APRIL 2021
NIBA WELCOMES ADAM SQUIRE Meet the new Gallagher Board representative WHILE THE SUN SHINES
A look at cover in the energy sector
LEVELLING THE PLAYING FIELD
Insurance premium funding
UNFAIR CONTRACT TERMS Are now here
WE ARE YOUR VOICE
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.
Insight based on FY20 CGU Business Package Property Cover portfolio data.
CONTENTS April 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.
16
UNFAIR CONTRACT TERMS New laws take effect from 5 April
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.
Cover image: Sarah Braden Photography
22
NIBA WELCOMES ADAM SQUIRE Get to know the new Board Director
NIBA.COM.AU / 3
CONTENTS April 2021
FEATURES
28 INSURANCE FOR THE ENERGY SECTOR
Finally seeing some real change
IN EVERY ISSUE
REFERENCE
NIBA CEO welcome.................................... 6 Representation............................................ 8 Why be a NIBA member?......................... 10
Community Hub ........................................40 Insurer strength ratings ..........................48
NEWS
Industry bulletin........................................ 12
PROFESSIONALISM
IBCCC Tip of the month .......................... 18 What does AFCA consider in a complaint against a broker ......................20
ANALYSIS
34 SET FOR A SHAKE-UP Insurance premium funding
4 / INSURANCE ADVISER APRIL 2021
Westpac case: What is personal advice? What is general advice? .............26
EVENTS
Forthcoming events ..................................27 Event pictorials .......................................... 47
50
CHARTING HIS OWN COURSE
The 2020 Vic/Tas Young Professional Broker of the Year, Patrick Selle has embraced the insurance broking profession with an extraordinary zeal.
CEO / Welcome
NOW IS THE TIME TO TAKE ROYAL COMMISSION REFORMS SERIOUSLY
W
ith Unfair Contract Terms reforms commencing early April 2021, and a number of other reforms taking effect in early October 2021, now is the time for all member principals and all insurance brokers to bring themselves up to speed on the reforms, and how they might impact their business. Some of the reforms – Design and Distribution Obligations (DDO), Anti-Hawking reforms, Deferred Sales Model (abolition of add-on insurance) will affect most if not all insurance brokers in Australia. To properly advise your clients, brokers will need to understand the Unfair Contract Terms reforms, and the new duties of disclosure. Broking firms who provide claims handling services on behalf of the insurer will need to get their ASIC licence amended or get an appointment as an authorised representative of the insurer for claims handling purposes. All of this is important. It is complicated, and difficult. NIBA has provided detailed notes to members on Design and Distribution, Claims Handling and Unfair Contract Terms reforms. We will continue to provide detailed commentaries on the reforms as they are finalised.
A MESSAGE TO MEMBER PRINCIPALS AND OPERATIONS MANAGERS
In many cases, the impact of the reforms will depend very much on the types of policies that are arranged by the broking firm, and the services that are provided to clients in conjunction with the insurance policies (such as premium funding).
I HATE TO SAY THIS, BUT…
I do hate to say this, but it seems to me that each insurance broking firm will need to get their legal adviser to review the policies that are arranged and other services that are provided in order to establish what needs to be done under the Design and Distribution reforms. They will need to advise whether products arranged by your firm are, or are not, caught by DDO. If they are caught, the firm will need to establish procedures which meet DDO obligations. An important aspect of DDO reforms impact advertising and marketing. If the broking firm has products caught by DDO, they will need to get legal advice as to how their
6 / INSURANCE ADVISER APRIL 2021
marketing and advertising will need to be adjusted as a result of the reforms. NIBA can only provide general commentary on these matters, because it will depend on what happens in each firm, and how the firm manages and processes the products and services. It will also be important for all broking firms to get careful legal advice as to how the Claims Handling reforms might impact the business. For broking firms who provide claims support services for and on behalf of the client only, there should be no problems, but if that is not the case the firm will need to carefully review the new obligations and determine the steps needed to comply. NIBA has provided detailed commentary to members in relation to this.
NOW IS THE TIME
Now is the time for all member principals and operations managers to look seriously at the Royal Commission reforms, determine which reforms will have an impact on their business, and work out how the business needs to be changed to comply with the reforms. All insurance brokers need to start to familiarise themselves with the reforms and understand how the reforms could have an impact on the advice they give to clients. I can’t emphasise too strongly: now is the time to take this seriously.
DALLAS BOOTH Chief Executive Officer, NIBA
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NEWS / Representation
WE ARE YOUR VOICE!
There is a lot happening at the present time. The following are the key developments all insurance brokers need to be aware of. As noted in the CEO column, now is the time for all insurance brokers to become familiar with Royal Commission and other reforms which take effect this year.
COVID-19
The Insurance Council of Australia (ICA) has sought leave to appeal to the High Court of Australia in relation to the business interruption test case that was undertaken in the Supreme Court of NSW. The ICA has also commenced a second test case which will examine a number of policy wordings and has provided an update on business interruption matters generally, which is available here: insurancecouncil.com.au/ issues-submissions/bi-test-case 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.
ACCC NORTHERN AUSTRALIA INSURANCE INQUIRY
The 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 and is finalising a formal response to the ACCC report.
FEDERAL
Royal Commission Reforms
Legislation implementing several Royal Commission recommendations passed the Federal Parliament prior to Christmas and
8 / INSURANCE ADVISER APRIL 2021
will take effect during the course of 2021. The key provisions of interest to insurance brokers are as follows: 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. It is important to note that any insurance broker who has authority to make decisions in relation to claims must discuss the matter
with the relevant insurance company and must take steps to either get a claims handling endorsement on their AFS licence or become an authorised representative of the insurer. NIBA has provided detailed information to members in relation to these provisions. Reference Checking and Information Sharing: new provisions require an AFS licence holder to comply with new reference checking and information 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. 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
NEWS / Representation
essentially ban the sale of an insurance product in conjunction with some other product or service. NIBA has been liaising with members to determine areas where exemptions should be given from these reforms. There are a number of areas where insurance has been provided in conjunction with another sale, and the immediate supply of insurance cover provides genuine protection for the consumer. 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.
Design and Distribution Legislation
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. 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.
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. 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/currentinquiries/insurance-inquiry
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 provided a response to ASIC on behalf of members.
NEW SOUTH WALES
NIBA has launched an ESL Hub on the 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.
Major review of workers compensation 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 has met with Counsel advising Justice Robert McDougall, who is conducting the review.
NSW icare Home Warranty Insurance Provider Tender
NSW icare has conducted a tender for the provision of distribution services for the home warranty insurance scheme. The tender outcome saw a reduction in the number of approved distributors. NIBA has expressed strong concern to icare in relation to several aspects of the tender, and at the time of writing was arranging to meet with icare senior executives to discuss the matter.
TASMANIA
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 ICA has released the new 2020 General Insurance Code of Practice, which is available at: codeofpractice.com.au 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. 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.
CONTACT NIBA
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
NIBA.COM.AU / 9
NIBA / Member Benefits
WHY NIBA MATTERS TO ME Members share why NIBA is important to them and the broking industry.
“NIBA to me is an insurance broking advocate and an industry body I am proud to be a part of. They are an association offering personal development and networking opportunities while keeping us up to date on legislation, compliance and the ever-changing regulations within our industry.” KELLY QUALMANN Gallagher 2020 SA/NT Young Professional Broker of the Year
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.
10 / INSURANCE ADVISER APRIL 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
NEWS / Industry Bulletin
CATASTROPHE DECLARED FOR LARGE PARTS OF NSW
T
he Insurance Council of Australia (ICA) has declared a catastrophe for large parts of NSW following the devastating storms and flooding. A coastal trough resulted in heavy rain over the NSW coast, with major flashflooding and riverine flooding. Prime Minister, Scott Morrisson announced that the Federal Government has activated its Disaster Recovery Payment to support those affected by the storms and flooding. He said, “One-off, non-means tested payments are available of $1,000 for eligible adults and $400 for eligible children, who
have been seriously injured, lost their homes or whose homes have been damaged as a direct result of the storms and floods.” ICA CEO, Andrew Hall said, “The insurance industry has made this catastrophe declaration to activate services and support for affected homeowners and businesses and reassure them that their insurer is there to help.” The ICA has confirmed that insurers will continue to monitor the situation in south-east Queensland to determine if a catastrophe declaration is required for that area as well.
Above March 2021: Floods after strong rain and dam overflow into the Hawkesbury River.
INSURANCE BROKERS CODE UPDATE
T
he public consultation for the Insurance Brokers Code of Practice Review is due to close on Friday, 9 April. NIBA has already received a number of submissions from brokers, consumer groups and other relevant stakeholders. Due to recent weather events, including flooding in many parts of NSW and Tropical Cyclone Niran impacting coastal areas of Far North Queensland NIBA will be accepting late submissions to the consultation paper. If you have been impacted by any of these events, or it has simply slipped your mind now is the time to get your submission in and have your voice heard. Following the public consultation process, key stakeholders will be invited to meet with the Independent Reviewer to discuss the proposed changes and feedback received from submissions. After which, the Independent Reviewer will prepare a final report for the NIBA Board of Directors with their recommendations.
NIBA WELCOMES NEW BOARD APPOINTMENT The Board of the National Insurance Brokers Association (NIBA) has welcomed the appointment of Adam Squire of Gallagher as a Director. Squire who is the Head of Claims at Gallagher will replace Vivienne Toll on the NIBA Board. NIBA President Dianne Phelan welcomed Squire and his wealth of global experience to the Board: “I am extremely pleased to welcome Adam to the NIBA Board and look forward to working with him as we continue the important work of representing members, promoting professionalism and fostering a community of trusted advisers.” “ His claims management knowledge
will add a unique skill set to the wealth of experience which already exists around the board table,” said Phelan. NIBA CEO Dallas Booth added that he looks forward to working with Squire on the National Board and related NIBA matters: “Adam is very highly regarded in the Australian intermediated insurance industry, and I am sure he will have a lot to offer the Board, especially considering his background in helping clients with their claims. His contribution to our Board discussions will be very valuable as we continue to address Royal Commission recommendations, regulatory changes, the review in 2022 and other
industry issues and challenges.” Squire said he is delighted to be joining the NIBA Board of Directors: “NIBA is the peak industry body for insurance brokers and plays a vital role in representing brokers and the value they provide to modern day society.” “I am honoured to have the chance to contribute at this level, particularly as insurance brokers face some real challenges in terms of how the profession will evolve and work in the years ahead. Personally, I know I will learn a tremendous amount but I’m also looking forward to being the ‘claims voice’ at the table, given claims advocacy is one of the key roles brokers plays,” he said.
For breaking news and updates curated specially for insurance brokers please visit: insuranceandrisk.com.au/category/news/
12 / INSURANCE ADVISER APRIL 2021
NEWS / Industry Bulletin
NIBA HAS UNVEILED A BRAND-NEW LOOK WEBSITE AND MEMBER PORTAL
T
he National Insurance Brokers Association (NIBA) has unveiled the brand-new look and feel of its website www.niba.com.au. NIBA CEO, Dallas Booth said, “This website has been rebuilt from the ground up, with our members in mind and we really hope it delivers a seamless user experience for you. We are continuing to work on it behind the scenes to bring to you news that will help you stay on top of any government and regulatory updates that affect insurance brokers.” “While we work through the profound impacts of the Royal Commission as well as prepare for the 2022 review, it is very important to us that you are able to successfully navigate and access all the information you need to on our website.” The updated website also features a brand-new Media Hub, chock-full of highly
relevant news articles and updates. The new ‘Dashboard’ allows members to update their details with ease, record and view CPD points, access member-exclusive content, and register for events at special member
rates. For principal members, the Dashboard provides a simple solution to keeping their NIBA membership data up-to-date. Booth said, “We encourage all our members and subscribers to visit the website and experience it for themselves. If you do encounter any issues, or would like to share your feedback, please email info@niba.com.au.”
