6 July 2020
Double-digit reinsurance price increases were seen for loss-hit catastrophe insurance programs in Australia at recent renewal negotiations with reinsurers, Willis Re says.
Increases on Australian treaties have ranged from 10% to 20%, it says in its latest market update.
More generally, reinsurers focused on wordings, are reluctant to accept any expansions of coverage, and communicable disease exclusions have become mandatory in order to complete placements.
Willis Re says “abundant capacity” is available, although reinsurers have been firmer in their demands on terms and conditions in Australia during the renewals, which were held at the start of this month and last month.
Rate discounts were immediately declined, and flat renewals more difficult to achieve.
“Rate increases, even on non-loss affected catastrophe layers, became more prevalent and a requirement for many reinsurers,” Willis Re says.
Reinsurers are prepared to cut capacity or decline renewals if perceived pricing adequacy was not achievable. This capacity could be replaced, but often with reinsurers waiting for improved terms.
It says a number of reinsurers have actively sought to move away from loss-affected lines in Australia.
“The effect of COVID-19 was a major discussion point in most casualty treaties. However, after thorough review of the underlying risk, reinsurers generally took a pragmatic approach to underwriting the risk,” the update says.
Reinsurers sought to limit their exposure in Australia to future COVID-19 claims in some instances, although for the most part long-term partnerships continued to be important to most reinsurers and buyers alike.
“Exclusionary language” was imposed on some of the treaties and Australian casualty rates continued to be under upwards pressure.
Willis Re says reduced activity and business closures in Australia due to the pandemic have led to reduced gross written premium for insurers across most casualty lines and some insurers expect higher small claims frequency.
Worldwide, insurers comfortably secured their required reinsurance capacity, backed by adequate reinsurance capital, Willis Re says.
A recovery in investment markets and appetite to support additional capital and debt offerings, as well as prudent risk and cost management at reinsurers, saw capital levels bounce back to be only 5% lower than at the close of 2019.
Still, Willis Re says investors in the reinsurance sector remain “cautious and selective”.
Reinsurers are recognising that COVID-19 losses – reported at about $US7 billion ($10.1 billion) so far – may take several years to settle, spreading out reserving over many quarters.
Willis Re Global CEO James Kent, says more persistent hardening is evident largely across the board, but reinsurers continue to exercise clear differentiation between clients, lines of business and territories.
“The value of sustained relationships has once again been proved,” he said.
Chubb has reiterated its reputation for claims excellence after a damaging program on national television.
The company reached a confidential agreement with Beaconsfield mine hero Darren Flanagan after he slammed the insurer on A Current Affair for denying his $100,000 business interruption claim.
Mr Flanagan cut a desperate figure on the Nine Network’s flagship program as he told of fears that he would be forced to sell his family home.
Chubb still insists that Mr Flanagan, who runs a camping store in Nowra NSW which was badly affected by last summer’s bushfires, was not entitled to a payout under his insurance policy.
But after an emotive episode in which Mr Flanagan accused Chubb of “throwing him to the wolves”, an agreement was reached. The specifics of that agreement are unclear, but the claim was not paid.
In a follow-up interview Mr Flanagan told TV reporters Chubb had “been amazing”.
“Today they've been on the phone all day, they’ve been working with us. Today we reached a resolution where we are all happy, and I want to thank them for that.”
The insurer also published an updated statement on its website under the headline “Chubb worked with Darren Flanagan in good faith and reached a satisfactory outcome”.
“Chubb shares the sympathy the Australian community expressed for Mr Flanagan and is appreciative of the way he acknowledged Chubb,” the statement said.
“It was a difficult situation because his insurance policy did not provide cover for the circumstances he experienced and, consequently, Chubb was unable to settle the claim.”
Chubb says it cannot comment on specific claim details, but honours claims in line with the policies it issues.
“We want to assure our broker partners and customers that paying claims and focusing on fairness is a core part of Chubb,” the statement said.
“We continue to strive to be a market leader in paying claims and are proud of the recognition achieved with recent awards for claims excellence.
“Equally we are always looking for opportunities to improve Chubb services and to support our clients.”
insuranceNEWS.com.au understands that A Current Affair’s coverage was misleading in some respects.
There was no detailed analysis of Mr Flanagan’s loss, or policy wording, and the report incorrectly gave the impression that the claim related to fires, floods and COVID-19 shutdowns.
In fact, the claim was purely in relation to bushfire disruption after lack of access and plummeting tourist numbers badly affected takings at Mr Flanagan’s store.
insuranceNEWS.com.au understands there are a number of other stores in the area also seeking claim payouts from Chubb.
The Insurance Council of Australia (ICA) says BT Financial Group GM Insurance Sue Houghton will serve as interim President until a board meeting at the end of the month.
Ms Houghton, who is currently Deputy President, fills a vacancy created due to Gary Dransfield stepping down from the top role after management changes at Suncorp that will see him leaving the company at the end of next week.
Mr Dransfield has been ICA President since January 1, taking up the position for an expected two-year term amid the summer catastrophes and the emergence of the coronavirus pandemic.
“Gary has provided staunch and dedicated board leadership during the most challenging times that the industry has experienced in a decade,” ICA CEO Rob Whelan said.
The Suncorp reorganisation has also led to change at the Insurance Council of New Zealand (ICNZ), with current President Paul Smeaton returning to Australia to become the company’s COO – Insurance from July 20.
ICNZ Deputy President Craig Olsen, IAG’s New Zealand CEO, will take over from Mr Smeaton.
“I look forward to continuing to work with ICNZ and our members to advance the vital role that the general insurance sector has in protecting New Zealanders in their everyday lives and businesses,” Mr Olsen said.
The industry’s move to have in place measures to support customers who are facing domestic violence through new provisions to its revamped code of practice is a step in the right direction, according to consumer advocates.
But the work is far from over, the advocates told insuranceNEWS.com.au, pointing out future revisions of the measures will need to go deeper and further.
“The first response is to make sure that the industry actually accepts responsibility for ensuring that a woman is safe, and the new section of the code that is being introduced now is aimed at just that,” leading consumer lawyer Denis Nelthorpe said.
“And I think and I know from discussions with the industry that they have taken that seriously and I think they are getting it right.
“I think the provisions in the code deal with the issue of family violence in a sensible and sensitive way.”
The family violence support measures took effect this month, with signatories to the new General Insurance Code of Practice required to have a publicly available policy on how they will support customers affected by family violence.
The new code’s overall implementation date has been put back six months to July next year because of coronavirus disruption, but there was no change to the start date for the family violence provision. Many code enhancements aimed at helping vulnerable customers were also brought forward to July 1.
Mr Nelthorpe, who was a leading advocate for the Victorian Government’s royal commission into family violence, says the next set of reforms should ideally focus on the way wordings are made in policies and insurance contracts.
But he warns the industry may find it hard as it will require possible reforms to the legal framework.
“The consumer movement believes there is potentially a need for law reform. There is a need for significant changes to policy documents but there may also need to be fundamental changes to underwriting processes.”
The Financial Rights Legal Centre calls the family violence support provision an “important first step” taken by the industry to address some of the issues facing customer who are victims.
“This is a complex and difficult area, and having these guidelines in place will hopefully both improve awareness among the sector of the issues faced by those experiencing domestic abuse as well as bring positive change to the way insurers engage with their customers,” Policy and Advocacy Officer Drew MacRae said.
“We commend the [insurance] sector for bringing the implementation of this guideline forward during a time where there has been a spike in domestic and family violence.”
He says most insurance issues facing customers who are victims of domestic violence involve home and motor claims. For example, a partner who has left the family home may return and damage the property, but the claim can be denied because a policy has an exclusion around people who are known to the insured.
