19 July 2021
Business interruption court decisions in the UK and South Africa related to the COVID-19 pandemic point to uphill battles for Australian insurers in their second test case, legal firm HFW has highlighted.
The law firm says in comparable jurisdictions the “overwhelming trend” has been that courts have found in favour of policyholders when looking at the types of issues to be considered in the Insurance Council of Australia case, due to start at the end of next month.
In the UK, the Financial Conduct Authority is currently reporting monthly figures on insurer payments for business interruption claims, following a Supreme Court appeal decision largely favouring policyholders.
“The policies that are being considered in this second test case don’t necessarily use the same wording, as the UK and there are also very Australian specific factual circumstances,” HFW Special Counsel Sophy Woodward told insuranceNEWS.com.au.
“My punt though, is that in relation to the broader legal issues, like the business trends clauses and the issue of causation, I think it is more likely than not that Australia will follow the UK.”
The broad range of policy wordings being considered include issues around the proximity of COVID-19 to a business premises and whether that is the actual cause of shut-downs and losses.
The UK decision found examples of a disease at or near a premises could trigger cover, with all the outbreaks of the disease taken together causing the government to close down premises.
“Some of the issues around evidence and proof will be very different in Australia compared to in the UK,” Ms Woodward says “For example, we have had a lot less cases here, so being able to point to a recorded case at or near your premises is going to be harder.”
Australia’s state and federal divisions also differ from the UK and add another layer of complexity locally.
“Where the state and federal divide comes in is really when you consider the application of exclusion clauses that refer to the Biosecurity Act, which sets up a federal scheme for managing certain diseases, and the fact that the restrictions have mostly been imposed by state governments,” Ms Woodward says. “Although the significance of this depends on how the exclusion clauses are worded.”
The second test case could also have implications for a broad range of disasters, as it tests legal principles for adjusting business interruption claim payments for surrounding circumstances.
The UK judgment, looking at “trends” issues, rejected a landmark Orient Express Hotels decision that found a hotel damaged by a hurricane wouldn’t have experienced major losses under a business interruption claim as its business would have been impacted anyway from the surrounding devastation.
HFW expects the UK Supreme Court view rejecting the Orient Hotels decision is likely to also prevail in Australia, with the decision on that point having “significant ramifications”.
Australia’s leaders need to adopt stringent carbon dioxide emission reduction targets as part of its long-term adaptation to longer and more severe bushfire seasons, Zurich says.
The recommendation was made in the insurer’s latest Post-Event Review Capability (PERC) - its first in Australia - which examined Tasmania’s devastating bushfires of summer 2019 that burnt 210,000 hectares and destroyed globally precious, protected ecosystems of the Tasmanian Wilderness World Heritage Area.
It says the island state has entered a “new era of bushfire risk,” an area not usually associated with this type of event, and this requires action at the national level to mitigate climate change through emissions reduction.
“Traditionally cool climate areas of Australia are beginning to experience bushfires of a treacherous nature for the first time,” Zurich’s local CEO General Insurance and Head of Commercial Insurance Tim Plant said.
In January 2019, more than two thousand dry lightning strikes hit the state, igniting 70 fires that formed into four massive fire complexes. More than 95,000 protected heritage hectares burned.
"While Tasmania’s contribution to global emissions is small, it has a responsibility to contribute to the global effort,” Zurich said. “The Tasmanian Government can also play a significant role in contributing to Australia’s commitment to emissions reductions, which could have a more significant impact on the global stage.”
The PERC proposes increasing the size of the Tasmanian Wilderness World Heritage Area to bring in “precious but less protected areas” on its borders.
“Unfortunately, beyond reducing emissions, options for arresting increasing bushfire risk in the Tasmanian Wilderness World Heritage Area are limited, because bushfire weather and dry lightning strikes are the main drivers of increasing risk,” it said.
The Insurance Council of New Zealand (ICNZ) says the recovery process after severe South Island flooding on the weekend may take some time, as assessors wait for affected areas to become accessible.
Parts of the West Coast and Marlborough areas received rainfall of 400mm in 24 hours after the MetService on Friday declared a red warning for the region.
The Buller and Orowaiti rivers topped their banks sending water surging through the town of Westport, causing hundreds of people to evacuate to emergency centres, Radio New Zealand reported.
“It won’t be until the areas are fully accessible over the course of the week before insurers’ assessors will be able to get to the affected places to review the damage and what’s needed for the recovery,” ICNZ CEO Tim Grafton said today.
“Clearing silt, drying out houses, getting resources and tradespeople into the region to undertake repairs will all take time and insurers will do everything they can to help their customers as quickly as possible.”
ICNZ says insurers have been supporting customers since the red weather warning was issued and that private insurers are now also managing Earthquake Commission cover claims on behalf of the government-owned authority.
“This includes some damage to residential land within 8 metres of the house caused by flooding or landslips, or damage to residential properties caused by landslips,” he said.
The New Zealand Government has committed $NZ600,000 ($561,579) in recovery assistance, including support to communities and farmers and growers.
“While it is too early to know the full cost of the damage, we expect it to be significant and this contribution will help communities to start to get back on their feet,” Emergency Management Acting Minister Kris Faafoi said.
WA Arson Squad detectives have charged a 40-year-old man in relation to bushfires near Perth earlier this year that were declared an insurance catastrophe.
Police allege the man used a mechanical device to remove a padlock on a sea container on his property, igniting the Wooroloo bushfire.
The blaze was first reported to the fire services on February 1 and continued burning over the following week amid adverse conditions, destroying 10,750 hectares of bushland, 86 homes and numerous sheds, vehicles and livestock.
The Perth Hills bushfires caused insurance losses of $91 million, with some 1000 claims received, according to the Insurance Council of Australia. The fires marked the first catastrophe declared this year.
IAG says COVID-19 support measures remain available to customers hit by the latest lockdowns in Victoria and NSW.
The measures were introduced last year to help Australians suffering financial hardship as a result of enforced lockdowns introduced to cut the spread of the potentially deadly disease.