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NEWS / Industry Bulletin
10TH VERO SME INSURANCE INDEX: UNCERTAIN ECONOMIC CONDITIONS HIGHLIGHT OPPORTUNITY FOR BROKERS
A
year on from the declaration of the pandemic, confidence levels among Australian Small and Medium Enterprises (SMEs) are mixed, but there are signs of a heightened interest in brokers, according to the 2021 Vero SME Insurance Index that surveyed recipients to understand the current business climate, insurance purchasing behaviour, and perceptions of brokers and the insurance industry. Vero Head of Commercial Intermediaries, Anthony Pagano said it wasn’t surprising that the various challenges triggered by COVID-19 had influenced business confidence, but it presented an opportunity for brokers to add value. “Whether your client is feeling confident
or not, businesses are operating in a fragile economic environment and many are facing issues not experienced before, like problems with stock availability, the movement of their goods, changes in their business operations and complications in recruiting and training staff. “It is important brokers understand their clients’ situation, so they can have an open discussion about their insurance choices.” The Index revealed early signs of increasing broker usage, suggesting potential reversal of the declining trend seen in previous years, with 40 per cent of SMEs stating they purchased their last policy through a broker, up from 35 per cent in 2020. The research also highlighted more than half of direct buyers are considering
Key insights from 10 years of the Vero SME Insurance Index
using a broker in the future, continuing an increasing trend over the last few years. Pagano noted the shift in recent years with great service overtaking expert knowledge as the primary reason for SMEs working with their current broker. “Relationships remain important to driving satisfaction and SMEs are continuing to seek proactive updates from their brokers over and above renewing policies and administration. “SMEs have changed, be it through their adoption of broker usage, understanding of insurance implications and purchasing behaviours. So, insurers and brokers alike must continue to evolve to keep up. It’s certainly a challenging time, but I think there’s plenty for us to be excited about.”
Expertise and service go hand in hand
SMEs perceived ease of insurance tasks
Reasons to work with broker:
75%
Collaborative relationships drive SME satisfaction
51% satisfied
24% satisfied
“I haven’t had much to do with my broker in the last 12 months”
“My broker presents me with choices and we make the decision together”
50%
38%
38% 2015
But only
42%
39%
Find Policy wording easy
2021
Expert knowledge and advice
Find Evaluating insurance needs easy
Great service
Stay in contact, provide options so that SMEs feel informed about their insurance choices.
It’s important for brokers to educate SMEs on the complexity of insurance and the need to get professional advice, particularly when it comes to policy wording.
Expertise is no longer enough on its own. It’s important to have a client approach that emphasises both expertise and service.
Tasks linked to satisfied SME clients
Brokers have an important role to play in claims Provide in-depth analysis on options/risk
Check up on business changes
Provide information on regulation changes
Advocate on clients’ behalf
Provide costeffective options
Take the time to understand a client's business. Share information and analysis that helps them feel they have the best solution.
Satisfaction with claims over time: 2019
51%
2019
47%
2020
63%
2020
40%
2021
72%
2021
37%
SMEs are getting more involved in insurance Overall shifts in SME mindset
Satisfied with claim broker clients
Then
Satisfied with claim direct buyers
Now
“I research the insurance needs of the business”
2013
49% agree
2021
60% agree
“I use the internet to research insurance options before buying”
2014
54% agree
2021
62% agree
“I am knowledgeable about business insurance”
2014
35% agree
2021
44% agree
Claims are an important moment of truth for clients, and an opportunity for brokers to demonstrate the support and benefits that they deliver to their clients. SMEs who have had a positive claims experience see more value in their insurance broker.
Those who’ve had a positive claim experience are more likely to say:
Discuss the recommendation and options with the quote. It engages clients and demonstrates expertise and the value of using a broker.
Disclaimer: The information displayed is based on commissioned research involving approximately 14,500 business owners and decision-makers from around Australia. The research was conducted annually from 20122021. AAI Limited ABN 48 005 297 807 trading as Vero Insurance (Vero) has prepared this material for general information purposes only and it should not be used as the basis for decisions in relation to the acquisition or disposal of insurance products or the use of broker services.Vero and its related bodies corporate do not assume or accept any liability whatsoever arising out of or relating to the information. Source:Vero SME Insurance Index 2021
14 / INSURANCE ADVISER APRIL 2021
“My broker supports me during difficult times”
“My broker advocates on my behalf to insurance companies”
Find out more and download the full report at www.vero.com.au/broker Disclaimer: The information displayed is based on commissioned research involving approximately 14,500 business owners and decision-makers from around Australia. The research was conducted annually from 20122021. AAI Limited ABN 48 005 297 807 trading as Vero Insurance (Vero) has prepared this material for general information purposes only and it should not be used as the basis for decisions in relation to the acquisition or disposal of insurance products or the use of broker services.Vero and its related bodies corporate do not assume or accept any liability whatsoever arising out of or relating to the information. Source:Vero SME Insurance Index 2021
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FEATURES / Financial Sector Reform: Royal Commission Response
UNFAIR CONTRACT TERMS CHANGES: AN UPDATE New laws which apply the Unfair Contracts Terms legislation to insurance contracts take effect from 5 April. BY TANAYA DAS
A
contract subject to the Insurance Contracts Act entered into, renewed or varied on or after 5 April 2021, will fall within the purview of the unfair contract terms (UCT) legislation. NIBA CEO, Dallas Booth says, “This is an important insurance law reform, and we strongly recommend all members familiarise themselves with the new laws.”
16 / INSURANCE ADVISER APRIL 2021
Until 5 April 2021, insurance contracts regulated under the Insurance Contracts Act (including both general and life insurance contracts) are excluded from the UCT laws. NIBA’s legal adviser Mark Radford has prepared a detailed note on the operation and impact of the new laws which is available on the member
portal of the updated NIBA website. Booth adds, “As always, it is complicated and the devil is in the detail, but I do believe insurance brokers should aim to develop an understanding of these reforms.” In response to Recommendation 4.7 of the Financial Services Royal Commission, the government has extended the UCT regime in the Australian Securities and
FEATURES / Financial Sector Reform: Royal Commission Response
Investment Commission (ASIC) Act to insurance contracts caught by the new regime are set out in the breakout box below. The UCT regime has the effect of voiding a term in a relevant contract that is declared to be unfair by a court. Radford has cautioned that insurers (and their agents) are subject to a great challenge in trying to amend wordings prior to 5 April 2021 and this will come at a significant cost and risk. “For insurance brokers acting on behalf of a client, this regime is another tool in a consumer’s arsenal to get their claim paid. Insurance brokers will need to have an understanding of how it operates in order to properly assist their clients when appropriate,” he added. The UCT regime will apply to relevant insurance contracts that are entered into, renewed or varied on or after 5 April 2021. This means that insurers will be reviewing and updating wordings prior to the start date where required in order to meet the new requirements.
WHAT CONTRACTS ARE CAUGHT?
Insurance contracts have always been specifically excluded from the UCT regime. The changes extend the UCT protections under the ASIC Act to all insurance contracts covered by the Insurance Contracts Act where the contract is: • a consumer contract or small business contract; • a standard form contract; and • a financial product or a contract for the supply, or possible supply, of services that are financial services. There are specific definitions for each of these categories. You can access the entirety of Mark Radford’s note on this topic on the NIBA website member portal: niba.com.au/2021/06/01/unfaircontract-terms-legislation-andinsurance-contracts/
WHAT ARE UNFAIR TERMS?
Section 12BG(1) of the ASIC Act sets out when a term in a contract is
For insurance brokers, clients will have new rights to challenge terms under such contracts as being unfair. A spokesperson from the Insurance Council of Australia clarifies that ASIC has worked with insurers in 2020 to review home and contents, motor, travel and pet insurance contracts within the UCT legislation framework. And as a result of productive discussion with ASIC, insurers identified and modified policy terms, to ensure compliance ahead of the commencement of the new UCT legislation. In addition to UCT compliance, insurers are taking the opportunity to improve the overall clarity and usefulness of policy documentation for customers. However, Radford has warned that the UCT regime places an additional onus on an insurer to ensure that their insurance contracts are drafted in plain English and clearly identifiable to the insured. If a term is unfair, it may be declared void by a court or tribunal. Although there are currently no penalties for
unfair - if: • it would cause a significant imbalance in the parties’ rights and obligations arising under the contract; and • it is not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term. A term of a contract is presumed not to be reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term, unless that party proves otherwise. This will be a key issue. The Explanatory Memorandum relevantly provides “While it is ultimately a matter for the court to determine whether a term is unfair, many terms in insurance contracts will be reasonably necessary to protect the legitimate interests of the insurer. For example, a term in a life policy within the meaning of the Life Insurance Act 1995 that allows the insurer to unilaterally increase premiums would not be considered unfair if it was used in response to a change in the actuarial pricing of risk required
using an unfair term, depending on the nature of the term and the extent of its use, the invalidation of the term may still have significant consequences. Michael White, Broker Technical Manager at Steadfast believes, based on the claims in triage, that UCT, with one exception, is not going to have a major impact on claims on a day-today basis. However, there could be discrete issues that come up but he does not think that it will be too often. White thinks that the big issue will be cash settlements, “It is common to see claims where insurers (even in large claims) are effectively forcing the insured to accept a cash settlement and the basis of the calculation of the offer does not reflect what the insured can get the work done for.” “It also puts the risk on the insured that the builder will stuff up. On the other hand, there are other situations where the insured is better off taking a cash settlement because they can then go and do whatever they like.”
to underwrite the policy. Similarly, specific terms in standard form contracts may be required for an insurer to obtain reinsurance from a third party or appropriately reflects the underwriting risk accepted by the insurer. Depending on the circumstances of the case, such terms may be reasonably necessary to protect the insurer’s legitimate interests.” • it would cause detriment (whether financial or otherwise) to a party if it were to be applied or relied on. In determining whether a term of a contract is unfair a court may take into account such matters as it thinks relevant, but must take into account the following: • the extent to which the term is transparent; • the contract as a whole. A term is transparent if the term is: • expressed in reasonably plain language; and • legible; and • presented clearly; and • readily available to any party affected by the term.
NIBA.COM.AU / 17
PROFESSIONALISM / IBCCC Tip of the Month
IT IS MUCH MORE THAN LAW AND REGULATION
The plethora of new law and regulation enacted for the financial services sector over the past 50 years could “sink a battleship”; what has it achieved?
