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Commercial rates will keep rising, says Swiss Re

Australian commercial insurance premiums are forecast to rise 6% next year after increasing 7.4% in the current 12 months as a rate-hardening trend continues and the economy expands, Swiss Re Institute says.

“Solid economic growth this year and next will further underpin demand for insurance,” Swiss Re Group Chief Economist Jerome Jean Haegeli says in a report on the Australian commercial insurance market issued this afternoon.

Commercial motor is forecast to rise 10.3% this year and 5.5% next year, while property is expected to increase 4.1% this year and then 6%.

In liability, financial lines, especially directors’ and officers’ covers, are facing sharp increases due to class action activity, while capacity constraints are also contributing.

The expected rises follow gains of 4.3% last year as the impact of natural catastrophes, including Cyclone Debbie, helped drive the market.

Swiss Re Corporate Solutions Head of Sales ANZ Stephen Higginson says gains are not across the board, with wide variations within various lines.

He says the market is still making up ground after more than a decade of difficult conditions.

The insurance community allowed the pricing levels to drop too low, he told But underwriting approaches and strategies have changed.

“We are still in a position where the insurance community needs to see at least another year of sensible rating and a sensible approach to risk to say we have got over the worst of it,” he said.

“But it is a lot better than having a market that continues in free-fall.”

Marine insurance remains a soft area, with no increase expected for this year and just a 1% rise forecast for next year, while the outlook is also clouded by the potential impact from escalating US-China trade concerns.

Australia’s commercial insurance market was estimated last year at $US10 billion ($13.8 billion) by direct premiums written, making it the 10th largest in the world, the report says.

Longer term, business interruption risk will be a growth driver as many companies in Australia, particularly SMEs, don’t have cover in place.

ICA defends travel insurers’ pregnancy exclusions

The Insurance Council of Australia (ICA) has challenged a comparison website’s travel insurance survey that finds one in four policies do not cover pregnancy.

ICA spokesman Campbell Fuller told almost all travel insurers cover pregnancy to some level, with exclusions varying according to policies and situations.

“ICA encourages pregnant travellers to research travel insurance policies and read the individual product disclosure statements to find a policy that best covers their individual circumstance and personal need,” he says.

Comparator Mozo says an analysis of 271 policies from 60 insurers found one in four exclude pregnancy, and those that do provide cover have a number of conditions.

ICA says the period covered by policies varies from 20-32 weeks for single-birth pregnancies and most use 19 weeks for twins or more births.

Cover is available if the traveller has not experienced complications, but some still offer insurance in the case of complications if extra information is provided.

Most IVF pregnancies are not covered. Generally, insurers will not cover medical or other expenses associated with premature birth while travelling, but a few policies will cover childbirth and care of the newborn up to the 30th week.

Mozo says its analysis shows blood-thinning medication is the most excluded condition, with 87% of policies not allowing claims, while 82% exclude cancer and 81% cardiovascular disease.

On adventure activities, surfing and trekking are usually covered, but 83% exclude mountaineering, 70% rock climbing and 63% skydiving.

Underwriting agencies remain highly optimistic

About 89% of Australia’s growing army of underwriting agencies see growth potential in their markets, up one point from last year, according to an annual survey.

The proportion who think new entrants will provide a fierce challenge fell 27 points to 33% and fewer than half believe strong competition makes life difficult, down six points.

“Underwriters remain highly optimistic and see potential in harvesting demand in their current markets,” the Underwriting Agencies Council CEO survey report says. 

“The perceived threat from new entrants is receding and rated as the least concern.”

The survey was conducted by the Underwriting Agencies Council and insurance technology group Gratex International, and includes participants from New Zealand.

Some findings suggest that despite their confidence about the market’s growth potential, some underwriting agencies are rethinking their strategies and easing up on diversification.

Only 22% rank entering new market segments as critical or very important, down from 45%, and the proportion planning to introduce new products to customers fell 11 points to 47%.

“We are delighted to see a thriving industry taking more and more advantage of automation and digital transformation,” Gratex MD Marian Korcek said. 

“However, looking at the trends, I would caution about the slowing of innovation and new market entry appetite. The tide will turn in a couple of years.

“Together with the lightning-fast advancement of technology, especially Big Data, business and artificial intelligence, the industry must be ready for unprecedented change already on the horizon.”

D&O premiums a sign of the times: Gallagher

Directors’ and officers’ premiums continue to escalate, mainly driven by a spike in class actions, according to Gallagher’s latest quarterly market report.

“Throughout this year of change, one thing has remained constant: the intense scrutiny company directors are under at a time when employees, consumers and shareholders are demanding more accountability for their actions,” CEO Sarah Lyons says.

The hardening market has led to insurers taking a much closer look at initial public offerings, engaging in more rigorous underwriting, raising prices and restricting cover.

“Insurers are more selective of the risks they insure, with an increasingly limited number prepared to consider putting up terms only after they have considered responses to an extensive list of questions,” Gallagher says. “This is challenging for large raisings where clients seek significant capacity from multiple insurers.”

The report says the insurance sector has opportunities to grow further as it evolves to meet the changing business landscape and support clients’ needs. Growth in the transport sector and the increasing popularity of surety bonds hold great promise.

Calculated attack: industry responds to Choice claim

Insurers have defended online home and contents value calculators after a Choice study produced varying replacement cost estimates.

The consumer group’s test of calculators offered on six insurers’ websites found differences of up to $71,500 for an identical four-bedroom house in a single postcode.

But an Insurance Council of Australia spokesman told that home building and contents calculators “are an important resource to help prevent or reduce underinsurance in the community”.

“Consumers are being helped, rather than misled, by online calculators. They provide reliable guidance on the amount of insurance householders may choose to purchase. Consumers may also use them to check their level of cover.”

As for the $71,500 discrepancy highlighted by Choice, ICA says the different outcomes are caused by insurers having individual underwriting methodologies and other criteria for assessing risk.

Calculators have been customised and may not include factors such as demolition cost, professional fees and other expenses likely to be incurred during a rebuild, and these could have a huge impact on the estimates.

IAG says its calculator “is designed to highlight to a customer what they need to consider when calculating their sum insured”.

“Variations in quality, construction materials, site differences, additions and extensions are just some of the factors that will influence the rebuilding cost,” a spokesman told

“Online calculators play an important role in addressing underinsurance and helping consumers make sure they are adequately insured. 

“However, it’s important to recognise they provide general information only and are not a substitute for professional advice about a customer’s individual circumstances.”

Suncorp says its online calculator uses “extensive building industry data to estimate rebuilding costs, including demolition and professional fees”. 

