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Lawyers weigh up add-on insurance class action

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Sydney-based Bannister Law is investigating a potential class action against seven general insurance companies providing add-on insurance through car dealers.

It follows intervention by the Australian Securities and Investments Commission (ASIC), which found the products can be expensive, poorly designed and sold in a high-pressure environment to customers who do not need them.

Since ASIC became involved insurers have been working to improve the performance of add-on products so they are cheaper and better meet consumer requirements. ASIC has also been consulting with the industry on a deferred sales model that would alleviate pressure tactics.

Bannister Law is at present working on five class actions, while another 10 – including the add-on insurance issue – are “under investigation”.

The firm has asked people to register their interest and provide information about their experiences. Questions include whether the buyer was aware they were purchasing add-on insurance, whether they felt pressured and if they had found the product too complex.

It says if consumers “were convinced at the dealership to take out any add-on insurance product, chances are you obtained little financial benefit”.

Potential targets for the action include Aioi Nissay Dowa, Allianz Australia, Eric Insurance (formerly Avea), Swann Insurance, MTA Insurance, NM Insurance and QBE.

See ANALYSIS.

Hackers, skills shortage pose threat to maritime sector

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Cyber crime and labour shortages are among the top five emerging risks for the Australian maritime industry, according to Gallagher.

“While the extent of the cyber threat is well appreciated by those in the international maritime industry, it receives comparatively little attention in Australia,” the broker says in a report.

Shipping company Svitzer Australia revealed this year it was the victim of a data breach, while in 2012 criminals hacked a system used by importers to track cargo movement through ports.

“We recommend all companies in the marine industry, large or small, seek standalone cyber insurance to ensure they’re sufficiently covered,” Gallagher says.

“In this day and age, cyber-crime extensions to existing cover just won’t cut it.”

Australia’s maritime industry also faces a looming skills shortage. About 65% of industry professionals are aged at least 45, and 98.9% are male.

“Attracting more women to the industry will help alleviate the impact of skills shortages, but very little is done to encourage more women to consider seafaring, and other related jobs, as a viable career,” the report says.

Other emerging risks include cargo accumulation due to the growing size of ships and storage facilities.

Climate change will cause more frequent extreme weather events, while melting ice caps will create new shipping routes and may make others inaccessible. Regulations regarding emissions and ship design will add costs.

Geopolitical tensions, particularly in waters around southeast Asia, could disrupt global trade.

Piracy and an escalation of disputes in the South China Sea could directly affect Australian marine, cargo and logistics companies, Gallagher says.

Manning urges industry to fight adjuster visa cut

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The industry has been alerted to a Federal Government move to remove loss adjusting from its short-term list of occupations for temporary skilled work visas.

LMI Group MD Allan Manning has criticised the draft proposal, saying the low number of visas issued may have prompted a decision that they are not required.

But nothing could be further from the truth, Professor Manning says, and he has urged the industry to raise its concerns with the Government.

The Australasian Institute of Chartered Loss Adjusters’ website lists 235 practicing loss adjusters. Professor Manning says 47 operate under the 457 temporary visa.

In a blog post, he says the number of brokers complaining to him about claims service is at an all-time high, and this will probably get worse with the visa change.

To compound matters, many loss adjusters are retiring, Professor Manning says. With the impact of offshoring, the talent pool for loss adjusters is shrinking, and loss adjuster groups are straining under the burden of investment in training amid pressure on fees.

The deadline for feedback on the proposal is Wednesday. To make a submission, click here.

CTP cover ‘widely misunderstood’

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Most Australian motorists do not understand what compulsory third party (CTP) insurance means, and many are driving without appropriate cover, according to a survey of 1500 people across NSW, Victoria and Queensland.

It finds that 32.4% of respondents are aware that CTP or greenslip insurance covers only injury compensation to other road users.

And 50.4% believe CTP covers injury to other people and vehicles, while 17.2% believe it covers damage to vehicles only.

The survey, conducted by Smith’s Lawyers, finds that drivers aged 18-24 are the least informed, with just one in five correctly understanding CTP.

“We receive hundreds of enquiries every year from drivers holding CTP only who are not at fault in an accident but have been surprised to find they can’t claim for property damage,” the law firm’s Principal Greg Smith said.

“The problem is worse when both drivers lack property damage insurance, because there is no insurer to step in and cover the costs.

“[People] ask us, ‘What if someone crashes into my car and I need to make an insurance claim?’ Or, ‘What do I do if I hit another car – is [CTP] enough to pay for the damage to their car as well as mine?’

“Our typical answer is this: your [CTP]… insures you against liability for any death or injury to other road users caused by your car, no matter who is driving, but does not cover damage to property, including the other person’s car.”