T
his question has been discussed for a number of years. It gained more prominence and seriousness from the Report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (see below extract from Interim Report Volume 1, page 290). “3 The future: Regulation 3.1 Change the law? As noted elsewhere in this report, I begin from the premise that breaches of existing law are not prevented by passing some new law that says ‘Do not do that’. And given the existing breadth and complexity of the regulation of the financial services industry, adding any new layer of law or regulation will add a new layer of compliance cost and complexity. That should not be done unless there is a clearly identified advantage. It should be considered recognising that there is every chance that adding a new layer of law and regulation would serve only to distract attention from the very simple ideas that must inform the conduct of financial services entities: • Obey the law. • Do not mislead or deceive. • Be fair. • Provide services that are fit for purpose. • Deliver services with reasonable care and skill. • W hen acting for another, act in the best interests of that other. These ideas are very simple. Their simplicity points firmly towards a
need to simplify the existing law rather than add some new layer of regulation. But the more complicated the law, the easier it is to lose sight of them. The more complicated the law, the easier it is for compliance to be seen as asking ‘Can I do this?’ and answering that question by ticking boxes instead of asking ‘Should I do this? What is the right thing to do?’ And there is every reason to think that the conduct examined in this report has occurred when the only question asked is: ‘Can I?’. The existing law has rightly been described, in at least some respects, as labyrinthine and overly detailed. In the blizzard of provisions, it is too easy to lose sight of those simple ideas that must inform the conduct of financial services entities. It follows that the regulatory framework does not always assist the regulator to impose discipline on entities. Regulatory complexity increases pressure on the regulator’s resources and may allow entities to develop cultures and practices that are unfavourable to compliance. Regulatory complexity affects the conduct of banks and other financial services entities. In particular, it affects how legal requirements are interpreted by and for front line staff. Mr David Cohen, Chief Risk Officer of CBA, observed that the accretion of new legal requirements: has been an additive process
and layer upon layer upon layer is introduced, is absorbed. Rules and policies are set around that new layer. And it is sometimes difficult to distil the very essence of the fundamental obligations out of all of that set of policies, procedures, processes, etc1. In particular, as noted above, regulatory complexity may foster the development of a ‘box-ticking’ approach to compliance, in which entities develop and focus on internal procedures intended to fulfil various complicated legal obligations, not only at the expense of considering the circumstances in each matter on their merits but also at the expense of measuring what is proposed against those simple ideas that must inform the conduct of all entities in the financial services industry.“ Good and bad practice in the insurance industry stem directly from behaviours; the culture of companies and the consequent behaviour of employees. Law plays a role but can never be the best or final answer. Last year, the IBCCC (the independent committee that monitors compliance of the Insurance Brokers Code of Practice (the Code)) adjusted its focus from simple technical legal compliance with the Code to include and prioritise the examination, understanding and focus on good behaviour and its cultural context. It is now undertaking activities designed to help it understand company culture2. In 2021-22, the principal focus of the IBCCC will be to promote better compliance through supporting change
Transcript, David Antony Keith Cohen, 30 May 2017, 2822. The change in focus was discussed in detail in the May 2020 Tip of the Month, which can be accessed at https://insurancebrokerscode.com.au/tip-of-the-month-may-20/
1
2
18 / INSURANCE ADVISER APRIL 2021
PROFESSIONALISM / IBCCC Tip of the Month
in behaviours and culture. The IBCCC’s projects for the upcoming year will be specifically aimed at helping Code subscribers understand their culture and its significance, and to enact meaningful changes that will result in improved practice. As part of its long-term strategy, in 2020 the IBCCC engaged a behavioural scientist to review the 2019 self-reported Code breach data. When viewed through a behavioural science lens, the data revealed behaviours that informed good and poor practices. The findings included useful insights and flagged culture-based issues the IBCCC can address to promote good practice. These findings will help shape the IBCCC’s activities in 2021-22 including its response to the Code review. The 2019 breach data revealed some behaviours that contributed to good practice and deserve broad promotion. As single processes and procedures inevitably fail, good behaviour tended to involve having multiple processes and ‘lines of defence’; the ultimate ‘fall-back’ being random reviews and file audits. Good behaviour was also demonstrated by brokers who endeavoured to understand the root causes of breaches, as did using breaches for learning across an organisation. The findings also highlighted a number of key behavioural biases that can affect brokers and, unwittingly, lead to poor practices. Understanding and addressing these biases with practical suggestions is likely to be an important factor in the IBCCC’s activities in 2021-22. The biases, and some of the ways the IBCCC could respond to them, include: 1. THE HUMAN TENDENCY TO SEE LEGAL MINIMUM REQUIREMENTS AS SOMETHING TO AIM FOR. The advice from our behavioural scientist is that when the law sets a bare minimum for behaviour, this can act as an ‘anchor’. Firms may target the minimum standards, not realising that inevitable policy or procedural failures mean there will be times when they fail to meet them. As a result, the IBCCC is considering reframing the standards, perhaps by providing specific examples of higher ‘good practice’ standards. Brokers would then ‘anchor’
to the higher, aspirational standards, rather than to the legal minimums. As some brokers might be unsure how to operate beyond the basics, specific behaviours could be highlighted as ‘good practice’, such as: • a longer internal standard for policy renewals (i.e. 21 or 28 days instead of the legal minimum of 14); • regular internal training that highlights past breaches and lessons learned; • cancellation in plain language • actual dollar disclosure of brokerage/commissions; • having multiple procedures in place to catch breaches or potential issues; • random internal audits and client file reviews; • a nd, using checklists at renewal time or for new customers. 2. THE POWERFUL HUMAN BIAS TOWARDS INERTIA – STICKING TO THE DEFAULT AND ASSUMING EVERYTHING WILL BE OK UNTIL SOMETHING BAD HAPPENS. Inertia was flagged as a particular issue in the insurance space and, especially, for policy renewals, an area that generated a number of Code breaches. Clients and brokers can regard renewals as a continuation of the status quo, which ignores the fact that Policy Wordings change, as do client needs and circumstances. Brokers may need to be especially careful with renewals to ensure inertia does not cause them to miss key points. Where Policy Wordings have changed, for example, these could be noted explicitly in correspondence rather than left for the client to glean from an updated Product Disclosure Statement. Encouraging brokers to be vigilant about inertia could be an important element of promoting good practice.
The ‘curse of knowledge’ can cause brokers familiar with the industry to lose sight of what a layperson might know. Helping brokers to understand client perspective at every point of the process is vital, whether it be employing plain language to explain Policy terms and conditions or considering what the average person might think is covered by ‘standard cover’ or particular words and expressions. As well as actively addressing this challenge of focusing on culture and behaviour to achieve good practice, the IBCCC will continue its in-depth exploration of the behaviours that drive both good and poor practices. To this end, our behavioural scientist will be commissioned to review the data currently collected in the 2020 Annual Compliance Statement, which will reflect how subscribers handled the impact of COVID-19 and the natural disasters in 2019-20. The IBCCC anticipates that the findings from two years of data will provide further, richer insights into the culture of companies and the consequent behaviours of employees. The broad achievement of Code objectives (for the industry as a whole and individual businesses) requires a broad focus. It is much more than legal compliance, it is about doing whatever it takes to achieve good service. The IBCCC is very encouraged by the initiatives currently being undertaken by the major firms and cluster groups within the insurance broking industry to strive for the highest standards of behaviour and professionalism within the industry. Whilst industry leaders are responsible for driving any change within their organisation, the IBCCC will seek to support these initiatives by providing useful insights based on analysis of annual compliance statements and breach data working in collaboration with NIBA.
Good and bad practice in the insurance industry stem directly from behaviours; the culture of companies and the consequent behaviour of employees. Law plays a role but can never be the best or final answer. NIBA.COM.AU / 19
PROFESSIONALISM / AFCA Case Study
WHAT DOES AFCA CONSIDER IN A COMPLAINT AGAINST AN INTERMEDIARY? In considering whether a broker has acted reasonably, AFCA takes into account the requirements set out in the Insurance Brokers Code of Practice, as well as good industry practice.
Facts
The complainant was a motor car trader who had purchased an insurance policy for its vehicles at the recommendation of the broker. The complainant later lodged claims on this insurance policy for damage sustained by two of its vehicles. The damage had been sustained after the complainant had leased the two courtesy cars to E who had in turn rented them out to customers. However, these claims were denied by the insurer which stated that the policy would only cover ‘Loan Vehicles’ as defined in the policy. At the time of the incident, neither vehicle met this definition as consideration was charged for the use of the vehicles so they were not within the cover for Loan Vehicles.
The Complainant’s Case
The complainant submitted that: • in December 2015, the complainant engaged the broker, dealing with the individual V, to arrange the policies; • the policies were arranged on or around 7 February 2016 and the relevant documents were sent to the complainant; • the vehicles (a 2015 Lexus and a 2014 Hyundai i30) suffered damage on 13 March and 26 May 2016 respectively while allegedly being used under the policies; • the broker was aware of the complainant’s arrangement with E as: o the complainant had mentioned the arrangement with E to V in several conversations between December 2015 and January 2016, before the vehicles were damaged; o an email was sent to the insurer on 16 June 2016 which stated that ‘one
20 / INSURANCE ADVISER APRIL 2021
service (the complainant) offer(s) is providing loan vehicles to repairers to be used as a courtesy vehicle for their customers’. • Hence, the broker had breached its duty of care towards the complainant by failing to recommend an adequate policy which would have mitigated this loss.
The Broker’s Case
The broker submitted that: • the complainant had not informed it of the rental arrangement and that it was not entitled to compensate the complainant for the losses incurred as a result of the two denied claims. The broker submitted a file note dated 22 December 2015 as evidence which merely stated “[J] advises there are four loan vehicles”.
The AFCA decision
AFCA set out its approach to insurance broker disputes: • At law, an insurance broker owes a duty of care when acting on behalf of its client. This includes exercising reasonable care and skill in the performance of its duties. • The standard of care in exercising this duty is that of a competent and experienced broker. • In addition, the broker provides services to its clients under an Australian Financial Services Licence (AFSL). This means it is required to do all things necessary to ensure those services are provided efficiently, honestly and fairly. It also requires the broker to act in the best interests of their customer. [We
BY MARK RADFORD
Principal, Radford Lawyers
note that AFCA did not qualify that the best interest duty under Part 7.7A of the Corporations Act only applies in relation to retail clients under the Act where personal advice is provided]. • In considering whether a broker has acted reasonably, AFCA takes into account the requirements set out in the Insurance Brokers Code of Practice, as well as good industry practice. • The broker will only be liable for the costs incurred by the complainant if: o the broker breached its duty to the complainant, and o the broker’s breach of duty caused the complainant to incur a loss. Based on the provided evidence, AFCA concluded that the email was contradictory to the complainant’s claim that it notified the broker of its rental arrangements. Thus, AFCA decided that: • it did not accept that the broker had breached its duty of care towards the complainant by arranging the policy; • the evidence provided failed to show that the complainant disclosed the specific rental arrangements to the broker when having the policy arranged or prior to the damage; and • the email dated 16 June 2019 refutes the complainant’s claim and the contemporaneous records did not support it either. AFCA stated that the broker had not breached their duty of care towards the complainant as they had exercised reasonable care and skill while arranging the policy. The broker was not required to take any further action and was not liable to compensate the complainant for the loss.
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INTERVIEW / Adam Squire
22 / INSURANCE ADVISER APRIL 2021
INTERVIEW / Adam Squire
NIBA WELCOMES ADAM SQUIRE Get to know Gallagher’s Adam Squire, the latest addition to the National Insurance Brokers Association (NIBA) Board of Directors, who looks forward to bringing his claims voice to the accomplished group. INTERVIEW BY TANAYA DAS
Insurance Adviser: What does your appointment to the NIBA Board mean to you and what do you hope to achieve during your term? Adam Squire: NIBA is the peak industry body for insurance brokers and plays a vital role in representing brokers and the value they provide to modern day society. I am honoured to have the chance to contribute at this level, particularly as insurance brokers face some real challenges in terms of how the profession evolves and works in the years ahead. Personally, I know I will learn a tremendous amount, but I am also looking forward to being the ‘claims voice’ at the table, given claims advocacy is one of the key roles an intermediary plays. IA: You have been at Gallagher for almost a decade, what have you enjoyed most in that time? AS: Time flies when you are having fun. During my time here two things stand out to me; one – Gallagher is a dynamic business and every day is different and a great challenge. I love the fact that I’m never bored. Two – eight years at an organisation gives you plenty of time to
put together a high performing team. I am obviously biased, but our team of claims professionals are fantastic to work with and it has been brilliant building that team.
