insurancebusinessonline.com.au Issue 7.03
CONSTRUCTING SOLUTIONS
Inside Allied World’s design and construction PI event in Sydney
IN SICKNESS AND IN HEALTH
What brokers need to know about personal accident and sickness coverage
AND THE WINNERS ARE … Highlights from the inaugural Insurance Business Awards
FUTURE-PROOFING QBE Group CEO Patrick Regan on setting up the global business for the future
BROKERS ON INSURERS Which insurers rose to the top of the pack in 2018?
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ISSUE 7.03
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CONTENTS
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UPFRONT 02 Editorial
How brokers can remain relevant
PEOPLE
36
DESIGNING AND CONSTRUCTING SOLUTIONS
SPECIAL REPORT
24
A recent roundtable gave brokers insight into professional indemnity solutions for the design and construction industry
PEOPLE
LEADING TODAY FOR TOMORROW
06 Head to head
Which areas of specialty insurance hold the most opportunity for brokers?
08 Opinion
One key thing brokers can do to build trust with their customers
10 News analysis
If your clients haven’t purchased cyber insurance yet, the recent Facebook scandal might change their minds Oracle makes a key acquisition in Victoria
FEATURES
42
IN SICKNESS AND IN HEALTH
AHI’s Chris McDowell explains why personal accident and sickness insurance is so critical for SMEs
14 Insurer update
Are traditional insurers about to become obsolete?
18 Underwriting agencies update How Lloyd’s is reinventing itself for the 21st century
FEATURES 62 How to build a network that drives your success
It’s all about who you know – but some types of professional contacts are more valuable than others
New QBE Group CEO Patrick Regan reveals how the insurer is positioning itself to face future challenges
20
Whose responsibility is insurance in the sharing economy?
12 Intelligence
BROKERS ON INSURERS 2018 Brokers name the insurers that are leading the pack with regard to turnaround times, premium stability, customer service and more
04 Statistics
WIINERS FEATURES
46
AWARD WINNERS REVEALED IB presents all the industry players who won big at the first-ever Insurance Business Awards
PEOPLE 64 Career path
Tracking James Baum’s rise to CEO at Aon
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UPFRONT
EDITORIAL
Staying relevant as clients change
I
nsurance brokers are accustomed to predictions of doom – hints of a loss of relevance in the face of insurtechs, comparison websites and other disruptors. What they’re less accustomed to, however, is one of their own suggesting that the industry as a whole is losing ground with its clients. Yet that’s what Aon CEO Greg Case suggested shortly after announcing that he had extended his contract through 2023, which will keep him at the helm of the second largest brokerage in the world for 18 years. “If I ask you, how is the risk industry doing in terms of relevance to the global economy, you have to say we’re becoming less relevant,” Case told The Financial Times. The examples he gave were stark. Take cyber insurance: Case pointed out that the industry is writing $3 billion in premium at a time when clients in the US alone have reported $450 billion in losses. Insurance, it seems, has focused on selling products rather than innovating – and now it’s being faced with clients who have seen significant changes in other areas of their businesses and lives and
Don’t just sell insurance: Be your clients’ risk expert, guide them on mitigation and become an essential part of their business expect insurance to keep up. Case suggested that businesses want insurers to respond to a “broader definition of risk” and said his company is trying to provide more data and analytics to meet that demand. But what about the smaller broker who lacks the resources of a major player like Aon? The solutions for progress are there if you look for them: Leverage the data you have at your disposal to make strategic plans for your business, be flexible and accessible with a mobile website and social media that can respond to clients who no longer work straightforward 9-to-5 hours, delve into new products, understand your clients’ businesses on a deeper level, and find a niche that becomes your specialty. Don’t just sell insurance: Be your clients’ risk expert, guide them on mitigation and become an essential part of their business – and leverage the available technology in doing so. Selling insurance policies should always be part of what you do. But now clients want more, and you need to give it to them – before someone else does. The team at Insurance Business
www.insurancebusinessonline.com.au EDITORIAL Editor Tim Garratt News Editor Jordan Lynn Writers Libby MacDonald, Lucy Hook Production Editor Clare Alexander
CONTRIBUTORS Sheila Baker, Janine Garner
ART & PRODUCTION Designer Joenel Salvador Traffic Coordinator Freya Demegelio
SALES & MARKETING General Manager Peter Smith Commercial Development Manager Sophie Knight Marketing & Communications Manager Michelle Lam
CORPORATE Chief Executive Officer Mike Shipley Chief Operating Officer George Walmsley Managing Director Justin Kennedy Chief Information Officer Colin Chan Human Resources Manager Julia Bookallil
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UPFRONT
STATISTICS
Sharing responsibility
NORTH AMERICA WHO SHOULD PROTECT THE CONSUMER?
43%
40%
18%
WHO SHOULD PROTECT THE PROVIDER?
34%
50%
16%
In the brave new world of the sharing economy, who should cover whom? AS INSURERS continue to grapple with the challenges of covering the sharing economy, one thing that’s clear is the demand for insurance on these platforms. In a recent survey conducted by Lloyd’s, the majority of respondents felt that more transparent coverage would expand the number of customers using sharing economy websites and apps like Airbnb and Uber. At present, only 16% of those surveyed
73%
of consumers expect insurance protection when using a sharing economy platform
49%
of consumers said the risks of using the sharing economy outweigh the benefits
had used such a platform, but 70% said they’d be likely to if they knew insurance coverage was part of the deal. Meanwhile, the majority of respondents also believed transparent coverage would increase the number of people willing to offer services on these platforms. Indeed, 70% of those surveyed said they would consider sharing an asset if it was protected by insurance.
71%
of consumers said they’d be more likely to use sharing economy services if insurance was offered
The platform The provider The consumer
WHERE DOES THE RESPONSIBILITY LIE? When it comes to the question of who should protect the risks of both consumers and providers in the sharing economy, opinion varies considerably around the world. However, there was a common thread: Few respondents considered it to be the duty of the consumer.
78%
of sharing economy providers felt insurance coverage would attract more customers
Source: “Sharing Risks, Sharing Rewards,” Lloyd’s Innovation Report, 2018
LACK OF AWARENESS
THE EXPECTATION GAP
Consumers in the sharing economy are woefully unaware of their protection: Nearly half assumed the platform they used provides insurance coverage, although less than a third actually checked.
Lloyd’s found a disconnect among the parties involved in the sharing economy when it comes to insurance coverage: More than half of consumers believe sharing economy platforms should bear the responsibility of providing protection, while 80% of companies believe that either the consumer or the provider should be responsible for securing coverage.
DID YOU KNOW WHETHER THERE WAS INSURANCE COVERAGE FOR THE SERVICE YOU USED?
WHO SHOULD PROVIDE INSURANCE COVERAGE?
50%
15%
40%
20%
30% CONSUMER VIEW
20% 10% 0%
45%
28%
19%
I assumed there I looked in detail Insurance was specific to ensure there never even insurance was specific occurred to me coverage but did coverage not look in detail
8%
27%
53%
I did not care if there was any coverage
Source: “Sharing Risks, Sharing Rewards,” Lloyd’s Innovation Report, 2018
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32%
53%
SHARING ECONOMY COMPANY VIEW
The consumer
The provider
The platform Source: “Sharing Risks, Sharing Rewards,” Lloyd’s Innovation Report, 2018
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UK
CHINA
WHO SHOULD PROTECT THE CONSUMER?
WHO SHOULD PROTECT THE CONSUMER?
39%
39%
22%
71%
WHO SHOULD PROTECT THE PROVIDER?
35%
46%
21%
8%
WHO SHOULD PROTECT THE PROVIDER?
19%
66%
29%
6%
GLOBAL 12%
15%
32%
WHO SHOULD PROTECT THE CONSUMER?
WHO SHOULD PROTECT THE PROVIDER?
53%
47%
40%
Source: Sharing Risks, Sharing Rewards,” Lloyd’s Innovation Report, 2018
TAKEN FOR GRANTED Consumers expect to be protected when they take part in the sharing economy: A full 97% believe some sort of risk protection is afforded for consumers and providers should something go awry. However, their perception of how much protection is provided varies. TO WHAT EXTENT DO YOU BELIEVE SHARING ECONOMY SERVICES PROVIDE RISK PROTECTION FOR THE USER?
Provide complete protection
Provide no protection at all
THE IMPACT OF INSURANCE Although most sharing economy platforms don’t consider providing insurance to be their responsibility, the majority admitted it would have at least some impact on consumers’ decision to use their platform. WHAT IMPACT DO YOU THINK PROVIDING INSURANCE WOULD HAVE ON A CONSUMER OR PROVIDER’S DECISION TO USE YOUR PLATFORM?
67% 7%
26%
47%
17%
3%
Source: “Sharing Risks, Sharing Rewards,” Lloyd’s Innovation Report, 2018
17% 17%
Some impact; consumers and providers view insurance as a factor in their decision to use our product/ service
Huge impact; consumers and providers wouldn’t consider using our service/product if there wasn’t insurance
No Impact
Source: “Sharing Risks, Sharing Rewards,” Lloyd’s Innovation Report, 2018
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UPFRONT
HEAD TO HEAD
Which insurance specialty should brokers target? As brokers look to build a niche, which areas of specialty currently represent the greatest opportunity?
Chris Budge
General manager, financial lines group JLT “Financial lines insurance – particularly directors & officers insurance – is a technical and specialized insurance class with an outsized profile, given the vested interests of those being protected. Little corporate risk-taking would take place in the absence of D&O insurance. For a decade or more, an oversupply of capacity and an apparent willingness by certain insurers to incur rolling years of losses has resulted in a multi-year soft market. Right now there is a real opportunity for brokers with strong financial lines teams who can advocate effectively on behalf on their clients to differentiate themselves from those who don’t.”
Paul Marsden
CEO Lockton Companies Australia “The responsibility and accountability on company directors has significantly increased and continues to grow. Directors & officers liability insurance has recently become far more complex and challenging for clients. Insured losses from securities class actions have impacted the D&O market significantly, and specialist skills are required to ensure clients continue to obtain the right cover and capacity. Reduced competition, changing policy coverage, increased premiums and a return to underwriting disciplines for D&O, particularly for listed clients with an exposure to Side C securities claims, require a broker to have a deep understanding of local and global insurance markets.”
Andrew Boal
Head of Australasia Willis Towers Watson “The rise of class actions and significant Side C losses means D&O cover has become unprofitable for a number of insurers in recent times. Capacity has reduced and premiums are soaring – in a word, the market is volatile. Insurers are focusing on continuous disclosure. Organisations need to be transparent on how they discharge their obligations and be able to respond to insurer enquiries as to their processes and practices. It is also important for brokers to work with their clients and engage with their D&O insurer early to formulate a strong strategy to differentiate and communicate their risk.”
A GROWING PRESENCE Specialty lines of insurance can encompass everything from coverage for specific professions or industries, such as lawyers or aviation, to more general products such as kidnap & ransom, directors & officers liability and cyber, which cover a range of industries. Specialty lines represent an expanding segment of the industry: According to A.M. Best’s latest report on the sector, specialty lines grew by 2.8% in 2016, representing the fifth consecutive year of growth.
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UPFRONT
HEAD TO HEAD
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UPFRONT
OPINION
GOT AN OPINION THAT COUNTS? ibo@keymedia.com.au
Where do we go from here? To build trust with consumers, brokers need to adopt a holistic approach to business practices, writes Gold Seal’s Sheila Baker IN HIS opening remarks at a recent regulator forum, ASIC’s new chair, James Shipton, talked about the “trust deficit” in the financial services industry. Talking about raising professionalism and trust in the industry is easy. As Mr Shipton said himself, it’s not a matter that can be legislated overnight. Consistency in the use of good business practices and demonstrating those practices to the point where public opinion is changed are different matters. Internationally, Mr Shipton’s remarks also reflect sentiments expressed by the London market related to conduct risk and the upward trend in the industry toward professionalism. Most brokers are valued advisors to their clients and are trustworthy, respected businesses in their communities, but the insurance media regularly reports on ASIC bans and fines, emphasising that not everyone is perfect. I’m reminded of a recent industry e-news bulletin with an ironic double subject line: “Aussie brokers finest in the world; disgraced broker to avoid jail and more”. The scrutiny of the financial services industry is more intense than it has ever been, and the royal commission will ensure that intensity won’t diminish any time soon. So the question is: Where’s the disconnect between how we see ourselves and public perception? To build a culture of trust, we recommend to clients that business practices not be viewed in isolation, but as interactive with each other, and the resulting platform as ‘holistic’. When we talk about business practices, we mean the
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activities undertaken in a business such as business planning, compliance, people and performance measurement, and learning and development – matters that aren’t revenuegenerating but that form the underlying platform the company uses to allow its people to ply their trade effectively. A holistic approach to business practices is
each and every one of us to demonstrate why we are trusted advisors from a tangible perspective with every contact we have – not just with clients, but also inside the business. We believe this is a process of continually doing the right things in the best interests of the client, even when there is an easier, cheaper or more profitable option – and reinforcing the same to our teams. Gold Seal’s holistic approach to building a trust culture starts with five key steps. First, ensure business practices, such as risk management frameworks, IT, records management and business continuity, are managed to a high standard. Second, have a business plan that clearly shows a link between the organisational objectives and the objectives of the individuals who will execute the plan. Third, ensure your business practices are not only in place, but also documented and understood by all your people. Fourth, check that people management practices are in good order – from your employment agreements, job descriptions, recruitment processes, induction programs and performance management through to adequate training and
“Consistency in the use of good business practices and demonstrating those practices to the point where public opinion is changed are different matters” a concept coined by one of our senior industry practitioners, Leigh Stalker, general manager of Capital Innovations Insurance Group and Insurance Solutions Tasmania, who actively seeks to implement such a platform. We all know that when businesses operate in silos that don’t communicate, they are less efficient and more vulnerable to criticism. They open themselves up to issues ranging from client service to compliance deficiencies and higher error rates. This is the danger zone, because lack of transparency throughout the business readily makes itself known publicly. A holistic, documented framework encompassing consistently high business practice standards is one of the best defences against criticism. The best way to change public perception is for
qualifications. And finally, ensure adherence to financial management standards is evident. Sound business practices underpin every customer touchpoint and ensure that you have a consistent, demonstrable approach that will continue to build the perception of trust within your community and of our industry. We stand by our mantra of delivering excellence. Sometimes it isn’t the easiest thing to do, but I’d rather that than be used as an example by a royal commission – or the court of public opinion.
