Insurance Adviser - February 2021

FEBRUARY 2021

THE

2021 NIBA

AWARDS

CELEBRATING BROKING EXCELLENCE PLUS BRINGING THE INDUSTRY TOGETHER NIBA Mentoring Program A BUMPY RIDE For heavy vehicles and fleet WINDS OF CHANGE For agriculture insurance

WE ARE YOUR VOICE

Consistency can be very exciting.

Our consistent and stable approach to underwriting gives you the confidence to recommend Zurich so you and your customers can grow business. Now that’s exciting.

Zurich Property Insurance This information is general advice only and does not take into account your objectives, financial situations or needs. You should obtain and consider the relevant Product Disclosure Statement and Policy Wording (as applicable) from zurich.com.au before making a decision.

The issuer of general insurance products is Zurich Australian Insurance Limited (ZAIL), ABN 13 000 296 640, AFS Licence Number 232507 of 118 Mount Street, North Sydney NSW 2060. ZU24150 V2 0121 TFMC-016337-2021.

CONTENTS February 2021

ACN 006 093 849 ABN 94 006 093 849

FEATURES

Insurance Adviser magazine is the monthly magazine of the National Insurance Brokers Association (NIBA).

Insurance Adviser magazine is published by NIBA

Publisher

Dallas Booth, CEO, NIBA T: (02) 9964 9400 E: dbooth@niba.com.au W: niba.com.au

Communications Manager Tiffany Eastland

NIBA Editor Tanaya Das

Editorial enquiries

E: editor@niba.com.au

National Sales Manager Tony May E: tmay@niba.com.au

Design

Citrus Media www.citrusmedia.com.au NIBA gives no warranty and makes no representation that the information contained in this magazine is, and will remain, suitable for any purpose or free from error.

To the extent permitted by law, NIBA excludes responsibility and liability in respect of any loss arising in any way (including by way of negligence) from reliance on the information contained in this magazine or otherwise in connection with it.

The contents of Insurance Adviser are protected by copyright and NIBA reserves its rights in this regard.

16

INSURANCE BROKERS CODE REVIEW

NIBA invites feedback and submissions from interested stakeholders

28

CELEBRATING BROKING EXCELLENCE 2021 NIBA Awards

Cover image (right): Philip Gostelow Cover image (left): Jeremy Veitch Photography

29

WHERE THE INDUSTRY GATHERS The NIBA Mentoring Program

NIBA.COM.AU / 3

CONTENTS February 2021

FEATURES 30

A BUMPY RIDE

Cover for heavy vehicles and fleet

IN EVERY ISSUE NIBA CEO welcome.................................... 6 Why be a NIBA member?.......................... 8 Representation........................................... 10 Bringing a new client on board ................14 Forthcoming events ..................................54 Insurance Journey: James Skiadas .......58

NEWS

Industry bulletin........................................ 18 WorkCover WA and WA Divisional Committee to launch new training package........................................................ 22

PROFESSIONALISM

Taking reasonable care to understand requests .................................24 Business lessons from 2020....................26

ANALYSIS

‘Testing’ for COVID-19: State of play ....25

38 WINDS OF CHANGE

The challenges facing Agricultural Insurance

4 / INSURANCE ADVISER FEBRUARY 2021

REFERENCE Community hub .........................................46 Insurer strength ratings ..........................56

CEO / Welcome

WHAT HAVE WE LEARNT?

T

he ACCC released its third and final report under its Northern Australia Insurance Inquiry between Christmas and New Year 2020. The final report follows three years of investigations into the availability and affordability of home, contents and strata insurance across the northern areas of Australia.

This was a three-year project, and two interim reports were published in December 2018 and December 2019. In order to undertake its work, the ACCC used statutory powers to gather extensive information from insurance companies operating in the regions.

NIBA met with ACCC officials on a number of occasions, including in Parliament House, Canberra, at a meeting that also included a number of members of parliament and government ministers. Working with insurance brokers based in north Queensland, we were able to provide first-hand accounts of “on the ground” experiences of the insurance markets. This is always far more informative than reams of data.

The ACCC report outlines a number of findings that were already common knowledge to insurance brokers servicing northern Australia, including – • Larger and more frequent claims are leading to rising costs for insurers; • This leads to northern Australia being an unprofitable market for insurers; • This has resulted in “unusual market dynamics”, and “soft competition”.

What was really worrying is the information regarding the level of uninsured and underinsured properties. Rates of noninsurance were reported as “significant” – and growing. It was no wonder many policyholders are using periodic payment opportunities.

Finally, the ACCC found it is time consuming to understand and compare insurance products, leading property owners to stay with their existing insurer.

All of this has been known to insurance brokers in the region for a number of years now, and in fact these issues were identified in the March 2016 report by the Northern Australia Insurance Premiums Taskforce.

INSURANCE BROKER COMMISSIONS

The ACCC repeated a recommendation contained in an earlier Interim Report, which called for the banning of “conflicted remuneration” in relation to general insurance retail products arranged by insurance brokers. In doing so, the ACCC noted the Royal Commission recommendation for general insurance arrangements to be reviewed by the government no later than December 2022 – the Federal Government has accepted this recommendation.

NIBA looks forward to the 2022 review of general insurance remuneration arrangements. We successfully

6 / INSURANCE ADVISER FEBRUARY 2021

argued in 2015 that the issues and concerns with commission structures in other areas of financial services do not apply to general insurance products, and in fact there was no evidence of poor client outcomes arising from inappropriate remuneration incentives.

Further, while insurance broking was within the scope of the Royal Commission into Misconduct in Banking and Financial Services, there was no evidence referred to by the commissioner of poor client outcomes as a result of insurance broking commissions. NIBA could not find any evidence of systemic poor outcomes in any of the Royal Commission’s published materials.

The critical thing at the present time, especially in northern Australia – and Far North Queensland in particular – is the need for property owners to have access to qualified, expert ADVICE on their general insurance needs and the products available to meet those needs.

The need for advice is so important when the market is extremely difficult, which it has been and is likely to continue to be for the foreseeable future.

The simple expectation that commissions will be replaced by a fee for service arrangement has not enhanced community access to advice anywhere in the world.

Changes to remuneration arrangements for financial planning and investment advice are seeing large numbers of financial planning advisers leave the industry, at a time when baby boomers are retiring and in need of good financial planning advice and support.

We also know from the Deloitte Access Economics Report that insurance brokers offer a wide range of benefits and value to clients at the present time. This is underpinned and supported by the commission arrangements that currently exist in the Australian market.

Where is the evidence that there is an actual problem with the current structures, and where are the client detriments that need remedial action?

DALLAS BOOTH Chief Executive Officer, NIBA

UNDERINSURANCE. NO MEAN FEAT FOR AMBITIOUS BROKERS. 75% of customers* haven’t updated their property sum insured. Let’s flip the script and help them review their cover. When you work with CGU, you get access to data and insights like these that help you better serve your customers.

We’ve been backing ambitious brokers for 165 years.

Contact your Account Partner for your customer insights.

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NIBA / Member benefits

WHY NIBA MATTERS TO ME Members share why NIBA is important to them and the broking industry.

“NIBA is brilliant and extremely important to me, I have been a member via different employers for nearly 30 years. It is our professional association who represent us to the community and government and every insurance broker should be a member.

The Insurance Brokers Code of Practice sets a benchmark of good ethical behaviour for every intermediary to follow and in so doing raises the profile of insurance brokers as true professionals.”

ROBERT COOPER 2020 NIBA Broker of the Year QLD Finalist Cooper Professional Risks

WELCOME TO NIBA

NIBA is thrilled to have the following new principal member on board: • Captive Holdings Pty Ltd t/a Resolute Insurance Brokers from WA

ABOUT NIBA OUR MISSION

NIBA is the one voice for insurance brokers in Australia, representing their interests and promoting high standards of professionalism and competence.

OUR OBJECTIVES Representation

We represent the interests of members and their clients to governments, regulators, industry stakeholders, the media and the community in a manner that is respected and relevant. We have forged strong relationships at state and national level to ensure that your interests are represented.

8 / INSURANCE ADVISER FEBRUARY 2021

Professionalism

We set and promote high standards of professional practice for insurance brokers for the benefit of their clients and the community through the development of professional standards, QPIB, CPD accreditation and the Insurance Brokers Code of Practice.

Community

We provide members with opportunities to meet, share, grow and prosper and build professional networks with the wider intermediated insurance community that will last throughout whole careers.

GET IN TOUCH!

Whatever your age, or level of experience, NIBA ha s brokers’ best interests at the core of everything we do. Fin d out what we can do to help be nefit your business and your tea m at niba.com.au/membe rship

2020

INSURANCE BUSINESS AWARDS

NEWS / Representation

WE ARE YOUR VOICE!

Quite a lot has happened since the December comments were written. The following is an overview of some of the things NIBA has been examining on behalf of Members.

COVID-19

The Insurance Council of Australia (ICA), in consultation with Australian Financial Complaints Authority (AFCA) and Australian Securities and Investment Commission (ASIC), took proceedings in the Supreme Court of NSW seeking clarification of issues relating to the interpretation of certain pandemic exclusion clauses which refer to the now repealed Quarantine Act. The proceedings went straight to the NSW Court of Appeal, where five senior Judges gave a unanimous decision in favour of policyholders. The Court found that clauses in policies that purport to exclude pandemic claims by reference to the Quarantine Act have no effect. The ICA subsequently announced its intention to seek special leave to appeal to the High Court of Australia.

The financial services regulator in the United Kingdom ran a test case in the UK courts seeking clarification of the pandemic exclusion clauses in a number of London market policies. An initial decision has been handed down by the court, and both the regulator and a number of insurers have lodged appeals against that decision. The appeals have been heard, and at the time of writing we await the outcome of the appeal.

NIBA continues to provide information to members in relation to government support for business, and the continuation of restrictions on community activity for health protection reasons. Those thinking of crossing state/ territory borders should consult the relevant state/territory websites for the latest information on any border restrictions that might be in place.

We also commend the work of the ICA, which has been working with relevant state governments to ensure insurance industry personnel can travel across borders to assist with the recovery of communities following major weather events.

10 / INSURANCE ADVISER FEBRUARY 2021

ACCC Northern Australia Insurance Inquiry

The Australian Competition and Consumer Commission (ACCC) has released its third and final report under the Northern Australia Insurance Inquiry. The report makes a number of recommendations, most of which are likely to have limited if any impact on the availability and affordability of home, contents and strata insurance in northern Australia.

The final report repeated an earlier recommendation that insurance broker commissions be abolished. NIBA has spoken with the Federal Government in relation to this issue, and understands the government remains committed to the 2022 review of remuneration arrangements for general insurance products and services. NIBA is preparing for that review.

FEDERAL

Royal Commission Reforms

Legislation implementing a number of Royal Commission recommendations passed the Federal Parliament prior to Christmas and will take effect during the course of 2021. The key provisions of interest to insurance brokers are as follows: Industry Codes of Practice: new provisions set out arrangements for ASIC to approve Codes of Practice, and to specify Code provisions to be legally enforceable.

The Insurance Brokers Code of Practice (the Code) is currently under review, and NIBA will give further consideration in due course to the new Code of Practice laws, and how they might impact on the new Code.

Use of the terms “insurance” and “insurer”: there are now stronger provisions which prevent use of the word

“insurance” for products and services that are not insurance. Care will need to be taken to ensure this word is not used in relation to the provision of non-insurance services, such as risk management advice.

Also, do not call yourself an insurer if you are not APRA-authorised or are otherwise able to act as an insurer in Australia.

Insurer avoidance of life insurance contracts: changes affect the ability of a life insurer to avoid contracts of life insurance in certain circumstances within three years of entering into the contract. Life risk brokers need to become familiar with this provision.

Caps on commissions for products sold in conjunction with the sale or long term lease of motor vehicles: new provisions give ASIC the power to set caps for commissions paid in relation to a number of add-on risk products including tyre and rim insurance, mechanical breakdown insurance, consumer credit insurance and some others. Those involved in this area will need to monitor ASIC activity in this area.

Claims handling and settling services: these reforms make insurance claims handling and settling services a financial service, and therefore they must operate under a financial services licence and be subject to the requirements of Chapter 7 of the Corporations Act. NIBA will provide detailed information to members in relation to these provisions shortly.