Consumer Action Law Centre Policy Officer Tom Abourizk says the provision means insurers are now at least required to take steps to better support people experiencing family violence and financial hardship.
But he called for more details from insurers.
“Many of the policies we have seen offer only limited detail on how insurers will handle this complex issue,” he said.
“We sincerely hope that these family violence policies indicate that insurers have also taken steps to ensure their staff can provide appropriate support to those experience family violence, and are not just ticking a box to comply with the new Code of Practice provisions.
“It is crucial that insurers have appropriately trained customer support staff to identify potential indicators of family violence, and help support those in danger or at risk of family violence through the implementation of processes that prioritise safety and recovery from the wide-ranging consequences.”
The owners of Opal Tower have launched a class action against the NSW Government, seeking compensation for new defects found in the building.
It is the second lawsuit filed against the state-owned Sydney Olympic Park Authority (SOPA), which owns the land the building sits on. Last year the owners launched legal action for individual losses they claim to have suffered due to lower property values and rental income.
SOPA is named as second defendant in the latest class action filed in the NSW Supreme Court. Icon, the builder of the 36-storey block, is first defendant, according to a copy of the court summons seen by insuranceNEWS.com.au.
A spokesman for SOPA declined to comment as the matter is before the court.
Residents were forced to evacuate on Christmas Eve in 2018 from the then recently completed tower after cracks were found in the structure.
According to local media reports, new defects have been found in the common areas by independent experts engaged by the owners, prompting them to launch the latest class action.
Opal Towers Owners Corporation Chairman Shady Eskander was quoted as saying the new defects have pushed up the insurance premium to $1.1 million. insuranceNEWS.com.au has reached out to Mr Eskander and the lawyer representing the plaintiffs for more details.
The NSW Government also declined to comment on the latest legal action but says it has delivered on its promise to reform the building and construction industry.
It says the new legislation, the Design and Building Practitioners Bill and the Residential Apartment Buildings Bill, will give consumers “peace of mind” when they enter the property market.
“For homeowners with existing defects in their buildings, the legislation provides new protections and recourse by stipulating that anyone carrying out building work has a legal duty to avoid construction defects both for new buildings and retrospectively for buildings built up to 10 years before the legislation was passed,” the spokesman told insuranceNEWS.com.au.
“This gives homeowners in properties built in the past 10 years new legal rights to recover the cost of repairing defects from responsible third parties through the courts, and has been universally welcomed by consumer groups.”
A new “POP. LOCK. STOP” ad campaign has been launched to remind motorists of simple steps they can take to prevent car theft as offenders “become more brazen”, sneaking into homes via unlocked doors or windows to steal keys left in accessible spots.
The new social media messaging campaign highlights that seven in 10 cars are stolen this way, the National Motor Vehicle Theft Reduction Council (NMVTRC) says.
It wants drivers to POP keys out of sight and LOCK all doors and windows to STOP sneak theft.
NMVTRC CEO Geoff Hughes said there is clear evidence of a shift in the behaviour of offenders, with more entering homes to steal car keys.
“The good news is sneak thefts are preventable,” he said.
The Insurance Council of Australia (ICA) has pushed backed calls from consumer advocates for a national pricing monitor, saying there is no evidence to back up their claims of “price gouging" by insurers.
Last week the Consumer Law Action Centre, Choice and Financial Rights Legal Centre joined forces to launch the latest pressure campaign against the industry, urging Canberra make it a “national priority” to set up a federal pricing watchdog before the next bushfire season.
They say the closure last week of the NSW Emergency Services Levy (ESL) Insurance Monitor’s office will leave a void in consumer protection.
But ICA spokesman Campbell Fuller says the critics have provided “no evidence that substantiates allegations of price gouging”.
He also rejects the groups’ claims that the ESL Monitor is necessary to prevent price gouging. Mr Fuller told insuranceNEWS.com.au that in the case of the ESL, “some insurers self-reported minor over-collection of a complex and variable tax on customers, and many insurers have also significantly under-collected the ESL”.
Mr Fuller says the industry is already one of the most heavily regulated in the country, having to comply with the Australian Securities and Investments Commission, the Australian Prudential Regulation Authority, the Australian Competition and Consumer Commission as well as the General Insurance Code of Practice.
The NSW Independent Pricing and Regulatory Tribunal and similar bodies in other states and territories also provide additional layers of protection for insurance customers, he says.
The consumer advocates say work done by the NSW Monitor has yielded important findings, such as pricing trends data and the so-called “loyalty tax” that penalises consumers with higher premiums when they choose to stay with the same insurer.
The insurance industry has the highest number of virus-related disputes, accounting for 38% of the 4773 cases lodged against financial services providers since March, when the pandemic was declared.
Credit was a close second at 36%, followed by superannuation on 16%, the Australian Financial Complaints Authority (AFCA) says in a statistics report for the 2019/20 financial year.
Of the 1813 virus-related general insurance claims received so far, more than 1500 are about travel insurance.
AFCA says about 56% of all virus-related complaints had been closed as at June 30.
For the 2019/20 year, consumers lodged 80,546 complaints against financial services companies, with credit products dominating at 43%, followed by general insurance on 24%.
AFCA says the overall disputes received represented a 13.7% rise in monthly complaints from the previous financial year. About $258.6 million was secured in compensation and refunds to consumers.
For general insurers, delays in claims-handling drew the highest complaints (3521), followed by claim amount (3171), denial of claim based on exclusion or condition (3032), denial of claim (2337) and service quality (1353).
The Financial Rights Legal Centre says the AFCA statistics, especially the ones on travel, mirror the cases it has been handling since the pandemic erupted.
“We too have had an abundance of calls regarding problems arising out of travel insurance claims, refunds and credit,” Policy and Advocacy Officer Drew MacRae told insuranceNEWS.com.au. “Travel insurance made up 78% of COVID-19 related calls to our Insurance Law Service.
“We have also seen COVID-19 compounding issues faced by those experiencing insurance problems from the Black Summer fires and other catastrophes that occurred earlier this year.”
In a separate statement, AFCA announced it has banned for-profit third party representative MCR Partners from lodging complaints on behalf of consumers and small businesses. The Melbourne-based accounting company’s website says it is “dedicated to helping individuals and small business in financial hardship”.
“It is important that consumers know they do not need to pay someone to lodge a complaint with AFCA,” CEO David Locke said. “We are an independent ombudsman service, and we are free to consumers.”
It is the first time that AFCA has exercised its powers to ban a “third party paid representative”. The 15-month ban came into effect on June 26.
Lloyd’s is urging industry and government collaboration in countries including Australia to improve risk protection responses to the COVID-19 pandemic and future risks.
The London-based marketplace last week released a white paper developed after widespread consultations that outlines three suggested models, labelled ReStart, Recover Re and Black Swan Re, to deal with immediate and long-term challenges.
“In the case of Australia, through this report we reached out to all of the mainstream general insurance industry directly,” Lloyd’s Australia GM Chris Mackinnon told insuranceNEWS.com.au. “We have shared this report with them and said we would like their input and their feedback and we’d like to work with them. We have also shared it with government at all levels.”
The ReStart proposal, which focuses on non-damage business interruption cover for SMEs seeking protection against a second COVID wave, is already being developed by Lloyd’s with an initial focus on the UK.
Recover Re, involving “after-the-event” cover, and Black Swan Re are proposed as initiatives that would be backed by Government guarantees.
Mr Mackinnon says global pandemics are beyond the resources of the insurance industry alone, while Governments also are under pressure from high level of expenditure on assistance packages.
