THE RESILIENCE EVOLUTION
CREATING A WORLD IN WHICH TO THRIVE
A NIBA BROKERS’ GUIDE
ISSUE 6 – JULY 2022
NIBA
Allianz@
Contents Green shoots slowly emerge in the hardest of hard markets Coping with whatever nature throws our way Navigating through the industry skills shortage
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Creating the new norm 10
The NIBA Brokers’ Guides are brought to you through a partnership between Allianz Australia Insurance Limited (Allianz) and NIBA. We hope the knowledge of our subject matter experts, coupled with Allianz’s industry expertise, helps you and your clients prepare for the future. We welcome ideas for future subjects – please email your suggestions to editor@niba.com.au P. 2
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A NIBA BROKERS’ GUIDE
PHILIP KEWIN Chief Executive Officer, NIBA
PHUONG LY Chief General Manager at Allianz
Welcome The world is in a state of transition as we all become accustomed to living with a global pandemic. Add to that the continued threat of natural disaster here in Australia, and brokers have a key role to play in helping clients navigate this era of unpredictability.
Resilience has become something of an overused word in recent years, but with good reason. Because, as individuals and as businesses, we’ve had to tap into and create levels of resilience that haven’t been needed for at least two or three generations. Of course, becoming accustomed to living and working with COVID-19 is something that is affecting all businesses, including our own organisations here at Allianz and NIBA. Figuring out the optimum way of operating today is difficult, there’s no blueprint to follow. As business leaders, we need to create workplaces that deliver what the business needs, offer the flexibility the workforce desires, and be flexible and adaptable to deal with whatever the world throws at us. There’s no right or wrong answer here, and every business will likely have a slightly different approach. It’s a challenge that, as brokers, you’re tackling and you’re helping your clients tackle too. With a changing way of working, of course, new risks emerge. One challenge that predates COVID-19, however, is the hard market – something that’s required bucket loads of resilience for brokers and insurers. Fortunately, there are some green shoots of recovery emerging both here in Australia and overseas (although domestically, the devastating floods that hit northern NSW and southern Queensland have halted some of those), but the need to work closely with clients to identify and sell the risk to insurers has never been greater. In any challenging situation, it’s important to look at the opportunities that emerge, and if nothing else the past few years have really presented the opportunity for brokers to firmly establish that role of risk adviser. It’s going to be as imperative over the coming 12 months as it has been for the past couple of years, and that helps make your business, and your clients’ businesses, more resilient than ever before.
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Green shoots slowly emerge in the hardest of hard markets
While we all know that, in theory, the insurance cycle is just that, a cycle. As sure as night follows day, a hard market will be followed by a softer market, but you’d be forgiven for wondering if that theory is a thing of the past. After all, we’re currently still in the longest hard market in most industry professionals’ careers. “I’ve been in the industry for 35 years, and I’ve seen four really hard cycles in that period,” says Andy Doran, General Manager, Underwriting, Commercial at Allianz. “This is the longest, and we’re now into year fve. We’ve seen double-digit increases year on year, and hardening prices. It’s not sustainable.” GREEN SHOOTS BEGINNING TO EMERGE? Resilience has been something of a buzzword over recent years, and brokers themselves have had to show signifcant resilience to help their clients get the cover they need. The on-the-ground reality, however, is it’s a tough, tough market, and one that can be incredibly testing for brokers. “There’s no magic bullet, there’s no unicorn, we’re all playing in the same market,” says Kylie Hull, Head of Regional Branches at Gallagher.
“Brokers are having to work two and three times as hard to place a risk. Money is tight for businesses, and often insurance is one of their biggest outgoings after salaries, so that puts a lot of pressure on brokers to minimise cost.” That pressure may be beginning to ease, however. There are green shoots of recovery. Capacity is opening up in London, and while we did see a brief glimpse of a softer market in Australia earlier in the year, the foods halted that easing. “There’s some new capacity emerging in the Australian market for SMEs, but larger clients may not see the beneft of that,” says Hull. “However, there’s a fair amount of new capacity in London, where these new entrants have not been impacted by claims, unlike the established insurer markets. For clients exhibiting a strong approach to risk management and those that are prepared to engage with insurers via presentations, there is good opportunity there, for example in the directors’ and ofcers’ marketplace. “To illustrate that, for one client we were looking at a doubling of premium if we placed locally. We’ve gone to London and we’ve actually saved them almost $200,000,” Hull added.