“It is an important tool for customers to ensure they have the right level of cover to rebuild their home,” a spokesman told

Actuaries’ climate index reveals extreme change

The frequency of extreme weather conditions in autumn this year exceeded historical trends, with risks linked to higher temperatures and sea levels increasing.

That’s the finding of the first Australian Actuaries Climate Index, which measures how weather extremes and sea levels are being affected by climate change.

The Actuaries Institute expects the index will help insurers assess risks by determining if their frequency is changing. Its baseline period covers the years 1981-2010, and it will be updated quarterly as new data becomes available.

The index features a series of indices measuring changes in wind, rainfall, drought, temperature, sea level and consecutive dry days. It also shows wind levels remain broadly unchanged.

Although the index follows similar tools introduced in the US and Canada, the Actuaries Institute says it has implemented key changes to improve data quality.

Its baseline covers a more recent period and it uses a more extreme threshold for observations, providing a better link to risk. However, the index is based on only three component indices, rather than all six, because some data was not available or would have been overweighted.

The institute intends to develop more explicit indices measuring the risk of damage to property, health and excessive energy.

Finity Consulting Principal Tim Andrews says the index helps the industry understand that extreme weather and sea levels are changing. Finity helped collate the index using Bureau of Meteorology data.

Click here to see the index.

Cyclone damage: a major problem with a simple solution

Wind-driven rain entering homes around windows and doors is a major source of cyclone damage, even when building exteriors are mostly unharmed, new insurance research shows.

James Cook University’s Cyclone Testing Station found 70% of strata property claims include damage caused by wind-driven rain, while the percentage of claims costs for which this accounted varied from 2-60%.

The study was commissioned by IAG and Suncorp.

“Water can wreak havoc in a cyclone,” Suncorp CEO Insurance Gary Dransfield said. “Past events have found that buildings appearing visibly fine disguised significant interior damage caused by wind-driven rain throughout the home.”

The study analysed strata and house claims from cyclones Marcia and Debbie, to investigate potential mitigation measures for north Queensland homes.

Videos taken by residents during Debbie showed “considerable volumes” of water coming through windows and sliding glass doors, under swing doors and through light fittings.

“The rain caused damage to vulnerable elements such as plasterboard wall linings and ceilings, floor coverings and personal belongings,” James Cook’s report says.

“In multistorey buildings the rain percolated down through the building for a number of storeys below the original point of entry.”

A wind-driven rain simulator found homeowners can keep water at bay using a strip of plastic sheet taped inside windows or sliding doors. The report calls for increased awareness of the issue in the design and construction industry, and among residents.

The insurance and window and door industries should work together to promote weather-resistant openings for cyclonic regions, it says.

Geoscience updates tsunami hazard model

Insurers will have a better understanding of the frequency of tsunami-causing earthquakes thanks to Geoscience Australia’s updated tsunami hazard model.

The model includes more than 500,000 earthquake-tsunami scenarios around Australia, plus data from tsunamis that occurred in the past decade, since the previous model was produced.

The Federal Government group’s updated analysis also has data for more locations around Australia, making it easier for modellers to conduct local impact studies.

The area most susceptible to tsunamis runs from Geraldton, north of Perth, up to the northwest tip of WA. This area is close to the edge of the Indonesia tectonic plate, which is an active fault line.

Many of the 50 recorded tsunamis to hit Australia’s coastline resulted in dangerous rips and currents.

Geoscience Australia has yet to determine the probability of land inundation from tsunamis.

A spokesman says this would require using information from the model in conjunction with detailed topographical coastline data.

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AUB starts capital drive to support acquisitions

AUB Group today announced a $116 million capital raising to support acquisitions, organic growth and debt repayment.

The group’s first equity capital raising since its 2005 listing will underpin the recently announced deal to take a majority interest in Adroit Insurance & Risk, plus future acquisitions.

AUB says it is “actively pursuing from a solid pipeline of opportunities in Australia and New Zealand”.

Group CEO and MD Mark Searles says the business sees “a number of strategic opportunities in market”.

“We’re making strong progress in the execution of our ‘total risk solutions’ strategy, as we respond to evolving market conditions by providing a diverse range of risk management services and solutions,” he said.

See other story.

AUB aims to grow Adroit

AUB Group is focused on growing Victorian brokerage Adroit Insurance & Risk after agreeing to acquire a majority stake in the business.

As reported by our Daily news service, AUB’s Divisional CEO National Partners and Acquisitions Fabian Pasquini has been appointed Adroit MD, effective December 1.

At the same time, Divisional CEO Austbrokers Network Nigel Thomas has taken an expanded leadership role across the Austbrokers division. 

AUB says Adroit shareholders Andrew Locke and Brendan Peck decided to step back from full-time leadership for personal reasons, and to sell their shareholding.

They will continue working with Adroit for at least two years, and there are other shareholders within the business.

AUB Group CEO and MD Mark Searles told Adroit has made impressive progress under Mr Locke and Mr Peck.

“We will aim to continue that growth trajectory, and opportunities in the Victorian market continue to increase.”

Mr Searles says further acquisitions are likely.

“Fundamentally, we use organic growth as our growth engine, but we are always on the lookout for acquisition opportunities, and we have a very strong pipeline at the moment.”

Adroit represents $100 million in gross written premium and operates 12 branches, servicing 25,000 customers across regional and metropolitan Victoria and NSW. It offers tailored solutions across business, personal and life insurance.

“AUB Group’s intent is to be the leading provider of risk management, advice and solutions to clients,” Mr Searles said.

“Adroit’s focus on acting first and foremost as a specialist risk adviser to its clients, alongside its strong fundamental of partnerships, make this move a logical decision.”

AUB says it has invested $170 million in successful acquisitions over the past five years.

Ownership change gives Assetinsure ‘certainty’

Assetinsure CEO Gregory Pfitzer has welcomed the move by CBL Corporation’s administrators to sell the surety bond insurer to a holding company co-ordinated by long-time business partner, Lombard Insurance.

Voluntary administrators KordaMentha last week announced Lombard Australia, an alliance of surety providers, will buy Sydney-based Assetinsure for an undisclosed price.

It could take up to six months to secure regulatory approval for the transaction.

CBL bought Assetinsure in 2015, but entered voluntary administration in February this year.

Assetinsure, which is Australia’s largest surety bond insurer, has previously said its parent’s financial troubles have had no impact on the business.

“The sale is a significant step forward in providing certainty around Assetinsure’s future,” Mr Pfitzer told

“We will continue to service our existing customer base and to develop new opportunities.”

Lombard Insurance has provided reinsurance capacity for an unincorporated joint venture in Australia for more than 10 years, and the acquisition will solidify the relationship.

“The new shareholders are already intimately involved in the surety business and that support will continue,” Mr Pfitzer said.