The report says the global insurance and reinsurance asset pool is estimated at $US2 trillion ($2.87 trillion), while government fiscal support packages in response to the pandemic totalled $US9 trillion ($12.9 trillion) as of May. They could reach $US15 trillion ($21.5 trillion) by the end of the year, according to the International Monetary Fund.
“It is really important that we engage with governments and sovereign funds, to work in partnership to create some solutions going forwards,” Mr Mackinnon said.
Recover Re is a proposed government and industry open framework to provide immediate relief and cover for non-damage business interruption cover, including for the current pandemic.
The “after-the-event” insurance would allow a retrospective immediate cash injection for a targeted portion of SMEs hit by losses, with payments recouped by insurers over the long-term, supported by a government credit-risk guarantee.
The Black Swan Re framework could provide reinsurance for commercial non-damage business interruption cover for future systemic risks through pools backed by a government guarantee to funds where the pool is insufficient.
Mr Mackinnon says the proposals build on approaches already used in insurance markets, such as terrorism pools, and the work is underpinned by reforms underway to make Lloyd’s more flexible and innovative.
“The paper is effectively designed as a call to arms, to get the whole industry and governments around the world collaborating and thinking into the future,” he said.
Infrared thermography scanning technology is being rolled out in three Australian states to safeguard organisations from COVID-19 and flu infection breakouts within shared office environments.
The new technology will facilitate mass screening for symptoms at large office facilities in coming months and ensure the safety of tens of thousands of staff returning to a shared work environment.
It may save hundreds of thousands in unnecessary absenteeism, says developer Workplace Medicine Australia and partner ADG Engineers.
The technology was recently rolled out at a large construction site office compound in Melbourne’s CBD and is now being introduced at more workplaces across Victoria, Queensland and NSW.
The “COVID-19 Support System” automates early detection of potentially infected staff members, with a confidential app-based reporting system. It identifies workers with a fever or respiratory symptoms and provides them with immediate access to professional medical review.
Discussions on liability cover for farms hosting coal seam gas (CSG) operations are continuing between the Insurance Council of Australia (ICA), the Australian Petroleum Production and Exploration Association (APPEA) and other groups.
“ICA believes contracts between CSG companies and landowners should indemnify the land owner for CSG-related risks,” spokesman Campbell Fuller told insuranceNEWS.com.au. “Insurance remains available for farm risk policies.”
Agricultural groups highlighted concerns about liability insurance availability after WFI policies were changed to exclude the cover from farm policies where CSG activities are underway, while continuing insurance for other risks.
ICA, APPEA, the National Farmers Federation, Queensland Farmers Federation, AgForce and Cotton Australia say they are working to ensure a common understanding of the combined effect of insurance, legislative protections and indemnities in protecting farmers who host gas activities.
“It is hoped that this position will soon be reflected in a common indemnity provision being included in all land access agreements and a common public liability position in farm insurance policies,” they say in a joint statement.
IAG, which owns WFI, says the group does not specialise in underwriting resources and mining activities and the recent change to the liability section of the policy brings it in line with CGU’s approach.
“Since then, it has become clear that farmers would benefit from greater clarity around the liability protection that is in place should they have CSG operations on their properties,” a spokesman said last week.
“As part of this, we’re working with the ICA and will review any proposal around a common liability position across all impacted industries. However, this work is still underway.”
The Earthquake Commission (EQC) is spending $NZ3 million ($2.8 million) on new research to increase New Zealand’s resilience to natural hazards and reach its goals of stronger buildings, resilient infrastructure and access to insurance.
The program will fund eight leading scientists at five universities for research into understanding natural hazard risks, and finding ways to reduce the impact. Each research project will receive $NZ125,000 ($116,768) a year for three years.
EQC Head of Resilience Strategy and Research Jo Horrocks says New Zealand is well known as one of the riskiest countries in the world from a natural hazards point of view.
“Our university research program funding helps these visionary scientists make further advances in each of their fields, which range from paleoseismology, geology and engineering to economics and applying Mātauranga Māori to disaster risk reduction,” Ms Horrocks said.
[Mātauranga Māori is defined as “the knowledge, comprehension, or understanding of everything visible and invisible existing in the universe”.]
The program will support more than 30 students at Masters and PhD level to develop their skills and knowledge under expert guidance.
The EQC invests $NZ17 million a year in scientific research and data.
Suncorp has split the leadership of its Australian insurance business between two executives as it seeks to accelerate improved performance from its largest division.
CEO Steve Johnston has also consolidated group and insurance head office functions, which he says will provide a streamlined layer of support to reduce duplication, drive efficiencies and speed up decision-making.
Accountability for reinsurance will be combined with management of group capital and the balance sheet, and there will be a focus on fast-tracking digital and automation opportunities.
“The change to our model represents more than just a change to the structure,” he told a briefing last week.
“However, this is a critical first step, which will be combined with clearer accountability at all levels of the organisation and an across-the-board shift to more agile ways of working.”
The changes have seen the departure of CEO Insurance Gary Dransfield, who was appointed to lead the division in October 2017. Mr Dransfield joined Suncorp in 2009.
Current Chief Customer & Digital Officer Lisa Harrison has been appointed Insurance Product and Portfolio CEO, encompassing distribution channels, customer strategy, brand and marketing, product and pricing and innovation.
The role of Chief Operating Officer – Insurance will be taken up by Paul Smeaton, who has led the New Zealand business for the past five years and who has been with Suncorp for 26 years.
Mr Smeaton will lead all aspects of claims management and operations and some group functions including real estate management and procurement.
Suncorp also said last week that the impact of COVID-19 on the group’s profit and loss for the past financial year is expected to be “broadly neutral”, excluding investment market movements and bank impairment losses.
The company has finalised its catastrophe reinsurance program for the current fiscal year amid a hardening market, leading it to increase the natural hazard allowance by $90-$130 million.
Morningstar analyst Nathan Zaia says many big businesses have shown agility in response to the COVID-19 pandemic and Suncorp is no exception.
“The rejig to the operating model in our view is an attempt to maintain this momentum and for CEO Steve Johnston to install an executive team he thinks can execute change,” he wrote in a research note.
Macquarie analysts say the restructure “clearly draws a line” between Suncorp’s bank and general insurance businesses, but management has advised no “shift of intent” regarding the role of the bank within the group.
Fund manager Australian Ethical Investment has sold its stock in US-listed Marsh & McLennan Companies because of broking subsidiary Marsh’s involvement with the Adani coal mine in central Queensland.
The stock was held in its Australian Ethical International Shares Fund and was disposed of last month for $5 million.
Australian Ethical has also decided to drop JLT as a broker for its insurance needs, and is looking for new brokers. JLT was acquired by Marsh last April for $US5.6 billion ($8.09 billion).
“The reason for the divestment is our assessment that Marsh has provided insurance services to facilitate the development of the Adani Carmichael coal mine,” Head of Ethics Research Stuart Palmer told insuranceNEWS.com.au.
“Marsh has subsequently failed to provide a clear public commitment not to provide services to support projects of this type in the future.”
He says the project is “fundamentally inconsistent” with the objectives of the United Nations-backed Paris Agreement to curb greenhouse emissions globally.
“As a result we have assessed that the company is not aligned with our ethical charter, including our ethical criteria for financial services and insurance companies,” Dr Palmer said.
Last month Marsh was named in a newspaper report as the broker that arranged the insurance program for the Adani mine. Marsh has consistently declined to comment.
Melbourne-based Insurance House has acquired an insurance brokerage in central Victoria as the group continues to expand its reach.
“The acquisition of Maw Insurance further deepens our connection with regional Victoria where we have been a key community partner for over 35 years,” Head of Broking Scott Leis said.
“Regional and rural Australia is an important part of our DNA, supported by our other recent acquisitions in Taree and Shepparton.”
