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Insurtechs force industry to keep up

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Australia’s major insurers are building their digital strengths in response to the insurtech challenge, according to IT consultant Capgemini.

“Insurance companies are investing heavily into advanced analytics, robotics to lower their claims costs, because insurtechs target them on aspects where they are weak,” Head of Financial Services Mohit Jain told

Capgemini’s annual World Insurance Report shows more than 60% of insurers in Australia prefer a mixed approach of working with digital disruptors to reach tech-savvy consumers and the so-called Gen Y cohort, a highly prized group of consumers born between 1983 and 1999.

“They are at the forefront of how the industry will evolve,” Mr Jain said. “They are more likely to change providers if the other providers [have] better engagement.

“The insurance companies now have to provide far better engagement through the life cycle of the insurance policy.

“From our perspective… the industry has changed more in the past three years than it has in the past 100 years. It will change even more in the [next few years].”

Mr Jain says last week’s launch of the latest Apple iPhone is an example of “technology that will allow for a lot of digital disruption in terms of what insurers can provide for their consumers”.

More than 100 industry leaders and 8000 consumers in 15 markets, including Australia, were surveyed for the Capgemini report.

The survey says about 31.4% of consumers rely on insurtechs either exclusively or in combination with incumbents for their insurance needs.

Almost 46% are unwilling to fully walk away from insurers, citing better security and fraud protection, while 43.7% say brand recognition is a reason for staying on.

About 39.8% trust their insurers, compared with 26.3% who trust insurtechs.

“One area where they score over tech is the aspect of trust,” Mr Jain said.

“Partnership is the best way for incumbent insurers to use that complementary strength to offer better products and services to consumers.”

Rate rises to lift NZ insurers, S&P says

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New Zealand property and casualty (P&C) insurers will receive an earnings boost from rate rises in personal and commercial lines, according to S&P Global Ratings.

Price growth in the home and motor lines is likely to be sustained.

“In recent years the underwriting performance of New Zealand’s P&C insurers has been reasonable in the face of frequent catastrophes,” the ratings agency says.

“We believe New Zealand’s P&C market will continue to post solid underlying results over the next year, underpinned by a sound economy, which should support good premium growth at the retail level, and some degree of further upward movement in prices for commercial lines of business.”

Commercial lines will be partly lifted by premium rises in property-related covers following last November’s Kaikoura earthquake.

S&P says reinsurers remain committed to the market.

“Despite the number of natural hazard events in recent years, we see no indications reinsurers are looking to exit the region, with primary insurers continuing to benefit from ample capacity at favourable pricing and terms and conditions due to the continuing soft state of the global reinsurance market,” S&P says.

Proposals to reform the Earthquake Commission (EQC) will be mildly positive for insurers.

“Under the initiative, policyholders will claim first with their private insurer, rather than the EQC, and we believe this should assist in improving the transparency and efficiency of the claims process,” S&P says.

The EQC will also stop providing residential household contents cover, which should “increase the market size and therefore growth opportunities” for private insurers.

A draft EQC reform bill is expected later this year or early next year, with changes most likely to be implemented in 2020.

Annual vehicle theft figures rise

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The number of vehicle thefts nationwide grew 4% to 56,184 last financial year, according to the National Motor Vehicle Theft Reduction Council.

Passenger and light commercial (PLC) vehicle thefts increased 6% to 45,666, while motorcycle thefts dropped 3% to 8056.

NSW was the only state to record a reduction in profit-motivated theft.

Victoria accounted for 33% or 12,041 of all PLC short-term thefts, and had the largest share of profit-motivated PLC thefts at 34% or 3338, followed by NSW at 27% or 2671.

While short-term PLC theft has stabilised in Victoria, it remains 61% higher than five years ago due to a sharp increase between 2014 and last year.

Thefts over the five-year period fell significantly in NSW (down 22%), SA (18%), WA (7%) and Queensland (3%).

Profit-motivated theft in NSW fell 35% over the five years.

Flammable cladding ‘faces coverage rejection’

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Buildings featuring flammable cladding that does not adhere to Australian standards may find it hard to access full insurance cover, according to Strata Community Insurance (SCI).

The Strata Fire Safety Forum in Sydney earlier this month was told that 80% of apartment blocks in Australia face the risk they are covered in the highly combustible aluminium composite panels that caused the deadly Grenfell Tower fire in London.

SCI says buildings featuring such products need a remediation plan in place to remove or replace the cladding.

“As with asbestos from the 1980s, insurers will look to limit this additional risk,” it said.

“Today, it is almost impossible to obtain insurance for asbestos-related products and Strata Community Insurance fears aluminium composite panels may follow the same path.”

Building owners must ensure their insurers are aware of the cladding and its status, SCI says. Failure to disclose this information may result in no cover under a policy.

Road crashes take $30 billion toll on economy

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Deaths, injuries and other consequences of road accidents cost the economy almost $30 billion a year, according to the Australian Automobile Association (AAA).

The public purse also pays a heavy price, losing $3.7 billion a year through missed tax revenue, income support, and health and emergency services costs, a study commissioned by the association shows.

“Road trauma has long-term implications on government budgets,” the AAA says.

“This is because road trauma impacts workforce participation and earnings, which subsequently affects taxation revenue and income support expenditure outlays.”

Road trauma deaths, and health and wellbeing payments cost the economy almost $9.3 billion in 2015, by far the biggest cost.

Vehicle damage was second at $4.8 billion, followed by disability care ($2 billion). Insurance administration placed sixth at $1.12 billion.

AAA CEO Michael Bradley has urged the Government to review its road safety policies.

“The social cost of road deaths is both obvious and immeasurable,” he said. “However, the economic implications of Australia’s road safety crisis are not.”

"The numbers… clearly demonstrate our current approach is neither effective nor proportionate, and that Australia needs an urgent response from our national Government in the form of greater leadership and greater funding.”

Quake settlements tracking ahead of expectations

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Private insurers have settled or partially settled 59% of residential and commercial claims from the Kaikoura earthquake, the Insurance Council of New Zealand (ICNZ) says.