The support includes access to temporary premium relief, the option to change premium payments from annual to monthly instalments for no additional cost, waiving cancellation and administration fees for customers who cancel their policies, and access to a free and confidential phone counselling service.
The measures are available to home, motor and small business customers of IAG brands including NRMA Insurance, CGU, SGIO, SGIC and WFI.
IAG also welcomed the latest support from the federal and state governments.
“For many households and businesses, this is a very tough time and access to this additional government support is critical to help them through the current pandemic restrictions,” IAG MD and CEO Nick Hawkins said.
“We have a dedicated team available to help tailor our support to ensure our customers have the right help at this time and to help get them back on their feet.
“IAG has helped more than 68,000 customers with financial support during COVID-19 and we will continue to be there for our customers and the community as we help support each other through this.
“This is an evolving situation, and we will continue to be here for our customers across the country through the pandemic and beyond. We encourage customers to contact us to discuss the support available as soon as possible.”
IAG says it strengthened support for customers experiencing vulnerability, including financial hardship, ahead of the new General Insurance Code of Practice, which came into effect on July 1.
It also says that commercial customers, including small businesses, which have the relevant business interruption cover and have been affected by COVID-19, may lodge a claim.
Authorised representative network Resilium has promoted Angela O’Neil to the position of GM Broking, effective today.
Ms O’Neil started with Resilium in the placement area in 2016 and joined the management team the following year.
Resilium MD Ben Hastie says Ms O’Neil has been actively involved in the coaching and mentoring of ARs around the country, focusing on broking skills, while also cultivating relationships with key insurers.
“Angela has provided incredible support and assistance to our 150 Resilium practices around the country in her prior senior managerial and broking role,” he said.
“In her new position of GM Broking, Angela will continue to manage the placement team along with the management and direction of Resilium’s regional team.”
Ms O’Neil takes on responsibilities that were formerly part of the Director of Sales & Distribution position, held by Mr Hastie before his recent appointment as MD.
Allianz Australia has pledged to work with Aboriginal and Torres Strait Islander peoples, organisations and communities to help build prosperity and ensure a “fairer and more respectful” nation.
In signing up to its first Reconciliation Action Plan (RAP), launched to mark this month’s NAIDOC week, Allianz joins a network of more than 1100 corporate, government, and not-for-profit organisations.
Allianz Australia MD Richard Feledy says the RAP is an opportunity for Allianz to “listen and learn from custodians of the lands on which we have lived and worked on for more than 50,000 years” and provides a “blueprint” to furthering inclusion and reconciliation through meaningful actions.
“As one of Australia’s largest general insurers, we are uniquely positioned to make a positive difference … to the communities in which we operate,” Mr Feledy said.
“The impact we can have reaches far beyond just insurance.”
Reconciliation Australia CEO Karen Mundine commended Allianz on the formal endorsement of its inaugural RAP, which she says will build strong foundations and relationships, ensuring sustainable, thoughtful, and impactful outcomes into the future.
“By investigating and understanding the integral role it plays across its sphere of influence, Allianz Australia will create dynamic reconciliation outcomes, supported by and aligned with its business objectives,” she said.
Since 2006, RAPs have provided a framework for organisations to leverage their spheres of influence to support the national reconciliation movement. Over 2.3 million people now work or study in an organisation with a RAP.
The Allianz RAP outlines 14 actions under the banners relationships, respect, opportunities and governance.
“We are proud of the strides we’ve made to date but we also recognise there is much work yet to be done,” Mr Feledy said.
Suncorp has confirmed that this year’s annual general meeting will be held on September 23.
The group says further details will be provided to shareholders later, with the company set to release its full-year earnings results on August 9.
Suncorp will be providing its first annual update since restructuring the insurance business into two divisions, with Lisa Harrison last year named Insurance Product and Portfolio CEO and Paul Smeaton COO Insurance, with responsibility for claims management and operations.
The Australian Prudential Regulation Authority (APRA) will require a number of insurers to review their risk management frameworks following “deficiencies” that led to the use of outdated business interruption (BI) policy wordings.
Lockdowns and restrictions associated with COVID-19 have triggered a spate of potential BI claims, with many insurers exposed through policy wordings that had not kept up-to-date with changing legislation, APRA says.
The resultant legal uncertainty, and significant financial exposure for insurers, has raised concerns about the strength of insurers’ risk management frameworks.
“Insurers are in the business of managing risk, yet the impact of the pandemic has raised clear concerns about how well some insurers are doing this,” APRA Deputy Chairman Helen Rowell said.
“Although the legal disputes around BI cover for some COVID-19 claims have yet to be fully resolved, the fact that so many insurers were selling policies with outdated wording exposes clear deficiencies in risk management.”
APRA has written to a number of insurers asking them to undertake a self-assessment of their frameworks in the context of the business interruption problems to prevent similar future problems.
The review will also focus on cyber risk, but the regulator expects insurers to ensure their frameworks are “robust” across all product areas and potential exposures.
“As well as examining the root causes of the BI problems, we are keen to identify whether similar hidden issues exist in other insurance products. The growing threat posed by cyber adversaries makes this a prudent place to probe,” ARPA says.
Where self-assessments identify material concerns, APRA will consider whether further supervisory action is warranted.
“The consolidated findings will also be published to send clear messages to all insurers around observed weaknesses, better practice, and the importance of maintaining robust insurance risk management frameworks,” Mrs Rowell said.
The self-assessments must be submitted to APRA by November 30, with feedback to be provided to the firms early next year.
The Federal Government plans to introduce wider ranging conduct laws for financial firm executives into the spring session of Parliament, along with legislation to set up a last resort disputes settlement compensation scheme.
Draft documents for both the Financial Accountability Regime (FAR) and a Compensation Scheme of Last Resort were released for consultation last week following recommendations from the Hayne royal commission.
FAR will apply to firms licensed by the Australian Prudential Regulation Authority (APRA), their directors and senior executives, extending exiting accountability laws applying to banks to companies including insurers.
Treasurer Josh Frydenberg and Financial Services Minister Jane Hume say the strengthened framework recognises “that decisions taken by directors and the most senior executives of financial institutions are significant for millions of Australians” and the economy.
