hadn’t been released when this article was written, Levy has proved to be a pragmatist, searching for what works best to achieve the “best interests” duty. Her comments in insuranceNEWS.com.au and elsewhere have indicated the end of general advice where it should really be personal advice, and an admission that although insurance brokers’ commissions will have to be disclosed to clients, they won’t be abolished. She said in a recent interview that the recommendations she has made for her review “exist against a very strong backdrop of consumer protection law that is, I think efficient, honest and fair”. That should settle brokers’ nerves without Levy ever losing sight of the needs and rights of the customer.
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.
It’s complicated and loaded with limits, but experts say cyber cover will become as common as car or home insurance
By Miranda Maxwell
Medibank Chief Financial Officer Mark Rogers recently played around the edges of describing cyber insurance as junk cover as he explained why the private health insurer had opted out of arranging a policy.
Speaking after the personal data of millions of customers was stolen by cybercriminals – costing Medibank an estimated $35 million and unquantifiable reputational harm – Mr Rogers questioned “the actual ability to make a claim” under a cyber policy.
He said there were limits on the amount of exposure insurers were willing to accept, on top of significant jumps in premiums over recent years.
“I wouldn’t expect that the majority of costs would have even been covered,” he said.
That an insurer valued at $8 billion couldn’t secure cyber cover it deemed appropriate or valuable sounds like a damning indictment on the state of the insurance market.
Yet it comes in stark contrast to optimism – even bullishness – from insurance industry sources closer to the issue than Mr Rogers.
Take as an example a report from Global Insurance Law Connect (GILC), a diverse global network of insurance law specialists that includes Sparke Helmore in Australia and Duncan Cotterill in New Zealand.
It says cyber insurance has the potential to become “as globally ubiquitous as car and home insurance,” with long-term growth assured.
GILC concedes that right now cyber insurance is expensive and sometimes provides limited coverage, particularly outside Europe and North America. It describes Australia’s cyber insurance market as “immature”.
The upshot appears to be that this very new insurance product is still searching for viability in the face of constantly changing risk levels that, at their worst, have the potential to seriously affect masses of connected entities all at once.
S&P Global Ratings says premium rises and wariness among cyber underwriters is “justified by the systemic risk” from interconnected digital services and infrastructure.
Swiss Re’s Head Cyber Reinsurance John Coletti concurs, saying says a single cyber attack could “potentially affect the entire portfolio of an insurer”.
Sydney-based cyber industry association CISO Lens, the peak body for cyber security executives from large organisations in Australia and New Zealand, says cyber insurers face the significant problem of “trying to ameliorate the risks, and associated costs, of a wicked problem which has no solution”.
Cyber catastrophes are a new phenomenon, and the modelling necessary to accurately predict losses doesn’t yet exist, with insurers missing the necessary tools and data to design competent insurance plans.
Ratings agency Fitch says the standalone cyber loss ratio last year was 65%, from 72% a year earlier.
Frequency now equates to a cyber attack every seven minutes in Australia. In a clear sign once-enthusiastic insurers have struggled to price correctly, cyber premiums, deductibles, obligations, exclusions, and the number of underwriters in a policy are all on the rise.
The enormity of the problem is resulting in the evolution of a unique product in which traditional cover is sold, but with insurers and brokers also playing the roles of educator and enforcer of cyber mitigation efforts. In a telling example, UK cyber specialist CFC now has a dedicated security division – and more security professionals than underwriters.
Medibank refused a $15 million ransom demand to prevent sensitive medical details of customers being published on a Dark Web site backed by Russian ransomware gang REvil. Weeks earlier, millions of Optus customers experienced the theft of their email and street addresses, birth dates and licence or passport numbers.
This has truly rammed home the gaping cybercrime risk to every Australian. A government “standing operation” to disrupt cybercrime syndicates has since been announced, and data breach penalties of at least $50 million are also in the works.
Melbourne-based Sparke Helmore Cyber Insurance Leader Jehan Mata says she has observed “some active realisation in the Australian community regarding cyber risks which is evident by legislative changes being undertaken”.
She calculates that 16 insurers in Australia offer cyber insurance, but more policies are being underwritten internationally, particularly in London.
Australian providers have either reduced their cyber coverage limits, substantially lifted premiums or removed themselves from the market entirely. Only a fifth of small businesses are estimated by Sparke Helmore to have adequate cyber cover.
The additional caveats and sophisticated pricing is a policy “review and reset” that is likely to see capacity constraints soon ease, and product innovation shared globally. Ms Mata says cyber insurance will become more mainstream with the continuing uptake of digital communication.
“This puts the likelihood of cyber insurance becoming as easily accessible and sought after as professional indemnity cover and more akin to fire cover.”
Despite Medibank’s Mr Rogers’ comments on the futility of having cyber cover, Ms Mata points to “integral value-adds” in cyber policies, including cover for breach response, legal fees and investigations and first-party losses.
Many of these policies offer a crisis management process with 24/7 assistance. A “breach coach” permanently on call can gauge and triage the nature of an attack and marshal forensic teams, loss assessors and public relations experts.
They will assess if any notification requirements are triggered, the options for recovery, and manage time-sensitive responses.
Insurers will inevitably increase their focus on facilitating behavioural change among customers, while Sparke Helmore says it assists with the pre-breach advisory phase, because having lawyers on board brings real-time experience “if and when” a breach occurs.
“Cyber does overarch various industries and areas,” Ms Mata says. “It is not limited to insurance and hence there has to be a real synergy between organisations and insurers to have a strategy when developing cyber resilience.”
Ratings agency Moody’s predicts cyber insurance market conditions will “tentatively improve” over the coming year as better returns attract more providers. Premium increases will moderate, though cyber insurance demand continues to outweigh supply, it says.
Moody’s says insurers are cautious about their exposure to systemic cyber risk, narrowing coverage and making underwriting standards stricter.
Globally, the average loss ratio for standalone cyber insurance – including direct costs for defence and cost containment – deteriorated to 73% at the end of 2020, prompting some triple-digit price increases last year.
Beazley, one of the largest global cyber insurers, reported a January-June cyber loss ratio of 49%, down from 69% at the end of last year.
“As profitability returns, more competition will enter the market, which will ease cyber capacity constraints and help stabilise prices,” Moody’s says.
“Nevertheless, insurers will likely remain highly cautious on pricing given the constantly evolving cyber threats.”
Marsh McLennan has also reported a moderation in the pricing of cyber, though New York-based Group President and Chief Operations Officer John Doyle says despite higher retentions and lower limits, “the cyber market is not near maturity”.
He says this indicates change – and growth – ahead.
“It’s been a difficult market. We’re still working to bring more capital to the market and better solutions to the marketplace. The cyber insurance market should be an area of growth for us for some time.”