Reference checking and information sharing: new provisions require an AFS licence holder to comply with new reference checking and information

NEWS / Representation

sharing protocols to be released by ASIC. These requirements will apply to authorised representatives of life risk brokers, and do not apply to representatives giving advice only in relation to general insurance products. The new rules take effect on 1 October 2021.

Breach reporting and remediation: detailed new laws in relation to breach reporting and remediation take effect on 1 October 2021. All member principals will need to thoroughly review their breach monitoring and reporting processes and procedures to take account of the new laws. NIBA will provide detailed information on this shortly.

Hawking of financial products: complex new provisions relating to the “hawking” of insurance products will take effect on 5 October 2021. The provisions do not apply when an insurance broker is giving personal advice to a retail client, but they will apply to insurance brokers operating under a general advice model. Essentially, the provisions will prevent the unsolicited marketing and sale of financial products to retail clients. The definitions and concepts are difficult and complex, and NIBA will provide further information to members in relation to these changes.

Deferred sales model for add-on insurance products: these reforms essentially ban the sale of an insurance product in conjunction with some other products or service. Examples include insurance sold in conjunction with the rental of a motor vehicle, travel insurance purchased after the purchase of a travel product, and so on. The legislation introduces a complex array of obligations which defer the insurance transaction for a period of four days. The reforms do not apply to comprehensive motor insurance, or products recommended by financial advisers in a very limited personal advice situation. NIBA will provide detailed information to members in relation to how the reforms will need to be implemented.

The reforms take effect on 5 October 2021.

Duty to take reasonable care not to make a misrepresentation: these reforms relate to a newly defined category of “consumer insurance contracts”. They apply to insurance obtained wholly or predominantly for the personal, domestic

or household purposes of the insured.

Where the new definition applies, the insured only has a duty to take reasonable care not to make a misrepresentation to the insurer before entering the consumer insurance contract.

The changes relate to insurance contracts entered into on or after 5 October 2021.

For non-consumer insurance contracts, the existing provisions in sections 21 and 22 of the Insurance Contracts Act (duty of disclosure obligations and misrepresentation provisions) apply.

NIBA will provide more information on these reforms to members.

Small Business Ombudsman Insurance Inquiry

During 2020 the Australian Small Business and Family Enterprise Ombudsman undertook an inquiry into the availability and affordability of general insurance cover for SME businesses.

Included in the inquiry is the role of brokers in getting the right coverage.

NIBA provided a detailed submission to the Inquiry and met with the Small Business Ombudsman and her officials to discuss the role of insurance brokers, and current market conditions in relation to the supply and cost of general insurance cover. It was pleasing to hear the Ombudsman has a good understanding of the role of insurance brokers (as a previous small business owner herself).

The Small Business Ombudsman issued a report and recommendations on 9 December 2020. NIBA will provide a detailed response to the report to the Federal Government.

More information about the Insurance Inquiry is available at: asbfeo.gov.au/ current-inquiries/insurance-inquiry

Design and Distribution Legislation

As previously advised, legislation to implement new obligations on insurers and distributors of insurance products has been passed by the Federal Parliament.

ASIC has indicated that commencement of the new rules has been put back to October 2021. This is welcome, but there is no room for complacency here: the new rules will apply to every product that currently has a PDS attached to it.

NIBA is continuing to work with the Insurance Council of Australia to develop an understanding of how the legislation will work. This has been a

slow process, but there has been some progress. We are also aware that a number of insurers are making contact with brokers to discuss these matters directly.

It will be unfortunate if insurers take a range of approaches to these matters.

The crucial thing for insurance brokers to consider at the present time relates to those firms who use “broker wordings”, or their own schemes - where the broker has been involved in the design of the policy and the development of the cover that is provided. In these cases, the broker will need to work closely with the insurer/ underwriter to determine how the design and distribution obligations will operate in respect of those policies, who will be responsible for the preparation of the target market determination, and how the product review obligations will be implemented. You will most likely need to get legal support for this process, in order to ensure you are meeting the legislative obligations.

We continue to urge all members with broker wordings to look closely into these matters now.

Unfair Contracts Terms Legislation

As previously advised, legislation which will apply existing unfair contracts terms legislation to insurance contracts has been approved by the Federal Parliament.

These reforms were recommended by the Royal Commission and by the ACCC Interim Report on Insurance Issues in Northern Australia.

It is important to note that implementation of this legislation has NOT been deferred by the Federal Government. The reforms will take effect in early April 2021. By that time all retail policies will need to be reviewed to identify and remove any potential unfair terms.

As noted above in relation to design and distribution obligations, where brokers have policies with their own wordings and cover, they will need to review the terms of cover and the wording of the policies to determine whether the policies might be caught by the unfair contract terms legislation.

This should be done in collaboration with the relevant underwriter. We also note that these are technical legal questions, and we strongly urge brokers to get legal support for this purpose.

ASIC has published revised information sheets setting out their

NIBA.COM.AU / 11

NEWS / Representation

expectations in relation to Unfair Contract Terms legislation. NIBA provided commentary on these matters to members in October 2020.

ASIC

Internal Complaints and Disputes

ASIC recently issued Regulatory Guide 271 – Internal Dispute Resolution.

It is a condition of every AFS licence that the licence holder have a system for managing and resolving complaints and disputes, preferably before they are elevated to AFCA. RG 271 reviews and updates ASIC’s requirements in this area. The new requirements take effect on 5 October 2021.

ASIC has also issued a discussion paper in relation to the collection and reporting of data regarding internal complaints and disputes. NIBA has been examining the discussion paper and will provide a submission to ASIC on behalf of members.

APRA

We again remind members that the person in every insurance broking firm responsible for providing data to APRA must review the new procedures set out on their web site: apra.gov.au/apra-replacing-d2a Every insurance broking firm should by now have made arrangements for a key manager to have myGovID credentials and to appoint a Relationhship Authorisation Manager, in order to be able to continue to provide relevant reports to APRA. Information about myGovID is available at: ato.gov.au/General/Gen/myGovID/ Please note that the existing AUSkey arrangements were due to expire on 31 March 2020. New arrangements should have been in place prior to that date.

We again strongly urge all members to become familiar with the new requirements, and start to develop procedures to implement the new system.

NEW SOUTH WALES

NIBA has launched an ESL Hub on the main NIBA website to provide information

and resources to members with clients in New South Wales and Tasmania, where emergency services levies remain and add considerably to the cost of property insurance in those states.

We urge all insurance brokers with clients in these states to discuss the matter with their clients, using the ESL fact sheet available at the ESL Hub. More broadly, our goal has been to point out the unfair and inequitable impact of the emergency services levy on insurance premiums, and the resulting impact on underinsurance and non-insurance.

It has been reported that 27 per cent of the houses totally destroyed by the summer fires did not have insurance cover. This constitutes a massive loss for the people involved, and for their communities. NIBA will be giving evidence to a Senate Inquiry into the handling of the bushfires in early July 2020.

The NSW Government has launched a major review of workers compensation, including the operation and management of icare, and the operation of the NSW workers compensation scheme more broadly. NIBA has provided a submission to this review, and is arranging a meeting with Justice Robert McDougall, who is conducting the review.

subscribers were required to implement a family violence policy by 1 July 2020, and the ICA announced that insurers were aiming to implement vulnerable persons and distressed client provisions from 1 July 2020. The remainder of the new Code will formally take effect on 1 July 2021.

Any insurance broker operating under a binder on behalf of insurers will need to undertake training on the new Code of Practice and to implement procedures to adopt the General Insurance Code in respect of those operations. This is particularly important for the new Code provisions relating to vulnerable persons and clients in distress.

NIBA also believes that any insurance broker acting on behalf of their clients should have a good general knowledge of the insurer Code of Practice, especially the provisions regarding family violence and vulnerable customers.

The new General Insurance Code also contains new provisions dealing with insurance and mental health, disclosure of information and the sale of insurance products through motor dealers.

A summary of key features of the new General Insurance Code of Practice is available at: insurancecouncil.com.au/ assets/media_release/2019/311019%20 Key%20features%20of%20the%20 new%20General%20Insurance%20 Code%20of%20Practice.pdf

TASMANIA

Insurance Brokers Code of Practice

Major review of workers compensation

NIBA has spoken with the Tasmanian Government about the unfair burden imposed by the Fire Services Levy in that State. The Government has been conducting a review of fire services funding, and NIBA looks forward to responding to the report and recommendations when released.

General Insurance Code of Practice

The Insurance Council of Australia has released the new 2020 General Insurance Code of Practice, which is available at: codeofpractice.com.au The new General Insurance Code was formally launched in February 2020. Code

CONTACT NIBA

The review of the Insurance Brokers Code of Practice is continuing. The NIBA Board of Directors has largely completed detailed discussions in relation to the content of a new Code of Practice for insurance brokers.

NIBA is now seeking the views of members on the operation of the Code of Practice, and the future development of the Code, taking account of what is happening in other areas of financial services, the recommendations of the Royal Commission, and the work being done by the Insurance Council of Australia in its review of the General Insurance Code of Practice. More information on page 16 and 17.

As always, brokers who have questions about these or any other government or regulatory matters should feel free to contact NIBA CEO Dallas Booth at: dbooth@niba.com.au

12 / INSURANCE ADVISER FEBRUARY 2021

“My QPIB designation gives my clients peace of mind that I’m a trusted professional.”

ING IS

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QPIB

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Apply online at niba.com.au or email NIBA Memberships Manager Audi Witsen – awitsen@niba.com.au

D PRAC IE T F I

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QPIB – A STATEMENT OF PROFESSIONALISM

• QUA L

– CRAIG ANDERSON, 2018 YOUNG PROFESSIONAL BROKER OF THE YEAR

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NIBA RULES / Rule 3: Code of Conduct - Brokerage

BRINGING A NEW CLIENT ON BOARD NIBA has developed protocols over a long period of time in order to ensure there is clear understanding between underwriters, brokers and ultimately clients as to where each one stands during the process.

W

e have had a number of inquiries and expressions of concern in recent months in relation to industry agreed protocols for bringing new clients on board.

Of course, the client is always the key focus of attention, and it is crucially important that all parties are acting in the best interests of the client at all times. Also, it is entirely appropriate that the insurer/underwriter has full and proper confirmation that the client wishes the broker to help them with their insurance needs.

There are three items I would particularly like to mention. Experienced brokers will be familiar with these matters, but less experienced brokers might not be familiar with these matters. The protocols are binding on all NIBA members and their employees and authorised representatives.

Before the broker is formally appointed

If a broker wishes to obtain a quote on behalf of a PROSPECTIVE client (i.e. before the broker has been formally appointed to act on behalf of the client), the broker should obtain a Letter of Authority to Review and Quote. The letter authorises the broker to make inquiries from relevant insurers, in order to be able to provide a quote to the prospective client. The letter should be on client’s letterhead, and should be signed by a director, financial controller or the owner of the business. The letter should be signed, dated and should state that it is valid for a certain period of time.

More information about the Letter of Authority to Review and Quote is set out on the NIBA website.

14 / INSURANCE ADVISER FEBRUARY 2021

Once the broker is formally appointed

Once a broker has been formally appointed to act for and on behalf of a client, they should obtain a Letter of Appointment.

Once again, the Letter of appointment should be on the client’s letterhead, and should be signed by a director, financial controller or the owner of the business.

The letter should be signed and dated, and clearly set out the terms of appointment.

The purpose of this letter is to avoid misunderstandings, confusion and disputes as between the insurer(s), previous and current insurance brokers, and the client.

It is important to note that if an insurance broker represents the scope of their authority to act in a way that is broader than what the client believes it to be, the broker may be subject to action for misleading the client, and may also have breached their AFS licensing obligations and their duty to the client, amongst other things. There may also be a breach of their obligations under the Insurance Brokers Code of Practice.

Further information about the Letter of Authority to Review and Quote, or the Letter of Appointment, including template letters, can be found on the NIBA website at: niba.com.au/ html/letters-of-appointment.cfm

Broker appointed at the time of renewal

One of the rules of NIBA membership relates to the allocation of commission and brokerage when the new broker is appointed to act for a client in relation to an insurance program that had been arranged for the client by another broker. This is NIBA’s Rule 3.

Rule 3 applies where a broker (the

BY DALLAS BOOTH

Chief Executive Officer, National Insurance Brokers Association

new broker) is appointed to act in relation to a contract of insurance arranged for the client by another insurance broker (the original broker).