“The change in ownership will provide new opportunities to grow and develop the business.”

He says the business is performing “better than budgeted” and expects to provide an update on the year in due course.

Meanwhile, KordaMentha has secured New Zealand High Court approval to further adjourn a CBL creditors’ meeting to no later than December 18.

It was due to take place this week. KordaMentha asked for the delay to take into account a Reserve Bank of New Zealand application to liquidate CBL subsidiary CBL Insurance, which has been in court-imposed interim liquidation since February.

The liquidation hearing for CBL Insurance is set for today.

QBE backs SME cyber-risk start-up

QBE has invested in Zeguro, a US start-up specialising in cyber-risk solutions for SMEs.

The insurer’s venture capital arm, QBE Ventures, joined investors including a Munich Re-owned entity to support the $US5 million ($6.9 million) launch of the San Francisco business’ Cyber Safety Platform.

“Cyber security is of increasing concern for businesses of every size right around the world,” QBE Group COO David McMillan told

“Many growing small and medium businesses, for which data is central to their operations, too often lack the resources to effectively manage it. This creates significant risk.”

QBE will offer the platform to North American clients next year before taking it to Australia and other markets.

“QBE already offers cyber insurance in Australia, and through our partnership with Zeguro we have the potential to augment our position globally,” Mr McMillan said.

The platform allows SMEs to automate cyber-security processes, and detect and manage risks.

It also makes recommendations for better cyber management across people, processes and technology.

RACQ Insurance takes pet cover national

RACQ Insurance will underwrite pet cover for fellow mutual National Seniors Australia, an advocate body that offers services including insurance to its 130,000-plus members.

The insurer has been offering pet cover in Queensland since October 2015, and last year it began underwriting the product for motor club the RAC in WA.

“Underwriting our products outside our home state is a great way [to] build scale and increase profits to benefit our members right here in Queensland,” CEO John Myler said.

GB buys Perth risk manager

Claims manager Gallagher Bassett has bought Aurenda, a specialist worker injury risk management group, giving the company its first presence in Perth.

Aurenda MD Deb Macksy will continue providing executive leadership for the acquired business, which focuses on injury management, safety and training.

“The acquisition of Aurenda is an exciting development for Gallagher Bassett, particularly in the Perth market,” Gallagher Bassett Australia CEO John McNamara said.

Gallagher Bassett has offices in Melbourne, Brisbane, Adelaide, Sydney, Darwin, Auckland, Christchurch and Wellington.

Ensurance introduces UK cyber product

Ensurance UK has launched a cyber-cover product for the London market, underwritten by global specialist insurer Beazley.

The product offers privacy breach response management and information security insurance, and is open to any policyholder that handles customer data.

Ensurance says 46% of UK businesses have identified at least one cyber breach in the past year.

Large businesses are the most heavily targeted: 68% have suffered an attack or breach in the past year. About 66% of medium businesses have identified one.

The policy will significantly expand Ensurance’s UK target market.

Executive Chairman Tony Leibowitz says it is the first in a number of new lines the business hopes to enter, targeting emerging risks and underserved markets.

Zurich holds insurtech world cup

Zurich is hosting a global competition for insurtechs to showcase their innovations in financial planning and four other categories.

Winners will receive Zurich’s support in bringing their pilot plans to life.

“Innovation is at the core of Zurich’s strategy,” Zurich Financial Services Australia CEO Volker Mayr said.

“The Zurich Innovation World Championship is about inviting insurtechs and start-ups to work with us to accelerate the transformation of our business towards being a truly customer-led insurer.”

Of the 459 initial entries worldwide, 15 came from Sydney, including the eventual country winner, HCF Catalyst start-up will present in the regional round next month in Hong Kong. The global round will take place in early February.

Johns Lyng expands in Tasmania

Building contractor Johns Lyng Group has acquired Hobart company Dynamic Constructions and Landscapes as part of a national expansion program.

Johns Lyng Group, which works with insurers on property restorations, will add 60 suppliers and contractors to its network.

The group works on about 2000 Tasmanian insurance claims per year.

State Manager Kelly Mitchell says the acquisition will expand the group’s insurance claim services and enhance its ability to respond to large-scale catastrophic events.

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Regulatory & Government

Responses flood royal commission website

The Hayne royal commission published hundreds of submissions last week, including potentially vital responses to the “policy questions” document that followed the insurance round of hearings in September.

Submissions to Commissioner Kenneth Hayne’s interim report, which did not include insurance, were also published, as were companies’ submissions from before the hearings.

Insurers were asked to list every example of misconduct and conduct falling below community standards over the past 10 years.

Also published were details of the final round of hearings, due to start next Monday – in which general insurance companies will not be expected to appear.

The seventh round will consider regulatory reforms necessary to deal with cases of misconduct heard in previous rounds.

The royal commission says it “intends to deal with these issues through the entities set out below”, naming the big four banks, the Australian Prudential Regulation Authority, the Australian Securities and Investments Commission, AMP, Bendigo and Adelaide Bank, and Macquarie Group.

Finity Consulting Principal Geoff Atkins told he is not surprised general insurers have not been called.

“My interpretation of this round of hearings is that it’s about the regulators and underlying systemic issues,” he said. “The banks plus AMP have been the number one focus of the royal commission all along.

“I don’t think any particular questions [about general insurance] are likely to come up, but it will be dealt with in the final report.”


APRA details its enforcement powers review

The Australian Prudential Regulation Authority (APRA) today announced the terms of reference for reviewing its enforcement strategy.

The regulator announced plans for a review last month, after the Hayne royal commission questioned why APRA isn’t using its court-based sanction powers.

Deputy Chairman John Lonsdale will lead the review, which he says will be “a forward-looking examination of APRA’s approach to the use of its enforcement powers to ensure that financial promises made by supervised institutions are met within a stable, efficient and competitive financial system”.

“APRA has taken a range of supervisory actions over many years, but it is timely to examine whether APRA’s traditional approach – prioritising prevention and rectification – can be augmented by greater enforcement activity.

“This review presents an opportunity for APRA to strengthen further its supervisory toolkit and reinforce sound prudential outcomes.”

APRA’s approach to breach reporting and whistleblowers, its process for identifying enforcement actions and the adequacy of existing framework are among the issues to be examined.

The final review report will be presented to APRA members by March 31.

Senators support product design reform

A Treasury bill that would overhaul the way financial products including insurance are sold has been backed by the Senate Economics Legislation Committee.

Insurers have previously raised concerns over the Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) Bill 2018.

They say changes such as making it mandatory to state a product’s intended target market may result in increased costs that will inevitably be passed on to consumers.

Insurance Council of Australia (ICA) spokesman Campbell Fuller says the industry body will “provide further feedback during consultation about the regulations”.

