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Market ‘failing to keep pace’ with cyber threat

Cyber attacks’ frequency, severity and evolution are accelerating too quickly for the insurance market to maintain coverage, Gallagher warns.

“The global premium pool for cyber cover and the expected risk exposures do not currently correlate,” Gallagher says. “This in in part due to the challenges of gaining an accurate picture of the frequency and severity of cyber losses.”

The lag is causing a threat of underinsurance and exposure.

Shareholders and customers are seeking damages for losses associated with cyber breaches, which may affect directors’ and officers’ (D&O) insurance.

Cyber is now identified as a major risk around business interruption, the broker says.

It warns the risk of cyber attacks is growing, casting a shadow over D&O coverage for C-suite executives because exposure of network security or protocols will damage a company’s ability to maintain shareholder confidence. Reputation and brand may also be harmed.

See ANALYSIS.

Suncorp defends fossil fuel stance

Suncorp has defended its record amid a campaign by climate group Market Forces pushing it to stop underwriting fossil fuel projects and ditch its coal investments.

“Suncorp’s exposure to fossil fuel activities currently makes up less than 1% of our commercial insurance business, and less than 2% of our investments,” a spokesman says.

Market Forces campaigner Pablo Brait has accused Suncorp of being light on detail when it announced two years ago that it would reduce emissions-intensive investments to an immaterial amount.

“The terms ‘immaterial’ and ‘emissions-intensive’ have not been defined, and so it’s impossible to determine how significant these moves are,” Mr Brait says.

Suncorp says its responsible banking and insurance policy guidelines will detail how to manage its exposure to thermal coal and coal-fired generators.

Mr Brait told insuranceNEWS.com.au: “We want to see Suncorp break its ties with fossil fuel companies, and that means phasing out its investment in coal, oil and gas, and phasing out underwriting of [those industries].”

Market Forces’ online campaign, a play on Suncorp’s motto, is titled Suncorp: Create a Better Today (and Bugger Tomorrow).

Although Mr Brait acknowledges that any gap in coverage may be filled by an international insurer, he says every bit helps.

“Our work is part of an international campaign called Unfriend Coal. There are already 11 companies, counting QBE, that are restricting their underwriting of coal, and even more that are dumping their coal shares. Company by company, we’re trying to limit access to insurance and investments to the industries that are fuelling global warming.”

Australia fuels global premium gains

The Pacific region, including Australia, outperformed the global market in the first quarter with a 16.1% jump in commercial insurance pricing, Marsh says.

Globally, premiums gained an average of 3%, the sixth consecutive quarter of increases.

The Pacific market built on previous year of rises, when rates grew at a similar pace.

Financial and professional liability lines had the sharpest increase of 25.8%, as insurers raised premiums and deductibles for directors’ and officers’ cover, spooked by the increase in class actions last year. Property pricing went up 14.5% and casualty 5.7%.

“The increases in the property, casualty and financial lines markets were steady in the first quarter, albeit they are the highest of any region in the world,” Marsh Global Placement Leader Asia-Pacific John Donnelly told insuranceNEWS.com.au.

“We are seeing a reduction in capacity in all these lines as we move through the second quarter, which is having a greater impact on pricing.

“Several major global insurers have continued with poor underwriting results and, consequently, are under increased pressure from their global management to push prices higher and reduce exposure.”

Casualty was the only line to record a decline worldwide, with prices down 0.7%. Property was up 4.7% and financial and professional liability lines 5.6%.

US prices gained 1.1%, the best result since 2013, and the UK posted its sixth consecutive quarter of rate gains, with the index up 2.9%. Continental Europe and Asia posted gains for the second consecutive quarter, up 2% and 0.4% respectively.

The Marsh Global Insurance Market Index measures commercial pricing changes at renewal and covers nearly 90% of Marsh’s premiums.

Levees and levies: ICA pushes re-elected Morrison

The Insurance Council of Australia (ICA) has called on the re-elected Coalition Government to step up mitigation programs in disaster-prone regions and axe taxes on insurance products.

CEO Rob Whelan says the industry will continue pushing for policies that improve insurance uptake, tackle climate change, reduce regulatory burden and raise business efficiency.

The Insurance Council is also committed to working with Prime Minister Scott Morrison to implement the Hayne royal commission’s proposed reforms.

“ICA encourages the Government to renew the tax reform agenda, with a focus on encouraging the removal of inefficient and unfair state taxes and levies on insurance products,” Mr Whelan said.

“ICA hopes a greater focus will be placed on investing in nation-building infrastructure that encourages economic sustainability and growth in regions exposed to natural disasters, in the form of permanent mitigation and other resilience programs.”

Construction faces PI price shock, Honan warns

Construction industry insureds face professional indemnity “bill shock” this year and more difficulty obtaining cover amid fallout from flammable cladding problems, Honan Insurance Group warns.

Honan’s Construction Industry Lead Adam Richardson says insurers are prepared to walk away from unprofitable business, and contractors that have had multiple professional indemnity losses are having to turn to Lloyd’s options with strict mandates.

“Bill shock will be a significant issue for many organisations when they receive their professional indemnity renewals this year, with premiums and loadings in some sectors increasing threefold,” he said.

Issues obtaining cover follow recent commercial decisions by reinsurers and the impact of the Grenfell Tower disaster in London and the Lacrosse and Neo200 apartment fires in Melbourne.

The Victorian Civil and Administrative Tribunal ordered Lacrosse builder LU Simon to pay more than $5.7 million to apartment owners, while also ruling funds should be paid to the company by the architect, fire engineer and building surveyor because they breached contractual obligations.

Mr Richardson says it is increasingly difficult to obtain professional indemnity cover in those areas without strict endorsements or exclusions for uncompliant cladding.

The issues raise fears businesses will not comply with their licences if they are unable to gain cover for cladding exposure.