Ms Mata predicts cyber attacks will be more prolific and sophisticated in the future, and as technology advances and more platforms become mainstream there is likely to be a shift to individual cyber insurance “like current home and content policies”.
“I believe there will be more policy options available, but the list of exclusions will also grow, which will look to shift the risk to the insured…to ensure that it has done its own due diligence.”
Lloyd’s recently mandated that managing agents exclude state-backed cyber attacks and war from standalone cyber policies, and CISO Lens argues that for now, cyber insurance should be viewed purely as a risk management mechanism of last resort during a “company-ending” event.
“If the worst risks a company can face cannot be insured against, it challenges the relevance of cyber insurance,” it says.
Even so, the association says insurance is still worth having as a backstop, and the “right answer is likely to be a complex combination of multiple factors,” with avoidance the first priority.
“The hard truth is that being able to make an insurance claim is a pyrrhic victory,” CISO Lens says.
It tells companies the “most pragmatic path forward in this market is to view cyber insurance as a safety net of last resort”.
“Lift your own deductibles as high as practical in order to minimise premiums, and then only seek to make a claim against your cyber policy in the event of a company-ending incident.
“Pay as little as you can, and plan to use it only once,” CISO Lens says.
Presenting the 2022 Insurance Ad Oscars, our annual look back at the industry’s efforts over the past year, compiled by The Lead Agency’s marketing team
While 2022 has been a year of change for the Federal Government and corgis everywhere, some things remain the same.
As much a Christmas tradition as putting up a tree and Uncle Bob complaining about petrol prices again, we present the annual Insurance Ad Oscars.
We’ve again turned to insurance marketing experts The Lead Agency to find the most effective insurance industry commercials in 2022.
Consumers today have experienced a year of external factors affecting their purchase decisions – from inflation to sustainability, climate risk and diversity – while also adapting to the pandemic’s aftermath.
To succeed with today’s consumers, advertisers must position their businesses in a way that addresses their evolving needs. Insurers have traditionally characterised themselves as the economy’s financial first responders, helping policyholders respond to and recover from some of the most challenging times in their lives.
However, the modern consumer demands more. Consumer uncertainty is at an unprecedented high, and in an unpredictable and ever-changing world consumers are looking for brands they trust.
The inaugural Insurance Ad Oscars in 2017 had NRMA Insurance’s Insurance Confidence campaign (https://www.youtube.com/watch?v=sH7Tsk7BR2c) taking out the Best Overall award for a humorous portrayal of a haphazard superhero in extreme circumstances.
Those were happier days: coronavirus sounded like a beer hangover, Donald Trump hadn’t been impeached and the cast of Friends hadn’t reunited.
In 2022, however, insurers went back to basics. The most effective advertisements of the past year have seen insurers switch to addressing real-life concerns and building trust through authenticity, value, inclusion and cost-savings.
Thanks: AAMI declares support for the Victorian SES
The Milk Crate Challenge Social Issues Award
Winner: AAMI VICSES: https://www.youtube.com/watch?v=kJ4Jwi3MbtA
Businesses have traditionally avoided communicating their values and beliefs due to a concern over being perceived as “political” or even choosing sides. However, there has been a significant shift toward Corporate Social Responsibility and issues-based advertising.
In 2021, Zurich made it known that it was actively involved in helping create a solution for climate change with its What Can Go Right? campaign (https://www.youtube.com/watch?v=fjxoRQZuKMQ), while AAMI’s Vax Up Australia campaign encouraged Aussies to get vaccinated – addressing a somewhat contentious topic in the country at the time (https://www.youtube.com/watch?v=m6awkkPhnQA).
In 2020, NRMA Insurance focused on raising awareness around bushfire protection with its First Saturday campaign (https://www.youtube.com/watch?v=RkrYxSuBZhM), and in 2018 QBE worked with South Australian schoolchildren to collaborate on the creation of a series of road safety videos (https://www.youtube.com/watch?v=v4tr66rnRpI).
Today’s consumers want brands to take a stand on sensitive issues, and insurers have taken note.
Consumers trust brands that have values and beliefs aligned with their own. They know companies have a platform and opportunity to bring awareness to important social issues and support charitable causes – and they expect that.
Allianz did this well through its I Imagine a World campaign, featuring employees talking about how Allianz has empowered them to achieve their personal goals. QBE’s Enabling a More Resilient Future campaign shows how the company has evolved and its dedication to helping those around it embrace change and build strength.
AAMI demonstrated its focus on social issues through its 20-year-long support of the Victorian State Emergency Service by gifting volunteers a uniform with woven-in Thank You messages.
Allianz I Imagine a World: https://www.youtube.com/watch?v=X8FMv92rq8w
QBE Enabling a More Resilient Future: https://www.youtube.com/watch?v=JU1C7K3AxJg
No regrets: AAMI warns against buying the cheapest cover
The Scotty From Marketing Adding Value Award
Winner: AAMI Bargain Regret?: https://www.youtube.com/watch?v=D25pwEP4rts
Issues-based advertising is undoubtedly effective in brand building and generating awareness.
Delivering added value for customers is about understanding their circumstances, needs and preferences at a specific moment.
Last year, life insurer TAL featured in the Insurance Ad Oscars with its Grief Support campaign. TAL also offers a Cancer Support service, communicating the benefits of both through its emotive Moving Forward Isn’t Always Straightforward campaign.
AAMI articulates its value-added services with a humorous approach. Its Bargain Regret? campaign depicts funny situations where spending less has gone wrong for consumers. The point? To demonstrate to budget-conscious customers that it is worth paying more for AAMI’s better quality (and presumably more expensive) service.
One of AAMI’s targets is Budget Direct, which effectively articulates the value of its services, winning our 2018 award for Best Product-Focused Advertising for its Insurer of the Year ad (https://www.youtube.com/watch?v=7tsBDq4pLgU).
In 2022, Budget Direct released a range of ads under the Insurance Solved campaign, which skilfully sends out positive messaging to customers by articulating Budget Direct’s features, awards and accolades while simultaneously entertaining them with humorous execution.
Budget Direct Insurance Solved: https://www.youtube.com/watch?v=RTZhXN0TOnc
TAL Moving Forward Isn’t Always Straightforward: https://www.youtube.com/watch?v=nKYTcowmt_U
Real deals: Youi taps into consumers’ appetite for savings
The Budget-Conscious Gwyneth Paltrow Award
Winner: Youi See How Much You Could Save: https://www.youtube.com/watch?v=A9PLexODY6A
Insurers have continued to deal with the impact of severe weather events, which has led to increased premiums and reinsurance costs being passed on to consumers. At the same time, the ongoing implications of Covid-19 have driven up the cost of living in Australia, with housing, petrol, and grocery costs at an all-time high.
