THE TOP 20

THE TOP 20

Our annual list of the issues and people who are setting the agenda for the insurance industry in Australia

By Terry McMullan

It’s hard to encapsulate everything that’s happened within – and to – the insurance industry in the past year in a simple list. Fact is, the insurance industry copped it from all sides in 2021 and now sits on the edge of a new year hoping 2022 will be better. It’s a hope starting from a low base.

The annual Insurance News Top 20, born in 2009 as a tongue-in-cheek look at the 20 most influential people in the industry, has evolved over recent years into a review of what really shook things up and who was best equipped to deal with it.

Last year we featured the “10 major things that influenced the industry in 2020, and probably still will be in 2021 and beyond”. We weren’t wrong.

As this year’s list illustrates, many of last year’s influences are indeed still top of mind. But the tone around many of them is changing; potential solutions are emerging.

This year we’re continuing on the same track as 2020, with the top influences and the top influencers – the people with the answers, or at least the vision and ability to lead insurance around those influences.

Please remember this is not a formal study. While we put them in a logical order, in this report all influences and influencers are regarded as equals.

1. CLIMATE CHANGE (2 LAST YEAR):

In the minds of many Australians the natural catastrophes around the country in 2021 – bushfires, floods, windstorms, hailstorms – could easily have seemed like a series of unlinked incidents. But the list of catastrophes – defined by insurers as any event costing more than $25 million – shows a disturbing global trend towards more diverse and more destructive storms, not just in Australia but around the world. Ignoring the political posturing over climate in Australia at present, the (re)insurance industry is doing stuff. It was a significant presence at the COP26 conference in Glasgow in November, and the pressure insurers globally and locally are putting on carbon-based industries, particularly coal miners, is getting noticed. Aon recently defined cyber crime as the biggest threat to business, but we’re sticking with climate change as the phenomenon that most influences the insurance industry’s future stability.

2. COVID (1 LAST YEAR):

In 2020 the COVID virus was an ominous presence, with workforces sent home to work as best they could, insurers reacting in horror to a business interruption policy blunder, lockdowns short and long popping up around the country and states locking out non-residents. COVID in 2020 dominated our business and personal lives. Today it is a significant presence in our daily – but not long-term, thinking. At the time of going to press (a necessary caveat with the omicron variant already in Australia) COVID was already beginning to move into the past. There are still minor inconveniences – masks, QR codes, anti-vaxxers – but thanks to high vaccination levels lockdowns are gone and the focus on “the office” has returned. But work life has not gone back to the old normal; “normal” is in the process of being redefined. Transitioning to new understandings of what work is all about will take a while, but people now know they can work more flexibly and lead more balanced lives. COVID caused that.

3. THE MARKET KEEPS MOVING:

The insurance market in Australia is famously competitive, and when it’s at its most challenging – as it is right now – opportunities tend to arise. In June Hollard Insurance pulled off the Deal Of The Year with the $625 million acquisition of the Commonwealth Bank’s general insurance business, expanding Hollard’s business by around 50% and pushing it into fifth spot in the ranks of the biggest insurers locally. Then London-based global broking giant Ardonagh acquired AR company Resilium as part of a brokerage build, and fellow Londoner Howden moved in to offer its global muscle to local brokers. Neither new entrant is afraid of the top end of the broker market, with corporate business in particular likely to feel some competitive winds blowing. QBE is one insurer showing new interest in personal lines, and industry rumours/leaks have speculated about the future of Zurich Australia’s local broker-aligned portfolio. Stir well, add in the fact that premiums are continuing to rise and profits have assumed a sharp upward trajectory after two tough years, and you have a market showing strong signs of recovery.

4. BYE BYE, OLD BOYS’ NETWORK:

2021 was the year that Insurance News decided to never again mention the fact that a new CEO in the insurance industry was – gasp! – a woman, simply because such a fact is no longer unusual and is therefore irrelevant. Less than 15 years ago very few women could be found in the senior ranks of insurance, but today gender is not a factor in companies’ selection criteria. Merit – covering such aspects as experience, skill, strategic vision, communications and leadership – is now the focus, as it should be. And we should recognise that women are having a much greater influence on the way the industry works and will work. Today they are leading major operations across all sectors of the industry, and our two most important representative groups are chaired by women: QBE Australia Pacific Chief Executive Sue Houghton, who is also the President of the Insurance Council of Australia; and Adelaide broker Di Phelan, the President of the National Insurance Brokers Association. They are just two of the many women who are leading and making a difference.