Maw Insurance MD Dennis Maw says joining with Insurance House will provide support as the brokerage has become busier.
“Having worked with the group as authorised representatives for a number of years now, we felt comfortable that we shared the same values,” he said.
Insurance House acquired Shepparton-based O’Sullivan Insurance Brokers early this year and also has regional Victorian offices in Echuca, Kyabram and Boort.
It now has 13 office locations around Australia and more than 40 authorised representatives.
After three years introducing streamlined technology, QBE’s performance has “increased tremendously” with almost no outages, Head of technology for Data, Advanced Analytics and Integration Shrenik Dagli says.
Now he’s urging a standard interface, similar in concept to open banking, to be adopted across the insurance industry.
Insurers have “some way to go to reach that level of standardisation and maturity across the industry,” Mr Dagli says in online presentation hosted by integration and API platform provider MuleSoft.
QBE has transitioned to a cloud platform and Mr Dagli says that with a centrally managed application program interface (API) strategy, much faster integration in adding a new region or vendor could be achieved.
“There’s a huge push to take this to the next level,” says Mr Dagli, who is based in New York.
“Here’s the core insurance APIs that almost any insurance company would use. What would it take for us to take the lead and say, ‘Let’s standardise these across the industry; let’s work with the different partners and organisations to come up with a common strategy?
“We have been able to integrate very, very quickly, especially in the claims space with a lot of our excellent partners, which has improved our customer satisfaction in a very big way.”
He says Uber, Amazon and Netflix have reset customer expectations through seamless, highly personalised services which people now want to see in other industries. This is forcing insurers to modernise and replace their core legacy systems.
IAG NZ lead engineer Derk Henderson told the online MuleSoft conference that APIs “are central to platform rationalisation and understanding of an organisation’s data”.
AUB Group is closing its Sydney CBD premises in Philip Street and moving its head office to the northern side of the harbour where the Sura underwriting agencies business is based.
The company advised last week that its registered office and principal place of business would change to Level 14, 141 Walker Street in North Sydney from the start of this month.
The move consolidates operations at the one location, and will see about 200 staff working from Walker St.
AUB moved its head office to 88 Philip St in 2016 from its previous base on the Pacific Highway in North Sydney.
QBE has entered into an agreement with dorsaVi for wearable on-body sensors which will allow customers to better predict, manage and reduce the likelihood of musculoskeletal injuries in the workplace.
The sensors have demonstrated harm prevention and better productivity where manual handling is involved.
QBE will provide its broker network and their mutual customers weith access to the wearable sensor technology to help manage risks to workers.
Australia GM People Risk Rob Kosova says the the agreement is the latest QBE collaboration to help make customers’ workplaces safer and increase productivity, and there are plans for more agreements to combine data, technology and science to “unlock deeper risk, insurance and claims insights and expertise.”
The on-body sensors monitor and measure muscle activity, quantify movement risk and guide appropriate risk mitigating strategies, QBE says. The sensors can track, analyse and report on movement throughout the day in real time.
IAG has invested in startup Bluedot, which counts McDonald’s and Transurban among the users of its customer location tracking technology.
The insurer says IAG will use Bluedot to explore innovative ways to provide customers with information that helps them understand and protect against risk.
This might include sending alerts on road safety hazards and taking the safest routes to destinations.
San Francisco-based Bluedot’s product identifies where a mobile app user is.
“Know where your customers have been, where they frequent and anticipate how best to engage them. 1:1 insights delivered directly from the source,” the company says.
IAG’s venture capital fund partner Scott Gunther says the insurer was impressed by Bluedot’s contactless solutions.
Vero says a grants program offered to SME customers will help them rebuild momentum quickly as restrictions ease and government subsidies scale back.
The insurer is offering 25 grants with a combined total value of $250,000 to SMEs, with funds to be awarded by payment of an approved supplier invoice for advertising, equipment, business consulting or promotional printing.
Applications are open until the end of the month to eligible Vero Business Insurance, Vero Corporate Insurance and GIO Workers Compensation customers that have suffered financial hardship due to COVID-19.
“These grants will empower SMEs to choose the support that’s right for them. Vero will continue to back brokers, and their SME customers, as they get back to business,” Head of Commercial Intermediaries Anthony Pagano said.
The program comprises five grants with a value of $20,000, 10 grants for $10,000 and the remainder have a value of $5,000 each.
More details are available here.
Underwriting agency Sure Insurance says it has made huge strides in north Queensland since its commercial launch a year ago, deploying a “specialist” mindset to crack a market that has seen an exodus of insurers.
The agency this month started offering residential strata insurance, in addition to home insurance that has been available since it started.
“We’ve been really blown away by the support there,” MD Bradley Heath told insuranceNEWS.com.au. “We are very, very happy with our growth and have done tens of thousands of quotes.
“We understand the market very well, we understand the realities of the market. We have taken a very specialist approach.”
Mr Heath says the business has also enjoyed strong support from Liberty Mutual, which is the capacity provider for its two main insurance products.
The entry into strata will see Sure initially provide cover for buildings up to a maximum $5 million in replacement value, with a review to come in the future.
The product will be available through Sure-authorised brokers across regional Queensland.
“We know insurers have continued to exit the strata market in the northern regions of Queensland, and [we are] now ready to step in and assist and support struggling body corporates and lot owners,” Mr Heath said.
Underwriting agency Enthusiast Motor Insurer has stepped up efforts to reach direct customers, launching a digital and social media branding campaign to raise awareness of its range of offerings for vintage, sports and other types of cars.
The agency, which is underwritten by Assetinsure, usually places its policies through brokers, but Business Development Manager Brett Williams says it is now keen to build up its business through the direct channel as well.
It has engaged design and marketing agency Dijgtal to work on the new campaign, sharing feel-good stories from customers who are car enthusiasts. The campaign contains multiple episodes that will be released over the coming year.
“We were not very well known in this niche segment of the auto insurance market,” Mr Williams told insuranceNEWS.com.au.
“Having such a partnership in place has ensured our targets have been met and our business has grown according to plan, and will continue to do so into the future.”
The Insurance Council of Australia (ICA) “strongly supports” the findings of the draft NSW Review of Federal Financial Relations report, which recommends the abolition of all state insurance taxes.
The report says there is “no principled case for applying a special tax on insurance” and that the NSW Emergency Services Levy (ESL) and other insurance taxes should be replaced as a priority.
ICA is now urging the NSW Government and Treasurer Dominic Perrottet to act on the report’s recommendations.
But writing in the Australian Financial Review, Mr Perrottet warns that no decisions have yet been made.
“Let me stress – this is a draft report from an independent review led by David Thodey and a panel of eminent experts,” he said.
“It’s not government policy. Over the coming weeks and months, we will engage closely with the panel’s ideas and consider whether or how to proceed.”
But Mr Perrottet concedes that “doing nothing is no longer an option”.
ICA CEO Rob Whelan says insurance taxes hit people who “do the right thing” and protect their assets, while also sapping the productivity of the economy.
“State taxes on insurance are especially damaging at present,” Mr Whelan said.
“Communities and businesses are struggling with the impact of natural disasters, COVID-19 and the recession, and these taxes are an unjustified impost.
“The situation in NSW is particularly dire for families, who are now paying more than 50% in taxes on household policies, and small businesses, which are typically paying 70%. This is because of the combined impact of the GST, state stamp duty of 9% and the ESL.
“I applaud David Thodey in taking a strong and rational view to achieve the best broad-based outcomes for all NSW residents, and not just a simple lift and shift on taxation.
“We agree with the Thodey report that there is a pressing need for abolishing insurance taxes, with replacement revenue sourced from more efficient and equitable taxes.