“I LOVE THE FACT THAT I’M NEVER BORED.” IA: Why is insurance a fascinating career choice to you? AS: There are so many different skills that are needed in insurance that we have fantastic opportunities for people with a very diverse set of skills. From lawyers to actuaries, top class salespeople to wording specialists and claims advocates to underwriters, we have the capacity to utilise a varied range of proficiencies. One is always learning, growing and coming across situations not seen before. It is diverse and dynamic while being present in nearly every single country. As a part of this industry there is very little one cannot achieve. Want to travel (post COVID)? Insurance is your passport.
IA: What have been the highlights of your career so far? AS: There have been many; from becoming London Claims Manager for CGU at 29 through to leading the Gallagher Broking Claims Team through multiple claims catastrophes. However, when I see members of teams that I have been lucky enough to lead, go onto bigger roles or just achieve a personal outcome they didn’t think possible, I get a huge kick out of that. IA: What are some of the greatest challenges you have encountered over the past few years? And what have you been most proud of ? AS: Working in claims you always get challenged by big natural disasters and in the last year we have had our fair share: bushfires; hail storms and COVID-19. Every one of these events were ‘big’ and I am proud of how the team have run at these, always trying to help clients through the stressful times. We made a really smart decision about two years ago to invest in new digital claims technology for clients and that has allowed us to manage these events so much better than we used to.
NIBA.COM.AU / 23
INTERVIEW / Adam Squire
On a very personal level a previous CEO threw an extremely large operational efficiency challenge at me about five years ago. It was probably the biggest work challenge I have ever had but I am pleased to say I succeeded, thanks to the team I work with, and actually ended up enhancing client service as well as significantly improving efficiency. IA: There was much discussion at the Royal Commission about governance and culture. What role do you believe company culture plays in the success of a business? And how has culture differed in the different organisations you have worked within? AS: An organisation’s culture is absolutely critical to its success. Anywhere I have worked that had a fractured culture did not achieve what it should have. Gallagher are well known for being the only insurance broker to have been awarded the Global Ethisphere, as one of the world’s most ethical companies. They’ve held the accolade for 10 years, that’s no accident. Every day we live the ‘The Gallagher Way’ which are a set of shared values Robert Gallagher came up with in 1984. What I love about these values are the fact that they are real and ‘from the heart’ and not just something that is on a ‘corporate to do list’, it is how we do things. IA: What will be your focus over the next 12 months? AS: There will be a million things that I have to do but two are really prominent: At the top of my list is the COVID-19 Business Interruption Claims situation and ensuring Gallagher clients get the best outcome. Secondly, for Gallagher staff, clearing roadblocks, so they can maximise their potential and client outcomes. All this while trying to work out what the post COVID-19 workplace will look like as vaccines do their job. IA: Why is NIBA important to you? AS: Insurance brokers play such a critical role in helping their clients transfer risk using insurance. Without them, modern day economies would struggle to function. Brokers need a strong body to represent their interests and the vital role they play in modern day society; NIBA is that body.
24 / INSURANCE ADVISER APRIL 2021
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ANALYSIS / Westpac case
WHAT IS PERSONAL ADVICE? WHAT IS GENERAL ADVICE?
The Australian Securities and Investment Commission (ASIC) was concerned that Westpac was giving personal advice, without all the obligations that are associated with giving advice in that form.
A
SIC commenced civil penalty proceedings against Westpac on 22 December 2016, alleging that Westpac provided personal financial product advice to customers and that through this conduct, the companies breached their general licensing obligation to act honestly, efficiently and fairly in section 912A(1)(a) of the Corporations Act. The alleged conduct was with respect to two telephone campaigns by Westpac which recommended that customers roll out of their other superannuation funds into a Westpac-related superannuation account. As a result of the campaigns, Westpac increased its funds under management by almost $650 million between 1 January 2013 and 16 September 2016. On 21 December 2018, the Federal Court initially found that Westpac breached the Corporations Act but that ASIC did not make out its case that personal advice was provided. This was appealed and on 28 October 2019, the Full Court of the Federal Court of Australia reversed the decision at first instance and unanimously found that personal advice had been given and upheld the decision that Westpac had breached s912A(1)(a). The Court concluded that in the circumstances, a reasonable person standing in the shoes of the customers might expect the callers to have considered one or more of the person’s objectives, financial situation and needs in making the recommendation. The Court also considered that the efficient, honest and fair general licensing condition had been breached on the basis “It could hardly be seen to be fair, or to be providing financial product advice fairly, or efficiently, honestly and fairly, to set out for one’s own interests to seek to influence a
26 / INSURANCE ADVISER APRIL 2021
customer to make a decision on advice of a general character when such decision can only prudently be made having regard to information personal to the customer. For one’s own interests, one is advising generally (on this hypothesis) to bring about a result which may not be in the interests of the customer. The general advice is given to reinforce an assumption that fewer fees (in number) will mean less fees (in amount). There was a degree of calculated sharpness about the practice adopted in the QM Framework”. Chief Justice Allsop also noted that perhaps Westpac could have avoided the above conclusion and result by the callers ensuring that the customers had the opportunity to consider their own positions and, having done so, later communicate an acceptance, if they wished. This was, however, not the intended model of the engagement. “Closing” was to take place, if at all possible, on the call over the phone.” On 24 April 2020, the High Court granted Westpac Special Leave to appeal the decision of the Full Court and the appeal was heard by the High Court on 7 and 8 October 2020. The High Court unanimously concluded that Westpac provided personal financial product advice in calls made to customers and thus breached financial services laws, including the requirement to act in their clients’ best interests and the s912A(1)(a) requirement to act honestly, efficiently and fairly. The matter will now return to the Federal Court for a hearing on relief on a date to be advised. At that hearing, among other things, ASIC will seek orders for pecuniary penalties in relation to Westpac’s conduct.
BY MARK RADFORD
Principal, Radford Lawyers
What should brokers do? Any insurance broking firm that is operating under a general advice model needs to pay careful attention to this decision. Indeed, it is probably relevant to say that every insurance broking firm should now seriously consider whether they wish to consider working under a general advice model (where that is the case) or whether they prefer to work under a personal advice model. Broking firms that wish to continue to operate under a general advice model need to take careful steps to review how matters are discussed with clients, and how information is provided to clients. Most likely it will be important to have your legal adviser review these matters, in order to ensure the firm is not giving personal advice, as Westpac was found to have been doing. Broking firms that operate under a personal advice model, or who wish to do so, must ensure that the personal advice obligations in the Corporations Act are being fully met when doing so. Again, this will most likely require a review by an experienced compliance professional or a legal adviser to ensure all appropriate steps are being taken at all times. IMPORTANT NOTICE This article is designed to provide helpful general guidance on some key issues relevant to this topic. It should not be relied on as legal advice. It does not cover everything that may be relevant to you and does not take into account your particular circumstances. It is only current as at the date of release. You must ensure that you seek appropriate professional advice in relation to this topic as well as to the currency, accuracy and relevance of this material for you.
CLIENTS OF TOMORROW
A NIBA BROKERS’ GUIDE ISSUE 4 – APRIL 2021
CONTENTS ISSUE 4 FEATURES 4 A Path to Growth 6
Caring About Sharing
8
Back to the Future
10 The Age of Opportunity
The NIBA Broker Guides are brought to you through a partnership of Allianz and NIBA. We hope the knowledge of our subject matter experts, coupled with Allianz’s industry expertise, helps you and your clients prepare for the future. We welcome ideas for future subjects - please email your suggestions to editor@niba.com.au. 2
In the fourth edition of A NIBA Brokers’ Guide, our subject matter experts help brokers leverage opportunities now and into the future by identifying emerging risks, highlighting growing sectors and examining future generations of clientele.
WELCOME
For many, the past 12 months has been the most uncertain and unsettling period of their life. In fact, the 2021 Allianz Risk Barometer1 was dominated by the global pandemic, with issues relating to business interruption, the outbreak and cyber incidents keeping company leaders awake at night. The outbreak of COVID-19 has taught us all a lot, but for brokers the lesson is critical – in order to deliver value to clients today, and into the future, the central conversation must transcend individual risk and focus on business continuity. Brokers ultimately have a choice, do they want to be a service provider, or do they want to help their clients understand risk, uncertainty and the future? Advising on risk transfer may have been sufficient in the past, but our experts say brokers are now expected to help businesses improve their ability to recover in the event of any loss or damage – insurance, while critical, is just one aspect of this.
DALLAS BOOTH Chief Executive Officer, NIBA
GLEN DRINNAN, Acting Chief General Manager Commercial, Allianz
Long before disruption brought on by COVID-19, the sharing economy had been growing exponentially. Now, thanks to the pandemic, it’s likely we’ll see the number of people working and earning money in non-traditional ways increase even further. And it’s not just millennials or Gen Zs, everyone is looking for flexibility in the way they work. For brokers, this is an opportunity to evaluate and educate their clients about the new risks they may be exposed to, without them even realising. As we consider the future of work, we must also explore the behaviours and attitudes of future generations of clientele. Their wants and needs do and will differ from those that came before them – brokers will need to provide expertise and knowledge via digital platforms, while aligning themselves to social causes, our experts say. Finally, it would be remiss to consider the future, without considering those that have lived through our past. In 2011, the Productivity Commission predicted that 3.5 million Australians will be accessing aged care services every year by 2050, requiring a workforce of almost one million direct care workers2. Our experts say there are a lot of opportunities from a broking perspective – there will be requirements for specialist professional indemnity policies for those consultants working with this growing demographic. We hope you find this a relevant and interesting read. 1 https://www.agcs.allianz.com/news-and-insights/reports/allianz-risk-barometer.html 2 https://www.pc.gov.au/inquiries/completed/aged-care/report
3
A PATH TO GROWTH
generations of clients are more nuanced than merely targeting areas of business that are expanding and reducing exposure to those contracting. “While we’ve identified the COVID-trio as being uppermost in the minds of most business leaders, the gamut of risk remains,” says James Stack, Pacific Distribution Director for AGCS. Stack says the central conversation brokers must have to deliver value to their clients today and into the future needs to transcend individual risks and focus on business continuity.
Leading demographer Bernard Salt, futurist Gihan Perera and Allianz Global Corporate & Specialty’s James Stack say the broking industry has a unique opportunity to position itself to forge new paths, ways of working and enhance its role with clients as a true partner in risk. Michelle Dunner reports. The 2021 Allianz Risk Barometer1 was dominated by the global pandemic with issues around business interruption, the outbreak and cyber incidents keeping company leaders up at night – dubbed the ‘COVID-trio’. While Australia’s economic recovery from a year like no other seems to be more rapid than many other countries, there are clear winners and losers in the business arena. But the implications for brokers in looking to attract future 1 https://www.agcs.allianz.com/news-and-insights/reports/allianz-risk-barometer.html
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“If COVID and the other major issues we saw last year, including bushfires and floods have taught us anything it’s the need for a working, living business continuity plan (BCP). There’s been a lot of talk about business disruption, supply chain issues, ‘near-shoring’, but it always comes back to having a robust BCP and that’s where brokers really can help their clients. “If the focus for brokers is to attract new generations of clients, it’s more than looking at individual industries. The broker today, tomorrow and into the future has to go beyond advising on risk transfer and help businesses with their ability to recover. Insurance, while a critical component, is just one aspect of that.” EXPANSION AND CONTRACTION At the 2020 NIBA conference, Bernard Salt identified healthcare, technology, logistics, high-end manufacturing and agribusiness as having the highest growth potential.