Sheila Baker is managing director of Gold Seal, the Australian insurance intermediary industry’s largest business management, compliance, learning and people development organisation.
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UPFRONT
NEWS ANALYSIS
The cyber scandal The Facebook/Cambridge Analytica scandal has brought renewed attention to concerns of data privacy and cybersecurity
IT’S LONG been said that almost every company today is susceptible to a data breach, but it’s a warning that has continued to go unheeded by many companies – until now, that is. Last year was marked by cyberattack after cyberattack, as breaches at companies like AMP, Equifax and Uber grabbed headlines and unsettled business leaders. Then, just a few months into 2018, social media giant Facebook became embroiled in a complex data scandal, in which it was revealed that data firm Cambridge Analytica had harvested millions of Facebook users’ personal information for use in political campaigns.
coverage, the impending arrival of stricter data protection laws in Europe, and IT and security professionals continuing to sound the alarm, business leaders are finally waking up to the realities of cybersecurity in the 21st century, says Mark McCreary, chief privacy officer at law firm Fox Rothschild and co-chair of the firm’s privacy and data security practice. “It’s more widely in the press and part of the daily conversation,” he says. “That has an impact.” The European Union’s sweeping new General Data Protection Regulation [GDPR] has been causing a stir beyond Europe, thanks to the introduction of hefty fines that apply
“There’s no question that company heads don’t have any idea what [policies] they need, and I don’t expect them to, frankly” Mark McCreary, Fox Rothschild The Facebook scandal has thrust the wider subject of data privacy into the mainstream once again. As a result, organisations and their leaders appear to be growing more aware of the value of the data they hold and the importance of keeping it safe. But how far do we still have to go? Thanks to an increasing volume of media
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to all companies that deal with EU nationals, whether they’re based in the EU or not. “Whether you love it or hate it, it has really put this topic into the forefront of the conversation,” McCreary says. Add to that the Facebook/Cambridge Analytica scandal, and the data issue is everywhere. “Think of the number of stories that
produced,” McCreary says. “People may not actually be deleting their Facebook accounts, but they are really starting to pay a lot more attention – and they’re realising that data breaches don’t all look the same.” But does greater awareness come with greater take-up of cyber insurance policies? A recent survey by Fox Rothschild found that an impressive 70% of respondents had cyber liability insurance in place. However, while coverage was common among respondents, the survey found that executives lack a solid grasp of the policies’ limitations, and just 21% had filed a claim. When it comes to businesses at the smaller end of the scale, figures indicate that both take-up and awareness are far lower. An Insureon poll found that 74% of small businesses don’t have cyber liability insurance, despite the fact that nearly one in six have experienced a data breach.
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THE STATE OF DATA SECURITY IN 2018
400
Number of Australian workers who had their personal and financial information leaked in the first publicised data breach since mandatory reporting laws went into effect
87 million
Estimated number of people who could have had their Facebook data harvested by Cambridge Analytica, according to ex-employee of the latter
147 million
Approximate number of US consumers who had their data stolen from credit rating bureau Equifax “Many businesses don’t believe that they have any kind of information available that would be interesting to a hacker, when in fact, whether it’s customer data, credit card infor-
understand policies. “I think there’s no question that company heads don’t have any idea what they need, and I don’t expect them to, frankly,” he says.
“In many cases, it’s not a question of if, but when, a cyberattack will occur. That’s the kind of message we need to be delivering” Jeff Somers, Insureon mation or purchasing behaviour, they probably hold information that would be interesting,” says Jeff Somers, president of Insureon, which specialises in small business cover. While some argue that business leaders need to do more to improve their understanding of the cyber risks they face, McCreary believes the onus is on brokers to better
“When it comes to cyber at the broker level, it truly is a specialty. It’s something that you have to really understand in terms of how the policies are different and how the claims made are different.” For companies that have the resources, McCreary says it’s about education and dollars: bringing in dedicated cybersecurity personnel
74%
Percentage of small businesses that don’t have cyber liability insurance Sources: IT News, Guardian, BBC News, Insureon, Manta
and making sure that enough money is being allocated to the cybersecurity budget. For smaller companies, Somers says it’s up to brokers to get the message out there. “I think there’s a lot of education and awareness-building that we need to do as a community to help small business owners understand that this is a risk ... and a part of doing business in our day and age,” he says. “In many cases, it’s not a question of if, but when, a cyberattack will occur. That’s the kind of message we need to be delivering to the small-business community.”
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UPFRONT
INTELLIGENCE PRODUCTS
CORPORATE ACQUIRER
TARGET
COMMENTS
Centerbridge Partners
Canopius
A Centerbridge-led consortium has agreed to purchase Canopius from Sompo Holdings for US$925m
Freedom Insurance Group
St Andrews Insurance
The Bank of Queensland is transferring its life insurance arm to St Andrews for $65m
Oracle Group Australia
Professional Insurance Brokers
Victoria-based Professional Insurance Brokers is selling to Oracle due to the retirement of its owner
BMS and CFC launch pioneering trademark cover
BMS Risk Solutions and CFC Underwriting have announced the launch of a new product designed to protect trademark applicants. A first in Australia, the new Trade Mark Protect cover enables trademark applicants and owners to meet the costs of defending their trademark against opposition to registration or application for removal. The coverage is aimed at helping SMEs deal with the growing risks surrounding intellectual property and defence against infringement claims. The product can be purchased from BMS and partners and is only available for use within Australia.
Oracle announces acquisition, senior changes
Oracle Group Australia has acquired Professional Insurance Brokers [Profin] following owner Martin Hastings’ decision to retire. After 30 years at the helm of Profin, Hastings has handed the reins to Jane Martin, formerly of Platinum Insurance Brokers, who will join Oracle as a director and will head up its office in Monbulk, Victoria. “I’m very pleased to be joining OGA as a director,” Martin said. “It gives me the opportunity to join a progressive national insurance brokerage with a clear vision of their future development, and I look forward to working with my codirectors in that development.” “Jane’s professionalism offers valued acumen, [and] her brokerage ... provides OGA with the hub necessary to facilitate growth strategies into Victoria,” said OGA managing director Steve Campbell.
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Guy Carpenter unveils new cyber modelling platform
Global risk and reinsurance specialist Guy Carpenter has partnered with CyberCube Analytics to create an industry-first cyber risk modelling platform with an inside-out view of cyber risk exposure. As part of the partnership, Guy Carpenter will use CyberCube’s new stochastic cyber catastrophe model to deliver innovative cyber reinsurance products to clients and prospects. The new platform will allow insurers to access to exabytes of unique data and multidisciplinary analytic methods to help them make more informed decisions when underwriting cyber risk and managing cyber risk aggregation.
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PEOPLE Agribusiness AWB launches new crop cover Agribusiness AWB has rolled out what the company says is an “industry first” set of products to allow growers to insure their crops specifically against frost and crop-establishment failure. The new frost and cropestablishment failure covers can be added on top of the basic fire and hail coverage traditionally included in Australian crop insurance. The frost cover is available to farmers throughout this growing season, and the crop-establishment feature will be available next year.
New direct player takes aim at cyber market
A new insurtech firm, Edmund, has launched to offer cyber cover to the SME market. Set up by ex-broker Richard Smith, Edmund will offer cover backed by Munich Re and aims to bring a customer focus to a complex market. “Edmund is an insurtech which is filling a very real need – the capability for Australian SMEs to quickly and efficiently buy a very comprehensive cyber insurance policy,” said Joel Pridmore of the Munich Re Syndicate at Lloyd’s. The firm has also partnered with KPMG to offer emergency response services in the event of a breach.
Crawford & Co. aims to boost claims efficiency
Claims management firm Crawford & Co. has announced the launch of TruLook, a new product it says will reduce costs, increase claims processing efficiency and improve customer satisfaction. Using best-in-class technology, TruLook sorts claims into one of three categories: mobile self-serve; WeGoLook, its on-demand field services provider; or traditional field adjusting. From there, each claim is processed with the appropriate level of service and attention, and Crawford monitors each claim, escalating it to higher levels as needed. The company said TruLook can reduce process time to 3.7 days and save up to 30% in cost.
NAME
LEAVING
JOINING
NEW POSITION
Paul Brown
Chubb
SURA
National underwriting manager, professional risks
Liam Buckley
N/A
QBE
Head of culture and talent
Nick Green
Cycling Australia
Aon Risk Solutions
Head of sports
Peter Grewal
Swiss Re
QBE
Chief risk officer
Ben Hissey
N/A
Liberty International Underwriters
Asia Pacific operations leader
Jane Hunt
South Australian Government
Gallagher Bassett
Claims operations manager, Victoria
Matthew Jackson
N/A
Liberty International Underwriters
Senior VP, Asian operations
Kevan Johnston
N/A
Aon
Managing director, commercial
Jin Lee
N/A
Chubb
Head of bancassurance, Asia Pacific
Paul Linder
CGU
SURA
Senior underwriter
Inder Singh
N/A
QBE
Group CFO
Rohan Stewart
N/A
PSC Group
CEO
Karla Wasinski
Hollard Insurance
Claim Central
Chief experience officer
Scott Willmot
N/A
Aon
Chief growth officer
PSC Group shakes up leadership
PSC Insurance Group has announced the appointment of Rohan Stewart (pictured) as its new group CEO. Stewart will combine his new responsibilities with his current role as group COO. According to PSC, the combined role reflects “the lead management role of group operations that Stewart has been fulfilling for some time”. Elsewhere at PSC, Paul Dwyer will take on the new role of executive deputy chairman while maintaining his current role as managing director. He will continue to focus on developing the group’s strong investments and acquisitions pipeline. Joshua Reid will remain as group CFO, and both Stewart and Reid will report directly to Dwyer and the board.
Olympic gold medallist joins Aon
Former Olympian and rowing legend Nick Green has been named Aon’s head of sports. Green, a dual Olympic gold medallist and four-time world champion, will work with the broader leisure, sports and tourism group. “Nick’s background and unique skills will enhance and grow Aon’s offering for sporting organisations across Australia,” said Aon Risk Solutions CEO James Baum. “He will be tasked with bringing the best of Aon’s capabilities to both our existing and potential sporting partners, delivering a comprehensive risk, retirement and health offer for the industry.”
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UPFRONT
INSURER UPDATE
Could traditional insurers disappear? Outside competition might be what many in the industry are watching, but threats from the inside are also a concern
as it combines their skills with the incumbent’s customer base and knowledge of regulation and underwriting. “That scenario may or may not play out; it is just one scenario that is currently playing out in the US – and in the lesser extent, Europe – but I think it does raise some fundamental questions for insurers,” Sandhu said. He pointed to both Swiss Re and Munich Re, who have stepped up their insurtech
“One view of the future, depending on how things might change, is that the primary insurer is disappearing”
Primary insurers could face threats to their very existence as reinsurers and insurtechs continue to forge partnerships, according to one industry expert. Speaking to a packed house at the inaugural Insurance Business Insurtech Summit in May, Angat Sandhu, partner at Oliver Wyman, highlighted the fact that insurers are facing increasing challenges from within the industry.
NEWS BRIEFS
“One view of the future, depending on how things might change, is that the primary insurer is disappearing,” Sandhu said. “They are in effect a capital player, competing with the reinsurers and alternative capital providers, and everything else is being provided by technology-enabled MGAs.” Sandhu noted that this is an especially attractive way for startups to enter the market,
Going beyond insurance key to IAG’s future
IAG plans to look beyond insurance as it seeks to carve out a role in the future of the industry. IAG’s James Orchard told attendees at the inaugural Insurance Business Insurtech Summit: “What we are starting to have a play with at IAG now is how we can extend that superior customer service into areas that relate beyond the insurance transaction. How can we start to use the other assets that we have … to start to offer services that increase the frequency of interaction?”
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investments over the last few years. “A lot of investments in these startups are in the forms of MGAs, where they are bypassing the insurer,” Sandhu said. “We are some way from reinsurers trying to become the insurer, because it is only 20%, but I think what is interesting is that the startups are able to raise capital fairly attractively, and in many cases are bypassing the insurer.” For insurers, Sandhu said, this raises the prospect of competition from different sides. “Are they competing with other insurers, or in this case, are they competing with a startup that is backed by providers that have a lower cost of capital?”
Berkshire Hathaway opens new office in Perth
Berkshire Hathaway Speciality Insurance [BHSI] has expanded its Australian operations with the launch of an office in Perth, led by Anthony Prindiville and Mark Shepard. The Perth office will underwrite the same lines as other Australian offices, offering cover in casualty, property, mining, energy, construction, power, marine, transport and logistics, healthcare liability, accident and health, and executive and professional lines for a broad range of businesses.
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UPFRONT
INSURER UPDATE Q&A
Anthony Pagano Head of commercial intermediaries
Opportunities abound in equipment breakdown
VERO
Fast fact Currently, only 20% of Australian businesses are covered for equipment breakdown
Do you think businesses understand the changing risks they face when it comes to their equipment? Today’s businesses are more tech-savvy than ever before. Most businesses know how frustrating the loss of computer-based equipment and systems can be, but I don’t think many have analysed if their business could even continue to operate in the event of a failure. For example, retail businesses may be totally hamstrung if point-of-sale equipment goes down, especially if this is linked to inventory management and accounting systems. It can be very difficult to manually replicate what these systems do. At the same time, modern manufacturing equipment is so complex, efficient and often running 24/7 that it is virtually impossible to continue without it. Gone are the days where you could make up for the reduced output the old-fashioned way with extra hands and tools. A significant breakdown is not just an increased cost of working expense – it’s going to hit the bottom line.
How can brokers help businesses better understand these risks? It’s important for brokers to ask businesses to stop and reassess the equipment exposures they have today, as they are likely different to the last time they considered it, even if it was just a few years ago.
Aussie rate rises still leading the way for QBE
In his inaugural address to shareholders, QBE Group CEO Pat Regan said the business has seen solid premium rate increases over the first quarter of 2018, led by operations in Australia and New Zealand. “Our rate increases in the first quarter of 2018 have been broadly in line with our forecasts and what we saw at the end of 2017,” Regan said. “We have experienced premium rate strength of approximately +4%, excluding CTP, in the first quarter.”
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Brokers can better understand a client’s needs by asking how they generate income from their business, what are the most efficient systems or machines that allow them to generate this income, can the business easily repair this equipment, and could the business continue to operate if one or all of the critical items of equipment failed. If the client is uncertain, chances are there is an opportunity to educate and provide some value. Insurers can help by providing examples of similar claims so clients can better understand the exposures. Whilst the theory is nice, practical examples are still the best way to help a business understand.