NZ insurers to look again at cladding risk

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New Zealand insurers will reassess risks after Auckland, Wellington and Christchurch authorities released updates from flammable cladding audits.

Auckland Council says it has almost completed its investigation has found 116 buildings in the region with aluminium composite panels (ACP). In some cases the cladding has a combustible core, while in others it is fire resistant.

The council says where ACP is present, safety is often maintained by features such as sprinkler systems.

“We haven’t identified any building that would be considered dangerous due to ACP cladding,” GM Building Consents Ian McCormick said.

“We are confident there are no Grenfell-type buildings in Auckland.”

Wellington City Council says 113 buildings with ACP have been identified, but only 18 required a fire engineer’s assessment, and none were found to be unsafe.

Christchurch City Council found 29 buildings with flammable cladding, but only seven were potentially non-compliant.

Insurance Council of New Zealand CEO Tim Grafton told insuranceNEWS.com.au he welcomes the fact Auckland has identified all affected buildings and “put the list out into the public domain. It is a good first step.

“Insurers now have the opportunity to see whether they are on risk, and carry out assessments.

“I can’t say what each insurer will do, but the reason councils are investigating this [cladding] after Grenfell [last year’s deadly tower fire in London] is because it does pose a risk. No doubt each insurer will take a prudent view.”

Housing NZ to examine meth policy failures

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Housing New Zealand will report on its methamphetamine contamination practices after a flawed approach led to state housing evictions and $NZ100 million ($92.7 million) of spending on mostly unnecessary testing and remediation.

The six-week review will include an examination of the wider environment, including guidance available from the Ministry of Health, the Residential Tenancies Act, test practices and employer obligations to staff and contractors.

Housing and Urban Development Minister Phil Twyford says the review will also consider what redress or further steps may be appropriate for any unfairness to the agency’s tenants.

The Prime Minister’s Chief Science Advisor Peter Gluckman recently found residues from historic meth smoking in homes are no risk to health, rejecting fears that have driven an explosion in testing and remediation and a jump in related insurance claims.

Mr Twyford has flagged a public consultation on meth regulations later this year.

Forum considers lessons from Canterbury quakes

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A two-day symposium on lessons learned from the Canterbury earthquakes will be held later this year.

Buildings collapsed and 185 people were killed when Christchurch was hit by a devastating quake on February 22, 2011.

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

“The symposium will be an event of national importance, sharing lessons from the Canterbury earthquakes so New Zealand as a whole can be better prepared… for any similar natural disasters,” Greater Christchurch Regeneration Minister Megan Woods said.

“The Canterbury earthquakes were unprecedented. They provide us with many valuable lessons, which we continue to review and learn from.”

About 250 participants from the public, private, voluntary, community and academic sectors will be invited to the symposium.

Dr Woods says New Zealand’s geography exposes it to extreme natural hazard risks.

“Kiwis need confidence New Zealand’s disaster and recovery systems are robust,” she said.

“We must keep learning from what’s happened in the past, to ensure we do our best to get it right moving forward.”

She says the symposium will provide “the platform into a much bigger international event to be held on the 10th anniversary of the earthquakes in 2021”.

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Corporate

ING, Axa form digital partnership

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Axa and Dutch bank ING will offer property and casualty cover and other insurance-related digital products as part of a bancassurance partnership announced last week.

Australia and five European countries including France, Germany and Italy will be the launch markets.

Axa will provide its expertise in modular insurance products and services, and ING its digital banking know-how.

“The partnership with ING represents a strong meeting of minds and a shared ambition of becoming a partner in our customer’s life journey,” Axa CEO Thomas Buberl said.

“We will… accelerate our growth in Europe and build innovative insurance solutions and services that have the potential of creating more frequent interactions with the customers.”

PSC acquires stake in UK investment group

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PSC Insurance Group has paid £18.5 million ($33 million) for a 19.6-19.9% stake in London-listed private equity investor BP Marsh & Partners.

“BP Marsh is a world-class investor in insurance intermediary assets and businesses, and has a very strong management team,” PSC MD Paul Dwyer said.

“We expect to be a long-term investor, and expect over time for there to be numerous collaboration opportunities.

“The investment in BP Marsh is likely to broaden the global horizons of PSC.”

BP Marsh’s global investment portfolio includes stakes in the parent of Sydney-based MB Insurance Group, Singapore-based Asia Reinsurance Brokers and US specialty lines distributor XPT.

Gallagher expands benefits business with key acquisition

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Gallagher has acquired employee benefit and retirement consultant Finergy Solutions and its technology-based sister business Avantek.

The acquired companies are based in Brisbane and Sydney, and Gallagher expects they will grow its benefits business by about 50%.

GM Gallagher Benefit Services Australia Andrew Howse told insuranceNEWS.com.au the purchase is part of a strategy to diversify beyond traditional insurance broking.