“We said we would have the majority of Kaikoura earthquake settlement offers made by year end,” ICNZ CEO Tim Grafton said. “We are more than halfway and ahead of expectations.”

The total value of claims for the November 14 quake was more than $NZ2 billion ($1.8 billion) at August 31, with commercial claims representing $NZ1.48 billion ($1.35 billion) and residential nearly $NZ550 million ($501 million).

On the residential side, 53% of claims were fully or partially settled by the end of last month, compared with 43% in July and 36% in June.

Private insurers have also completed 92% of residential assessments in the Upper South Island following a focus on the most damaged areas

For commercial claims, 76% by number were fully or partially settled by the end of last month, compared with 72% in July and 67% in June.

Suncorp New Zealand says it has completed all claims assessments in the Kaikoura area and closed a temporary office set up after the quake.

The company, which includes Vero and joint venture AA Insurance, received more than 9000 claims, including more than 300 residential claims in and around Kaikoura.

Suncorp has completed more than 90% of assessments and is on track to wrap up the remainder by the end of next month.

New Zealand's Earthquake Commission and private insurers had in total completed 80% of initial residential building assessments and settled 45% of claims for building damage at the end of August, up from 62% assessed and 34% settled as of July 31.

Little lies cause big trouble, NZ Ombudsman warns

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New Zealand Insurance & Financial Services Ombudsman Karen Stevens has warned consumers against believing a “bit of a lie” won’t hurt when it comes to insurance.

She says the ombudsman scheme has investigated many cases over two decades involving varying degrees of dishonesty, including people claiming for better televisions, phones or laptops than those actually stolen or damaged.

“Often people do not appreciate that the consequences of lying can be dire,” she said.

“Claims are declined and the flow-on effects include cancelled policies and names registered on the Insurance Claims Register.”

Details on the anti-fraud register can affect future insurance and have implications for home or business ownership, Ms Stevens says.

The ombudsman cites a case in which a man falsely wrote invoices in the names of five different people for home repair costs totalling $91,500, when he had done the work himself.

Ms Stevens also warns against guessing the value of losses.

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IAG restructure results in key departures, new roles

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IAG has announced a series of role changes following its decision in July to unite all its Australian businesses into one division.

The restructure is wide-ranging and is thought to affect hundreds of positions, with an unspecified number of people leaving the business.

Nine direct reports to Australian Division CEO Mark Milliner have been confirmed. They are:

EGM Customer Development Cheryl Chantry; EGM Consumer Distribution Amanda Whiting; EGM Business Distribution Ben Bessell; EGM Australian Operations Chris Newlan; EGM Customer Promise (Short-Tail Claims) Steven Fitzpatrick; EGM Customer Promise (Long-Tail Claims) Steve Marshall; EGM Operational Partnering Suzanne Young; EGM leading IAG's Core Simplification Program Kylie Burtenshaw; and Chief Technology Officer Neil Morgan.

Mr Bessell’s team of executive managers has also been announced. The team is:

EM Broker and Agency Solutions Phuong Ly; EM Agri Solutions Andrew Beer; EM Business Performance Brenton Hall; EM Business Underwriting Damien Gallagher; EM Digital Distribution Nicole Shobrook; EM SME Solutions Isaac Crichton; EM Customer Delivery (Direct) Karena Harley; and EM Customer Delivery (Intermediated) Lilly Lazarevski.

IAG has confirmed to that EGM Broker Business Donna Walker and EGM Customer Delivery Fiona Phillips will leave the company.

A spokesman also confirmed that the restructure will lead to a number of departures “as a result of removing duplication, simplifying our structure and putting us in the best position to deliver for our customers”.

“We will be supporting our people who are affected in every way possible during the transition to the new division over the next couple of months.”

An interview with Mr Milliner in which he details the new thinking and strategy behind the formation of IAG’s Australian Division will feature in Insurance News (the magazine) next month.

QBE reshuffle opens vacancy for Australia/NZ chief

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QBE’s Group CEO-elect Pat Regan will lead the search for his successor as CEO Australia and New Zealand Operations when he takes over from John Neal on January 1.

The company surprised the market last week when it announced Mr Neal will step down at the end of the year.

Mr Regan says the insurer has “some clear strengths and great franchises”.

“I am delighted to be appointed to lead the group,” he said. “One of my first priorities will be to lead a search for my successor as CEO of our Australian and New Zealand operations.”

As reported by last Tuesday, Mr Neal will step down after five years at the helm. He began with the company’s European operations in 2003 and moved to Sydney in 2011 as CEO global underwriting operations.

Mr Regan was identified in an Insurance News (the magazine) article in April as “the person with the inside running” to replace Mr Neal. He joined QBE in 2014 as CFO from UK insurer Aviva, allegedly for an $8.5 million sign-on fee.

He will receive a salary of $2 million, while the executive incentive plan provides for a maximum award of 350% of base salary.

Chairman Marty Becker says Mr Neal “has led the business through a significant transformation and a challenging period in the insurance industry globally, and has been working closely with the board to ensure a smooth transition for his succession”.

QBE says the board undertook detailed succession planning over the past two years and carried out an internal and external candidate review for the CEO appointment.

“In the past 12 months Pat has led a strong turnaround in the Australian and New Zealand operations, highlighting his operational skills and business acumen, and in his previous role as group CFO [was] pivotal in stabilising the balance sheet and enhancing the group’s capital management,” Mr Becker said.

QBE reported a net profit of $US345 million ($428 million) for the six months to June 30, up 30% on the corresponding period last year.

But the group came under fire before the results announcement, when it warned the combined operating ratio from its emerging markets division would blow out because of higher than expected claims from Asia and Latin America.

The company also surprised the market earlier this year with the sudden departure of COO Colin Fagen, while Mr Neal’s short-term incentive bonus for last year was cut by 20% because “personal decisions” he had taken were “inconsistent with the board’s expectations”.

Risk and demand trends prompt Genworth downgrade

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Moody’s has downgraded Genworth Australia from A3 to Baa1, reflecting rising risks in the Australian housing market and reduced demand for domestic lenders’ mortgage insurance (LMI).