“The Insurance Council has raised its concerns about the bill with the Government,” he told “ICA is seeking to prevent outcomes that could be detrimental to consumers and to the general insurance industry’s capacity to provide relevant and innovative products to the market.”

Last month ICA Policy Regulation GM John Anning told the committee premiums will rise because the changes will add to the cost of re-collecting policy information at each renewal.

But the committee sees it differently.

“There was concern that the bill would apply the design and distribution obligations to renewals of policies that would formerly have been automatic,” it says in its report supporting the bill.

“This would involve unnecessary (possibly large) costs and could lead people to drop policies and be left underinsured.

“The committee notes that draft regulations with the effect of including and excluding specific products have already been published. It believes this step-by-step approach is appropriate, and that the industry must be ready for continual refinement of the bill.”

The National Insurance Brokers Association says little guidance has been provided on how a target market is to be defined, and dealing with the new arrangements will pose difficulty since many insurance policies have a location-specific element.

Again, the committee has a different view on this.

“The committee appreciates that industry does not yet know what the rules about content of target market determinations will be, but observes that [the Australian Securities and Investments Commission] cannot publish guidance before the legislation is in place.”

Industry backs latest call to drop insurance taxes

The Insurance Council of Australia (ICA) has backed a Grattan Institute report urging state and territory governments to ditch insurance stamp duties and emergency services levies.

Insurers have been campaigning for more than 25 years for the removal of stamp duty systems, including insurance-based fire and emergency services levies, saying they are counter-productive. Inquiries into Australia’s taxation system have also criticised stamp duties on insurance products.

“Broad-based taxation remains the most economically effective, equitable and efficient method to fund Australia’s state and territory governments,” ICA spokesman Campbell Fuller told

“A broad-based property levy would encourage adequate take-up of insurance and be a more efficient and certain way of collecting revenue compared with insurance duties, which in essence penalise policyholders for effectively managing their risks.

“The Insurance Council therefore strongly submits that the interests of all states and territories would be best served by abolishing their insurance duties.”

Abolition of state and territory taxes on insurance would allow Australians to take out an extra $36 billion in cover for their homes and household assets, ICA says. It would also boost the economy by more than $500 million.

As for insurance levies to fund emergency services, Victoria, SA and WA have shown it is possible to fund emergency services through a property levy instead of insurance-linked duties.

The Grattan Institute report says NSW and Tasmania are the only states to retain fire service levies, raising about $900 million annually.

Scrapping the taxes would leave residents in the two states about $430 million better off.

The institute describes insurance stamp duties as “economically destructive”.

“There is a big prize for tax reform,” the report says. “All taxes drag on economic growth, but some are worse than others.

“State governments rely too much on taxes that reduce growth more. Making state taxes more efficient would boost economic growth.”

Canberra consults on accounting standard

Treasury is seeking feedback on the tax impacts of a new accounting standard for insurance contracts.

It wants to know if tax laws should be changed to accommodate AASB 17 Insurance Contracts when it takes effect on January 1 2021.

AASB 17 is issued by the Australian Accounting Standards Board and is designed to provide a consistent accounting treatment for health and general insurance contracts.

It is based on the International Accounting Standards Board’s new IFRS 17 requirements for insurance contracts worldwide.

The Insurance Council of Australia and its overseas peers have called for a delay in implementation of IFRS 17 to give insurers more time to prepare.

For more information, click here.

NSW cracks down on bushfire arsonists

The NSW Government is to increase the maximum jail sentence for bushfire arson from 14 years to 21 years.

“Such thoughtless acts place lives, homes, businesses and entire communities at risk,” Attorney-General Mark Speakman said. “These new penalties will give courts the power to impose tough sentences in line with community expectations.”

The State Government will also ask the Sentencing Council to consider if the five-year non-parole period should be increased, and review maximum penalties for a range of arson acts, including destroying or damaging property through fire.

Emergency Services and Police Minister Troy Grant says the penalty will provide a strong deterrent while more than 99% of the state is gripped by drought. Low rainfall is predicted in coming months, making bushfires even more likely.

The penalty legislation will be introduced on Parliament’s first sitting day this month.

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Life Insurance

FSC consults on new code of practice

The Financial Services Council (FSC) has released its overhauled Life Insurance Code of Practice for public consultation.

More than 30 significant changes have been made to last year’s original version.

They include banning pressure selling and coercive retention tactics, banning medical disclosure without reasonable grounds, improving consumer understanding of funeral cover and considering individual circumstances of mental health conditions in underwriting.

The code will include plain-language explanations for non-standard terms such as exclusions, and it also features the moratorium on genetics testing in life insurance.

Under the moratorium, all Australians can obtain up to $500,000 of life or total and permanent disability cover without having to disclose an adverse test result. There are also limits of $200,000 for trauma and $4000 a month for income protection.

FSC CEO Sally Loane – who was criticised in September for lacking knowledge of the life insurance code in her appearance before the Hayne royal commission – says every aspect of the life insurance industry is now under the microscope after poor behaviour was exposed in the hearings.

The FSC will hold three public meetings in Melbourne, Brisbane and Sydney, beginning tomorrow. It will also consult with stakeholders.

The consultation is open until January 12. Chapter one of the code will be implemented from next July and chapter two by 2021.

BT stands alone as locals sell out of life

Nine out of 10 Australian life insurers will be foreign-owned by next year, with Westpac’s BT Group the only locally owned insurer still standing.

This follows the sales of AMP’s life business to Resolution Life and Suncorp’s operation to Dai-ichi Life, S&P Global Market Intelligence says.

S&P’s breakdown of local life insurance operations and their owners:

  • TAL, Japan’s Dai-ichi
  • AIA Australia, AIA Group of Hong Kong
  • MLC, Japan’s Nippon Life
  • AMP, Resolution Life of the UK
  • OnePath, Zurich of Switzerland
  • Comminsure, AIA Group
  • Suncorp Life, Dai-ichi
  • Zurich Financial Services, Zurich
  • MetLife, MetLife of the US.

Zurich commits to ANZ OneCare offering

Zurich will keep the OneCare product line from its acquired ANZ life insurance business open long-term.

Zurich Life and Investments Chief Distribution Officer Kristine Brooks says there is a need for greater product differentiation as the life industry consolidates and choice narrows.

OneCare will be enhanced in line with customer requirements, Zurich says.

Ms Brooks says the product has an impressive track record on customer retention and a loyal following of advisers, and Zurich wants to preserve that.

Many of the “touch points” advisers use, such as quoting, applying or managing a policy, will remain the same, as will many features and service elements.

Ms Brooks says there is an opportunity to build on the strengths and differences in each of Zurich’s product ranges, to “create clearer differentiation and to broaden the range of recommendations that advisers can make to their clients”.