“It diversifies our revenue streams and also helps put a fence around clients – it’s about client growth and retention,” he said.

“There will be more acquisitions like this in the not-too-distant future, providing there is a cultural fit. These guys saw the opportunity to be part of a global benefits business with access to a broader range of expertise.”

Finergy was established in 2010 to provide specialist superannuation education and advice services to employers and individuals. It has 10 staff, 50 corporate clients and 26,000 members.

Avantek develops customised financial and benefit reports for large groups of individuals, including its Super Score technology, which helps employees take a more active role in managing their super.

Finergy GM Corporate Solutions Jamie Levitt and GM Technology and Innovation Tim Woodhouse will continue operating from their current locations, under the direction of Leslie Lemenager, the head of Gallagher’s international employee benefits consulting division.

Gallagher Chairman, President and CEO Patrick Gallagher says in a statement that the two companies “will move Gallagher more prominently into the retirement services space in Australia, and their customised employee communication capabilities are a terrific complement to our offerings”.

AM Best confirms QBE credit rating

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QBE Insurance Group’s credit ratings have been confirmed at bbb+ by AM Best.

Its balance sheet and operating performance are both strong, with a favourable business profile and appropriate risk management, the ratings agency says.

Capitalisation remains strong despite recent catastrophe losses, poor experience on emerging market portfolios and a one-off writedown of a deferred tax asset.

A reduction in claims reserves due to catastrophe writedowns and the sale of the Latin American business should further improve capitalisation, AM Best says.

Tower shifts to EIS digital platform

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New Zealand’s third-largest insurer, Tower, has chosen digital insurance platform provider EIS Group to facilitate its online offering.

The EIS platform will unify Tower’s core, data and digital operations, which are currently contained within four systems. The cloud-based platform will be used for creating new products, quoting, self-service, billing, claims and customer management.

NTI adds tracking app to breakdown service

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National Transport Insurance (NTI) has introduced a tracking app for its Truck Assist service, enabling drivers to monitor their technician’s location en route to a breakdown.

NTI CEO Tony Clark says the technology will be useful for truck drivers operating in regional areas or outside normal work hours.

A text notification is also sent to drivers, and the app includes a site safety checklist to be completed by the technician before undertaking repairs.

IAG NZ wins tick of approval for inclusion

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IAG New Zealand is the country’s first general insurer to be certified with a “Rainbow Tick”, denoting its support for diversity and inclusion.

The Rainbow Tick program recognises safe, welcoming and inclusive places for people of diverse sexual orientation and gender identity.

CEO Craig Olsen says the tick is a “fantastic endorsement” and IAG’s progress around diversity will continue.

“We will be working in our offices and stores across New Zealand in the coming months to ensure everyone at IAG understands what we are working to achieve in this area,” he said.

IAG entered the Auckland Pride Parade for the first time this year under the banner Together We’re Safer.

TravelCard opens Moscow base for World Cup fans

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New travel insurer TravelCard has opened a front office in Moscow to serve as an immediate contact point for customers during the Word Cup.

As previously reported by insuranceNEWS.com.au, the broker-focused insurer, which is underwritten by Hollard, gives customers an insurance payment card that enables it to make “real-time” payments to travellers on their trips.

TravelCard says the soccer tournament carries “a unique set of risks” including terrorism, a high crime rate, car accidents, pickpocketing, unlicensed taxis and cyber exposure.

CEO Michael Tauber says the Russian World Cup’s risks go “beyond the threats usually associated with such events. Travellers must make sure they have sufficient travel insurance in place, particularly to cover health and medical costs.”

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Regulatory & Government

Suncorp, Youi fall under royal commission spotlight

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Natural disaster insurance case studies involving Suncorp and Youi will be examined at the Hayne royal commission’s next round of hearings.

The commission on financial services misconduct will consider issues arising from Cyclone Debbie last year, a Broken Hill hailstorm in November 2016, bushfires at Wye River in December 2015 and floods in the Hunter Valley in April 2015.

The fourth round of hearings focuses on the experiences of people in regional and remote communities, and will be held outside Melbourne for the first time.

The commission will also examine farming finance and interactions between Aboriginal and Torres Strait Islander people and financial services groups. Hearings will be at Brisbane Magistrates Court next week and at the Supreme Court in Darwin from July 2-6.

Directors back litigation funder licensing

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The Australian Institute of Company Directors (AICD) has backed a proposal to license litigation funders under an overhaul of the class action framework.

“Australia’s class action regime should operate so disputes are resolved justly, efficiently and quickly,” AICD CEO Angus Armour said.

“Currently, a great deal of time and money is spent on opportunistic cases, where the interests of class-holders may not be the dominant driver.”

