General, meet life
Combined strength: Justin Delaney sees plenty of opportunity in Australia. Credit: Louie Douvie/AFR
Not so long ago there were many financial services companies with significant life and general insurance operations in Australia.
Since the banks’ exodus over the past few years, they are now few and far between – but that’s not deterring Zurich from working to bring the two sides of its business closer together.
The local branch of the Swiss-based giant global insurer sees strength in being one of the few remaining composite operations in the financial services marketplace.
Since his appointment in July 2021 to manage both the life and general arms, Zurich’s Australia and New Zealand Chief Executive Justin Delaney has prioritised a more collaborative approach, based on the belief that each side of the business can benefit the other.
Traditionally, Zurich’s local general insurance business was the larger side, but that changed with the acquisitions of Macquarie Life in 2016 and ANZ’s OnePath in 2019.
Zurich now sits third in Australia on total life premium share, but second in the retail sector.
In general insurance the fully intermediated business is the sixth-largest, with a strong focus on commercial, SME and mid-market.
It sees particular strength in its SME motor offerings and its ability to provide international coverage through connections with the global group.
But while both the life and general operations are significant in the local market, Mr Delaney believes they will offer greater opportunity if they can be made to work more closely together.
“My focus has really been on leveraging the strengths of both sides of the business, for the benefit of the business in aggregate and also ensuring that we can build scale and develop better insights,” he tells Insurance News.
“If you think about the strengths of each, on the general insurance side we have a very deep technical capability, risk insurance capability and risk engineering capability.
“And on the life side, we’re a very strong retail player with deep digital and customer insights. So bringing those together is certainly something that we’re focused on, and leveraging the best of those capabilities.”
A unified culture across the business is also a key target.
“It’s an opportunity that we haven’t had before because we have run the businesses, not completely but relatively independently of each other.”
While the life and general markets in Australia have traditionally been “quite disparate”, Mr Delaney sees ways to do things differently.
“It’s how the markets have evolved, with general insurance being predominantly intermediated through a broker network, and life insurance, in the retail context, through financial planners and dealers.
“But if I think about some of our broker relationships, they’ve got tens of thousands of small businesses on their books as customers, and we know that their needs don’t stop when it comes to general insurance. They also potentially have life insurance needs as well.
“So that is certainly something that we’re exploring further, and how can we deepen those relationships with brokers.”
Mr Delaney is targeting the group life sector as a major opportunity for growth.
In February, Zurich announced a deal with Queensland-based Brighter Super to provide insurance to the fund’s members, and there has been significant investment in the past 18 months to build out the group life proposition.
It’s about combining the strength of Zurich’s historic brand with the capability brought in by the OnePath acquisition.
“At the time ANZ’s appetite for growing that business wasn’t strong because they were looking to obviously exit wealth,” Mr Delaney says.
“But we’ve invested in new people, new digital capability and technology to expand our offering and our capability there.
“It’s really a case of ensuring that the market is aware of our appetite, our capability and starting to grow the business, get in front of super fund trustees and push our case forward, to really bring something different to the group insurance market. Brighter Super is a good proof point for us.”
Mr Delaney welcomes the Federal Government’s consultation on legislating the objective of superannuation, but says it’s vital that the role of life insurance within super is not forgotten.
“It’s really important that that review doesn’t lose sight of the important role that life insurance has played for a long time within the retirement ecosystem,” he says.
Research shows about a quarter of all retirees retire either with a disability or supporting and caring for someone with a disability.
“Many people don’t consider their life insurance needs. That’s a fact. So [life insurance within super] is really providing a base level of coverage that underpins and provides a great level of security for many Australians and their families.”
On the general insurance side it’s a case of focusing on current strengths and tapping into Zurich’s global expertise and offerings. Revenues are still growing strongly, partly from rate increases but also from gaining new business.
“SME and our motor proposition continues to be a focus for us for growth, and we’re building out that capability and our presence in market,” Mr Delaney says.
“We certainly see mid-market as an opportunity for us to grow in a more efficient way.
“So we’re looking at ways that we can service the market differently and better – not necessarily the insurance product or proposition, but certainly how we support brokers and their customers in that market.
“We see both the mid-market and SME being strong areas of focus for us for future growth.”
Mr Delaney describes the current general insurance market as “transformative”, with the increasing number of natural catastrophes and reinsurance capacity issues leading to a sustained hard market.