The ratings agency says these factors outweigh positive developments such as the de-risking of Genworth’s portfolio and its stable regulatory capital.

“Latent risks in the housing market have been rising in recent years, because significant house price appreciation in the core housing markets of Sydney and Melbourne has led to very high and rising household indebtedness,” Moody’s says.

Low wage growth and rising underemployment have hit households’ capacity to service debts.

The rise in house prices over the past four years, along with growth in home investment and interest-only mortgages, has also raised concerns about financial stability.

Australia’s ratio of household debt to disposable income increased to 188.7% at the end of last year.

Regulatory measures introduced in 2015 caused a decline in higher loan-to-value ratio mortgages, which are the most likely to be insured.

This led to a sharp fall in gross written premium for Australian LMI providers, with Genworth Australia reporting a 25% drop in financial year 2016 and a 20% decline the previous year.

Genworth has responded to the downgrade, noting both Fitch and S&P affirmed its financial strength and saying it has a strong, stable balance sheet with a highly rated cash and fixed-interest-rate portfolio of $3.5 billion. It says it remains strongly capitalised.

Moody’s says it expects Genworth to maintain its stable Baa1 rating, despite elevated risks in the housing market and the potential for further erosion of the customer base.

Elders agent leaves after alleged breach

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Three rural NSW branches of Elders Insurance were temporarily closed after the agent running them left suddenly following “a breach in his agreement”.

A source has told that staff were led out of offices in Glen Innes, Forster and Port Macquarie and the locks were changed.

A spokesman for QBE, which owns the rural insurer, says the offices have since been reopened.

“The agent who had been running the Elders agencies in Glen Innes, Forster and Port Macquarie left the business at the end of August,” the spokesman said.

“A new agent will be appointed as soon as possible.”

The spokesman says the agent left “because of a breach in his agreement” with Elders.

“We’re unable to share any further details at this time,” he said.

App helps Allianz Worldwide Partners’ student clients stay safe

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International students who hold health cover policies with Allianz Worldwide Partners (AWP) now have free access to an app designed to keep them safe in Australia.

AWP’s exclusive deal with student support service Sonder Australia gives student policyholders access to preventative advice on security, safety and welfare issues, plus round-the-clock crisis and general welfare management.

The associated app is free for all international students who buy Allianz Global Assistance Overseas Student Health Cover.

Key features include a distress button that sends for help in an emergency and a “check in/out” function monitoring the user’s location.

The “walk with me” function guides users to their destinations, while the “I’m safe” function helps customers in the event of a natural disaster or security incident.

AWP CEO Craig Dalzell says the app will help thousands of international students at a time that can be “confusing and daunting”.

“It’s natural to worry about how they may cope with cultural differences, adapting to a new environment and their safety,” he said. “The partnership with Sonder Australia will allow us to extend local support and care to students studying in Australia, providing an end-to-end health, safety and security offering that is [unique] in market.”

Allianz tops industry sustainability index

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Allianz has taken first place among rated insurance companies in the Dow Jones Sustainability Index.

The index ranks companies according to environmental, social and governance criteria, assessing their sustainability strategy and performance.

Allianz Australia Diversity and Sustainability Manager Charis Martin-Ross says sustainability initiatives have enabled the company to reduced its greenhouse gas emissions by about 50% over the past decade.

She says sustainability at Allianz goes beyond an environmental agenda.

“It also encompasses social inclusion and safety initiatives such as providing employment to refugees, using technology to improve workplace safety and supporting organisations such as the Australian Paralympic Committee,” she said.

Employees and customers expect companies to have sustainable outcomes, she says.

Allianz publishes its group-wide environmental, social and governance integration approach to provide ratings agencies, non-governmental organisations and other experts with a detailed overview.

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Regulatory & Government

ICA rejects APRA crisis control proposal

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The Insurance Council of Australia (ICA) wants general insurance treated differently to the banking sector in proposed laws increasing financial crisis management regulatory powers.

The proposed legislative changes include giving the Australian Prudential Regulation Authority (APRA) power to take control of an insurer, particularly where it is part of a complex financial group or its distress poses a risk to the financial system or economy.

But ICA says if an insurer enters financial difficulty it is not susceptible to sudden collapse, as a bank would be, and there is time to take recovery action or manage a resolution in an orderly fashion.

The council is “not convinced there is a need to provide for statutory management of an insurer. A court should be able to respond with a sufficient speed in relation to matters of judicial management.”

It has also criticised the Government for allowing only a three-week consultation period on the legislation. The Government previously consulted on extending APRA’s powers in 2012, but action was put on hold while the Financial System Inquiry was completed.

“The limited consultation timeframe has materially constrained our ability to properly assess the implications of the proposals and provide in-depth comments on the draft legislation,” the submission says.

“The general insurance sector does not require the same regulatory approach as that applied to the banking sector, which is heavily influenced by the goal of promoting systemic stability.”

Further talks planned over complaints body rules

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Insurers can provide further feedback on rules for the new Australian Financial Complaints Authority (AFCA), which is due to start operating from next July.

AFCA will replace the Financial Ombudsman Service, the Credit and Investments Ombudsman and the Superannuation Complaints Tribunal to provide a one-stop shop for complaints, under legislation currently before Federal Parliament.

A transition team led by former Reserve Bank assistant governor Malcolm Edey will advise on the terms of reference, governance and funding arrangements.

AFCA is to have a monetary limit of $1 million and compensation cap of $500,00.

“The transition team will consult on sub-limits, such as for disputes about general insurance broking, for inclusion in AFCA’s [terms of reference],” the Government says.

Insurance Council of Australia CEO Rob Whelan says the industry welcomes the opportunity for stakeholder consultation on the terms of reference.

“It looks forward to the delivery of streamlined consumer experiences and efficiencies created by sharing resources and back-office functions and services,” he said.

ICA at halfway mark on disclosure reform

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The Insurance Council of Australia (ICA) is midway through a two-year program to improve consumer understanding of products, according to a submission to the Productivity Commission.