The new conduct laws are expected to apply to insurers from the latter of July 2023 or 18 months after the FAR starts.
The Compensation Scheme of Last Resort, to be funded by industry levies, aims to ensure consumers receive compensation decided by the Australian Financial Complaints Authority even if a financial firm involved in a dispute has become insolvent.
Submissions on both pieces of draft legislation are due by August 13. More details are available here.
The Department of Home Affairs has released a cyber security paper for consultation, seeking feedback on a range of proposed options to strengthen the economy’s defence against ransomware and other digital threats.
A portion of the paper deals with governance standards for the business community, which at present is left to manage cyber threat as it sees fit.
The paper flagged two options for consideration if the status quo was to be scrapped.
The first would involve the development of a voluntary cyber security governance standard, laying out the responsibilities of large businesses and processes for managing cyber security risk, supporting the role of company boards overseeing the threat.
But this would not require specific technical controls to be implemented and will complement existing regulatory requirements.
The second option involves a standard similar to the first proposal but large businesses would be required to achieve compliance within a specific timeframe. Entities covered by existing regulation, such as responsible entities for critical infrastructure, would not be covered by this policy.
The paper says the second option means larger businesses will improve their cyber security governance in a timely manner, resulting in better management of cyber threats.
But it says the costs associated with mandating governance would be high as a large number of businesses would be required to comply.
If implemented, the government would have to allow a significant amount of time for businesses to shift their governance structures and ensure they are able to comply with the mandatory standards.
The paper says regulatory costs may be passed on to consumers.
“On balance, a mandatory standard may be too costly and onerous given the current state of cyber security governance, and in the midst of an economic recovery, compared to the benefits it would provide,” the paper said.
The paper says cyber security incidents cost the Australian economy $29 billion annually or 1.9% of gross domestic product.
Citing the Australian Cyber Security Centre, the paper says the threat is increasing in scale, frequency and sophistication.
“If no action is taken, the costs and consequences of cyber security incidents are likely to rise over time as more economic activity moves online and the number of connected devices grows,” the paper said. “COVID-19 is just one factor driving this trend.”
Law firm Clyde and Co says there is currently significant political pressure on the government to take action in respect of cyber risk and its impact on the Australian economy.
It says it is unlikely that the government will opt for the status quo at the conclusion of the consultation period.
The law firm says the discussion paper highlights that cyber security must be a fundamental part of all organisations’ risk management practices.
“Boards will face increasing scrutiny to maintain effective data governance practices to mitigate against cyber incidents, including data breaches,” Clyde and Co said.
“Whether standards are voluntary or mandatory, if an organisation suffers a cyber incident and are not able to demonstrate that they have adequate policies and procedure in place, directors may be exposed to claim.”
Closing date for submissions is August 27.
Click here for the discussion paper and here for the submission form.
New Zealand’s Commerce Commission is assessing whether undertakings by Aon and Willis Towers Watson resolve its preliminary competition concerns over a planned merger of the brokerages.
“As part of its assessment, the commission will be contacting a range of market participants to discuss the proposed undertaking,” the commission says in an update released last week.
The commission is scheduled to decide whether to grant clearance for the deal by August 20, but says the date may change as the investigation continues.
Aon plans to divest parts of the Willis Towers Watson business in various markets to global broker Arthur J Gallagher, whose operations include the Crombie Lockwood business in New Zealand.
The divestment would include Willis Towers Watson’s largest commercial risk broking customers serviced out of New Zealand, comprising about two thirds of gross written premium placed by the local business.
Also included would be various tangible and intangible assets, to the extent that those are required by Gallagher/Crombie Lockwood.
The deal has gained preliminary EU regulatory clearance but the US Department of Justice has filed a lawsuit to block the deal.
The Australian Securities and Investments Commission (ASIC) has reissued a media release on urgent interim orders obtained in the Federal Court against Alliance Insurance Broking Services (AIBS) and its sole director Renato De Maria.
ASIC put out a statement last week outlining the orders, which prevent funds being removed from company bank accounts. An investigative accountant has also been appointed and the business must be sold.
ASIC says that in support of its application for the orders it “alleged that Mr De Maria caused substantial client money held by AIBS to be improperly paid into a bank account for his own personal benefit”.
As reported by insuranceNEWS.com.au, AIBS questioned the accuracy of the ASIC statement.
“The fact is that it was AIBS who proposed an arrangement whereby the interests of all parties would be best protected by the sale of AIBS' business,” the company said on its website.
“ASIC rejected the proposal. The Court accepted AIBS’ position. Orders were then made to give effect to AIBS’ proposed arrangement.
“Most importantly, the orders referred to in ASIC’s statement have all been complied with by AIBS; and AIBS has cooperated fully with ASIC and is disappointed by the statement. It does not accurately reflect what has occurred.”
On Friday ASIC reissued the press release with some amendments.
“This media release was amended on 16 July 2021 to clarify that the appointments referred to in the media release were made by AIBS as a result of an undertaking provided by AIBS to the Court,” ASIC said.
“The orders that were made by the Court included that AIBS file evidence of the appointments and other matters, including the receipt of $5 million which AIBS has now filed.”
Victoria and Queensland have agreed to share a large air tanker to bolster aerial firefighting capacity, extracting optimum value and ensuring the aircraft is available where it is needed most.
The Bombardier Dash-8 Q400AT aircraft will operate in Queensland from September to December to cover the north-eastern bushfire season, moving south to Victoria for December to February.
The collaboration comes after the Royal Commission into National Natural Disaster Arrangements recommended cost sharing for aviation resources.
“We’re ensuring this important aircraft gets maximum use during our bushfire seasons to keep communities safe,” Victorian Acting Minister for Police and Emergency Services Danny Pearson said.
The Bombardier, which will remain in Victoria between bushfire seasons, has a 10,000-litre tank for water or fire retardant and replaces a larger C130 previously used by Victoria. It is 50 knots faster, uses half the fuel, has improved low speed handling for dropping retardant and a faster turnaround time.