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A NIBA BROKERS’ GUIDE
THE NEED FOR A LONG-TERM APPROACH Looking longer term, Doran believes a fundamental shift is needed in how we deal with the sustainability of insurance and our resilience as a country to natural disasters. “It’s increasingly important for federal and state government and insurance bodies to look at how we build resilience and how we approach urban planning because otherwise, we’re going to end up with a really impacted society that cannot get insurance. “How we collate and collect risk data is going to be vitally important too, to help insurers diferentiate between a good risk and a poor risk,” Doran added. Taking the positives from a testing fve years or so, Hull believes the experience of working through this prolonged hard market, and the resilience and know-how that’s been consequentially gained, will only serve brokers well.
“A hard market is a great training ground,” she says. “You understand how to underwrite a risk and sell a risk, and sell yourself as a broker. “As brokers, we do ofer a great service – it’s not about entering numbers into a system and spitting out the price at the end of it – there’s far more to it than that.” And it’s during a hard market when that becomes truly evident.
TIPS FOR BUILDING RESILIENCE IN A HARD MARKET Barbara Cliford of The Hinwood Institute ofers these fve tips for building resilience during a challenging time at work.
1. Support innovation and change If you can shift your focus from panic or anxiety to one of excitement to the challenge, the brain will then seek out evidence for why this is true. When you can build a bridge from problem to prize, you become resilient and valued.
2. Focus on what’s in your control and do that well Lamenting over things from the past exacerbates depression, worrying about an unpredictable future creates anxiety. A mindful approach to what is happening now will create a greater foundation for resilience and progressive improvement.
3. Look for the opportunity in crisis There’s wisdom in the saying ‘when life gives you lemons’. Those that transform disadvantage into opportunity are the most resilient. It is the man who sells shovels in the goldrush who is more likely to make his fortune.
4. Get comfortable with asking for help The biggest mistake people make is not allowing themselves to ask for help. Those that have a support network and are better at asking for help are more resilient than others. The key is in knowing what your breaking point is, and when you have reached it.
5. Stay connected and in touch Research has shown that those who stay connected in the community are more resilient and have a greater life expectancy. Professionally, it’s about staying connected to your community, network and industry.
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Coping with whatever nature throws our way
Coping with nature throws The true value of a broker is well and truly spotlighted during a natural disaster. Natural disasters are part and parcel of living in Australia, but whereas once they were relatively infrequent occurrences, today they seem to be almost part of everyday life. The foods earlier in the year, which afected south east Queensland and the northern coast of New South Wales, were Australia’s costliest food disaster to date. According to the Insurance Council of Australia (ICA), the event has, to the end of May 2022 cost $4.3 billion in insured losses – making it the fourth most expensive natural disaster ever in Australian history. With claims still being lodged, however, that fgure will continue to rise and could surpass the record $5.57 billion of insured losses from the 1999 Sydney hailstorm.1 “From my perspective, the severity and duration of natural disasters seem to be increasing,” says Luke Smith, Head of Property Short Tail Claims at Allianz. “The Lismore foods, for example, are the worst natural disaster I’ve seen in 25 years, because you’re talking about a whole town that’s impacted.’’ For anyone working in insurance, the ability to be on the ground to help in the aftermath of a natural disaster is paramount, and Smith says it’s vital to ensure you understand the challenges your customers are facing and what they’re going through. “In the case of the Lismore foods, we got up there as quickly as we could, and we heard harrowing stories of everything from loss of life to loss of property. Houses were fully submerged, and people just didn’t know where to start,” Smith added.