The independent Effective Disclosure Taskforce, appointed by ICA, has proposed 16 ways to enhance the disclosure framework, all of which have been taken up by the industry body and are now being implemented.

These include shifting from a minimum mandated disclosure approach to best practice transparency, and exploring new forms of electronic disclosure.

“All these initiatives are aimed at better equipping consumers to consider their insurance needs, and to make it simpler for consumers to choose an appropriate policy,” the ICA submission says.

“Better assisting consumers to assess and compare policies on their coverage will stimulate deeper competition based on product features and not just price.”

The commission is reviewing competition in the financial system and its final report will be delivered to the Government by July 1 next year.

A submission from the Australian Prudential Regulation Authority says the industry has become increasingly concentrated in the past 10 years, due mainly to acquisitions.

In June, about 55% of industry-wide gross written premium was with the five largest insurers, up from 42% in 2007, it says. The five biggest players accounted for 80% or more of the market for household insurance, domestic motor and travel cover.

ASIC focuses on cyber resilience

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The Australian Securities and Investments Commission has published its market integrity report for the six months to June 30, highlighting a focus on cyber resilience, sell-side research and listing standards.

During the period the regulator took five criminal actions, resulting in one person being jailed.

There were three enforceable undertakings, nine infringement notices and three people disqualified from providing financial services.

“Market integrity affects all Australians,” Commissioner Cathie Armour said.

“Well-functioning markets give investors the confidence to invest capital in businesses – helping them innovate and grow. To support fair and efficient markets, we set standards and educate stakeholders, pursue behavioural change and take enforcement action to disrupt market misconduct.”

Ongoing priorities for the commission’s market integrity work include technology and cyber resilience, conduct and effective capital markets.

WA road injury scheme costs exceed forecast

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WA’s Catastrophic Injuries Support (CIS) scheme has assessed 28 people as eligible for treatment and care in its first year, and their young ages compared with forecasts has led to an increase in expected average costs.

The Insurance Commission of WA says a further 20 people were accepted through the compulsory third party (CTP) scheme in the year to June 30, while another 13 potential cases are undergoing an eligibility assessment.

The CIS scheme was introduced on July 1 last year to cover people catastrophically injured in car crashes where fault cannot be attributed to another driver.

“The people catastrophically injured on our roads have been younger and more severely injured than we estimated in the first year,” Commission Secretary Kane Blackman said.

That caused the average cost of lifetime support to rise to $4.9 million per person, against a forecast of $4 million, because high-cost care will be required for a longer period.

Acquired brain injuries were the most common catastrophic injury, representing 69% of eligible cases across the CIS and CTP schemes. Spinal injuries accounted for 29%.

The commission says 46% of people were within the 15-34 age group and 75% were males, showing young men continue to be a vulnerable group on the road.

Regional WA accounted for 52% of crashes resulting in catastrophic injury, with the state’s southwest representing 23% of that total.

ARPC supports ‘crowded places’ anti-terror plan

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The Australian Reinsurance Pool Corporation (ARPC) backs the recently unveiled national security plan to protect crowded places from terror attacks similar to the Manchester Arena bombing in May.

The Australia-New Zealand Counter-Terrorism Committee released Australia’s Strategy for Protecting Crowded Places from Terrorism last month.

“One of [our] strategic objectives is to ‘support and promote terrorism risk mitigation’,” the ARPC says in a market update. “This is achieved through supporting and promoting initiatives that reduce the risk carried by ARPC and ultimately the Australian Government.”

Post-attack recovery plans and increased resilience form part of the strategy. “Resilient crowded places can do more to prevent a terrorist attack, can reduce the damage caused by an attack and can recover more quickly after an attack has occurred,” the strategy states.

It says a robust business continuity plan often includes cross-training of skills among the paid and volunteer workforce and documented procedures to guide staff to quickly perform unfamiliar tasks.

icare hands out TMF awards

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NSW Department of Education, in partnership with Allianz, won the “people’s choice” award for the SeekSMART vocational counselling program in Insurance and Care NSW’s TMF (Treasury Managed Fund) Awards for Excellence.

SeekSMART helps employees move through the job redeployment process, using a “whole-person” approach that identifies readiness for change.

The award was presented at the TMF Risk Management Conference in Sydney earlier this month. More than 500 senior executives and risk management professionals from NSW government agencies attended the conference.

The Department of Industry and Allianz won the “frameworks and systems” category for their injury management framework, while the Northern NSW Local Health District and QBE were commended for a collaborative injury management program.

Fire & Rescue NSW won the innovation design category, and Northern Sydney Local Health District took the innovation process award.

The Department of Industry won the innovation reporting and risk intelligence category, and Michael Nicholl from the NSW Maternity Risk Network took the risk leadership award.

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Life Insurance

AustralianSuper drops default cover for under-25s

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AustralianSuper will stop providing default life cover for people aged under 25 who sign up with the fund.

The change, a “first” for the super industry, follows an internal analysis of member experience and feedback on default insurance premiums’ effect on account balances.

“AustralianSuper’s experience is that for claims paid for members aged under 25, only 10% are paid to financially dependent spouses or partners and children,” Group Executive of Membership Rose Kerlin said.

“People under 25 starting out in the workforce need to begin building a base for their retirement savings.

“Given they are often on relatively low incomes, the fund does not want to see undue account erosion because of insurance that may actually be of very limited value to them.”

Young members can still opt in to the cover, which offers death and total and permanent disability insurance.

The cover will start automatically when they turn 25, if they make no change.

BT earmarks $12 million for customers hit by exclusion

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BT Financial Group will make $12 million of “goodwill payments” to 103 customers who were denied claims because of exclusion clauses around pre-existing conditions.

The refund applies to customers with the BT Super for Life superannuation product.

It follows changes in 2015 to the way customers are informed about pre-existing condition exclusions.

“I can think of no clearer way to demonstrate our absolute focus on our members,” GM Superannuation Melinda Howes said.

“We want to make sure those members who didn’t have the benefit of these improved disclosure practices, and whose claim was ineligible due to a pre-existing condition, are given a goodwill payment.