“Zurich is aiming – through the variety of products we offer – to better service people at different ages and stages of life, with different careers or income levels, or with different pre-existing health conditions,” she said.

A “one-size-fits-all approach” might exclude sections of the market.

ASIC consults on adviser education guidance

The Australian Securities and Investments Commission (ASIC) is consulting on regulatory guide changes to support reforms lifting advisers’ education, training and ethical standards.

Australian financial services licence applicants currently have five options for demonstrating the knowledge and skills of responsible managers.

Under the proposed changes a sixth option would reflect new education and training requirements and would need to be met by at least one responsible manager.

The requirements include completion of a financial adviser exam, an appropriate degree and continuing professional development.

The manager would also need three years of relevant experience over the past five years.

“Our proposals are designed to strengthen the organisational competence of financial advice licensees by ensuring advisers are supervised by at least one responsible manager who satisfies the new education and training standards,” ASIC Commissioner Danielle Press said.

The Financial Adviser Standards and Ethics Authority has been set up to oversee new training and ethical standards.

The new rules also propose a “professional year” for advisers still completing their training.

Submissions on ASIC’s consultation paper are due by December 6. An updated Regulatory Guide 105 is expected early next year. View the consultation paper here.

TAL makes changes to Accelerated Protection

TAL has upgraded its Accelerated Protection product series, including lower premiums for life and total and permanent disability (TPD) insurance.

It says customers who bundle their cover with TAL will benefit the most.

TAL has also updated 22 medical definitions under its critical illness insurance, and added the ability to apply “double critical illness” on both attached and linked policies.

A continuation option for white-collar occupations has been added to TPD insurance, allowing up to $1 million of “any occupation” cover to continue at age 70 and giving added flexibility, with “double TPD” on both linked and attached policies.

A business expense option has been added within income protection.

Future2 reaches $1 million milestone

The Financial Planning Association’s philanthropic arm has hit the $1 million mark for donations since its creation 11 years ago.

The Future2 Foundation donates to disadvantaged young Australians. It gave $181,000 this year to non-profits, with three of its 19 grants for drought relief in rural areas.

Groups tackling domestic violence and offering suicide bereavement support were also given grants.

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The Professional

Gallagher managers follow Godden to BMS

BMS Australia has recruited Gallagher executives Stuart Davies and Samantha Ford as a director and corporate broker respectively.

They will report to Andrew Godden, their former boss who in May was appointed CEO of the specialist insurance broker.

Mr Davies, previously Gallagher’s NSW manager, will specialise in corporate risks including directors’ and officers’ cover, and will also advise on placements in cyber, litigation, indemnity and other emerging risks.

He has 25 years’ experience in the UK and locally, and has held senior roles at Aon and JLT.

Ms Ford joined Gallagher in 2008 and was most recently its account manager for professional and financial risks, according to her LinkedIn profile.

“[They] are fantastic additions to the team and will form part of our continuing strategic build-out in the region,” Mr Godden said.

BHSI adds ‘expertise, leadership’ in technical lines

Berkshire Hathaway Specialty Insurance has expanded its Australian technical lines team, led by Cameron Holmes.

“With our most recent hires of Alex Hind and Fraser Logan, we have added expertise and focused leadership in the mining, energy and power markets,” Mr Holmes said.

Mr Hind has been appointed Mining and Energy Manager after moving from HDI, while Mr Logan, previously a risk engineer at Chubb, has joined as Senior Underwriter for Power and Utilities.

The technical lines team also includes Manager for Construction Rob McNab, Senior Underwriter for Construction Steve Najdovski, Senior Underwriter for Mining Ari Bitzilis and Underwriter for Property Technical Lines Widya Hasan.

Mr Holmes says technical lines is supported by a risk engineering team including Manager Patrick Whyte and Senior Risk Engineer Mike Arundel.

Inquiry chief to address Canterbury quake conference

The as-yet-unannounced head of an inquiry into New Zealand’s Earthquake Commission will be a keynote speaker at a two-day Canterbury quake recovery symposium.

The Government earlier this year flagged a public inquiry into the commission’s performance during the earthquakes, but it has yet to announce who will lead the process.

Other speakers include Greater Christchurch Regeneration Minister Megan Woods, Auditor-General John Ryan, disaster consultant Laurie Johnson and Maori Ngai Tahu CEO Arihia Bennett.

Topics during breakout sessions will include construction and housing, business recovery, mental health, infrastructure recovery, and arts, culture and heritage issues.

“More than 300 participants have been invited to the symposium,” Dr Woods said.

“These people are primarily leaders of organisations that could be impacted by future disasters, or involved in recovery efforts.”

The event, at the University of Canterbury in Christchurch on November 29-30, will be co-hosted by the Department of the Prime Minister and Cabinet and Christchurch City Council.

Dr Woods says there has been a “huge amount” of interest in the symposium, which is an opportunity to share recovery lessons and ensure mistakes are not repeated.

Talks will be live-streamed and slides and videos will be available on the EQ Recovery Learning website.

Start-up founder joins premium funder Attvest

Premium funder Attvest Finance has appointed Darren Evans as State Manager SA and NT, and has entered a strategic partnership with Insurtech Finance, a start-up he recently co-founded.

Mr Evans was state manager at Hunter Premium Funding for nine years and has three decades’ experience in corporate sales and marketing.

Insurtech Finance focuses on digitally enabled tools for premium funding services. In his new role Mr Evans will work closely with selected brokers to develop technology initiatives.

The strategic partnership aims to grow the national footprint for both Attvest and Insurtech Finance.

Bushfire centre pays tribute to chairman

The Bushfire and Natural Hazards Co-operative Research Centre has announced the death of chairman Laurie Hammond following a short illness.

Dr Hammond was appointed independent chairman of the centre when it began in 2013, and CEO Richard Thornton says he was “integral to the growth and development of the centre”.

“His leadership at the board level and his strategic advice to management was always insightful, timely and welcomed,” Dr Thornton said. “Laurie will be sadly missed by all of us here… and by his colleagues across the emergency services and management sector.

“Our thoughts and sympathies are with his wife and family, and with his large network of professional colleagues.”

Gallagher recruits branch manager

Gallagher has appointed Gary O’Meara as Branch Manager for its Parramatta office.

Mr O’Meara joins from Aon, where he worked for a decade, also as a branch manager. Before that he spent more than 15 years in a similar role at Allianz Australia.

The Parramatta branch is part of Gallagher’s network of 26 regional and metropolitan offices across Australia.

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JLT shareholders back Marsh takeover

JLT shareholders in London have voted overwhelmingly in favour of Marsh & McLennan’s takeover of the business.