Claims were submitted as quickly as possible, but three months later, Smith says there are still an average of 150 claims per week being lodged. SUPPORTING CLIENTS THROUGH NATURAL DISASTERS The value of insurance and insurance brokers is something that is only truly realised when an incident occurs. Steven Hill, a Brisbane-based director at Capital Innovation Insurance Group, was faced with the unenviable prospect of not only helping his clients deal with the impact of the fooding but managing the repercussions of his home being afected, too. “On the Sunday morning, I had a call from a client, who’s also a friend, to tell me that water was entering his basement. I went over to help him try to slow that down, and in the meantime, water started to come into our house,” he explains. “It rained so heavily, and water got into places and buildings that it never had before. Water continued to come into our home during the afternoon and by the evening it was coming into the other side of the house, too.” Of course, as well as managing his own situation, Hill had his clients to think of, and on Monday morning he began contacting every one of them. “I just got my client list and began calling them to see if they’d experienced damage and if they needed to make a claim. “Those who had experienced damage were ecstatic that I’d called and we were being proactive enough to call them rather than them having to call us,” Hill added.
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https://insurancecouncil.com.au/resource/2022-food-cost-continues-to-rise/
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whatever our way GUIDING CLIENTS THROUGH THE PROCESS A key component of the broker value proposition comes from having an advocate in the event of needing to make a claim, as well as having someone with the knowledge to guide you through the process. Smith says ‘’it’s important to remember that while insurance professionals are familiar with the process, those afected are most likely not and it’s difcult for them two retain information in what is a traumatic time.’’ “On average, people have a claim once every seven years, so they’re not used to claims processes. “We can advise the client about the process, but it’s difcult to get someone who’s just had their home submerged in foodwater to retain information and to understand the steps in the process of a claim. “We can add an awful lot of value by guiding them through that whole process, keeping them updated, and ensuring we’re providing everything needed for a quick and successful claim.” And according to Hill, being proactive – rather than reactive to a situation – is essential for brokers when faced with a natural disaster. “I’ve seen so many things where, a few days after something’s happened, insurers and brokers have set up a web portal to lodge your claim, or they’ve created a new phone line for you to call to register a claim. “To me, that’s not a professional response. If you’re a professional broker, you should be on the front foot, you should get out there and deal with clients individually.” And it’s that individual service and dedication that’s going to make all the diference during an event that rips apart people’s lives, and livelihoods.
THREE TIPS FOR BROKERS 1. Speak to clients about a maintenance schedule. Sometimes, the impact of natural disasters can be reduced by maintenance and preparation. For example, cutting back tree branches and clearing guttering of leaves and debris can reduce the chances of a bushfre taking hold, while clear guttering will reduce water build up. In food-prone areas, moving goods and stock of the foor onto pallets can reduce the risk of damage from food water. 2. Remember, anyone can be afected by a natural disaster, so it’s important to review cover and sums insured of all clients regularly, particularly in light of escalating building costs. 3. The need to be weather ready is a fact of life in Australia, and planning is critically important. Every client should have an evacuation plan should a natural disaster strike, and a business continuity plan, too, to ensure they know how they’ll keep operating their business. For further tips, please visit AllianzEngage at allianzengage.com.au
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Navigating through the industry skills shortage
Navigating through the industry skills shortage It’ll come as no surprise to anyone working in the insurance industry that, from a talent and skills perspective at least, things are tough. With low unemployment fuelling increased wage demands, COVID-19 border closures stemming the fow of insurance talent into the country and people generally reprioritising what’s important to them from their careers, insurance – like many other sectors – has been hard hit. “The great resignation has been the buzz term of 2022, and when you really break it down it’s about job satisfaction,” says Alison Brough, Head of Underwriting Services, Commercial, at Allianz. “It has all been triggered by our time at home during COVID-19. People are far more conscious of the culture of a company, and the work/life balance they can achieve, together with job satisfaction.” Brough says while certain skill sets are always in high demand,
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experience has become increasingly valuable to attract and retain. “Skills are trainable, but experience – that innate ability to know what to do – has become incredibly valuable for many roles.” The skills shortage, however, is real, and in the short, medium and long term needs to be addressed in the industry, though it’s not a problem that is confned to insurance. “There is a signifcant talent shortage across all sectors and industries, insurance is not exempt from this,” says Jasmine Claridge, Learning and Development Manager at Insurance House. “We don’t think there’s a single reason for this. It’s multifaceted and complex, like most people issues are.” MOVE OVER RESILIENCE… Bringing good people into the industry and, perhaps more importantly, retaining them once they’re here, is going to be critically important over the coming months and years. And, while ‘resilience’ has been talked about a lot through the pandemic, Brough says thinking in Allianz has evolved.