Today’s Australian consumers are incredibly price-sensitive and looking for ways to spend less across a wide range of categories to buffer the instability in the economy. This is reshaping purchase behaviour across the industry, as consumers downshift to products that are cheaper or considered better value, and seek new product options at a lower price point.
While cost-saving is consistently featured in insurance advertising, it has never been as prominent as it has been in 2022.
Advertisers know that consumers have more choices than ever and will shop around to save money, and messaging has focused on discounts and special offers. Allianz offered a 10% discount when consumers purchased insurance online, and GIO provided customers with a multi-policy discount.
NRMA Insurance’s Help campaign promised a hard cold-cash incentive, with $201 off its home and contents insurance, while Suncorp’s APIA gave customers the chance to win a $5000 gift card with an insurance purchase.
Youi opted for a more subtle approach with its See How Much You Could Save campaign showing real examples of customers shopping around to get a better deal on their home and car insurance.
The Real Housewives of Insurance Award
Special mention: ANZ #homefails: https://www.youtube.com/watch?v=gWsGPhyUuug
Winner: Youi Making Assumptions: https://www.youtube.com/watch?v=XWwN6KdtLEg
Brand endorsements have always helped marketers connect a brand with people, places, things, and emotions.
While some people consider influencers as proof of humanity’s impending doom, they are an effective way to expand brand endorsement to a much wider audience. However, it is not without its drawbacks (See: Musk, Elon).
In a considerable nod to authenticity, several insurers in 2022 featured their clients or representations of them – see TAL’s Insuring this Australian Life, APIA’s Work less Pay Less, and Medibank’s It’s About Love campaigns.
The ANZ #homefails campaign for home insurance deserves a special mention in the “real life” category, taking us back to the days of Australia’s Funniest Home Videos. It hilariously depicts a shot-at-home video of a child kicking a soccer ball indoors and smashing a window with the tagline “For those ‘oooooh’ moments”.
However, the real standout in this category was Youi’s Making Assumptions campaign. Since entering the Australian market in 2009, Youi’s advertising has focused on communicating how the company tailors cover to its customers’ needs rather than treating them as a demographic within a postcode.
Its 2022 campaign featured a range of real people with the voiceover asking the viewer to “make some assumptions” about them before detailing their unique characteristics.
As commerce becomes more automated and streamlined, consumers are craving more personalised experiences. Customers reward brands with loyalty when they use their data in a way that makes them feel comfortable. Youi communicates that it does just that by providing personalised recommendations and support.
Moreover, the “challenging assumptions” line ties into diversity, another critical issue for today’s consumers.
TAL Insuring this Australian Life: https://www.youtube.com/watch?v=hlbWzfsmAn4
APIA Work Less Pay Less: https://www.youtube.com/watch?v=3Bd4ET_E3w8
Medibank It’s About Love: https://www.youtube.com/watch?v=I8AOzHt3zAU
On top: Youi’s Making Assumptions campaign
The Qatar World Cup Shift to Inclusivity Award
Overall winner: Youi Making Assumptions: https://www.youtube.com/watch?v=XWwN6KdtLEg
In 2017, our Insurance Ads Awards article stated that “diversity is seriously lacking in the casting and writing. If you watch all the adverts mentioned in this story, there are more aliens featured than all the ethnic minorities prevalent in Australia combined.”
How times have changed.
This year, across the board there was a real sense of inclusivity in the ads, reflecting the societal change in views around equality and representation. Several movements have shaped the last decade, bringing attention to the rights of specific minority groups, and calling for inclusion, regardless of age, sex, disability, race, ethnicity, origin, religion or economic or other status.
Creating campaigns representing people from all backgrounds and walks of life is becoming the norm. It not only reflects real people in the real world, but it also generates a broader sense of social inclusion.
Rather than focusing their sponsorships only on prominent AFL or NRL stars, QBE & AAMI also featured AFLW players & Sydney Swifts netballers, who would likely have been overlooked previously. Many real-life ads in this article depicted diverse living situations featuring people of varying ages, races, cultural backgrounds, and sexual orientations – a massive shift from previous years.
Advertising has a powerful ability to shape society through communications and messaging. While many believe that advertising has been instrumental in creating and reinforcing negative stereotypes, the opposite is true.
Advertising can shape behaviours and societal norms, and many advertisers take on the crucial responsibility of driving positive change. However, embracing diversity in marketing and advertising isn’t simply about featuring a diverse range of people in ad campaigns to “tick the box” of inclusion.
Businesses must live and breathe diversity, or their ads will appear disingenuous and inauthentic.
Earth’s driest continent has been served up a year of cataclysmic floods, with a third consecutive La Nina costing insurers more than $6 billion
By John Deex
Unprecedented” can be a dangerous word to use – but 2022 has set a number of records in relation to floods that hopefully won’t be repeated anytime soon.
Sydney, for example, broke its annual rainfall record after just 279 days of the year, with records dating back to 1859.
The flood catastrophe that hit New South Wales and Queensland in February and March is also in the record books as the Australian natural disaster with the highest value of insurance claims – $5.65 billion and still rising.
That event led to more than 237,000 claims, but the flooding didn’t end there.
NSW was hit again in July, with another 22,000 claims rolling in (valued at $244 million), and in October it was Victoria’s turn to be devastated by overflowing river systems, along with Tasmania and NSW. Add another 17,000 claims to the grim tally ($477 million).
In November, another significant event was declared in central-western towns in NSW – where drought is feared more than rain, until now. That brought another 3500 claims and counting.
There was also a myriad of smaller events, causing misery and mayhem across the country.
The cause? A very rare “triple dip” La Nina is at least partly to blame. Throw into the mix climate change with the uncertainties it brings, joined by other weather drivers such as the Indian Ocean Dipole and you have a destructive mix that brought incessant rain and massive flooding on the east coast.
Coverage on insuranceNEWS.com.au of industry loss events through 2022 has been dominated by floods this year. Issues reported on included the widening unaffordability of flood cover, coupled with unavailability for farmers, and the sheer volume of claims that has at times overwhelmed insurers.
Devastation: Forbes, NSW, following flooding in November. Picture supplied by Nearmap, which aims to capture aerial imagery following every major natural disaster in Australia
However, there has been a response from governments to the need for genuine mitigation spending and building resilient communities. The scale of the floods has forced the states into action.
NSW and Queensland have announced buy-back and build-back schemes for the worst-affected residents, and the Federal Government came good on its commitment to provide $200 million a year for mitigation measures.
The Insurance Council of Australia says the events of this year should act as a “collective catalyst”.
“A relentless third La Nina season has left almost half of eastern Australia waterlogged and suffering,” CEO Andrew Hall says.