The Australian Law Reform Commission has released a discussion paper on class actions and third-party litigation funders and will report to the Government by December.

The AICD says it is cautious about a proposal to ease a longstanding ban on lawyers accepting contingency fees, which would allow them to take a share of money awarded to clients.

“The prohibition exists for good reason,” Mr Armour said. “The potential for a conflict of interest where a law firm both commercially funds and represents a client is great.”

See ANALYSIS.

AFCA appoints Chief Ombudsman

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The Australian Financial Complaints Authority (AFCA) has announced the appointment of David Locke as Chief Ombudsman and CEO.

The new one-stop dispute resolution service replaces the Financial Ombudsman Service (FOS), the Credit and Investments Ombudsman and the Superannuation Complaints Tribunal. It will start accepting new disputes from November 1.

Mr Locke is currently Assistant Commissioner Charity Services at the Australian Charities and Not-for-Profits Commission.

He was formerly executive director of charity services at the Charity Commission for England and Wales, and has worked as an adviser to several international governments. He is a qualified lawyer in the UK, where he started his career in community legal centres.

“David brings a very strong track record as an experienced senior leader involved in all aspects of establishing and operating complex legal and regulatory service-based organisations in Australia and UK,” AFCA Chairman Helen Coonan said.

“His appointment comes at a critical time in the formation of AFCA as the new single complaints body for the financial sector.”

Ms Coonan has thanked outgoing Chief Ombudsman Shane Tregillis, who served almost seven years in the role with FOS.

Mr Locke starts his new role next Monday.

NSW to fund automated vehicle tests

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The NSW budget, to be announced tomorrow by State Treasurer Dominic Perrottet, has set aside $10 million to expand driverless vehicle trials, with the transport department to distribute the funds over four years through its Smart Innovation Centre.

Transport and Infrastructure Minister Andrew Constance says the trials will help the government, universities and the private sector work together to see how the technology will shape cities and regions.

The first trial of driverless “smart shuttles” is taking place at Olympic Park in Sydney.

ICA calls for clarity on information security standard

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The Insurance Council of Australia (ICA) has outlined ways to improve CPS 234, a new prudential standard aimed at strengthening cyber resilience.

Its proposals revolve around the board’s role, notification requirements to the Australian Prudential Regulation Authority (APRA), assessment of third-party information security capability and the implementation period.

“The decision to establish a prudential standard… will help strengthen our members’ resilience to cyber risks across the extended business environment,” the ICA submission to APRA says.

“However, ICA considers the clarity of the requirements in CPS 234 could be improved and greater recognition of the complexity of implementation [is needed].

“In particular, there should be greater consistency between APRA’s requirements and other regimes around data and privacy breaches, adequate time for implementation and a satisfactory intermeshing between CPS 234 and other prudential standards.”

APRA expects to release a final cross-industry prudential standard in the fourth quarter, before implementing it in July next year.

WA passes workers’ comp payout reform

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The WA Government has passed legislation to increase compensation for family members of people killed at work.

The lump sum payable to dependants will increase from $308,339 to $570,767, which is more than twice the amount paid for a non-fatal injury. A child’s allowance will increase from $58.90 to $135 per week.

De-facto partners will be granted the same compensation as spouses under the reforms, which are due to take effect next month.

icare service overhaul ‘lifts customer satisfaction’

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Insurance & Care NSW (icare) says customer satisfaction levels have jumped since it overhauled workers’ compensation systems that failed to meet expectations.

The insurer says its net promoter score, which measures customer experience and predicts business growth, has increased 26 points since the changes 18 months ago.

icare worked with consultant Perceptive to reshape its relationships, operations and processes, and provide a more tailored customer experience. The new approach has support from employers, workers and healthcare providers.

“The insights work we’ve done with Perceptive has helped successfully develop a more inclusive, more adaptable, more reciprocal workers’ compensation insurance program,” Interim CEO John Nagle said.

Workers’ compensation in NSW was previously dominated by systems that were “disappointing for users at best and adversarial at worst”, icare says.

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Life Insurance

APRA weighs in on worker rehab reforms

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The prudential regulator has told policymakers to exercise “care” in any legislative changes that give life insurers a role in worker rehabilitation.

Reform must not come at the expense of consumers, the Australian Prudential Regulation Authority (APRA) warns.

“The interaction between the relevant pieces of legislation that impact this issue are… complex,” it says in a submission to a parliamentary inquiry.

“If the Government was to consider changes to the legislative framework administered by various agencies, APRA believes care would need to be taken to ensure there were no unintended consequences and that the desired policy outcomes continued to be met across life insurance, private health insurance and the health system more generally.”

Anecdotal evidence suggests current regulatory settings may have been detrimental to policyholders in certain situations, APRA says.

