Aon revenue steady in Q3

Aon recorded flat revenues of $2.69 billion in the three months to September 30, down slightly from $2.70 billion last year.

The international broking giant told investors that net income attributable to shareholders had increased to $408 million, compared to a loss of $900 million over the same period last year.

Total operating expenses dropped 40% year-on-year over the quarter, to $2.1 billion, due to a $1.0 billion ‘termination fee’ from the breakdown of its mega-merger with Willis Towers Watson.

Organic revenue rose by 5% yearon-year due to robust retention, new business generation and management of its renewal book portfolio, it said.

The company said double-digit growth in Latin America, UK, and Asia reflected a strong retail brokerage market, solid growth in core property & casualty, and positive global exposures and pricing.

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2022: a challenging and rewarding year

The past year has been tough but rewarding, and brokers are excited about the future, writes Angela Cuming.

The past year has marked a significant shift for the broking sector. The insurance industry has grappled with several challenges, including pandemic impacts, disruptive technologies, and climate-related risks.

The industry also saw an increase in claims and extreme weather events, contributing to shrinking capacity and rising premiums.

The long-awaited Insurance Contracts Bill was released, which proposes fundamental changes to the duty of disclosure, and the Government announced an increase to the EQC building cap.

And in one of the most significant changes to the market, brokers had to adapt to new FSLAA regulations, marking a significant new era for the insurance industry and the advisors who work within it. Adapting to FSLAA regulation

Following a Covid-related delay, new rules and regulations for financial advisers and insurance

brokers came into effect on March 2021, along with requirements to disclose more information to clients.

Claire Holt, a financial adviser at SHARE, says her brokerage adapted “really well” to the changes.

“It’s great to be part of an industry that puts our clients first and foremost, in the way we do business,” she says.

“Apart from there being changes to the documents we use, this is all about putting our clients first and ensuring clients understand their insurances, which is something we’ve always had as a core focus.”

Updating qualifications to Level 5 wasn’t too hard, and having a workforce which is continually learning is only a good thing for our industry,” says Holt.

“We are continually looking at ways to ensure that we not only comply with the regulation but keep our focus on what really matters — the client.”

Anthony Jones, general manager of operations for the Abbott Group, says the company’s adviser and broker teams already followed an advice process before the FSLAA regulations, so the way they work had not changed substantially.

“What has changed is the layer of compliance-related documentation that supports our policies, processes and procedures, and the fine-tuning required to ensure we continue to meet our obligations under the new regime,” he says.

“The other big change, of course, is the qualification requirement for our financial advisers. Fortunately, our team welcome the introduction of an industry-specific qualification and recognise it benefits them as individuals in terms of their professional development, as well as our clients.” How the pandemic changed things

Like so many things, the Covid-19 pandemic had an effect on the industry, with many brokers switching to remote working during lockdowns. Now, as 2022 draws to a close, flexible work arrangements are here to stay, at least for some firms.

“The pandemic has definitely changed the options available to us in terms of the flexibility of where we can work,” says Holt. “We can not only work from home, but Teams meetings are still a good option for time-saving as well, as they allow us to connect and collaborate. It’s enabled us to explore avenues to work smarter, has given us more of a balance with our families, and more flexibility in terms of working from home around family schedules. It’s only a good thing.”

Clients' needs haven’t changed too much, although many businesses are being hit by supply chain issues, inflation and a very tight labour market, says Holt.

Mark Reid, chief executive for the Abbott Group, says the lessons from the pandemic have been “positive overall”.

“Prior to the nationwide lockdown in 2020, our teams worked by default in the office during business hours, visiting clients at their premises,” he says.

“Working more flexibly has become part of the way we work now, and we are currently trialling policies to provide our team and clients with the best experience.”

The key for the Abbott Group is offering a range of work options, recognising that some of their team, and teams within teams, prefer to work from a shared office/team environment, says Reid.

“This is because they find face-toface enhances a learning culture and positively impacts on team culture overall and others found working from home during lockdown very isolating or had difficulty switching off.

“So, for all of those reasons around work/life balance, fostering teams and our culture, we need to balance flexible work needs and wants across the group to deliver on our employer of choice goal.” The FAP licence deadline looms

March 2023 is looming — the key deadline by which brokers need a Financial Advice Provider (FAP) licence to be compliant under FSLAA.

There’s been a two-year transitional period in place since March 2021, so has that given the industry enough time to prepare?

No, says Holt, who says some advisers are planning their exit.

“In terms of the industry being prepared, no, I don’t think some of the industry is prepared for the new FSLAA regulatory regime. As a result, we are seeing a few advisers planning their exit the industry before the March 2023 deadline,” she says.

In better news, SHARE is “definitely prepared” for the new FSLAA regulatory regime and has been for a while now, she says.

“We are on track to have all brokers and support staff complete their qualifications by March 2023, and our full licence is already in place.

“We only see this as an opportunity for growth at SHARE and are gearing up for this growth both in terms of preparing systems, but also thinking strategically around staffing to ensure that we can accommodate the growth.”

The Abbott Group’s full FAP licence was granted by the FMA in June 2022, and Jones says they have comfortably met licensing obligations within the two-year transitional period.

“We’ve had very strong support from Steadfast New Zealand throughout this process, and the benefits of a strong, proactive broker network have been clear to Steadfast members throughout New Zealand,” he says.

“I think time will tell how well members of our industry are prepared. Our focus has always been on what we need to do and how best to do it, not only to ensure our compliance with the new regime, but also to do the right thing by our clients.” The year ahead

It’s been a busy year with many challenges, so what are brokers looking forward to for the year ahead?

“It’s definitely been a very busy couple of years, especially with the new FLSAA regulations coinciding with significant Covid-related challenges,” says Reid.

“At Abbott Group, we’re looking forward to getting back onto a more business-as-usual footing, albeit with our full FAP licence, a team of qualified advisers, and a more robust

compliance programme in place.”

He says that clients will continue to be the priority in the year ahead.

“There are clear signs of economic headwinds to come, and it’s our role as insurance specialists, as their trusted advisers, to help clients navigate the challenges they face while best protecting their position and future goals.

“As always, communication will be key, and we’ll be encouraging clients to keep us up to speed so we can provide the greatest value and support to them if and when times get tough. Outcomes are typically better when you can work in partnership with clients and front-foot any issues as they arise.”

Over at SHARE, the team is “hugely positive” about the year ahead, says Holt.

“There are so many opportunities within our business networks that we are looking forward to embracing. We’re excited about growing our team to accommodate the natural growth in the market and taking advantage of the opportunities out there. "We’re also excited about the technology platforms that we have access to via our Steadfast partner, which enhance and speed up the way we do business.”

It’s great to be part of an industry that puts our clients first and foremost, in the way we do business.

Claire Holt, financial adviser at SHARE