5. CYBER INSURANCE — A CONTINUALLY GROWING RISK:

Cyber crime has swept the world, with recent business risk surveys showing it has toppled climate change as the most significant risk facing business. That may be in part because the granite-hard directors’ & officers’ insurance market is forcing companies to focus on the cost and difficulties of measuring cyber crime risks, which in five years have moved from “emerging threat” to “nightmare”. The criminals have become more intrusive and the stakes much higher. Increasing incidences of ransomware, state-sponsored cyber-attacks and increasingly sophisticated methods have exposed the flaws in even the largest companies’ networks. The increasing complexity and size of claims has seen insurers reducing exposure to single risks and introducing sub-limits for ransomware. It’s not going to get better anytime soon.

6. HARD MARKET ACTION:

In the past year the Federal Government has taken the lead in forcing solutions to affordability issues for Australia’s cyclone-prone north, with a reinsurance pool arrangement being sorted out between Treasury and the insurance industry. While the urgency being shown after a decade of reviews and reports is primarily about the ruling coalition’s need to shore up support in the key northern electorates, it will nevertheless bring new (if untried) solutions to an old problem. Meanwhile, business insurers have been positive in their reaction to an Insurance Council-commissioned review by industry leader John Trowbridge calling for, among a range of unusually practical propositions, collaboration between and the industry and business groups, with the insurance industry acting as a clearing house for “problem” risks.

7. A MORE ACTIVIST INDUSTRY:

The Insurance Council of Australia, long considered an important but low-key part of the industry, is transforming under the leadership of Andrew Hall. He has overhauled ICA’s approach to a swag of issues that have been around for years, placing the insurance industry on the front foot in finding solutions and actions rather than just talking about possibilities. Insurers’ reaction to the alternative approaches highlighted in the recent Trowbridge Review into business insurance affordability illustrates insurers’ new willingness to seek out real answers. While insurers’ stances on issues are often driven by their own priorities, they have shown unified confidence in Hall and his team getting out in front. It’s been more than a decade since ICA had the confidence to act this decisively.

8. MORE ROAD RULES FOR A SOCIAL LICENCE:

Australia’s financial regulators are changing the face of insurance almost by stealth. They have been carrying out the recommendations of the 2018 Hayne royal commission, which demands the industry earn the right to their “social licence” to operate. The regulators’ new rules are many and varied, and place enhanced responsibility on companies in areas like claims and the way they handle customers’ insurance needs. Most of these new rules have been enacted over the past year, despite the many COVID-related impacts on insurers who already have to deal with the expansive new insurers’ code of practice. New governance, risk and compliance measures that came into effect in October follow on from the application of unfair contract terms to insurance. They require improved internal dispute resolution processes and impose a challenging design and distribution obligations regime, along with a new deferred sales model, strict anti-hawking rules and changes to the duty of disclosure that put the onus of collecting the necessary information for non-commercial contracts on to insurers.

THE INFLUENCERS:

9. RICHARD ENTHOVEN, MANAGING DIRECTOR, HOLLARD INSURANCE HOLDINGS

Hollard is a big insurance brand in southern Africa, and its Australian arm founded in 1999 by Richard Enthoven has grown to become a very significant player in the market. Already a shrewd financial backer of a range of mainly broking and underwriting agency ventures, Enthoven’s Hollard Insurance was a surprise buyer of the Commonwealth Bank’s insurance operations in June with a 15-year strategic alliance to make the deal even sweeter. Enthoven has now stepped back to develop new initiatives, leaving the day-to-day insurance operation to new CEO Paul Fahey.