“We know community expectations have changed and simply meeting the standard required by law may not always be enough.”

ISWG suggests more transparency on premium adjustment

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The Insurance in Superannuation Working Group (ISWG) has proposed ways to improve transparency around premium adjustment mechanisms.

Super funds should be required to disclose whether they use such mechanisms, it says in its latest discussion papers.

Trustees with a mechanism arrangement in place should have a documented policy made publicly available and allocate any payment from the mechanism to the fund’s insurance reserve, the group says.

Premium adjustment mechanisms refer to arrangements between certain funds and their insurers to return some group risk premium payments to the fund where the claims experience is less than assumed, and vice-versa.

The ISWG wants submissions on the proposals in its discussion papers, the fifth tranche as the group moves towards developing a Life Insurance Code of Practice for super trustees.

“Given the public interest in these mechanisms, it is very appropriate arrangements are formalised consistently in all cases, properly disclosed and operate within tight parameters that protect members’ interests,” Chairman Jim Minto said.

“Under this proposal, any excess that arises can only be used by a trustee to offset future premiums for insured members.”

Adviser guilty over false education documents

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Victorian financial adviser Michael Davie has been placed on a 12-month good behaviour bond without a conviction for submitting false or misleading statements to the Australian Securities and Investments Commission (ASIC).

He pleaded guilty to three charges in the Melbourne Magistrates Court following an ASIC investigation that found he had provided a forged education certificate and a table referring to a qualification that had not been obtained.

Mr Davie submitted the documents in August last year to support an application for an Australian financial services licence.

TAL educates advisers on cancer

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TAL has introduced an education course to increase financial advisers’ understanding of cancer conditions and help them give clients the best possible support.

The course, run through the life insurer’s Risk Academy, is presented by TAL’s health services team and focuses on understanding the staging, diagnosis, prognosis and treatment of cancer, plus relevant medical terminology.

“We want to lead the industry in understanding medical conditions such as cancer, and one way we are doing this is by equipping our adviser partners with the knowledge and tools they need to get the best outcomes for clients that are at risk of, or faced with, cancer,” TAL GM for Health Services Sally Phillips said.

“Cancer represents the largest category of claims for TAL and it costs Australia more than $4.8 billion per year in direct health system costs.

“We know the devastating impact it can have on the lives of individuals and their families, and there is value in a financial adviser helping people through their cancer journey.

“This course aims to upskill advisers on the specifics of the medical condition so they can help clients choose the right insurance cover for their situation and lifestyles at underwriting time, and best support clients if they need to claim.”

The course can be accessed through TAL’s Risk Academy on-demand webinar.

AMP hails case managers’ motivational approach

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Motivational interview techniques have produced a 34% increase in customer re-engagement with treatment, AMP says.

The life insurer’s new skills training program teaches case managers to better assess customers’ capacity and motivators for recovery, show empathy and build trust.

Group Executive Insurance Megan Beer says the program is helping more customers get back on the road to recovery.

“Our new process puts the customer at the centre of their own recovery, harnessing the power of their own goals and motivations,” she said.

“Case managers help our customers articulate their own recovery goals and tap into their own motivations that will help them achieve these goals.”

Once the case manager identifies a customer’s capacity and motivators for recovery, a bespoke strategy is created.

Ms Beer says the program builds on work that began several years ago to simplify the claims process and provide more personal and expert help to customers.

“We understand that, as an insurer, we show up in our customers’ lives when they are at their most vulnerable, and our role is about more than just paying a claim,” she said.

“It’s about being there to support our customers to live a healthy life in the long term.”

AFA names top award finalists

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The Association of Financial Advisers (AFA) and Zurich have announced the finalists for this year’s adviser of the year and practice of the year awards.

Adviser of the year finalists are Charlie Fraser from Shadforth Financial Group, Glen James from Fortify Financial and Julia Schortinghuis from Lighthouse Capital.

The practice of the year contenders are Australian Financial Risk Management, Mediq and PFG Financial Services.

Zurich Life and Investments CEO Tim Bailey says the calibre of finalists is “exceptional”.

“In the face of technological disruption, intense regulator and media scrutiny and heightened consumer expectations, these are the advisers and advice practices who are truly taking the advice profession forward,” he said.

Winners will be announced at a gala dinner on October 13 at the AFA conference on the Gold Coast. 

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The Professional

Allianz program helps young refugees into work

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Allianz Australia and Settlement Services International have established a program to springboard young refugees into work.

The Allianz Ladder comprises workshops and mentoring sessions that develop foundational business skills such as problem-solving, innovation, communication and teamwork.

Allianz Australia has a track record of tackling refugee unemployment, with the creation last year of its Sustainable Employment Program, providing 15 refugees with tailored development and career management plans, leading to permanent employment.

Sustainability and Diversity Manager Charis Martin-Ross says it makes business sense to build a culturally diverse workforce.

“Australia is a multicultural nation: four out of five people were born overseas or have a parent born overseas,” she said. “In this regard, understanding and responding to the needs of our culturally diverse customers is vital.”

Vero tool helps brokers and SMEs plan ahead

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Vero has introduced a tool allowing brokers to help their SME clients prepare for issues that may affect their businesses.

The Contingency Planning Tool examines different scenarios, and details how SMEs can respond and what they can plan in advance.

It then advises how insurance brokers may provide advice.

The tool was developed following this year’s Vero SME Insurance Index, which shows three-quarters of broker clients want to feel more in control of their businesses.

ANZIIF announces NZ award finalists

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The Australian and New Zealand Institute of Insurance and Finance has announced the finalists of this year’s New Zealand Insurance Industry Awards.

The awards will be presented on November 16 in Auckland.