“The industry urges NSW Treasurer Dominic Perrottet and Premier Gladys Berejiklian to accept the report’s findings in relation to insurance stamp duties and the ESL, and prioritise this vital reform process.”
Comments can be made to the review up until the end of this month “to inform its Final Report to Government”.
ICA says it will review the draft report in consultation with its members and provide feedback.
Click here for more details and to read the full report.
Fire and Emergency New Zealand (FENZ) funding reform progress will be delayed until after this year’s general election due to the Government’s focus on the COVID-19 pandemic.
Department of Internal Affairs GM Policy Raj Krishnan says the Government’s response to COVID-19 came shortly after public consultation concluded on the FENZ review paper earlier this year, causing progress on phase two to be placed on pause.
“The department will now seek a Government decision on how Fire and Emergency should be funded after the election,” he told insuranceNEWS.com.au.
“Once this decision is taken, there will be further consultation with stakeholders on the details of the proposed funding regime.”
A recently released summary of submissions shows pressure has increased for FENZ to be at least partly funded through taxation, rather than through a levy on insurance premiums that allows “free-riding”.
“Of those that commented on this there was a range a range of positions, from stating that Fire and Emergency should be wholly funded through general taxation, through to an increase to the Crown contribution,” Mr Krishnan said.
The consultation paper released last year said funding mainly through taxation was outside the scope of the review, but many responses protested that it should be considered.
The Insurance Council of New Zealand (ICNZ) says full taxpayer funding is the best option, but it would support a mixed model that includes direct levies paid on property and through motor vehicle licensing.
“We have never considered that funding FENZ through a levy on insurance is appropriate and we’re pleased with the overwhelming support from the submissions for future funding to be supported by general taxation,” ICNZ CEO Tim Grafton said.
FENZ was formed in 2017 through the amalgamation of rural and urban authorities, while funding continued to be provided by an insurance-based levy under transitional arrangements.
Legislation was passed last year to extend the transitional levy provisions to July 2024, while allowing the date to be brought forward as needed to implement a new regime.
The New Zealand general election will be held on September 19.
Angela Kelly, Lloyd’s Singapore CEO since November 2016, will relocate to Melbourne to take on the role of Chief Insurance Officer at The Victorian Managed Insurance Authority (VMIA) in September.
During a 30‐year insurance industry career Ms Kelly has worked in Melbourne, Sydney, Queensland, Hong Kong and Singapore, and was formerly Swiss Re Corporate Solutions’ head of casualty Asia Pacific and CEO – Singapore.
The VMIA provides insurance and risk advice to government departments, agencies and community clients across the state. It insures more than $208 billion of Victorian state assets and supports 4600 organisations.
The authority also offers domestic building insurance in Victoria, which covers homeowners for incomplete or defective building work.
The General Insurance Code Governance Committee (CGC) has published a guidance note to assist subscribers with the reporting of significant breaches.
A previous CGC inquiry had identified “a lax attitude” towards identifying breaches and called for improvement.
“The CGC’s inquiries revealed that subscribers are failing to correctly identify multiple breaches connected to the same underlying cause as a reportable significant breach, instead including them as standard breaches in their annual report of breach data,” the note says.
“Some subscribers have historically reported a disproportionally low number of significant breaches when compared to other subscribers of comparable size and market share.”
The guidance note is aimed at ensuring code subscribers identify significant breaches and report them in a timely manner.
“Given the potential negative impact on consumers, if you fail to identify, report or remediate significant breaches in an efficient and timely manner, you will be subject to sanctions under both the current and 2020 code,” the committee says.
To see the full guidance note, click here.
New Zealand’s Financial Markets Authority (FMA) has committed to reporting on the progress of key pieces of law reform such as its present insurance contract law review, including implementation dates and milestones.
The FMA says the insurance contract law review – one of seven legislative reforms it is currently conducting – is aimed at improving the conduct of financial institutions and market participants, the wellbeing of customers and investors and confidence in financial markets.
“We will give examples to demonstrate how the FMA has provided effective input in relation to law reform and system coordination,” a new FMA statement of intent says. “We will seek feedback from stakeholders on the effectiveness and efficiency of our role in implementing law reform.”
The FMA says it will deliver policy objectives in a way that promotes confidence in the regulatory regime and financial markets generally.
It intends to contribute to policy development through advice on regulation and practical implementation to the Ministry of Business, Innovation and Employment, as well as other relevant agencies and ministers.
WorkCover WA has published a set of standards outlining new service expectations for insurers.
Produced after six months of consultation, WorkCover says the Insurer and Self-insurer Principles and Standards of Practice will “safeguard the viability” of the state’s workers’ compensation scheme.
The standards clarify areas which if not performed well may result in disadvantage for workers and employers. They respond to findings from royal commissions, jurisdictional reviews and regulatory expectations.
Effective from this month, they detail six priority areas with the greatest potential to positively impact workers and employers: worker and employer experience, claims management, injury management, underwriting, scheme regulation and administration, and records management.
WorkCover WA has an online self-assessment tool for case managers available here.
AMP CEO Francesco De Ferrari has voiced support for increased oversight of litigation funders, tying their financial backing of class actions to the escalating cost of securing professional indemnity (PI) insurance.
He told the House of Representatives Standing Committee on Economics hearing last week that major reinsurers now view Australia as a “very dangerous litigation risk”, and as a result PI premiums have shot up with potentially severe consequences for consumers.
Citing a recent study from public policy think-tank the Menzies Research Centre, he says Australia is presently the second most attractive jurisdiction for class action litigation, after the US.
The study found plaintiffs’ share of settlements has declined, falling from 59% in 2016 to 39% last year.
“So litigation plaintiffs are taking a much bigger share of the settlements,” Mr De Ferrari said. “That creates an escalating cost of doing business in Australia.
“It's reflected in higher professional indemnity insurance. It's reflected in the fact that today a number of the large reinsurers globally consider Australia to be a very dangerous litigation risk.
“Ultimately, that will result in a higher cost of doing business, which will result in job losses and higher costs being passed on to consumers.”
He backs the Government’s recent measures to rein in litigation funders, requiring them to hold an Australian Financial Services Licence from late next month.
The Government has also referred an inquiry into litigation funding and the regulation of class actions to the Parliamentary Joint Committee on Corporations and Financial Services. A report will be released by December 7.
“The whole area of litigation funding is a topic that I really worry about,” Mr De Ferrari said. "I welcome the Government's push to get these litigation funders to have an AFSL licence because that will require them to also act in the best interests of the plaintiffs, which is not true, I believe, with the setup that we have today.”
But law firm Slater and Gordon has hit back at Mr De Ferrari’s comments, calling them a “kind of clumsy attack” from a financial services giant that is at the centre of two class actions – one of which is led by the law firm.
“CEOs like Francesco De Ferrari are telling politicians the solution to getting hit by class actions is to make it harder for Australians to sue them,” Head of Class Actions Ben Hardwick said. “I would argue the solution is to stop breaking the law.
“Those of us who run class actions against financial sector giants must be doing something right to trigger this kind of clumsy attack from the boss of AMP.”
Reforms aimed at lifting standards in the financial advice industry have led to increased compliance cost for advisers, with adverse impact on consumers in the form of higher fees, a parliamentary hearing was told last week.
Peak bodies representing the profession say they are for changes that will improve the industry but fear what has been proposed and implemented so far, with more to come over the next 18 months, could hollow out the industry, denying Australians access to financial advice.
Many advisers have been forced to raise the fees they charge, with the average cost of a statement of advice up 10% to $2700 from last year.