The new model also requires less room for take-off and landing. This potentially opens several regional airports for firefighting operations that have not been able to be used previously.
The 2021/22 Victorian Budget included record funding to expand Victoria’s firefighting capacity, strengthen communication systems during emergencies and deliver other recommended reforms.
The latest agreement covers the 2021 to 2024 bushfire seasons.
The corporate regulator says no further action will be taken against AMP over the financial services firm’s alleged “fees for no service” conduct after finalising its investigation into the matter.
The Australian Securities and Investments Commission (ASIC) says it reached the decision to end the probe following consultation with the Commonwealth Director of Public Prosecutions (CDPP).
“The CDPP has now determined, on the basis of the available evidence and weighing the relevant public interest factors, that no charges should be brought for that conduct,” ASIC said in a statement.
ASIC says the investigation relates to suspected criminal conduct regarding the charging of fees for no service by AMP Financial Planning arising from its Buyer of Last Resort Policy arrangement where the practices of retiring advisers were bought if no other buyers were found.
At the Hayne royal commission hearings in 2018, it was revealed clients of the retired advisers were charged fees for advice they never received.
AMP has welcomed Friday’s announcement from the corporate regulator.
“AMP acknowledges the deficiencies in its historic systems and processes within the advice business to monitor ongoing service fees in relation to [Buyer of Last Resort],”
Group General Counsel David Cullen said.
“In 2018, the business completed the implementation of enhanced systems and controls to improve monitoring and reporting and to protect against recurrence.
“We have apologised to all affected clients and confirm that remediation was also completed in full in 2018.
“With [the] confirmation that no action will be taken, we are pleased to have closure on this matter.”
Allianz Australia Life Insurance has appointed Adrian Stewart as acting CEO, replacing Matthew Rady who will be leaving the business.
Mr Stewart will also oversee Allianz Retire+, a joint venture with investment management firm Pimco to offer retirement products.
He was most recently Pimco’s client management head for Asia Pacific excluding Japan, with responsibility for strategic initiatives to achieve investors’ needs.
During his tenure at Pimco, Mr Stewart founded Allianz Retire+ and has served as a Board Member since 2018.
“In appointing [Mr Stewart] as acting CEO, the board is instilling a proven leader with a deep understanding of the worldwide capabilities of the Allianz Group in retirement income and life protection solutions,” Allianz Australia Life Insurance Chairman David Plumb said.
“[His] strong track record in growing client-focused financial services businesses in the Australian market keenly positions us for significant growth.”
The Association of Financial Advisers (AFA) will hold its national conference from September 21-22, with Minister for Superannuation and Financial Services Jane Hume to deliver the keynote address on the opening day of the event.
AFA says the Evolve Conference will be a hybrid event streamed live from a Sydney studio and celebrated in capital cities across the country via in-person evening functions, subject to COVID restrictions.
“Since 1946, the AFA has been proudly supporting financial advisers and advocating for the advice profession,” AFA Conference Chairman Olivia Sarah-Le Lacheu said.
“As we reflect on the past 75 years, we recognise that the past two years have really tested even the most resilient and experienced advisers.
“We believe the conference will help our advice community to navigate the ever-changing business, regulatory, technological and cultural landscape and encourage them to look forward to the future.”
Click here for registration details.
Melbourne-based adviser group ASVW Financial Services is gaining traction in the market by setting out to be different from the traditional licensee model, CEO Stuart Abley says in a business update. Mr Abley says the conventional model - regardless of ownership - that measures success by funds under manage ment or adviser numbers is “under stress” as well as unsustainable in a growing number of cases. “It was obvious that a much different approach was needed, one that provided fresh thinking for those advice practitioners seeking a more innovative offering, a boutique feel, was professional and independent of manufacturers and institutions,” Mr Abley said. “From this understanding, the ASVW offering was developed to provide advisers the opportunity to be associated with a licensee that intimately understands the industry.” Mr Abley says the business officially commenced in February but only introduced its services to the market two months later in April. “We have had a lot of interest and several financial advice businesses have shown great interest and decided to join our licensee business,” he told insuranceNEWS.com.au. He says the business is different from others because it is technology driven, product agnostic, has access to marketing-leading client engagement tools as well as choice of platforms and managed accounts. “We believe there is a real appetite out in the market to partner with a boutique [Australian financial services licensee], who is non-institutionalised, with like-minded advisers who are focused on maximising business profitability and in turn maximising their business value,” Mr Abley told insuranceNEWS.com.au. “Many advice businesses are tired of the institutional model [which] has different goals and objectives to an entrepreneurial financial advice business. “We are also focused on business succession strategies to help our advisers in this important area while they grow and optimise their business.” The setup of ASVW places the business in a good position to grow its presence in the market following the Hayne royal commission and Future of Financial Advice (FOFA) reforms. “Financial services has undergone immense and unprecedented change and this will continue to be the norm for the foreseeable future,” Mr Abley said. “This environment has provided an opportunity for ASVWFS to position ourselves as ‘licensee of choice’ for entrepreneurial advice businesses seeking to capitalise on post-FOFA and royal commission opportunities. “We are determined to build success on the productivity growth of our advice network and differentiation from other licensees via a very clear vision of the future and a collaborative corporate model dedicated to servicing the needs of advice businesses and their clients.”
The National Insurance Brokers Association (NIBA) will crown the SA/NT Broker of the Year and Young Professional Broker of the Year at a gala lunch in Adelaide on Friday, the last of its five 2021 regional awards.
Sydney-based Marsh Head of Financial and Professional Services Pacific Craig Claughton was last week named Broker of the Year for NSW/ACT while Crucial Insurance & Risk Advisors MD Tony Venning won in Queensland.
They now compete for the national Stephen Ball Memorial Award, sponsored by QBE, alongside WA’s GSK Insurance Brokers Senior Account Manager Jeff Booth; Tasmania’s Capital Innovation Chairman Ian Goninon; and the soon-to-be-named SA/NT winner - either CBD Insurance Services MD Kate Edgar or Skinner & Irvine Insurance’s Karen Skinner.