There are still regulatory hoops to jump through, but Marsh President and CEO Dan Glaser says last week’s vote, securing 99.9% backing, is an important milestone.

“Planning the future of Marsh & McLennan and JLT together now begins in earnest,” he said.

“Upon closing, the combined firm will have the deepest pool of talent in the industry, the broadest industry expertise and the greatest capability to invest in data, analytics and digital solutions. We will meet our clients’ greatest challenges with innovation and thought leadership.”

The deal will create a global giant and the largest insurance broker in Australia.

Nobody knows exactly what the merger will bring in Australia, but early indications suggest a 2-5% headcount reduction across a global workforce of 75,000.

Mr Glaser has named Australia a “top-six” country for his global company and says “JLT is quite large and significant there too, so I love the idea of how that combines”.

What he did not say is that JLT in Australia is significantly larger than Marsh in one key measurement – profit. Nobody disputes the two companies are a good fit in this market: there is not much crossover and JLT’s dominance in prime niche sectors such as local government complements Marsh’s strength in the large corporate space.

The transaction remains subject to additional antitrust, financial regulatory and UK High Court approvals.

‘Rapidly mutating’ terror risk demands action

The insurance industry has been called on to respond to a protection gap around lone-wolf assaults, cyber attacks and other emerging terrorism tactics.

Unlocking new capacity, obtaining insights from academia and helping clients understand their risk portfolios are among solutions, reinsurance broker Guy Carpenter says.

“With the peril mutating rapidly, the entire insurance value chain is being challenged by new types of threats, new modes of attack and the terrorists’ deployment of any violent
and disruptive means to reach their desired end state. It is clear our industry will play an important role in shaping the response to this threat.”

State terrorism pools and the open market are key players in the next phase of protection for economies and individuals, Guy Carpenter says.

Michael leaves an $11 billion insurance bill behind

Hurricane Michael is estimated to have caused at least $US15 billion ($20.69 billion) of economic damage in the US, with insurance payouts to exceed $US8 billion ($11.04 billion).

Aon modeller Impact Forecasting’s global catastrophe report for last month says most damage occurred in the Florida Panhandle, but parts of Georgia, South Carolina, North Carolina, Alabama, Virginia and Maryland also suffered wind and flood damage.

It was the fourth-strongest hurricane on record in the US.

Meanwhile, flash flooding in Texas caused an estimated $US350 million ($482.82 million) of damage. Public and private insurers will pay at least $US175 million ($241.41 million).

Severe wind and hail across the northeast US caused tens of millions of dollars in economic and insured losses. And rainfall across Central America from the still-forming Hurricane Michael caused $US100 million ($137.95 million) of flood damage.

Extreme weather in southern and central Europe caused $US3.4 billion ($4.69 billion) of economic losses. Italy suffered floods, landslides, severe wind and strong waves, with the Veneto region recording at least $US1.1 billion ($1.52 billion) of damage. Austria suffered $US270 million ($372.46 million) of damage.

Impact analyst Michal Lorinc says Europe is on course for its costliest year for weather disasters since 2013.

Typhoons in Japan caused $US1 billion ($1.38 billion) of damage last month, while Cyclone Titli in India topped $US920 million ($1.27 billion). Damage from the remnants of Cyclone Leslie in Portugal is expected to reach hundreds of millions of dollars, while total economic losses from Hurricane Willa will be millions of dollars.

ILS issuance sets another record

A record-breaking $US1.6 billion ($2.2 billion) of insurance-linked securities (ILS) were issued in the third quarter.

A market report from Willis Towers Watson’s reinsurance division notes the sum is well above the five-year average of $US800 million ($1.1 billion) and exceeds the $US1.4 billion ($1.92 billion) third-quarter record set in 2013.

Issuance is also on course to match or exceed last year’s $US9.7 billion ($13.31 billion) full-year record. This year’s figure is already at $US8.7 billion ($11.94 billion).

Willis Towers Watson says the ILS market is continuing to move away from parametric triggers: 60% of bonds are now triggered by insurer losses, up from 40% in 2008. It says this reflects improved data and transparency, and a greater understanding of indemnity risk.

Zurich holds steady amid North America shake-up

Gross written premium in Zurich’s property and casualty (P&C) division grew slightly to $US25.87 billion ($35.61 billion) in the first three quarters, from $US25.35 billion ($34.9 billion) in the corresponding period last year.

Premium growth in the Asia-Pacific region and Latin America was offset by planned action to increase Zurich’s profitability in North America.

Group CFO George Quinn says the insurer continues to focus on profitability over volume in a challenging P&C environment.

The group is on course to achieve its targets for the next two financial years, he says.

Weather and catastrophe losses were slightly above expected levels in the nine months, and fourth-quarter losses from Hurricane Michael are expected to hit $US175 million ($240.91 million).

Zurich’s life insurance annual premium increased to $US3.57 billion ($4.91 billion) in the period from $US3.47 billion ($4.78 billion).

Allianz profit jumps on moderate disaster losses

Allianz net profit grew 23.6% to €1.9 billion ($2.6 billion) in the third quarter due to a benign period for natural catastrophes and strong performance in the asset management business.

Property and casualty operating earnings jumped 44.6% to €1.5 billion ($2.1 billion), with catastrophe losses returning to a normal level following last year’s string of high-cost events.

The combined operating ratio improved to 93.1% from 96.1% thanks to a better underlying claims development and a lower expense ratio.

“The combined operating ratio is in line with our renewal agenda target of 94% and we are pleased with the overall development of the segment,” CFO Giulio Terzariol said.

GWP grew about 4% to €12 billion ($16.6 billion), supported by volume and price growth.

Life and health operating profit fell slightly to €1.1 billion ($1.5 billion) in the quarter, while asset management earnings increased 10.6%, with both Allianz Global Investors and Pimco receiving strong net inflows.

“Especially in challenging times, customers are looking for a financially solid partner for their insurance and investment needs,” CEO Oliver Bate said.

The company is “very confident” of reaching its targets for the full year, he says.

The nine-month net profit grew 7.2% to €5.8 billion ($8 billion), while operating earnings of €8.7 billion ($12 billion) represent 79% of the full-year target midpoint.

Munich Re stays on target

Munich Re’s third-quarter profit rebounded to €483 million ($664 million) following a loss of €1.44 billion ($1.98 billion) a year earlier, keeping the company on course to meet its full-year target despite recent natural catastrophes.

The reinsurer estimates losses of about €300 million ($413 million) for each of Typhoon Jebi and Hurricane Florence, but says major loss spending for the first nine months was below expectations.

Gross written premium (GWP) increased 4.2% to €12.79 billion ($17.59 billion) in the third quarter.