The finalists in each category are:

  • Direct general insurance company of the year: AA Insurance, AMI, FMG
  • Intermediated insurance company: NZI, Vero
  • Life insurance company: Asteron Life, Fidelity Life
  • Innovation of the year: AMP Financial Services, NZI
  • Service provider to the insurance industry: Construction Cost Consultants, CoreLogic, Gallagher Bassett, JB Hi-Fi, Smith&Smith
  • Professional services firm: Cunningham Lindsey, DLA Piper, Duncan Cotterill, Finity Consulting, Hesketh Henry
  • Young insurance professionals employer of the year: AA Insurance, Cigna New Zealand, Gallagher Bassett, Runacres Insurance
  • Women’s employer of the year: AA Insurance, ANZ (including OnePath Life), IAG New Zealand, Suncorp New Zealand
  • Young insurance professional: Amanda Cooper of IAG New Zealand, Charlotte Langridge of Runacres Insurance, Sophie Riddle of NZI, Tony Seto of Willis Towers Watson, Jonathan Winstone of Pearce Financial Services
  • Broking professional: Kim Matthews of Rothbury Insurance Brokers, Hayden Ryan of Crombie Lockwood.

Time to rethink risk, hazards conference told

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Aon Benfield’s biennial Hazards Conference began this morning with a call for the reinsurance industry to “reimagine risk” to prepare for future challenges.

More than 300 delegates are at the three-day Gold Coast conference, which runs from today until Wednesday.

Speakers and panellists are exploring “surprises still challenging the insurance industry around traditional risks such as natural catastrophe”.

Aon Benfield CEO Australia and New Zealand Robert De Souza told delegates companies must reinvent themselves to remain relevant as technology reshapes traditional business models.

“Add to this backdrop volatile investment markets, unpredictable weather, fierce competition from both large incumbents and agile fintechs, and increased political and regulatory reform, there’s no doubt the financial services sector is grappling with change,” he said.

He believes the insurance industry has a history of rethinking what it thought it knew.

“Unforeseen events such as Hurricane Harvey, a 1000-year unprecedented rainfall event, the magnitude-nine earthquakes in Japan or the huge industrial losses during the Thai floods remind us of this.

“Let’s not wait for the next big event before we act.

“Instead, we must innovate and better prepare for the opportunities and challenges of future socioeconomic, environmental and technological trends.”

NTI truck raffle raises $55,000 for MND foundation

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National Transport Insurance’s (NTI) restoration of a historic truck has raised $55,020 for the MND and Me Foundation, with the raffle winner receiving keys for the vehicle on Friday.

Trevor Fry from Brisbane won the fully restored 1946 International Model K5 truck, while runners-up Leoni Roberts and Wayne Wust both received $2000 in BP fuel vouchers.

NTI began the restoration project and raffle earlier this year to raise funds to fight motor neurone disease. The cause has resonance for the company, with former CEO Wayne Patterson diagnosed with the illness in 2015.

The insurer has tracked the restoration in a series of videos highlighting the truck’s transformation from a wreck discovered in a parts yard in the SE Queensland town of Dalby.

An event to announce the winner was held in King George Square, Brisbane, coinciding with the launch of NTI’s Truck Assist Club for owners and operators.

IAG recognised for ‘shared value’ strategy

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IAG has made Fortune magazine’s global Change the World list, ranking at No.29 in recognition of its commitment to shared value, research and innovation.

The shared value concept aims to connect company success with social progress, and the Australian insurer is a founding member of the Shared Value Project in Australia.

Chairman of the project, Peter Yates, has congratulated IAG and Bendigo Bank, which were the only two Australian organisations to make the list.

“Their recognition by Fortune as two of the 50 companies changing the world is a clear sign that Australian companies are achieving competitive advantage through the adoption of shared value,” he said.

IAG MD and CEO Peter Harmer says the recognition reflects the company’s focus on embedding shared value into the business.

“Shared value provides a pathway for us to approach every aspect of our business with our communities, customers and people at front of mind, while still delivering the commercial value and strength our stakeholders expect from us,” he said.

“We know collaboration is critical in creating long-term and impactful change.”

Marine forum focuses on cargo covers

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Austbrokers Hiller Marine MD Neil Hiller will discuss cargo, carriers and freight forwarders’ insurance fundamentals at the Melbourne Marine Insurance Forum next week.

Mr Hiller was formerly GM of QBE’s marine specialty risks division.

The forum is at Colin Biggers & Paisley’s office in William Street on September 26.

To register, click here.

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Reinsurers looking for diversity, Willis Re says

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Reinsurers are continuing to diversify their portfolios as they look to improve underwriting performances, according to a half-year market report from Willis Re.

“Due to ongoing pricing pressure, reinsurers continue to moderate their exposure to catastrophe-exposed business, including for their US business,” the report says.

Diversification has targeted structured property and casualty, life, health and specialty lines such as cyber and mortgage business.

Premium growth for some companies is also supported by the further allocation of capital to primary insurance business.

Net written premium for companies in the Willis Reinsurance Index increased 2% to $US129.8 billion ($162.4 billion) in the half.

The reported combined operating ratio increased to 95% from 94.1% after a negative impact from the UK change in the Ogden rate, used to estimate injury compensation payouts, and despite a reduction in natural and man-made catastrophe losses and reserve releases.

Net income declined to $US8.3 billion ($10.4 billion) from $US14.5 billion ($18.1 billion), while continued active capital management returned $US10.8 billion ($13.5 billion) through share buybacks and dividends.

Shareholder funds totalled $US348.2 billion ($435.6 billion) at the half-year, a 1.2% increase from the end of last year, while alternative capital increased to $US75 billion ($93.8 billion) from $US70 billion ($87.6 billion) at the previous half-year.

Insured natural catastrophe losses fell to $US20 billion ($25 billion) compared with $US30 billion ($37.5 billion) in the corresponding half last year, and significantly below the 10-year average of $US29 billion ($36 billion).


Modeller scales down Irma’s upper loss estimate

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Insured losses from Hurricane Irma will probably range from $US32-$US50 billion ($40-$62 billion), changed from an earlier $US20-$US65 billion ($25-$81 billion) estimate, according to catastrophe modeller AIR Worldwide.

The loss estimates cover the US and affected Caribbean islands.

Irma struck the Caribbean islands as a Category 5 storm before making another landfall on September 10 (US time), when it hammered the Florida Keys as a Category 4 storm.