This typically occurs when the original broker has arranged renewal of cover, and invariably has placed the cover with the insurer(s), and a new broker then takes over the business. Often this will involve the new broker collecting the premium for remittal to the insurer.

Where this occurs, the new broker is required to account to the original broker for any brokerage received by the new broker in relation to the existing policy, as soon as is reasonably practicable after receipt of that brokerage.

NIBA receives a number of requests for Rule 3 to be applied each year. Our approach is to determine whether the new broker has been appointed to act in relation to an existing contract of insurance arranged by the original broker. If this is the case, we will seek to apply Rule 3 in relation to any commission or brokerage that had been collected by the new broker.

NIBA does not apply Rule 3 in cases where the new broker reviews the insurance program and arranges material changes to the client’s cover. Where there has been substantial change to the cover being provided, we do not believe the new broker is acting in relation to a contract of insurance arranged by the original broker.

Rule 3 has been a key rule of NIBA membership for many years, and we ask all members to be mindful of the rule and to abide by its provisions when called upon to do so.

NIBA’s Rule 3 can be obtained at the following page on the NIBA web site: niba.com.au/resource/ NIBA_rules_regulations.pdf

ADVERTORIAL / Community-focused Industrial Special Risk

EVER-INCREASING PREMIUMS WITH UNREASONABLE EXCLUSIONS HAVE LED TO THE CREATION OF A NEW SELF-PROTECTION OPTION FOR COMMUNITY-FOCUSED ORGANISATIONS ACROSS AUSTRALIA

When the property insurance renewal for the Anglican Diocese of North Queensland jumped from $500,000 to $2,500,000 in a year despite very low claims over a long period of time, the Archdeacon began to look for alternatives.

The result, launching in December 2020, is Our Ark, a new Discretionary Mutual protects the Diocese’s $120 million in assets.

Our Ark is now collaborating with brokers and advisors across Australia to provide quotes for not-for-profit, community groups, aged care, schools, childcare and faith-based clients that are facing similar challenges with under-service, spiking renewals and unreasonable exclusions.

What is Risk Protection?

With Mutuals, every customer becomes a Member, who is also an owner. Discretionary Mutuals are public companies limited by guarantee and have long existed in Australia to provide risk protection, an insurance-like product, to buying groups.

Classed as a Miscellaneous Financial Risk

by ASIC, risk protection requires PDS and FSG documentation.

Reinsurance for large claims and catastrophes is obtained by the Mutual with the assistance of Willis Re, in the same way an insurer buys reinsurance.

Stamp Duty and the Emergency Services Levy do not apply to risk protection products, so there are no insurance tax on-costs.

How claims work The Board has the legal obligation to act in the best interest of Members and has the discretion to make key decisions, including ones about claims.

When an insurance claim meets all policy

terms and conditions, there is a contractual right to have the claim paid. When it only meets some, the claim can be denied.

With Risk Protection, there is the right to have the claim considered, even if, at prima facie, not all conditions are met. The Board can consider the totality of a situation and exercise discretion over claims.

The Our Ark Board has deep insurance and community understanding The Chair, Rowan Ward currently serves on the National Injury Insurance Scheme QLD and the Insurance Commissioner’s Advisory Committee for Motor Accident Insurance (QLD). He is the former Chief Actuary of Suncorp.

Chris Wright, Archdeacon of the Anglican Diocese, is a Member Representative on the Board. He is also a Director of the Trinity Anglican School in Cairns, and active in the local ambulance, schools, childcare and neighbourhood community centres. In 2019 he was awarded a Medal of the Order of Australia for community service.

Charles Pollack, the former Chief Actuary of Youi and a former Principal Actuary at Suncorp, is CEO. He is also the CEO of Picnic, the provider of the turn-key Mutual solution used by Our Ark to provide underwriting, risk management, regulatory compliance and governance support.

In Sydney, Melinda Snowden, a professional Non-Executive Director with 20 years’ experience in financial markets, audit, risk and governance and Mark Arnold, the Chair of Picnic, round out the Board.

BY JEN STOREY

Our Ark Mutual

A better way to self-insure Mutualising risk across organisations that understand each other creates benefits including: • Lower prices from operational efficiencies • Maximising group buying power for reinsurance • Providing broad, fair cover with few exclusions • The Mutual legal structure requiring open and transparent operations • The shared incentive by Members to manage risks and maintenance to reduce claims • Members keeping profit to increase cover or reduce contributions How Our Ark works with Brokers “We consider the risk characteristics and claims history of each property when quoting,” Mr Pollack explained.

“We hear from brokers all the time, where despite long term favourable claims experiences, their client’s premium increases are exponential.

There’s another way to do this,” said Mr Pollack.

Our Ark is open to members with a single, or portfolio of properties, from across Australia. Other products, such as liability protection, will be launched during 2021.

“If a Broker’s AFS licence does not allow them to provide a risk protection quote, we collaborate with them to ensure their client has a viable alternative,” he said. “We will help a Broker help their client – that’s the Mutual way of working.”

To learn more about the Broker Referral program or to receive a quote for your client visit: https://www.ourark.com.au/niba

Pooled self-insurance with reinsurance protection

NIBA.COM.AU / 15

REVIEW / Insurance Brokers Code of Practice

INSURANCE BROKERS CODE REVIEW IS ABOUT TO GO PUBLIC

The National Insurance Brokers Association of Australia (NIBA) will shortly invite feedback and submissions from insurance brokers, clients and consumers, organisations, representative associations, and any other interested stakeholders as part of the review of the 2014 Insurance Brokers Code of Practice.

The Code of Practice

The Insurance Brokers Code of Practice (Code) is an agreement between NIBA and its members and other brokers who subscribe to the Code (subscribers), which sets out the minimum service standards that clients can expect from subscribers.

The Code and Code Procedures also outline how complaints and disputes regarding potential breaches of the Code can be resolved. A link to the Code and its guidance notes can be found at niba. com.au/codeofpractice/overview.cfm and

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the Code Procedures at niba.com.au/ codeofpractice/c3-complaints-and-disputesresolution-1.cfm.

The Code is independently administered by the Australian Financial Complaints Authority, with Code compliance monitored independently by the Insurance Brokers Code Compliance Committee (IBCCC). The IBCCC Annual Review 2019-20 analysing how subscribers complied with the Code can be found at insurancebrokerscode.com. au/app/uploads/2020/10/IBCCC-AnnualReview-2019-20-Oct2020.pdf.

The Code sets out 12 service standards that subscribers commit to: Standard 1: We will comply with all relevant law Standard 2: We will transparently manage any conflicts of interest that may arise Standard 3: We will clearly tell you if we do not act for you Standard 4: We will clearly tell you about the scope of our covered services Standard 5: We will discharge our duties diligently, competently, fairly and with honesty and integrity Standard 6: We will clearly tell you how our covered services are paid for before we provide them and answer any questions you have Standard 7: We will handle any money received in accordance with relevant law and any agreement with you Standard 8: We will ensure that we and our representatives are competent and adequately trained to provide the relevant services and will maintain this competence Standard 9: We will respond to catastrophes and disasters in a timely, professional, practical and compassionate manner in conjunction with any industrywide response Standard 10: We will ensure that we have an internal complaints and disputes handling process that meets the Code Complaints and Dispute process standards Standard 11: We will support NIBA in promoting the Code and make information on the Code (including how to make a complaint) and our Covered Services readily available to you Standard 12: We will not engage in activity or inactivity that is reasonably likely to bring the insurance broking profession into disrepute.

REVIEW / Insurance Brokers Code of Practice

Many of the Standards include additional as to how the Standards might be achieved.

The Code Review

NIBA believes the Code has been fit for purpose and remains a leading benchmark for industry self- regulation. As part of its commitment to professionalism and continuous improvement, NIBA is undertaking a review of the Code to ensure continuing high standards of service allowing the profession to remain in step with regulator and community expectations.

The Code was last reviewed and updated with effect from 1 January 2014. In 2018, NIBA commenced a review of the Code with a view to undertaking consultation during the course of 2019. With the delivery of the final report of the Royal Commission into Misconduct in Banking and Financial Services, NIBA decided to pause the Code review until the Governments responses to the Royal Commission’s recommendations became clear.

This was followed by the disruption of most areas of economic activity as a result of the COVID-19 pandemic. As Australia moves out of the turbulence of 2020, NIBA has committed to proceeding with the Code review in 2021 in order to maintain the relevance and currency of the Code.

The NIBA Board has engaged a third-party consultant to conduct an independent review of the Code with a view to submitting the revised Code to ASIC for approval of the Code under Regulatory Guide 183. In undertaking the review, the NIBA Board recognises the importance of ASIC approval of the revised Code as “it is a signal to consumers that this is a code they have confidence in.”1 In the interests of transparency and continuous improvement, the Code review is not limited in its scope, with NIBA’s intent being to ensure that the Code remains relevant and a benchmark of industry self-regulation in a regulatory environment that has turned its focus more keenly to community expectations, culture, and conduct.

facilitate formal submissions in relation to the current Code. The Discussion Paper sets out topics for consideration which have been derived from common themes arising from preliminary discussions that have already taken place between the independent reviewer and key stakeholders.

The key stakeholders who have contributed their preliminary views include representatives from the following organisations: • Australian Financial Complaints Authority; • Australian Securities & Investments Commission; • Consumers Federation of Australia; • General Insurance Code Governance Committee; • Insurance Brokers Code Compliance Committee; • Insurance Council of Australia; • NIBA Regulatory Affairs Committee; • NSW Office of the Small Business Commissioner; and • Australian Small Business & Family Enterprise Ombudsman.

The NIBA Board of Directors has taken time to reflect on the common themes that have emerged from these discussions and has provided the independent reviewer with NIBA’s preliminary comments and suggestions for change in response. In the interests of transparency, NIBA has made the proposed changes to the current Code available at: niba.com.au/html/niba-copreview as part of the review consultation.

It is important to note that the document reflects NIBA’s initial thoughts and does not take into consideration design/layout/ readability, which will be considered and addressed before the revised Code is finalised.

In preparing the Discussion Paper, the independent reviewer has also had the benefit of the recent significant code review work undertaken by other financial services

Review Pathway

The next step in the Code review will be the publication of a Discussion Paper prepared by the independent reviewer in order to 1

Invitation to contribute

We encourage everyone to consider the Discussion Paper and provide a submission as part of the review. The Discussion Paper and other relevant information will be available on the NIBA website, at the following link: niba.com.au/html/niba-cop-review-

industries, and relevant regulatory reviews, including the Royal Commission Final Report, and the regulatory response to the Royal Commission.

The aim of the Discussion Paper is to foster discussion and feedback on the key areas identified, raise any other key issues to consider, and suggest the best approach to implementation to ensure that any Code changes are reasonable and can be executed in practice to achieve the intended benefits.

Target Timeline

The planned timeline for the Code review is as follows: 8 Feb – 9 April 2021: Public release of Discussion Paper and request for submissions.

12 April – 21 May 2021: Invitation for key stakeholders to meet Independent Reviewer to discuss submissions and NIBA’s proposed changes.

24 May – 25 June 2021: The independent reviewer will review and assess any feedback from submissions. If necessary, prepare a further draft Discussion Paper arising from stakeholder and public consultation and re-plan timeline to accommodate additional consultation.

If additional consultation is required, the timeline below will change.

28 June – 12 July 2021: Finalise outstanding questions and issues prior to issuing final report.

30 July 2021: Final Review Report released to NIBA Board with Code recommendations arising from consultation.

Second half of 2021: Finalise revised Code with NIBA Board approval.

NIBA to submit revised Code to ASIC for approval. Launch at NIBA Convention 2021.

Mid to late 2022: Revised Code becomes effective following training and roll out assistance to subscribers. submission.cfm.

Submissions may be made confidentially, or you may choose to make a public submission which will be available on the Code Review Submission page.

Submissions will remain open until 9 April 2021.

ASIC, Regulatory Guide 183, March 2013, 4 [183.3].

NIBA.COM.AU / 17

NEWS / Industry bulletin

INSURANCE MARKET FAILURE A NATIONAL CRISIS: ASBFEO

T

he Australian Small Business and Family Enterprise (ASBFEO) Ombudsman Kate Carnell has handed down her Insurance Inquiry final report, that reveals widespread market failure in regard to the availability and affordability of essential small business insurance products.