In the Young Professional Broker of the Year category, Markey Insurance & Risk Senior Account Executive Megan Farmer won in NSW/ACT on Friday while Crucial Insurance & Risk Advisors Broker Alishia Oliver won in Queensland on Wednesday.
They now compete for the national Warren Tickle Memorial Award, sponsored by Vero, against Albany District Insurance Brokers Account Executive Luke Cameron; Victoria’s Integral Insurance Services Senior Broking Executive Mitchell Wight; and the SA/NT winner - either Webber Insurance Services Account Broker Nikia Goers, Aon Client Executive Patrick McCole or PSC Insurance Brokers Account Manager Jasmine Miller.
NIBA is conducting most of its award ceremonies online due to recent COVID-19 outbreaks and will this year host a five-day hybrid annual convention, visiting Perth, Adelaide, Melbourne, Brisbane, and Sydney from September 28 to October 28.
The NIBA/UAC Queensland Underwriting Expo and gala lunch was rescheduled to September 22 while WA and NSW gala lunches are now slated for August.
The Bridge International says former RAA Insurance CEO David Russell, also a previous Insurance Council of Australia board member, has joined the consultancy.
Mr Russell, who retired from RAA last year after 12 years in the top role, will be offering executive coaching and mentoring.
“David is passionate about developing people, building a strong inclusive team culture and driving sustainable profitable growth by executing well-defined strategies and embedding change across an organisation,” The Bridge MD and former insurance executive Stuart Blake said.
Mr Russell also held a number of senior positions over two decades with South Australian insurer SGIC, now part of IAG, and currently sits on the South Australian Government Financing Authority Advisory Board.
The Bridge International operates in Australia, New Zealand, the UK and North America. The firm works across multiple industries and in insurance has assisted companies including RAA, QBE, Suncorp, Swiss Re and Allianz.
Loss adjuster Technical Assessing (TA) has appointed Karen Leslie in its Brisbane property team as it expands following a management buyout a year ago.
TA also opened an office in Canberra and expanded in NSW in recent weeks.
Ms Leslie has 25 years’ experience in insurance, around half as a loss adjuster. She was most recently a manager at panel insurance builder Advanced Buildings and was formerly claims manager at AustBroker Premier, loss adjuster at Crawford & Company and QBE, and asset compliance manager for the Queensland government.
“An accomplished marketer, Karen is very well connected within the insurance industry,” TA Queensland State Manager Stefan Lakomy said.
TA says it is the largest independent locally-owned national loss adjuster and has offices in Sydney, Melbourne, Brisbane, Launceston, Hobart, Perth and is internationally affiliated.
ANA Chartered Loss Adjusters says Warren Ellis has joined its Perth-based team as Senior Loss Adjuster.
CEO Chay Wilkinson announced his appointment in a brief LinkedIn post, saying he brings “extensive experience and expertise” to support the WA business.
Mr Ellis was most recently specialty commercial loss adjuster with Crawford & Company. Before joining Crawford in 2016 as senior adjuster, he was a regional leader at Cunningham Lindsey.
ANA provides general, engineering, construction and specialist claims and risks across Australia and Asia for insurers, reinsurers, captives and brokers. It also offers risk assessment and claims consultancy services within its areas of expertise.
The business has more than 40 service locations across Australia and a team of more than 80 qualified adjusters and technical experts to support clients here.
Great Southern Bank has appointed Mathew Patterson as Head of Broker & Insurance Partnerships after the firm’s recent change of name.
Formerly known as Credit Union Australia (CUA), Great Southern Bank says it looks after the insurance and financial needs of more than 560,000 Australians and is “still the same customer-owned bank” after its rebranding.
Mr Patterson was most recently Head of Broker at ME. He has more than 20 years of experience in the third-party mortgage industry, including roles at AMP Financial Planning and ING.
“Mathew joins us at an important time for the business as we look to expand our broker channel and work with them on demonstrating why Great Southern Bank is the right choice for home buyers,” Chief Customer Officer Megan Keleher said.
Insurtech Evari’s underwriting portfolio has been bought by Envest, which will also license Evari’s tech platform as part of the deal.
Evari, founded in 2016 by former local Zurich CEO Daniel Fogarty, consultant Robert Jeffery and tech entrepreneur Brack Norris, creates flexible insurance that is easy to buy and manage.
Mr Fogarty says the underwriting portfolio is now in “good hands” and he was excited by the opportunities the acquisition presented. Evari now expects further expansion locally as well as in the US, Europe and elsewhere.
“We can focus our energy on creating value for insurance businesses in Australia and around the world with our best-in-class tech,” Mr Fogarty, who is on the board of Insurtech Australia, said.
Evari originally aimed to simplify the insurance process for SMEs and evolved into primarily an end-to-end technology business, with clients in Australia, the US and UK, while also running a successful direct insurance offering for tradies and professionals through partnerships with Bunnings and RAC.
It has about 35 staff globally.
Its cloud-based platform is suited to all types of insurance and Envest MD Greg Mullins says the acquisition is a win-win for both organisations.
“Evari’s underwriting portfolio has an established customer base and opportunities for growth that fits our model of distribution to customers in partnership with big brands,” Mr Mullins said.
Evari was named in the 2020 global Insurtech100 list, selected by a panel of industry experts.
Technology is equipping insurance brokers with data-driven tools to identify risk hazards, enabling more robust risk conversations with customers and optimising face-to-face sales, Capgemini says.
Steadfast’s new iProfileRisk service, which equips brokers with strong data evidence when making risk and insurance considerations, is an example of technology augmenting conversations by identifying exposures by geographic locations and operational activities, according to Capgemini.
That tool helps brokers show their clients the most prominent risks aligned to 12 classes of insurance as well as a NatCat risk grading summary of the likely severity of a loss.
Capgemini says the future lies in this “digi-intermediation” – in which brokers are digitally empowered while virtual channels are humanised – and this will eliminate distribution gaps and improve the customer experience.
Local Senior Director Insurance Practice Daniel Rademeyer says distribution channels offering direct human interaction are good at providing advice while digital channels are great at delivering convenience to customers.