“There is growing evidence that early intervention should, in principle, be expected to improve outcomes for policyholders, because the likelihood of a person returning to work decline significantly the longer their absence… while their medical expenses increase.”

The National Insurance Brokers Association says the full range of potential funding mechanisms for worker rehabilitation and support should be considered in any review.

Insurer Allianz’s submission supports legislative change to let life insurers fund rehabilitation programs for injured claimants.

“Such legislation would promote optimal recovery from injury and illness and mitigate the effects of long-term disablement and worklessness,” Allianz says.

Digital platform speeds MLC underwriting process

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MLC Life has reported an increase in policy issue rates since the launch of a digital underwriting platform less than two months ago.

Straight-through acceptance rates – when applications are approved without further manual underwriting – have increased 300% since April, it says.

The number of follow-up calls seeking clarification on applications fell 20%.

TAL makes pricing, client appointments

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TAL has appointed Joseph Daley as GM Pricing and Nick White as Head of Clients and Strategic Management within its group insurance business.

Dr Daley is responsible for developing group pricing models with superannuation funds. He was previously GM of value, profitability and pricing in TAL’s individual life business.

Mr White was previously technical sales manager at MetLife.

Honan Life builds on accounting, planning links

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Honan Life Insurance Group says it is developing strategic relationships with accountancy and planning practices following its launch earlier this year.

The group was established as a joint venture between Honan Insurance Group and MBS Insurance, owned by Drew Burden.

“Accountants and wealth management practices recognise that their clients have insurance needs, and often they are the most likely to identify the need and compel the client into action,” Mr Burden told insuranceNEWS.com.au.

“We have created the framework for our strategic relationships to operate in a manner that we almost become another internal division of the firm.”

The Honan group also has Asia-Pacific operations, but Mr Burden says the joint venture is focused on Australia.

“We believe the next 5-10 years present immense opportunity for intermediaries and we seek to maintain consistent growth over this period,” he said.

Asteron appoints head of distribution

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Asteron Life has appointed Graham Hill as EM Life Distribution.

Mr Hill is the former head of adviser distribution at Sovereign, and he has also worked as head of group sales and service at New Zealand bank ASB.

Asteron says he will be responsible for adviser engagement and delivering a smooth customer experience. Mr Hill replaces Mark Frecklington, who died earlier this year.

Swiss Re, ALUCA open return-to-work award

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Applications are open for this year’s Swiss Re and Australasian Life Underwriting and Claims Association (ALUCA) return-to-work award.

The program recognises life insurance claims management and rehabilitation initiatives this financial year that led to good customer outcomes.

The winner will receive a conference package for either the International Forum on Disability Management in Canada or the ALUCA conference in Hobart.

Candidates must submit a 2500-word paper by July 27. The winner will be announced in August. For more information, click here.

TAL’s AI underwriting tool wins global prize

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TAL has won a global award for its WunderWriter tool, which uses artificial intelligence (AI) and machine learning to audit underwriting cases.

The life insurer took silver in the AI category at the Efma-Accenture Innovation in Insurance Awards in Paris last week.

WunderWriter improves quality assurance in the underwriting process.

“This is a step-change for the business and a great demonstration of the potential of AI to support our business and our employees,” TAL GM Innovation Dan Taylor said.

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The Professional

Mansfield Awards: tickets available for top claims event

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Tickets can now be purchased for the second annual Mansfield Awards, which recognise claims excellence.

Following an enthusiastic reception from the industry at last year’s inaugural event, the claims-focused awards will again be held at Sydney’s Establishment Ballroom, on Thursday July 5 from 6pm.

Awards will be presented for claims excellence in personal lines, SME property and casualty, corporate property and casualty, and specialty. 

There is also a Gold Mansfield Award for the general insurance company that scores highest overall.

A number of executives and claims professionals have already secured their tickets for the upcoming night of networking and celebration.

The awards are organised by Insurance News and LMI Group, and are made possible by the support of sponsors Insurance & Care NSW (icare) and Steadfast.

See The Mansfield Awards website for more details and to purchase tickets.

Two finalists vie for NIBA Queensland award

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The National Insurance Brokers Association (NIBA) has named Steven Hill from Capital Innovation Australia and Glen Ryan from Austcover as finalists for the Queensland broker of the year award.

The winner will be announced at a gala lunch at the Royal International Convention Centre in Brisbane on July 18.

Regional winners compete for the Stephen Ball Memorial Award for national broker of the year, which will be announced at the NIBA Convention in Hobart in September.

The award is sponsored by QBE.

CTP chief leaves QBE

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QBE has confirmed the departure of National Manager Compulsory Third Party and Motor Trades Matt Lawler.

Mr Lawler was with the insurer from 2007, when he joined as state manager for NSW, ACT and Victoria. Before that he was with Allianz Australia.