“I think we’re shifting now from it not just being a question of rates in market, but a genuine issue of risk appetite, and I think many, many reinsurers are reassessing their risk appetite.
“So that’s certainly one area that is going to be more difficult in the future, which will certainly impact how the market is structured to support customers.”
He says Zurich for the most part “meets the market”, but where it has shifted appetite it has been related to sustainability, and moving away from industries like thermal coal.
“Zurich has very, very strong global credentials when it comes to climate change, and sustainability,” Mr Delaney says.
“The company believes strongly in taking action, and making a positive impact through our role as an insurer and also as an investor, employer and a member of the community.
“There’s been some work done from a sustainability angle, and then looking to really partner with businesses to help them transition through to a sustainable footprint.”
He sees a clear link between climate change, increasing natural catastrophes, and rising insurance premiums.
“We can’t disconnect the impact of climate change from natural catastrophes. And I think over the last three, four years particularly, that realisation has come to the fore.
“That’s why Zurich, both here and globally, is so focused on climate change and sustainability. It’s something that we need to see action on.”
Affordability is a big focus, he says, with broader cost of living challenges hurting clients.
“We are in a transformative time and it is clearly going to have an impact on affordability over time, but also potentially accessibility.
“We hear about cost of living across the whole economy and our market. There’s no doubt that inflation is having an impact on claims costs, and that will ultimately translate to increased costs for consumers.”
On industry reform, Mr Delaney believes that the insurance sector might be suffering from regulation overload.
The past decade has seen a raft of changes, he says, each of which was well-intentioned and made sense on their own. But the end result is “problematic”.
“You bring all those together and we’ve ended up in a situation now where we’ve got, in aggregate, a really expensive and inefficient system.”
Mr Delaney sees the Quality of Advice Review as an opportunity that must not be missed to simplify some rules, and Zurich is broadly supportive of reviewer Michelle Levy’s recommendations.
“Australia is lauded for having a world-leading retirement savings system – top three, four or five in the world, depending on which review and how it’s looked at,” he says.
“But things such as financial literacy haven’t kept pace with that. So on the one hand we’ve got this great retirement savings pool being built, but the financial literacy of Australians is actually going backwards at the moment.
“I think that we need to not miss this opportunity for reform. Because otherwise, I think we will be in a situation where we don’t have the opportunity to really provide more Australians with accessible and affordable advice.”
He says consumer protection has been the driver of many of these initiatives, but people still need to be able to access the support they need.
“That’s what’s missing at the moment. One of the challenges we have is we’ve got tens of thousands of customers who no longer have an advice relationship.
“And they will approach us to help them with their life insurance needs, and it’s very difficult for us to provide that support without providing personal advice.
“So we need structural reform, I think, to enable us to really to meet that need.
“I think the quality of advice review really looked at all those issues and focused on the first principle being ‘how do we provide accessible and affordable advice?’
“And I think if you look at the recommendations as a whole set, they do produce a compelling case for change and reform.”
On the general insurance side, Mr Delaney backs Ms Levy’s recommendation to allow general insurance broker commissions to continue.
Commissions work for some customers, he says, so why make things harder for them?
“I think a change that moved us backwards in that sense certainly wouldn’t serve the purpose of continuing to look at different ways of expanding the market, providing more advice to more people.
“There’s no doubt that brokers provide a really important role in improving people’s understanding of what’s available to protect the risks.”
As well as bringing the Zurich business closer together, Mr Delaney is also focused on strengthening external partnerships.
“Our whole business across all our segments really is a partnership business. We partner with brokers on the general insurance side, with financial planners on the retail life insurance side, and then with super trustees on the group side.
“I think for the community and obviously, for Zurich, they’re incredibly important relationships.”
Justin Delaney has a background in wealth management, but after a foray into insurance at Macquarie Group he decided that was the industry for him.
He worked at TAL before joining Zurich in 2019 to head up life and investments. In 2021 General Insurance head Tim Plant left to join IAG and Mr Delaney took on the overall Chief Executive role with responsibility for both life and general insurance.
“Most people fall into insurance,” Mr Delaney says. “For me, having come from the wealth side, the purpose of insurance had quite a strong resonance, particularly on the life side given the impact that life insurance has on people when they are facing some of their most difficult challenges.
“That purpose did really drive me in the last 10 years of my career, and where I’ve looked to work.”