Our annual assessment of the influencers and influences whose actions impact on the Australian insurance industry

By Terry McMullan

Welcome to 2023’s examination of the Top 20 influences and influencers in Australian insurance – our annual tongue-in-cheek look at the major people and things that steer the industry and its strategic position.

Insurance News doesn’t do awards. While it’s logical for insurance groups and even the industry associations to celebrate the brightest and best in their ranks, we reject the value of “hot”, “hottest” and “best” awards by publications that frankly are focused on money more than merit.

Our Top 20 was first published in December 2009 as a light-hearted list that nevertheless introduced to our readers the people we believed were leading the industry. It proved to be a useful reference for many, and each year since we’ve been encouraged by readers and advertisers to do it again, please.

But leaders don’t change all that often, so years ago we threw “influences” into the annual mix to ensure the Top 20 retained its interest value. No one has ever paid a cent to be featured, and we don’t sell meaningless little stickers to celebrate any accession to the Top 20 ranks, either. We don’t claim the annual list to be anything more than the opinions of Insurance News’ journalists, who speak to thousands of industry practitioners each year and have a good idea of who’s who.

Checking through that long-ago 2009 list is illustrative. Many of the people featured have moved on to other things, but some names are as familiar now as they were then. Some examples: Frank O’Halloran, then chief executive of QBE and now Chairman of the listed Steadfast Group; John Trowbridge, the country’s best-known actuary and go-to expert on complex issues, was then an executive member of the Australian Prudential Regulation Authority; and Rob Scott ran Wesfarmers Insurance and is now managing the entire Wesfarmers empire. Also on that first list was Robert Kelly, who has made every list since. Even way back in 2009 he and his unlisted Steadfast operation were making waves. We described Mr Kelly then as “personable, tough-minded, witty and often controversial”. So some things haven’t changed much in 14 years.

The essential ingredients we seek in our leaders – knowledge, confidence, entrepreneurial thinking and a willingness to walk the talk – are as valued today as they ever have been. The challenges and opportunities are still there for the entrepreneurs and managers who can see potential through the present mist of uncertainty.

So, here’s our list of the Top 20 influencers and influences that have had the greatest impact on insurance in 2023, as decided by the journalists of Insurance News.

THE INFLUENCERS

#1 Andrew Hall, Chief Executive, Insurance Council of Australia:

Deep knowledge of the insurance industry is helpful for anyone who heads up the insurance industry’s peak body, but frankly that hasn’t always been successful. More important in today’s world is deep knowledge of the personalities and processes that dominate in Canberra, and how to convert them to new ways of thinking. Andrew Hall probably knew very little about general insurance when he moved over from CBA to become Chief Executive of ICA, and he may never develop the passion for the industry that so many practitioners have.

But that doesn’t matter – there are more than enough of us already carrying that candle. Hall is a professional communicator and political operative with an impressive background in key companies and industries. When he arrived at ICA in 2020 Hall installed his own team of communications specialists, and he gets the credit for securing solid Federal Government support for mitigation projects.

This year he and a host of insurance leaders took Assistant Treasurer Stephen Jones on a tour of the world’s (re)insurance hotspots, and Hall’s team was reputedly a catalyst behind NSW Premier Chris Minns’ surprise decision to have another shot at replacing the state’s odious Emergency Services Levy system.

He was recently also a speaker at the Canberra Press Club’s regular luncheon, where no insurance person has ever before been invited. While some complain ICA is too NSW-centric, that’s where the recent big plays have been centred. Hall’s job is to solve previously unfixable situations wherever they are, and that’s what he’s doing.

#2 The customer:

Let’s raise a glass to the Australians who remain committed to fully securing their property, businesses and other assets. And a toast also to the hundreds of thousands – possibly millions – who struggle to pay premiums that seem to keep rising while risks that were once covered are constricted.

In a wealthy society where the gap between the rich and the strugglers is becoming a yawning chasm and where affordability is a real issue, insurance professionals would do well to consider the customer when they say a healthy insurance industry is a profitable one. No one disputes that, but affordable insurance is also a sign of a healthy community. Some radical thinking is required here.