Not only have the increased fee made it more expensive to seek advice, the situation has left several advisers “deliberately choosing clientele that can afford to pay” in order to survive, the Financial Planning Association (FPA) said.
“Effectively, more Australians are wanting to access advice, but what we are seeing is the affordability of that declining,” FPA CEO Dante De Gori told the House of Representatives Standing Committee on Economics.
“While many of the current waves of reform are welcome and will improve the overall standard of financial advice, their upheaval they are causing creates some significant risks.
“The demand is there, but we are seeing, on two sides, reform and regulation which are increasing the costs and therefore driving financial planning businesses to target higher net wealth clients.”
Association of Financial Advisers (AFA) CEO Philip Kewin, who told the committee the number of registered planners has fallen by 6000 in the past 18 months, agrees cost have increased because of tighter regulatory scrutiny.
“We are seeking smarter regulation, not more regulation,” he said. “Financial advisers have multiple regulators, which means multiple codes to follow, duplicate and conflicting rules and guidance, multiple registration requirements and multiple fees to pay.
“In recent years everything has become a lot more complicated.”
Research shows only about 10% of adult Australians have an active financial adviser relationship, which is not surprising considering the prohibitive cost of seeking advice.
“This trend is reflective of increasing costs and declining income and a need to focus on higher fee-paying clients,” Mr Kewin said. “This is a concerning trend, as financial advice is critical to people of all levels of wealth.
“Financial advice is often misunderstood and the benefits unappreciated by those who don't have access to it.”
AFA GM Policy and Professionalism Philip Anderson says some of the mandatory requirements made by the various regulators are duplicative or inconsistent. He believes there is a “great opportunity” to try to review them and see it from the perspective of delivering the best outcomes for clients in terms of cost.
The $3 billion sale of AMP’s life insurance business to Resolution Life is complete.
Bermuda-based Resolution Life says it is “delighted” with the deal, which gives it a strategic platform outside its traditional markets in Europe and North America, and positions the company strongly for future growth in Australia and New Zealand.
“We are thrilled to be part of Resolution Life,” AMP Life and Resolution Life Australia CEO Megan Beer said. “We welcome this investment, which will enable our people to focus on initiatives to enhance outcomes for AMP Life policyholders.”
As part of a revised agreement made in August, AMP receives $2.5 billion in cash and $500 million in equity interest in a new holding company that will own AMP Life. That gives AMP about a 20% stake in Resolution Life Australia, which the new owner says will ensure close alignment between the customers and advisers of the two companies.
AMP cleared a final regulatory hurdle for the sale with the New Zealand central bank last month when it agreed to the formation of a trust to hold local capital and assets to give additional protection in the event of insolvency, and other benefits.
AMP will continue to provide technology and administrative services to AMP Life for two years.
Resolution Life founder and executive chairman Clive Cowdery says the “strategic need for life insurance groups to release trapped capital and resources continues to grow globally”.
S&P has affirmed 'A-' ratings on AMP Life and Resolution Life Australia. The outlook remains negative, reflecting potential pressure if economic conditions worsen.
Resolution Life Australia’s board will be chaired by David Clarke, who was formerly CEO at MLC and Lloyds Merchant Bank in London, and a director at AMP. Resolution Life New Zealand’s board will be chaired by Anne Blackburn, the Chair of the NZ Government Superannuation Fund Authority. AMP Life will continue to be governed by an independent board of directors.
Resolution Life has spent $US16 billion ($23.22 billion) of equity so far across 28 life insurance companies.
The Australian Prudential Regulation Authority (APRA) said last week it has registered Resolution Life as a non-operating holding company of AMP Life and The National Mutual Life Association of Australasia under the Life Insurance Act 1995.
The Australian Securities and Investments Commission (ASIC) has cancelled the licence of MyPlanner Professional Services, a Queensland-based financial services provider that is in liquidation.
The cancellation followed moves in February by the corporate regulator to suspend the firm’s Australian Financial Services (AFS) licence for 10 weeks over continued compliance concerns.
“ASIC cancelled the licence because MyPlanner Professional is no longer operating a financial services business and is in liquidation,” the corporate regulator said. “Under the Corporations Act 2001, ASIC may suspend or cancel an AFS licence if the licensee ceases its financial services business.
In December 2017, ASIC imposed additional conditions on the firm’s licence because its representatives were giving poor advice and there was inadequate supervision.
Funds under management in both the wholesale and retail markets fell sharply in the March quarter, as the virus pandemic soured investor mood, according to data from actuaries and researchers Plan for Life.
Overall wholesale funds declined 9.6% or $118.6 billion to $1.12 trillion from the December quarter, while total retail funds tanked 12.4% to $856.8 billion.
“Global investment markets dropped sharply with the fall initiated by the extraordinary quarantine measures enforced to slow the spread of the COVID-19 pandemic,” Plan for Life said.
“They have since partially bounced back but are starting to go backwards once more as economies worldwide remain in trouble with this volatile and uncertain situation expected to continue as in many countries the virus spread remains out of control.”
In the wholesale market, institutional funds declined 8.8% to $682.32 billion from the December quarter, investment funds slipped 10.8% to $406.88 billion and superannuation and pension funds fell by a similar margin to $28.8 billion.
For the retail market, leading manager BT Financial suffered a 14.8% drop in funds under management to $147.2 billion while second-ranked AMP recorded an 11.4% decline to $135.8 billion.
Commonwealth/Colonial and National Australia Bank/MLC, ranked third and fourth respectively, were also affected by the market turmoil, posting falls of 12.4% to $128 billion and 13.9% to $104.6 billion.
More than half of life insurance claims made by retail customers are now lodged over the phone, Westpac-owned wealth manager BT says.
Since the launch of its tele-claims service in 2010, the number of claims processed over the phone has steadily increased, making up 58% of new monthly lodgements for benefit payments across trauma, life, terminal illness and other income protection cover.
BT says making a tele-claim reduces the decision-making time by up to four weeks, from notification of a claim to first payment into the customer’s bank account. Customers spend on average 45 minutes on the phone to submit supporting information for their claims.
“Over the years BT has looked for opportunities to streamline life insurance processes, so we can improve the customer experience,” Head of Claims Neil Borthwick said.
These include tele-interviewing people who are applying for life insurance, through to tele-claims and using medical e-certificates.”
The board of ClearView Wealth has appointed Geoff Black as its new chairman and Jennifer Lyon as director.
Mr Black replaces Bruce Edwards, who said in April he had decided to retire from the position after more than seven years on the board.
A director on the board since November, Mr Black has more than 30 years’ experience in life insurance and wealth management and was formerly MD of PrefSure Life and Lumley Life.
He is a director of Platypus Asset Management and headed business development at RGA Australia from 2015 until April 2019. Mr Black also held senior positions at TAL Australia.
Ms Lyon has served on the board of ClearView’s Superannuation Trustee Board, ClearView Life Nominees, for five years. She was formerly President of the Actuaries Institute of Australia, MD of recruitment firm Qed Actuarial and held positions at AMP and Towers Perrin.
Jennifer Mogg has been appointed to the board of The Advisers Association (TAA), which was created with a name change after AMP Financial Planners Association merged with Hillross Advisers Association.
Ms Mogg is the Operations Manager, Company Secretary and a director at Invest Blue, a planning firm licensed by AMP Financial Planning.
She has 20 years’ experience in the insurance industry including two years at Suncorp.
The TAA board and CEO Neil Macdonald work in partnership with AMP, AMP Financial Planning and Hillross and is made up of authorised representatives of AMP Financial Planning and Hillross Financial Services.
Ms Mogg would help “deliver on our intent to represent, protect and enhance our members' interests, so that they are enabled to efficiently deliver affordable financial advice to their clients," Mr Macdonald said.