“Our climate is testing the nation’s readiness and proving once again that more needs to be done to protect communities from the extremes we are living with.
“All this hardship is our collective catalyst for long-term change to better protect Australian communities. We must take this opportunity to build back better.”
Mr Hall says the frequency and severity of the year’s flood events requires meaningful action from the industry and from government policymakers.
“This means resilient homes, more mitigation, a thorough review of land-use planning and moving people out of harm’s way. Together we are making progress but there is still more to do.”
At the time of writing, the negative Indian Ocean Dipole is drawing to an end, while the La Nina system that has dominated the weather is expected to wrap up early in 2023.
No one would dispute that in the eastern states in particular Australians are due a calmer spell of weather in 2023 – but that’s far from guaranteed.
The covid-related business interruption test cases have concluded – but insurers haven’t heard the last on the issue
By Wendy Pugh
Legal test cases to determine business interruption cover for pandemic losses have finally ended, with the High Court shutting its doors to further appeals. But while the decisions have narrowed the scope for successful claims, the industry hasn’t emerged completely unscathed.
The second test case resolution clears the way for claims and complaints to move ahead, as the three-year mark from the arrival of covid in Australia approaches.
Class actions in the wings are restarting, while regulators have called for insurers to improve their processes after their “sloppiness” with outdated wordings and the complexity of business interruption policies and systems.
The Insurance Council of Australia (ICA) acknowledges the length of time taken to complete the industry-backed legal process, but counters that the cases have provided the guidance needed to facilitate fair and consistent claims determinations.
“[The] decision by the High Court marks a significant milestone in a process that at its heart has been about understanding the extent to which business interruption insurance provides cover under the unprecedented conditions we experienced over the past two-and-a-half years,” Chief Executive Andrew Hall said.
“Insurers and brokers will be communicating directly and quickly with policyholders who have made claims affected by the judgment to explain next steps.”
In the first test case, the NSW Court of Appeal found against the insurers, ruling exclusions that cited the Quarantine Act 1908 “and subsequent amendments” were not valid for covid, given the replacement Biosecurity Act 2015.
That case was filed in 2020 and ended in June last year.
The second test case, which was filed in the Federal Court in February last year, appealed in the Full Court and then wrapped up before the High Court on October 14, looked at a range of issues including disease, prevention of access and hybrid clauses. Insurers had a win overall.
The industry has avoided crippling payouts and a deluge of claims, after insurers warned last year in an unsuccessful appeal application on Quarantine Act wordings that 250,000 policies and some $10 billion could be at stake.
Reserves are now being released. IAG said in October it was reducing a provision to $615 million from $975 million at the end of June. The insurer last year announced a pre-tax total of $1.2 billion. Suncorp and QBE are also reducing provisions after setting aside smaller amounts.
The Australian Financial Complaints Authority (AFCA), which has a jurisdiction extending to small businesses but not larger enterprises, registered 340 disputes as of mid-October, of which 306 remained open.
Melbourne-based insurance law specialist John Berrill suggests only a small percentage of valid claims have been filed, for reasons that may include JobKeeper support payments and the passage of time. He says businesses affected by covid restrictions should look at their policies and the circumstances and seek advice.
“The insurance industry ran this line that ‘we don’t cover pandemics’,” Mr Berrill tells Insurance News. “That is simply not right – they do cover pandemics in certain circumstances.”
Lawyers say that despite the insurers’ successes in the second test case, some policies will still respond, a number of matters were not covered by the judges and class actions will pursue some of the issues remaining as well.
An example includes a clause judged valid for cruise specialist Meridian Travel, based in suburban Melbourne. The firm’s ability to claim losses was questioned in the second test case, given its circumstances. But lawyers say others may be successful.
Slater & Gordon Class Actions Associate Ruby Haynes says the test cases didn’t deliver outright victories for insurers and they haven’t escaped responsibility for claims under their business interruption policies.
“There were favourable findings for insureds, including that JobKeeper payments do not have to be offset against insureds’ losses, and the findings in relation to Meridian Travel under its infectious disease clause,” she says. “We consider that cover is available under both infectious disease clauses and hybrid clauses in certain circumstances.”
Slater & Gordon and Gordon Legal have each filed two class actions in the Federal Court, which after the High Court decision scheduled a case management hearing for December 6. Claimants include a swimming school, gym, opal retailer and bar owner.
Gordon Legal says issues include how claims will be determined for some businesses affected by local or site-specific lock down orders, such as in metropolitan Melbourne in July 2020.
“There may still be thousands of businesses in that undetermined category, who may well have valid and arguable claims, and whose claims will be progressed through the class actions that have been already issued,” Commercial Law Partner James Naughton tells Insurance News.
Questions also remain about how businesses with viable claims will be permitted to quantify their losses, which may be resolved through the class actions, he says.
Separately, IAG is defending a shareholder class action filed over alleged securities market disclosure failings in 2020, when insurers were fighting their ultimately unsuccessful battle over the Quarantine Act exclusions.
Australian Prudential Regulation Authority (APRA) Deputy Chair Helen Rowell says uncertainty around business interruption cover and claims, and related legal action, had the potential to seriously undermine insurers’ balance sheets as well as consumer confidence.
The regulator asked 10 insurers to complete risk self-assessments following alarms raised by the Quarantine Act wordings, and it has been blunt in its feedback.
“The problems were not isolated to sloppiness with outdated policy wordings,” Ms Rowell told the ICA annual conference. “Key themes included miscalculation or ignoring of the potential materiality of the risk associated with the pandemic, a lack of willingness to escalate matters of concern, and complexity in policies and systems.”
The multiplicity of policy wordings was identified as a problem, especially in the SME market where third-party distributors were used; and in some cases, “competitive drivers” overrode sound underwriting discipline.
“APRA will be closely monitoring to ensure insurers make the improvements they have committed to, and is prepared to adopt stronger measures if we don’t observe good progress,” Ms Rowell says.
Insurers that weren’t asked to undertake the initial self-assessments have been urged to consider completing similar reviews and to introduce changes as necessary.
Bugs in the BI noodle bowl
Australian Securities and Investments Commission (ASIC) Deputy Chair Karen Chester, appearing before a parliamentary committee, described a “noodle bowl” of policies and clauses, complexity and lagging systems. She also pointed to test case process shortcomings.
“We were very frustrated with the breadth of the first test case,” Ms Chester told the committee. “We were also very frustrated with the time it took for the second test case to be finalised and filed.”
ASIC is keeping tabs on industry responses, encouraging proactive and transparent communication with policyholders and the timely and efficient payment of valid claims.
The regulator is monitoring insurers’ and brokers’ conduct and will take action if there’s evidence legal requirements are not being met, a spokesperson told Insurance News.