#3 Stephen Jones, Assistant Treasurer:

Jones is a refreshing change from previous holders of the portfolio. Some seemed more keen to move on to the next portfolio asap, but Jones has worked hard to understand and support insurers in their struggles to maintain a competitive and responsive industry.

The role of insurance in maintaining economic stability has become a preoccupation for the Albanese government – hardly surprising when you consider how dramatically premium rises, inflation and insurers’ still-low but gradually easing appetite for risk have affected Australian households and businesses. In September Jones accompanied industry leaders on a trip to London and Munich to learn how reinsurers in particular regard their business in Australia.

The message – don’t subsidise bad property risks, mitigate them – seems to have found a receptive ear. Jones returned as a convert to the belief that a flood reinsurance pool isn’t the answer to floods, while “building better infrastructure” and no longer “doing dumb things like building the wrong houses in the wrong places” are the way to go.

#4 Quality of Advice Reviewer Michelle Levy:

Regulators can and occasionally do shake up the insurance market, but the preferred approach is usually softly-gently. In 2022 Levy, a highly regarded lawyer, was appointed by the Federal Government to review the quality of advice being given to customers across the intermediary sector.

Her 267-page report released in February 2023 was hailed by brokers for its continuing support of commissions, ensuring customers would still have access to affordable advice on risk products. But debate simmered over Levy’s preference for commissions to be disclosed to clients – albeit with some concessions – that became a cause celebre in broker circles throughout 2023.

Among Levy’s suggestions was the replacement of the “best interest” duty with a new “good advice” duty. Her report should have been a game-changer, and brokers do risk their resistance to her views being met by regulatory reaction.

#5 Robert Kelly, Managing Director, Steadfast:

Kelly, a broker turned business magnate, is one of the industry’s most interesting stories. Life wasn’t always easy, and the founding of Steadfast – then quaintly called a “cluster” which provided buying advantages to broker members – was a long way from the behemoth we see today. Larger than life and gifted with clear visions of how things could be, Kelly’s determination to build a broker group second to none has succeeded thanks to his relentless drive.

Now Kelly is moving Steadfast into the US market in a typically innovative and ambitious way. As he assembles the firepower to succeed in the world’s most difficult market, Kelly has also built a management team who can focus on the essentials while he constructs a new broking giant for his members and shareholders.

#6 Mike Emmett, Chief Executive AUB:

While it’s overshadowed in the local consciousness by Steadfast, AUB has always been the home of some of Australia’s biggest and best brokerages and underwriting agencies. Emmett has brought greater balance to AUB’s already impressive range of offerings, and the group’s $880 million acquisition in September 2022 of leading Lloyd’s broker Tysers has opened up a range of new options for the group’s brokers.

Talks over a 50/50 Tysers retail joint venture proposal with Melbourne-based listed broker PSC fell over in May, with AUB raising $150 million to carry on solo. Since taking the top job at AUB in March 2019 Emmett has focused on reshaping the business to make it more responsive to a changing market dynamic. He’s succeeding.

#7 Phil Kewin, Chief Executive, National Insurance Brokers Association:

The membership of NIBA is a disparate lot – from international and Australian giants to small neighbourhood brokers, many of whom belong to AR groups. Meeting all the specialised demands of such a polyglot bunch has always been NIBA’s strength and its weakness.

Phil Kewin found that out when his code of practice went through some redrafting of its commission disclosure rules, with a requirement that members would disclose commissions to small business clients, then back to where they were, with disclosure only required for retail clients.

Faced with threats of resignation from some large locals, Kewin backtracked, saying members weren’t sufficiently consulted on the change. An insurance veteran with some solid achievements on the life side, Kewin has pointed out the code is nevertheless a powerful document. Which it is, but that “blink and it’s gone” incident hasn’t helped in selling it.

#8 Underwriting agencies:

Large crowds of brokers are attending the Underwriting Agencies Council’s (UAC) broker expos around the country. Once of marginal interest, the expos – basically trade fairs where brokers “shop” for specialist cover they can’t easily find in the mainstream – provide clear evidence of a continuing change in distribution trends.

No longer regarded solely as providers of niche products, the underwriting agencies are bulking up and increasing in number as mainstream insurers realise their value to the market. In a reprise of the old adage that “if you can’t beat ‘em, join ‘em”, insurers are now major investors in the sector by providing risk capital.