“Matt has left us and has our best wishes for his future endeavours,” a QBE spokesman said.

The spokesman also confirmed the departure of Singapore-based Head of Wholesale, Asia, Denis O’Sullivan.

Ex- Suncorp adviser joins PwC

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Former Suncorp senior adviser Mark Reinke has joined PwC as a board member for the professional services group’s CMO Advisory practice.

Mr Reinke left Suncorp last month after 14 years with the insurer, most recently driving its Marketplace strategy. He will start his new role next month.

PwC Chief Creative Officer Russel Howcroft says Mr Reinke will offer expertise on the changing role of technology in marketing and managing multiple brands in a single portfolio.

The CMO Advisory practice focuses on marketing, brand and media strategy, operations structure, and investment analysis and optimisation.

UAC GM joins Acord regional committee

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Global insurance standard-setting body Acord has appointed Underwriting Agencies Council (UAC) GM William Legge to its Asia-Pacific governance committee.

The committee directs the region’s general insurance program, which provides insurance process, messaging and data standards. Its standards cover a range of products and support the entire policy and claims life cycle.

UAC and Acord entered a reciprocal membership agreement in February.

AA clings to Canstar customer satisfaction crown

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New Zealand’s AA Insurance has won the Canstar Blue award for insurance customer satisfaction, for the sixth consecutive year.

It achieved maximum scores in six of seven categories.

ANZ was runner-up, receiving maximum scores in four categories. It was the only insurer to receive the maximum score on “value for money”.

IAG-owned State Insurance and Tower were third and fourth respectively.

Canstar surveys policyholders across New Zealand every year for the award.

Registrations open for asbestos conference

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The Asbestos Safety and Eradication Agency will hold its annual conference from November 18-20 in Sydney.

New strategies and goals will be discussed, with more than 300 industry professionals expected to attend.

For more information and to register, click here.

Finity to host risk forum

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Registrations are open for a Finity-organised risk forum in Canberra.

The July 5 breakfast event will discuss applying industry solutions to non-insurance cases, risk transfer and insurance solutions for sovereign risks, climate risk identification for government and streamlining regulation with artificial intelligence.

For more information and to register, click here.

Gallagher aids community leadership program

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Gallagher has teamed with the non-profit Victorian Regional Community Leadership Program (VRCLP) to provide risk management advice and insurance to the organisation’s members and alumni.

More than 3500 people have attended VRCLP programs, which aim to strengthen the leadership credentials of individuals in regional areas.

“VRCLP is committed to ensuring we partner with organisations that offer knowledge, expertise and leadership advice to our members and their communities,” CEO Katrina Baddeley said.

“Gallagher’s footprint in Victoria means our members can access that knowledge base from those who truly understand regional risks.”

A range of free and discounted products will be available through Gallagher’s Access1st Professional Benefits program.

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International

Lloyd’s Lab scours world for tech talent

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Lloyd’s has begun a global headhunt for tech specialists and entrepreneurs to help it develop innovative insurance solutions.

The market’s Lloyd’s Lab also aims to recruit early and growth-stage companies in the insurtech space.

“Lloyd’s Lab will contribute towards a more sustainable and competitive insurance market by providing a dynamic environment where start-ups can come in with different ways of thinking and fresh ideas,” CEO Inga Beale said.

“We want to challenge how we do things and we are looking for entrepreneurs who can help Lloyd’s redefine how we use technology to better serve our customers in this hyper-connected world.”

Lloyd’s Lab will initially focus on four themes: enhancing customer experience; building a relationship-driven culture for the digital age; powering data-driven underwriting; and creating smart insurance products.

Successful applicants will work with Lloyd’s market experts to shape innovations. The closing date for applications is July 22.

For more information, click here.

US rates climb in first quarter

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US commercial insurance prices increased modestly in the first quarter, global broker Willis Towers Watson says.

Aggregate price growth exceeded 1% for the first time in nearly three years.

Commercial motor, property and excess/umbrella liability recorded significant gains in the quarter.

Workers’ compensation was the only line to take a downward turn as claims frequency dropped and workplace safety continued to improve.

Florida renewals fall short of expectation

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JLT Re says Florida property-catastrophe reinsurance renewals posted low single-digit rate increases at the start of the month, as plentiful capacity muted expected gains.

“Overall, the renewal was highly competitive, reflecting abundant capacity and only moderate increases in demand despite the market suffering its most expensive catastrophe loss year on record [last year],” North America EVP Brian O’Neill said.

JLT’s risk-adjusted rate-on-line index gained 1.2%, the first increase in seven years. This compared with a drop of 5.1% last year, but was short of early market expectations.

Pricing for the Florida business remains 40% down on 2012 levels and only 13% above the previous cyclical low of 1999/00.