10. ROBERT KELLY, MANAGING DIRECTOR AND CHIEF EXECUTIVE, STEADFAST GROUP:

It shouldn’t surprise anyone that Robert Kelly has always featured at or near the top of the Insurance News Influencers list since it began in 2009. In that time Kelly has grown Steadfast from a buying group into a listed ASX 200 performer that dominates the Australian broking sector. Always a plain-speaker, he has built a fully equipped broker network made up of a continually growing list of partially or fully owned brokerages, as well as independent local and international operations. Steadfast has massive influence within the industry, but its expansive MD has always been careful to focus on the benefits that scale offers his network and their customers.

11. ANDREW HALL, CHIEF EXECUTIVE, INSURANCE COUNCIL OF AUSTRALIA:

Coming from a political and communications background, Andrew Hall has been busy since his arrival at ICA in September 2020. His task: to turn around the Insurance Council from a light-touch bit player to a strong and capable business leader with a voice. Unlike one of his predecessors, he hasn’t thrown out the baby with the bathwater, retaining ICA’s focus on data while enhancing links with governments and interest groups and seeking solutions to issues that have, in some cases, been hanging around for far too long. Insurance has never been a high-profile industry, but key groups – regulators, politicians, consumer representatives and business groups – are now being consulted as the industry evolves new approaches and solutions that will help to keep its function in line with expectations.

12. SUE HOUGHTON, PRESIDENT, INSURANCE COUNCIL OF AUSTRALIA AND CHIEF EXECUTIVE, QBE AUSTRALIA PACIFIC:

She’s only been in the role at QBE since august, but Sue Houghton has already made clear her intention to make the insurer a more significant player in the local market. In that she’ll likely be backed by QBE Group Managing Director Andrew Horton, who joined in September from global insurer Beazley. Houghton brings to QBE’s most important division some top-level experience at Westpac Bank, where she was GM insurance, and Arthur J Gallagher, Wesfarmers Insurance and IAG. Her ICA presidency began in June last year, followed shortly after by the appointment of Andrew Hall to bring a new dynamism to the organisation and swift progress on balancing the industry’s needs with the community’s.

13. NICK HAWKINS, MANAGING DIRECTOR AND CHIEF EXECUTIVE, IAG GROUP:

Life hasn’t been all that easy for Nick Hawkins since he replaced Peter Harmer in IAG’s top executive role in November 2020. The group has weathered some hefty financial challenges in the past 18 months or so, but as IAG’s former long-serving CFO Hawkins understands insurance is a long game. He knew what he wanted to do when he took the top job, immediately reshaping the group by splitting the Australia Division formed by Harmer in 2017 and recruiting a new group of managers to run separate personal lines and commercial (CGU) units. Expect to see IAG aggressively pursuing new commercial lines opportunities and continuing to develop its strong personal lines brands to protect them from disruptors.

14. STEVE JOHNSTON, CHIEF EXECUTIVE AND MANAGING DIRECTOR, SUNCORP:

While arch-rival IAG struggles to financially fly, over at Suncorp Steve Johnston is managing his company through difficult times with considerable flair. Like his IAG counterpart Nick Hawkins, Mr Johnston engaged in a “reset” of the business after he took over in late 2019, shedding top-level executives and this year seeing the insurer-banker achieve a 42% rise in after-tax cash earnings to $1.06 billion in the year to June 30 – the best result in 10 years. The insurance operation remains focused on revitalising growth, optimising pricing and risk selection, being digital-first in distribution, and being best in class for claims. Suncorp is now well-set for a market resurgence.

15. PHILIP KEWIN, CHIEF EXECUTIVE, NATIONAL INSURANCE BROKERS ASSOCIATION:

When NIBA set out to find someone to succeed Dallas Booth as leader of the nation’s diverse insurance broker sector, Philip Kewin’s track record put him at the top of the list. He came to NIBA in August after four years running the Association of Financial Advisers – a professional group whose members have suffered some intense pressure from consumer groups and regulators. Adviser numbers have fallen dramatically, but AFA’s membership actually grew under Kewin’s management. While this former financial planner and senior Zurich executive’s experience isn’t in general insurance, his familiarity with the Federal Government and regulators will prove invaluable to brokers.

