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:

THE INFLUENCERS:

1 Insurance-buyers:

Eighteen months before inflation became the in word, insurance-buyers were already complaining about significant rises in their premiums. Social media and consumer advocacy groups around the world are forcing governments to make their financial services sectors more customer-friendly. Put that alongside a growing cohort of householders unable to afford to insure their homes adequately and claims inflation lowering the real value of the sum insured, and you can see the regulators’ focus on insurance isn’t going to go away. The customer has never been so demanding.

2 Andrew Hall, Chief Executive, Insurance Council of Australia:

In interviews with Insurance News the head of the industry’s peak body sticks closely to the industry line. So we really don’t know much about Hall, and what he really thinks, but we still like what this former National Party apparatchik and senior corporate player is doing for the insurance industry at a tough time in its history. Hall has taken the industry into issues (like the controversial plan to raise the Warragamba Dam wall) that the industry should be talking about but in the past rarely has. Hall and his team are also capitalising on the arrival of a federal government unafraid to address climate change issues, and along the way the politicians seem to have gained a more sophisticated understanding of the hurdles the industry is facing at present. Being part of the solution is always better than being seen as part of the problem.

3 Anthony Albanese, Prime Minister of Australia: 

4 Robert Kelly, Managing Director and Chief Executive, Steadfast: 

5 Mike Emmett, Chief Executive and Managing Director, AUB:

6 Phil Kewin, Chief Executive, National Insurance Brokers Association: 

7 Insurance people: 

8 Michelle Levy, Quality of Advice reviewer:

9 Richard Joffe, founder of Honey Insurance:

We’ve talked a lot over the past six or so years about the threat to established insurers of disruptors using technology to simplify insurance. Joffe is the sort of innovator-disruptor the insurance industry needs to know. Honey is the latest of a slew of projects he’s started, focusing on homeowners, renters and landlords cover. It’s early days, but Joffe is following the trend towards collaboration with an established insurer, having RACQ Insurance on board as an investor and underwriter. He has attracted some powerful big-name backers and key distributors. It will take time to see how much success Honey derives from its technological edge and what Joffe calls “truly modern smart insurance”. The established insurers in his chosen niches aren’t exactly wallflowers.

THE INFLUENCES:

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.

2 Floods:

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.

6: Reinsurers:

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.

7 Technology:

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

No regrets: AAMI warns against buying the cheapest cover

The Scotty From Marketing Adding Value Award 

Real deals: Youi taps into consumers’ appetite for savings

The Budget-Conscious Gwyneth Paltrow Award 

The Real Housewives of Insurance Award 

On top: Youi’s Making Assumptions campaign

The Qatar World Cup Shift to Inclusivity Award

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.

A friend: Lloyd’s marked the death of Queen Elizabeth II, a regular visitor to its London HQ

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.

Zurich entertains brokers at annual event

About 200 brokers attended Zurich’s renowned Prawns on the Lawn festivities in Brisbane in November.

It was the 46th anniversary of the iconic event, and Zurich’s 150-year milestone globally was also marked.

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.