“In terms of reach with customers, the new digital intermediaries have that as their forte,” he said.
“None of the channels are effective alone and thus digital retooling of channels is essential to uplift the success for the insurer of the future.”
Leveraging technology using AI and data enhances the effectiveness of these channels and Capgemini recommends insurers fast track channel digitisation while empowering human engagement via technology for the most effective sales model.
“Reinventing their operating ecosystems and evolving the physical model into a more digital model will increase the growth and expansion of these channels,” Mr Rademeyer said.
Future leaders in the insurance market will prioritise a shift from product-centric distribution to embed insurance services in customers everyday life, he says.
“The insurance landscape is changing and the need to be more relevant within customers lifestyle is becoming a greater driver.”
Consumer insurance brands, particularly for motor vehicle coverage, face disruption as tech-led changing market dynamics continue to play a key role in shaping the future of the industry, according to insurance consulting firm Xceedance.
The firm says its informal survey of senior industry executives in Australia found the shift towards autonomous vehicles will impact the motor line, including the possibility of a “significant reduction” in some consumer brands.
“The rise of driverless cars and vehicle manufacturers insuring their own products will change motor insurance business markets,” VP and Country Manager Stephen Browne said.
“This emerging model could shift the need for traditional consumer motor coverage, moving the industry to focus on commercial motor and coverage for classic or specialty vehicles.”
Xceedance says with fewer people owning motor vehicles, insurance will increasingly become tied directly to car manufacturers, usage, and rental companies.
As the insurance landscape evolves, bowing to technology changes, the resulting market dynamic will alter motor insurance business models, the firm says.
“It is highly likely that insurer and manufacturer relationships will result in one insurer providing coverage and services for a particular motor vehicle brand during the life of its vehicles,” the firm said.
“The vehicle manufacturer’s insurer will know each vehicle’s entire history (and the status of every component within the vehicle), as well as the insured value - up to the day it’s worth nothing, or alternatively becomes a classic collector’s item.
“This trend could negate the need for competitive consumer insurance brands, shifting the industry to focus predominantly on commercial motor vehicle insurance and classic or special vehicles.”
The findings of the informal survey are contained in a white paper that also outlines other factors that are driving massive changes in the local insurance industry.
According to the white paper, the other factors are automation, data explosion, rise of underwriting agencies, new insurance roles, predictive claims modelling and hyper-personalisation of insurance.
“Australia’s insurance industry is at the precipice of a significant transformation within the next few years,” the paper said. “It will be unlike anything we have seen in the past.”
Click here for the paper.
Agile Underwriting Services has expanded its online trading platform’s offerings with the launch of two Accident & Health (A&H) products.
Head of Accident & Health Adam Bohacek says the availability of Individual Accident & Sickness and Bill Cover on the Powered by Agile platform will be a boost to its broking partners.
“Our broking partners have been eagerly awaiting these products,” Mr Bohacek said.
“It provides a seamless and user-friendly way for brokers to rapidly process A&H policies and ensure their customers get access to the right products for their financial security and peace of mind for when the unexpected happens.
“Cover can be obtained within minutes through whatever device they choose.”
Agile says it has seen “significant increases” in the usage of the platform in the first six months of this year, a sign of the value it is providing to broking partners.
“We’re excited about the growing reach of the platform,” CEO Robin Barham said. “We’ll continue to engage with the market to ensure we’re delivering products they need to service their customers.”
The quote-and-bind platform now has 18 niche products, according to Agile.
Systems provider SSP says Gallagher Australia has expanded a digital-first product offering that’s provided through the technology group’s insurance platform.
A natural therapies product has been added, in addition to fitness professionals insurance and the IMAR product for tradies introduced last year.
Gallagher is able to cost-effectively roll-out products in a 4-5 months cycle using a “design-configure-launch-repeat” approach enabled by the SPP Insurance Platform, the technology firm says.
The platform offers online purchasing and provides self-service capabilities for customers to administer and renew their portfolio. Gallagher says the IMAR product launch has allowed processing of higher volumes of new business while leveraging automation to reduce manual back-office administration tasks.
“The rapid launch of the natural therapies product is the next step in building out our range of tailored digital small business insurance solutions,” Gallagher Head of Digital & Delivery Rattana Sysengrath said.
The company says despite this year’s challenges and restrictions the customer take up of the new digital channel has exceeded expectations.
SSP Asia Pacific GM Paul Miller says the platform provides a simplified approach for adding new products compared with a legacy system approach that would typically take much longer and be more prone to problems.
“We are delivering on our promise to enable insurance customers to get innovative products to market both rapidly and cost effectively,” Mr Miller said.
Insurers aiming to increase reserving process automation in response to rising pressures are continuing to battling multiple data sources and legacy systems, a Willis Towers Watson survey finds.
“Insurers commented that they still believe there is insufficient automation across their processes and that they are still dependent on actuaries to perform repetitive, manual data processing tasks,” the firm says in a report.
“This is an inefficient use of highly skilled resources and can additionally lead to job dissatisfaction and retention issues.”
Automation scores for each core area of the property and casualty (P&C) reserving process showed 31.9% for data, 22.1% for results production, 22% for loss calculations, 14.6% for assumptions and 13.8% for audit trail.
The P&C insurance industry overall automation score was 21.7%, while its aspirational score for the next five years was 44.9%.
Data quality and validation remain pain points, with a strong reliance on spreadsheets that typically require manual updates and adjustments, making them cumbersome and prone to human error.
The life industry’s overall current automation score was 21.5%, versus a five-year aspirational score of 49.1%.
Willis Towers Watson says survey results are set against a backdrop of increasing regulatory, management and auditor demands that are putting pressure on actuarial processes, including the need for transparency on calculations.
The impact of COVID-19 and various global lock-downs has also accelerated the drive for automation, moving it rapidly up the C-suite agenda over the past year, it says.
The report says automation ambitions need to have “complete and total buy-in” from employees and key stakeholders and insurers need to adopt a culture of change that “actively enforces and encourages” the vision.
“Otherwise, there is high risk of wasted spend, low employee engagement and rejection of new systems,” it says.