The broking industry has a unique opportunity to position itself to forge new paths, ways of working and enhance its role with clients as a true partner in risk. “While those five industries still hold true, if I was giving my conference address today, I’d be leading with home furnishings and home technology businesses,” he says. Salt says this is driven by ‘VESPAs’. “The acronym stands for ‘virus escapees seeking provincial Australia’. It’s a movement of people scootering out of Melbourne and Sydney looking for escape to a sea change or a tree change. We saw that 20 years ago led by downshifting retirees but VESPA takes that theme and injects youth and energy into it. People relocate because they can now take their jobs with them, particularly into what I call the ‘Goldilocks zone’ within 120km of the CBDs. “These are people who may need to get to the city once a week but are now focused on lifestyle. There are also people moving who are taking their businesses with them, to meet the demand for local services. For me, insurance agents should see a lot of opportunity unlocked with this movement; it’s about running with the current, reading the trends and looking to capitalise. If you’re waiting for everything to return to normal it may well be a death knell.” If brokers have traditionally focused on businesses impacted by industry contraction, Salt advises them to “look laterally” to reap the advantages of the demographic shift exemplified by VESPAs. “Rather than, say, a hospitality business, which may or may not come back, look at the suppliers of appliances, furniture, technology contractors, tradies involved in building improvements. “But even with hospitality clients, there is a potential role for brokers in helping them rethink their business.” Brokers can use the PESTLE analysis, which is a framework used to monitor the macro-environmental factors that may have a profound impact on an organisation’s performance, to help them accelerate the “rethinking” process. Futurist Gihan Perera says it’s an optimal tool looking at political, economic, social, technological, legal and environmental factors. “Brokers should first take a step back,” Perera believes. “If they used PESTLE to look at their own businesses, to see what’s happening in the insurance industry, the political
KEY CONSIDERATIONS FOR BROKERS • Have conversations with your clients that transcend individual risks and focus on business continuity. • Acknowledge that insurance is just one component of enhancing the ability of a business to recover. • Recognise that your client may no longer be local – you can pick up new business without having to shift yourself. • Build a social media presence and engage your target audience online. If you don’t have the skills to do so yourself, subcontract someone to deliver engaging messages to potential clients. • Be aware that in the future you may not be competing with another broker to attract clients. Be prepared that apps, online software and other disruptors may impact your client base.
and economic changes, the new technologies available, they can then have a greater awareness of how to do that for their clients. Ultimately, all brokers can choose whether they want to be a service provider or go further and help their clients understand about more than insurance products, but about risk, uncertainty and the future.” Perera says to attract future generations of clients, or indeed continue to deliver value for existing clients, “Brokers need to be closer to clients and customers and understand their priorities have changed. Technology means even if you’re a small broker it doesn’t mean you can’t compete with the big guys. It’s all about going beyond the transactional; most businesses don’t think about risk in the same way as brokers and you need to understand their environment. Run an online webinar, a client loyalty event, educate your clients, build the relationships by bringing your clients together so they can network with each other. “People have problems they want solved and help with goals they aspire to.” Perera suggests brokers carefully consider what’s in their wheelhouse that can help their clients solve problems and reach goals. He says, those brokers that do, can feel confident about their future.
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CARING ABOUT SHARING
The sharing economy – think Uber and Airbnb – has grown exponentially over the past decade. However, Urtzi Grau, Jim Minifie and Allianz’s Philip Heath warn that with new business models come new risks – Martin Wanless investigates. Traditionally, brokers could look at insurance rather simply. On one hand, there were personal lines, on the other were a vast array of business-related insurances. The same client may well have needed both, and indeed from a clientrelationship perspective, it often paid to help ensure the client’s full range of risk was covered. Over recent years, however, those two areas have begun to overlap. Thanks to the connectivity enabled by the internet, and the growth of opportunity that’s followed, we’ve seen the rise of the sharing economy, in which people use personal possessions – from a hammer to a holiday home – to earn a few extra dollars. NEW BUSINESS MODELS, NEW RISKS When we talk about the sharing economy, the best examples are the likes of Airbnb, Uber and Airtasker. Whether you want to ‘rent’ out your home, car or tools to someone else, you can feasibly do so in a matter of minutes, thanks to a third party facilitating the transaction. Urtzi Grau, Director of the Master of Research and Director of the Master of Architecture at the School of Architecture at UTS, and co-author of the Future of Living1 report, commissioned by Allianz in partnership with UTS, says “These platforms are basically 10 years old, so they’re still extremely new. “There’s been two models of backlash – one a rejection of some of these models by some elements of society, and another in terms of attempting to understand and regulate these models of business, and trying to figure out how to do it well.”
When new business models emerge quickly, it presents challenges to all concerned – as we’ve witnessed with restrictions on the number of Airbnb properties in some areas, and restrictions on the presence of Uber in others. “Even the bite-sized transactions you find on sharing platforms such as Airbnb can have big implications for risk,” says Jim Minifie, former Productivity Growth Program Director at the Grattan Institute and current visiting fellow of the Committee for Economic Development of Australia, and author of Peer-to-Peer Pressure: Policy for the Sharing Economy2. “Hosts and guests are usually well-behaved, but things can go wrong for them or for third parties, whether it’s injury, property damage or theft. Not surprisingly, they and insurers have been keenly interested in who bears the costs and risks of the sharing economy.” ATTENTION NEEDED “It’s an incredibly complicated area of insurance,” says Philip Heath, General Manager of Consumer and SME/ Farm Platform Solutions at Allianz. “Airbnb and Uber are good examples of where you’re using a domestic item normally used for personal use, for business use. “On most private domestic policies, you’ll have exclusions or limitations as to how you use that asset for business.”
“Even the bite-sized transactions you find on sharing platforms such as Airbnb can have big implications for risk.”
1 https://www.allianz.com.au/aalaus/aalaus.nsf/docs/future-of-living-report/$file/Allianz_The_Future_of_Living_FINAL.pdf 2 https://grattan.edu.au/wp-content/uploads/2016/04/871-Peer-to-peer-pressure.pdf
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“There’s significant risk in terms of damage, as well as liability for injury to third parties.” Similar risks come hand-in-hand with Uber. Given a vehicle will be on the road for business, a client will need more than the usual domestic cover, as they’re exposing themselves to commercial risk, like loss of business income and again, higher liability exposure.
KEY CONSIDERATIONS FOR BROKERS
THE EVOLUTION OF THE SHARING ECONOMY
• T he demand to work and consume products and services in new ways is growing. Ask your clients whether they’re participants of the sharing economy.
The rise in popularity of different ways of working is only going to grow – and, thanks to COVID-19, it’s likely we’ll see the number of people working in non-traditional ways increase.
• I f your clients are using their personal items to generate revenue, they may need to re-evaluate their insurance needs.
“It’s not just millennials or Gen Zs,” says Heath. “Everyone wants that flexibility in the way they work. You’ve got the technology that can enable it, and you’ve got the increased demand from small businesses and householders who actually want to use the service.” And that demand will only see flexible ways of working increase.
• E nsure your clients are aware that most private domestic policies have exclusions or limitations as to how assets are used for business.
Aside from growth, however, what else does the future of the sharing economy hold? One evolution is a collective approach to construction, for example. “We’ve been researching a series of collectives that operate at a smaller scale,” says Grau. “For example, The Commons in Melbourne. Basically, people have used the sharing economy concept to cut the developer out of building a building. “A group of people bring that kickstart thinking; everyone buys into the building and they’re the developer – they operate and make decisions over the design and construction, for example.
• C lients may be under the impression that the sites they trade through offer adequate cover. You have an important role to play in encouraging them to read the policies so they can determine whether it is right for them.
“It has some major insurance implications, but it’s another example of how technology is changing the way things are done.” It’s another to add to the brokers’ watchlist – and another example of the new risks your clients are potentially being exposed to, sometimes without even realising it.
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BACK TO THE FUTURE Millennials and Gen Zs want more from life than previous generations may have – however, millennial broker Kate Martin and Allianz’s Pierre De Villiers agree that it doesn’t mean it’s all new. In fact, social commentators Claire Madden and Katie Iles reveal that due to the pandemic, some of their values are more in keeping with a post-war generation – Steph Wanless reports.
Account Executive at Marsh, and NIBA’s 2020 Young Professional Broker of the Year.
When working with a multitude of different generations every day, it’s important to understand how they operate: how they think, how they work, their motivators and, crucially, how best to work with them.
“We have a focus on maintaining, creating and curating brands – not just the brand of the company we might be employed by, but our personal brand too.”
The millennial generation, which attracted a few raised eyebrows when entering the workplace, is now a dominant sector of the global workforce. Born between January 1983 and December 1994, they account for more than 40 per cent of the workforce1 – and 70 per cent of them have or want to own their own business2. Following them are Gen Z – born between January 1995 and December 2002, and the first generation that in its entirety are digital natives1. While millennials and Gen Zs – like generations that came before them – have a different context, life experience, priorities and motivators, it’s important not to pigeonhole them as something they’re not. “Millennials and the younger generations coming through aren’t a completely foreign species,” says Kate Martin,
When it comes to connecting with younger generations as an insurance broker, it’s important to align yourself with social causes you care about – and demonstrate your commitment to helping make the world a better place.
“We are still driven by doing the very best job we can.” Due to the consistent presence of digital and hyperconnectivity, Martin says there’s a huge understanding of – and value placed on – brand.
THE IMPORTANCE OF CAUSE That sense of brand is driven in a major way by an alignment to social causes. “In years gone by, a broker would be able to add value by knowing all about the product and educating the customer,” says Pierre De Villiers, General Manager of Allianz’s People Centre of Expertise. “That’s still important, but for millennials and Gen Zs it’s more about what’s beyond the product. A brand saying ‘we’re the best quality’ or ‘we’re the best value for money’ isn’t going to cut it anymore. People buy into the story behind the brand and what it stands for, not just the product.” Katie Iles and her colleague Claire Madden researched Gen Zs for the book Hello Gen Z: Engaging the Generation of Post-Millennials, and found that cause and purpose are hugely important for that demographic. “This generation is strongly driven by altruism,” says Iles. “They want their life to mean something – they want to make a lasting contribution. That’s going to inform their choices. They want to feel as if they’re making a positive contribution every day.” CONNECTING WITH YOUNGER GENERATIONS When it comes to connecting with younger generations as an insurance broker, it’s important to align yourself with social causes you care about – and demonstrate your
1 https://www2.deloitte.com/content/dam/Deloitte/global/Documents/About-Deloitte/deloitte-2019-millennial-survey.pdf 2 Hays Australia. 2013, Hays Gen Y and the world of work
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commitment to helping make the world a better place. This will build your brand story and your credibility as a business worth dealing with. In addition, you need to know about the beliefs and causes the insurer supports. Communicating these things consistently and digitally will be hugely beneficial in connecting with younger clients. “Here at Allianz, we have a long-standing relationship with the Paralympics and are focussing on creating better access to our products and services for people with disabilities. Globally we aim to be a leader in climate change action too,” says De Villiers. “We invest in these causes because we believe in them and they are deeply important to our customers and our people around the globe.” Hand in hand with the right company and the right policy, however, comes the need for knowledge. There is a thirst for information around the risks people are exposed to, says Martin. “Younger clients are reaching out and wanting more information. They want expertise and knowledge via digital platforms, and then they want one-on-one conversations.” Positioning insurance as something that helps maintain and facilitate the lifestyle they’ve created puts it into meaningful terms, says Iles. THE COVID IMPACT For all of us, the world changed dramatically last year – things we’d taken for granted disappeared in an instant, and we all had to re-evaluate our businesses, our approaches and our outlooks.
For younger millennials and Gen Z in particular, the COVID impact resulted in some interesting changes in attitudes. “This generation has gone from having a total, clear prescription of their future to the pandemic affecting their home, education, work, income and/or social life,” says Iles. “It’s forced them to re-evaluate the world, and what we’re seeing now are values, attitudes and outlooks that are more in line with the generations that emerged from the Great War and Depression. “There’s a greater value now for saving, security and stability than there ever was – Gen Zs are now starting to use the same language as 85-year-olds.” From an insurance perspective, this means there’s never been a better time to connect with Gen Zs.