“We have been emphasising the importance of early engagement with our clients because it’s an imperative in the current environment,” Mr Richardson said.

“Underwriters will not positively receive risks that are presented late or close to expiry.”

Government ‘must consult with industry’ on reform

Suncorp has urged the Federal Government not to implement Hayne royal commission reforms without first consulting the industry.

CEO Insurance Gary Dransfield says if a balanced approach is not taken, insurers could be put out of business, with communities forced to suffer the consequences.

He says criticisms in Kenneth Hayne’s final report were “at times scathing”, but the Government cannot supply all the answers.

“By working together, the industry and government can deliver a far more sustainable insurance industry, along with targeted reforms to strengthen customer protections and outcomes,” he said.

“Insurers and government need to balance any industry reforms to ensure individual customers, entire communities and taxpayers don’t suffer from insurer insolvency and collapse, which could severely hamper community disaster recovery.”

Mr Dransfield says Suncorp believes in four pillars “that underpin our industry and allow us to provide affordable and much-needed insurance protections to millions of customers each year”.

These are: a focus on customer contracts; servicing the communities in which insurers operate; providing a diversified offering to the country’s unique geographic regions; and delivering value for shareholders.

“We’d urge the incoming Government to consider the complex balancing act the insurance industry must strike,” Mr Dransfield says.

Ex-Allianz exec takes reins at Insurtech Australia

Insurtech Australia has named founding member Rita Yates as CEO, the first woman to hold the role since the organisation was established in 2017.

She takes over from Simon O’Dell, who becomes Chairman.

Ms Yates says her experience, including at Allianz Australia and fintech hub Stone & Chalk, are an asset as she looks to build on the insurance start-up community’s progress.

“Those are probably two aspects of my background that will really help me moving forward,” she told insuranceNEWS.com.au. “Our mission at Insurtech Australia is really to create a world-leading insurtech ecosystem.”

On being the group’s first woman CEO, she said: “I feel very honoured, obviously, to represent this incredible ecosystem. We have some wonderful female founders locally in the insurtech space, but of course we would like to see more and see more role models.”

Ms Yates is presently Advisory Committee Member Start-ups for Cebit Australia, which runs the region’s biggest technology fair. Before that she was head of corporate partner experience and insurtech lead with Stone & Chalk.

She worked for more than four years at Allianz Australia, until October 2007, with spells as national account manager and in injury management advisory.

Customers more willing to share personal data

About 72% of Australian consumers are open to providing personal data to insurers if it means a lower possibility of injury or loss, an Accenture study has found.

About 68% are interested in receiving adjusted car insurance premiums based on safe driving records.

The Global Financial Services Consumer Study is based on responses from 47,000 participants in 28 markets, including Australia, the US, China, Japan and the UK.

“It’s clear that, overall, Australian consumers are growing increasingly comfortable with digital banking and insurance services,” Accenture Financial Services Partner Alex Trott said.

“Creating seamless and valuable customer experiences through digital technologies should be a key focus for banks and insurers in strengthening their market position… [people] are also becoming increasingly aware of the value of their financial data, and are open to sharing this if there is a clear value proposition.

“However, data safety and security must be at the forefront, and full transparency on how consumer data is used will be paramount.”

In other findings, fewer than 50% of Australian consumers are keen to submit claims through internet-enabled chat or video, and 79% trust their main insurer with their data.

NZ broker ordered to repay Asteron

New Zealand’s High Court has rejected insurance broker Peter Taylor’s bid to have Suncorp-owned Asteron Life resume paying him income protection benefits.

Justice Francis Cooke ruled Mr Taylor has “not acted in good faith” and must repay the insurer $NZ371,286 ($352,188).

The final amount may be higher, because Asteron is seeking interest on that sum.

Asteron suspended payments in September 2014 when additional information the broker provided failed to answer questions about his work income.

Mr Taylor subsequently began action against the insurer.

Testimony from former employees did not support the broker’s claims that he was not working because of his medical conditions.

And the judge did not accept Mr Taylor’s explanations for buying Mercedes and Maserati cars and going on a trip to Hawaii despite claiming to have back problems.

“I generally found Mr Taylor’s evidence, and his answers in cross-examination, unreliable and at times not credible,” Justice Cooke says in his judgement.

Suncorp's Australian life insurance business has been acquired by TAL Dai-ichi Life, but Asteron in New Zealand remains part of Suncorp.

Bureau cuts El Nino likelihood

The chances of an El Nino weather system developing this year have been cut from 75% to 50% in the Bureau of Meteorology’s latest update.

Indicators have been close to El Nino thresholds for several months, but the bureau says the patterns have started to weaken.

As a result, the outlook has been downgraded from El Nino “alert” to “watch”.

However, at 50% the chance of El Nino developing is still double the normal likelihood.

El Nino typically brings drier than average conditions to eastern Australia during winter and spring, and warmer days across the southern two-thirds of the country.

The Indian Ocean Dipole (IOD) is currently neutral. However, the bureau says models suggest a positive IOD is likely to develop in winter and persist into mid-spring.

A positive IOD often results in less rainfall and above-normal temperatures over parts of Australia during winter and spring.

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Corporate

QBE automates non-complex property claims

QBE has introduced technology to automate non-complex property claims, allowing it to streamline operations and appoint Sedgwick as its sole principal loss adjusting partner.

The automated Property Decisioning Tool is one of QBE’s first data-driven products developed in house and brought into operation following a pilot.

“The new data and analytics tool allows us to quickly determine the likely complexity of a claim, the repairs needed, and immediately engage the correct supplier to begin actioning the recovery within a much faster timeframe,” a spokesman told insuranceNEWS.com.au.

It will drive a shift from 85% use of national builders to focusing on local providers for commercial and residential work, and reduces the reliance on external loss adjusting partners.