About half of under 30s do not have home insurance, an untapped area of sales growth for insurers that should be targeted with cheaper, flexible and digital policies, GlobalData says.
The younger “generation rent” home insurance market is ripe for disruption by insurtechs and growth, says a new report from GlobalData, based on a survey in the UK which found 46% of respondents aged 30 or younger had no form of home insurance, compared with 77% uptake across all ages.
Adults aged 18-30 were also particularly likely to purchase home insurance through a price comparison website, with 35% favouring that channel, compared with only a quarter of respondents across all ages.
“This indicates that they are driven heavily by value and look to find as cheap a policy as possible,” analyst Ben Carey-Evans said.
Manageable monthly payments should prove popular with young homeowners who often have stretched budgets and appreciated being able to switch or cancel anytime, he says, a benefit to renters whose living situation can change more quickly.
“The key will be to offer cheap, flexible and digital policies”.
First estimates of damage from deadly rain and floods in Germany are expected to be available later this week and may put insured losses near $15 billion, industry association GDV says.
Only around 45% of buildings are believed to be insured against floods and heavy rain.
Since July 12, countries in Europe have been struck by catastrophic floods, killing 188 people. Belgium and Germany - as well as Austria, Luxembourg, the Netherlands, Switzerland and Italy - are all severely affected, resulting in 160 deaths in Germany alone.
Germany’s insurance industry may this year face its highest claims from storms, floods and hail since 2013, when property & casualty and motor insurers recorded €9.3 billion ($14.87 billion) in natural catastrophe claims in the country, GDV CEO Jörg Asmussen said last week, according to Reuters.
Severe damage to infrastructure has been sustained in Germany, where Federal Finance Minister Olaf Scholz announced initial emergency aid of more than €300 million for the victims of the flood disaster.
UK business interruption (BI) settlements for claims triggered by the COVID-19 pandemic have climbed to £566.6 million ($1 billion), the Financial Conduct Authority (FCA) says.
Final settlements have been agreed and paid for 18,958 policies, the FCA’s latest monthly update shows, while interim or initial payments of £308.9 million ($566.9 million) have been made on an additional 4975 claims.
“This means that, at the point of this information submission, 23,933 BI policyholders out of the 40,531 who had had claims accepted, had received at least an interim payment,” FCA says.
The regulator says any business interruption policyholders who believe they may have a claim but have not yet submitted it to their insurer should do so as soon as possible.
“We remind firms of the need to handle claims promptly and fairly and to provide reasonable guidance to help a policyholder to make a claim,” it says.
The UK Supreme Court last week published declarations providing additional detail on the application of its judgment for policies in the test case samples brought by the FCA.
The court handed down its judgment on January 15, concluding the legal appeals process.
Motor premiums in the UK fell 8.4% in the last 12 months, pushed down by an uptick in competitive telematics offerings and push for market share, according to data analytics firm Consumer Intelligence.
The firm says the decline means the average motor premium is now about £779 ($1444) annually.
But the downward trend is likely to end in the coming months as new rules such as banning loyalty penalties kick in on January 1, the firm says.
“We are seeing a downward trend for premiums across the board - in all of our age and regional segments - and it’s not just the uptick in telematics quotes behind the plummeting premiums,” Product Manager Harriet Devonald said.
“With the [Financial Conduct Authority’s] pricing remedies coming in at the end of the year, some brands are looking to gain volume while they can.
“Others, who benefited from a quiet year of motor claims in 2020, have been able to pass savings onto customers, whilst other brands are following the market downward in order to remain competitive.
“It’s unlikely that this trajectory will continue as we move through the second half of the year. Once the new regulation takes force, we are likely to see a hardening market once more.”
The Financial Conduct Authority says the move to ban home and motor loyalty penalties and other pricing measures will save UK consumers £4.2 billion ($7.8 billion) over 10 years.
Reinsurers globally face up to more than half a billion in losses as a result of Japan’s decision to hold the Tokyo Olympics without spectators because of a resurgence in COVID infections, Fitch Ratings said.
Organisers announced earlier this month the move to completely ban fans from the Summer Games, expanding a decision made months ago that spectators from outside of the country would not be allowed to attend the pandemic-delayed sporting showpiece, which starts this week.
Fitch says its estimate of $US300-400 million ($400-534 million) in reinsurance payouts should be mostly limited to losses from ticket sales and hospitality refunds.
The rating agency does not expect the projected losses to materially affect earnings, particularly given the reserves that reinsurers had already set aside in anticipation of potential claims payouts.
Had the Games been cancelled, the cost would have been more significant, Fitch said. The Tokyo Games was supposed to have taken place last year but was pushed back to July 23 to August 8 because of the coronavirus pandemic.
“This is only 10–15% of the amount reinsurers would have faced had the Olympics been cancelled, and its impact on earnings should be limited, leaving capital and ratings unaffected,” Fitch said.
“Cancellation of the Olympics would have led to the largest ever insured losses from a single event cancellation, adding to pressure on reinsurers’ earnings from the pandemic and US casualty reserve deficiencies, and following several years of high natural catastrophe losses.”
Fitch says the pandemic has led insurers and reinsurers to rethink some of the cover they provide and how they price it.
“In the past, they may have considered cancellation risks for different events to be mostly uncorrelated,” the rating agency said.
“However, the pandemic has highlighted how mass cancellations can happen simultaneously due to a single trigger, with even mega events, such as the Olympics, potentially at risk.
“To assess the insurability of risks, and to price accurately for them, insurers and reinsurers need to factor in correlation such as this, as well as the potential for extra-large aggregated losses when correlated risks crystallise together.”
Fitch says the COVID pandemic has led the insurance market to generally stop offering cover for losses resulting from communicable diseases, although cover for event cancellation due to other causes is still available as before.
It says renewed insurance policies for event cancellation now exclude cover for losses due to communicable diseases, which should shield insurers and reinsurers from losses resulting from further lockdowns to fight the coronavirus pandemic or future pandemics.
However, event cancellation policies are typically multi-year, so it will take time for the existing risk exposures to run off, Fitch said.