16. DI PHELAN, GROUP OPERATIONS MANAGER, BJS INSURANCE GROUP, AND PRESIDENT, NATIONAL INSURANCE BROKERS ASSOCIATION:

It’s an interesting time to chair an organisation like NIBA, and Di Phelan is more than capable of leading the brokers’ peak body through some long-simmering issues which are coming to the boil. Apart from helping to deal with a mass of new rules imposed by regulators whose focus has been primarily on the financial services side of the intermediary game, Phelan must also front up to the looming debate over broker commissions. Taking up the presidency in February, she successfully led the effort to lure Philip Kewin across to replace the now-retired Dallas Booth. NIBA represents a very broad church in the broker sector, but she’s a long-serving broker who knows the people and the issues.

17. RICHARD FELEDY, MANAGING DIRECTOR AND CHIEF EXECUTIVE, ALLIANZ AUSTRALIA:

Allianz is strongly placed in the Australian commercial lines space, and claims third spot overall in the pecking order ahead of QBE. That comes about through its $725 million acquisition in June of Westpac’s general insurance portfolio, but its estimated 7.7% share of the local market is still well below that of IAG (21.7%) and Suncorp (12.6%). However, with an extra 350 or so staff from the bank now aboard at Allianz and a 20-year distribution deal with Westpac as well, Feledy now has a prime opportunity to really shake up the personal lines space. A very experienced insurance professional, he’s worked in many specialised parts of the insurance operation after moving to Allianz 21 years ago from HIH. He became MD in January 2018. With premiums continuing to rise and Allianz keen for more organic growth, Feledy is in the box seat.

18. TIM PLANT, CHIEF INSURANCE AND STRATEGY OFFICER, IAG:

The new organisation chart at IAG looks similar to Suncorp’s old one – separate divisions for commercial and personal lines, with a manager overseeing the divisional chiefs. But in Tim Plant IAG just might have the management mix right, because he’s the industry’s go-to person when a company is seeking a reliable chief who knows the ropes. Highlights of his 30-year insurance career include a variety of senior roles at QBE over seven years, including CEO of the group’s Australian and New Zealand divisions. After a stint at New South Wales state insurer icare he moved to Zurich as CEO of its regional general insurance division, before joining IAG recently. Well liked across the industry, Plant is IAG’s best hope to get more from its wide variety of brands.

19. JOSEPH LONGO, CHAIR, THE AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION:

Early this year ASIC’s inaugural chairman, Tony Hartnell, defined exactly what the next leader must be. He wanted a commercial lawyer focused on enforcement rather than the “fantasy” of setting rules. “People fantasise that it’s a policy job,” he said. “It is not. It is an enforcement job.” That apparently suits new Chairman Joseph Longo just fine. The one-time national director, enforcement for ASIC was senior counsel for a major Australian financial firm before joining Deutsche Bank in 2002. He served in a range of senior roles at the German bank before returning to Australia in 2019. In interviews since his appointment Mr Longo has been strong on ASIC continuing to pursue court action against companies rather than just serve enforceable undertakings. “I’m absolutely committed to ASIC remaining an active, credible law enforcement agency,” he told the ABC. “We have teeth now and we will continue to use them.” We have been warned.

20. MIKE EMMETT, CHIEF EXECUTIVE AND MANAGING DIRECTOR, AUB GROUP:

AUB has changed considerably since Mike Emmett moved aboard in 2019. The South African-born accountant has enjoyed a diverse career in insurance, corporate consulting and IT, and his experience shows in the way the broker group has redefined its role and focused on the core businesses – broking and the Sura underwriting agencies. Emmett came to AUB after holding senior roles at QBE and consultant EY, before moving on to Cover-More, a Sydney-based travel insurer with considerable international positioning. It was sold to Zurich in 2017. AUB is the second-largest broker group in Australia with 3000 members. It owns stakes in some of the country’s best brokerages, which returned record growth and net profit last financial year. For the future Emmett has moved AUB away from its previous health and rehab services strategy and forced through performance improvements. The group’s strategy is clear enough – Emmett says it will come from “evolution, not revolution”. There’s money in that, and little risk.