NIBA Chief Executive Noel Pettersen has heaped praise on insurers and brokers who have worked long hours over to secure ongoing cover for HIH policyholders.

He said most people in the industry are anxious to understand how the second-largest insurer could fail, but added: “Now isn’t the time for questions.”

 “Right now everybody is concentrating on ensuring that clients are catered for and to see if they need to secure new insurance cover,” he said. “After that we’ll get to analysing what went wrong to ensure it never happens again.”

Singling out insurers Allianz and QBE for their assistance to brokers at a very difficult time, Mr Pettersen said: “It must be very confusing right now for clients who don’t use a broker.”

He said there is likely to be a long tail to claims incurred while business was written on HIH paper, and claims disputes and legal argument over such matters could go on for years.

While he regrets the blow to consumer confidence the HIH collapse must have caused in the wider community, Mr Pettersen said the message must go out that the Australian insurance industry remains “strong and viable, with total assets in excess of $50 billion and solvency surplus of around $7 billion”.

“We should remember that Australian insurance consumers are still getting an excellent deal, with more than 80% of the premium dollar being paid back in claims,” he said. “Consumer confidence is vital.”

The HIH collapse has stretched NIBA’s resources, with the organisation having to field many calls from the media and the general public. More importantly, members seeking guidance have taken up a lot of time.

“Most clients wouldn’t have been aware that their brokers’ own professional indemnity facility was affected by the HIH collapse,” Mr Pettersen said. “I’ve been really impressed by the way brokers put their own concerns about insurance cover on the back-burner while they got to work ensuring their clients were properly protected.”

The brokers’ facility has now been taken up by QBE in an action that Mr Pettersen said took a lot of weight off brokers’ shoulders.

“NIBA’s own support for its members has been as extensive as we could make it,” he said. “We’ve communicated regularly with ‘faxshots’ to keep members up with the latest developments and to ensure they can meet their duty of care to their clients.

“But it has been frustrating not being able to give specific legal advice to members, because every case has been different and has to be handled that way by the individual broker.

 “We’re limited as to what legal advice we can give. It’s frustrating, but it’s the only proper action we can take in such a circumstance.”

While Mr Pettersen expects the present frantic pace of activity to continue for a while yet – “the June renewal period is just around the corner, too!” – he believes the industry must eventually come together to discuss how the HIH collapse came about.

“It will take a while for all the facts to come out,” he said. “But we must do everything we can to boost public confidence in the industry and build new safeguards for the protection of policyholders.”