Lloyd’s Regional Head of Australia and New Zealand Chris Mackinnon says insurance transactions are based on a promise, the reputation of the industry is therefore always on the line, and the business interruption experience showed the importance of clarity around those promises.
“It is nonsensical that we should be arguing what is it that we actually meant,” he told the National Insurance Brokers Association summit in October. “We need to ensure that wordings are crystal clear.”
The lengthy test cases contrast with the experience in the UK, where the Financial Conduct Authority (FCA) took the lead in a swifter process that concluded with a final judgment in January last year.
The FCA acted because it is able to initiate urgent test cases, without the need for a specific dispute between the parties, for an issue of general importance where authoritative legal guidance is needed.
In the Australian industry-led process, claims were drawn from those received by AFCA, with its consent. A protocol was agreed between AFCA, which wasn’t involved in the court actions, the insurers and ICA, with the industry paying policyholders’ costs.
Insurer selection of the matters has prompted scepticism, with suggestions several of the second test case claims were sure-fire industry wins, while scenarios that might have had a greater chance of policyholder success weren’t included.
ICA has flagged the potential for changes, proposing in a pre-election policy document released this year that the Federal Court Act be amended to allow a process similar to the UK’s.
“Finding suitable matters that were the subject of existing complaints before AFCA was a difficult process, and although cases were eventually identified, insurers were not fully satisfied they covered all the issues requiring the courts’ determination,” ICA says.
Policy wordings have been tightened since covid arrived in Australia in January 2020, while the position of insurers on pandemics remains the same: they are systemic global risks beyond the capital resources of the insurance sector.
Former ICA chief executive Rob Whelan said, in announcing the first test case, that “most insurers have never contemplated coverage for pandemics in their policies and did not price pandemic risks into premiums”. Still, an expected quick early court victory turned into a drawn-out process.
APRA’s Helen Rowell says the legal uncertainty has “largely abated” but the self-assessments show insurers “took their eye off the ball of sound insurance risk management”.
“The BI issue was a near miss for insurers and one which cannot afford to be repeated,” she says.
As it turns 125, Actuaries Institute members are confident their skills are as essential as ever
By Miranda Maxwell
We’re in a great space for the future,” Elayne Grace says as the Actuaries Institute commemorates its 125th birthday. “Anywhere there’s uncertainty and data analysis required, we can add value.”
Though it took around a century – until the 1990s – to have women in the top roles, today Ms Grace is the Institute’s Chief Executive and Annette King its eighth female president. Half its 5500 members are under 35 and more than a third are women.
The Actuaries Institute says the world is now entering “the age of the actuary because it is the age of data”.
Far from being superseded, the relevance of actuaries in a world of artificial intelligence, machine learning and data science has never been more vital.
Actuaries are there to harness, integrate and question that data, and make sure it is used wisely.
“We’re doing well, we’re in demand,” Ms Grace tells Insurance News. “Young people want to get in jobs that are meaningful and actually deliver value, and companies also want that.
“Our essence has not changed – the fundamentals are the same, the same social purpose, the same analysing of information – but everything else has.
“We have continued to evolve. We work right across data science, retail, telcos, climate change, ESG (environmental and social governance), cyber.”
A new challenge is the tsunami of data now available and a requirement for extreme discipline by actuaries as they find pathways forward to be sure “you don’t provide a solution that could cause problems later”.
As the venerable Actuaries Institute celebrates its birthday and reflects all the way back to its inception by a group of 17 “like-minded individuals” in October 1897, the guiding principle at the very beginning – to protect Australians from an uncertain future by “wresting the truth from data” – is as true as it ever was.
From aspiring actuaries enduring long sea voyages to sit the fellowship exam in the UK (and a membership charge of five shillings), pioneering work by local actuaries Geoff Lane and Garth Ward on the use of early computers in valuations, and Catherine Prime becoming the first Australian and first female president of the International Actuarial Association, the Institute has adapted and progressed over its 125-year existence.
“It is a huge milestone for us as we celebrate our history, and it’s an interesting point of reflection,” Ms Grace says. “It’s a long time, but we also really look forward to the future, the age of data, our skills and solving the many problems in the world, bringing our particular value and professionalism.”
Next year the Institute will host the International Congress of Actuaries, a global meeting in Sydney of the brightest actuarial minds. The five-day ICA2023 will bring together 500 speakers from more than 50 countries to discuss technology, climate change, cyber risk, the rise of financial services in Asia, the impact of IFRS 17, the age of the consumer and many other topics.
Ms Grace says today’s focus for Australia’s actuaries involves balancing pricing specific risks with the needs of society as a whole, and evaluating “what does fairness mean?”.
While better assessment of risks such as catastrophes has led to premium changes, bringing a “social purpose” to problems is at the core of actuarial world. “It’s in our DNA,” she says.
Recognition that certain areas are riskier than others and must be somehow accounted for is needed.
“How do we accommodate that into the mix fairly? It is difficult,” she says. “It used to be very much that fairness was the insurance premium that reflected your risk and the more data you had the more accurately you could price that.”
Now it’s about considering fairness and access to insurance.
Making insurance “very much just a singular product for each person” could see the whole system break down and the government having to step in.
“These are the interesting questions we need to investigate. Insurance increases the resilience of our community, and our businesses, but how do we make sure those systems are sustainable?”
Promisingly, this year has finally seen a “huge step-change” in attitudes to mitigating severe weather risk in the wake of record floods, and Ms Grace has observed “much more of an understanding and less of a blame game, which is an acknowledgement of the risk being increased”.
Looking ahead, the Institute says its tools will change – and also that “many things will stay the same”.
“We’ll still be helping business run their operations and drive their strategy using our mathematical skills, crystalline thinking and rigorously-assessed evidence,” it says. “Our expertise will still be helping to inform public policy and drive change in areas like climate, health, energy adaptation – and public policy fields we don’t even have names for yet.”
It’s been quite a year for the insurance industry. We take a look back at what you made the most looked-at stories of 2022
By Harris Pozderovic
From January 1 to the time of writing insuranceNEWS.com.au has published more than 2600 articles, which have attracted almost 6 million pageviews.
But not every story is equal. Some are read by a few hundred people, while others attract 20,000 views or more.
And there has been plenty to write about. The year 2022 will go into the record books as one of historic weather events and claims, global conflict and rising cost of living pressures – all of which overflowed into the Australian insurance market. Affordability and insurability have become major community issues. And, sometimes almost unnoticed, consolidation in the industry is continuing.
With insuranceNEWS.com.au appearing each working day through the year (bar national holidays) those 2600 articles range from Breaking News items of major importance to the “softer” personnel changes, company developments, bubbling issues, commentary on all sorts of relevant things, meetings, politics, regulation. And so on.