TIPS FOR WORKING WITH MILLENNIALS AND GEN ZS • M illennials are beginning to turn 40, so some of their characteristics over the coming years may change. • C ause and purpose are important to millennials and Gen Zs – ensure you know the causes insurers are backing. • C lients will be attracted to you if your beliefs are aligned. • T he pandemic has changed attitudes, with security and stability now hugely valuable and desirable for Gen Zs.
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THE AGE OF OPPORTUNITY The Productivity Commission has predicted that by 2050, Australia will require a workforce of almost one million direct care workers to support our ageing population. Tiffany Eastland speaks to Professor Peter McDonald AM and Allianz’s Peter Button about ensuring this growing sector, and those associated, have adequate professional risk cover. According to the Australian Institute of Health and Welfare, Australia’s older generation (those aged 65 and over) continues to grow and is projected to more than double by 20571. Peter McDonald AM, an Honorary Professor of Demography at The University of Melbourne, and Chief Investigator at the ARC Centre of Excellence in Population Ageing Research (CEPAR), says for the past 45 years, the Australian fertility rate has fluctuated between 1.7 and 2.0 births per woman. “This has driven Australia’s population ageing along with considerably lower mortality since the 1970s,” he explains. In fact, according to Professor McDonald, expectations of life in Australia are among the highest in the world. McDonald says the 80+ group presents the main challenges and is the fastest growing of all age groups. “For the 80+ age group, the major considerations are health care and aged care. The Australian health system is excellent but becomes increasingly expensive to run as new drugs and new procedures become available that make the lives of persons aged 80+ more comfortable.” Professor McDonald says the aged care sector is a disaster – read the Royal Commission findings2. In 2011, the Productivity Commission predicted that 3.5 million Australians will be accessing aged care services every year by 20503. Peter Button, Head of Financial Lines at Allianz, says the increase in the number of people providing consulting services within this sector, will increase the demand for professional indemnity (PI) insurance.
1 https://www.aihw.gov.au/reports-data/population-groups/older-people/overview 2 https://agedcare.royalcommission.gov.au 3 https://www.pc.gov.au/inquiries/completed/aged-care/report
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“Some independent or smaller aged care operators lack the ability to adequately facilitate insurance for themselves,” he adds. Looking beyond consultants working in the aged care sector specifically, Peter identifies an increase in demand for accountancy, financial and legal advice, driven by the ageing population. For example, Peter believes we will see the older demographic wanting to potentially draw down on the equity in their home, and mortgage brokers subsequently requiring cover to facilitate that. “There will be requirements for specialist PI policies for those consultants if they don’t already have them.” In turning his attention to the construction environment, Peter identifies an opportunity for brokers to provide risk advisory to those residential developers diversifying their portfolio to encompass purpose-built aged care facilities and retirement communities. Peter says there are a myriad of risks emerging from these communities, “From a PI perspective, there’s the initial design and construction of the community. Then there’s the ongoing management of the retirement community from both a care and financial perspective.” Peter concludes that there are a lot of opportunities from a broking perspective. However, he cautions brokers to partner with an insurer who is prepared to cover the services their client provides, and ensure the cover adequately meets their client’s exposure.
KEY CONSIDERATIONS FOR BROKERS • Seek opportunities to provide risk advice to independent or smaller aged care operators. • Consider how you can provide value to financial consultants offering unique services to our ageing population. • Highlight the challenges and risks that property developers face when entering the aged care category. • Promote your broking services via related associations and institutions.
NIBA GUIDES Member Helpline: Tel: 02 9459 4300 niba@niba.com.au www.niba.com.au National Insurance Brokers Association Level 11, 20 Berry Street North Sydney NSW 2060 Allianz Australia Insurance Limited Level 20, 2 Market Street Sydney NSW 2000 For the latest product news and information from Allianz, visit www.allianzengage.com.au/nibabrokerguide and connect with us on Linkedin.com/showcase/AllianzBrokerandAgencyAU
CPD ENTITLEMENT NIBA Members can gain ½ a point per hour engaged in reading the substantive content of an issue of A NIBA Brokers’ Guide. For more information and to download a CPD reading record sheet, visit niba.com.au/unstructured-cpd *Members can claim a maximum of 7.5 points annually for unstructured training (professional reading and individual research activities)
Allianz and NIBA gives no warranty and makes no representation that the information contained in this publication is, and will remain, suitable for any purpose or free from error. To the extent permitted by law, Allianz and NIBA excludes responsibility and liability in respect of any loss arising in any way (including by way of negligence) from reliance on the general information contained in this publication or otherwise in connection with it. The contents of this guide are protected by copyright. © Allianz Australia Insurance Limited and National Insurance Brokers Association 2021.
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NIBA / Events
NIBA EVENTS
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 CONSTRUCTION CLAIMS | WHERE ARE WE NOW? – PRESENTED BY PROCLAIM
We are proud to showcase the following national webinars and invite you to join us.
WHEN: Tuesday, 20 April 2021 TIME: 12.30pm – 1.30pm WHERE: Live webinar This webinar will cover current public liability trends that we are seeing below and above deductible. Including claims settled without going to litigation, as well as what precedents are currently being set by court decisions and how they will impact an insured’s daily operations. In a hard market, immediate and comprehensive data insights on your risk is in invaluable. Identification of trends through easy to understand and visually striking data presentation tools has the power to reshape and empower your risk response and management.
Check out what’s happening close to yo u and registe r via the events cale ndar at niba.com.a u/ events thrive through challenges and trauma. • Gaining focus and clarity around purpose and direction. • Getting into positive and permanent action. An opportunity to reflect and explore what it means to live your best life.
Please note that in light of COVID-19, NIBA will continue to follow and implement national and state health authorities’ recommendations.
2021 LIABILITY TRENDS – PRESENTED BY PROCLAIM
STAY UPDATED!
2021 F.O.C.U.S – MINDSET, WELLBEING AND SUCCESS WORKSHOP – PART 1
WHEN: Friday, 30 April 2021 TIME: 1.00pm – 2.00pm WHERE: Live Webinar Andrew Jobling returns to NIBA in 2021 and is joined by author/speaker/ coach Deborah Stathis partnering as a dynamic team to present on individual empowerment whilst focusing on the following: • Building resilience and managing stress. • Developing and maintaining relationships and connections with yourself as well as others. • Learning strategies to overcome and
WHEN: Tuesday, 11 May 2021 TIME: 12.30pm – 1.30pm WHERE: Live Webinar Join us for this informative session, where we discuss the ramifications of the current claims climate and how best to contain your claims from blowing out of control. We will look at two significant Court of Appeal cases which have also had an impact on daily operations: 1. Contractors and Vicarious Liability – ANM Building Services Pty Ltd (de-registered) v Brett Harford. 2. Occupation Certificates – Impact of Kur-ring-gai Council v Chan [2017] NSWCA 226 Coupled with the hardened insurance market, this webinar is not to be missed.
DISPLAY ADVERTISING INDEX – APRIL 2021 CGU..................................................... IFC Vero............................................................5 Zurich........................................................7 Brooklyn.................................................. 11 Agile Underwriting............................ 13
Focusnet................................................. 15 NOVA Underwriting.......................... 21 Community Broker Network......... 25 Ebix.......................................................... 31 Technosoft Solutions........................ 33
Premium Funding.............................. 37 UAC.........................................................39 NIBA Mentoring.............................. IBC Allianz............................................... OBC
If you’d like to advertise your products and services through NIBA, please contact Tony May today on (02) 9459 4303.
NIBA.COM.AU / 27
FEATURE / Insurance for the Energy Sector
28 / INSURANCE ADVISER APRIL 2021
FEATURE / Insurance for the Energy Sector
While the sun shines The energy market is finally seeing some real change in Australia, and the rapid rate of evolution presents both opportunities and challenges. However, if you are in renewables, you’ve got to be all in – it’s not a space for half measures. BY MARTIN WANLESS
W
hile the abundance of sun and vast swathes of open land seem to be tailor-made for renewables in Australia, there has been a reluctance to embrace it at the top – so much so that we were recently named by the head of a think tank related to the United Nations as one of the countries that had “shamefully done nothing” to phase out fossil fuels. Things are starting to slowly change, however. Prime Minister Scott Morrison has subsequently said the country needs to get to zero emissions as quickly as possible – preferably by 2050, though not committing to it. Meanwhile, at the end of February, renewable energy was named for the first time as a priority in Infrastructure Australia’s list of potential investments, to the tune of $59bn. Right now, however, renewable energy has been picking up pace as a new and emerging market. Predictably, it is evolving rapidly – and so too are the risks.
THE EVER-EVOLVING RISKS
From an insurance perspective, weather and catastrophe are significant risks in many sectors, and renewables are no different. “Global claims experience has shown that the frequency of NAT CAT losses affecting the renewable energy sector is on the rise, and Australia has been no exception,” says Sara de Sampaio-Soares, Liberty Specialty Markets’ National Manager, Energy & Power. “Given the physical nature and characteristics of solar and wind projects, these assets can be very exposed to such perils. In Australia we are predominantly affected by flooding and windstorm, and also so-called secondary perils of lightning, hail and bushfire.” Consequently, says Jane Smith, Pacific Practice Leader, Energy & Power at Marsh, there’s been an increased frequency and severity of losses, particularly for solar. “This has created upward pricing trends, increased retention and reduced capacity being deployed by underwriters,” she says. “However, this has also created
opportunity, as new insurers now see profitability in renewable energy and are entering the market.” As the market grows and evolves quickly, it proves increasingly desirable to many new contracting parties, and another significant risk emerges. “Industry losses due to contractor error or poor workmanship have increased our scrutiny of contractor and subcontractor experience,” says de Sampaio-Soares. “While we’ve not necessarily been hit with highly technical workmanship claims, even relatively straight-forward incidents replicated across multiple sites and at scale are generating very high-value losses for the industry.” Depending on the size of the project, getting the right cover can be a challenge, however, and one that requires a broker to have in-depth knowledge of the sector. Nathan Martin, Senior Account Director at Finsura Insurance Brokers, says, “There’s not a lot of capacity about for projects with assets under $50m – it attracts higher
NIBA.COM.AU / 29
FEATURE / Insurance for the Energy Sector
rates, and you don’t have many markets to approach to obtain that cover.”
HOLDING GREAT STORE
Another area that’s inextricably linked to renewables is, of course, storage. The number of battery storage facilities worldwide is growing, and Matt Langham, Placement Director, National Power & Utilities Practice Leader at Aon, says they’re frequently categorised with renewable energy generation, given how they complement each other – and presenting another aspect that needs consideration. “Batteries are most often deployed as a frequency response regulator – that is, storing electricity from power-generating facilities for on-demand deployment to the grid as and when it is required,” he says. “These projects are now starting to reach a scale that can have a major impact on grid stability, which was one of the previous criticisms of the technology.” Various developers in Australia have announced some extensive, ambitious battery energy storage system (BESS) projects. However, this technology does bring added risks and challenges that must be managed. “Globally, the industry has already sustained various BESS fire-related losses,
“Global claims experience has shown that the frequency of NAT CAT losses affecting the renewable energy sector is on the rise, and Australia has been no exception.” SARA DE SAMPAIO-SOARES, LIBERTY SPECIALTY MARKETS
30 / INSURANCE ADVISER APRIL 2021
and it has become evident that further developments and considerations are needed to ensure fire protection and loss mitigation of these assets,” explains de Sampaio-Soares. “According to an expert independent risk-management and design-certification body on BESS technology, over the life of a battery operation, it can be expected that it will be affected by at least one fire. Underwriters are therefore looking for a great deal of reassurance around any operation’s fire-mitigation strategies, as well as spacing and real-scale fire tests.” Battery technology is advancing quickly, so insurers require significant information to review – but, on the plus side, says Smith, “batteries can positively change the BI profile for a risk as they can reduce the volatility.”