Crawford & Company, previously a principal partner with Sedgwick, will continue as one of five other companies contracted to maintain geographic capability and capacity.

McLarens and Charles Taylor will also continue to be contracted, while new arrangements will be made with YDR and Technical Assessing to supply specialist services.

The new process will not affect staffing levels, QBE says.

“It just means we can increase the number of customers we can service and also reduce the claim lodgement time, so the customer gets a better experience and the claims officer gets more time to think and act,” the spokesman said.

The changes come under QBE’s Brilliant Basics improvement program.

“We know that today’s customer is seeking quality of service and speed of service – and both at the same time,” Chief Claims Officer Jon Fox said.

“Through our evolving in-house data and analytic capabilities, and exploring new industry partnerships to enhance this, we can ensure we are delivering on these customer expectations.”

Suncorp incubator seeks fintech partners

Suncorp is inviting fintechs to apply to join its Digital Incubator Program, to bring innovative ideas to life in a well-resourced environment.

The program aims to combine ideas, technology and resources to create the next wave of digital financial customer services, Suncorp says.

Based at the group’s Digital Labs in Brisbane, the 90-day program will accept two start-ups in the first intake, beginning next month.

Participants will have three months to partner with Suncorp and develop their idea. They can access mentors, designers, data and experts across security, business and technical.

“An innovative new wave of fintechs will test and validate their ideas, learn from industry experts… and leverage Suncorp’s vast data capability to hone their business models, with the aim of ultimately deploying new solutions,” CIO Sarah Harland said.

Donnellys sees bright future with Gallagher

Donnellys Insurance Brokers founder Mike Donnelly says the Adelaide company has a brighter future under new owner Gallagher.

Gallagher announced the acquisition last week, as it continues to expand its SME capability.

Mr Donnelly is a former National Insurance Brokers Association director and was a founding member of the Insurance Brokers Network Australia founding member, also serving as chairman and director. He is a past recipient of the Lex McKeown Trophy for services to broking.

The brokerage was founded 43 years ago, and Mr Donnelly says the sale to Gallagher will open new growth opportunities for the company.

The threat of increasing government regulation and competition from direct players makes it hard for small independent brokers to grow, he says.

“This guarantees a better proposition for clients and more security for staff,” he told insuranceNEWS.com.au.

“I had been looking for a suitable buyer for two years, and [Gallagher’s] values are the same as ours. Gallagher is a family business, and it was the right time to make the move.”

The business has seven staff working from its Adelaide office, including Mr Donnelly as Executive Director and his son CHris as Account Executive.

It offers domestic and commercial insurance, specialising in personal lines products distributed through affinity groups.

The Donnellys name will be phased out, with the business now known as Gallagher’s Adelaide CBD branch.

Gallagher CEO Sarah Lyons says Donnellys is “a great fit”.

“As a family-originated business, Mike, Chris and the team have built a solid reputation over the years for professional and friendly client service and will continue in this vein as they transition into the Gallagher team,” she said.

“Small businesses have a unique set of needs and this is a space ripe for innovation, and connection with associations and other affinity groups aligns well with our core business model.”

Group COO departs QBE

QBE Group COO David McMillan will leave the company after almost two years to become CEO at UK-based Esure Group.

Mr McMillan will not be replaced, with his responsibilities “reallocated” between other executives.

Group CIO Matt Mansour, who arrived at QBE last year from Barclays, will join the Group Executive Committee.

Group Chief Human Resources Officer Margaret Murphy will take on a wider role as Group Executive People and Change, with responsibility for people, culture and transformation.

“David has played an important role in establishing the strategy of a stronger, simpler, more future-focused QBE,” Group CEO Pat Regan said.

“He has built leadership strength across our operations and mapped out our transformation, cost efficiency, IT, digital and innovation agendas.”

Mr McMillan, who was based in London but travelled regularly to Australia, joined QBE in September 2017.

He replaced Colin Fagen, who is now MD and co-founder of underwriting agency Blue Zebra.

AMI considers branch closures

AIG-owned New Zealand insurer AMI is considering closing seven retail outlets because customers increasingly prefer to contact the company using digital media.

The closures would still leave 51 AMI stores across New Zealand, making it the the largest insurance retail network in the country.

AMI reports strong growth in customer engagement via social media and its website, and says the phone remains a very popular means of contact.

“The number of customers visiting some stores has reduced significantly,” EM Retail Network Alex Geale said.

AMI is considering closing South Island stores at Alexandra, South Dunedin and Motueka, and North Island stores at Feilding, Hawera, Porirua and Thames.

Affected staff will be offered other employment.

Nib seals acquisition of QBE travel arm

Nib Holdings has completed its purchase of QBE Travel for a final price of $24.2 million, after making allowance for net liabilities acquired.

The health insurer immediately rebranded the business as Nib Travel and announced Axa XL will underwrite its new policies.

Nib has absorbed 150 QBE employees in Victoria and the Philippines into its business.

It expects to see a 50%-plus increase in domestic gross written premium in the travel market, where it is already the third-biggest player.

“This is a very good acquisition, consistent with our strategy to grow our travel insurance operations both domestically and globally,” Nib MD Mark Fitzgibbon said.

“With more than 60% of travel insurance claims medical or health-related, being part of the Nib group allows our travel business to leverage and tap into our hospital and provider networks, claims management capability and distribution channels.”

Nib has invested significantly to build its travel arm, paying $95 million about three years ago for World Nomads Group, which was renamed Nib Travel last month.

Aon opens Australian cyber operation

Aon is expanding its global data security offering in the Australian market, establishing a new cyber solutions group.

The group, which brings together Aon's cyber consulting and insurance operations, will be led by Chris McLaughlin and is intended to help clients uncover and quantify cyber risks, protect critical assets and recover after incidents.