All these articles and many rather more complex items can be found on the free insuranceNEWS.com.au online archive, which contains around 37,000 articles stretching back to 2001.
Insurance News journalists speak to everyone who’s relevant to help us explain the industry’s events, issues, controversies and interactions. Think of the variety of matters we report and the number of people we talk to in compiling those articles and you’ll appreciate that our contacts list is vast (and tightly held).
But sometimes it’s not just the big stories that get the most readers. Sometimes, in fact, we can’t explain why one article in a bulletin is more popular than another.
For example, our regular reports on the decisions made by the Australian Financial Complaints Authority have proved to be enormously popular. Brokers in particular devour AFCA rulings as fast as we can write them. And senior appointments have always been among our most popular items.
So rather than look at the year as a series of major issues developing, happening and then being reviewed from many different viewpoints, what follows isn’t our assessment of the things you read during the year. It’s simply the articles that attracted the most readers. Most have been edited to fit the magazine space, and some headlines have been altered.
IAG powers up its intermediated business
IAG announced the appointment of former Suncorp senior executive Darren O’Connell as its new EGM Underwriting for its Intermediated Insurance Australia (IIA) division, which includes CGU. That appointment coincided with the permanent promotion of Christa Marjoribanks as IIA’s EGM Product Pricing. Group Executive Jarrod Hill said the division intends to reach insurance profits of $250 million by 2023/24.
Going to the mattresses over claim
Queensland’s Supreme Court backed IAG’s decision to decline a multi-million dollar claim over a fire that destroyed a bedding factory.
The insurer denied the claim and alleged the factory owner intentionally started the blaze himself. The owner denied the allegation, but the judge rejected his version of events.
Zurich for sale? Nein
The business media pushed a story that Zurich’s Australian general insurance operations (excluding travel) were up for sale, and our follow-up stories were hugely popular.
No one in Zurich Australia or anywhere else ever said a word, but the local market was buzzing with rumours. Suncorp, Chubb and Allianz were said to be among the final bidders after QBE and IAG reportedly dropped out.
Then insuranceNEWS.com.au Editor John Deex dug out a comment in a German business paper by Zurich’s Global CEO Mario Greco.
A rapid translation resulted in an insuranceNEWS.com.au Breaking News report that Mr Greco “intends to hold on” to the Australian business. And he did.
$10,000 deductible becomes $1,220,000
The NSW Court of Appeal ruled in favour of Allianz in a claim dispute over whether deductibles should be applied for each individual home after more than 100 properties were damaged by a hailstorm.
Allianz agreed to cover the claims lodged by Rawson Homes for hail damage to 122 partially constructed homes in Kellyville and Rouse Hill in 2017, but said the $10,000 deductible should be applied to the sum insured for each building.
The initial Supreme Court decision backed Rawson Homes’ argument that only one deductible should be paid, but the appeal court determined that each home counted as an individual claim, so the deductible should be applied to each.
$731,000 fraud charge
An ex-employee of a Sydney-based insurance company was charged by NSW police for allegedly obtaining fraudulent payments that exceeded $730,000.
Sydney City Police Area Command detectives claim the 32-year-old man made 239 fraudulent payments amounting to $731,124 between March 2019 and March last year.
He was charged with making a false document to obtain financial advantage, knowingly dealing with proceeds of crime and dishonestly obtaining financial advantage by deception.
Full Court backs insurers on BI appeal
A Full Court decision largely backed the findings of the Federal Court in support of insurers over appeals related to business interruption coverage during the covid pandemic.
Justice Mark Moshinsky said the Full Court “substantially agreed” with the findings of Federal Court Justice Jayne Jagot, who heard the Insurance Council of Australia’s second test case last October.
The decision was subsequently appealed to the High Court of Australia – which declined to hear the case.
Flood insured losses of $2 billion predicted
Early reporting from S&P Global on “significant flooding” in NSW and Queensland in February and March estimated it would exceed $2 billion in insured losses, making it one of the worst flood events in Australian history.
It seemed a lot at the time – but certainly not now. The latest figures put losses from the catastrophe at $5.56 billion, making it the worst – and most expensive – Australian natural disaster on record.
Gone in 90 seconds: insurer wins over theft of unlocked car
The Australian Financial Complaints Authority (AFCA) ruled in favour of IAG after it decided to decline cover for a man whose partner briefly left his car unlocked – but long enough for three thieves to steal it.
The vehicle had been parked in the claimant’s driveway for less than two minutes while his partner went to collect their baby. AFCA acknowledged the “unfortunate situation” but said the policy exclusion guidelines were unambiguous.
QBE announces high-level staff changes
QBE “reorganised its Australian operating model” with several executive hires and departures.
The changes saw Elliot Hill named as MD Business and Eleanor Debelle as its new MD Consumer, while Chief Customer Officer Credit Lines and CEO QBE Lenders Mortgage Insurance Phil White left the business.
Tokio Marine says Greensill policies void
Tokio Marine says that Greensill policies written by its Australian subsidiary BCC Trade Credit were invalid after it conducted “extensive investigations” that revealed “fraudulent misrepresentations and fraudulent breaches of an insured’s duty of disclosure”.
IAG, which previously owned 50% of BCC, acknowledged the declaration, and potential litigation by Greensill administrators or other claimants.
QBE to underwrite Kogan Insurance products
QBE entered into a long-term agreement with online retailer Kogan Australia to underwrite its home, motor and compulsory third party insurance products.
“We are confident that partnering with Kogan and its over three million Australian customers will enable us to deliver a best-practice digital sales experience for customers,” QBE Australia Pacific MD Consumer Eleanor Debelle says.
AIG set to withdraw PI offerings to financial planners
More trouble looms for the under-pressure financial planning industry after AIG ceased offering professional indemnity to the profession.
Association of Financial Advisers CEO Phil Anderson warned he was concerned to see the pull-out in an “important part of the market.”
Graham Stevens dies
Leading broker and former National Insurance Brokers Association (NIBA) president Graham Stevens died aged 68 on May 6 after a battle with cancer.
Tributes to Mr Stevens flowed from across the industry for Mr Stevens, who was director of Edgewise Insurance Brokers. His career included a stint as president of the National Insurance Brokers Association and president of the World Federation of Insurance Intermediaries.
AUB to acquire Lloyd’s wholesale broker Tysers
AUB Group announced an agreement to purchase UK-based Lloyd’s wholesale broker Tysers for $880 million.
Tysers, the sixth-largest wholesale broker in the Lloyd’s Marketplace, writes annual gross premium of $3.6 billion.
Insurers to up pay in ‘once in a career’ skill crisis
Hays says nine out of 10 insurance employers will increase salaries for employees at upcoming reviews as the industry faces a “once-in-a-career” market.
