Time for action

Andrew Hall has hit the ground running by implementing a range of key strategies at the Insurance Council

By John Deex

Andrew Hall started work as the Chief Executive of the Insurance Council of Australia (ICA) in September last year, and faced immediate and unprecedented challenges.

The potential impact of COVID-19 on the insurance industry was becoming clear, and at the same time insurers were continuing to deal with a record-breaking catastrophe season that led to more than $6 billion in claims.

On top of that, a raft of regulatory changes loomed as the recommendations of the Hayne royal commission flowed through to the industry.

Despite this confronting introduction to his new job, Mr Hall remains optimistic about the insurance industry and determined to change it for the better.

In his first in-depth interview since taking the role, he tells Insurance News his priority now is to push two key areas – the role of insurance in the economy, and its role in addressing the consequences of climate change.

“Advocacy in positioning the role of insurance in the economy is critical,” he told Insurance News. “Without insurance the economy doesn’t function and, sometimes, it is a little bit taken for granted.

“I see a real opportunity to elevate the role of insurance in the national economic narrative as we recover out of COVID-19.”

As for climate change, he splits the debate into two parts – the global effort to reduce emissions and whether it’s moving fast enough, and Australia’s progress in building resilience to the impacts.

On the first point, Mr Hall believes the most valuable contribution the industry can make is through data.

“When it comes to the broader question about national and international settings for emissions, the one thing that insurers can bring to the table is the data,” he says.

“Whatever position we want to take in that debate, at the very least we can help policymakers understand what the data is that we’re seeing.

“I know reinsurers in particular have some really interesting quality data that shows what the changing climate has been driving in this country.

“I think we need to elevate our voice so that the data around that risk can be really well understood.”

He says that with climate change, insurers are operating within a framework set by the Federal Government. But he believes most insurers “are subscribed to the goals of the Paris Agreement”, as well as targets to reach net zero emissions by 2050.

“How you get there is a pathway. It will be understanding where the risks are, understanding your role in those risks and making the right decisions for how you manage through that.

Elevating insurance: Andrew Hall

“That’s the thoughtful and sensible approach that I think all sectors are taking. I went through that in the last couple of years with banking and I can see insurers doing the same.”

On resilience and mitigation, Mr Hall says the industry has had a loud voice, but it must be louder still.

“If we are to accept the fact that we have had increasing catastrophic climatic events, insurance is just going to be critical to how we respond to all that.

“Australia is exposed to a lot of extreme events. As the climate change debate rolls on – and it will roll on – what we want to keep front and centre is how you build a more resilient community that can recover quickly from these unexpected events, and insurance needs to be part of that.”

Having worked with the ICA board to identify key priorities, Mr Hall believes now is the time for action.

He joined ICA from the Commonwealth Bank with extensive experience in corporate affairs and politics, thanks to high-profile roles at Woolworths and in the National Party.

He intends to use that experience to drive action on insurance issues that have been talked around for years, sometimes decades.

But that’s not to criticise the previous regime at ICA. Mr Hall is hugely complimentary about the previous administration’s efforts to launch the new General Insurance Code of Practice, revolutionising catastrophe responses and laying the crucial groundwork for some of the programs he has planned to build on.

And he understands that ICA has to tread a fine line as it bridges the competing needs of different sets of stakeholders.

There are politicians “who are listening to the people that elected them”, but also companies that have to consider not just customers but also employees and investors looking for returns.

“Getting that balance right is always pretty hard,” he says. “But you do that from trying to understand what people’s perspectives are at the get-go.

“Some of these debates have been grinding on for years, with good reason. They are really hard to solve.

“Decisions made around some of these issues can have very longtail effects on how a market may operate, both for what the taxpayer could end up paying and for any unintended consequences for consumers.”

But the industry cannot allow this complexity to lead to the stagnation of such key debates, Mr Hall says.

“Working through them really carefully is important. But people judge us on actions, not words, and that’s another lesson out of what the banks have been through in the last few years.

“I don’t want to labour the point, but it is the reality that if people want change, they need to see action.

“There is so much work that has been done in the last 10 years, and we are already setting about looking at what those reports and inquiries have said.

“We’re working out as an industry what we need to do, [and] what we have got control of that we can make some firmer decisions around.”

These are some of the things Mr Hall and the ICA team will be focusing on in the next six to 12 months.

“It’s our job to identify what would be the most effective actions to take and then what the plan is to do that.

“That is what we are thinking through at the moment, particularly where it can relate to contributing to an economic recovery, [and] it relates to building a resilient economy against climate change.”

Many commentators see the affordability of insurance as the industry’s most pressing challenge, with the market continuing to harden and catastrophe-related problems continuing to affect the north of the country.

The Australian Competition and Consumer Commission (ACCC) carried out a three-year inquiry into the affordability of insurance in northern Australia and released its final report late last year.

It followed a report from the Small Business and Family Enterprise Ombudsman that described a “national crisis”, and alleged widespread insurance market failure.