Mr McLaughlin previously led PwC’s cyber transformation and strategy team, providing cyber-security consulting services to some of Australia’s largest companies.

Cyber attacks can “result in significant damage to reputation and brand, and potential directors’ and officers’ liability exposures, as well as having significant financial implications”, he says.

Aon, which predicts cyber will become the third-biggest risk by 2022, says threats vary widely by industry and region, and staying informed about the evolving danger is a key challenge.

Flamingo Ai receives R&D grant

Insurtech Flamingo Ai has received a $1.13 million grant from the Australian Government’s Research and Development Tax Incentive Program.

It will contribute to Flamingo’s development of cognitive virtual assistants and journey assist platforms, and its unsupervised machine learning algorithms.

Founder and CEO Catriona Wallace recently revealed she will move to a Chief Revenue Officer role next year, to focus on Flamingo’s income generation.

Flamingo, which specialises in artificial intelligence for the insurance industry and has bases in Sydney and the US, also revealed its US headquarters will move from New York to Hartford, Connecticut.

Bob Hilborn, who has 30 years’ experience in the IT, financial services and start-up sectors, has been appointed Head of US Operations.

Ensurance adds terrorism and sabotage cover

Ensurance is introducing a terrorism and sabotage insurance line, which it expects will attract strong demand from current and new customers.

The offering, now available to UK customers, will launch later in the US, followed by Australia.

“There is a growing demand for terrorism and sabotage cover from the construction industry,” Ensurance UK CEO Tim James said. “However, government-backed pools don’t always provide the necessary extensions of cover.

“We’ve responded to this by developing a product that is competitively priced.”

The range of policy extensions includes non-damage business interruption, denial of access, loss of attraction and active shooter.

The cover is designed to protect businesses from harm to buildings, profits, employees and customers resulting from terrorism or sabotage.

Two established specialist underwriters have been appointed to the UK business, to spearhead Ensurance’s push beyond construction and engineering cover.

New CEO joins QBE’s Indian joint venture

QBE’s Indian subsidiary Raheja QBE has appointed Pankaj Arora as CEO and MD, based in Mumbai.

The company is a joint venture with Prism Johnson and QBE Holdings.

Mr Arora will be responsible for developing products in personal lines, and improving the company’s brand in India, where it already has strength in products liability and other commercial lines.

He is a former president of personal lines, bancassurance and affinity at Liberty General Insurance. He has also worked with Tata AIG and Bajaj Allianz, and was national head of general insurance at SMC Group.

Mr Arora says Raheja QBE aims to bring one innovative product to the market every two years.

Chairman Akshay Raheja said: “Over the next five years we plan to expand our footprints across the country, with focus on tapping into the fast-growing personal lines market.”

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Regulatory & Government

Brokers urged to speak out for NSW review

The National Insurance Brokers Association (NIBA) has called for members to detail their experiences with the NSW workers’ compensation scheme, as a regulatory review examines problems highlighted by businesses.

CEO Dallas Booth says there is anecdotal evidence of premiums soaring after relatively straightforward claims, while members have also raised issues with claims handling and other operations.

“We want members to put hard examples forward so the reviewer can get a clear idea of precisely what is going on,” he told insuranceNEW.com.au.

NIBA’s submission will also seek more clarity around the overall financial performance of the scheme, which recovered ground last financial year after reporting a loss of nearly $1 billion in 2017.

“We believe it will be important for the review to look at the financial and funding position of the scheme, as well as its day-to-day operations,” Mr Booth said.

“These are important issues we need to be clear about.”

The NSW State Insurance Regulatory Authority (SIRA) has appointed Janet Dore, a former Victorian Transport Accident Commission CEO, to conduct a compliance and performance review of workers’ compensation arrangements managed by icare.

Ms Dore, also an independent member of the SIRA compulsory third party premium committee, is supported by actuary EY and SIRA officers.

The review was commissioned earlier this year and has now reached the public consultation phase.

The Nominal Insurer scheme managed by icare accounts for about 65% of active claims in the state’s workers’ compensation system.

The NSW Business Chamber, which last year called for an urgent inquiry, says the review provides an important opportunity to address concerns.

“We have received many reports from businesses across NSW complaining of poor administration when it comes to workers’ compensation,” CEO Stephen Cartwright said.

“These include a lack of appropriate checking of claims, lengthy delays and poor advice and support for both employers and employees.”

The review will include work undertaken on icare’s behalf by its agents EML, Allianz and GIO.

In 2017 icare selected EML as its sole workers’ compensation agent for new claims, starting this year. CGU and QBE ceased services in 2017, while GIO and Allianz continued as transition agents.

icare says it is always supportive of reviews and looks forward to receiving the findings.

“Reviews are standard practice and part of our regulatory environment,” a spokeswoman told insuranceNEWS.com.au. “It is an opportunity to display our successes and progress in transforming the scheme since icare’s formation.

The public consultation will close on June 14, with the report to be published at a date to be determined later in the year. The discussion paper is available here.

ASIC commits to punishment through courts

Financial services providers in breach of the law will face court action under the Australian Securities and Investments Commission’s (ASIC) new enforcement approach.

“Why not litigate? is our own strategic construct and the aim of this is to deter future misconduct and address community expectations that wrongdoing be punished and publicly denounced through the courts,” Chairman James Shipton told last week’s ASIC Annual Forum.

“Our enforcement work has a core focus on deterrence, public denunciation and punishment of wrongdoing by way of litigation.”

The corporate regulator will initiate court action if a company is “more likely than not” to have broken the law and pursuing the matter would advance public interest.

Deputy Chairman Daniel Crennan told a panel discussion ASIC will use its expanded powers to tackle poor behaviour “because otherwise they are an abstract concept”.

ASIC was heavily criticised in the Hayne royal commission report for favouring negotiated agreements over public denunciation and punishment.