A NIBA BROKERS’ GUIDE
salary, fexibility, professional development, career advancement, good culture and aligned values.” And, once you’ve found the right people, it’s imperative a concerted efort goes into retaining them. Claridge continues, “We believe every single employee should have their own learning and development pathway that they help to design, which will couple their area for improvement with their area of interest.”
As well as recruiting for mindset and attitude, the ability to deal with ambiguity is now a highly sought after skill. “It’s the evolution of resilience as a characteristic,” says Brough. “Resilience is a reactive word – it indicates you have little say in the matter, and you’re just coping with whatever is thrown at you. “The ability to deal with ambiguity means you lean into uncertainty, take control of it and navigate through it proactively, rather than you just having the strength to get through it,” Brough adds. As well as recruiting for and prioritising the attributes that are going to help people succeed in the longer term, it’s also important for businesses to understand the motivating factors for job seekers. Recruitment is a two-way street, and a prospective employee is interviewing you as much as you’re interviewing them. “We need to be truly listening to what is needed [by current and prospective employees],” says Claridge. “It is no longer one or two primary things, it’s more like six –
ATTRACTING AND RETAINING THE TALENT OF TOMORROW As many of us will attest, working in insurance is a fantastically varied and rewarding career, with many career avenues and opportunities to pursue in a relatively secure environment. However, how many of us dreamed of working in insurance at school? The sector is populated with people who’ve moved into it after beginning in another profession, something that Brough believes will stand insurance in good stead over the coming years. “It is that melting pot. Because we do attract people from all sorts of trades, professions and backgrounds, it’s a diverse sector in terms of skill sets and experiences. “I think that diversity of knowledge and experience will serve us well as a sector over the coming years.” Of course, it would be nice to build a steady pipeline of talent entering the industry from schools and universities, and Claridge says, “I do believe that speaking at university and school events, attending career fairs, and knowing the ofering well enough to be able to inspire others will assist in making insurance an attractive career. “By doing that we can showcase the diferent array of technical skills that are needed to be a successful insurance professional and the potential career opportunities to be had. “Within our industry there are many diferent businesses, departments and roles – there is such a wide audience to be tapped into,” added Claridge. To do that successfully, however, she says that insurance businesses, as well as the profession, have to make themselves attractive propositions, too. “Some businesses are falling short right now because they’re unwilling – maybe unable – to clearly and strongly defne their own identities and to then make decisions based around this, rather than responding to headlines and short-term sentiment. “Business should be steadfast in who they are and what they represent in order to attract the key talent that aligns with this.” While insurance is certainly fnding it tough as far as people are concerned, it’s certainly not alone, with most other sectors tackling the same challenges. Insurance has a few good cards to play, however. With a repositioning as a desirable sector that ofers job security, fexibility, training and opportunities galore – and underpinned by the genuine desire and ability to do good – we could be well positioned to emerge from these challenges in a very strong position indeed.
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Creating the new norm
•• Creating the new norm Businesses have been forced to do things very, very diferently since early 2020. ‘Lockdown working’ threw everyone into unknown territory – systems had to be quickly established, technology integrated and home ofce space created, with no concept of how long we might be working like that. It was a needs must, temporary solution. As we emerge from lockdown working, however, it’s clear that things aren’t going to go back to how they were before the pandemic. The concept of working fve days a week from an ofce, regardless of what you’re doing or what you need to do, is unlikely to be attractive to current or future employees. “In my view, the fexibility you ofer will become a reason you retain or lose staf,” says Kevin Baker, Regional Director of South East Australia, at Aon. “Flexibility is now an expectation, and each individual is going to have an expectation of what fexibility looks like for them. “There’s no right or wrong answer, other than if you say people have to be in the ofce fve days a week, you’re not going to be an employer of choice.”