The recruiter’s salary guide ranked insurance seventh for industries facing the most extreme skill shortages, with low unemployment fuelling “an ideal situation” for employees.
Allianz pleads guilty to false statement criminal charges
Allianz Australia and its subsidiary AWP pleaded guilty to six criminal charges of making false or misleading statements regarding travel insurance, following investigations from the Australian Securities and Investments Commission (ASIC).
“Between 2016 and 2018, Allianz and AWP misrepresented the characteristics or level of coverage of travel insurance available for consumers,” ASIC said.
RACQ Insurance chief exits to ‘take a break’
RACQ announced that Group Executive Insurance Tracy Green had left the business, with a
spokesperson telling insuranceNEWS.com.au Ms Green was leaving the organisation “to take a well-earned break” after a “challenging year across the insurance industry ”.
Claims GM Trent Sayers was appointed to replace her.
Suncorp banks $4.9 billion after sale
Suncorp agreed to sell its banking business to ANZ for $4.9 billion to focus on its insurance operations in Australia and New Zealand.
Morningstar Analyst Nathan Zaia described the agreement as “a reasonably good deal for both parties”.
QBE admits pricing promises ‘not fully delivered’
QBE set aside $US75 million ($110 million) in provisions for a customer remediation program after an internal review found “instances” where pricing promises were not “fully delivered” to policyholders.
The review came after ASIC called on general insurers to examine their pricing systems and controls to prevent consumer harm.
Industry responds after reports focus on ‘side hustle’ policy issues
Following news reports that home and contents policyholders had their policies cancelled or claims denied because they were operating an income-generating side business from the property, insurers looked to clarify their position.
A spokesperson from Suncorp explained that when a business is operated from an insured home, it could represent a “significantly” different risk that requires more intensive reviews compared to a property with no business operations.
Steadfast to acquire Insurance Brands Australia
Steadfast Group agreed to acquire Insurance Brands Australia (IBA) for $301 million.
IBA, which specialises in the SME sector, was one of Australia’s largest privately owned insurance distribution businesses, as the parent company of Melbourne-based brokerage Insurance House as well as agencies ProRisk and Armada Underwriting.
360 Underwriting grabs QBE’s executive as Australia CEO
360 Underwriting Solutions brought aboard Jason Clarke as the new CEO of its Australian business.
Mr Clarke spent 32 years at QBE, where he served in several senior positions and most recently was working with Group CEO Andrew Horton on the establishment of a global distribution function.
360 Underwriting Solutions co-founder Denis Morrissey described Mr Clarke’s appointment as a “watershed moment” for the company.
A friend: Lloyd’s marked the death of Queen Elizabeth II, a regular visitor to its London HQ
Lloyd’s rings Lutine Bell in memory of Queen Elizabeth II
Lloyd’s rang the Lutine Bell on September 8 following the death of Queen Elizabeth II.
Chairman Bruce Carnegie-Brown commented on Britain’s longest-reigning monarch’s relationship with the marketplace, saying it had been “lucky to call her a friend”.
‘Agreed value’ catching out car owners as inflation spirals
A consumer group issued a warning about agreed value car insurance, as some claimants found values falling short of current market prices.
The Financial Rights Legal Centre flagged a rapid rise in used car prices since the covid pandemic, with policyholders “finding that they are underinsured and short-changed”.
‘Significant weaknesses’: risk governance issues rock insurer
RACQ Insurance was told to improve its risk governance after an Australian Prudential Regulation Authority (APRA) review uncovered “significant weaknesses”.
APRA took enforcement action against the insurer after it self-reported a regulatory breach to ASIC relating to premium discounts and inadequate product disclosure statement wording.
It’s over: High Court refuses second BI test case appeal applications
The High Court of Australia declined three appeal applications that stemmed from the Insurance Council of Australia’s second test case over business interruption cover during the covid pandemic.
The decision ended long-winded legal proceedings that considered a range of issues, including the definition of a disease, proximity of an outbreak to a business, and prevention of access.
Previous Full Court judgments, mainly in favour of insurers, remain effective.
Insurer criticised for denying claim ‘after costs increased’
AFCA cut loose on Allianz for its handling of a home claim that saw it accept cover and begin repairs, before denying the claim a year later as costs shot up.
The ruling criticised Allianz’s actions as “unreasonable and arguably a breach of the insurer’s duty of utmost good faith”.
Allianz was required to cash-settle or complete the repairs and also pay the complainant $5400 – the maximum amount – to compensate for non-financial losses.
Conflicted remuneration: review gives commissions a tick
The Quality of Advice Review proposed keeping general insurance commissions exempt from the ban on conflicted remuneration, but did suggest an additional layer of protection for consumers requiring brokers to first obtain written consent from retail clients for commissions.
Consumer groups say they are “extremely disappointed” by the recommendations and called for a prohibition on life, general and consumer credit insurance commissions.
Giant UK broker swoops for Australia’s Envest
The UK’s largest independent broker, Ardonagh Group, has agreed to purchase Australian insurance investment and distribution business Envest for $482 million.
Envest’s portfolio includes broker network Aviso Group and 10 underwriting agencies.
Ardonagh Global Partners CEO Des O’Connor says the deal “provides a proven platform to accelerate our growth ambitions in the region”.
On the move: Insurance Brands Australia buys Victorian brokers
Insurance Brands Australia is rapidly growing its regional presence in Victoria, acquiring Bendigo-based Aus Insurance Services and Mattiske & Henderson in Hamilton for undisclosed amounts.
The two brokerages are former authorised partners of the Steadfast-owned business, the parent company of Insurance House and other intermediaries with a combined $438 million in annual gross written premium.
“We’ve got our eyes on other opportunities there at the moment. It’s part of our ongoing strategy,” Insurance House Broking General Manager Scott Leis said, after the deal for Aus Insurance Services was announced.
Aus Insurance Services has an SME-dominated portfolio of clients in Bendigo, a regional city in the north-western region of Victoria. Managing Director Jarrod Nelson is now an integral part of the Insurance House Bendigo Team, continuing to support existing and new clients in regional Victoria.
“Strategically it’s an important investment for us. It adds to our business there, giving us some really good scale,” Mr Leis said.
“We remain fully committed to Bendigo, and I am proud that we continue our legacy of supporting our clients and communities across regional Australia.”
Mattiske & Henderson, in business for more than 50 years focusing on rural clients, provides a range of insurance solutions across business, farm, personal and professional lines.
It says the ownership change marks a “great new chapter” for the brokerage as it works to expand in western Victoria.
“We look forward to the future ahead,” Principal Scott McDonald said.
As part of Insurance Brands Australia, the two Victorian brokerages will have access to a broader range of products, competitively negotiated premiums and innovative risk management solutions.