Reinsurance contributed €309 million ($425 million) to earnings, compared with a loss of €1.47 billion ($2 billion) in the corresponding period last year, when hurricanes Harvey, Irma and Maria caused widespread damage.

The division’s GWP increased 6.2% as significant growth in property and casualty reinsurance more than offset a decline in life and health volumes.

Losses from Hurricane Michael and Typhoon Trami are expected to have a €350 million ($481 million) impact on the current quarter.

The Ergo primary insurance business generated a third-quarter profit of €173 million ($238 million), up from €29 million ($40 million), driven by life and health in Germany.

Munich Re’s nine-month earnings grew to €2.04 billion ($2.81 billion), with the full-year result expected to reach  €2.1-€2.5 billion ($2.9-$3.4 billion).

Hannover Re ‘well on track’ for year

Hannover Re has reported net income of €725 million ($1.14 billion) for the nine months to September 30, up 32% on the corresponding period last year.

The reinsurer says treaty renewals in property and casualty at June 1 and July 1, including in Australia and New Zealand, “saw sustained intense competition”.

However, significant rate increases were obtained under programs suffering losses in the previous year.

CEO Ulrich Wallin says the third quarter was dominated by large losses from typhoons in Japan and hurricanes in the US.

“However, the resulting strains for Hannover Re were in line with our expectations,” he said.

“For this reason, and thanks to the good income from our investments, we are well on track to achieve our profit target for [this year].”

The combined operating ratio for the nine-month period improved to 96.8% from 104.4%.

Strong exchange revenue lifts Ebix profit

The Australian operations of insurance technology specialist Ebix has been singled-out for further growth.

Reporting a 21% rise in third-quarter net profit to $US29.2 million ($40.2 million), driven by its core exchange business, Chairman and CEO Robin Raina said

Exchange revenue, which made up 83% of turnover, grew 67% to $US106.9 million ($147.22 million), lifting overall revenue 39% to $US128.6 million ($177 million).

Discussions are under way to grow the exchange business further in Australia and the UK.

“We are… negotiating a number of large-value recurring exchange deals in international markets,” Mr Raina said. “If consummated, these agreements should contribute to our growth goals for revenue and operating margins.

“We believe substantial top-line growth [next year] will come primarily from the US, southeast Asia, the Middle East, the UK, Australia and Brazil, where we are undertaking a number of new business development initiatives.”

Commercial lines underpin Axa result

Axa, which completed its acquisition of Bermuda-based XL Group in September, says property and casualty (P&C) revenue grew 1% to €25.4 billion ($35.2 billion) in the first nine months of the year.

Commercial lines revenue gained 2% to €12.4 billion ($17.2 billion), led by motor increases in markets including the UK and Ireland and the international segment.

Axa’s overall revenue grew 4% to €75.8 billion ($104.9 billion), with health up 7% and protection annual premium equivalent gaining 10%.

“We grew in all five of our geographies and across all business lines,” Deputy CEO and Group CFO Gerald Harlin said.

“Notably, we recorded a strong top-line growth in our preferred segments, with the continued dynamism of our health, protection and P&C commercial lines businesses.”

Mr Harlin says the XL acquisition’s closure was a key milestone and Axa’s balance sheet remains strong.

Third-quarter catastrophes, including typhoons Mangkhut, Jebi and Trami and Hurricane Florence, are expected to trigger about €300 million ($415.3 million) in claims before tax and reinsurance – about twice typical third-quarter natural catastrophes charges.

The company says Hurricane Michael claims are likely to be about €200 million ($276.8 million) based on a preliminary estimate – about twice typical fourth-quarter levels. The profit and loss impact will be “immaterial” at Axa Group level.

Hiscox flags premium growth slowdown

Bermuda-based Hiscox says growth may ease this quarter after its gross written premium increased 14.3% to $US3.04 billion ($4.2 billion) in the first nine months.

“We have had strong growth, but as the market remains challenging we will remain disciplined, and I expect our growth to moderate over the balance of the year,” the specialty insurer’s CEO Bronek Masojada said.

Hiscox London market rates increased 5% across the portfolio, with double-digit rises in major property, while Lloyd’s “decile 10” turnaround directive has forced the whole market to take action in unprofitable areas.

“Cargo business, for example, has seen much-needed rate improvement of more than 20% since August,” Hiscox said.

Overcapacity continues to drive pricing pressure in cyber and terrorism classes.

Hiscox Re and insurance-linked securities rates in US catastrophe-exposed businesses have recorded mid-single-digit gains, while rates in the international book are slightly down.

“Looking ahead to January and further into [next year’s] renewals we expect the market to recognise material adverse development from the hurricanes of [last year] and the recent events in the US and Japan,” it says.

Hiscox has reserved $US125 million ($173 million) to cover claims and reduced profit commissions from hurricanes Florence and Michael, plus typhoons Jebi and Trami.

The group also recorded a large marine loss of $US13 million ($18 million). Hiscox USA has experienced a higher frequency of directors’ and officers’ claims, and there has been an uptick in subsidence in the UK and Ireland after a particularly dry summer.

Hiscox Retail has gained its millionth retail customer, while a new European subsidiary will start writing business from January 1.

US market drives Beazley GWP

An 18% surge in the US market and a jump in property rates grew Beazley’s gross written premium (GWP) grow 11% to $US1.96 billion ($2.71 billion) in the year to September.

“Our business continues to deliver double-digit premium growth and has been aided by higher rates in some classes following last year’s catastrophe losses,” CEO Andrew Horton said.

US momentum is expected to continue and the company aims to again deliver high-single-digit growth next year, he says.

The London-based company’s specialty lines GWP grew 11% to $US1.03 billion ($1.42 billion) and property premium increased 21% to $US340 million ($470 million). The political, accident and contingency division’s GWP gained 5% to $US183 million ($253 million).

Beazley says it will stop underwriting construction and engineering business, which accounted for about 10% of property division premium last year, because it is unlikely to satisfy “cross-cycle” profitability requirements in the foreseeable future.

It estimates losses from hurricanes Florence and Michael and typhoons Jebi and Trami will be about $US105 million ($145 million).

Crawford upbeat despite earnings slip

Crawford & Company has posted a decline in third-quarter net income to $US7.9 million ($10.9 million) from $US11.8 million ($16.2 million), pushed down by lower earnings.

The claims management company also booked a $US1.2 million ($1.7 million) pre-tax loss in the quarter from the sale of its Garden City Group legal services business.

Consolidated earnings fell to $US16.5 million ($22.7 million) from $US24.1 million ($33.2 million) on weaker contributions from its three main divisions – Crawford TPA Solutions: Broadspire, Crawford Claims Solutions and Crawford Specialty Solutions.