ASIC urged to put complaints data in context

The Insurance Council of Australia (ICA) says it will hear from members before responding to an Australian Securities and Investments Commission (ASIC) consultation on proposed new standards for the handling of customer complaints by financial companies.

ASIC says the proposals, which could include collecting and publishing companies’ internal dispute resolution (IDR) data, will lead to better outcomes and increased transparency.

Spokesman Campbell Fuller told insuranceNEWS.com.au ICA will “prepare and lodge a submission in due course”.

“ICA advocates that the financial firms are provided with ample time to implement ASIC’s proposed changes,” he said.

“ICA also advocates collection and publication of disputes by the regulator should be guided by relevant metrics and context. This would ensure dispute information is relevant to both consumers, financial firms and the financial services industry.”

Hayne royal commission hearings highlighted a number of issues with complaints handling, including in the general insurance industry.

Under the proposed reforms, financial companies would be required by ASIC to meet new standards when they deal with complaints through IDR arrangements.

ASIC also wants to reduce maximum timeframes for IDR responses, set clear standards about what should be in written reasons for decisions, and establish a framework for complaints data reporting.

“It is widely acknowledged there is room for much improvement when it comes to handling consumer complaints in our financial system,” ASIC Deputy Chairman Karen Chester said.

“Consumers expect and need a fair, timely and effective way to have their complaints dealt with, and to be provided redress where appropriate.

“Firm performance in how they handle customer complaints, and their interaction with the Australian Financial Complaints Authority (AFCA), will increasingly be in plain sight.

“This greater transparency will inform consumer and broader public understanding of how well firms treat their customers.”

ASIC aims to release new IDR standards in a regulatory guide by the end of this year. A separate consultation on the publication of IDR data will start early next year.

To respond to the consultation documents before August 9, click here.

South Rockhampton flood levee talks begin

Public consultation on the proposed $60 million South Rockhampton Flood Levee is under way and will continue until June 21.

Meanwhile, a comprehensive assessment of all environmental, social and economic impacts will be undertaken.

The 8.7km levee would run from Rockhampton CBD to the Bruce Highway. Flood modelling has identified the project as the most cost-effective way to mitigate the effects of flooding in several key areas of the Queensland town.

Insurer Suncorp says it is a strong supporter of flood mitigation in Rockhampton, which has long been dangerously exposed.

“Suncorp looks forward to receiving data and information about the project and getting on with the important business of repricing premiums for those households and buildings that stand to directly benefit,” Insurance CEO Gary Dransfield said.

ACT passes revamped CTP laws

The ACT’s no-fault compulsory third party reforms will begin next February, after the Legislative Assembly passed legislation last week.

The overhaul was developed after a controversial citizen’s jury process that started in 2017. It has been opposed by lawyers, who say the changes mainly benefit insurer profits.

ACT Chief Minister Andrew Barr says about 600 more people each year will be covered by the scheme, compared with current arrangements.

“Everyone who is injured in a motor vehicle accident will now be entitled to receive treatment, care and lost income benefits for up to five years, no matter who is at fault,” he says.

“People who are more seriously injured will continue to be able to make a claim for further compensation through common law.”

The ACT Law Society says the scheme discourages the use of legal practitioners by injured people, makes quality of life damages more difficult to obtain and gives insurers “extraordinary control” over the lives of those hurt in accidents.

It says insurers will determine a person’s capacity to work, will decide whether treatment is reasonable or cost-effective, and can require multiple medical and other assessments.

“Few injured people will be in a position to contest the insurer’s decisions,” the society says.

The Government says people with matters in train at the time of the transition will continue to be dealt with under the current scheme.

Data breach figures show need for staff training

Companies must improve employee training and deploy better technology to prevent data breaches, according to the Office of the Australian Information Commissioner.

About 41% of finance sector data breaches were due to human error in the year to March, compared with 35% across all sectors, while 56% of finance sector breaches involved malicious attacks, it says in a report.

Contact information was disclosed through data breaches in 86% of cases overall. One in 10 data breaches stemmed from personal information being emailed to the wrong recipient.

“Our report shows a clear trend towards the human factor in data breaches – so training and supporting your people and improving processes and technology are critical to keeping customers’ personal information safe,” Commissioner Angelene Falk said.

Overall, about 60% of data breaches involved malicious or criminal attacks. The most common methods (153 incidents) were phishing or spear phishing. Compromised or stolen credentials (112) were next. In 28% of cyber incidents, credentials were obtained through unknown means, because the company did not detect anything.

Some 964 data breaches occurred in the year to March, mostly affecting fewer than 1000 people.

The Australian Prudential Regulatory Authority is introducing new cyber-security standards to improve companies’ resilience.

ASIC warns on timings for licence changes

The Australian Securities and Investments Commission (ASIC) has told licensees to factor in the time it may take to assess applications to cancel or vary their licences as part of any measures taken to reduce levies.

The regulator aims to assess 70% of all complete applications within 150 days of lodgement and have 90% completed with 240 days.

“We expect licensees to have considered ASIC’s service charter timeframes, particularly when applying to cancel or vary the conditions of their licence in light of ASIC industry funding,” Commissioner Danielle Press said.

“How many we can ultimately assess is subject to the number of applications we may receive, the completeness of the application, and whether or not ASIC has any regulatory concerns related to the application.”

Licensees with authorisations current on July 1 have to pay funding levies for next financial year under new arrangements that make sectors requiring the greatest regulation pay higher fees.

Invoices to recover ASIC regulatory costs for next financial year will be issued in January 2021.

NZ central bank begins actuary review

The Reserve Bank of New Zealand has selected 15 insurers to take part in its review of the appointed actuary regime.

“Over the past few years the Reserve Bank has stated its intention to undertake a thematic review,” the central bank says. “The review is now in progress.”