With experienced insurance executive Jenny Bax now running UAC and a high-powered board backing her, expect to see the underwriting agencies sector assuming even more importance in the minds of brokers – and insurers.

#9 Steve Johnston, Group Chief Executive, Suncorp:

Like oil and water, insurance and banking don’t mix easily. In recent years CEOs have come to the conclusion that the mixture dilutes the profitability and efficiency of both, so most banks have quit the insurance businesses they’d spent so much to acquire in the previous 20 or so years.

Suncorp CEO Johnston has the problem in reverse – his group is an insurer with a bank attached. Johnston tried to sell the bank to ANZ in 2023, but the consumer watchdog nixed the deal. Johnston and ANZ are forging ahead in the expectation the sale will be approved on review next year.

The second-largest local insurer can then use ANZ’s $4.9 billion to become a “pure” insurer with a hefty acquisition war chest. Johnston has spent considerable effort making Suncorp more competitive with its top-end counterparts, so the next year will be interesting.

#10 Chris Minns, Premier of New South Wales:

After what happened in 2017 when the Berejiklian state government tried to reform NSW’s Emergency Services Levy to make it more equitable, we didn’t expect to see another attempt being mounted for years. But ALP Premier Chris Minns, elected to office in March 2023, announced in November that ESL reform is back on the table. The levy takes 73.7% from insurance customers, 11.7% from local councils and 14.6% from the state government to finance its emergency services.

Minns notes that the increasing rate of climate-related catastrophes has forced the move, saying “It’s not easy, but it’s the right thing to do.” Let’s wish him luck, because he’ll need it, but the cause is a just one.

THE INFLUENCES

#1 Climate change:

At the end of a year where the word “record” seemed tacked on to every mention of climate change-related weather events, it hardly needs to be said that the time for fierce debates over the cause has passed. Global heating is causing catastrophes, putting insurers’ staff and bottom lines under stress. For Australia, weather-related catastrophes like bushfires and floods are predicted to become more intense.

The impact of the northern NSW floods demonstrated how such major events stymie the insurance industry. If there is an upside, it’s that politicians are at last supporting mitigation projects. Climate change is an existential threat in so many ways.

#2 Affordability, availability, viability:

While we blame the changing climate for much of the high cost of insurance, for people in exposed environments cover is either horrendously expensive and limited in scope or simply not available. When it reaches such a point it can get very messy, with media and politicians naming the industry as the villain of the piece.

A future risk for the providers of insurance is that new market entrants with “final option” propositions or an innovative approach could dilute the insurance industry’s pre-eminence in providing insurance. Property is one of the biggest markets in insurance, and any scheme that could fill the availability vacuum would be welcomed. If insurance ever ceases to be viable in extreme environments, an alternative will come along to do all it can to fill the gap.

#3 Broker commissions – from fees to disclosure:

The first-ever edition of Insurance News magazine back in 2009 included an article about commissions, but the focus then wasn’t on disclosure, as it is now. The options facing brokers then was whether they should be paid via commissions or be forced to charge fees.

That particular debate faded without any action being taken, but it has bubbled in the background.

Now that the matter of brokers’ compensation has been resurrected by the Federal Government in the Quality of Advice review, and brokers have opposed formalising disclosure of commissions to small business clients, it would be wise to remember that regulators always have more than one string to their bow.

#4 Professionalism/recruitment/competition for talent:

The quest for professionalism in insurance is always with us. Progress has been made in baby steps across the industry, and yes, there are many more university graduates with a wide variety of suitable qualifications than there have been before.

But the “professional problem” remains. Insurance people’s minimum industry qualification is low, and sometimes it shows. Some industry people are reluctant to invest the time and effort required to lift their industry qualifications and maintain them through continuous learning.

Low barriers to entry – or to practising – are one thing, but even less desirable is the risk of turning off high-achieving university graduates from wanting to work in insurance, because the learning pathways are opaque. Customers expect the people licensed to advise them on important issues like risk are qualified to do so. Experience only deepens the talent pool so much.