More than 800 small businesses took part in the insurance survey, describing their feedback as both insightful and concerning Carnell said, “Our Insurance Inquiry has revealed we are in the grip of a national crisis that is killing small businesses.”

In addition to the response from small businesses, the report also took into consideration the 20-plus submissions from industry stakeholders.

She added, “Hundreds of small businesses have told my office they face closure if insurance remains unavailable to them. In reality, it means thousands of small businesses are likely impacted and there could be dire consequences for the Australian economy if left unaddressed.”

The final report makes a suite of recommendations designed to rebalance risks taken on by insurers and make small business insurance products more accessible.

A major recommendation included in the report is to expand the Australian Reinsurance Pool Corporation (ARPC) to provide reinsurance for all natural disasters on commercial property insurance.

Carnell also said that the insurance industry urgently requires a mandatory Code of Practice, recommending the Australian Financial Complaints Authority (AFCA) be given additional powers to deliver dispute resolution and enforcement.

The report highlights a lack of availability

of public liability and professional indemnity insurance, pin-pointing the unlimited nature of injury claims and potential for large damages as a key factor.

She also revealed that there have been reports of poor conduct by insurers, “Including very late notice of renewal terms and price hikes, effectively putting the small business in the position of accepting the terms or being uninsured.”

You can access the entire report online: asbfeo.gov.au/inquiries/insurance-inquiry

Above Hundreds of small businesses will face closure if insurance remains unavailable to them.

ACCC RELEASES THIRD AND FINAL REPORT ON NORTHERN AUSTRALIA INSURANCE INQUIRY

O

ver the holiday period, the Australian Competition and Consumer Commission (ACCC) released their third and final report of the Northern Australia Insurance Inquiry.

Most concerning for insurance brokers was the inclusion of an earlier recommendation from the 2019 interim report which called for the removal of the exemption for brokers under the current conflicted remuneration ban. Although not a new recommendation, it remains worrying for both the National Insurance Brokers Association (NIBA) and its members.

The report also contained a number of concerning findings which confirm anecdotal evidence provided to NIBA by members.

NIBA will provide a detailed response to the Federal Government, outlining broker concerns and highlighting the potential impact on brokers and their clients. NIBA strongly believes that these recommendations are unlikely to provide any significant relief to property owners in northern Australia, and will not ease the availability and affordability issues in that market.

NIBA CEO, Dallas Booth said, “We will continue to prepare for the 2022 review

of remuneration arrangements in general insurance, as recommended by the Royal Commission. NIBA has already started this process by commissioning the Deloitte Access Economics Report on the economic role and value of insurance broking, and will continue to liaise with government, regulators and other stakeholders on the important work brokers do for their clients and the broader community.”

The ACCC indicated they look forward to making submissions to the 2022 review recommended by the Royal Commission, as does NIBA.

For breaking news and updates curated specially for insurance brokers please visit: insuranceandrisk.com.au/category/news/

18 / INSURANCE ADVISER FEBRUARY 2021

NEWS / Industry bulletin

ASIC REGULATORY GUIDE ON PRODUCT DESIGN AND DISTRIBUTION OBLIGATIONS

T

he Australian Securities and Investment Commission (ASIC) has released a new regulatory guide on the product design and distribution obligations (DDO).

ASIC Acting Chair Karen Chester said, “The design and distribution obligations are a game changer. They are designed to embed a consumer-centric approach and assist industry to deliver better outcomes for consumers while managing non-financial risks and avoiding costly remediation.”

NIBA CEO Dallas Booth said it is disappointing ASIC did not engage more effectively during the development of the new Regulatory Guide. NIBA has been calling for ASIC to outline the expected operation of DDO for typical general insurance policies, including worked examples of how ASIC expects the requirements to work, “We have still not seen this,” said Booth.

“At the end of the day, the obligations on insurance brokers will very much depend on the wording of the Target Market Determinations prepared by insurers.”

NIBA has been calling for a consistent approach to the development of TMD’s in general insurance, in order to ensure all parties are likely to be observing their new obligations, and to avoid unnecessary and inefficient procedures which will add cost but little or no benefit for policyholders.

“The good news is that the main DDO obligations do not apply when personal advice is provided in relation to the product. This does not remove all obligations, however,” explained Booth.

“DDO is going to be a major challenge for broking firms during 2021, and systems and processes will need to be developed to ensure compliance with the new obligations. NIBA will now start to provide detailed information to Member firms to help them implement the new rules.”

LEGISLATION PASSED TO IMPLEMENT ROYAL COMMISSION The Financial Sector Reform (Hayne Royal Commission Response) Bill 2020 has been passed by the Federal Parliament, addressing 20 recommendations and one additional commitment from the Hayne Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

National Insurance Brokers Association (NIBA) CEO, Dallas Booth welcomed the passage of the Bill through parliament, and said, “We will now develop information packages for our members on the range of reforms contained in the Bill. This will be a major area of focus for NIBA during 2021.”

Insurance Council of Australia (ICA) CEO, Andrew Hall said, “The Insurance Council and its members now look forward to working with Commonwealth Treasury, ASIC, and other groups such as consumer advocates to bring these reforms to life.

“There are practical implementation issues that we are keen to see resolved so the legislation can maximise consumer outcomes as effectively and quickly as possible.”

NIBA PROMOTES THE ROLE AND VALUE OF BROKERS TO GOVERNMENT

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he National Insurance Brokers Association (NIBA) met with a representative of the NSW Minister for Finance and Small Business, Damien Tudehope as well as the NSW Shadow Minister for Finance and Small Business, Daniel Mookhey to discuss the Deloitte Access Economics report, The Economic Value of Insurance Broking and the upcoming review into broker remuneration.

NIBA CEO Dallas Booth said, “These meetings are just some of many that NIBA is conducting with members of government, regulators and business and consumer groups around Australia in the lead up to the 2022 ASIC review.”

Booth also revealed that the Association

made a submission on behalf of brokers in response to ASIC’s Consultation Paper 332 Promoting access to affordable advice for consumers (CP 332).

The submission states, “NIBA is firmly of the view that the Australian community deserves access to and needs good-quality advice in relation to their general insurance risks and needs. The fact that increasing numbers of retail clients are seeking the advice and support of an insurance broker is evidence of this position.”

This submission is in response to the inquiry that forms part of ASIC’s unmet needs of advice project.

“Only general insurance brokers are trained, experienced and licensed to provide

personal advice to retail clients in relation to general insurance needs, products and services. Virtually all insurance companies operate under a general advice model, and do not provide advice to prospective policyholders on the insurance products likely to meet their individual needs and circumstances.”

Booth added , “A number of NIBA members have indicated that they have examined the potential for operating under a personal advice model, but having regard to regulatory and compliance obligations it is not cost effective to do so.”

He said, “NIBA would like to suggest that instead of starting with the legislation, we start with the needs of clients.”

For breaking news and updates curated specially for insurance brokers please visit: insuranceandrisk.com.au/category/news/

NIBA.COM.AU / 19

NEWS / Industry bulletin

NIBA’S TOP FIVE FOCUS AREAS FOR 2021

N

ational Insurance Brokers Association (NIBA) CEO Dallas Booth, believes 2021 will be an interesting year for insurance brokers, “NIBA has been examining a plethora of legal and regulatory updates on behalf of our members and we are engaged in a lot of discussions with Treasury and the Federal Government to ensure that insurance intermediaries’ concerns are represented to policy makers.”

Booth has listed the top five focus areas for NIBA in 2021 as follows: 1. Preparing for the 2022 review of remuneration arrangements in general insurance, as recommended by the Royal Commission. NIBA has started this process with the Deloitte Access Economics report on the role and value of insurance brokers in Australia, which sets the foundation on which a range of industry submissions will be based.

2. Completing the review of the Insurance Brokers Code of Practice, which will demonstrate the industry’s ongoing commitment to professionalism, ethics and integrity, and to putting the interests of clients first at all times.

3. Continuing to work with Australian Securities and Investment Commission (ASIC) on setting higher standards for education and training of insurance brokers.

4. Working with our members to implement the reforms coming out of the Royal Commission.

5. Promoting the role and value of insurance brokers more broadly, to a wide range of stakeholders and interested parties.

He said, “Late last year we asked our members to provide input to NIBA’s 2020-

21 policy strategy, we were overwhelmed with responses from brokers all over Australia. As the representative body for insurance intermediaries, we will continue to engage on these and other important issues. If you would like to provide input on any of these or other issues, please contact NIBA’s Policy and Research Manager via email (ahextell@niba.com.au).”

ASIC SEEKS FURTHER FEEDBACK ON INTERNAL DISPUTE RESOLUTION DATA REPORTING The Australian Securities and Investment Commission (ASIC) is seeking further feedback on proposed requirements for internal dispute resolution data reporting.

National Insurance Brokers Association (NIBA) CEO, Dallas Booth, said: “NIBA has been examining the discussion paper and will provide a submission to ASIC on behalf of members.”

This request follows the regulator’s

earlier consultation through Consultation Paper 311 Internal dispute resolution: Update to RG 165 (CP 311) which was published on 15 March 2019.

New internal dispute resolution (IDR) standards and requirements will apply to financial firms that deal with retail clients, including superannuation trustees, from 5 October 2021. This includes the requirement to record all complaints that a firm receives. Mandatory IDR

data reporting will not commence on that date, but ASIC wants to give firms some certainty about what information will be collected as they make changes to their systems now.

In response to feedback received to CP 311 the regulator reached preliminary positions on a number of issues related to data reporting.

ASIC has also simplified the draft data dictionary and reduced the number of data elements from 37 to 23.

For breaking news and updates curated specially for insurance brokers please visit: insuranceandrisk.com.au/category/news/

20 / INSURANCE ADVISER FEBRUARY 2021

THANKS FOR VOTING US

1ST IN 23 CATEGORIES 2020 NIBA Broker Market Survey

OVERALL

BEST BROKER EXPERIENCE

Is a trusted partner* Underwriting overall satisfaction Is a brand that delivers on promises

Overall satisfaction*

Overall opinion versus other insurers*

Responsiveness

Work with me to find a solution for my client

Understand underwriting for my client’s needs

Have expert knowledge in specific product areas

Are comfortable having complex or challenging conversations

Communicate when underwriting appetite has changed

Takes ownership for resolving my business issues and follows through on commitment

Willingness to negotiate for the benefit of my client

Takes the time to learn about my business and client needs

Strong product knowledge and technical expertise

ACCOUNT MANAGEMENT

Account management overall satisfaction

Responsiveness to my needs and the needs of my clients

PRODUCT EXPERIENCE

Underwriting flexibility

Ability to tailor a policy to suit my client’s needs

Product coverage and wording that suits the needs of my client

Policy conditions and cover

CLAIMS EXPERIENCE

BRAND EXPERIENCE

Staff are knowledgeable about what the product covers in the event of a claim

Develops and maintains strong relationships

* Liberty Specialty Markets shares the first place ranking with other insurers in these categories.

The independent NIBA Broker Market Survey was conducted from July to August 2020 and compared 18 general insurers in Australia.

Liberty Specialty Markets is a trading name of Liberty Mutual Insurance Company, Australia Branch (ABN 61 086 083 605) incorporated in Massachusetts, USA (the liability of members is limited).

PROFESSIONALISM / WA Workers’ Compensation

WA DIVISIONAL COMMITTEE TO LAUNCH NEW TRAINING PACKAGE WITH WORKCOVER WA

I

n March, the Western Australian Divisional Committee (the Committee) of the National Insurance Brokers Association (NIBA), together with WorkCover WA, the Personal Injury Education Foundation (PIEF) and the Insurance Council of Australia (ICA), will launch a new training package to further educate brokers and other key stakeholders on the workers’ compensation scheme in Western Australia.

Clint Jeuring, WA Divisional Chair, said: “Given the Workers’ Compensation Act in Western Australia does not specifically recognise the role of brokers, our continued commitment to high levels of professionalism is critical in demonstrating to WorkCover WA and the licensed insurers, the critical value and support brokers offer clients.”

Jeuring said the Committee has maintained a strong working partnership with both WorkCover WA and the ICA, with additional support from GIO, QBE, CGU, Allianz and Zurich, to ensure the critical role brokers play, with respect to workers’ compensation, is both understood and valued by all key stakeholders.