As technology changes, do you think businesses understand that the definition of ‘equipment’ has broadened? Many of today’s busy businesses simply haven’t stopped to think about how broad the definition of equipment has become. Most still believe it’s limited to mechanical items in a manufacturing workshop. Every business could be impacted should its switchboard, transformer or even the electrical wiring fail. One of the most important discussions brokers can have with their clients is around their reliance on equipment being greater than ever before, and how the definition of equipment is now broader than ever and includes today’s latest technologies.
Allianz announces plans to limit coal investments
Amid mounting pressure, Allianz has said it will no longer provide stand-alone insurance coverage for single coal-fired power plants and coal mines. The insurer also plans to ban all companies planning to build more than 500MW of new coal capacity from its investment portfolio, with the aim of phasing all coal risks out of its business by 2040. “As a leading insurer and investor, we want to promote the transition to a climate-friendly economy,” said Allianz CEO Oliver Bäte.
Ansvar to hold broker forums this summer
Ansvar has announced a series of broker forums to be held across Australia in July and August. The forums will discuss key points on how governance risk and insurance are vital to ensuring that organisations in specialty sectors are able to protect vulnerable people and prevent harm. The events will also provide information on how brokers can access relevant risk management services and deliver tailored risk solutions through Ansvar Risk.
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UPFRONT
UNDERWRITING AGENCIES UPDATE NEWS BRIEFS Quantum announces international partnership
WA-based Quantum Underwriting has partnered with AEGIS London to pilot the launch of a fine art and jewellery insurance product in Australia, led by AEGIS’ class underwriter for specie, Ian Seakens. The product, which will be distributed via AEGIS London’s OPAL online quote-and-bind platform, is designed to provide coverage for jewellery and fine art assets, including those that were bought as an investment as part of a private individual’s pension plan. If the product proves successful, it will be rolled out in other territories.
CHUiSaver makes updates to residential strata policy
CHUiSaver has updated its existing residential strata policy with two additional sections as optional covers: legal expenses and lot owners fixtures and fittings. “With the growing demand for tailor-made strata covers, and based on feedback from our intermediaries and clients, these optional covers were added with minimal extra cost,” said Ani Kakulapati, CHU’s chief disruptor. “This will help strata owners to have the backup and peace of mind, if they wish to opt for these covers.” Kakulapati added that “providing the flexibility to opt in or out of certain covers” is part of CHUiSaver’s “intention of challenging and disrupting the traditional strata insurance products.”
CFC Underwriting receives royal seal of approval for trade
CFC Underwriting has received a Queen’s Award for Enterprise in the international trade category, which
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recognises company for having demonstrated a “substantial and sustained increase in export earnings over three consecutive 12-month periods, to a level which is outstanding for the products and services concerned, and for the size of the organisation.” CFC started with just one office in London in 1999; today, the company provides insurance products to brokers in more than 75 countries across the globe.
Lloyd’s looks to fill out Brussels outpost in advance of Brexit
Lloyd’s has taken another step towards setting up its subsidiary in Brussels, which will act as its European outpost when Britain leaves the European Union. Lloyd’s has begun a recruitment effort to fill out roles in finance, operations, compliance, HR and underwriting. The insurer said it plans to advertise a number of jobs on its website, all of which will be based in the Belgian capital. Lloyd’s CEO Inga Beale confirmed that Lloyd’s plans to open its Brussels subsidiary in January 2019.
UAC hails its recent Sydney Expo as the “best ever”
The Underwriting Agencies Council is calling its recent Sydney Expo the “best ever”, thanks to record-setting numbers of attendees. The 19th annual expo saw a record-breaking 98 exhibitors and just under 400 brokers in attendance. This year’s expo also involved extended opening hours to give brokers more access to exhibitors. “I have not heard so many satisfied comments from both exhibitors and brokers, and from third parties who came along to see what the fuss is all about and left really impressed,” said UAC general manager William Legge.
Making an old market new How well equipped is Lloyd’s to deal with the challenges posed by a changing insurance environment? As the world’s oldest insurance market, Lloyd’s might seem like it will always have a place within the insurance industry. However, according to Chris Mackinnon, Lloyd’s representative for Australia, the importance of modernisation is not lost on Lloyd’s. “I think it would be somewhat arrogant of us to assume that Lloyd’s will always be there,” he says. “I think that we, as a market, and any business or organisation, have to remain relevant and current to [our] customer base and the changes in the world.” So far this year, Lloyd’s has already undergone changes designed to boost efficiency and access. The London market has moved further down a path towards electronic placement, and a worldwide agreement has been signed with ACORD as part of the London Market Target Operating Model [LMTOM] to roll out greater access to education and data standards. While the modernisation work is focused on the London market for the moment, Mackinnon says the Australian branch is looking at ways to integrate technology to benefit local coverholders and brokers. “As part of the overall [strategy], we are looking at a number of different initiatives that will interface with PPL from here and from other territories around the world,” he says. “We are looking at what solutions we can deliver to the coverholders that can then interface with
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“I think it would be somewhat arrogant of us to assume that Lloyd’s will always be there. I think that we, as a market ... have to remain relevant and current to [our] customer base and the changes in the world” PPL and the other initiatives in London.” Mackinnon noted that the Australian market is well suited as a testing ground for new initiatives, and that Australia plays an important role in the modernisation plans for the entire group. As a mature market, and the fourth largest in the world for Lloyd’s, Australia offers scale and a strong jurisdiction in terms of regulatory oversight. “We can trial things here, and if we trial things here, we know they will work elsewhere
in the world,” Mackinnon says. “So we’ve got a cracking team at Lloyd’s Australia who are motivated and ready for change. “I think the other thing is that Australia is a very innovative country,” he adds. “We talk to the coverholders about a new idea, and they embrace it and give it a crack, as opposed to saying, ‘We don’t like change.’ It is a fantastic market to develop ideas in, and Lloyd’s is very cognizant of that and is working very hard with my team and myself to drive some of
those changes.” This isn’t the first effort Lloyd’s has made at modernisation, but Mackinnon believes the latest batch of changes will stick as the market takes a more concerted approach. “We moved away from the quill and inkpot and modernised by giving people big biros,” he says, “so we need to move much quicker than that to maintain our relevance.”
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PEOPLE
THE BIG INTERVIEW
LEADING TODAY FOR TOMORROW QBE Group CEO Patrick Regan talks about improving the business of today while simultaneously building the insurer of the future
IT’S BEEN a hectic time for Patrick Regan, who took the QBE Group’s top job five months ago. But he also describes the period as “terrific”. “We’re trying to do a lot of things, trying to move the ball on our seven key priorities, and while it has involved a lot of travelling, it’s felt good,” Regan says. “It’s felt like we’re doing a good body of work, and it’s felt energising.” For the first half of 2018, the initial focus has been on creating a clear plan and assembling the right team. “We spent most of the last few months coming up with a plan – and that’s not Pat Regan’s plan, that’s our team’s plan,” he says. “It would’ve also been my plan – it’s what I wanted to do – but it’s very much been constructed by our team, and they’re all taking roles in it that I couldn’t possibly have asked them to do, in addition to their day jobs: leading various elements of our program, putting their own expertise in, putting their own time in … It means we’ve come up with the right plan for QBE.” In April, QBE announced a reshaping of the group’s senior management team. Inder Singh was appointed group chief financial officer, Peter Grewal is now group chief risk officer, Liam Buckley became group head of culture and talent, Matt Mansour is group chief information officer, and Anders Land is
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now group head of internal audit. “We’ve just got one more appointment, which is the chief underwriting officer,” Regan says, “and hopefully we’re pretty close on that.”
Back to basics In late February, QBE announced to investors its new strategic agenda, featuring seven key priorities, which aims to strengthen the group following a challenging 2017 in which
will really make a big difference to QBE,” he says, particularly as it relates to claims. “How do we show up, pay what you think you’re owed and pay it in a really good manner so that you feel like you’ve got good customer service?” he says. “I think a lot of our work is providing a better, really firstclass claims service, whether that be with more digital tools [or] highly trained staff … I want us to be known for providing a really
“The trick for us at the moment is there’s so much data that we already have that we can do more with. We’ve hired some genuine rocket scientists into our data analytics teams around the world” it sustained a statutory net loss after tax of US$1.2bn, compared to a profit of US$844m in FY2016. One of QBE’s seven priorities is rolling out its Brilliant Basics program, which Regan described at the time as a focus on “delivering consistent excellence in our underwriting, pricing and claims everywhere that we do business”. “That’s an interesting piece of work, and it
high-quality claims service.” Alongside Brilliant Basics, another key priority for QBE this year is laying the groundwork to shape the organisation into what it needs to be in five years’ time – or, in Regan’s words, “the QBE of the future that embraces innovation a lot more, has highly digital processes, has got data science in every corner of how we do business, is much more
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PROFILE Name: Patrick Regan Title: Group CEO Company: QBE Group Based in: Sydney Years in the industry: 17 Fast fact: Before moving to London for his first role in the insurance industry, Regan worked for GE Capital in the US as a financial controller
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PEOPLE
THE BIG INTERVIEW
modern, fast-paced [and] has a more modern, diverse workforce”.
The tech piece One of the keys to QBE’s technological future will be its use of data. “It’s amazing what more you can do with the information you’ve already got,” Regan says. “The trick for us at the moment is there’s so much data that we already have that we can do more with. We’ve hired some genuine rocket scientists into our data analytics teams around the world. We’ve hired people directly from university, from known good-quality teams in other companies, and it’s been brilliant. It’s really opened the eyes of everybody in the business. We’ve got similar teams in all of our businesses now, so more than 100
into a commercial agreement with them.” The aim is for QBE to use HyperScience’s technology for a number of purposes, including driving operational efficiency and unlocking new data and insights. “They’ll look for any form of information that exists, [from] somebody posting on Facebook about a fire in their house or next door’s house, to looking at the fire department’s schedules and seeing how long it takes them to get to different calls, and they accumulate these massive amounts of information and do loss prediction based off that, which is dramatically better than historic insurance loss prediction,” Regan explains. “We’re really excited about that [partnership].” QBE is also undertaking considerable work around automation.
“I think in every walk of life, whether you’re in a sports team [or] running a business, people identifying with the culture of the company, and it being a really distinctive culture is so important” people across the globe, and it’s fantastic, and we can do a ton more tomorrow than we did yesterday on that, [and] more next year than we’ve done this year.” As well as putting substantial focus on building data analytics capability, QBE is continuing to invest in partnerships with insurtech businesses. Regan mentions the most recent investment by QBE Ventures in HyperScience, a machine-learning company that builds enterprise-grade artificial intelligence solutions with a view to reducing companies’ dependency on costly, slow and error-prone manual data-entry operations. “This has been our third investment,” Regan says. “We take an equity stake and enter
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“One of the things we’re really working on now on SME products is how we do question less SME underwriting,” Regan says. “We’ve got access to data such that we don’t need to ask you 50 really annoying questions. We can actually use data that’s already available to us and provide you with a high-quality product in a standardised way so that you can get a quote very quickly and easily, and then back that up with a high-quality, predictable claims service.” Also in the SME space, the business is working to make some of its SME products more tailored to specific industries. “Typically at the moment, what insurers do is you’ll have a certain set of products or
a set of questions that are generic across all industries, whereas … a restaurant [and] a factory [are] two very different businesses, and we can actually tailor [coverage] more for both of them.”
Replicating successes During the year before he became group CEO, Regan held the reins of QBE’s Australia and New Zealand operations, where he led the implementation of several successful changes, some of which are now being rolled out to QBE’s other business units. One of the key initiatives that will be implemented across the broader group is aimed at driving strong underwriting performance management via regular updates by portfolio managers to the leadership team. “It gives you such a great insight into what they’re doing and whether we’re on track to deliver what we say we [will],” Regan says. “That worked really well for us in Australia, [and] it has some cultural elements to it that are really attractive as well, in terms of accountability.” There’s also the Brilliant Basics agenda, which was initially piloted by QBE’s Australian team. “When we started that in Australia, I was curious as to how people would find it, and [they] actually really like it – who’s not going to like getting better at what we do for a living?” Regan says. “And implicit but also explicit in that is that we’ll make investments [and] we’ll give them better tools. We spent a lot of money investing in pricing tools … and we spent quite a bit of money externally with help from [organisations] like Finity to make us better at that, and similarly claims as well.” Culture was another significant focus for Regan when he was in charge of operations in Australia and New Zealand, and it will be equally important for him now that he’s leading the global organisation. “I think in every walk of life, whether
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PATRICK REGAN’S CAREER HIGHLIGHTS
2001 Is hired as finance director for AXA, based in London
2003 Becomes group chief financial controller at RSA
2005 Is named group chief financial officer for Willis Towers Watson
2009 Moves to Aviva as group chief financial officer
you’re in a sports team [or] running a business, people identifying with the culture of the company, and it being a really distinctive culture is so important,” he says. “We spent quite a bit of time defining what we wanted our culture to be [and] then getting everybody to mobilise behind that and start role modelling that. We’re doing that right across QBE now.” On the subject of culture, Regan also discusses QBE’s ongoing work on the diversity and inclusion front. “I feel lucky that I’m in a country where people are quite thoughtful about diversity and have been for some time,” he says, adding that he’s joining the Male Champions of Change, a group of senior men across the business community committed to achieving change on gender equality issues. Additionally, QBE is continuing to do a
significant amount of work on this front, both in Australia and around the world. “We’re doing more and more … and [promoting] more women into leadership roles,” Regan says. “Across the group, I think we increased women in leadership roles by about 3% … We had a target previously of 35%, but I think we shouldn’t stop at that. We should keep doing that [work] until it feels much more equal across the business.” Regan is determined to ensure QBE delivers on its promises, which means not only working to achieve a better business for today, but also preparing the global insurer to be the company it will need to become in a rapidly changing world. In his own words, the group’s biggest challenge right now is to learn “how we pat our head and rub our tummy at the same time”.