Fitch says it believes cyber risk could give rise to the next widespread catastrophe losses triggered by a single event, which could lead insurers and reinsurers to rethink the cyber cover they provide.
UK-based Ardonagh will open a data and risk management centre in Ireland to gain insights assisting clients globally as the company continues its expansion.
The centre in Mullingar in County Westmeath will help develop tailored solutions for a range of insurance products and related services, the company says.
“Our Global Data and Risk Management Centre will focus entirely on improved outcomes for every participant in the value chain; forensically investigating our pool of data to build an improved understanding of risk, examining possible future outcomes and working with clients and insurer partners in preparation for the unknown,” CEO David Ross said.
The centre will include 60 data science and analysis roles and Ardonagh says it intends to work with the Atholone Institute of Technology to offer graduates career opportunities.
Ardonagh last year acquired Irish brokerage Arachas, and that firm’s CEO Conor Brennan led an approach to statutory agency IDA Ireland to secure Irish Government support for the data centre through investment into the initiative.
In Australia, Ardonagh acquired authorised representative network Resilium earlier this year, appointed Paul Lynam as Chairman of the group’s wider local operations and has recently established Ethos Broking Australia to look at further opportunities.
Eleanor Bucks is joining Lloyd’s in the newly created role of Chief Investment Officer, overseeing the Treasury and Investment Management team and charged with building and leading the Lloyd’s Market Investment platform.
From September, London-based Ms Bucks will focus on the creation of the new platform, which Lloyd’s says will enable greater scale and access to broader products, and also reduce costs and improve returns for the market.
Lloyd’s CFO Burkhard Keese said her appointment strengthens the investments team and “adds to the diverse representation of Lloyd’s senior leadership team”.
“With a strong track record of investing to support pensions and insurance in the UK, Bermuda and the US, she brings with her a valuable global perspective,” he said.
Ms Bucks was most recently COO of Legal & General’s alternative asset platform.
She has 20 years’ experience in insurance and finance, including MD Direct Investment and Real Assets at Legal & General Retirement, Chair of LGIM Real Asset’s Alternative Investment Fund Manager and director of Legal & General’s Single-Family Build-to-Rent business.
The coronavirus is proving to be a formidable foe to crush. More than a year into the public health crisis, the world is still struggling to hold the virus at bay as more infectious variants emerge, seeding new waves of transmissions.
A return to normalcy without mask wearing and QR code check-ins may be some time away yet but for the insurance industry, Swiss Re says there is much to look forward to when the COVID-19 nightmare is over.
Not only is the industry poised to sprint back faster than it did from the 2008-09 global financial crisis, the reinsurance giant says the pandemic has cemented “positive paradigm shifts” for insurance in the form of growing consumer awareness of risk protection and digital adoption.
“The scales are tipped towards a positive insurance outlook,” the reinsurer’s Swiss Re Institute says in its latest Sigma study. “The [economic] recovery may be uneven worldwide, as much still depends on the ability of vaccines to keep the pandemic under control.
“However, on balance we have a positive outlook.”
Released last week, the Sigma study offers a peek at what’s in store for the insurance industry in a post-pandemic world.
The study says the pandemic has been a major catalyst for heightened awareness of the importance of risk mitigation. And it is not just confined to life and health insurance lines.
“Whether it is private medical insurance or supply chain interruption for businesses, the pandemic experience has made people much more aware of the need for insurance protection,” Swiss Re Institute Head Insurance Market Analysis Irina Fan said.
As the study puts it, “the pandemic has also impacted risk awareness in non-life insurance”.
The pandemic chaos has made the corporate sector much more conscious of its risk environment and what it means for their businesses, including from potential disruptions to global supply chains given the hiatus in international trade, and cyber risks, as employees work increasingly from home.
“Companies are seeking more comprehensive and flexible protection such as parametric covers as they adapt to new ways of working post-COVID-19,” the study said.
The study says another positive to have emerged from the pandemic is the swift adoption of digital technology by the insurance industry.
Initially seen as an aid to convenience or commoditisation in property and casualty (P&C) personal lines, the digital tool kit has since moved to cement its role as a sales and service facilitator during the pandemic lockdowns.
There’s no holding back the digital wave, the study says, as consumers have quickly adapted to online channels and increasingly prefer to transact digitally from start to finish.
“This creates opportunities for insurers along the whole value chain, from acquiring new consumers and providing consulting advice to underwriting, generating insurance policies, processing payments and after-sale services,” the study said.
“It is imperative that insurers offer digital engagement at all touchpoints as they compete with new, non-traditional players entering insurance markets.”
The wide-ranging study also touched on the state of the global economy and what its recovery will mean for insurers.
The economic outlook, according to the study, bodes well for the industry with the world set to recover strongly from the COVID-induced slump.
Swift deployment of vaccine rollout in the US and several advanced economies, combined with the economic boost from massive fiscal stimulus to support households and businesses, have the world on track to rebound strongly from the pandemic downturn.
The study predicts the global economy will achieve a 5.8% expansion in real gross domestic product this year, after a 3.7% contraction last year.
And this augurs well for the insurance industry, with the improved economy to translate into increased demand for risk protection products.
The study says the insurance industry should see above-trend growth of 3.3% this year and 3.9% in 2022.
If achieved, it means combined non-life and life premiums written globally will exceed $US7 trillion ($9.4 trillion) for the first time by the end of next year.
“The rapid global economic recovery, the strongest rate hardening for 20 years in non-life insurance commercial lines and increasing risk awareness will fuel rising demand for risk protection insurance,” the study said.
After registering a 1.5% rise to $US3.49 trillion ($4.7 trillion) last year, P&C premium volume globally is forecast to improve further to 2.8% this year and 3.7% in 2022.
The study says the non-life sector demonstrated resilience under difficult circumstances in the COVID-19-induced global economic recession, the deepest since World War II.
Advanced market premiums, including Australia, grew faster than emerging markets for the first time in 25 years, partly driven by strong commercial line rate hardening.
The study says commercial P&C lines will lead non-life growth with a 6% rise in premium volume this year and 5% next year.
Click here to download the report.