“The training package is targeted at brokers and other stakeholders of all levels of experience; from those new to managing workers’ compensation, to those more experienced who may require a refresher or simply may just want to enhance their existing knowledge base,” he explained.

The training package consists of three modules, and assessment questions that the user is required to pass to demonstrate competency. The modules include; • Welcome to Workcover WA • Workers Compensation Scheme – The Role of the Broker • Claims Management and Processes

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Workers’ compensation represents the largest insurable risk (by cost) for most businesses in Western Australia, according to Jeuring. “Therefore, the role brokers play in assisting and adding value to clients is critical. Completion of the course allows brokers to enhance their knowledge and understanding of all facets of workers’ compensation.”

The idea was initially conceived in 2016, however, due to the complex nature of the content required, it wasn’t until the Committee sought the engagement and support of both Workcover WA and the ICA in

2017, that the project got underway.

NIBA CEO Dallas Booth congratulated the WA Divisional Committee, “I’d like to thank all those involved, in particular, Clint Jeuring, Ross Bethell and Ian Maybury – they have dedicated a tremendous amount of time and effort to deliver Western Australian brokers a very impressive training package.”

The cost of completing all three modules of the training package is $130 for NIBA Members, and $150 for Non-Members.

Further details on how to enrol you or your employees will follow in due course.

Completion of the course allows brokers to enhance their knowledge and understanding of all facets of workers’ compensation.

PROFESSIONALISM / AFCA case study

TAKE REASONABLE CARE TO UNDERSTAND CUSTOMER REQUESTS It is absolutely essential to confirm a customer’s instructions before proceeding with their requests.

Facts

The complainants held an insurance policy arranged by the broker which insured a truck used in the complainants’ business.

The broker reduced the sum insured for the truck from $50,000 to $20,000. The truck was damaged and repaired at a cost of $26,501.45 and the sum insured did not cover the full cost of repairs.

The broker said it reduced the sum insured at the complainants’ request and the complainants denied this, leading to the dispute.

The Complainant’s Case

The complainants submitted that: • they had only asked the broker if they could insure the truck’s chassis and tray for separate amounts ($30,000 and $20,000 respectively, and not the whole truck for $20,000); • they did not ask for the truck’s sum insured to be reduced to $20,000; and • the market value of the truck was about $60,000.

The Broker’s Case

The broker submitted that: • the broker emailed the complainants saying the policy was due for renewal and the complainants called on two separate occasions and asked to reduce the truck’s sum insured to $20,000; and • the market value of the truck was between $20,000 and $30,000; and • the complainants could have queried a refund they received in March 2019, and could have reviewed the certificate of currency they received in June 2019 that had the sum insured.

The AFCA Decision

AFCA was satisfied, based on the evidence

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provided, that: • In relation to whether the complainants asked to reduce the sum insured: o there were no recordings of the two phone calls where the complainants allegedly asked for the sum insured to be reduced; o it can be inferred from the insurer’s assessment and from evidence of online advertisements for similar vehicles that the truck’s market value was closer to $50,000 than $20,000, and the complainants knew this so it was unlikely they would have asked to reduce the sum insured from $50,000 to $20,000.

• In relation to the broker reducing the sum insured: o the broker did not confirm the complainants’ instructions before reducing the sum insured. The broker’s internal email said the complainants wanted to reduce the sum insured to $20,000 “to see if there is a significant reduction in premium”, but the broker did not ask the complainant’s whether saving $598.23 in premium was worth reducing cover for; o an updated invoice showing the reduced sum insured was not sent until after the truck was damaged; o the broker did not email the complainants to confirm the reduction in the sum insured like it did previously when the sum insured was reduced from $60,000 to $50,000; o a competent and experienced broker would have realised that reducing the sum insured from $50,000 to $20,000 was an unusual and risky request because a truck

BY MARK RADFORD

Principal, Radford Lawyers

does not normally lose 60 per cent of its value in one year and it could cause a financial loss of up to $30,000; o the broker should have explained the risks of underinsurance; o the broker should have clearly informed the complainants that the change had been made.

• In relation to the complainant’s knowledge of the reduction: o the complainants paid the amount quoted for the policy with a sum insured of $50,000. The broker later refunded the complainants $598.23 but did not tell them the refund was for reducing the truck’s sum insured; o the complainants asked the broker for a certificate of currency to forward to a client. The complainants received the document and forwarded it to their client without reading it.

• AFCA concluded that the broker breached its duty of care to the complainants because it: o misunderstood the complainants’ instructions; o did not confirm the instructions before reducing the sum insured; o did not tell the complainants that the sum insured had been reduced; o did not take reasonable steps to determine whether lowering the sum insured was suitable for the complainants’ needs.

• The broker was liable for any loss the complainants suffered because of the breach.

• The complainants were entitled to recover $20,000 (less the excess) from the insurer and compensation from the broker in the sum of $5,903.22 (ex GST) plus interest.

ANALYSIS / Legal

‘TESTING’ FOR COVID-19: THE STATE OF PLAY

As we move into the new year, the COVID-19 pandemic continues to present socioeconomic challenges on a global scale. This is true in relation to the extent to which losses sustained by businesses as a result of the pandemic – and the associated government action to contain it – qualify for cover under policies of business interruption insurance.

A

t this time, it is useful to reflect on the attempts from last year (many of which are ongoing) to ascertain the availability of business interruption cover and what 2021 is likely to bring in this regard.

The first business interruption test case was commenced in June 2020 in the UK, by its financial services regulator: the Financial Conduct Authority (FCA). The decision delivered by the High Court of Justice in London on 15 September 2020 was, in some respects, a ‘mixed bag’, with the FCA (on behalf of policyholders) achieving success on certain points and insurers succeeding on others. By way of broad example (acknowledging the difficulty of attempting to summarise a judgment which ran for over 160 pages), policyholders generally fared better on so-called ‘Disease Clauses’, which provide cover for business interruption arising from disease occurring in a particular area. The Court found that cover may be available, provided it could be established that there had been at least one case of COVID-19 in the prescribed area. On the other hand, the Court construed so-called ‘Prevention of Access Clauses’ – which provide cover in circumstances where access to insured property has been restricted or hindered by the action of authorities in response to an emergency in a particular area – relatively narrowly. The Court found that these clauses provided a localised form of cover, enlivened by action of an authority in response to localised outbreaks of COVID-19, not the pandemic at large.

On 2 November 2020, the UK Supreme Court granted leave for six

of the eight insurers involved in the test case to appeal the High Court’s judgment. The appeal hearing proceeded over the course of four days in November 2020 and it has recently been announced that the Supreme Court’s decision will be handed down on 15 January 2021.

Turning our sights on Australia, the ‘Quarantine Act Test Case’ – commenced in August 2020 at the instance of the Insurance Council of Australia and the Australian Financial Complaints Authority – concerned the application of exclusions for loss resulting from diseases declared to be quarantinable diseases under the Quarantine Act 1908 (Cth) “and subsequent amendments”. On 18 November 2020, the NSW Court of Appeal delivered its decision in favour of policyholders, effectively finding that such exclusions do not capture loss resulting from COVID-19. On 16 December 2020, the insurers involved in the ‘Quarantine Act Test Case’ filed an application for leave to appeal to the High Court of Australia. A determination of this application is expected in the first quarter of 2021.

It has also been reported that a further business interruption test case is presently being considered. On 19 November 2020, the ICA announced it anticipated the proposed second test case would explore “outstanding policy matters, including proximity and prevention of access”, with a view to obtaining judicial guidance on such matters as quickly as possible.

In addition to the above test cases, ‘stand alone’ litigation has

BY CLANCY O’DONOVAN

Senior Associate, DLA Piper Australia

also proceeded in the Federal Court of Australia in relation to the availability of business interruption cover. In Rockment Pty Ltd t/a Vanilla Lounge v AAI Limited t/a Vero Insurance, the Full Federal Court considered the application of an exclusion for claims arising from a “biosecurity emergency” declared under the Biosecurity Act 2015 (Cth). Although the Court granted the relief sought by the policyholder in that case, it stressed that its construction of the relevant exclusion was closer to the interpretation advanced by the insurer.

Meanwhile, proceedings commenced

by The Star Casino against its insurers are ongoing in the Federal Court. A key issue in that case is whether the pandemic is a “conflagration or other catastrophe” for the purpose of enlivening business interruption cover under The Star’s insurance policy.

Whilst significant steps have been taken to obtain clarity in relation to the availability of business interruption cover for loss caused by the pandemic, these efforts are on-going and in many cases there is still a way to go. Resolution of ongoing test case appeals (both at home and abroad), foreshadowed further test case action and other satellite litigation is eagerly anticipated by the insurance industry and the wider business community alike. These decisions will play an important role in determining both the extent to which loss caused by the pandemic is to be borne by insurers and whether further litigation, including class action litigation, in relation to business interruption insurance, is likely to be a fixture of the Australian legal landscape in years to come.

NIBA.COM.AU / 25

PROFESSIONALISM / Business lessons from 2020

LESSONS LEARNED THROUGH COVID-19

Many of us are breathing collective sighs of relief having navigated our way through 2020 and the associated challenges of the year.

T

he very nature of COVID-19 created an opportunity for people and organisations to make critical changes in attitudes and practices that may continue well past the pandemic. Whilst some businesses folded and were financially devastated, it is evident that many businesses continued to not only thrive, but have emerged even stronger.

So, what are some of the key business lessons that have transpired as a result of the pandemic and what will the new ‘norm’ possibly look like moving forward?

The Way We Work Will Change

Prior to COVID-19, a number of employers were not in favour of providing flexible work arrangements nor the concept of their team working from home, however, were forced to do so due to lock-down measures.

Interestingly, the idea around productivity has shifted and a number of employees believed they were more effective working within their own environments, rather than being constantly distracted within their workspace. As a result, organisations have also become more trusting of their employees and the notion of flexibility, working from home and virtual teams will certainly continue into the future.

What We Do Today, Will Affect Tomorrow

Whilst we have all experienced a level of vulnerability during this past year, it’s important to recognise that in order to move forward, we need to start planning now! Taking proactive steps to market your business, develop new products or

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change how you will operate will make it easier to adapt and pivot to future needs.

Client needs have also changed and understanding current service expectations will increase sales and opportunity. The way we have traditionally worked in the past, will definitely not be how we work post pandemic and those who have a future strategy will weather the storm.

Remote Learning Will Increase

In response to the health situation, a number of organisations recognised that it was critical their employees continued to be provided with learning and development opportunities. Whilst face-to-face training opportunities ceased, many organisations globally implemented remote learning tools that could be easily accessed whilst working from home. Additionally, personalised learning such as one-on-one Zoom coaching sessions have also increased as they are easy and effective to facilitate from any location. There is no doubt that this mode of learning will continue.

Resilience Is A Necessity

The fallout from the pandemic means that moving forward, businesses will likely change the way they hire and recruit. From a leadership perspective, we will see that organisations will seek to recruit leaders who are able to demonstrate a level of resilience as part of their skill set.

That is, the ability to bounce back and rally the troupes after a major set-back. It’s also about exhibiting positivity and poise during stressful situations. Naturally, employees look

BY NIKKI HEALD

Director at Corptraining

towards their leader during a crisis and during this recent chaotic time, it became evident that some leaders were ill-equipped to support and guide their teams effectively. Conversely, the pandemic also revealed those managers who shone like a beacon and despite very challenging times, were able to maintain engagement and positivity in their team.

Continue To Be Thankful

Whilst 2020 was a year of many disheartening and low points, one of the most positive aspects of COVID and lockdown was that we all had extra time on our hands that, perhaps, previously we had never experienced. We learnt the art of thanks and appreciation, simply from the little things. The opportunity to slow down our busy lives and take time out, provided people with the choice to change how they may want to live their lives moving forward. Some people sought out an entirely new career, others chose to focus on health and fitness, whilst the memories made with family (myself included) are some that may never again be replicated. I believe that people will continue to be thankful and grateful for what they currently have, their good health and what they have achieved during these unsettling times.

So, am I glad to see the end of 2020?

Absolutely yes! However, we should remember that the best lessons learnt in life are often when we experience hard times and when we make mistakes.

History has demonstrated that this pandemic, like every other pandemic, will end and it will provide us with important teachings to deal with the next big challenge we will inevitably experience.