NSW state-owned insurer icare has called for nominations across eight categories in its annual Care and Service Excellence (CASE) awards, which this year take place after a period marked by natural disasters and a pandemic.
CEO John Nagle says the year has presented unique and familiar challenges which have had a wide impact across the industry.
“There are many stories of strength and resilience coming out from the bushfires, floods and COVID-19 pandemic, and the CASE Awards 2020 will celebrate this continued show of strength, empathy and support our customers,” Mr Nagle said.
The awards aim to recognise and support continuous improvement in the NSW insurance and care sector and encourage innovation and process improvements.
The eight categories are: Young Professional of the Year – Care & Service; Outstanding Care & Service; Excellence in Injury Prevention; Customer Excellence; Excellence & Innovation in Injury Management; Excellence in Improving Employer Performance: Lifetime Achievement; and the CASE Award.
Nominations, to be submitted through the CASE awards website, close on August 16, finalists will be notified on September 3 and the winners will be announced at an October 21 ceremony.
More information is available here.
Steadfast has cancelled its New Zealand conference scheduled for Wellington in October due to the COVID-19 pandemic.
NZ CEO Bruce Oughton says the firm is closely monitoring the evolving situation and has made the difficult decision to cancel the event despite New Zealand moving to Alert Level 1 status and easing restrictions.
“Our first and foremost priority is the health and safety of our attendees, and we strongly feel this is the right decision given the current circumstances,” he says in a note to brokers. “A new date will be communicated once we make alternative arrangements.”
Steadfast had planned to hold the event at the Te Papa Museum on October 11-13.
Liberty Specialty Markets has promoted Robert Mercer, who previously led Professional and Financial Lines claims, to the new position of Deputy Head of Claims for Asia Pacific, based in Sydney.
His appointment was announced in a brief post on the insurer’s LinkedIn page.
“[He] has long been one of our senior claims leaders, and relied on to navigate highly complex losses,” Liberty Specialty Markets said. “He’s now taking on broader leadership responsibilities.”
Liberty says he will continue to lead the Professional and Financial Lines claims team as well as a broader suite of products and services.
The Australian and New Zealand Institute of Insurance and Finance (ANZIIF) is seeking feedback from insurance professionals on a draft loss adjusting qualification.
It wants industry members, regulators and other key insurance stakeholders to review the FNS51420 Diploma of Loss Adjusting and related units, as well as underwriting specific units.
ANZIIF worked with the Australasian Institute of Chartered Loss Adjusters and PwC to suggest improvements.
The revised loss adjusting qualification ensures a clear pathway to becoming a chartered loss adjuster, while the underwriting-specific units have been updated to reflect current technologies, demand for more technical knowledge and compliance.
ANZIIF CEO Prue Willsford says the request for feedback is a “great opportunity for the industry to contribute to the growth of professional standards in insurance”.
“The insurance industry continues to experience extensive changes due to regulatory and legislative changes,” she said. “It’s critical that training requirements in the insurance sector are reviewed to ensure our industry obtains the skills and competencies required to effectively service the needs of our customers.”
Feedback can be made until July 17 through the PwC website.
HDI Global Specialty SE Australia has promoted Claims Manager Kosta Biris to take up the newly created Head of Claims role.
The specialty lines insurer also promoted Delegated Authority Underwriting Manager Peter Gezimati as inaugural Head of Delegated Authority.
They will be based in Sydney and have already started in their new roles.
Deloitte has appointed Anne Driver as the consulting firm’s Audit & Assurance Partner and IFRS 17 General Insurance Leader.
Ms Driver, who began work at the consultancy last week, was previously QBE Head of Finance Policy and Global IFRS 17 Business Lead.
“As Deloitte’s new IFRS 17 General Insurance Leader, [her] extensive experience with IFRS 17 will help organisations to implement and operationalise the new standard,” Deloitte Australia Insurance Leader Arthur Calipo said.
“Her practical knowledge of what it takes to move forward with the implementation of the biggest evolution in insurance reporting will be welcomed by our clients.”
The Insurance Council of New Zealand (ICNZ) will host a number of webinars to discuss the challenges facing the insurance industry globally.
Billed as the ICNZ Speaker Series to replace this year’s annual conference, the first webinar on July 14 has lined up Australian Prudential Regulation Authority Executive Board Member Geoff Summerhayes to talk about the post-pandemic landscape facing the industry.
ICNZ CEO Tim Grafton will chair the panel discussion, which will also feature Association of British Insurers Director General Huw Evans and Victoria University of Wellington’s Ilan Noy, who is Chairman of Economics of Disasters and Climate Change.
“While we are sad that we won’t be meeting in person this year, we are very much looking forward to bringing together a broad range of thought leaders to share their insights on important industry topics,” Mr Grafton told insuranceNEWS.com.au.
“Kicking off on 14 July and running through to the end of the year, the series will provide thought-provoking sessions that will encourage wide conversation while also enabling you to continue your professional development with CPD credits earned for each webinar.”
Six webinars have been planned for the Speaker Series, with the second set for July 30, focusing on the impact of COVID-19 on the financial landscape.
Click here for more details on the webinars.
QBE Foundation is backing charity R U OK?’s new campaign to promote a culture of mental health awareness in the grassroots sporting community.
The ‘Hey Sport, R U OK?’ campaign will direct sport coaches across Australia towards online resources that will equip community coaches with skills to identify and support sporting community members who might be struggling mentally.
QBE, which has partnerships with the Sydney Swans AFL club and the NSW Swifts netball side, will “encourage our elite sport partners to share the resources throughout their clubs and promote the campaign at a grassroots level,” QBE Foundation Australia Pacific co-chair Jon Fox said.
About 5 million Australians participate in grassroots sport or its organisation, encompassing all age groups and economic, regional and cultural demographics.
R U OK? CEO Katherine Newton says sport can break down barriers, reduce stigma and provide a safe and inclusive environment where everyone can thrive.
“All our feedback and advice points to coaches as having the most influential role in grassroots sport and the opportunity to change lives,” she says.
Usage-based insurance (UBI) has been given a popularity bump by the COVID-19 pandemic as social distancing and lockdowns see car owners drive much less.
UBI premiums are calculated depending on the use of the insured asset.
“As a result of COVID-19, customers will appreciate UBI’s value proposition more, as they will feel unfairly treated by paying to protect an asset they barely used during the past few months,” analytics firm GlobalData says.
A UK survey by GlobalData last year found 9.7% of drivers had a UBI policy and the company expects this figure to increase as a result of COVID-19.
UBI policies are more popular among younger drivers, with uptake just 2% among those aged 50–54.
UK insurer and UBI provider By Miles recently raised £15 million ($27.06 million) in funding and had its strongest week ever in April. Pay-per-mile motor insurer Just Auto Insurance recently launched in the US.
GlobalData says the ongoing interest in UBI will spur more cover of this nature to be developed.
“While these policies are mostly focused on motor insurance, more lines of business will begin to experiment with the model as well.”
The Association of British Insurers (ABI) has rejected accusations that the industry is trying to use the UK Government’s pandemic financial grants as a subsidy to avoid paying business interruption (BI) claims.
Responding to enquiries from small business owners, ABI Director General Huw Evans says insurers are required by law to only pay for actual income loss suffered if a BI claim is accepted.
Very few UK businesses have BI policies that cover for pandemics. He says that in these cases, the final claim paid will have to take into account government grants that may have been given to claimants.
“If insurers were to make payments beyond those set out in the insurance policy, to cover income firms had not ended up losing, they would be unable to recover such payments from their own reinsurance,” Mr Evans said.