Renewal experiences varied, with cedents that demonstrated strong post-event capabilities benefitting from the market’s additional capacity. JLT estimates dedicated sector capital will be at record levels by the end of this month, recovering from a modest dip last year.

Capital has grown more than $US10 billion ($13.2 billion) in the first half, following about $US7 billion ($9.2 billion) of new capital raised in the final four months of last year.

“This affirms the now established trend of third-party capital rapidly entering the sector post-loss to fill the gap more or less immediately,” Global Head of Analytics David Flandro said.

The negligible gains this month contrast with previous experience, when large-loss years were often followed by double-digit rate increases.z

AGCS urges businesses to wise up on resource depletion

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Businesses must do more to understand and address “natural capital” risks, Allianz Global Corporate & Specialty (AGCS) has warned.

Degradation of natural resources such as air, soil, water, biodiversity and living organisms has long-term consequences that extend beyond direct effects on the environment, it says.

Businesses can expect increased interruption and liability risks.

“Natural capital risks are today’s reality,” an AGCS report says. “Companies need to improve their understanding of natural capital risk and use existing insurance and risk management systems to adapt to and mitigate the threats.

“Companies that are willing to invest in natural capital risk management will be best-equipped to keep damages under control and seize opportunities in an increasingly resource-constrained world.”

AGCS says the top 100 environmental impacts cost the global economy about $US4.7 trillion ($6.2 trillion) a year in social costs, lost ecosystem services and pollution.

Mining, transport, oil and gas, and food and beverage rank highest in terms of risk exposure to natural capital depletion, the group says.

“With threats to the environment coming from many different areas, there will be no such thing as business as usual in the future,” Environmental, Social and Governance Business Services Manager Chris Bonnett said.

“Companies need to understand, quantify and even monetise their dependence on natural capital and the impacts their operations have on it, to ensure their organisations are resilient and future-proof.”

Car makers told not to oversell ‘self-driving’ features

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The Association of British Insurers and car safety group Thatcham Research have warned car makers to be more careful when describing autonomous technology.

Misleading language has caused some motorists to mistakenly believe their cars can drive independently, and several have crashed as a result.

They say misleading names have been given to assisted-driving technologies designed to work only in specific situations, such as on highways.

Thatcham Head of Research Matthew Avery says names such as “autopilot” and “ProPilot” can suggest a level of autonomy beyond the car’s capability, and clarity is needed to help drivers understand when and how technologies are designed to work.

Drivers remain criminally liable and cars’ capabilities must not be oversold, he says.

Thatcham has released a list of 10 criteria each assisted-driving car must meet, and announced a new testing regime for driver assistance systems.

Zurich calls for mitigation focus in disaster strategy

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Disaster management plans must focus more on preventive measures, as the risk from extreme weather rises, Zurich says.

Every dollar spent on resilience saves $5 on future losses, according to the insurer.

“That means it’s five times more expensive to be unprepared,” Group Chief Risk Officer Alison Martin said.

“Building resilience is money well spent and, more importantly, it saves lives.”

A Zurich study found disaster risk management is playing catch-up as natural hazard exposure grows, while infrastructure protections already in place can lead to complacency.

Mitigation funding is usually directed at physical structures, rather than more cost-effective risk management such as environmental planning. Few incentives exist to encourage “building back better” – a focus on resilience in the rebuilding process.

“The phrase ‘building back better’ has become a staple of the disaster risk management community,” Zurich said. “Common sense dictates that rebuilding to the same level of risk after a disaster would be futile and a wasted opportunity to strengthen resilience.”

Engineering cover struggles as construction falls flat

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Swiss Re says engineering insurance premium growth has continued to stall due to depressed construction spending and poor underwriting performance.

Global premium has fallen flat in recent years at $US21 billion ($27.76 billion), or about 3% of all commercial insurance premium.

Construction spending as a percentage of GDP is down in many advanced economies compared with its pre-financial-crisis peak, with emerging markets slowly emerging from recession.

Underwriting performance has deteriorated due to reduced quality control. Loss ratios and claims have risen in some construction sectors, which has depressed insurance pricing.

Replacement of ageing infrastructure and the move to renewable energy projects should sustain engineering insurance demand, Swiss Re says.

The short-term cyclical boost in economic activity should stimulate construction, but this may not lift premium growth.

Increasing use of digital technology in construction may spur improvements in monitoring, mitigation and risk management, but could also create cyber risks.

This may bring more severe claims, even if frequency falls, Swiss Re says.

ABI appoints first female chief

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Amanda Blanc has been appointed Chairman of the Association of British Insurers – the first woman to take the role.

Ms Blanc is the incoming CEO of Zurich Europe, Middle East and Africa, and a former group CEO for Axa in the UK and Ireland. She replaces Aviva UK CEO Andy Briggs, who will remain on the association’s board as a senior independent director.