Now ICA has launched its own review of affordability and availability issues, to be led by former insurance executive and regulator John Trowbridge, in collaboration with economist Michael Blythe. A consultation paper will be released shortly and a final report is due mid-year.

It’s an effort by ICA to take a leading role in the affordability debate and sort through the plethora of previously proposed solutions, with the intention to move forward on those solutions that could work.

Mr Hall says ICA is still digesting the ACCC report, which takes up almost 600 pages and makes 38 recommendations.

“We have been reading through [the report] carefully and we are talking to members now, and we will formulate a response to some of these recommendations.

“Affordability and availability is something we are planning to spend a lot of time working through in the next couple of months.

“We know that there are some segments of insurance where both affordability and availability are proving to be a challenge.

“That’s because of a range of factors and we are committed to talking to government about what we can do as an industry to tackle some of those things.”

Some commentators have predicted the impact of climate change will make large swathes of Australia uninsurable in just a few decades, but Mr Hall is less gloomy in his own assessment.

“We have governments and companies in this country that understand what their responsibilities are, and they will find ways to work through it,” he says.

“There are so many options, there have been so many reports and inquiries. It is not for lacking a range of suggestions to consider, that’s for sure.

“Our job is really how we move forward on some of the ones that make sense.”

Andrew Hall on…

…Regulatory reform

“We need to accept that the change is coming, and we need to work collaboratively and closely with government on making sure that that change is as effective as possible, and that there are no unintended consequences out of some of these changes that may disadvantage consumers.

“There are still some exemptions that we need to work through with government and they are giving us those processes to do that, and I think data will be key to making a case for some of the more logical exemptions that probably should take place.

“I think the industry is listened to and my observations are that the government is actually hungry for even more data from the industry to understand better what we can see are the challenges.”

…Consumers

“Understanding insurance is critical and we need to find other ways to have conversations with the community about that, about helping the consumer make the right choices for themselves.

“Financial products can be quite complex, and helping the consumer understand upfront what they have purchased is really important.

“I’d say that the industry has got quite a strong sense of community expectations and applying the fairness test these days, that perhaps a decade ago was a little less common.

“I’ve heard about and seen some examples where

insurers do take a real consumer-centric view to some claims. The response to the bushfires is a really great example of how focused the sector is on meeting obligations.”

…COVID-19

“I think insurers did a really good job.

“When you dig down you can see that a lot of the measures that already existed around hardship and vulnerability because of things like the code of practice…they actually did their job.

“Whenever an economy or a community goes through an event, we have to sit back and ask ourselves as we are emerging from it what we would do differently next time around.

“Regardless of the court cases, most business interruption policies were sold with an exclusion around the pandemic because it is such a large-scale event and premiums weren’t collected to cover that type of scale.

“We now understand what that scale can look like – and that is governments intervening and literally shutting down the economic operations of businesses for health outcomes.

“If there is a community desire to be able to protect against this type of disruption in the future, similar to what happened after 9/11, I suspect we will need to have some sort of discussion with government around how you would construct a model that would be able to cater for that kind of an outcome.

“It is almost too soon to have those discussions – we’re still going through it, we are not out of it yet.”

Quite a journey

Andrew Hall’s career started in the “wonderful world of journalism”, when he left university and landed a job on a local newspaper in the Northern Rivers region of New South Wales.

“It was a great first job where you got to meet a lot of interesting people. Whatever was happening in the town that day, you got to be involved.”

But while he enjoyed writing, he had a nagging desire to “contribute differently in life”.

A friend scored a job as a press secretary for the Howard Government in 1996, and urged him to follow her lead.

“So without any background in politics, I ended up applying for and getting a role as a media adviser,” Mr Hall says.

“I was adviser for Warren Truss [who later became leader of the federal Nationals], and then in 2001 I flipped from working for a minister to actually working in the campaign side of things and ended up as federal director of the National Party.”

In 2007 he decided he’d stayed in politics too long and looked for a private sector role.

“That’s when Woolworths came along and I moved from Canberra to Sydney as head of government relations initially, and then took on corporate affairs more broadly for the Woolworths group.”

It was at Woolies that Mr Hall “first thought deeply about insurance” as the supermarket giant launched its white-labelled insurance product line.

Then “out of the blue” came the opportunity to join the Commonwealth Bank where he spent seven years as head of corporate affairs.

“There were challenging and difficult times and good times as well,” Mr Hall says.

“It taught me a lot around how companies need to work to get things right, keeping the consumer at the centre of everything we do, and always making sure that stakeholders are listened to.”

Next stop, ICA. Mr Hall says he was attracted to an opportunity where he could share some of the lessons he’d learned from the banking sector.

“There are a lot of differences [between insurance and banking] but also a lot of similarities around that whole ‘consumer trust’ piece, and thinking about a product when a customer really needs it and how you respond at the time.

“I was attracted to that, and in my career I’ve always enjoyed areas of heavy regulation that require a lot of complex stakeholder management.

“Insurance is definitely one of those.”