It spared the east coast of Florida, including the highly urbanised areas of Miami, Fort Lauderdale and West Palm Beach, where residential and commercial properties are valued at about $US1.2 trillion ($1.5 trillion).

Initial modelling showed the storm heading towards the three urban areas.

“Had Irma struck the east coast of Florida, close to Miami… insured losses could have been much greater,” a spokesman for AIR Worldwide told

AM Best says Irma “was weaker than expected” but still caused significant damage that will challenge the Florida insurance market.

“Even though losses will clearly not be as severe as originally thought, Irma will remain a sizeable event and will test the infrastructure and, potentially, the financial wherewithal of some writers, particularly those that are concentrated,” the ratings agency says.

“Hurricane Irma may also force insurers to rethink their risk selection/appetites and reinsurance purchases.

“The storm could prompt some concentrated companies to increase their focus and efforts on diversifying outside of Florida, while others may revamp products to more desirable coverages.”

Hurricanes may knock Munich Re off profit target

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Munich Re faces a third-quarter loss and may not achieve its €2-€2.4 billion ($3-$3.6 billion) profit target this year because of hurricanes Harvey and Irma.

“These two events are expected to result in high insured losses, which the market and Munich Re are unable to quantify at the moment,” the German reinsurer says.

“The figures for the third quarter will probably show a loss. Despite good business performance [this year] to date, the losses from Harvey and Irma could mean Munich Re might miss its profit guidance… for the year.”

Earnings in the June quarter took a hit from the Grenfell Tower fire in London and other man-made disasters, with net profit down 24.7% to €733 million ($1.09 billion).

Hurricanes show need for US flood cover reform: Lloyd’s

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The US must reform its flood insurance market, including allowing the private sector to play a bigger role, according to Lloyd’s CEO Inga Beale.

She says Hurricanes Harvey and Irma show the inadequacy of the government-run National Flood Insurance Program, which is saddled with debt of more than $US24 billion ($31 billion).

“We urgently need reform to the flood insurance market in the US to make… communities more resilient,” Ms Beale said. “We need to find ways to pay these rising costs.

“That’s why Lloyd’s is actively pursuing the further development of the private flood insurance market in the US, which will help to promote flood insurance and encourage more people to take up cover.

“We need clear authorisation from Congress for the private flood insurance market to allow the market to continue to grow and move more risk into the private sector.

“This will provide consumers with more choice and better coverage options in some cases.”

The two hurricanes do not yet meet Lloyd’s market turning event (MTE) criteria, for losses that exceed $US200 billion ($250 billion).

“However, the situation could change,” Director of Performance Management Jon Hancock said. “We are evaluating all the latest information from the region and, as announced earlier this year, we have new measures in place to help the market deal with an MTE.”

Capacity, lack of modelling ‘hold back terror market’

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Restricted capacity, limited modelling and lack of demand from smaller organisations is hampering development of a substantial terrorism market as the focus of attacks shifts, according to Guy Carpenter executives.

MD Charles Gibbs says attacks are moving towards mass-casualty and fear-inducing events, and away from physical damage.

Private cover is emerging to address non-physical losses such as denial of access, but limited terrorism capacity is heavily weighted towards larger-scale corporations, rather than small businesses that could benefit the most.

“The small number of players offering terrorism cover significantly heightens the potential for accumulation risk if efforts were made to push cover into the wider market,” Mr Gibbs says. “At present, there simply isn’t the incentive to extend out to the SME sector.”

Restricted modelling capabilities for terrorism remain a barrier to market expansion.

Guy Carpenter VP Jamie Russell says modelling is limited by a lack of claims data, especially for the more diverse covers now on offer.

“Development in this area will aid insurers with their portfolio management, and unless this is addressed, coupled with modelling capabilities that can support improved frequency analysis, insurers will continue to be restricted in how far they can extend their offering,” he said.

Mr Gibbs says customer demand that would spur modelling investment is lacking at the SME level, amid a lack of awareness about potential threats and exposure.

Insurtech ‘enables’ traditional insurers, Aon says

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Insurtech could be an enabler rather than a disruptor of the traditional insurance model, according to a new report from Aon.

The broker examines key areas of potential growth in its annual Global Insurance Market Opportunities report, and concludes insurtech may have a more supportive role than previously thought.

The report says three leading lines where analytics can help with insurance industry growth – cyber risk, casualty catastrophe risk and pathogen risk – may become increasingly insurable through collaborations with insurtech companies. This could open up opportunities for insurers and reinsurers to provide new and enhanced products.

Aon says the on-demand economy presents both opportunity and disruption to the traditional insurance sector. Services such as Uber and Airbnb will lead to greater demand for insurance products that recognise assets such as cars and homes are increasingly used on both a commercial and personal basis.

“We know the insurance sector is facing challenges in the current macroeconomic environment, so we should expect leading organisations in the industry to drive change,” Aon’s Global CEO of Analytics Paul Mang said.

“We are already using technology to make us more efficient as a sector, and to expand into emerging risk markets.

“However, the true transformation will happen as we reimagine risk management altogether.

“In this new environment, collaborations, or what we call open-architecture innovation, will be key to creating net new growth.”

Reinsurance blockchain project set for market tests

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A reinsurance initiative using blockchain technology will undergo “beta testing” next month before a planned wider introduction to the market.

Beta testing involves testing the product with a number of user companies prior to a full commercial launch.

The B3i group of 15 insurers and reinsurers says it has produced a prototype to enable handling of property catastrophe excess-of-loss “smart” contracts using the distributed ledger technology.

“The deployment architecture is already close to a production-ready environment and the team is preparing for feature enhancements of the prototype and a first deployment into production [next year],” B3i’s Paul Meeusen told participants at this month’s Monte Carlo Reinsurance Rendezvous.

B3i members and new participants will have access to a “sandbox” environment to simulate the creation and settlement of contracts during the beta testing, and will provide feedback.

“To collectively explore how blockchain can help us be more efficient and better deliver for our clients is in the whole industry’s interest,” XL Catlin Property and Casualty Insurance and Reinsurance President Greg Hendrick said. “This is an exciting step for the B3i and a significant leap towards the future for the industry.”