‘Green shoots’: AMA welcomes new pricing agreements
Crash repairer AMA Group says green shoots are emerging amid a bumpy fiscal first half, as new pricing agreements take effect in a transition year for the company.
AMA CEO Carl Bizon told the annual general meeting in November that agreed new pricing was introduced across the network in the first quarter, after insurer partners were approached late in the previous financial year.
“These pricing negotiations were generally constructive and positive, and resulted in an ongoing commitment between AMA Group and our insurer partners to regularly engage in price discussions through these times of heightened cost inflation,” Mr Bizon said.
The company last month also announced an agreement with its largest customer Suncorp for pricing for services provided by Capital Smart for the period from October 1 to June 30 next year.
Key operational priorities for this year include progressing a parts and procurement strategy, revenue growth and diversification and pursuit of opportunities in Advanced Driver Assistance Systems.
AMA affirmed guidance for earnings before interest, tax, depreciation and amortisation of $70-90 million this fiscal year and $120-140 million next year.
Lloyd’s welcomes Chairman with cocktails
Lloyd’s held a cocktail function in October to welcome Chairman Bruce Carnegie-Brown.
The event was held at the Ivy Sunroom in Sydney, and was attended by 100 Lloyd’s stakeholders including coverholders, brokers and service providers.
Mr Carnegie-Brown was appointed Chairman in 2017, and was visiting Australia for the first time in the role.
MGA broker assistants conference returns
MGA’s 12th Broker Assistants Conference took place in November at the QT Hotel on the Gold Coast.
Broker assistants from across the country came together with members of the MGA operations team, senior leaders, underwriters and industry supply chain partners at the first face-to-face event since covid struck.
Managing Director Paul George and Executive Chairman John George opened the two-day conference, noting the vital role that broker assistants play.
Hosted by Kim Skubris, the event included a keynote speech from Sally Pearson (OAM), a boat building activity, customer relationship workshop, engaging insurer workshop and masquerade ball.
Adelaide packs full house for UAC expo
The Underwriting Agencies Council (UAC) saw a strong turnout at its expo in Adelaide in September.
Almost 290 brokers turned up for the event at the Adelaide Convention Centre to engage with 79 UAC member exhibitors.
In the Sedgwick-sponsored lucky draw, Jacqueline Atkins and Karen Hicks from Holdfast Insurance Brokers each went home with a $250 voucher.
UAC’s earlier expos in Sydney, Brisbane, Melbourne, Canberra and Wagga Wagga also attracted strong support.
PSC says it’s ‘better together’
More than 200 delegates attended this year’s PSC Insurance Group Conference in Sydney – the first event since 2019.
The conference was themed Better Together, and enabled participants to network, celebrate recent successes and plan for continued growth.
PSC says attendees came from Australia, the UK, New Zealand and Hong Kong “reflecting the increased growth and scale of the business”.
Hundreds attend 30th CQIB convention
The Council of Queensland Insurance Brokers (CQIB) held its 30th annual convention at Tangalooma Island Resort in October, attracting 318 industry professionals and 41 exhibitors.
Presentations included those by CHU’s Craig Stanley, 360 Underwriting Solutions Director Denis Morrissey, Protecsure’s Jackson McDonald and Emergence CEO Troy Filipcevic.
The final keynote on Saturday afternoon was from Dr Karl Kruszelnicki who spoke to members about “The Tales of The Atmospheric River”.
On Friday night, attendees participated in Tangalooma’s signature activity, dolphin feeding, followed by a dinner on the beach sponsored by Vero.
On Saturday night, a tropical themed dinner featured a fresh seafood buffet and attendees were encouraged to come dressed in their best Hawaiian/tropical dress, with a prize handed out for the best outfit.
More than $40,000 was raised for Wesley Mission Queensland. The donations will help fund the mission’s young adults and children’s mental health initiative.
CQIB President Andrew Hinz announced Cairns as the destination for the 31st convention from September 15-16 2023.
UAC Hobart expo draws a crowd
Brokers drove from Launceston, Burnie and Devonport to attend the Underwriting Agencies Council (UAC) Hobart expo held at the Grand Chancellor Hotel.
The expo, featuring 61 exhibitors in the biggest turnout yet for the Hobart event, was attended by more than 130 brokers, who welcomed the opportunity to speak with agencies about their specialist products and with UAC business service members about their offerings.
In two Sedgwick-sponsored prize draws, Lewis Wilkinson from Austbrokers BGA in Hobart won a $200 gift card, while Lynne Cipura from McKillops Insurance Brokers in Launceston won a $400 gift card.
UAC has also held expos this year in Perth, Sydney, Canberra, Wagga Wagga, Melbourne, Brisbane, Norwest Sydney and Adelaide.
Insurance Advisernet hosts Gold Coast conference
More than 600 delegates descended on the Gold Coast in October for Insurance Advisernet’s first face-to-face conference since 2019.
Berkley was crowned Insurer of the Year, NTI took out Agency of the Year and Elantis won Funder of the Year.
Thai Cave Rescue Diver Richard Harris delivered an inspiring keynote to delegates, comprised of authorised representatives from Australia and New Zealand as well as industry partners and sponsors.
Transformative leader Matina Jewell was also a keynote speaker and IA’s Managing Director Shaun Standfield delivered an IA/IANZ Network only session outlining deliverables for the past year as well ongoing initiatives to protect, enhance and grow ARs’ businesses.
Golf was enjoyed by 140 attendees while a further 150 people participated in the ‘IAthlon’ – a walking/running event. Founder and Chairman Ian Carr provided an update on the IA Foundation and more than $210,000 was raised across the three days.
During the gala dinner awards ceremony, Jamie Janouris of Vero was named BDM of the Year, Kate Phanoraj took out Employee of the Year and John Lewis won the Chairman’s award.
Westside Insurance Specialists and h2 Insurance were crowned joint Practice of the Year winners, the IA Region of the Year went to Central region, led by Simon Elliot, while allinsure took the prize for Central Region Practice of the Year.
Planning is well underway for IA’s 2023 conference taking place in Hobart from October 30 to November 1.
It’s been a tough year for the Australian insurance industry, and there are many challenges ahead. But the task of supporting people and businesses through their own crises is what the industry does every day. Insurance News supports industry people by providing focused news and information that’s relevant and reliable to you – because the more you know about an issue, the better equipped you are to deal with it. Our news and information services are provided free, and we never forget that’s only possible through the support we receive from our advertisers, who in turn deserve your support.
As the holiday season looms the crew at Insurance News thank you for reading our news and magazines and listening to our podcasts through the year. As the holiday season nears, we wish you the very best. Be happy, stay safe.
Operations Support Manager