BUT WHAT OF THE OLD GUARD? Of course, while much focus is – quite rightly – on renewable energy sources, that puts significant strain on the traditional power-generation facilities. “As traditional power-generation facilities continue to age, so too do the costs associated with maintaining and repairing them,” says Aon’s Langham. “Many of these facilities are still critical to the smooth operation of the
National Electricity Market and power supply, and the method of transitioning safely and sustainably needs to be carefully considered by the industry to ensure future grid stability.” Insurers, however, are facing growing environmental, social and governance (ESG) pressure of their own. “We’ve seen insurers issue targets or withdrawal to reduce their exposure to coal-fired power generation,” says Smith of Marsh. “Continuing to attract capacity at a cost-effective level will become increasingly challenging as more insurers determine their ESG stance.”
WORKING WITH ENERGY CLIENTS
To say the energy sector is ever-evolving would be an injustice – it’s rapidly changing. From a brokers perspective, it’s vital to fully understand both your clients’ businesses and the sector as a whole. “Each client has their particular pinch points,” says Langham. “Some clients own and construct projects in critical natural catastrophe zones. How do they mitigate this risk in the facility design at the outset, and how do they manage this risk during the project’s life cycle? “Some clients are contracting
FEATURE / Insurance for the Energy Sector
“As traditional power-generation facilities continue to age, so too do the costs associated with maintaining and repairing them.” MATT LANGHAM, AON unproven, prototypical technology for use in their projects. How do we get insurers comfortable with the technology risk, lead times for spare parts, and the strength of the underlying manufacturer’s warranty? “Other clients may have complex interfacing risks. For example, their preferred site may be some way from the nearest grid connection point, necessitating the need for long transmission lines to get their project to the grid. Bushfire
THE HYDROGEN FACTOR Australia’s National Hydrogen Strategy aims to position hydrogen as a major player in the energy market by 2030, and it can be expected that significant activity and growth will occur. “Insurers will be asked to step in to help the transfer of risk for these new projects, be they considered brown, grey, blue or green hydrogen projects,” says Sara de SampaioSoares, Liberty Specialty Markets’ National Manager, Energy & Power. According to the Hydrogen Council, hydrogen is expected to contribute up to 22 per cent of our global energy demand needs by 2050 (up from four per cent presently), with investments of $11 trillion to be committed during this period. Matt Langham, Placement Director, National Power & Utilities Practice Leader at Aon, says, “As with any newer form of technology, insurers are more cautious than they would be with proven technology they have experience modelling and understanding exposures, particularly given hydrogen is highly flammable. “We are spending much time with our capital partners and clients looking to grow in this area, to get them to a level of comfort so we can design bankable insurance solutions that allow projects to proceed.” 32 / INSURANCE ADVISER APRIL 2021
liability risks and a consideration of overall project redundancy need to be considered, as all the project’s revenue may be reliant on a single line. “It is critical risk advisors are involved at the start of a project’s life cycle, well before contract tendering commences, to help guide clients through the design phase, to ensure a proper understanding of insurable versus uninsurable risks all the way through to contract tendering – and making sure
contracts are structured prudently – and then into program placement.” It’s a market, however, that you can’t easily dip in and out of. “It’s a specialised market requiring specific knowledge and commitment to ensure adequate placement in these changing times,” says Martin. “It’s a broad market that has so many complexities, and it’s constantly changing.”
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LEVELLING THE PLAYING FIELD FEATURE / Insurance Premium Funding
Premium funding allows businesses and consumers to pay their insurance premiums in monthly instalments. And it is set for a shake-up. BY NINA HENDY
P
remium funding is a simple and innovative lending product that allows businesses and consumers to pay their insurance premiums in easy to manage monthly instalments. Using background funding to provide a monthly payment option on every invoice enables brokers to allow clients to make their own decision about what is best for their own cash flow. “This ultimately benefits the broker too, as data suggests that providing a monthly payment option improves client retention rates,” Daniel Gronert,
34 / INSURANCE ADVISER APRIL 2021
CEO of Principal Funding says. The industry was formed to help clients pay their insurance premiums, and only exists due to its highly secure nature. So, if a client defaults on their premium funding loan, premium funders have an enforceable right to cancel the insurance policy, for which a clause is included in the funding contracts. “While most brokers are helpful in managing the process with us, industry players reveal some aren’t aware of their requirements to cancel without delay,” Gronert says.
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FEATURE / Insurance Premium Funding
OVERLOOKED OPPORTUNITIES
Gronert says that some brokers still make the decision on behalf of their clients as to whether they are going to provide a premium funding option. His experience with schemes also reveals that there is a lot of opportunity in funding small value premiums, with take-up rates of over 80 per cent on premiums circa $600. “In our experience with background funding, the take up rate of premium funding loans by clients is higher than what brokers might realise. The fact is that using the convenience of background funding to provide a monthly payment option improves client retention rates,” he says.
A PERIOD OF CHANGE
The big news is that the insurance premium funding sector is preparing itself for the implementation of a Code of Practice, likely to come into play in the very near future. It is being developed by the Australian Financial Industry Association (AFIA) in conjunction with the National Insurance Brokers Association (NIBA) to make sure that both industry codes align and that members of both associations are clear on their obligations under these codes. The code is critical to the setting of minimum standards and for encouraging best practice within the industry. Designing and implementing a Code is no mean feat. According to AFIA,
“BROKERS CAN CURRENTLY EARN COMMISSION, AND I BELIEVE THAT MOVING FORWARD, REMUNERATION WILL BE MORE TRANSPARENT AND MORE COMPETITIVE.” STEVEN HILL, CAPITAL INNOVATION INSURANCE GROUP
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an estimated $7 billion in insurance premiums are funding on an annual basis, with $7.253 billion funded in FY 2020. An estimated 20 to 30 per cent of policies are premium funded, with insurance premium loans instrumental in assisting SMEs to manage cashflow and working capital. More than 97.5 per cent are utilised for business purposes with consumers making up a much smaller portion (2.4 per cent in FY 2020) of the insurance premium funding customer base. AFIA CEO Diane Tate explains that the Code has been developed to make it easier for customers to compare prices and other aspects of these funding products. AFIA aims to have the Code operating by July this year, however, acknowledges that this timeframe may be impacted by the ongoing consultation process. “AFIA and its IPF members have developed this code proactively, looking for it to go above and beyond the law, because we all understand that good conduct, disclosure and complaints handling standards are important to allow customers to consider the most suitable and cost-effective
FEATURE / Insurance Premium Funding
TOP 5 THINGS BROKERS SHOULD KNOW ABOUT INSURANCE PREMIUM FUNDING: • An estimated $7 billion in insurance premiums are funded on an annual basis. • It is estimated that up to 30 per cent of business policies are premium funded.
• Some suggest that brokers will have to lower their fees for the service in the future as the Code exposes remuneration models.
• A new Code of Conduct is being developed and is expected to come into play mid-2021. • The new Code will enable customers to compare the cost and features of lending products.
We are merging to create Australia’s largest independent funder. Premium Funding Pty Ltd and Principal Finance Pty Ltd are set to join forces. With over 60 years of combined experience, together we will build further on our competitive product offerings and unrivalled industry innovations for our brokers and over 100,000 Australian clients. The future of funding is here. Stay tuned.
FEATURE / Insurance Premium Funding
product for themselves and their businesses, and to get things fixed if something goes wrong,” Tate says. One of the many important considerations in the development of the new Code is the disclosure of broker remunerations, which could be set to be exposed under the new arrangements. Daniel Gronert says, “It’s important that we tackle these proposed new standards in the right way so that we can promote transparency and alleviate conflicts of interest for the
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“DATA SUGGESTS THAT PROVIDING A MONTHLY PAYMENT OPTION IMPROVES CLIENT RETENTION RATES.” DANIEL GRONERT, PRINCIPAL FUNDING
client, but not disrupt the trust and deemed value of using an insurance broker at the same time.” Queensland’s Capital Innovation
Insurance Group managing director Steven Hill is in favour of a Code. It will mean clearer disclosure, and clearer complaint and dispute processes. He is also confident that broker remuneration models will be exposed under the plan. “Brokers can currently earn commission, and I believe that moving forward, remuneration will be more transparent and more competitive,” Hill says. The Code will also impact the size of the standard premium funding contract as industry players include more granular detail in the paperwork, he says. For the operators playing in this space, the next 12 months will be an interesting time.
COMMUNITY HUB
COMMUNITY HUB APRIL 2021
The COMMUNITY HUB is your space to showcase your products and services to a specialist audience.
INDEX AB Phillips .................................................... 40 ASR Underwriting....................................... 41 MGA Insurance Brokers.......................... 42
Moran Insurance Brokers ...................... 42 Newline Group............................................ 43 Affinity Insurance Brokers...................... 43 Tudor Insurance .......................................... 44 AIBI....................................................................44
Wellington Underwriting.........................44 Brookvale Insurance Brokers................. 45 QPIB.................................................................. 45 Marsh & McLennan Agency.................. 46 All Parks Insurance......................................46
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
Exclusive timber and sawmill insurance facility AB Phillips has been insuring the Timber and Sawmilling industry for more than 25 years. We have an exclusive underwriting facility which is available to select brokers. Our insurance facility is for clients in the following sectors: • • • • •
Timber yards Timber storage Timber processors Sawmills Roof truss and wall frame manufacturers
Commission is paid on placements.
