Sure thing

Sure thing

In a disaster-prone area of Australia where many insurers have retreated, a smaller competitor says it’s doing well

By John Deex

North Queensland can be a difficult place to write home and strata insurance, with some major providers either not willing to operate there or quoting eye-watering premiums that some residents simply cannot afford.

It’s understandable. The area is uniquely exposed to cyclone risk, as well as the floods and fires Australia is renowned for.

But that’s little consolation to homeowners, who either have to pay significant sums – up to $30,000 a year in some cases – to insure their major asset or play the cyclone lottery every disaster season.

Into this environment in 2019 stepped Sure Insurance, an underwriting agency backed by Liberty Mutual Insurance Company to specifically service the north Queensland market and promising significant savings for customers.

Two years on its Managing Director Bradley Heath says many ambitions have been achieved, and Sure is in the market for the long term.

To be clear, Sure is still a relatively small player, with single-digit percentage market share. But it says it’s growing fast and has taken on an advocacy role for north Queenslanders that goes beyond business profits.

Speaking up for Queenslanders: Bradley Heath

It’s insuring some 30,000 residences from Hervey Bay to Cape York and expects to triple that figure over the next few years.

Having started by offering home and contents direct, it has now moved into the broker channel, and offers strata too.

Sure says independent analysis by actuarial firm Finity shows it saves customers an average of $1900 per year and that overall it’s saved the regional Queensland economy about $20 million.

That’s a big claim, but Mr Heath believes 10 years as RACQ Insurance chief executive has given him critical insight into the area’s issues and possible solutions.

He says there was a “market crisis” and Sure believed it could help, measuring its success in terms of “how many people we’re giving a better deal to”.

“Of course, we need to measure dollars, we need to be viable, we need to be solvent, and we need to have a solid business; but at the end of the day we’re doing what insurance always set out to do and that is help people,” Mr Heath tells Insurance News.

“We’re very happy with our growth, and very happy with what the trajectory looks like.

“The brand is now clearly very well recognised [in north Queensland]. In terms of the impact on the market, it’s been considerable.

“The brokers have taken us on as well. I mean, they’ve lost brands up there and they’ve seen massive price rises through some of our competitors. That’s their strategy and there’s nothing wrong with that. But brokers have embraced us and customers have embraced us.”

So how is Sure able to provide cheaper cover? Insurers criticised about high prices in the region point back to the underlying risk, and various official inquiries have supported that view.

Sure can work in such a difficult market because, frankly, it’s nowhere near as big as its competitors and it focuses solely on the north Queensland market. Being smaller it’s also lean and flexible and can use technology to build its share of the market. Mr Heath says it’s about data – and, more importantly, how that data is used.

Sure says it has highly relevant product features, and it can ask specific risk-related questions that can lead to lower premiums.

Those “highly relevant features” include 18 months temporary accommodation, as opposed to the more common 12 months, and there’s no excess on frozen food losses. It also covers pool water replacement following a storm or flood.

Regional focus: Michael Boucher

Sure’s General Manager Michael Boucher, who previously spent 13 years at RAA Insurance in South Australia, says the regional focus brings advantages over national insurers with national products.

“We’ve got significant rating factors that focus on mitigation and significant discounts, some of the biggest discounts in the market.

“[National players] are not going to ask if you have cyclone shutters in Tasmania or in South Australia, but we certainly ask those questions up north. We correspondingly give those mitigation measures discounts and focus heavily on that.”

Mr Boucher takes particular pride in the fact that 10% of Sure’s new business comes from customers who have not held insurance in the past 12 months, which helps to tackle the region’s growing underinsurance and non-insurance problems.

Mr Heath says that despite looking after consumers through sharp pricing, “the numbers are stacking up” for the company.

But Sure is so new it hasn’t yet experienced the massive challenges that come with the major natural catastrophes the region is notorious for. Mr Heath accepts that caution, and concedes a major catastrophe could affect his company’s pricing.

But he’s highly confident Sure will come into its own when disaster strikes, with arrangements in place to upscale quickly and meet the challenges through an in-house claims service he says consistently delivers.

“Michael and I…have both been claims managers for big brands. We’ve both managed events. It’s not a mystery. It’s not a ‘make it up as you go along’ thing. We are ready. The only way we can prove it is when it actually happens.”

Mr Heath believes long-term and shortterm measures are required to tackle the region’s risk exposure, especially to flood, and that while insurers should be on the front line suggesting solutions, it’s up to governments to implement them.

“We just don’t see a plan,” he tells Insurance News.

“Federal and state and local governments have got to combine to all do their bit. That’s what we’d like to see – a bit of a national think tank.

“Why aren’t we seeing action on town planning? I mean, is it so hard to understand that you shouldn’t build houses on a highrisk floodplain. Let’s do something now.”

The Federal Government’s much-debated cyclone reinsurance pool may help, but it’s far from clear how it will operate, and whether it will actually produce any savings.

Sure has concerns that if the pool is mandatory, it could even disadvantage some consumers.

“We think that insurers should be prohibited from ever charging more than the pool price,” Mr Heath says. “But if the insurer wants to charge less, then they should be allowed to do so and keep the risk themselves.

“Thus a policyholder that’s getting a very good price with either Sure or any other insurer should not face an increase merely because there might be a decision to make the pool participation mandatory. “We don’t think it should be mandatory.” Sure has been asked to look at entering other cyclone-prone regional markets, but for the time being its focus remains squarely on north Queensland. It says Liberty is in it for the long term, and there’s lots still to achieve in the region.

“The opportunity for Sure is where we think the market crisis is, and we believe we can do it better than the incumbents,” Mr Heath says.

“That’s the key strategy. That’s where Sure was born – a market crisis. We believed we could do it better, and we did.

“There are other options open to us down the track. But in the short to medium term, we still haven’t got to the end of our capacity and capability in our current zone.

“You never say never to anything, but our focus is on the area that we know so well.”