Royal London CEO Phil Loney becomes Deputy Chairman, succeeding Paul Geddes.

Ms Blanc says she hopes her appointment sends a signal to young women that there are no “closed shops” in the industry.

Mr Briggs says the association has taken a leading role promoting gender diversity in the past two years.

RIMS explores risk management’s post-GFC strategic rise

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The Risk and Insurance Management Society has published a report chronicling the evolution of enterprise risk practices since the 2008 global financial crisis.

Executives from various industries provided insights on the topic, and examined how the landscape may look in the next decade.

“The evidence shows risk management has evolved from a promising but somewhat perfunctory exercise into a strategic management competency,” VP Strategic Initiatives Carol Fox said.

“Even so, given increasingly uncertain times, risk management professionals would be unwise to declare victory or become complacent.

“As a core organisational competency, risk management has the opportunity to play a key role in successfully dealing with a broad spectrum of risks that can impact more than just the organisation, but economies, societies, environments and industries as well.”

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Class actions: no reprieve for D&O insurers

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The threat of five class actions against AMP and recent reports from Aon and Marsh have shown that challenges in the directors’ and officers’ (D&O) market will not be dealt with soon.

Take the example of AMP. Its shares dived after a dire week at the Hayne royal commission, where it was revealed the company unfairly charged service fees and executives had lied and provided misleading information to regulators for years.

The financial group’s chairman, CEO and general counsel have since departed, three other board members have announced their exits and the company’s share price has continued to languish.

The revelations and their fallout were clearly such fertile ground for class actions that the record five suits come as almost no surprise.

Slater & Gordon, in calling for expressions of interest, said litigation funder Therium had slashed its commission to just 10% of net recoveries, throwing down the gauntlet as the various law firms jostled to represent shareholder claimants.

The royal commission has some way to run before it provides a final report by February, in an environment of increased financial services scrutiny.

Investigations and regulatory action regarding add-on policies in general insurance have also prompted a potential class action, with Bannister Law calling for expressions of interest.

A recent Aon Insights paper says there are about 20 open class actions, excluding multiple actions, and class action settlements by listed companies totalled $1.74 billion last year. Marsh puts the number of open actions at 16.

The latest class action flurry comes as the D&O market grapples with increased claims activity that has emerged in recent years, particularly when it comes to Side-C cover typically purchased by publicly listed companies.

Marsh warns the number of D&O claims is now exceeding the premium pool by a significant margin, and some insurers are leaving the market.

Premiums have surged by 200% in the past 12-18 months as class action payouts have soared, according to a review by law firm King & Wood Mallesons. Market participants and analysts suggest further rises are needed.

“Upward premium pressure is expected to continue unimpeded until tempered by competitive forces,” Aon says.

Class actions became part of Australia’s litigation landscape more than 26 years ago, but took some time to start making an impact. They debuted in the federal jurisdiction before states followed. Six class actions were filed in 1992, and the first securities class actions emerged in 1999.

They were given fresh momentum when a High Court judgement in 2006 cleared the way for litigation funding of cases, a review by General Re says.

More than 15 litigation funders are now involved in Australia, and almost half the class actions in recent times are related to securities, financial products and investments.

Class actions are designed to improve access to justice for individuals who may otherwise lack the resources to pursue cases. They have also been acknowledged for putting the heat on companies to improve governance.

Criticisms include that litigation funding commissions are too large, multiple actions take up company time and resources, the growth of actions is an unintended consequence of Australian sharemarket continuous disclosure obligations, and the impact can be detrimental to shareholders still on the register.

Gen Re says the Australian regime has been labelled one of the most liberal in the world. The onus to establish that threshold requirements are met is placed on the defendant, rather than those initiating the action. Requirements include that a minimum of seven people have the same claim.

The Australian Law Reform Commission has released a discussion paper querying whether the Commonwealth should regulate class action proceedings and third-party litigation funders. It will report to the Government by December.

The Australian Institute of Company Directors says licensing and prudential supervision of litigation funders would improve the class action environment, with current “light touch regulation” offering inadequate protection.

“Fixing this is in the interests of all stakeholders, including shareholders, companies and customers. The ALRC’s paper is an important step towards sensible reform,” CEO Angus Armour says.

The Victorian Law Reform Commission has also been examining issues related to the actions, conflicts of interest and other matters.

Recommendations from the reform commissions may lead to some changes, but Gen Re says all stakeholders consider class actions a valuable tool in the legal environment, with no group seeing any reason to abandon a regime that has served the community well since its inception.

“Insurers and reinsurers that write policies that would respond to class actions should price for the fact class actions are here to stay and will continue to be a feature of the Australian litigation landscape,” the reinsurer says.

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