2014 Relocates to Sydney and takes the role of group chief financial officer at QBE
2016 Is appointed chief executive officer for QBE’s Australia and New Zealand operations while also continuing to serve as group chief financial officer
2018 Is promoted to group chief executive officer of QBE
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SPECIAL REPORT
BROKERS ON INSURERS
BROKERS ON INSURERS Australia’s best insurers rated, ranked and revealed
WHICH INSURER is leading the way when it comes to turnaround times on claims? Which insurer is setting the standard for the overall level of service it offers its broker partners on a daily basis? And which insurer has risen to the top of the pack to be crowned Insurer of the Year for 2018? For the sixth consecutive year, Insurance Business turned to brokers to find out which insurers they feel are delivering the best bang
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for their buck. As always, IB received a strong response from our readers, who were eager to provide a wealth of feedback on their experiences with Australia’s major general insurers. Their scores and comments have been collected and packaged together for this 2018 Brokers on Insurers special report. As in previous years, IB asked brokers to rate insurers across 11 categories and to identify which individual aspects of their
dealings with insurers have been most crucial in influencing their ultimate impression of that company. So, how did insurers fare in 2018? Who has improved on their 2017 performance, and which insurers have fallen behind? Read on and find out. Tim Garratt Editor, Insurance Business
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METHODOLOGY Using our online newsletter and Twitter, Insurance Business invited brokers to rate the performance of several insurers that operate in Australia: AIG, Allianz, Berkshire Hathaway Specialty Insurance, Calibre, CGU, Chubb, QBE, Vero, XL Catlin and Zurich. More than 400 survey participants rated these insurers on a scale from 1 (very poor) to 5 (very good) over 11 categories: CLAIMS TURNAROUND TIMES NEW BUSINESS ENQUIRY TURNAROUND TIMES OVERALL SERVICE LEVEL PREMIUM STABILITY ONLINE PLATFORMS BDM SUPPORT TRAINING AND DEVELOPMENT PRODUCT RANGE PRODUCT INNOVATION COMMISSION STRUCTURE BRAND RECOGNITION Brokers also rated the importance of each of these categories on the same scale. An average was then generated for each insurer in each category, and an overall average was calculated based on each insurer’s performance across all 11 categories. Brokers were also asked a number of questions about how insurers had performed in the most important areas. In addition, they provided feedback on their best and worst experiences with insurers during the past year.
WHAT BROKERS WANT Insurance Business asked brokers which factors are most and least important to them in their dealings with insurers. Brokers tend to name the same top four factors in precisely the same order each year – and that was the case once again in 2018. Unsurprisingly, respondents named turnaround times on claims as what matters most to them in dealing with insurers. When a client suffers a loss or damage, it’s their expectation that the claim process will be as painless and stress-free as possible. And of course, a broker acting on behalf of an insured wants to deal with insurers they know will provide precisely that kind of customer experience. In second place, brokers once again named overall service level. In today’s world, time-poor brokers need to be able to interact with insurance company staff members who can confidently, efficiently and empathetically address their and their insured’s questions and concerns. And in a world where technology continues to ramp up the pace of change, brokers now have access to best-in-class customer experiences that they expect to see replicated across the board, including in their dealings with insurers. When asked about the best thing an insurer had done for their business or a client within the last 12 months, one broker said, “[They] offered to have a claims consultant sit in my office and help out with progress updates,
making live decisions on claims, answering questions, lodging claims on our behalf.” Another broker praised an insurer that “paid a claim quickly to the client without any unnecessary delays”, while a third was impressed by an insurer that “[took] the time to understand my clients and assess the risks correctly.” Finishing third on the list yet again was turnaround times on new business enquiries, while premium stability rounded out the top four. When premium increases are on the horizon, brokers want to know why so they can prepare their clients for what’s ahead. One survey respondent raved about an insurer that “communicated clearly over the phone the reasons for a large premium increase and offered to review the policy to reduce the premium where possible”. Online platforms moved from sixth to fifth place in terms of importance this year. As technology continues to enhance customer experiences across industries, and with more paper processes moving online, it’s hardly a surprising move. Brokers increasingly expect insurers to deliver seamless, intuitive online platforms that make vital information exchanges easy. At the other end of the spectrum, the two factors that usually find themselves at the bottom of the list – commission structure and the insurer’s brand recognition – occupied those last two spaces again this year.
WHAT’S IMPORTANT TO BROKERS: THE TOP 5 5 4 3 2 1 0
4.79 Claims turnaround times
4.65
4.52
4.32
4.08
Overall service level
New business enquiry turnaround times
Premium stability
Online platforms
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SPECIAL REPORT
BROKERS ON INSURERS
WINNING MORE BROKER BUSINESS Brokers who participated in the 2018 survey were asked how an insurer can win more of their business in 2018. They responded with a plethora of varied and constructive responses. “Be innovative,” one broker advised. “Work with the broker on innovative underwriting solutions to risks … [and] flip the thinking of philosophy from end customer back up the chain through broker and insurer.” Another broker suggested an insurer could win more of their business “by simplifying and shortening their proposal forms, by using online systems and by providing the brokers with more plain English materials for both advertising and policy wordings”. Several brokers were in favour of increased use of online systems. “The electronic quoting systems definitely make all the difference,” one said. “When we are time-poor, we cannot afford referrals and requests for more information. The easier it is to quote and bind electronically, the more business the insurer will win.” However, other brokers stressed that tech-
nological upgrades must be balanced with face-to-face interaction. One broker said insurers need to “accept the fact that technology is changing the way business is run and transacted, but to look for a balance with personal service and relationship modelling”. Another advised insurers to “continue to focus on personal service. I like to know that my query is being attended to. If I can’t have a response within 24 hours, give me an update. Understand my expectations [and] listen.” The timeliness of communications between brokers and insurers was an issue raised by several survey respondents. “I understand that you might not be able to write everything; let me know straight away – don’t wait weeks to say no,” one broker said. Another responded: “Insurers need to be proactive with responding to claims, regardless of the decision to accept or decline. Delays with claims affect the insurer’s and our credibility.” Some brokers intimated that they would be more inclined to work with an insurer if they had the opportunity to see more of their
people. “Come and visit us in our office and ask what you can do for us, and then follow through,” one broker advised. Another suggested a stronger relationship would help. “Be more involved in our business,” the broker said. “Learn how we work and give us the opportunity to write new business instead of declining all risks presented.” And another emphasised the importance of teamwork. “Believe and trust in your brokers, just as we believe and trust in you and your product,” the broker said. “Working alone is futile – teamwork is key.” Of course, in a market that is now showing signs of hardening, brokers also made a number of comments about premiums. One is looking for insurers to “provide quick, prompt and fair premiums for risks and service from intelligent operatives”. Meanwhile, another broker opined that “insurers need to be realistic on premiums. Rather than trying to push higher premiums, they should be working with us to add value to our client relationship.”
WHAT’S IMPORTANT TO BROKERS: THE REST
5 4 3 2 1 0
26
4.07
3.74
3.66
BDM support
Product range
Training and development
3.64 3.57 www.insurancebusinessonline.com. Product innovation
au
Commission structure
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3.41 Insurer’s brand recognition
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TURNAROUND TIMES – CLAIMS certain types of claims: “Insurers are definitely getting better at dealing with claims, [with] more streamImproved lined service and much improved service for catastrophe events.” But one broker reported that while insurers are doing a “fairly good” job overall, “there have been some absolute headaches with claims getting sorted”. One broker commented on how insurer behaviour has changed in tandem with market conditions: “Due to the hardening market, insurers are once again looking to reel in losses and leakage by minimising claims costs through strict auditing criteria and claims requirements. This is causing
HAVE TURNAROUND TIMES ON CLAIMS IMPROVED OR WORSENED OVER THE LAST 12 MONTHS?
47%
Chubb
3.54
Allianz
3.26
CGU
3.17
Industry average: 3.07
For the sixth year in a row, brokers said that what matters most in dealing with insurers is turnaround times on claims. After all, there is no time when a broker expects more from their insurer than when called upon to honour their promise to pay. Respondents’ feedback about insurers’ turnaround times on claims within the last 12 months was quite varied. “Some insurers have implemented better systems to deliver faster claim outcomes, which is brilliant,” one broker said. “However, other insurers have worsened considerably and always point the finger at a lack of resources.” Others agreed that some players are clearly outperforming their competitors on this front. “Some companies are fantastic – exceptional systems and staff to support claims,” said one broker. Another noted general improvement across the board, specifically in handling
BROKER FEEDBACK
“Some insurers have dropped the ball on claims, while others have significantly improved” delays in the claims process, as the burden of information required to submit a claim is increasing and review of this information impacts the timeframe involved.” Another broker observed that in the current market, “everyone wants to find a way not to pay a claim”. Brokers also expressed dissatisfaction with decisions to outsource claims teams, as well as specific experiences with certain claims staff. And when asked how insurers could win more of their business, several respondents’ answers were claim-focused, including “improve claims capability”, “[provide] knowledgeable claims staff [and] quick and responsive service” and “settle claims as quickly as possible when it is a simple claim”. Perhaps one broker said it best,
Worsened
53%
INSURER
2018 2017 MOVEMENT RANKING RANKING
Chubb
1
1
Allianz
2
2
CGU
3
3
Vero
4
4
Berkshire Hathaway Specialty Insurance
5
5
calling upon insurers to “acknowledge that claims service is the most crucial area for us to prove ourselves”. Winning the gold medal for turnaround times on claims this year is Chubb, which has taken the gold in this category in five out of the six surveys to date. One broker reported that their good claims outcomes for clients had been “principally with Chubb”. Allianz took the silver again this year; one broker described the insurer as “terrific to deal with”. CGU again rounded out the top three, earning the bronze medal. One broker labelled the claims service of both Allianz and CGU in recent times as “exceptional”.
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SPECIAL REPORT
BROKERS ON INSURERS
OVERALL SERVICE LEVEL
TURNAROUND TIMES – NEW BUSINESS
Has overall service improved or worsened over the last 12 months?
IMPROVED
CGU
3.27
Vero
3.26
Chubb
3.21
Industry average: 2.98 As with their feedback on claims turnaround times, broker responses around insurers’ overall service levels were mixed. Almost two-thirds of respondents believe overall service levels have worsened over the past 12 months. “Our key insurers have improved their overall service, which is why we like to work with them,”
36%
WORSENED
64%
INSURER
2018 2017 MOVEMENT RANKING RANKING
CGU
1
2
Vero
2
4
Chubb
3
–
Allianz
4
3
QBE
5
1
players seem to be continually under-resourced in the intermediated space, and that this has led to “long delays, reactive decision-making and poor service outcomes for the client and broker alike”. Meanwhile, another broker noted that “as the rise in premiums overshadows everything else, it is critical for insurers to maintain their excellence in other areas to remain viable options”. Taking the gold medal for overall service level this year is CGU. “The [CGU] underwriters actually speak to us and discuss risks with us, rather than just saying ‘no’,” one broker said.
BROKER FEEDBACK
“I think the service in general has declined from the insurers we support” said one broker. “Others barely provide any service at all, even when you are trying to give them business.” Another broker complained that “general insurers talk about relationships, partnerships, innovation and plenty of other buzzwords these days, [but] they’ve forgotten about basic service”. One broker commented that the bigger
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Another complimented CGU’s EDI team on having “worked really closely with our business during a recent acquisition, assisting greatly in providing information and guidance on how best to handle some of the hurdles we have encountered along the way”. The silver medal for overall service went to Vero, while Chubb picked up the bronze.
BHSI
3.36
AIG
3.25
Chubb
3.23
Industry average: 3.10
INSURER
2018 2017 MOVEMENT RANKING RANKING
BHSI
1
1
AIG
2
–
Chubb
3
–
CGU
4
2
QBE
5
4
Several brokers felt there was little change when it came to turnaround times for new business enquiries in the past year, while others saw movement in the right direction. “Most insurers will respond to new business enquiries quite quickly” and “most have improved, but [it] depends on the type of new
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business” were among the comments from satisfied brokers. But others noted a general drop in performance in this category. “Brokers here complain all the time about getting the required information to finalise business placements,” one respondent said. “Everyone is busy, but underwriting is a crucial part of satisfying a client with either a renewal of business placement or any new business. If a new insured thinks
PREMIUM STABILITY Has premium stability improved or worsened over the last 12 months?
IMPROVED
BROKER FEEDBACK
“Underwriting agencies have improved, with major [insurers] worsening in response times” you are struggling with a business placement, they could be concerned about the future, should a claim arise.” Another broker noted that “insurers who use to take an hour or so now take days … gone are the days when you could phone and speak to an underwriter and discuss an account”, while a third said times had worsened overall and attributed the decline to “the hardening market and increased quote activity”. When it came to the insurer at the top of the pack for turnaround times on new business enquiries, Berkshire Hathaway Specialty Insurance earned a gold medal for the third consecutive year – especially impressive considering that the insurer has only been included in the last three annual surveys. AIG shot up the ranks this year to take the silver medal, while Chubb secured the bronze, making it three medals in three categories.
Have turnaround times for new business enquiries improved or worsened over the last 12 months?
IMPROVED
44%
WORSENED
56%
Chubb
3.23
AIG
3.20
25%
WORSENED
INSURER
2018 2017 MOVEMENT RANKING RANKING
Chubb
1
2
AIG
2
–
BHSI
3
4
Vero
4
5
Allianz
5
1
BHSI
3.13
Industry average: 2.98 After an extended soft market, signs of hardening – both in terms of pricing and risk appetite – have been widely observed across the industry in recent months. And given the changing climate, many brokers have been expecting their insureds to be hit with premium increases. “We are seeing rate increases; however, this was forecast and is expected,” one survey respondent said. “Premium prices are all over the place,”
rates without much explanation and without any change in risk/exposure, but possibly because the rates have been static for a while,” one broker said. Similarly, another broker said, “The market has definitely shifted; however, some major companies have made knee-jerk reactions to certain market segments.” One respondent detailed how the situation is putting client relationships in a precarious position. “The increase in [rate] is sometimes ludicrous, as the business requirements have not changed, they have never had a claim, and yet premiums have increased by 50%. How do you explain that to a client without losing them?”
BROKER FEEDBACK
“After a lengthy soft market, insurers are taking a strong stance to increase rates” another broker reported. “I can see huge increases in some areas, where some other products remain stable.” One area where several brokers raised concerns this year is around the communication – or lack thereof – about specific premium increases. “Quite a few insurers [are] increasing
The message from brokers is clear: transparent communication around rate increases and their rationale is essential. Taking the gold for premium stability in 2018 is Chubb, making it the insurer’s second gold this year, while AIG picked up another silver and BHSI won the bronze.