B3i was established last year to explore the potential of distributed ledger technology for insurance. The technology offers a shared process for handling information between parties that can provide transparency and security, while speeding processes and reducing costs.

The team has also developed an industry business case for the platform across the whole value chain, with companies suggesting a productivity gain of up to 30% is achievable.

B3i’s 15 members are Achmea, Aegon, Ageas, Allianz, Generali, Hannover Re, Liberty Mutual, Munich Re, Reinsurance Group of America, Scor, Sompo Japan Nipponkoa Insurance, Swiss Re, Tokio Marine Holdings, XL Catlin and Zurich.

Ebix makes fastest-growing companies list

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Insurance technology specialist Ebix has been included in Fortune magazine’s list of the world’s 100 fastest-growing companies.

The list ranks companies with market capitalisation of $US250 million ($312 million) or more based on revenue growth rate, earnings per share growth rate and three-year annualised total return for the period to June 30 this year.

Ebix ranks No.76, and is the only insurance software company to feature.

Chairman, President and CEO Robin Raina says this is the fifth time in the past decade the company has made the list.

Ebix Australia’s general insurance products include the market-leading Sunrise Exchange insurance transaction platform, the WinBEAT, CBS and eGlobal broking systems and the iClose end-to-end business solution.

Chubb to swap Brexit Britain for France

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Chubb says it will relocate its European Union headquarters to France if the UK leaves the EU as anticipated in March 2019. 

France is a logical choice for Chubb. It is already home to the principal office for its continental European operations, and it has significant financial investments and human resources there.

The insurer also has a large portfolio of commercial and consumer business in France and an understanding of how the market is regulated.

Chairman and CEO Evan Greenberg says France is “a clear choice”.

“Our many years of experience in the French market and working closely with the French regulators gives us great confidence in making this decision and reinforces our commitment to our staff, clients and distribution partners in both France and across the continent,” he said.

The French Government’s offers of help and co-operation further influenced the decision.

Chubb will continue to have a substantial presence in London post-Brexit, in addition to other offices and operations across the UK and EU.

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Monte Carlo: reinsurers look to release the pressure

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Destructive US hurricanes have helped put this year’s Reinsurance Rendezvous spotlight on the global insurance protection gap and innovative opportunities to extend cover in traditional and new areas.

The annual Monte Carlo meeting of global insurance and reinsurance leaders also took place against a background of weak markets and abundant capacity.

As delegates gathered the centre of discussion was the impact of Hurricane Harvey, which  caused catastrophic flooding as it swept across the Texas coast late last month, while the gathering also coincided with the Florida Keys arrival of Hurricane Irma on September 10.

An Aon Benfield report was among several noting economic losses from Harvey would far exceed insured losses, with the low number of homeowners having flood cover just the latest example of the global protection gap.

“Uninsured populations exposed to natural disasters and severe weather events are growing, increasing the post-event refinancing burden for hard-pressed national governments,” the report says.

“At the same time, commercial insurers are adjusting to a world in which corporate buyers are just as worried about supply chains, intellectual property and reputation risk as they are about tangible assets.”

The challenge for reinsurers is to find opportunities within the underserved areas, particularly with plenty of capacity ready to be deployed and strong rebounds in property and catastrophe markets not expected any time soon.

Whether the hurricanes will have a significant impact on renewals remains to be seen. The Atlantic storm risk season continues until the end of November, and it will take a lot to lift a market weighed down by large levels of capacity, swollen by alternative capital.

“The pricing impact of any major loss is determined largely by its timing and the extent to which it was previously contemplated,” Aon Benfield says.

It believes an extraordinary loss event, or combination of events, would be needed for capacity to be materially impaired.

The Swiss Re Institute estimates the protection gap attributable to natural catastrophes and weather events was $US180 billion ($225 billion) globally last year, with insurance take-up curbed by a lack of awareness or trust, restricted access and affordability concerns.

“Innovative solutions help the industry make progress towards closing the ever-growing global protection gap,” Swiss Re CEO Christian Mumenthaler said.

“As we have seen again in the aftermath of recent floods in the US following Hurricane Harvey, as well as devastating flooding in Bangladesh, India and Nepal, the protection gap is very real and needs to be tackled with solutions that make insurance both more widely and more easily available.”

More generally, new technology is offering the potential for solutions beyond traditional reinsurance areas, with opportunities seen across multiple lines and all along the insurance chain.

Developing areas highlighted at Monte Carlo include cyber cover and progress on using blockchain technology to improve efficiency. A raft of other benefits could emerge through various insurtech projects that are attracting increasing interest.

Guy Carpenter says there is an opportunity for the industry to extend the cyber market by moving beyond data confidentiality and looking at operational technologies that increasingly carry cyber risks.

It says there must also be more work on identifying particular exposures, so reinsurers can better target specific areas.

Generally, technology advances and innovation are supporting moves to go beyond generic products, according to industry reports.

“As reinsurers seek to de-commoditise their offering we have seen an increase in product complexity and a willingness to offer innovative and customised solutions to help meet their clients’ goals and growth ambitions,” Guy Carpenter President International James Nash says.

JLT Re’s Viewpoint Report says the ability to extract commercial gains from innovations could become a key differentiator as companies compete for market share amid difficult economic conditions.

In the meantime, the prolonged market softening continued to prove challenging for revenue growth in the first half of this year.

The Willis Reinsurance Index shows net written premium grew 2% to $US129.8 billion ($162.4 billion), with companies seeking to diversify portfolios to lift underwriting performance amid pricing pressure.

The first half was also notable for a renewed surge of alternative capital, which affected mid-year reinsurance renewals and is now finding its way into the primary market, according to Aon.

“Sustained growth in reinsurance demand is dependent upon increasing the relevance of insurance to the global economy,” the group’s report says.

“Although alternative capital is not expected to have a material impact on the protection gap in the short-term, it potentially presents an opportunity to grow what is insurable and create new products that can address some of the underlying issues.”

Aon says there is every reason to believe reinsurance will have a growing role to play “as capital becomes better matched to risk”.

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