Specialist Underwriter

COMMUNITY / NIBA Awards

Give a fellow professional the experience of a lifetime NIBA’s annual search for Australia’s top insurance brokers is underway, with nominations open for the 2021 Broker of the Year and Young Professional Broker of the Year Awards.

Y

ou have a chance to give a peer a career-changing gift, simply by nominating them for one of NIBA’s esteemed broker awards.

The annual awards recognise the top broking talent at a regional and national level with the QBE-sponsored Broker of the Year Award for senior practitioners and the Vero-sponsored Young Professional Broker of the Year Award for our industry’s rising stars aged under 35.

The NIBA awards are the broking profession’s most prestigious. They are independently judged by leaders in the industry and brokers are nominated by their contemporaries. Therefore, winning is true recognition from the industry. Only the very best brokers, with superior technical knowledge, client advocacy and customer service will succeed.

NIBA CEO Dallas Booth says, “The past year has been difficult for many of us and through the hard times inspiring stories have kept us going. Sharing stories of grit and determination in the face of adversity has been cathartic.

“Many risk management professionals have numerous such stories to share and we encourage you to share them with us.

Work that brokers do is essential to the wellbeing of our community and sharing your professional endeavours provides motivation and connection throughout the industry.”

Considering the situation, the awards process and celebrations are going to be different than they were in the pre-COVID world but Booth reveals that the awards planning is fluid, keeping in mind the evolving nature of the pandemic, “We aim to bring everyone together in some capacity to celebrate the wonderful work that insurance intermediaries do.

28 / INSURANCE ADVISER FEBRUARY 2021

“I believe it is time to turn up the volume and recognise great work in the Nominate no w to celebra insurance broking profession and the outstanding te b ro people behind it.” king profess io nals If you are a part 2020 Young Broker of the Year, Kate of the insuran industry in an ce Martin of Marsh said, “If anyone has y capacity and noticed a broker who is a diligent and know a senior or you ng broker wh intelligent worker and they are a real o is doing a wonderful job looking after pleasure to engage with, please do not the needs of their clients, y hesitate to put their name forward for ou are invited to nominate the 2021 NIBA awards.” them for the N IB A a w She added that the boost in ards.

It takes just fi ve minutes. confidence from just being nominated niba.com.au/ is indescribable, “The whole process is html/awards. cfm such a valuable exercise of self-reflection, from writing a personal statement and gathering written references from clients and underwriters to interviewing with a panel of leading brokers. opportunities of their choice valued in “Nominating a great young broker will the tens of thousands of dollars including really provide a fabulous opportunity for international travel where possible. them to celebrate their achievements and There are countless outstanding brokers get excited about their future in the broking worthy of recognition, and NIBA needs profession.” your help to put them forward. So, whether Anyone in the industry can nominate a that’s a mentor, a rising star, or the quiet top broker, and it’ll only take five minutes. overachiever who knows their subject All you have to do is fill in a nomination form matter inside out, if you know of a broker via the links below outlining the broker’s who deserves some official recognition for name, company and contact details, plus five their stellar efforts, NIBA wants to hear reasons you think they’d be a worthy winner. about them.

And we will take it from there.

For full details of broker eligibility, prizes Five regional winners in each award and online nomination forms, visit the NIBA will contest the national titles, which website: niba.com.au/html/awards.cfm are announced each year at the NIBA For any queries about the awards process, Convention. The winners will receive all or eligibility of brokers, please email expenses paid professional development awards@niba.com.au.

“Nominating a great young broker will really provide a fabulous opportunity for them to celebrate their achievements and get excited about their future in the broking profession.”

COMMUNITY / NIBA Mentoring Program

BRINGING THE INDUSTRY TOGETHER

NIBA’s illustrious Mentoring Program is returning in 2021 in a new format.

T

he NIBA Mentoring Program is for young brokers, insurers, and associated professionals across the insurance industry.

The aim of the program is to empower young professionals by partnering them with supportive and motivating industry role models. With their mentor’s guidance, mentees develop focused goals that help them achieve higher levels of performance. The program is also a great experience for mentors, many of whom appreciate the chance to do something meaningful and give back to the industry.

The new hybrid program will begin in February for 12 weeks, ending in May. During this time, there are three structured sessions which all mentors and mentees are required to attend. All participants receive a program handbook which has been designed as a platform to guide you through the program.

The first program for the year will be held around the country with face-to-face workshops in all states where possible.

The program will be held in Queensland, New South Wales, Victoria, Tasmania, South Australia and Western Australia.

Meetings between mentors and mentees are flexible and should be arranged by mutual consent. Mentors and mentees should plan to meet every week for approximately 1 hour during the 12-week program.

As part of moving to a hybrid format, participants will be able to share ideas and knowledge between states and watch key videos of other states’ programs. We hope this also provides an avenue for rural participants to join the program virtually as we livestream from CBDbased venues.

To apply as a mentee: niba.com.au/html/apply-to-be-a-mentee.cfm To apply as a mentor: niba.com.au/html/apply-to-be-a-mentor.cfm

NIBA.COM.AU / 29

FEATURE / Heavy Vehicles and Fleet

30 / INSURANCE ADVISER FEBRUARY 2021

A bumpy ride Extending insurance cover to heavy vehicles and fleet is a particularly fraught sector of the market.

BY NINA HENDY

NIBA.COM.AU / 31

FEATURE / HeavyVehicles and Fleet

B

rokers working with heavy vehicles and fleet clients were dealt a challenging blow in the last year.

On one hand, fleet vehicles were deemed a no-go zone in a bid to stop the spread of COVID-19.

And on the other, heavy vehicles were working overtime as online shopping reached fever pitch due to stay at home orders. The flow-on effect for brokers has been extremely challenging.

CEO of ATL Insurance Group Steve Nichols has witnessed changes as business opportunities for transport operators carrying consumables and wholesale goods increased dramatically with the change in buying behaviour due to restricted

32 / INSURANCE ADVISER FEBRUARY 2021

movement and increased demand for online sales last year.

“This has resulted in a growth in vehicles requiring insurance, increased distances travelled as businesses took on higher value contractors, increases in freight task combinations and variations, and the purchase of higher value equipment,” Nichols says.

He explains that ATL is focused on building ease of transaction by focusing on engaging relationships, market-leading products and a soon-to-be-launched digital delivery channel.

Meanwhile, Fleetsure Managing Director, Sean Rafferty has also noticed a dramatic change to this industry sector on the back

of a shift in spending patterns during COVID-19 from mall retail to home delivery.

As this trend continues, the industry will grapple with high traffic use of larger vehicles in congested commercial and residential areas, which will no doubt bring an increase in accident rates, Rafferty predicts.

The costs of this will start to flow in early to mid-2021, and will be costed into premiums from June onwards. “Brokers have been left explaining the reasons for premium increases over the last couple of years on most classes of a clients’ program, and they’re likely to have the same tough conversations about motor fleet renewals in 2021,” Rafferty says.

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HITTING THE ROAD

Meanwhile, freight delivery via road continues to be the dominant method for over 200-billion tonne-kilometres of goods a year moved around the country, says National Distribution Manager of ATL Insurance Group, Allan Smith.

He has worked in the heavy motor underwriting space for more than 30 years and has seen the industry ebb and flow alongside changes to regulations and trends during that time.

“The importance of the freight and logistics sector to the national economy in

terms of distributing goods, construction materials, retail supplies and general goods is rising as consumer behaviour towards online shopping increases,” Smith says.

“As a vital part of the Australian economy, brokers should look to grow or maintain a healthy percentage of Heavy Motor in their portfolio, especially after big hits to hospitality, tourism and other key industries due to COVID-19.”

CEO of GT Insurance Tony Dodd agrees that the transport sector has evolved significantly, particularly in the past decade.

“This has come about through increased

“The importance of the freight and logistics sector to the national economy in terms of distributing goods, construction materials, retail supplies and general goods is rising as consumer behaviour towards online shopping increases.”

– ALLAN SMITH, NATIONAL DISTRIBUTION MANAGER - ATL INSURANCE GROUP

34 / INSURANCE ADVISER FEBRUARY 2021

regulation, availability of highly effective safety systems and heightened customer expectations. Understanding how these and other circumstances, such as load volumes and business margins, are linking together to form an enhanced view of the business operation is providing an opportunity for further risk assessment,” Dodd says.

And as the industry changes take effect, it is important for insurers to provide ongoing education, review pricing models and enhance product offerings to ensure they’re meeting the needs of the industry, he says.

CHEAP BUSINESS

The good news is that the commercial sector is a short tail class, with underwriting results known very quickly, explains Rafferty.

COVID-19 resulted in a lot of the underwriting market pricing business cheaply off the back of a highly unusual period of low claims, he says.

“While the roads were nearly empty, obviously the claims fell significantly in 2020. Commercial motor has been the only class where premium rates haven’t jumped significantly for the last two quarters,” Rafferty says.

He’s hopeful that 2021 will see a return to more normal economic times and

FEATURE / Heavy Vehicles and Fleet

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FEATURE / HeavyVehicles and Fleet

“Brokers have been left explaining the reasons for premium increases over the last couple of years on most classes of a client’s program, and they’re likely to have the same tough conversations about motor fleet renewals in 2021.”

- SEAN RAFFERTY, MANAGING DIRECTOR - FLEETSURE

usual levels of fleet utilisation. “Insurers will quickly include in their premium pricing the loss costs of the big weather events (particularly hail), and the increasing attritional costs of busier roads and more expensive repairs to vehicles.”

RISKS

Commercial motor in Australia faces issues with driver health, distances they are travelling and the shift to online consumer behaviour, resulting in more trucks on the road driving more frequently, Nichols says.

As a result, there has been an influx of inexperienced drivers leading to negative results that need to be addressed by underwriters.

“We’re asking – how do we provide a pathway for inexperienced drivers to progress to high value vehicle combinations while still maintaining underwriting standards? We have invested a lot of time in this issue and will release our updated, clearer and sensible driving acceptance guidelines in 2021, which makes doing business with us much simpler,” Nichols says.

Case Study A broker provided this example of a claim, but didn’t want to be identified, saying they get a spate of claims where someone has ‘inadvertently’ done this.

SUMMARY OF THE CIRCUMSTANCES: The insured driver was driving the vehicle that was running a bit rough. Whilst at a service station, the insured driver purchased an injector cleaner, as he had heard that this will fix the problem of the vehicle running rough.

The insured driver sprayed the injector cleaner onto the engine, and as well for some reason, decided to add the injector cleaner to the fuel. This caused the engine to blow up, deeming the vehicle a total loss.

OUTCOME: The claim was investigated, and a mechanical engineer appointed, who confirmed the circumstances.

The insured claim was settled as a total loss.

36 / INSURANCE ADVISER FEBRUARY 2021

TOP GEAR

The National Heavy Vehicle Regulator (NHVR) told Insurance Adviser that it prioritised keeping the industry moving through COVID-19 and industry, regulators and governments were still able to progress key initiatives to ensure an efficient, productive and safe and sustainable road freight sector in the post-COVID economic landscape.

The key priority for 2021 is to build on the gain made to safety both on the road and right across the heavy vehicle supply chain, as well as looking at productivity measures to support the industry as it returns to normal operation, explains NHVR Communications Manager Andrew Berkman.

One of the key priorities is promoting the update of more modern, higher productivity vehicles. “The Performance-based Standards Scheme continues to gather momentum as more operators realise the benefits to both safety and productivity these vehicles can deliver,” he says.

Of note for insurers and brokers is that the median age of PBS vehicles is 4.3 years compared with 11 years for prime movers and around 13 years for rigid trucks and trailers.

“What this means is that the PBS fleet fitted with superior safety technologies and is designed to higher level technical standards, creating a safer product.”

This observation aligns with data garnered by the National Transport Commission, which suggests a 46 per cent reduced crash rate can be attributed to the use of PBS-approved heavy vehicles.

“The PBS scheme is something the NHVR takes great pride in. As it matures, we’re seeing more and more how it has already fundamentally changed the way we move freight around this country while delivering significant safety and productivity benefits,” Berkman says.

We may not be able to catch up in the usual way this year, but we are always around to provide insurance solutions for your not for profit clients

Insuring Not for Profits it’s all we do

FEATURE / Agriculture Insurance

WINDS OF CHANGE While the weather continues to be a major factor in agricultural insurance, the sector shows signs of maturing.