#5 Technology:

Hampered by masses of data stored on stable but limited and elderly systems, the established insurers are always at a disadvantage to late-entry competitors with more efficient and reactive data and processing systems. It’s a problem that grows year on year, and the only solutions are priced in the hundreds of millions of dollars.

While insurtech continues to make inroads to the industry, innovation seems to be a niche thing, with one issue at a time being addressed. End-to-end processing has to come, but those legacy systems are an uncompetitive handicap. Artificial Intelligence is seen by many as the panacea we’ve been waiting for, but the commitment to spend shareholders’ money on innovation is still muted.

#6 Planning ahead:

High inflation, costly risk capital, rocketing claims and staffing issues are the themes of the moment for the insurance industry. They’re big issues, and the deserve the amount of attention they’re getting. But little attention is being devoted to the “softer” issues that have dominated in the (less challenging) recent past: innovation, development, growth, staff development, market opportunities.

The industry has come to understand that piecemeal solutions tend to have a short life. The need to plan for a profitable future requires proper understanding of the causes of the present insurance environment, and the ways businesses can use that knowledge to avoid failure and grow.

All this talk of planning may seem a luxury in tough times, to smaller businesses in particular. But as the traumas of the covid years fade and the industry tries to do more with less, there’s never been a more important time to understand the Big Pictures that make up the insurance industry. If you’re going to think about the future, think bigger.

#7 The “where did that come from?” syndrome:

Remember the business interruption court cases that dragged on seemingly for years after some unfortunate drafting laid bare insurers’ exposure – and also their habit of copying model policies rather than applying their own innovative thinking? While that drama is behind us (just), the rapid emergence of risks nobody thought of previously is becoming a bit of a trend.

Cybercrime, for example. Actuaries and underwriters need data to understand new risks and set benchmarks, which explains why it took a decade or more for insurers to design effective policies against cyber criminals. Even then there’s a bit of guesswork in the final cost, which can complicate settlements. As climate change reveals new global vulnerabilities, new claims from unexpected risks will emerge. The worst part is, you can’t effectively plan an insurance response to issues that don’t exist yet.

#8 Regulatory uncertainty:

If your mother ever admonished you to clean up your bedroom or she’d do it for you “and you won’t like what I do”, you know what it’s like dealing with financial regulators. They are there to oversee the industry’s performance and processes, its products and its plans.

Insurers caught up in the Hayne Royal Commission found themselves very
expensively spanked for selling consumers products that were heavily weighted against them. In many cases such products – particularly add-on warranties – had been around for so long they had become regarded by their insurers as benign. Hundreds of millions of dollars later they know otherwise.

So it’s worth remembering Commissioner Hayne’s “six principles: obey the law; don’t mislead or deceive; be fair; provide services that are fit for purpose; deliver services with reasonable care and skill; when acting for another, act in the best interests of that other.”

#9 The data dilemma:

Insurance companies are experts at collecting data from customers so they have all relevant details of the risks they’re expected to cover. That data is knowledge, and knowledge, of course, is power. It has taken 10 years or more for insurers and larger brokers to get so-called Big Data – stuff that’s relevant and sometimes not particularly relevant but useful – under control.

Such data, properly plumbed, provides insights into specific population or business cohorts that buy insurance. The uses of the resulting information are vast – everything from marketing to assessing your likely age when you die. Issues about who owns personal information and how securely it is stored will become increasingly important in the future for insurers and actuaries.

The aim is to produce products and services that match the aspirations of customers. If that’s all that happening, great. But archaic technological infrastructure and unstructured data stemming from multiple disparate systems should be sending up caution flags at least.

#10 Competition:

Eventually the inflation dragon will be slain, premiums will come under pressure via competition, and new insurance companies will enter the dynamic Australian insurance market in search of new customers.

Future battles for personal lines customers will be in the niches. These entrants may not take the same shape as the incumbent insurers, they may be online-only, and up-to-the-minute technology will allow them to pick and choose who they will cover.

Opportunity will always speckle the most difficult of challenges, and data will enable flexibility and efficiency across the insurance industry. That’s the dream.

Looked at in the cold light of 2023, competition in the future will revolve around technology, data and marketing aimed at niche groups, with the end result a more fragmented but also more satisfied customer base.