“They would also risk being non-compliant with regulatory requirements that demand insurance executives hold the right amount of capital for the claims they have contractually committed to pay and that they manage the firms’ finances prudently and responsibly.
“I therefore do not share the characterisation that insurers are treating the grant scheme as a subsidy to protect against losses.
“They are simply recognising when income has already been replaced and avoiding double-compensating the claimant.”
Organisers of major events are unlikely to be able to secure pandemic cover for business interruption in the immediate future, making sporting tournaments and other events extremely risky for organisers until a vaccine is available, GlobalData says.
One of the few organisations to make a pandemic claim is the British Tennis Open grand slam event at Wimbledon, which is expected to receive a payout of more than £100 million ($198.3 million) after paying around £1.5 million ($2.98 million) a year in pandemic insurance premiums since the SARS outbreak 17 years ago.
Hoewever, Wimbledon has said it will not be able to renew its business interruption insurance with a pandemic clause in 2021, while Tennis Australia has also said "pandemic coverage will not be viable to include for 2021" for the Australian Open.
GlobalData analyst Ben Carey-Evans says holding major sporting events before widespread vaccination is available poses an extreme risk to sporting tournament organisers as insurers back away from offering business interruption cover.
Insurers withdrawing business interruption insurance “comes as no surprise” given the scale of the potential costs, as seen for this year’s Wimbledon cancellation.
GlobalData says the Wimbeldon event earns around $US160 million ($231.26 million) in media rights and $US151 million ($218.25 million) in sponsorship each year, and this should be secure for 2021 as the tennis tournament is “very likely” to go ahead.
However, capacity crowds “may be ambitious” even by next June, suggesting $US52 million ($75.16 million) in annual ticket sales is at risk.
Three insurtechs focused on pandemic-related solutions and products have joined Lloyd’s incubator program for promising digital start-ups.
The addition of Metabiota, Praedicat and Dialogue to Lloyd’s Lab is part of the market’s long-term response to the pandemic fallout, as it moves to expand the scope, process and timings of applicants to the program.
“The purpose of this is to help Lloyd’s and the start-ups bring to market more quickly their COVID-19 related products and innovations,” the market says in a statement.
“Lloyd’s wants to understand, model and create products that better protect customers against pandemics, and other systemic risks.”
Metabiota focuses on quantifying and mitigating epidemic and pandemic risk, Praedicat uses litigation data and science to predict the next big liability catastrophe, and Dialogue specialises in credit and political risk.
Allianz Global Corporate & Specialty (AGCS), the industrial insurer of Allianz Group, has set out on a “comprehensive transformation” program to turn around its business by 2024.
AGCS CEO Joachim Mueller says the plan is aimed at regaining its market leadership and profitability in the corporate and specialty insurance segments.
He says the business will achieve the goals through improved technical capabilities across its core underwriting and claims functions, streamlining of processes and enhancing of current distribution and sales function.
It will also invest in digitalisation to strengthen its core business and customer offerings.
“We will now focus our entire business under a new strategic direction,” AGCS CEO Joachim Mueller said.
“We will put technical excellence in underwriting before growth, simplify and strengthen our global model to ensure that we think and act as one team, and become more efficient, leaner and faster, benefitting us and our clients.
“Our joint ambition is set high. The ‘New AGCS’ will be the market leader in our target segments. We expect to see significant profitability improvements of our underwriting results from 2021 onwards and aim to achieve the full turnaround and transformation of our company by 2024.”
A late-night message to insuranceNEWS.com.au’s Facebook page suggested something was up.
“Just watched A Current Affair… You pack of scumbags, the lowest of the low.”
The Nine Network’s flagship current affairs program had insurance in its sights again, and it wasn’t pretty.
Beaconsfield mine disaster hero Darren Flanagan, now running a camping store in Nowra NSW, had fallen on hard times thanks to fires, floods and COVID-19 – and his insurer, Chubb, had declined his $100,000 business interruption claim.
Cue carefully crafted emotive soundbites.
Mr Flanagan explained how everyone has rushed to his aid – except his insurer.
“The only people that haven’t helped me at all is the people that I’ve paid insurance to for years, thinking that when it really came to it, they would be the ones there to help me – and they ran a mile.
“I just want them to do what they said they’d do.
“We’re trustworthy, we’re a good family in town, and we thought that this insurance company was trustworthy too.”
Ouch. Saving miners trapped deep underground is apparently “far easier” than dealing with Chubb.
Nine’s reporter got in on the act too, screwing up and throwing away a copy of Chubb’s initial response – that the insurer sympathises with Mr Flanagan but his policy “does not provide cover for the circumstances he has experienced” – with a flourish.
“We have just gone through what they said today was the worst fires in Australian history, a terrible flood and a global pandemic,” he said. “If you’re not covered for that as an interruption – what are you covered for?”
Good question, and one he didn’t bother asking anyone to answer. The reporter’s summary of the situation – you paid for insurance and your takings are down so you should be able to claim – is a gross simplification of a highly complex issue.
Legal experts across the world are wrestling with how business interruption cover should respond to COVID-19, and insuranceNEWS.com.au has reported an Australian Financial Complaints Authority (AFCA) ruling on a similar bushfire-related matter.
In this case the small business lost its dispute over a business interruption claim after losing more than $150,000 in profit when thick smoke from bushfires on SA’s Kangaroo Island in January deterred tourists.
As always, it comes down to the specific circumstances of the loss and the precise wording of the policy.
As for Mr Flanagan’s claim, his TV coverage had the desired effect.
Australians rushed to donate to his cause and Chubb found itself forced to act. Still insisting the policy did not respond and refusing to pay the claim, the insurer nevertheless came to a confidential “commercial arrangement” with Mr Flanagan that he was happy with.
The family home was saved, so all’s well that ends well. Or is it?
Mr Flanagan’s actions in 2006 were clearly heroic. It was sad to see him brought so low by circumstances outside his control, and inspiring to see fellow Australians come to his aid. It’s also possible – despite Chubb’s insistence – that his claim should have been paid.
But by not carrying out a proper analysis of Mr Flanagan’s circumstances and his insurance policy wording, A Current Affair passed up an opportunity to contribute real insight on the debate over business interruption coverage.
But then meaningful discussion of complex issues isn’t compelling television. Ratings achieved through “human interest” – preferably with a victim and a villain – are what A Current Affair is about.
In its rush to condemn, the program didn’t attempt to tell the full story. insuranceNEWS.com.au understands that – despite the clear implication in the program – Mr Flanagan’s claim related purely to bushfires, and not floods or COVID-19.
Had his dispute gone through AFCA we could at least be assured that experts had reviewed all the circumstances of the claim. We would then have ended up with an emotion-free analysis of the facts, and lessons that could be learned.
As it is we’re still no closer – and probably never will be – to knowing whether the policy should have responded, and no one can say what Mr Flanagan’s experience means for others facing similar scenarios without the profile to justify prime-time TV coverage.
The real problem with the sort of skewed public floggings A Current Affair specialises in is that Chubb isn’t the only one to be affected by a report like this. The reputation of the whole industry (even those that write about it) was smeared.
Our Facebook troll was not put off even after insuranceNEWS.com.au responded that it does not sell insurance policies.
“So what… It was a big issue on national TV. Everyone saw what a pack of scumbags you are. What a low act, it’s spreading all over Facebook. Chubb does not honour their policies. We all saw it on A Current Affair.”
Whatever Chubb’s motive in reaching a confidential “arrangement” with Mr Flanagan that had him belatedly singing the insurer’s praises – it will be interpreted by the program and its viewers solely as capitulation. That’s sad, because such coverage impacts on the public’s view of insurers and on claims professionals who take pride in their work.
A Current Affair did not tell the whole story – far from it. It was an opportunity lost.