BY MARTIN WANLESS

38 / INSURANCE ADVISER FEBRUARY 2021

FEATURE / Agriculture Insurance

C

hangeable extreme weather is becoming an increasingly volatile fact of life for all of us in Australia.

After the bushfires that ravaged and devastated many parts of our country during the ‘black summer’ of 2019-20, we’ve had something of a polar opposite this time around, thanks to the La Niña weather front, which has brought with it lower temperatures and high rainfall.

While we’re all affected by the extreme weather, the farming community across Australia is affected more than most, with the weather having the power to literally make or break a crop season.

“The summer season is the one that brings with it the most risk,” says Joel Wilson, Partner & Insurance Broker at

Austbrokers in Dalby, Queensland.

“Some of the storms you see come through damage sheds, houses and, of course, crops, and it’s something you just can’t control.”

And while some weather events are unpredictable, there’s also the regular, more predictable weather to consider too.

“Frost is the biggest threat to cover against in the west,” says Quinten Lynch, Account Manager at GSK Insurance Brokers, Western Australia.

“A serious frost can wipe out a big portion of your crop, and consequently put you behind the eight ball.”

For farmers, their domestic and business lives are largely entwined, with the farm buildings and land providing both their livelihoods and residence.

NIBA.COM.AU / 39

FEATURE / Agriculture Insurance

Rod Ostrognay, National Product Manager – Rural at QBE, says “The challenge with farm is that it’s so different to any other type of insurance because you are insuring people’s livelihoods as well as their homes. You’re insuring everything.

“You’ve got to consider the domestic home, property and vehicles, as well as the commercial areas – your farm property, farm vehicles, shed contents, tools, fencing, livestock and crops.

There’s so much to consider.”

Underinsurance is a huge issue in many

sectors of insurance, particularly farming.

“The bushfires showed that, unfortunately, many people didn’t insure things or didn’t insure them properly,” says Ostrognay. “When you have a big loss, you can find you’re tens of thousands – or hundreds of thousands – of dollars short of what it costs to replace those items.”

During the 2019/20 bushfire season, claims were estimated to be in excess of $2bn – and it was estimated that 40 per cent of people who were affected were underinsured.

“YOU’VE GOT TO CONSIDER THE DOMESTIC HOME, PROPERTY AND VEHICLES, AS WELL AS THE COMMERCIAL AREAS – YOUR FARM PROPERTY, FARM VEHICLES, SHED CONTENTS, TOOLS, FENCING, LIVESTOCK AND CROPS. THERE’S SO MUCH TO CONSIDER.” ROD OSTROGNAY, NATIONAL PRODUCT MANAGER – RURAL, QBE

40 / INSURANCE ADVISER FEBRUARY 2021

A HOT HARVEST SEASON

This harvest season has been one of the more successful over recent years, with the La Niña weather front providing fertile conditions.

However, fire is always a potential issue at harvest time – and it’s a smart conversation to have with clients when discussing cover for the 2021-22 harvest, as just one fire can cause major problems.

Bearing failure combined with winds and what is still a relatively dry landscape can be a recipe for disaster. And as well as

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FEATURE / Agriculture Insurance

CASE STUDY 1: Hail storm damage results in cash settlement A farm suffered serious damage after a huge hail storm ripped through it, damaging roofs, sheds and outbuildings. A claim for $235,000 was lodged, however an issue arose when the insurer insisted on using out-of-town builders for the repair, which led to a significant price discrepancy between the sum insured and the work that needed to be done.

After a series of negotiations between broker Joel Wilson, the client and insurer, a cash settlement was agreed upon, meaning the farmer could engage local builders to carry out the work.

“As a result of that claim and others like it,” says Wilson, “the insurer has now partnered with a loss adjuster who engages local builders.”

42 / INSURANCE ADVISER FEBRUARY 2021

the spontaneous combustion of haystacks, harvester fires can be devastating.

“Crops, including lupins, canola and chickpeas, can create flammable dusts that will ignite easily, so it’s important to ensure there’s a good maintenance program in place to check things are working properly and cleaned regularly on harvesters,” says Ostrognay.

When it comes to contract harvesting, which will be busier this year than many others, the constant use of the harvesters, and subsequent risks of overheating, is a risk that many insurers are backing away from.

“Anything to do with contract harvesting is really hard to place at the moment,” says Wilson. “There’s a very, very limited number of insurers out there looking to pick those guys up.”

Having good safety processes in place, including inspecting and maintaining equipment, checking local regulations and weather warnings, and having the recommended safety precautions in place can go a long way to reducing the chances of an incident occurring, and minimising the impact should one occur.

2021

YOUNG PROFESSIONAL

BROKER OF THE YEAR

Warren Tickle Memorial Award

Help us recognise and reward a rising star. Accepting nominations for Young Professional Broker of the Year.

Nominate now - It’ll take just 5 minutes. $10,000 in professional development up for grabs.

For full details, and to nominate online, visit:

www.niba.com.au/youngbrokeraward Nominations close 14 March 2021

NIBA and Vero celebrating 32 years of partnership in the Warren Tickle Memorial Award

FEATURE / Agriculture Insurance

CASE STUDY 2: Drift spray scuppers neighbour’s crop A farmer was spraying weeds on his land with insecticide, however it was a windy day and the spray drifted over to a neighbouring crop, causing $170,000 worth of damage.

Under the farmer’s liability insurance, the claim was paid, and the value of the damage covered.

NO MORE ‘SHE’LL BE RIGHT, MATE!’

Farming’s obviously serious business, but there’s a potential misalignment with how the business is being run and the risks it actually faces – and this is another area of opportunity for brokers.

“Many farms have been running in relatively the same way for years,” says Wilson.

“Today, people might have a few employees but they sometimes don’t view what they’re doing as a true ‘business’.”

“They’ve got employees, they need the right insurances, they need management liability, and in the country there’s often an attitude of ‘She’ll be right, mate’. So we need

“ONCE UPON A TIME, MOST OF THE WORK WAS DONE IN-HOUSE BY THE FAMILY, SO IT WASN’T VIEWED AS A REAL NECESSITY TO HAVE WORKERS’ COMP AND LIABILITY, FOR EXAMPLE.” - QUINTEN LYNCH, ACCOUNT MANAGER, GSK INSURANCE BROKERS

44 / INSURANCE ADVISER FEBRUARY 2021

to get in there and try to change and shape that conversation with them.”

For Lynch, personal experience has given him the insight to see that transition first-hand.

“I’m from the farm myself, and everyone saw farming as a lifestyle thing for a long time.

“Once upon a time, most of the work was done in-house by the family, so it wasn’t viewed as a real necessity to have workers’ comp and liability, for example.”

“Today, with employees and temporary workers – travellers and students, for example – you need to have the right things in place. And it’s something the majority of bigger farms, certainly, are increasingly educated about.”

COMMUNITY HUB

COMMUNITY HUB FEBRUARY 2021

The COMMUNITY HUB is your space to showcase your products and services to a specialist audience.

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Tudor Insurance .......................................... 50 Trident Marine Insurance.......................... 51 Marsh & McLennan Agency................... 51 All Parks Insurance....................................... 51 NIBA Mentoring........................................... 53

WANT TO ADVERTISE IN THE INSURANCE ADVISER? If you’re a NIBA member with a product or scheme you’d like to promote to a broker audience in our Community Hub section, please contact Tony May E: tmay@niba.com.au

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BE PART OF NIBA Advertise with the most influential and trusted voice in the Australian intermediated insurance industry ·Insurance Adviser

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WE ARE YOUR VOICE Contact Tony May National Advertising Sales Manager E: tmay@niba.com.au

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WHAT WILL THE PROGRAM DO FOR YOU? For more information and to express interest visit www.niba.com.au/mentoring

NIBA / Events

NIBA EVENTS

STAY UPDATED!

NIBA stages a variety of educational and social events across Australia for the whole intermediated insurance community.

EVENTS UPDATE Mark your calendars to meet, share, learn and grow with your industry peers at NIBA events across the country.

2021 REGULATORY LANDSCAPE EXPLAINED FOR YOUNG PROFESSIONALS – WHY IT MATTERS TO YOU WHEN: Thursday, 11 February 2021, 2.30 – 3.30pm AEDT WHERE: Live webinar NIBA CEO, Dallas Booth and Mark Radford, Principal Lawyer, Radford

Please note that in light of COVID-19, NIBA will continue to follow and implement national and state health authorities’ recommendations.

Lawyers will provide a high level, easy to understand, overview of the Royal Commission for the benefit of Young Professionals.

They will break down, what it was all about, what the commissioner found, key outcomes and some of the recommendations relevant to brokers and why it matters to you.

Check out what’s happening close to yo u and registe r via the events cale ndar at niba.com.a u/ events

2021 NIBA LEADERSHIP TRAINING COURSE

WHEN: Part One, Friday, 5 March 2021 1-3.30pm AEDT | Part Two, Friday 12 March 2021 1-3.30pm AEDT WHERE: Live webinar Part One will cover techniques for leading and engaging a virtual/remote team.

This session will be presented by Michael Kelly, a pitch consultant and leadership communication trainer, media commentator and a leading virtual body language and speech expert.

Part Two will cover techniques for building presence and influencing a virtual team.

The second workshop will be run by John Le Mesurier, an international change management expert who coaches managers in effective leadership of remote and virtual team.

Both parts are each 2.5-hour participatory workshops.

DISPLAY ADVERTISING INDEX – FEBRUARY 2021 Zurich...............................................IFC Vero........................................................5 CGU....................................................... 7 Insurance Advisernet......................9 QPIB.....................................................13 Our Ark advertorial .......................15

Liberty Specialty Markets ...........21 SLE.......................................................23 NOVA .................................................27 NTI....................................................... 33 ATL Insurance .................................35 Community Underwriting...........37

QBE...................................................... 41 NIBA Awards .................................. 43 Ebix..................................................... 45 NIBA Awards ................................455 QPIB................................................ IBC Berkley Insurance.....................OBC

If you’d like to advertise your products and services through NIBA, please contact Tony May today on (02) 9459 4303.

54 / INSURANCE ADVISER FEBRUARY 2021

2021 BROKER

OF THE YEAR

Stephen Ball Memorial Award

Do you know a broker that rises to every challenge?

Accepting nominations for Broker of the Year.

Nominate now - It’ll take just 5 minutes. $20,000 in professional development up for grabs.

For full details, and to nominate online, visit:

www.niba.com.au/brokeroftheyear Nominations close 14 March 2021

Sponsored by

NIBA and QBE are proud to partner in the Stephen Ball Memorial Award

INSURER STRENGTH RATINGS

S&P GLOBAL

INSURER FINANCIAL STRENGTH RATINGS

The following list of S&P Global Ratings insurer financial strength ratings assigned to insurance companies in Australia and New Zealand. Ratings at 7 January, 2021.

Contact: Craig Bennett, S&P Global Ratings Telephone: 03 9631 2197

NEW ZEALAND

RATING

NON-LIFE INSURERS

AUSTRALIA

RATING

NON-LIFE INSURERS AAI Ltd.

A+/POSITIVE

AIG Australia Limited

A/CreditWatch Negative

Allianz Australia Insurance Ltd.

AA-/STABLE

BHP Billiton Marine & General Insurances Pty Ltd. A/STABLE Chubb Insurance Australia Ltd.

AA-/STABLE

Great Lakes Insurance S.E (Australia Branch)

AA-/STABLE

Hallmark General Insurance Co. Ltd.

BBB+/STABLE

Insurance Australia Ltd.

AA-/STABLE

Society of Lloyd's

A+/STABLE

AA Insurance Ltd.

A+/POSITIVE

Medical Insurance Australia Pty Ltd.

A-/STABLE

AIG Insurance New Zealand Ltd.

A/CreditWatch Negative

QBE Insurance (Australia) Ltd.

A+/STABLE

QBE Insurance (International) Ltd.

A+/STABLE

Zurich Australian Insurance Ltd.

A+/POSITIVE

Chubb Insurance New Zealand Ltd.

AA-/STABLE

Hallmark General Insurance Co. Ltd. (NZ Branch) BBB+/STABLE IAG New Zealand Ltd.

AA-/STABLE

Society of Lloyd's

A+/STABLE

Medical Insurance Society Ltd.

A-/POSITIVE

Southern Cross Benefits Ltd.

A/STABLE

Southern Cross Pet Insurance Ltd.