It aims to gain a better understanding of how appointed actuaries work for the industry in practice, and identify potential areas for improvement.

The insurers and their actuaries will be required to complete short fact-based surveys, and some will be asked to provide relevant documents.

They will soon receive information requests for the review’s desk-based phase next month and in July, which will be followed by site visits in August and October.

A report is expected in the first quarter of next year.

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Life Insurance

Check your cover, super members urged

Superannuation fund members must act promptly to retain their group life insurance, law firm Slater & Gordon says.

Under recent reforms, funds will be required to cancel cover in accounts that have been inactive for 16 months unless the member opts in or makes a super contribution.

The reforms take effect from July 1. Funds will soon begin contacting members, asking them if they want to retain their coverage.

“We are advising clients to be aware of the upcoming changes and to ensure they understand the super insurance policies in each of their accounts might offer different benefits, so it’s best to check what qualifications and criteria they’ll need to meet to access the insurance,” Principal Lawyer Annemarie Gambera said.

The Government was forced to negotiate with the Greens to pass the reforms, extending the period of inactivity from 13 months and keeping cover under opt-in arrangements for low-balance and under-25-year-olds’ accounts rather than removing it.

MetLife’s retail offer slow out of the blocks

MetLife is off to a rocky start in the retail life insurance market, CEO Richard Nunn has conceded.

According to media reports, he says a competitive environment has slowed the insurer’s launch in the retail field.

“The initial volumes were projected to be small anyway, so we’re a bit behind plan,” he said.

“But it’s early days and we’re building momentum, so I’m not overly concerned about it.”

Credit Suisse analysts reportedly say premium growth and profit margins for life insurers are at record lows.

Ibisworld research shows MetLife made a $54.7 million profit in 2017, and a $32 million profit the year before.

Life goes as YBR ditches wealth division

Yellow Brick Road is to offload, outsource or restructure its wealth division, including life insurance, to focus more on mortgage distribution, servicing and product manufacture.

Group CEO Frank Ganis will leave as a result.

Yellow Brick Road’s advice franchises will distribute wealth products with a third party that holds its own financial services licence, and is thus responsible for liability and compliance costs. The shake-up is expected to reduce employee headcount.

“The restructure of the wealth business is expected to significantly reduce our cost base, allowing us to run a leaner and more cost-effective organisation,” Executive Chairman Mark Bouris said.

FASEA exams open for registration

Advisers can now register for the Financial Adviser Standards and Ethics Authority exam.

Exams will be held from June 20-24 across Sydney, Canberra, Brisbane, Townsville, Melbourne, Adelaide, Perth, Darwin and Hobart.

Advisers can also sit the exam in September or December, with further sittings next year.

The test is a key requirement of improved education, training and ethical standards for advisers, who must pass by January 2021. New advisers must pass the exam before they start the third quarter of their “professional year”.

Registrations are open until May 31. To sign up, click here.

ALUCA to name award winners

Finalists have been chosen for the Australasian Life Underwriting and Claims Association’s Life Insurance Excellence Awards.

The awards recognise excellence in leadership, claims, underwriting, education, rehabilitation services and volunteering. Team awards are also given for claims, underwriting, innovation and customer service.

Winners will be announced at the Arts Centre Melbourne on Wednesday night.

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The Professional

Daisee, Perx Health win insurtech competition

Artificial intelligence (AI) start-up Daisee and motivation and rewards platform Perx Health have won this year’s DXC Technology insurtech competition.

Daisee aims to bridge the gap between technical AI and commercial uses in vision and voice, while Perx Health is involved in medication and chronic disease management.

The competition encourages companies with market-ready products or solutions relevant to the insurance industry to demonstrate proofs of concept.

DXC Technology Australia and New Zealand MD Seelan Nayagam says the 31 competition applicants demonstrated the kind of innovation that can be achieved.

“The insurance industry is undergoing a state of transformation, with insurers looking for new and innovative solutions to improve overall customer experience and engagement,” he said.

The competition was held in collaboration with CoVentured, which helps connect corporates and start-ups.

Robertson co-founder joins Technical Assessing

Technical Assessing has appointed Bruce Murphy as Executive Loss Adjuster, based in Victoria.

Mr Murphy has more than 35 years’ experience loss adjusting in Australia and abroad, including about two decades at Robertson & Co, a business he helped found, concentrating on high-end, complex claims.

He has claims experience in mining, petrochemical losses, major commercial reinstatements and business interruption, and his lead adjuster appointments have included V/Line and Metro Trains.

Chubb recruits property portfolio manager

Chubb has appointed Rick Hogan as Property Manager for Victoria and Tasmania.

Mr Hogan was previously AIG’s global property regional underwriting officer for Asia-Pacific, according to his LinkedIn profile.

He will oversee underwriting, management and administration of Victorian and Tasmanian property portfolios.

He is also involved with the implementation of branch sales, marketing strategies and business plans.

Cover Genius hires for global expansion push

Sydney-based insurtech Cover Genius has recruited Richard Hankin as Head of Retail Partnerships and Justin Turner as Head of Strategic Partnerships for Logistics.

Mr Hankin, previously eBay’s head of commercial partnerships, will oversee partnerships in the Asia-Pacific region.

Mr Turner will lead and execute logistics strategies. He was most recently head of sales and operational marketing with Neopost Shipping.

Cover Genius says the new recruits will aid its plans to grow globally.

In recent months the company has appointed Peter Phillips as Chief Technology Officer and Chris Toft as Head of Insurance Asia-Pacific.

 

Insurance chiefs rough it to help the homeless

Some of Australia’s top insurance executives will sleep rough next month in support of St Vincent de Paul, which hopes to raise more than $7 million for homeless people.

The Vinnies CEO Sleepout takes place on some of the longest and coldest nights of the year, and has been running since 2006.