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75%
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SPECIAL REPORT
BROKERS ON INSURERS
ONLINE PLATFORMS
CGU
3.50
INSURER
2018 2017 MOVEMENT RANKING RANKING
CGU
1
2
AIG
2
–
Allianz
3
1
Zurich
4
3
Vero
5
4
BDM SUPPORT
Vero
3.26 BROKER FEEDBACK
AIG
3.44
Allianz
3.36
Industry average: 3.03 Brokers were clear this year on what they expect from insurers’ online platforms. “Electronic platforms are supposed to make life easier for broker and underwriter,” one broker said, and many others expressed similar sentiments. Another broker reported that the best thing an insurer had done for their business this past year was “focus on online platforms and the need to bring efficiency to our business”. Others expressed surprise that some insurers still haven’t jumped on the tech bandwagon. One broker criticised an insurer for having “no online model, which means everything has to be done manually. This is really unacceptable in 2018 – all insurers and underwriting agencies should have an efficient and functioning online model where brokers can login and get their own quotes.” Brokers told Insurance Business that insurer efforts on the online front are a genuine enticement. One broker said an insurer could win more of their business by “having an online
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“If any insurer was able to provide consistent service, quality solutions and an easy-touse platform, that insurer would pick up every intermediated customer in Australia” system that is user-friendly and easy to transact,” while another suggested insurers should be creating not only web platforms, but also “simple broking tools like the CGU survey app”. Yet another broker made a bold prediction: “If any insurer was able to provide consistent service, quality solutions and an easy-to-use platform, that insurer would pick up every intermediated customer in Australia, not just our business!” This year’s gold medallist in the online platforms category is CGU, while AIG and Allianz also secured places on the podium, earning silver and bronze, respectively.
Allianz
3.12
QBE
3.06
Industry average: 2.61
INSURER
2018 2017 MOVEMENT RANKING RANKING
Vero
1
1
Allianz
2
3
QBE
3
2
CGU
4
4
Chubb
5
–
To use the words of one broker: “BDM support is vital … and all brokers, regardless of size, should have someone there to meet them face-to-face.” While brokers agree on the importance of BDMs, many expressed concerns about seeing less and less of their BDMs, as well as the decline in their BDMs’ decision-making authority. “Insurers do not seem to be providing BDM
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support, or if they do provide a BDM, they have no authority and need to go to another underwriter, which makes the process of placing new business slow,” one broker complained. Another observed that “BDMs don’t seem to have as much authority anymore,” describing their role as more akin to that of a relationship manager. Some believed a lack of BDM visits was attributable to their increasing workloads: “BDMs seem to be stuck with higher workloads and looking after larger areas, not allowing them to provide individual brokers with quality service,” one broker noted.
Vero
BROKER FEEDBACK
“We are a relationship business, and we need these relationships” But when asked to cite the best thing an insurer had done for their business within the last year, one broker singled out a BDM for being “more proactive and simply asking what they can improve to have our office place more business with them”. Vero again secured the gold this year for BDM support. “We have received exceptional service from our [Vero] BDM,” one broker reported. “He shows genuine interest in our business, which garners him opportunities, but he also ensures that he keeps us up-to-date with any developments and takes the time to discuss these changes with us, which has assisted us with servicing our clients … There are very few other BDMs that are providing service anywhere near this level at present.” Allianz took silver, while QBE won the bronze; one broker singled out both insurers for organising BDM meetings that are “purposeful and specific”.
Has BDM support improved or worsened over the last 12 months?
IMPROVED
31%
PRODUCT RANGE
WORSENED
69%
3.61
Allianz
CGU
3.73
3.60
Industry average: 3.24 The ability to deliver a smooth claim experience, to provide attentive and efficient customer service, and to offer stable rates are all of substantial importance to a broker when dealing with insurers. But it’s obviously also vital that the insurer can offer risk-transfer solutions that will address their clients’ needs. And as the world continues to change, and risk exposures become more varied and complicated, businesses and consumers will require a wider range of products to ensure they remain protected.
INSURER
2018 2017 MOVEMENT RANKING RANKING
CGU
1
1
Vero
4
2
Allianz
3
3
QBE
2
4
Chubb
–
5
BROKER FEEDBACK
“The quality of product offered by insurers has improved over the last few years” “The quality of product offered by insurers has improved over the last few years as underwriters keep up-to-date with changes in business practices and client needs,” said one broker. However, in sharing what it would take for a particular insurer to win more of their business, brokers expressed a desire to see more flexible products and a willingness by insurers to offer “the most comprehensive products at a competitive price”. One broker
wanted insurers to provide “more than just mainstream products”, while another encouraged insurers to develop more “bespoke products”. When it came to rating insurers on their product range, brokers awarded CGU the gold medal for the fifth consecutive year. The silver medal went to Vero, which moved up two spots from its 2017 performance, while Allianz followed closely behind to take the bronze.
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SPECIAL REPORT
BROKERS ON INSURERS
BROKER TRAINING AND DEVELOPMENT Allianz
2.92
Vero
2.90
CGU
2.84
Industry average: 2.43 Last year, training and development found itself two spots higher on the list of factors that matter most to brokers in their dealings with insurers. This year, brokers again ranked it eighth on the list.
One of the things that has become clear during the six years of this survey is that brokers are highly appreciative of insurer efforts to offer training, whether it’s education around new products the insurer offers or training that’s geared at assisting a broker more generally in the management and development of their business. One broker praised a major general insurer for a recent Market Day event they held. “We met underwriters from around Australia, and they presented on various topics,” the broker said. Rather than each topic being focused around the insurer’s own offerings, the broker reported that the sessions offered general information; he described the overall day as “fabulous for training and development, as well as relationship-building”. Asked about the best thing an insurer had done for their business in the last 12 months, one broker raved about “the constant access to news and information about cyber risks by all
INSURER
2018 2017 MOVEMENT RANKING RANKING
Allianz
1
2
Vero
2
1
CGU
3
3
QBE
4
5
Chubb
5
–
insurers.” And when it came to what insurers could do to win more of their business, one broker simply said, “Education, education, education!” The gold-medal winner for broker training and development in 2018 is Allianz, which moved up from last year’s second-place finish. The silver medal went to Vero, complimented by one broker on its “great training days”, while CGU nabbed the bronze.
PRODUCT INNOVATION In last year’s survey, brokers ranked product innovation seventh on their list of top priorities; this year, it slipped back slightly in the rankings to ninth. But despite this, the high overall average score it received for importance (3.64) indicates that brokers continue to regard product innovation as essential. That’s hardly surprising in light of today’s emerging risks, including the ever-increasing cyber threat, which will require insurers and underwriting agencies to stay on their toes in order to ensure their ongoing ability to offer comprehensive coverages. In detailing what insurers can do to win more of their business, one broker simply said, “more product innovation”, while another expressed a desire for insurers to put “more resources into innovation”. Some brokers even expressed a keen interest in working with their insurer partners on innovative product solutions that would ultimately
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Chubb
INSURER
2018 2017 MOVEMENT RANKING RANKING
Chubb
1
1
AIG
2
–
CGU
3
2
Vero
4
5
BHSI
5
3
deliver benefits to both parties, as well as insureds. “Insurers need to work with us on new business, not simply seek to ‘look at our renewals’. All that does is drive down the price,” one broker said. “Let’s look at new market segments or target specific industries … with product-specific wordings or packages.” Judging by the average score of 2.91 insurers achieved in this category, it’s also clear that
3.21
AIG
3.08
CGU
2.99
Industry average: 2.91 product innovation efforts represent a considerable opportunity for insurers to expand their business. For the second year in a row, Chubb took the gold medal in this category, while AIG snapped up another silver and CGU earned its third bronze.
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COMMISSION STRUCTURE AIG
3.67
CGU
Allianz
3.54
3.50
Industry average: 3.39 It’s no secret that brokers want to feel like a valued partner of their insurers. A substantial component of that value will come through the insurer’s ability to deliver what the insured
needs in terms of coverage and customer service. But another important part of that partnership is a commission structure that recognises the value of the business the broker has delivered. While brokers ranked commissions 10th out of 11 factors that matter most in their dealings with insurers, the results of past surveys show that downward movement in commission structures can noticeably impact brokers’ overall attitudes toward their insurers. Debate swirls about whether brokers should continue to be compensated via commissions from insurers. Earlier this year, when asked what he would change about the insurance industry, multi-award-winning Queensland broker Dale Hansen told Insurance Business: “We should charge a fee in accordance with the service we provide and be very transparent about any commissions that we receive.” In responding to this survey, some brokers
BRAND RECOGNITION CGU
4.09
Allianz
4.01
QBE
3.94
Industry average: 3.23 Back in January, CGU received praise on social media from users who applauded the insurer’s advertising campaign, ‘Australian as it gets’. Inspired by CGU’s Migrant Small Business Report, the campaign highlighted hard-
working migrants and refugees who have gone on to become Australian business owners since their arrival in this country. At the time, CGU marketing director Kate Wellard told Insurance Business that the campaign was designed to celebrate the “significant contribution” migrant small business owners make to Australia’s social, cultural and economic landscape. “The campaign has already struck a chord with our customers and broker partners, as well as the small business sector,” Wellard said. “Our hope is that it shines a light on the incredible migrant business owners who are working hard, creating jobs and making our culture richer.” Perhaps it’s as a result of this lauded campaign that CGU has moved back up the ranks (from third place in 2017) to take gold for brand recognition in 2018. It could also be a result of the insurer’s heightened public profile, owing to its ongoing association with the iconic Tropfest Film Festival, which it
INSURER
2018 2017 MOVEMENT RANKING RANKING
AIG
1
4
CGU
2
1
Allianz
3
2
QBE
4
3
Zurich
5
5
listed “increased commissions” as the best thing an insurer had done for their business over the past 12 months. Additionally, when asked what an insurer could do in order to win more of their business, several brokers responded with “better commissions”. AIG added to its medal tally by taking the gold for commission structure. Behind AIG is last year’s gold medallist, CGU; Allianz, which took the silver medal in this category last year, rounded out the top three.
INSURER
2018 2017 MOVEMENT RANKING RANKING
CGU
1
3
Allianz
2
1
QBE
3
2
Vero
4
4
Chubb
5
–
continues to sponsor. A close second in this category is Allianz, which last year took home the gold medal after launching a campaign focused around being inspired, which was underscored by the hit track ‘Chase That Feeling’ by the Australian hip-hop group Hilltop Hoods. In all six years of the survey, the top spot for brand recognition has been a three-way race between CGU, Allianz and QBE. And again in 2018, it was QBE that completed the top three by earning the bronze medal.
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SPECIAL REPORT
BROKERS ON INSURERS
INSURER OF THE YEAR
Allianz
3.26
CGU
Vero
3.27
3.23
Industry average: 3.00 When the final scores were tallied, the race between the top two insurers this year was as close as it could have been, with just 0.01 points separating first and second. But for the third time in the last four years, CGU has emerged victorious, taking the title of Insurance Business’ Insurer of the Year. In addition to being crowed the overall winner, CGU was the winner of eight medals in 11 categories, including four gold medals. In the mountain of feedback survey respondents delivered, some brokers took the time to share individual standout moments they’ve had in dealing with CGU. “CGU quoted and bound cover on a large commercial building … within three hours to help an important client,” one broker reported. “The risk was not straightforward, but they were able to put everything on hold to get this major account over the line in such a short period of time.” Another broker praised CGU for “agreeing to cover an aged care transport business that we had been struggling to get cover for”. A third broker simply commented
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that “CGU seems to be the only market that tries to help”. Right on CGU’s heels was last year’s gold medallist, Allianz. And like CGU, the Munich-headquartered global giant has found itself ranked among the top three insurers in every one of the six annual Brokers on Insurers survey to date. Allianz also received seven medals this year, including a gold for broker training and development. Rounding out the top three for 2018 is Suncorp’s Vero, a company making its first appearance on the medallists’ podium since this survey debuted in 2013. Winning four medals, including a gold for BDM support, Vero also received some hugely positive comments from brokers. “Vero seems to be open to assisting whenever they can – and mostly go the extra mile,” one respondent said. Another broker shared a positive impression of Vero based on their experience of the insurer being “willing to look at every avenue before declining” to underwrite a risk.
INSURER
2018 2017 MOVEMENT RANKING RANKING
CGU
1
2
Allianz
2
1
Vero
3
4
QBE
4
3
Chubb
5
–
While the ranking order has changed over the years, the same five insurers have consistently secured the top five overall spots in every Brokers on Insurers survey to date. This year, however, Chubb shook things up by breaking into what was a seemingly impenetrable top five. Given that brokers awarded the insurer three gold medals this year – for claim turnaround times, premium stability and product innovation – it’s unsurprising that Chubb managed to crack the overall top five.
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A TRIPLE THREAT Insurance Business talks to Ben Bessell about CGU’s gold-medal finish in the Brokers on Insurers survey for the third time in four years CGU is “thrilled” to have been voted Insurance Business’ Insurer of the Year in 2018, according to Ben Bessell, executive general manager of business distribution and group executive at IAG. On top of this achievement, the insurer recently received another impressive accolade, winning the award for Australian General Insurer of the Year at the inaugural Insurance Business Awards. “To receive this award from our brokers, on top of the General Insurer of the Year Award, I think is testament to our people and their resilience, but also the way they go about managing relationships, risk selection and pricing,” Bessell says. “It’s a particularly chal-
“We’ve had some really good feedback from our customers and partners … [about] how we responded to the bushfires in March, both in New South Wales and Victoria, in addition to Cyclone Debbie,” he says. “I think the processes we’ve put in place and the proactive nature of our claims teams stood out to me, and definitely resonated with our customers and partners.” So, what does it takes for an insurer to occupy a leading position in today’s exceptionally competitive environment? Bessell believes consistency is vital. “By that, I mean consistency in how we respond, how we communicate and how we
“The role brokers have in providing their clients with great advice is as important now as it has ever been, and the value of that advice is probably as important as ever. Where we can play a part in complementing the broker advice with good products and good service is where the partnership is shown, and that’s where it comes alive.”
“The role brokers have in providing their clients with great advice is as important now as it has ever been” lenging time in the industry at the moment for a range of reasons, so to be voted Insurer of the Year is extra special this year, I think, for all the work that’s been going on internally and externally within our business.” Bessell is also proud that CGU was able to earn such an accolade during a time of significant internal structural change. “I think the [challenge] during times like that is to make sure we can keep a balance, focusing on our people, but also our customers and partners,” he says. “I think – and this award is probably a reflection of that – that we’ve managed to do that well, both manage our people … and also keep the wheels turning and maintain great customer and partner service.” In terms of business highlights over the past year, Bessell singles out CGU’s response to natural disasters across Australia.
interact with our partners,” he says. “Communicating very clearly and in a timely manner [with partners] is … extremely important when there is competition because reliability, clarity and dependency are very important, and they’re the things, for me, that will make a difference in a competitive environment.” Bessell also speaks to the ongoing importance of broker partners to CGU. “They make up by far the majority of the premium that we underwrite, and they’ll continue to be a significant and important part of our business,” he says. “The customer interactions that they have, the distribution platforms that they have, play an important role in ensuring our product gets to market in a timely and effective way, but also that our products get effectively marketed.