A/STABLE

Teleco Insurance (NZ) Ltd.

BBB+/STABLE

Vero Insurance New Zealand Ltd.

A+/POSITIVE

Vero Liability Insurance Ltd.

A+/POSITIVE

HEALTH INSURERS Southern Cross Medical Care Society

A+/STABLE

NIB NZ Ltd.

A-/STABLE

LENDERS MORTGAGE INSURERS Genworth Financial Mortgage Insurance Pty Ltd. (NZ Branch)

A/NEGATIVE

LIFE INSURERS Asteron Life Ltd.

A+/POSITIVE

Hallmark Life Insurance Co. Ltd. (NZ Branch)

BBB+/STABLE

Medical Life Assurance Society Ltd.

A-/POSITIVE

Westpac Life-NZ-Ltd.

A+/NEGATIVE

Resolution Life New Zealand Ltd.

A-/NEGATIVE

*For the S&P Global Insurer Financial Strength Ratings Definitions visit: https://www.niba.com.au/resource/standardandpoors.pdf Copyright © 2020 S&P. This material is reproduced with the permission of S&P. Reproduction of this the S&P Information in any form is prohibited without S&P’s prior written permission. Neither S&P, its affiliates nor any of their thirdparty licensors: (a) guarantee the accuracy, completeness or availability of the S&P information, or (b) make any warranty, express or implied, as to the results to be obtained by Insurer Financial Strength Ratings or any other person from the use of the S&P information or any other data or information included therein or derived therefrom, or (c) make any express or implied warranties, including any warranty of merchantability or fitness for a particular purpose or use, or (d) shall in any way be liable to Insurer Financial Strength Ratings or any recipient of the S&P information for any inaccuracies, errors, or omissions, regardless of

56 / INSURANCE ADVISER FEBRUARY 2021

LENDERS MORTGAGE INSURERS Genworth Financial Mortgage Insurance Pty Ltd.

A/NEGATIVE

QBE Lenders' Mortgage Insurance Ltd.

A/STABLE

Westpac Lenders Mortgage Insurance Ltd.

A+/CreditWatch Negative

LIFE INSURERS AIA Australia Ltd.

A+/STABLE

AMP Life Ltd.

A-/NEGATIVE

Challenger Life Company Ltd.

A/STABLE

Colonial Mutual Life Assurance Society Ltd. (The) A+/STABLE Hallmark Life Insurance Co. Ltd.

BBB+/STABLE

MetLife Insurance Ltd.

A+/STABLE

Westpac Life Insurance Services Ltd.

A+/STABLE

REINSURERS General Reinsurance Australia Ltd.

AA+/STABLE

General Reinsurance Life Australia Ltd.

AA+/STABLE

Hannover Life Re of Australasia Ltd.

AA-/STABLE

Munich Reinsurance Co. of Australasia Ltd.

AA-/STABLE

RGA Reinsurance Co. of Australia Ltd.

AA-/STABLE

SCOR Global Life Australia Pty Ltd.

AA-/STABLE

Swiss Re Life & Health Australia Ltd.

AA-/NEGATIVE

cause, in the S&P information or for any damages, whether direct or indirect or consequential, punitive or exemplary resulting therefrom.

Ratings are statements of opinion, not statements of fact or recommendations to buy, hold, or sell any securities. S&P Global (Australia) Pty. Ltd. holds Australian financial services licence number 337565 under the Corporations Act 2001. S&P Global credit ratings and related research are not intended for and must not be distributed to any person in Australia other than a wholesale client (as defined in Chapter 7 of the Corporations Act). Ratings are based on information received by Ratings Services. Other divisions of S&P Global may have information that is not available to Ratings Services.

INSURER STRENGTH RATINGS

NEW ZEALAND

BEST’S

FINANCIAL STRENGTH RATINGS

RATING

COMPOSITE Quest Insurance Group Limited

B/STABLE

LIFE, ANNUITY AND ACCIDENT American Income Life Insurance Company (New Zealand Branch)

A/ STABLE

BNZ Life Insurance Limited

A u/NEGATIVE

CIGNA Life Insurance New Zealand Limited

A/STABLE

Co-operative Life Limited

B++/STABLE

DPL Insurance Limited

B++/STABLE

Fidelity Life Assurance Company Limited

A-/STABLE

Foundation Life (NZ) Limited

A-/STABLE

General Reinsurance Life Australia Limited (New Zealand Branch)

A++/STABLE

LIFE, ANNUITY AND ACCIDENT

Kiwi Insurance Limited

A-/STABLE

General Reinsurance Life Australia Ltd.

Lifetime Income Limited

B u/NEGATIVE

Momentum Life Limited

B++/STABLE

Partners Life Limited

A- u/DEVELOPING

Pinnacle Life Limited

B/STABLE

The following list of AM Best Financial Strength Ratings (FSRs) assigned to insurance companies in Australia and New Zealand. Ratings as at 6 January, 2021.

Contact: Scott Ryrie, Co-CEO A. M. Best Asia-Pacific (Singapore) Pte Ltd. Board Member and Commercial Director for Asia Pacific Tel: +65 6303 5007 Email: scott.ryrie@ambest.com

AUSTRALIA

RATING A++/STABLE

PROPERTY/CASUALTY Ansvar Insurance Limited

A-/NEGATIVE

First American Title Insurance Company of Australia Pty Limited

A/STABLE

General Reinsurance Australia Ltd

A++/STABLE

Guild Insurance Limited

A-/STABLE

Aioi Nissay Dowa Insurance Company, Limited (New Zealand Branch)

A+/STABLE

Pacific International Insurance Pty Limited

B++/NEGATIVE

Beneficial Insurance Limited

B++/STABLE

The Hollard Insurance Company Pty Ltd

A-/STABLE

Brightsideco Insurance Limited

B/STABLE

The New India Assurance Company Limited (Australia Branch)

B++/STABLE

Consumer Insurance Services Limited

B+/STABLE

First American Title Insurance Company of Australia Pty Limited (New Zealand Branch)

A/STABLE

FMG Insurance Limited

A/STABLE

General Reinsurance Australia Ltd (New Zealand Branch)

A++/STABLE

Health Services Welfare Society Limited

B+/STABLE

Mitsui Sumitomo Insurance Company Limited (New Zealand Branch)

A+/STABLE

New Zealand Medical Professionals Limited

B+/STABLE

Pacific International Insurance Pty Ltd (New Zealand Branch)

B++/NEGATIVE

Police Health Plan Limited

A-/STABLE

Provident Insurance Corporation Limited

B /STABLE

The Hollard Insurance Company Pty Ltd (New Zealand Branch)

A-/STABLE

The New India Assurance Company Limited (New Zealand Branch)

B++/STABLE

Tokio Marine & Nichido Fire Insurance Company Limited (New Zealand Branch)

A++/STABLE

Tower Insurance Limited

A-/STABLE

Union Medical Benefits Society Limited

A/STABLE

Virginia Surety Company, Inc. (New Zealand Branch)

A/STABLE

Rating Disclosure: Use and Limitations: A Best’s Credit Rating (BCR) is a forward-looking independent and objective opinion regarding an insurer’s, issuer’s, or financial obligation’s relative creditworthiness. The opinion represents a comprehensive analysis consisting of a quantitative and qualitative evaluation of balance sheet strength, operating performance and business profile or, where appropriate, the specific nature and details of a security. Because a BCR is a forward-looking opinion as of the date it is released, it cannot be considered as a fact or guarantee of future credit quality and therefore cannot be described as accurate or inaccurate. A BCR is a relative measure of risk that implies credit quality and is assigned using a scale with a defined population of categories and notches. Entities or obligations assigned the same BCR symbol developed using the same scale, should not be viewed as completely identical in terms of credit quality.

Alternatively, they are alike in category (or notches within a category), but given there is a prescribed progression of categories (and notches) used in assigning the ratings of a much larger population of entities or obligations, the categories (notches) cannot mirror the precise subtleties of risk that are inherent within similarly rated entities or obligations. While a BCR reflects the opinion of A.M. Best Rating Services, Inc. (AMBRS) of relative creditworthiness, it is not an indicator or predictor of defined impairment or default probability with respect to any specific insurer, issuer, or financial obligation. A BCR is not investment advice, nor should it be construed as a consulting or advisory service, as such; it is not intended to be utilised as a recommendation to purchase, hold or terminate any insurance policy, contract, security, or any other financial obligation, nor does it address the suitability of any particular policy or contract for a specific purpose or purchaser. Users of a BCR should not rely on it in making any investment decision; however, if used, the BCR must be considered as only one factor.

Users must make their own evaluation of each investment decision. A BCR opinion is provided on an “as is” basis without any expressed or implied warranty. In addition, a BCR may be changed, suspended, or withdrawn at any time for any reason at the sole discretion of AMBRS.

PROPERTY/CASUALTY

NIBA.COM.AU / 57

INSURANCE JOURNEY / James Skiadas

GAINING NEW INSIGHTS EVERY DAY

The 2020 VIC/TAS Broker of the Year finalist, James Skiadas from IMC Insurance Brokers discusses his career to date, from starting small in the industry to gradually building a business that he is proud of.

“I

stumbled into the industry in 1987 working in both life and general Insurance. Within the first year, I became more interested in the general insurance market and soon after opened my first office, with a very small portfolio of family, friends and clients.

I chose to have a career in this profession because I love a challenge. I have worked with thousands of clients throughout my career from all different fields including finance, hospitality, construction and more, each have allowed me to learn about their operations, which has given me the skills and tools to develop as a risk management professional.

Having a background in finance, the entire subject of insurance resonated with me and grew on me rapidly – my thirst to develop in the industry snowballed.

The thing that makes our profession interesting is that a day in the broking industry is never the same. The risks we manage and the claims we handle differ and surprise us constantly, which allows me to learn and develop as an adviser, even after so many years in the profession.

I believe that in this vocation we learn a new lesson or gain a fresh insight every day.

Even if there isn’t that one ah ha moment and one never really has one big takeaway, there are so many small lessons along the way, which helps one develop in the long run.

My biggest lesson is to learn from everyone’s mistakes, and not wait to make them myself.

I encourage others within the industry to immerse themselves in all areas. From risk assessment and risk management, to claims and the internal ‘guts’ of the business (accounts, management etc).

The only thing I would change about my

PROUDLY SUPPORTING

58 / INSURANCE ADVISER FEBRUARY 2021

career in hindsight is that I would have started much earlier.

My career in this profession has gained a lot from formal and informal mentorship and I believe that learning from someone who has already done the hardyards within the industry will only benefit you.

I have been grateful to have the opportunity to work closely with and share my experience with all broking staff that walk through our door.

I also believe in the Qualified Practising Insurance Broker (QPIB) designation, has contributed immensely to a fulfilling career in the insurance broking profession.

Having the QPIB designation assures

clients that you uphold professional practices and undertake continuous professional development within your business.

I believe personal excellence should be held as the number one priority.

Consistently educating yourself and your staff to ensure they are up-to-date with industry regulations, changes in products and new offerings will benefit each staff member individually and the business as whole.”

QUICK QUESTIONS Tell us something most people do not know about you?

When I was 22, I wrote the ‘complete guide’ on how to buy and import a motor vehicle from anywhere in the world. After about 10 editions, my last version was completed in 2009, I hung up my pen to focus on other projects. You can check it out at importyourcar.com.au.

Favourite food?

A nice eye-fillet steak Favourite film?

O’ Brother, Where Art Thou? – anything by the Coen brothers.

Favourite tipple?

Red wine

Share your insurance journey. Email editor@niba.com.au

“QPIB represents competence and the will to strive for excellence.”

ING IS

U

RA

K

ER

QPIB

S

Apply online at niba.com.au or email NIBA Memberships Manager Audi Witsen – awitsen@niba.com.au

D PRAC IE T F I

IN

QPIB – A STATEMENT OF PROFESSIONALISM

• QUA L

– CAITLIN CARSON, 2019 YOUNG PROFESSIONAL BROKER OF THE YEAR

NCE BR

O

THANK

Y U

Our teams are not only local they are an expert resource readily available to support you From our entire team here at Berkley Insurance Australia, we would like to say a big thank you to our valued brokers for naming us 2020 General Insurer of the Year.

We look forward to continue providing the high quality service you know and love!

Call your local underwriter 1300 800 772

berkleyinaus.com.au