On June 20 more than 1000 business leaders will participate.

IQumulate Premium Funding CEO Raj Nanra has signed up for the first time.

“I wanted to put more actions around my words and try to make a difference,” the former Zurich General Insurance boss says on his LinkedIn page. “I expect this to be an eye-opening experience.”

His successor at Zurich, Tim Plant, has also signed up, while Marsh CEO Australia and Pacific Scott Leney is in his sixth year sleeping out.

Mr Leney already has commitments of almost $13,000 this year, lifted by $1510 donations each from Zurich, Liberty International Underwriters, CGU, Vero, Swiss Re Corporate Solutions, Axa XL, Alliance Global and Allianz Australia. That has helped provide 428 meals and 107 beds, St Vincent de Paul says.

RACQ Insurance CEO John Myler will sleep out again after raising almost $10,000 last year.

“Vinnies has helped me see how easy it is for people to fall out of the system and how hard it is to get back in,” Mr Myler said. “It’s so easy to make a tax-deductible donation.”

STeadfast MD and CEO Robert Kelly and Tim Bailey from Zurich Life and Investments will also take part. Don Shields, CEO of Geelong Insurance Brokers, and Kim Gilbert, director at Zenith Insurances Services in Perth, have said they will sleep out on June 27 when the event hits their cities.

Help ANZIIF study unconscious bias

The Australian and New Zealand Institute of Insurance and Finance is seeking industry input on a research project around unconscious bias in insurance organisations.

The results will be presented as part of Lloyd’s fifth Dive In Festival, which encourages diversity in the global insurance industry.

Law firm Wotton + Kearney and underwriting agency group Sura, in conjunction with the institute, will host an event at the festival in September aimed at gaining better understanding of unconscious bias and how to address it.

Unconscious bias can affect attitudes spanning race, gender, appearance, age, wealth and much more. It can undermine recruiting and employee development, destabilising organisations.

An anonymous questionnaire, called Deep Dive Research Survey: Unconscious Bias, can be completed here.

GB taps Allianz Partners manager for manager role

Gallagher Bassett today announced that Simon Wilson has joined as GM Consulting Services, based in Brisbane.

He was most recently national business development manager with Allianz Partners Australia.

In his new role, Mr Wilson is responsible for driving the consultancy and corporate injury management offerings, and emerging mental health and wellbeing services.

“He has shown a track record for delivering brilliant outcomes in leadership, project management and continuous improvement initiatives,” CEO John McNamara said.

Fintech award program sets entry dates

The fourth annual Australian Fintech Awards begin next month ahead of winners being announced in August.

Submissions will be accepted from June 5 to July 23 in 16 categories, including insurtech start-up of the year.

Judges will select three finalists in each category, who are invited to the awards night at the Ashurst Ballroom in Martin Place, Sydney, on August 1.

In the insurtech category, judges are seeking a business or core service that has disrupted the sector. The entry must have been created, developed or released in the past 18 months.

Previous category winners include Audeamus Risk, Trov and Boundlss.

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International

Industry ‘not aligned’ with consumer demands

Insurers are not meeting consumers’ demands for better protection from a growing list of emerging risks such as cyber and increased natural catastrophes, according to Capgemini’s annual World Insurance Report.

It says fewer than 15% of personal policyholders and one-quarter of commercial clients believe they are adequately insured.

About 37% of customers are willing to share additional data for more personalised risk control and prevention. In Australia, a similar proportion agree.

“Customers are expecting insurers to play a major role by providing consultation and responding to the changing market with agility and speed, and new products that can ensure they are fully protected with uncertainties,” Capgemini Australia Insurance Director Easwaran PR told insuranceNEWS.com.au.

“The key takeaways for insurers are that there are many opportunities to adapt to the changing industry.”

More than 55% of customers are ready to explore new insurance models, but only 26% of insurers are looking into this area, the study shows.

“Individual customers with comprehensive coverage and tech-savvy customers are more willing to share additional data and pay for personalised risk control and prevention services,” Mr PR told insuranceNEWS.com.au.

“Customers are ready to explore new business model offerings such as usage-based and on-demand insurance.”

The World Insurance Report covers the life and non-life sectors, and is based on research in 28 markets including Asia-Pacific economies Australia, China, Hong Kong, India, Japan, Philippines and Singapore.

US tornadoes take heavy toll

The US suffered multibillion-dollar losses from almost 250 tornado touchdowns last month, the most for any April since 2011, according to Impact Forecasting.

Two major tornado outbreaks were recorded, the Aon-owned modeller’s latest monthly catastrophe recap says

The first hit from April 13-15, killing at least nine people and causing estimated economic losses of $US925 million ($1.34 billion), with insurers covering about $US700 million ($1.01 billion). There were 70 tornado touchdowns, baseball-sized hail and gusts up to 160kph across Texas, Louisiana, Arkansas and Mississippi.

The second outbreak from April 17-19 killed at least four people. At least 96 tornadoes affected a dozen states and economic losses were predicted to be in the hundreds of millions, mostly insured.

Elsewhere, flooding in Canada left up to 10,000 homes inundated, with losses expected to be hundreds of millions of dollars. Due to relatively low overland flood insurance take-up, a sizeable portion is expected to be uninsured.

Impact meteorologist Steve Bowen says the uninsured costs have “once again exposed the… protection gap within mature insurance markets for a specific peril”.

Other natural catastrophes last month included torrential rainfall in Rio de Janeiro, flooding and mudslides in South Africa, flash flooding in Pakistan, and thunderstorms across Afghanistan, Pakistan and northern India.

Allianz profit slips in first quarter

Allianz Australia made a first-quarter operating profit of €49 million ($79.23 million), down 15.2% from the corresponding period last year.