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FEATURES
PROFESSIONAL INDEMNITY FOR THE CONSTRUCTION INDUSTRY
Designing and constructing solutions Allied World Australia recently invited several brokers to a breakfast roundtable, hosted at the Sydney office of insurance law firm Wotton + Kearney. Four experts shared a host of insights into design and construction professional indemnity insurance, emphasising the importance of having well-informed insureds
TOPICS OF DISCUSSION
The roundtable examined the intricacies of design and construction professional indemnity [D&C PI] insurance in the context of Allied World’s own recently launched policy. Topics included the intersection of construction professional indemnity with general liability and contract works coverage, loss mitigation costs extensions, and the critical need for brokers to ensure their clients understand the product.
THE PANEL
THE LEGAL PERSPECTIVE Andrew Moore Wotton + Kearney
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THE BROKER PERSPECTIVE Michael Joseph Austbrokers Cyber Pro
THE INSURER PERSPECTIVE Carly Robinson Allied World Australia
THE CONSTRUCTION PERSPECTIVE Jeffrey Gray Downer EDI
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THE KEY MESSAGES A COMMON MISCONCEPTION Loss mitigation costs extensions are frequently standard extensions on D&C PI policies but remain widely misunderstood by insureds.
THE RIGHT TO ELECT D&C PI coverage can overlap with two other key policies usually in place on a construction project: a contract works policy and general liability coverage. This means a dual insurance may arise and, pursuant to section 76 of the Insurance Contracts Act 1984 [CTH], an insured will have the right to elect which policy to submit a claim under.
THE MODERATOR Kym Beazleigh Allied World Insurance
EDUCATION IS CRITICAL Proper education of insureds as to the nature and extent of their coverage is critical. Brokers need to facilitate an ongoing dialogue with their clients, ensuring they understand the kinds of circumstances that should be communicated back to them.
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FEATURES
PROFESSIONAL INDEMNITY FOR THE CONSTRUCTION INDUSTRY
Loss mitigation costs extensions A LOSS mitigation costs extension protects an insured against costs and expenses they might incur in working to mitigate the effects of a fact, circumstance, act, error or omission that would otherwise result in a claim under the policy. One broker asked whether it remains common for loss mitigation costs to be an optional extension under D&C PI policies or whether common practice is now to include this cover automatically. Kym Beazleigh: Certainly, from our perspective, we would see it as just an extension of the policy. Where we have seen some challenges historically as an insurer is where people have gone off and thought that the loss mitigation cover simply meant that they had the right to go up the sub-limit of the mitigation costs, thinking they could just go and spend that money as they saw fit, then later on saying, “Could you please reimburse us for these costs?” I think a good professional indemnity design and construction wording would have loss mitigation costs as a standard extension. I also think the key is making sure the extension is clear in its intent as to how it operates, and also making it clear that you still need to obtain the consent of the insurer to incur those costs. Michael Joseph: This is something that I think insureds and brokers don’t understand all that well. It comes back to educating the client about the design and construction policy to start with, and ensuring that the client understands what a claim is and what a claim isn’t under the policy. We have situations – and I’ve seen this numerous times – where clients will get a request to fix something on the project. They’ll do that, and then they’ll come back later on and ask for a cheque from the
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“I think a good professional indemnity design and construction wording would have loss mitigation costs as a standard extension. I also think the key is making sure the extension is clear in its intent as to how it operates” Kym Beazleigh, Allied World Insurance insurer. It causes issues, and for us, it’s all about being proactive with the insured to start with, explaining that loss mitigation to them. Andrew Moore: There is a requirement
to get consent to incur the costs with respect to a reasonable mitigation solution. It’s actually a process which, by involving the insurer, can be a lot simpler, and costs allocation is a great example of this. When we have these
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incurred after the fact can be difficult and complicated. In my experience, if costs are incurred without insurers’ consent, one of the key issues is determining if the costs are reasonable, and there can often be disagreement on this point. When insurers are involved early, we can adopt a proactive approach and work towards a solution. That solution can tap into valuable information and resources, which the insured can use to reach the best outcome in mitigating the issue at hand.
Overlapping coverages THERE ARE two other key policies generally always in place on a construction project with which PI coverage can overlap – a contract works policy and general liability coverage.
‘CIVIL LIABILITY’ VERSUS ‘BREACH OF PROFESSIONAL DUTY’ Wotton + Kearney’s Andrew Moore describes Allied World’s design and construction professional indemnity policy as offering insureds protection against “civil liability arising from the performance of professional services”. In the past, Moore says, wordings in the market often haven’t used the term ‘civil liability’, opting instead for ‘breach of professional duty’. “‘Civil liability’ is a much lower threshold,” he says. “Civil liability’ is, in effect, anything that is not criminal liability.” He adds that a clause in the Allied World policy clarifies the breadth of civil liability coverage.
scenarios involving a claim under mitigation loss cover that’s an afterthought, you end up with basically this massive pot of costs, which can be very hard to try to unpick. Carly Robinson: Evaluating costs
Contract works policies Andrew Moore: The contract works policy will typically cover multiple insureds. It will cover, generally, the head contractor, all of the subcontractors, all of the sub-consultants [and] all of their onsite activities. It covers damage to the project, which is defined as ‘insured property’, and it’s only for the period of construction and any maintenance period. Property damage means different things in a first-party contract works sense to a thirdparty liability sense. In a contract works policy, it is any damage, so any physical alterations which impair the use of the insured properties, which is the works. Property damage in a general liability/third-party liability sense is something else. It is damage to third-party property or it is personal injury. It’s not, for example, damage to the building you’re designing and constructing or the manufacturing plant you design and construct – that’s regarded as pure economic loss. So, it’s important not to think property
TYPICAL EXCLUSIONS Wotton + Kearney’s Andrew Moore identified three exclusions typical in D&C PI policies. FAULTY WORKMANSHIP FAULTY PRODUCTS ASSUMED LIABILITY
damage under a contract works policy is the same concept as property damage under a PI or a general liability policy.
General liability policies Andrew Moore: They cover third-party damage to third-party property and personal injury. They’ve got a faulty products exclusion in there, they’ve got faulty design and workmanship exclusions, but looking at the professional liability or breach of professional duty exclusion in that policy – and with quite a lot of policies, particularly some of the manuscript GL wordings – there’ll be a write-back of that professional services exclusion for property damage and personal injury. So you’ve now got a scenario, if you’ve got one of those write-backs and there’s been property damage, and this is damage to third party or personal injury, it’s not necessarily out because it arose from a professional service. A good example might be down on Clarence Street, you’re designing and constructing a glass façade. There’s an error in the design [and] that façade shatters. The general liability policy covers property damage and personal injuries, so to the extent that that’s fallen on cars and people and there’s a write-back on the professional services exclusion, you can look to that policy for cover.
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FEATURES
PROFESSIONAL INDEMNITY FOR THE CONSTRUCTION INDUSTRY
Client education EACH PANELLIST stressed the importance of brokers properly educating their clients as to what falls within a design and construction professional indemnity policy. Michael Joseph: Design and construction contractors sometimes forget that even though they’re subcontracting out elements of their work, they’re still going to be liable under the contract in most cases, and the principal will more than likely come after them if there is an issue. We see a lot of claims where subcontractors have actually [made] that initial error and it’s caused the head contractor the loss there. The issue we have, particularly in the mid-market space, with these sorts of clients – and brokers as well who don’t understand design and construct – is they have that feeling that essentially subcontracting out those sorts of elements reduces that exposure, and it’s really not the case. I know insurers have the ability to subrogate, but there’s a lot of reliance around what PI policy that contractor may have in place. Also, it’s unlikely that that subrogation will result in full recovery. Some things we look for to counteract that element a little bit tend to be limitation of liability clauses under policies. This particular clause will essentially ensure that if there is a subcontracting situation with a particular professional service, and that contractor limits their liability back to our insured, the policy won’t be affected by that and, effectively, at the time of subrogation, the insurers won’t rely on that subrogation clause and won’t limit their liability in terms of how much they will pay. Jeffrey Gray: Insurance is all about balance-sheet protection – we all know that. Contractors always want to look to recover any losses that they fortuitously incur. I think it’s an incumbent requirement for brokers,
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“I think it’s an incumbent requirement for brokers, especially in this type of area, to clearly enunciate what’s specifically not covered” Jeffrey Gray, Downer EDI especially in this type of area, to clearly enunciate what’s specifically not covered. In my career, I’ve noticed often that people get into trouble, don’t put their hand up, try to bat their way out of it, and then, as a last
resort, they look at insurance instead of that being their first point of call for circumstances which may give rise to a claim. I think that’s really the broker’s role – to alert the contractor to the necessity of always being transparent in
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POSTSCRIPT After the session ended, both attendees and panellists shared some final thoughts. Henry Clark, Honan Insurance Group: There are grey areas in interpretation around which policy should respond in the event of a claim. I guess it’s ultimately up to the insured to make the right decision about which policy they should be claiming on to make sure they achieve the best result. Michael Joseph, Austbrokers Cyber Pro: [The market is] becoming a bit more difficult. Insurers are looking at things a lot closer. So, as a broker, it’s about being on the forefront, looking at new providers in the market, because you can never count anyone out. Essentially, for us, it’s about working with new partners and seeing what each has to offer.
conveying anything that occurs so that you can get professional advice straight away. A lot of you will get clients who get themselves into a big bit of trouble before you hear about it. I’d recommend that you become proactive when you’re talking to them about this type of insurance [so that they] know they have to come to you a lot earlier than they have in the past [and] it’s not going to inconvenience you if they put their hand up and say, “I have a problem.” I think most insurers these days would say, “Yes, we’ll give you half an hour and we’ll talk about it and see if we can direct you.” Carly Robinson: I agree that that early
engagement piece is very important. From my perspective, [it’s important to] obtain the necessary information early on to understand how the loss arises and if it’s connected – identifying if there are any gaps in cover or coverage issues early in the piece and communicating that early to the broker and the insured. I’m a big believer in open communication and letting you know about any issues that I see in a claim. I want to ensure that there are no surprises from anyone’s perspective so that you can work to manage the insured’s expectations of our position and any issues that we’ve seen early in the piece.
Andrew Moore, Wotton + Kearney: A key theme that came out of this morning was the importance of an open and transparent discussion that happens early on in the piece. Nine times out of 10, whenever there’s a problem with insurance on a construction project, it’s because there’s been a lack of communication and a lack of collaboration. Insurers have been through this many times before, and often they’ve got a lot of value to add to the process. Kym Beazleigh, Allied World Insurance: The construction industry has always been a cornerstone of the Australian economy – never more so than during this current residential and infrastructure boom. I’m excited by the opportunity to continue to support our brokers and clients through our suite of three professional indemnity primary wordings and claims support.
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FEATURES
SECTOR FOCUS: ACCIDENT AND HEALTH
In sickness and in health IB talked to AHI’s Chris McDowell about the importance of personal accident and sickness insurance and how its products are addressing a growing need for this coverage among SMEs
MOST AUSTRALIAN businesses that employ workers must obtain workers’ compensation insurance, although “the rules and requirements vary across states,” says Chris McDowell, National Underwriting Manager for Accident and Health International. However, non-employing businesses such as sole traders, proprietors, members of partnerships and contractors are generally ineligible for workers’ compensation insurance and therefore need to consider personal accident or group personal accident insurance. “According to the Australian Bureau of Statistics, at the end of 2016–17, there were nearly 1.5m non-employing businesses in Australia,” McDowell says. “So there are a vast number of small and medium-sized enterprises who are not covered by workers’ compensation policies.” In addition, a recent National Australia Bank white paper revealed that SMEs now contribute over 55% of Australia’s GDP. “When key personnel in SMEs are involved in an accident or experience a serious health issue, there can be serious impacts to their income and their family,”
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McDowell says. “There can also be flow-on effects throughout the community. Personal accident insurance works to protect the policyholder’s income and what matters most to them, as well as providing the support that enables them to get back to what they do best
can cover employees 24 hours a day, seven days a week, meaning it covers staff outside of work hours. GPA can also provide additional coverage to act as a top-up for workers’ compensation policies. It can also be compulsory in enterprise bargaining agreements across all industry sectors.”
Claims activity In terms of the most common claims AHI sees for personal accident insurance, McDowell says musculoskeletal or upper extremity injuries top the list. “Over the last five years, AHI has seen an average of 13% of claims benefits paid relating to accidents resulting in death, which highlights the importance of SMEs taking out personal accident policies to ensure their families are protected if the worst occurs,” he says. McDowell adds that the large majority of the illness claims AHI sees come from cardiac or cancer-related illnesses. “Year-on-year, these illness claims amount to an average of 25% of AHI’s claims,” he says. In 2017, AHI’s data showed that the average
“As the statistics show, mental illness is a fast-growing problem, so brokers should be asking if their clients are covered” Chris McDowell, Accident and Health International as quickly as possible.” Personal accident insurance is designed to cover an insured’s income if they are temporarily unable to work due to an accident, and “you can also choose to include cover for illnesses as well, with personal accident and sickness insurance, which would pay you the same benefit if you fell ill and were unable to earn your regular income,” McDowell says. “Companies can also consider group personal accident insurance,” he adds. “GPA
time off work for personal accident and/ or sickness insurance claims was 29 weeks. However, many claims ran for up to two years. “The impact of these accidents and illnesses on the claimants, who are often the sole person running their business and also often the breadwinner in their family, can be highly detrimental,” McDowell says. “If the right insurance policies aren’t in place, both the business and the individual owner or director can quickly find themselves in financial stress.”