HYBRID WORKING – MORE NUANCED THAN YOU MAY THINK While the notion of fexible working may seem simple on the surface, once you begin scratching, it’s deeply nuanced. What will work for a company of 100 people, won’t necessarily work for a business with fve employees. Similarly, what works for one role won’t work for another. And over the coming months and years, it’s something that businesses are going to have to fgure out by trying certain things and seeing how they work in practice. However, the research is clear - hybrid working has a benefcial efect on business2. Under a hybrid working arrangement, employees are 22 per cent more likely to increase productivity and 29 per cent more likely to try something new and innovative. “We haven’t mandated that a certain number of days have to be in the ofce, we’ve left it up to our people to do what they feel is right, within our guardrails of client need and collaboration or connection opportunity,” says Baker. “However, there are times when certain projects or meetings Busting the productivity myth: Hybrid working in Australia 2021. http://1u0b5867gsn1ez16a1p2vcj1-wpengine.netdna-ssl.com/wp-content/ uploads/2021/10/Telstra_HybridWorkingReport.pdf
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A NIBA BROKERS’ GUIDE
require people being together face-to-face, and that’s where that fexibility has to work both ways.” Of course, when you have employees working from home on a regular basis, you still have a duty of care as an employer. “You need to make sure they’re set up correctly at home, and that they’re safe,” says Mark Pittman, General Manager, Government Services, at Allianz. “There are a whole host of issues that employers need to look at from an injury care perspective, as well as functionality and productivity.” EMBEDDING A HEALTHY CULTURE A fundamental part of creating a workplace that’s both resilient to whatever the world throws at it, and one that delivers strongly for the business, is creating an environment that positively supports mental health. Thanks to our recent experiences, we’re seeing a surge in mental health claims, and that’s got to be a priority when creating a workplace that will thrive in the future. “The challenge is how do you make the employee feel they’re being listened to and valued,” says Pittman. “A lot of the time, being proactive around workplace stress will prevent the claim from happening in the frst place or reduce the severity of it.” By adopting a proactive approach to mental health in the workplace, combined with a fexible approach to working, a business can increase its reputation as a desirable place to work – which helps both the retention and recruitment of staf. Research shows that the sense of empowerment employees get from hybrid working can lift employee engagement. 90 per cent of people who work in a hybrid way say their mental health has improved or stayed the same, while 83 per cent agree the same can be said for their physical health3. And in an environment in which talent holds many of the cards, that can be a signifcant advantage. “An employee will talk to their colleagues and say, ‘my manager actually took a real interest in me’, and that’s a positive for workplace culture and productivity.”
Creating a workplace that’s going to satisfy both the needs of your business and your employees isn’t a straightforward task. What works for one organisation may not work for another, and what works for one person may not work for another, either. The reality is, however, that businesses need to embrace a hybrid model of working if it’s possible to do so. If not, they’ll be left with the people who couldn’t get a job elsewhere – and that’s going to be to the long-term detriment of the business. While there’s no simple answer to establishing the ‘new norm’ for your business, getting clarity on what you need as a business is a good place to start. Baker says, “You’ve got to have clarity about what your baseline looks like, and what you feel the business needs as a minimum, and why. “If you can articulate this strongly, you’re creating a good starting point from which to evolve.” Busting the productivity myth: Hybrid working in Australia 2021. http://1u0b5867gsn1ez16a1p2vcj1-wpengine.netdna-ssl.com/wp-content/ uploads/2021/10/Telstra_HybridWorkingReport.pdf
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CREATING TOMORROW’S WORKPLACE 1. Hybrid working is an expectation for many workers 2. There’s no one-size-fts-all solution 3. Flexibility works both ways, so employees need to be as fexible as employers 4. Home setups need to be suitable for work, and an employer has responsibilities here 5. Start by getting clarity on what the baseline needs are for the business, and work from there.
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Behind you for what’s ahead
At Allianz, we work with our Broker Partners to give your customers confidence in tomorrow. Our Broker Claims Dashboard makes the claims process simple and easy for you to search, lodge and check the status of your claims online – so you can focus on delivering for your customers. 100 years and counting, we’re behind you for what’s ahead. Speak to your Account Manager today, or to learn more visit www.allianzengage.com.au/claims Any advice here does not take into account your individual objectives, financial situation or needs. Terms, conditions, limits and exclusions apply. Before making a decision about this insurance, please consider the relevant PDS. The PDS and TMD are available from allianz.com.au. Allianz Australia Insurance Limited ABN 15 000 122 850 AFS Licence No. 234708 is the insurer.