Natural catastrophes were behind a 1.9-percentage-point deterioration in the Australian combined operating ratio to 98.4%, although this was partly offset by lower weather-related losses, Allianz says. Revenue fell 7.9% to €688 million ($1.11 billion).

The German parent’s property and casualty arm made an overall operating profit of €1.46 billion ($2.36 billion) in the March quarter, up 14.2%. A better underwriting result was driven by strong premium growth, fewer natural catastrophe losses and an improved expense ratio.

The combined operating ratio improved 1.1 points to 93.7%. Group net income grew 1.6% to €1.97 billion ($3.19 billion).

CEO Oliver Bate says the group is on track to meet its full-year target of an €11.5 billion ($18.6 billion) operating profit, plus or minus €500 million ($808.66 million).

Zurich on track as pricing trends improve

Zurich says property and casualty pricing improved in the first quarter, but gross written premium (GWP) fell 2% to $US9.18 billion ($13.25 billion) due to local currency impacts and the disposal of a business in Germany.

Asia-Pacific GWP was $US717 million ($1.04 billion), up 14%, driven mainly by growth in Australia, Malaysia and Japan, while Latin America gained 10%. GWP from Europe, the Middle East and Africa, the largest division, fell 7% to $US5.33 billion ($7.69 billion).

On a “like-for-like” basis, Zurich says global property and casualty GWP increased 4%, with gains across all its regions.

CFO George Quinn says the life business continues to perform strongly and Zurich is on track to meet or exceed all targets for the year.

“The group is well positioned to meet the growing expectations of customers in the digital era and continues to strengthen its customer and partnership propositions by adding new distribution agreements,” he said.

The first-quarter update does not include profit figures.

Guy Carpenter joins Aon for blockchain collaboration

Aon and Guy Carpenter have teamed up on a blockchain project aiming to bring greater efficiency to the reinsurance placement process.

The project involves the Institutes RiskStream Collaborative, a global blockchain consortium representing more than 50 risk management and insurance companies.

“This project is an important first step on the path to improving transactional efficiency and creating value for our clients through blockchain,” Guy Carpenter CIO John Crichton said.

“We believe an open platform that is supported by industry stakeholders will maximise adoption, which is so critical to the success of any new technology.”

The project leverages advances in blockchain, distributed ledger technology and industry standards to harmonise the approach to digital reinsurance transactions.

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Analysis

Wobbly lines: the market’s key trouble spots

Capacity constraints continue to bedevil a number of business classes as insurers try to improve their bottom lines and back out of difficult markets.

That’s the assessment of major broker Gallagher, whose latest quarterly market report offers a sobering assessment of the issues still plaguing various areas of the industry and wider economy.

Persistent concerns around flammable insulation are causing premiums to rise in the food production industry, while a skills shortage in the transport industry is getting worse and the construction insurance sector faces capacity challenges due to major losses and insurers withdrawing. None of these issues show signs of abating and the result is a hardening market across multiple lines.

Worryingly, the spread of cyber incidents is starting to affect other insurance policies. This rapidly evolving threat may yet leave companies underinsured or totally exposed.

Industry trouble spots include:

Aviation: Gallagher says the aviation insurance market is facing tough times. Reduced competition and a sustained reduction in revenue are pushing up premiums. Only two major international insurers remain in the market after two withdrew in 2017 after incurring sustained losses. The remaining insurers are writing for profit, not premium income, Gallagher says.

Claims costs are climbing and insurers are trying to reduce their exposure by tightening risk-selection criteria. Airline operators with loss histories are now more heavily scrutinised, and insurers are demanding proof from brokers that their clients are striving to reduce loss exposures.

Transport: The Australian trucking industry faced a severe shortage of skilled drivers in the past year and insurers are hesitant to cover inexperienced drivers. Only certain routes and vehicles are being covered. Vacancies have grown 60% in the past three years, and 87% of transport employers report shortages.

The problem can only get worse, with truck traffic predicted to increase by 50% in the next 11 years and Asian demand for Australian products growing. Gallagher says licensing must be reformed to help younger drivers, and insurers can set up exclusions for younger drivers to give them the experience they need.

Food production: Combustible insulation panels – usually expanded polysterene – on industry properties is a serious problem. Insurers are increasing their scrutiny of producers and demanding strategic plans to mitigate risks.

Producers have been complacent around risk mitigation strategies because cover was previously widely available for reasonable premiums. But insurers are now quitting the market or reducing exposure because of cladding risks. Food producers face higher premiums, or may not get full cover for their business, Gallagher says.

The broker says insurance is becoming increasingly complex, and some clients have needed to double the number of insurers on their property policies.

Cyber: The risk of cyber attacks is increasingly tied to liability risk for top executives, because companies may face reputational and brand damage from data breaches.

This is causing a growing tie-in between cyber insurance and directors’ and officers’ insurance (D&O), and clients are increasingly worried about the connection.

Exposure of network security, procedures or controls will have a serious impact on a company’s ability to maintain shareholder confidence, and business confidence may also be damaged, Gallagher says.

The trading suspension of listed real estate company LandMark White due to a data breach caused shares to drop to a four-year low, leaving it facing regulatory and shareholder risk.

“With data vulnerability an omnipresent threat and accountability shifting to board level, awareness of how cyber and D&O insurance can intersect is critically important.”

Construction: The construction insurance market is hardening quickly as yearly losses force insurers to re-examine risk appetite, Gallagher says.

A number of London insurers have left the market or reduced their exposure, and the remainder are trying to avoid losses. Today’s losses come from projects or policies dating back several years, and insurers are working to return to profitability.

An imbalance between years of increasing volatility from mechanical failures, fires and natural catastrophes and declining prices and broad coverage has finally corrected, Gallagher says.

Insurers are even differentiating between contractors working on the same project with different risk management, and refusing cover for contractors with poor claims records.