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Dealing with mental illness Statistics from the Australian government’s Department of Health show that, each year, approximately one in five Australians will be affected by mental illness. “Mental illnesses are the third leading cause of disability burden in Australia, accounting for an estimated 27% of the total years lost due to disability,” McDowell says. He also cites a statistic from the Black Dog Institute, which found that mental illness is now the leading cause of sickness absence and long-term work incapacity in Australia. “The total workplace cost of depression in any one year is estimated to be $8,025 per affected individual, with an estimated three to four days of work lost per month for each employee experiencing depression,” McDowell says. “Workers’ compensation
claims for stress-related mental disorders have increased to $200m per year. “AHI has responded to changing community expectations by removing mental health exclusions across its entire suite of policy wordings,” McDowell adds. “This is a marketleading change, and as the statistics show, mental illness is a fast-growing problem, so brokers should be asking if their clients are covered.” McDowell also mentions a new prevention initiative AHI has introduced. “AHI’s individual personal accident policyholders and their immediate family members can benefit from specialist medical advice at no cost, regardless of whether they’re making a claim,” he says. “An exclusive partnership between AHI and Best Doctors means that new and renewing policyholders now have access to more than 50,000 world-
ACCIDENT AND HEALTH INTERNATIONAL: PROTECTING WHAT MATTERS MOST As a specialist in accident and health risk solutions, AHI is dedicated to protecting our customers’ health, family and livelihood. Our underwriters and claims professionals address your unique risks and provide genuine support so you can live your life, your way. Web: acchealth.com.au Ph: 1800 618 700
leading medical specialists, who are able to provide a second opinion on medical diagnoses or treatment. “Should a policyholder or an immediate family member suffer an injury, illness or
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SECTOR FOCUS: ACCIDENT AND HEALTH Brought to you by
medical condition, regardless of whether they’re making a claim, Best Doctors can provide them and their treating doctor with insights and expertise from a leading international expert in their condition,” he adds. McDowell says policyholders and their immediate family members can receive clarification on a diagnosis, a second opinion on the best possible treatment plan, advice about a medical condition, answers to everyday medical questions and referrals to local specialists.
ment of third-party agencies to achieve successful claim outcomes,” he says. “Some of the different providers we regularly work with in the management of personal accident and sickness claims include return-to-work coordinators, who have an understanding of the actual workplace; rehabilitation providers, who can provide external ‘allied health capital’ to assist in managing and driving return-to-work goals and outcomes; and independent medical specialists, who have the ability to approach injury manage-
“Personal accident and group personal accident policies provide peace of mind to employers that their staff are covered when they’re not on the clock. It’s an indicator that an employer is taking their duty of care seriously” Chris McDowell, Accident and Health International “More than 10% of Best Doctors’ case reviews see a change in diagnosis, so this highlights the value in receiving a second opinion when a policyholder is diagnosed with a serious illness or faces a long road to recovery after an accident,” he says. “Since we’ve launched our partnership with Best Doctors, we’ve already seen positive patient outcomes and a steady growth in our policyholders seeking secondary advice.”
Integral partnerships When it comes to working with service providers, McDowell says AHI acknowledges that successful outcomes cannot always be managed by the underwriter alone. “Whilst numerous claims will only involve a simple ‘dollar transfer’ as part of the financial settlement process, more complex claims will often require involve-
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ment in a facilitative rather than an adversarial approach.” There are also some developments on the legislative landscape that brokers placing personal accident risk should keep in mind. McDowell says AHI is seeing the impact of the legislative change in New South Wales that removed journey cover from workers’ compensation policies. “For brokers, this is an important opportunity to discuss this gap in coverage with their clients,” he says. “Personal accident and group personal accident policies provide peace of mind to employers that their staff are covered when they’re not on the clock. It’s an indication that an employer is taking their duty of care seriously and can also be articulated during the hiring process as an additional benefit of being employed by that company.”
A CASE STUDY Sean, a 38-yearold electrician, was married with a wife and two young children. His primary employer was a large energy company, but his goal was to run his own independent electrical business. In 2016, Sean started providing private electrical contracting work a couple of afternoons a week and on weekends on an independent and subcontract basis. He purchased his own van for his private work and also took out various insurances to cover his liabilities as a sole trader. Sean was also encouraged to take out personal accident and sickness insurance. Soon, more than 80% of Sean’s income was derived from self-employment, and he was working one day as a casual employee. Sean was cleaning the gutters on his own house when he slipped and fell. He sustained a significant ankle fracture that required surgery to pin and plate his ankle. His recovery involved being on crutches with an ankle cast for six weeks and a further six weeks walking with a special ankle brace. After 15 weeks, he was able to partially return to work, putting in just two days per week. He progressively increased his working hours and duties over the following three months. However, it was not until 27 weeks after his initial injury that he fully returned to work. As Sean’s accident occurred at home, his injury was not covered by workers’ compensation. Fortunately, when selecting his personal accident and sickness cover, Sean had elected to be covered 24/7 and had also elected a two-week waiting/deferral period. Sean submitted his claim, and it was promptly assessed. Benefit payments commenced after expiry of the twoweek waiting period. Sean’s policy also covered him for periods of partial disability, and Sean continued to receive income support as he progressively transitioned back to full-time work. Source: Accident and Health International, May 2018
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More than 600 brokers, authorised representatives, underwriters and insurers came together to celebrate the industry’s finest at the inaugural Insurance Business Awards THE INDUSTRY’S elite gathered at the Westin Sydney on Friday, 4 May, for the first-ever Insurance Business Awards. Recognising those who are setting the standard in the sector, the awards celebrate the hard work and professionalism of individuals and companies across the insurance spectrum. The event was an opportunity to shine a light on how the industry gives back to the community and how it makes good on its promises when it comes claim time. The atmosphere was positively electric as the winners were announced. The awards recognised everyone from young guns who are already making their mark to the senior brokers and brokerages who have helped make the industry what it is today, as well as the authorised representatives who are now an integral part of the sector. Brokerages of all sizes – small and large, local and international – were acknowledged for their work in shaping Australia’s insurance community, as were the insurers and underwriters that continue to innovate and provide brokers with the best service to help their clients.
Based on rigorous judging by an independent panel of industry experts, 28 trophies were handed out, including six ‘highly commended’ accolades. These went to DUAL Australia for Most Effective Internet Presence – Underwriting Agency, James Pennetta of Vero for Insurer BDM of the Year, 20:20 Insurance Brokers for Best Customer Service from an Individual Office, Aimee Williams of Austbrokers Coast to Coast for Young Gun of the Year – Independent (1-19 Staff ), Centrewest Insurance Brokers for Brokerage of the Year (20+ Staff ), and DUAL Australia for Australian Underwriting Agency of the Year. Congratulations to all the winners and the finalists. Hundreds of applications were received for this year’s awards, so just making it as a finalist is a significant achievement. Insurance Business would like to thank all our judges, presenters and award sponsors for helping to make this a successful event for all the winners. Got your eye on a trophy? The countdown to 2019’s Insurance Business Awards begins now …
2018 INSURANCE BUSINESS AWARDS BY THE NUMBERS
600+ guests
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finalists
28
trophies
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INSURANCE BUSINESS AWARDS WINNERS 2O18 BEST COMMUNITY ENGAGEMENT PROGRAM – INSURER
BEST COMMUNITY ENGAGEMENT PROGRAM – BROKER
QBE
ADROIT INSURANCE GROUP
Vero The QBE Foundation was launched in 2011 and, in a few short years, has already achieved much in the community. Its philosophy is to “help people overcome disadvantage, strengthen their abilities and live more independently, successfully and productively”. Each year it forms partnerships with a number of charities, working closely with them to help their cause. The company also provides staff with a day of volunteer leave each year. In receiving the award on behalf of QBE, Rebecca Engel, general manager of underwriting agencies said: “We are genuinely interested in serving our community. It’s not just about what we do every day in the office in terms of insurance, but actually delivering back to the community, and we see it as a very important part of what we do at QBE.”
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Andrew Locke, managing director at Adroit Insurance Group, said this award “holds a special place in our business’s heart”. While Adroit has previously won other business and broking awards, Locke detailed why this one stands out. “Community is one of the five value pillars of our business,” he said. “We’re primarily a regionally based insurance business in Victoria. Supporting local and supporting the communities where we work and live is huge for us, and we are dedicated to it. It’s a great thing for our team … [It’s nice recognition for] everything that we do, all the volunteering and fundraising we achieve.”
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MOST EFFECTIVE INTERNET PRESENCE – UNDERWRITING AGENCY
MOST EFFECTIVE INTERNET PRESENCE – GENERAL INSURER
MECON INSURANCE
VERO
The internet is a ubiquitous part of our lives now, and Glenn Ross, CEO of MECON Insurance, certainly recognises that. “In today’s market, it’s paramount that you have that strong [internet] presence,” Ross said. “Young brokers, young insurance professionals – that’s how they communicate. We realise that, and we’ve lifted our game.”
Sam Sanfilippo, national manager of international intermediaries and broker distribution at Vero, picked up the trophy on behalf of the team, saying it was a privilege to win. Last year, the company launched a simplified and enhanced online platform, VeroEdge, to make life easier for brokers. “I think social media is having a particularly strong and significant role in insurance, and to be recognised with this particular award … goes down well,” Sanfilippo said.
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INSURANCE BUSINESS AWARDS WINNERS 2O18 UNDERWRITING AGENCY CLAIMS TEAM OF THE YEAR
GENERAL INSURER CLAIMS TEAM OF THE YEAR
NTI
CHUBB
“Humbling” is how Alan Hasted, general manager of niche and affinity at NTI, described winning the trophy for Underwriting Agency Claims Team of the Year. “It means so much because it’s about our people and what they do every day,” he said. According to Hasted, NTI sets itself apart by assigning each claim to one person, who handles it from start to finish. “Our claims people, they stand in our customers’ shoes and try to get people back on the road to earn money again,” he said.
According to James Flaskett, head of claims at Chubb, there’s no secret ingredient to providing good customer service at claims time. “It’s doing all the little things right all the time,” he said. “It’s having an engaged team, a motivated claims team, recognising what is important and delivering service excellence to our customers. That’s when the rubber hits the road. That’s the promise. At the end of the day, that’s what [customers] are buying: that promise to pay. It’s always remembering that.”
UNDERWRITING AGENCY BDM OF THE YEAR
Matt Almond, national underwriting manager at High Street Underwriting, followed up his appearance on the Insurance Business Young Guns list with a trophy for Underwriting Agency BDM of the Year. “It’s a very exciting opportunity,” he said. “At High Street Underwriting, we are a bit different. We’re trying to get into the tech side, so we have a full IT team developing online bespoke services for brokers. That makes my life [as BDM] quite easy.”
MATT ALMOND HIGH STREET UNDERWRITING
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THE K2 AWARD FOR GENERAL INSURER BDM OF THE YEAR
BEST CUSTOMER SERVICE FROM AN INDIVIDUAL OFFICE
REBECCA GUMM
TRADE RISK
CGU
Rebecca Gumm, business relationship manager at CGU, says “getting to know people and making things personal” is what sets her apart as a BDM. After 17 years in the industry, she said, she is excited, honoured and humbled to receive the award for General Insurer BDM of the Year and to get to share it with her colleagues. AWARD SPONSOR
YOUNG GUN OF THE YEAR – INDEPENDENT (1–19 STAFF)
JONATHAN ROSS AVISO WA
Trade Risk might not be one of the ‘big guys’, but it is no stranger to success. It was named a Top 10 Brokerage by Insurance Business back in 2015, and managing director Shane Moore has been crowned an Insurance Business Elite Broker twice (in 2016 and 2017). Still, he was “pretty surprised” to take home a trophy. “We are all about customer service – it’s what we do,” Moore said. “Having an awesome online presence and awesome people – you just can’t beat that.”
An account executive at Aviso WA, Jonathan Ross says he “fell into insurance” after studying architecture. But after nearly five years in the industry, his dedication to insurance shines through. “I really have a passion for [the industry],” Ross said. “I think it is a great industry to be a part of, and we are great advocates of it.”
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INSURANCE BUSINESS AWARDS WINNERS 2O18 THE XL CATLIN AWARD FOR YOUNG GUN OF THE YEAR – INTERNATIONAL
YOUNG GUN OF THE YEAR – INDEPENDENT (20+ STAFF)
DANIEL QUINTIN
ADAM WARE
GALLAGHER
BJS INSURANCE BROKERS GIPPSLAND
Gallagher’s Daniel Quintin with Bonnie Chow of XL Catlin In a hotly contested category, Gallagher branch manager Daniel Quintin came out tops. The secret to his success? “Talking to clients – getting to know their business, how they will survive an insurable event, and just doing the right thing.” Quintin acknowledged that “adapting to the hardening market” will be a challenge, “[but] good dialogue and good relationships count for a lot – and hard work. A bit of common sense also goes a long way.”
AWARD SPONSOR
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Adam Ware, partner at BJS Insurance Brokers Gippsland, is no stranger to the awards scene after snapping up the NIBA Warren Tickle Memorial Award for Young Professional Broker of the Year in 2017. To other young professionals, Ware’s advice is, “Just be genuine. Be yourself and back yourself as well.”
Vero
BROKER OF THE YEAR – INDEPENDENT (1–19 STAFF)
KATE FAIRLEY SIMPLEX INSURANCE SOLUTIONS
Senior insurance broker and branch manager Kate Fairley is no stranger to recognition, having been named an Insurance Business Elite Broker, Young Gun and a member of the Hot List. “When I was 24, I started my own advocacy business, educating consumers about insurance and brokers about how they can educate the public,” she said. “I’m really enjoying being back in broking.”
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BROKER OF THE YEAR – INDEPENDENT (20+ STAFF)
BROKER OF THE YEAR – INTERNATIONAL
MARIA PARRY
RUSSELL BOUCHER
AUSTCOVER
GALLAGHER
“I’m lucky to work in a very fantastic industry,” said Maria Parry, CEO of Austcover, when accepting her award. “It’s a people industry based on relationships. We work very hard for the greater good of the customer. It’s nice to see that hard work come through.”
After 47 years in the industry Russell Boucher believes there are two things that set a good broker apart. “One, you have to build relationships, build trust in people. Relationships mean everything,” he said. “Two is your work ethic. You’ve got to have the fire in the belly. You have to want to help people … Without insurance, the world doesn’t go around.”
BROKER OF THE YEAR – AUTHORISED REPRESENTATIVE
SIMON FELDMAN SOUND INSURANCE
Simon Feldman, owner and director of Sound Insurance, said he was content being a finalist for Broker of the Year – Authorised Representative. “To win is very exciting,” he said. “I’m feeling humbled.” Sound Insurance has slowly climbed Insurance Business’ Top 10 Brokerages rankings moving from eighth in 2016 to sixth in 2017. And now, Feldman has won a trophy at the Insurance Business Awards. “I just try to provide good professional service, do the right thing … [and] look after our clients,” Feldman said.
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INSURANCE BUSINESS AWARDS WINNERS 2O18 THE SURA AWARD FOR BROKER OF THE YEAR – SPECIALIST
RACHEAL TUMELTY GALLAGHER
Denver van Gramberg of SURA with Gallagher’s Racheal Tumelty Dedicating her win to her team, Racheal Tumelty, head of credit, surety and political risk at Gallagher, emphasised that winning awards is not about one individual. “We’re a team – that is how we have achieved the award.” Tumelty noted that senior brokers have a responsibility to mentor the next generation of brokers: “The more we as managers can get the younger ones out to meetings to meet underwriters, clients – that’s the best on-the-job learning you can ever achieve.”