CEO Harsha Agadi says the group is focusing on the future by investing in technology, product development and other areas.

“Our third-quarter results demonstrate the continued progress we are achieving as we return [the company] to sustained revenue growth, though we fell short of our expectations for operating earnings,” he said.

“Our investments are clearly delivering revenue growth while positioning Crawford for future success.”

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Royal commission submissions: a summary

The Hayne royal commission website has been flooded with hundreds of submissions in recent days.

Responses to the insurance policy questions document could have vital repercussions for the industry, but it’s not easy to cut through a very broad mix of opinions, defensive statements, explanations and even cautious agreements.

In summarising consumer, regulator and industry reactions to the key questions, we’ve highlighted the most pertinent points answering the royal commission’s questions.

Is the current regulatory regime adequate to minimise consumer detriment?

Consumers: It’s a clear no.

As an example, consumer group Choice says the evidence presented to the commission “clearly illustrates the current regulatory regime is failing to protect consumers”.

“These failings have created systemic problems in the industry that can only be addressed through significant reforms. This should include a decisive move away from self-regulation and towards a model that involves more direct regulatory involvement and oversight.”

Regulators: The Australian Securities and Investments Commission (ASIC) says no, but specifically references concerns in the life insurance sector. The Australian Prudential Regulation Authority (APRA) only answers questions relevant to its role, so offers no opinion.

Industry: The Insurance Council of Australia (ICA) sits on the fence.

While the regulatory regime “provides extensive protections for consumers”, it says the emphasis on product disclosure is “misplaced” given low financial literacy levels.

The National Insurance Brokers Association (NIBA) accepts there is “room for improvement”, but says a “major shift is not justified”.

Is the current disclosure regime for financial products… adequately serving the interests of consumers?

Consumers: A unanimous no.

“It is now well established that insurance disclosure, through product disclosure statements (PDS) and key fact sheets, is ineffective,” the Consumer Action Law Centre says.

Regulators: ASIC says no, and borrows a line from ICA, saying there is an “over-reliance on disclosure as the mechanism to address a wide range of product and conduct problems”. APRA doesn’t comment.

Industry: ICA also gives a clear no, but says a solution won’t be easy to find.

“Providing information at the right time and in a manner likely to be comprehended and useful for decision-making is a complex challenge, and the solution is unlikely to be in the form of more mandated disclosure,” it says.

NIBA asks how far an insurer should have to go to protect consumers from themselves.

“Statements are being made at present that insurers should ‘meet customer needs and expectations’ that are too broad. Disclosure documents, no matter how clear or concise, will not protect a consumer that does not read them or if financial literacy is an issue.”

Is the standard cover regime… achieving its purpose?

Consumers: Consumer groups say the standard cover regime is failing.

“Insurers have met the letter but not the spirit of the regime,” the Financial Rights Legal Centre says. “In practice, all insurers contract out of the provisions, rendering them pointless, and consumers don’t know what is standard and what is not.”

Regulators: ASIC says no, because insurers aren’t using it.

“In ASIC’s view, insurers deliberately circumvent the application of standard cover by utilising the opportunity provided by the Insurance Contracts Act.”

Industry: ICA says the standard cover regime is unlikely to be achieving its purpose, and supports a review.

NIBA says “the provisions are out of date” and suggests a government review “should resolve the issues after proper consultation with stakeholders”.

Should monetary and non-monetary benefits given in relation to general insurance products remain exempt from the ban on conflicted remuneration?

Consumers: Consumer groups are pushing hard here.

“Nothing short of a total prohibition on conflicted remuneration will remove the risks of poor consumer outcomes,” the Financial Rights Legal Centre says.

The Consumer Action Law Centre highlights the sale of add-on insurance through motor dealers and various types of general insurance through bank branches as “clear examples for removing the exemption”.

Regulators: ASIC backs an extension of the ban.

“ASIC considers that a ban on conflicted remuneration could encourage insurers to achieve sales through better engagement with consumers, leading to the development of improved sales methods because they would not be able to rely on the payment of commissions to intermediaries.”

Industry: NIBA and ICA are in strong agreement that extending the ban across the general insurance sector would have a disastrous impact on brokers.

This is the “key issue” for NIBA and its submission lists dozens of reasons not to proceed.

Should the sale of add-on insurance by motor dealers be prohibited?

Consumers: Consumer groups favour a ban.

“The profits of insurers and car dealers – not customer need – are the rationale for the car yard add-on insurance market,” the Consumer Action Law Centre says.

Regulators: APRA says its “preference” is not to ban products, but strong product intervention powers are necessary.

ASIC “supports the implementation of the design and distribution obligations and the product intervention power, which will likely limit the sale of unsuitable products and in exceptional circumstances may require a product to be banned”.

Industry: ICA says no, because “policymakers should not constrain consumer choice by prohibiting the sale of certain products”.

NIBA says such products should not be prohibited “if they provide value to relevant target markets”.

Should ASIC have jurisdiction in respect of the handling and settlement of insurance claims?

Consumers: Consumer groups are united in moving this issue forward.

“If insurance claims handling was brought within the Corporations Act definition of ‘financial service’, ASIC would have greater remit over claims handling,” the Consumer Action Law Centre says.

Regulators: APRA says it “supports ASIC having jurisdiction over handling and settlement of claims, and supports obligations on insurers to undertake these functions efficiently, honestly and fairly”.

ASIC says its “powers in relation to the regulation of insurance products should cover claims handling and settlement”, and considers its current powers under the Insurance Contracts Act are limited.

Industry: NIBA and ICA believe ASIC already has powers to regulate conduct in relation to claims handling under the Insurance Contracts Act and the duty of utmost good faith.

Should a failure to comply with the General Insurance Code of Practice or the Life Insurance Code of Practice constitute a failure to comply with financial services laws?

Consumers: The Financial Rights Legal Centre says a failure to comply with either code “should lead to serious consequences including enforceable sanctions, civil penalties and administrative action”.

But the Consumer Action Law Centre holds back.

“As a general principle, our view is that codes of practice should lift industry standards above the law, and not be a substitute for regulation,” it says.

“Industry codes are largely authored by industry participants themselves, therefore we do not support them being given the force of law per se.”

Regulators: ASIC says the issue requires some thought.

“While treating a failure to comply with the… general insurance code as a failure to comply with a financial services law… may have merit and may, in particular, enhance the enforcement of minimum standards across industry, it would mean the code is not a self-regulatory instrument.”

Industry: ICA says a breach of the code should not be treated as a breach of the law, adding: “Such a change will impede industry efforts to strive for higher standards of self-regulation.”

NIBA says it supports self-regulation and “does not support this proposal”.

If you’d like to wade through the submissions yourself, you can access them here.