For more information please contact Rose Dee on:
Phone: 1800 819 394 | Direct: 03 8586 9316 | Email: rose@abphillips.com.au AB Phillips Pty Ltd. Australian Financial Services Licence No. 234457. ABN: 91 007 075 934. PO Box 832 Moorabbin VIC 3189. 445 Warrigal Rd Moorabin VIC 3189. e: info@abphillips.com.au t: 03 8586 9333 f: 03 8586 9394 w: www.abphillips.com.au
COMMUNITY HUB
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COMMUNITY HUB Key Liability Industries:
Key PI Occupations:
Key FI Occupations:
• Alternate & Complementary medicines • Automotive • Biotechnology • Clinical Trials / Research • Defence – machinery, weaponry & protective equipment • Life Science / Pharmaceuticals • Medical & Surgical Devices (including invasive implants) • Medical Cannabis • Medical Equipment / Products • Mining • Rail, Products, Maintenance, Locomotive Engineering, operators, Rolling Stocks & Engine Manufacturers • Tyres – new, re-threading, lugging, repair & sales • Universities • Veterinary Medicines
• Accountants • Architects • Engineers • Environmental Consultants • Insurance Brokers / Underwriting Agencies • Law Firms • Management Consultants • Miscellaneous Risks • Real Estate Agents • Valuers
• Fund Managers/Investment Managers • Insurance Companies • Managed Investment Schemes • Excess lines for Financial Planners
Chief Executive Officer / Underwriting Manager – Liability
Underwriting Manager - PI
Key D&O • Insured firms can be not-for-profit, privately held or publicly traded • Side A/DIC placements • Medical Cannabis risks • All industry sectors, both commercial and financial, are underwritten
Key Crime Commercial Crime Insurance is also offered alongside other Financial Lines products
Linda Sepala Underwriting Manager – D&O & FI
PH: 03 9998 1900
Newline Australia Insurance Pty Ltd ABN 81 118 089 651 PO Box 16208 Collins St West VIC 8007 PH: 03 9999 1901 FAX: 03 9670 0045 newlinegroup.com.au info@newlinegroup.com.au
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AFFINITY EQUINE, ADVENTURE & LEISURE LIABILITY Abseiling Accommodation Agistment Animal & Petting Zoo Archery Bush Walking Camping Campsites Canyoning Caving Team Building
Equine Associations Equine Events Equine Therapists Farriers & Dentists Fishing & Boat Cruises Four Wheel Driving Flying Fox Horse Carriage Driving Horse Trainers Horse Riding Schools Initiatives
Kayaking Mountain Biking Orienteering/Rogaining Paddle Boarding Pony Rides Paintball & Skirmish Riding Schools River Rafting Rock Climbing Ropes Course Rowing
Sailing Sea Kayaking Snorkelling Snow Skiing Surfing Swimming Trail Running
1300 130 535 www.affinityib.com.au
NIBA.COM.AU / 43
AFS License No. 214 185
COMMUNITY HUB
Wellington Underwriting Agencies specialise in labour hire/recruitment, complex liability risks and niche property solutions. Labour Force includes Broadform Liability, Professional Indemnity and Management Liability and has been developed for: • labour hire companies • recruitment companies • group training and registered training organisations
�aibi
Adult Industry Business Insurance
Our Combined General Liability wording has been tailored for complex risks including: • construction • manufacturing • rail • resource sector; and • other hard to underwrite risks Wellington’s Property capabilities are focussed on niche exposures including: • catastrophe-exposed properties • mining sector
Contact our Underwriters today or visit our website at
www.wellingtonu.com.au
AIBI is a registered trading name of Capital Mutual Insurance Brokers Pty Ltd. Capital Mutual Insurance Brokers Pty Ltd is a Corporate Authorised Representative of McLardy McShane Partners Pty Ltd, Australian Financial Services Licence No 232987 ABN 14 064 465 309. McLardy McShane Partners Pty Ltd is a member of The Steadfast Group.
Benefits of dealing with LSM:
Demolition and Asbestos Removal Liability Insurance Contact us for a confidential review of your clients insurance needs.
$20M Asbestos Liability now available Security of dealing with local office of a major insurer Local claims and underwriting service working closely with you to meet your clients business needs Automatic addition of Errors & Omissions coverage when Asbestos Liability is purchased
service@tudorinsurance.com.au
You can also apply for enhancements when you purchase this policy - coverage for Statutory Fines & Penalties, coverage for Shoring & Underpinning and coverage for transportation of asbestos (clean-up-costs)
(03) 9707 3033
15% commission of all placements
Tudor Insurance Australia Cameron McKerchar
44 / INSURANCE ADVISER APRIL 2021
tudorinsurance.com.au
COMMUNITY HUB
MOBILE BUSINESS SCHEME (Food Vans, Coffee Trailers, Dog Grooming, Mobile Offices, Mobile Dentists etc. all considered) • Security 100% Australian Insurer • Combined Package (Motor & Business Combined) • All Motor Vehicles Trucks & Trailers cover includes Fitout (Reinstatement & Replacement Coverage) • Public & Products Liability • Optional Downtime (loss of income) Machinery Breakdown, General property & Money Covers • Dedicated Internal Claims staff
Contact: Tom Saddington (02 9934 9700) toms@bib.com.au
Also at Brookvale we have a National Motorcycle Dealership Scheme, with competitive rates and comprehensive offerings. Your contact is Peter Timosevski on 02 9934 9700 / 0421 440 552 or pt@bib.com.au
NIBA_Classifieds_Brookvale_HPH.indd 1
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“My QPIB designation gives my clients peace of mind that I’m a trusted professional.”
Apply online at niba.com.au or email NIBA Memberships Manager Audi Witsen – awitsen@niba.com.au
IN
D PRAC IE T F I
ING IS
QPIB – A STATEMENT OF PROFESSIONALISM
• QUA L
– CRAIG ANDERSON, 2018 YOUNG PROFESSIONAL BROKER OF THE YEAR
RA
K
S
U
ER
QPIB NCE BR
O
NIBA.COM.AU / 45
COMMUNITY HUB
MARSH& MCLENNAN A G E N C Y OUR INSURANCE PRODUCTS INCLUDE:
■
Advertise with the most influential and trusted voice in the Australian intermediated insurance industry · Insurance Adviser · Insurance and Risk website · Broker Buzz · Need a Broker website · Targeted eDMs · NIBA events (Annual Convention)
■ ■ ■ ■ ■ ■
Demolition & Asbestos Liability - demolition, asbestos removal and transport, asbestos and environmental consultancies and similar occupations Kidnap, Ransom & Extortion Personal Accident & Illness Income Protection Motor Trades - public and products liability Tyre Retailers - property Window Cleaners - public and products liability
PLEASE VISIT OUR WEBSITE, AND CLICK ON "PRODUCTS AND SERVICES" FOR MORE DETAILS www.marshmc.com.au
CONTACT Michael Beveridge
08 8385 3630 or
Tara Nadge
08 8385 3583 enquiries@marshmc.com Marsh and McLennan Agency Pty Ltd ABN 33 000 668 584 / AFSL 238984
Contact Tony May National Advertising Sales Manager T: 02 9459 4303 E: tmay@niba.com.au
46 / INSURANCE ADVISER APRIL 2021
517-3776
NIBA / Events
NIBA MENTORING PROGRAM The first workshops for the current sessions were held in New South Wales, Victoria, Queensland and Western Australia. Visit the NIBA website for more details on the program: niba.com.au/nibamentoring-program
UAC SYDNEY UNDERWRITING EXPO Brokers and underwriters met in person for the first time in a long time at the Underwriting Agencies Council’s expo on 12 March at the Hyatt Regency.
NIBA.COM.AU / 47
INSURER STRENGTH RATINGS
AUSTRALIA
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 1 March, 2021. Contact: Craig Bennett, S&P Global Ratings Telephone: 03 9631 2197
NEW ZEALAND
RATING
NON-LIFE INSURERS
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
Chubb Insurance New Zealand Ltd.
AA-/STABLE
QBE Insurance (International) Ltd.
A+/STABLE
Zurich Australian Insurance Ltd.
A+/POSITIVE
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.
LENDERS MORTGAGE INSURERS Genworth Financial Mortgage Insurance Pty Ltd.
A/NEGATIVE
A-/POSITIVE
QBE Lenders' Mortgage Insurance Ltd.
A/STABLE
Southern Cross Benefits Ltd.
A/STABLE
Westpac Lenders Mortgage Insurance Ltd.
A+/NEGATIVE
Southern Cross Pet Insurance Ltd.
A/STABLE
LIFE INSURERS
Teleco Insurance (NZ) Ltd.
BBB+/STABLE
AIA Australia Ltd.
A+/STABLE
Vero Insurance New Zealand Ltd.
A+/POSITIVE
AMP Life Ltd.
A-/NEGATIVE
Vero Liability Insurance Ltd.
A+/POSITIVE
Challenger Life Company Ltd.
A/STABLE
QBE Insurance (Australia) Ltd. (New Zealand Branch) A+/STABLE
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)
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 A/NEGATIVE
LIFE INSURERS
General Reinsurance Australia Ltd.
AA+/STABLE
General Reinsurance Life Australia Ltd.
AA+/STABLE
Asteron Life Ltd.
A+/POSITIVE
Hannover Life Re of Australasia Ltd.
AA-/STABLE
Hallmark Life Insurance Co. Ltd. (NZ Branch)
BBB+/STABLE
Munich Reinsurance Co. of Australasia Ltd.
AA-/STABLE
Medical Life Assurance Society Ltd.
A-/POSITIVE
RGA Reinsurance Co. of Australia Ltd.
AA-/STABLE
Westpac Life-NZ-Ltd.
A+/NEGATIVE
SCOR Global Life Australia Pty Ltd.
AA-/STABLE
Resolution Life New Zealand Ltd.
A-/NEGATIVE
Swiss Re Life & Health Australia Ltd.
AA-/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
48 / INSURANCE ADVISER APRIL 2021
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 3 March, 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 / 49
INSURANCE JOURNEY / Patrick Selle
CHARTING HIS OWN COURSE
From wanting to be a pilot to finding his true calling in risk management, the 2020 Vic/Tas Young Professional Broker of the Year, Patrick Selle has embraced the insurance broking profession with an extraordinary zeal.
“F
or as long as I could remember I actually wanted to be a pilot and work in the airline industry, because I enjoyed being up in the air on many family holidays around the country. My foray into insurance broking transpired at 20 when a friend told me about a role available working in claims. I always had the ambition and drive to learn new skills quickly while connecting with people which led me to working for a large international broker. Being part of a brokerage allowed me to gain new skills and attain an insurance qualification. I quickly realised that this is where I belonged. Since then, I have kept progressing through the industry all while growing more confident in my role as a trusted advisor. I believe that the industry chose me, and I became passionate about the profession once I was able to find my feet and deliver good service and value to my clients. The insurance profession has so much to offer whether it be career progression or just learning new skills that you can truly utilise in your day-to-day routine. Before insurance I was working for a national transport company in customer service, so it was a high volume call centre, and it was easy to become transactional. I found that insurance is the opposite as every day brings new insights and challenges and I am always learning about different products and services that bring value into my role as a risk advisor. Meeting new people from a range of backgrounds is what makes insurance interesting to me, whether it be the mum and dad business owners or a director of a major listed company. With all the regulatory discussion in our industry presently, it is actually a very interesting time to be involved in the profession. Having a valid voice or opinion
PROUDLY SUPPORTING
50 / INSURANCE ADVISER APRIL 2021
underpinned by reason is of immense value in the present time. This biggest lesson I have learnt in my career so far is to work out where to position oneself in the industry and try to not over think things all the time. We are professionals who service a wide range of clients and everyone is different, so I believe remaining calm and composed during difficult situations often teaches us new ways of approaching things for the future. I like to encourage others into our wonderful industry by getting to know people that are already in the profession, hearing the good stories about our role as insurance professionals in the community and sharing with others the amazing opportunities they can avail to grow both personally and professionally. The only thing I would ever change about my career is that I would get into the industry sooner than I did. One of the highlights of my career has been the NIBA Awards process last year. In our busy day-to-day routines, we often forget the great things we achieve as insurance brokers. Nominating a young broker for
the NIBA awards is so much more than it seems, it is the ultimate acknowledgement and recognition from our peers. My experience was one that I will never forget as I was nominated in 2020 during seriously challenging times. Even though it was easy to get side-tracked during isolation and the lockdown in Victoria, I was able to harness the opportunity and meet four other incredible insurance brokers during the professional development process. Having access to mentorship and working as a collective team remotely was simply amazing. Mentorship has played a significant role for me and has also added great value to others that I have mentored during my career. Mentorship generates the drive and willingness to develop new skills and harness existing ones to grow our industry and ourselves. I believe mentorship to be an important pillar of professionalism. And I believe holding a QPIB designation is an important part of being a broking professional because it acts as validation and ensures a successful career path.”
RAPID-FIRE QUESTIONS Tell us something most people don’t know about you? I am also a DJ and emcee on the weekends. Secret ambition? To take the family and kids to Disneyland in the United States.
Favourite film? Batman Favourite book? Against All Odds by Craig Challen & Richard Harris Favourite tipple? Heineken Favourite past-time? Cycling Favourite food? Chinese dumplings
Share your insurance journey. Email editor@niba.com.au
MENTORING
NIBA Mentoring – Promoting Professional Development for 10 Years
WHAT WILL THE PROGRAM DO FOR YOU? For more information and to express interest visit www.niba.com.au/mentoring