AWARD SPONSOR
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SPECIALIST BROKERAGE OF THE YEAR
AUTHORISED REPRESENTATIVE NETWORK OF THE YEAR
BAC INSURANCE BROKERS
INSURANCE ADVISERNET AUSTRALIA
Strata specialist brokerage BAC Insurance Brokers burst onto the scene at the awards gala to win the trophy for Specialist Brokerage of the Year. Account director Jason Proudlock attributed the success to his staff. “If you surround yourself with amazing staff, it makes you look good,” he said. “That’s what we’ve done. This goes to our staff out there.” Starting out as a small family business in 1973, the brokerage now boasts more than 40 insurance professionals. “It’s a tough journey to get the right people on board,” Proudlock said. “We hire for attitude [and] we teach skill, and that prevails in the end.”
Shaun Standfield, managing director of Insurance Advisernet Australia, dedicated his network’s win to its authorised representatives. “They do a tremendous job every day for our clients, and that is what it’s all about,” he said. “We are here to support the ARs across our network, and we are so proud of what they do every day [delivering] – advice you can trust for our clients.” What makes Insurance Advisernet Australia stand out, Standfield added, is the fact that “we really team well together, to make sure we look after each other, which is really important, but we also front the market as a collegiate group, which really makes a difference in the marketplace”.
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INSURANCE BUSINESS AWARDS WINNERS 2O18 BROKERAGE OF THE YEAR (1–5 STAFF)
CPR INSURANCE SERVICES
THE LLOYD’S AWARD FOR BROKERAGE OF THE YEAR (6–20 STAFF)
AUSTBROKERS COAST TO COAST
Chris Mackinnon of Lloyd’s with Nigel King from Austbrokers Coast to Coast
According to director Robert Cooper, a customer-first mentality is what led CPR Insurance Services to win Brokerage of the Year (1–5 Staff). “It’s a great honour,” Cooper said when accepting the trophy. Cooper started his brokerage in his late 40s, after a career trajectory that began in the Lumley mail room. He’s come a long way – he was recently named an Insurance Business Elite Broker for the second year in a row. His advice to other brokerages? “Customers are number one … good customer service and continuing to build on your skills and knowledge.”
Vero
The winning streak continues for Austbrokers Coast to Coast, which won the Australian Insurance Industry Award for Small Broking Company of the Year in 2017 and its principal Dale Hansen was also named an Insurance Business Elite Broker more than a few times, following a swag of awards from 2016. Nigel King, director of finance and corporate affairs, was quick to congratulate the other finalists in the category. “I think the secret is very much customer service,” he said. “We drive a different model – it is very much about service rather than price. We concentrate on that greatly, and that is probably one of the reasons why we win some of these awards.” AWARD SPONSOR
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THE JAVLN AWARD FOR BROKERAGE OF THE YEAR (20+ STAFF)
McLARDY McSHANE GROUP
Don McLardy, Meg Long and Mike McShane of McLardy McShane Group with JAVLN’s Dale Smith Victorian regional brokerage McLardy McShane Group has had some time out of the limelight but has made a big comeback, winning the inaugural Brokerage of the Year (20+ staff ) trophy. “It’s a testament to all the hard work the team has put in,” said director Mike McShane. “It was a good field of finalists.” McLardy McShane came in seventh in Insurance Business’ Top 10 Brokerages back in 2014. The key, McShane added, is good staff. “We are big on getting the right culture in our business. We look after our staff and our clients. Once you get good people in your business, the rest of it flows.” AWARD SPONSOR
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INSURANCE BUSINESS AWARDS WINNERS 2O18 THE GALLAGHER BASSETT AWARD FOR INTERNATIONAL BROKERAGE OF THE YEAR
AON
AUSTRALIAN UNDERWRITING AGENCY OF THE YEAR
NTI
Gallagher Bassett’s Peter Tomkins with James Baum of Aon Picking up the award for Aon was new CEO James Baum, who dedicated it to the staff. “It’s a great achievement for the people who work so hard to make these things happen,” he said. “It’s a fantastic company and exciting [for me] to be asked to lead it. We have a great culture – it’s all about our people.”
Vero It’s been a big year for niche underwriting agency NTI. In early 2017, it revealed a new identity and a new marine offering. But that hasn’t changed its DNA as a “specialist, expert, innovator and service differentiator”, according to Alan Hasted, general manager for niche and affinity. “We’ve had so much growth over the last 12 months,” Hasted said. “It’s about having a team of experts and showing that every day.”
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THE BLAKE OLIVER CONSULTING AWARD FOR AUSTRALIAN GENERAL INSURER OF THE YEAR
THE LONDON AUSTRALIA UNDERWRITING AWARD FOR AUSTRALIAN YOUNG GUN OF THE YEAR
CGU
ADAM WARE
CGU’s Damien Gallagher with Daniel Marsh of Blake Oliver Consulting
Adam Ware of BJS Insurance Brokers Gippsland with London Australia Underwriting’s Steve Walker
According to Damien Gallagher, executive manager of business underwriting at CGU, this award is a testament to the hard work of the staff. “From our perspective, it is our people,” he said. “It’s how we support our customers and our partners. Our people are our difference, and that’s how we win awards.”
Winning the premier Young Gun award of the night was Adam Ware of BJS Insurance Brokers Gippsland, who called it “very surprising and very humbling”. But he says it shows how much opportunity there is in insurance. “It’s great for young people who can make a full career in the industry,” Ware said. “There are opportunities galore – we just need to advertise them better so we can get young players into the industry.”
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BJS INSURANCE BROKERS GIPPSLAND
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INSURANCE BUSINESS AWARDS WINNERS 2O18 THE INSURANCE BUSINESS AWARD FOR AUSTRALIAN BROKER OF THE YEAR
MARIA PARRY AUSTCOVER Austcover’s Maria Parry says she’s had a “very plain” insurance career, but 30 years in the industry have stood her well. Parry’s trajectory from an office junior to CEO in the same company is testament to the opportunities available in insurance. Parry said she had a great mentor in business partner David Ingram, managing director of Austcover, adding that mentoring is important in this industry. “We spend a lot of time at the moment mentoring our staff and ensuring a formal system is in place so that we can all grow and develop,” she said.
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THE INSURANCE BUSINESS AWARD FOR AUSTRALIAN BROKERAGE OF THE YEAR
AON Two wins made this year’s awards a good start for new Aon CEO James Baum. Upon winning the ultimate broking award, Baum said: “I think the fact [is], as an organisation, we really represent businesses from smallest to largest – we are the only broker that does that on scale.” Indeed, he told Insurance Business when he first stepped into the top job: “Our clients have never been more reliant on having someone in their corner and being a trusted adviser”, and a broker’s role has “never been more important”. AWARD SPONSOR
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FEATURES
NETWORKING
How to build a network that drives your success Assembling everyone from your pit crew to your butt-kickers involves much more than cocktails and canapés, writes speaker and author Janine Garner
HOW MANY times have you been told that networking is “essential for your growth and personal success”? And yet when it comes to networking, many of us are overwhelmed by the pressure of where to start, confused by what appears to be an overcomplicated world of opportunities to connect online and offline, and overstretched by the demands on our time. The truth is, the adage “It’s not what you know; it’s who you know” has significantly more weight in this 21st-century world of busy-ness, in which jobs are filled before they are advertised, previously un-thought-of collaborations appear out of nowhere to create new and competitive markets, forming referral relationships is increasingly hard to do yet is critical to business growth, and everyone seems to be friends with everyone else on social media. A Harvard Business Review article entitled “Managing Yourself: A Smarter Way to Network” found that “the executives who consistently rank in the top 20% of their companies in both performance and well-being have diverse but select networks … made up of high-quality relationships with people who come from several
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different spheres and from up and down the corporate hierarchy.” So, the questions to ask are: Who is in your network? How much input or influence do they really have on what you’re doing or trying to achieve? How much do they truly know you and your goals? How much can they help you? Effective networking has to be about the genuine – about the interplay of a select group of people who are working closely together, strategically creating plans to succeed. Here are three key tips to building a network that works:
he said, would result in the creation of other subgroups and tribes. Momentum starts with a significantly smaller circle of influence that you are securely in the centre of, rather than being mixed in somewhere with all the other participants. A small group of people providing quality thinking and behaviours will push you further than you could ever go alone. An effective network bridges a smaller number of more diverse individuals with differing levels of expertise and varying ages, genders and experience. Such networks are cross-functional, cross-hierarchical and cross-industry, delivering balance and diverse thinking. Identify the quality of people you surround yourself with, not the quantity. So, who are the right people to have in your network?
Identify your critical few British anthropologist Robin Dunbar posited that there is a limit to the number of relationships humans can comfortably maintain – 150, to be precise. He suggested this is the number we can manage to maintain stable relationships with – remembering each other’s names, keeping in contact and doing each other favours. Anything more than this,
Find your personal cheer squad – your promoters. According to research from the Center for Talent Innovation, people with promoters are 23% more likely to move up in their careers than those without sponsors. Your own personal cheerleading squad is key to your success. They are by your side through thick and thin, never giving up on
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consider who else you need to learn from, add value to, engage and collaborate with. Successful networking is about understanding the connections you should be making, as opposed to those you are making. It’s about asking who you need to surround yourself with to inspire you and help you grow. It’s about being brave enough to seek out and connect with new individuals.
Exchange value
you, always dreaming big with you. Get your support team in place – your pit crew. Your pit crew can make or break a race. They add stamina to help you run the marathon of your dreams, navigate complexities and recover from setbacks. They help you learn from mistakes and keep pushing you on anyway. They celebrate your wins, remind you of your achievements and keep it real. There’s no doubt that climbing the ladder of success can be a lonely task that requires grit, determination and perseverance. Having the right crew to help you overcome any difficulties and challenges, and keep you mentally tough and balanced, is essential. Discover people who make you better every day – your teachers. Harvard professor Linda Hill says, “You can’t think of something new unless you are being pushed to think in new directions, and you can’t do that unless you are engaging with people who have a different viewpoint.” A life of continuous learning is essential to growth. The right teachers teach you mastery, guide and stretch your thinking, challenge your ideas,
and encourage you to keep learning, because they know that this constant curiosity creates real opportunity for growth, achievement and success. Have some accountability buddies – your butt-kickers. Linda Galindo, author of The 85% Solution: How Personal Accountability Guarantees Success, believes butt-kickers are our secret weapon for success. “Working with a partner prevents the ready-fire-aim approach that a lot of entrepreneurs use,” she says. Love them or hate them, we all need buttkickers – those individuals who help accelerate the journey, pushing you to do more and holding you accountable for your actions. Butt-kickers listen to your dreams and accelerate your goals by making sure you stick to them. They hold you accountable for your actions and decisions and ensure you do what you say you’re going to do – and then some.
Be brave and diversify Step out of your comfort zone, strategically expand your circle of influence, diversify your connections, and explore other people, businesses and experiences. Consciously
Find ways to constantly add value. Ask yourself if you're doing enough with and for your connections. Consider what more you could do to add value to them and their businesses. Model the behaviour you seek in return. Give knowledge unconditionally, open doors willingly, and share insight to drive continued growth and success for others in order to attract them and engage with them. Richard Branson famously said that “nobody can be successful alone,” and in our fast-moving business world, we all need a network that works for us. Take a long, hard look at your network and ask yourself: Who really matters? Who is teaching you mastery and knowledge? Who is the key influencer pushing you to be and do more, holding you accountable to your dreams? Who is promoting you, acting as your personal cheer squad, inspiring you to become more? Who is keeping you balanced and aligned, caring and connecting you with others? Choose your network wisely. Build a circle around you that allows you to transform and become so much more.
Janine Garner is an internationally acclaimed Fortune 500 mentor, keynote speaker and author of It’s Who You Know: How a Network of 12 Key People Can Fasttrack Your Success.
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PEOPLE
CAREER PATH
FINDING SOLUTIONS
In his latest role as CEO of Aon’s Australia operations, James Baum plans to continue to find new ways to meet clients’ needs As a graduate, Baum wasn’t sure what he wanted from his career. He considered joining the army, but a chance introduction to a successful insurance CEO opened his mind to the world of broking “I realised pretty quickly the difference we can make – we enable businesses, including household names, to trade. I learned that if you apply yourself, you can progress, and this career has given me so much in return”
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CHOOSES INSURANCE
2005
2011 BECOMES AN EXECUTIVE DECISION-MAKER Baum was eventually promoted to managing director and chief broking officer, Pacific, charged with leading the organisation’s dedicated broking and claims teams in the Pacific across all client sectors “As a member of Aon’s global broking executive, I was able to leverage best-inclass solutions. I led the development of a new go-to-market broking strategy that has since been replicated across global markets and has redefined carrier connections”
2017 EMBRACES CHANGE Baum has also been part of Aon’s efforts to promote greater diversity and inclusion by moving to 50/50 male-to-female representation in its leadership team
“These results show that change doesn’t have to take a generation. Sometimes it is important to demonstrate impatience to create the change that really matters”
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ARRIVES AT AON Baum joined Aon as northern region manager for program design and placement. Since then, he has worked in every facet of the placement business “Joining Aon and an established broking team provided a unique opportunity to learn from and experience international markets. The volume and breadth of Aon’s business in unparallelled and allowed me to connect with a global network of solutions and insights”
2017 HEIGHTENS COMMERCIAL FOCUS Baum expanded his expertise when he moved into the role of managing director, commercial, leading Aon’s mid-market and SME business in Australia and Papua New Guinea. Under his leadership, Aon’s commercial business – which represents a third of the company’s overall business – enjoyed sustained growth “The commercial role enabled me to lead a team that delivered some incredible initiatives for the business. Aligning with Aon’s commitment to regions, we simplified our business structure, harnessing the expertise of regions and giving them more autonomy in the decision-making process”
2018 HEADS TO THE TOP In February, Baum was named the new CEO of Aon Risk Solutions Australia “I know just how hard we have worked to deliver against our business plan for sustainable growth. I am excited by the opportunity to maintain the growth of our business and to lead our efforts to empower results for our clients. As we look to the challenges and opportunities of emerging risks, we will ask ourselves and our partners: Is there an unmet client need, and how can we solve it?”
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PEOPLE
CAREER PATH
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