JULY/AUGUST 2020
WAITING TO TAKE OFF
What’s on the horizon for travel and A&H?
FINANCIAL SOLUTIONS
The cost of professional indemnity skyrockets
STAYING AFLOAT
Running a business on the high seas
BRAVE NEW WORLD #NIBA2020 goes virtual
WE ARE YOUR VOICE
CONTENTS
July/August 2020
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
22
THE WARREN TICKLE MEMORIAL AWARD
Continuing to celebrate professionalism in the lockdown era
NIBA gives no warranty and makes no representation that the information contained in this magazine is, and will remain, suitable for any purpose or free from error. To the extent permitted by law, NIBA excludes responsibility and liability in respect of any loss arising in any way (including by way of negligence) from reliance on the information contained in this magazine or otherwise in connection with it. The contents of Insurance Adviser are protected by copyright and NIBA reserves its rights in this regard.
24
GET UP TO SPEED WITH MARINE Problems can escalate quickly on the high seas
NIBA.COM.AU / 3
CONTENTS
July/August 2020
FEATURES 32 FINANCIAL SOLUTIONS
In an increasingly litigious world, directors and officers premiums have increased exponentially
42 WAITING TO TAKE OFF Industry experts weigh in on the future of travel
IN EVERY ISSUE NIBA CEO welcome.................................... 6 Representation............................................ 8 Why be a NIBA member?......................... 10 Forthcoming events...................................62
NEWS
Industry bulletin........................................ 12
PROFESSIONALISM
IBCCC 2019 Annual Compliance Data .... 18 AFCA case study ............................................. 19 Breaches of the Corporations Act ..............20
66 RELATIONSHIPS ARE EVERYTHING
In conversation with NIBA SA YP Committee Member Megan Spiniello
4 / INSURANCE ADVISER JULY/AUGUST 2020
REFERENCE Community hub .........................................54 Insurer strength ratings ..........................64
49 YOUR GUIDE TO COVID-19 RELIEF
The ongoing challenges of COVID-19....50 Federal Government support for businesses.............................................. 51 State and Territory Government support for businesses..............................................52
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CEO / Welcome
WILL THERE BE A ‘NEW NORMAL’?
I
n the past few weeks, I have been listening to as many commentaries as I could get to about what happens ‘on the other side’ of the COVID situation. Early on, there was much discussion about the fact that we will not return to a pre-COVID world, that there will be a ‘new normal’ where things will operate differently. The question was what would the ‘new normal’ look like, which industries would survive, which would thrive, and which would struggle and possibly fail. At the time of writing, the focus on managing the health issues and challenges has reduced somewhat, and the focus has transferred to what needs to be done to get the economy going once again. The big questions relate to which industries will be able to resume operations relatively quickly, and which will continue to struggle. From personal observations, retail seems to be getting under way very quickly. Some of the car parks at major suburban retail centres have been quite full recently.
“The big questions relate to which industries will be able to resume operations relatively quickly, and which will continue to struggle.” But for tourism and many areas of travel, anything that has an overseas element will most likely struggle well into 2021. This includes businesses relying on foreign tourists coming into Australia, and businesses relying on Australians heading on holidays interstate or overseas. And there are other areas where – in mid-June – it is difficult to work out what the future might look like. In recent years, Australia has had a strong political and trading relationship with the United States of America, but it is not at all clear whether that is a help or a hindrance at the present time. That country has its own health, economic and political challenges at the present time, and hopefully some of those will start to settle down after the November presidential elections. We are also facing a very difficult period in our relationship with China – a very significant trading partner for resource exports, inbound tourism and tertiary education. At the same time it looks like many other countries will struggle with COVID-19 for some time to come. From all of this, I am getting the impression that there might not be a ‘new normal’ as such. Rather, society and the
6 / INSURANCE ADVISER JULY/AUGUST 2020
economy will continue to face ongoing issues and challenges, and this will generate a high level of instability and uncertainty – possibly for a number of years. I do worry that this will become the ‘new normal’ – ongoing dynamic change, difficult economic conditions, some sectors doing well, others not, pressures from the insurance markets, from digital and IT developments, and from broader international geo-political struggles. What does all this mean for insurance broking in Australia? Our member principals are no doubt giving very careful thought to all of these matters at the present time. They are much closer to the clients than I am and will be developing a ‘feel’ for what the rest of 2020 might hold. For what it is worth, my suggestion is that to cope with the uncertainty, the ongoing change, and the instability nationally and internationally, broking firms will have to be nimble, agile, ready to try new things, able to implement new ways of operating, and develop new ways of identifying and financing risks that emerge, and all the time keeping a very close eye on the needs of the client. While doing this, brokers must remain committed to high standards of professional behaviour. Nothing less is expected by governments, regulators, the media and the broader community. We look forward to working with our members to help them meet the challenges of the post-COVID world.
DALLAS BOOTH Chief Executive Officer, NIBA
NEWS / Representation
WE ARE YOUR VOICE!
NIBA is the voice of insurance brokers in Australia. We work with governments and regulators and we do our very best to promote the interests of NIBA members and their clients.
FEDERAL
Design and Distribution Legislation
As previously advised, legislation to implement new obligations on insurers and distributors of insurance products has been passed by the Federal Parliament. This will establish important new obligations for insurance companies and insurance brokers. The legislation establishes a framework for the new obligations, but much detailed work still needs to be undertaken so that everyone understands how the legislation will operate in practice for general insurance products. Fortunately, the commencement of the legislation has been put back to October 2021, but we believe we need to continue to work on these reforms so everyone will know what is expected at the start of the new year. In the meantime, NIBA will continue to work with the Insurance Council of Australia (ICA) and with a number of insurers to develop an agreed framework for the implementation of the legislation.
Unfair Contracts Terms Legislation
Legislation which will apply existing unfair contracts terms legislation to insurance contracts has now been approved by the Federal Parliament. These reforms were recommended by the Royal Commission and by the Australian Competition and Consumer Commission (ACCC) Interim Report on Insurance Issues in Northern Australia. It is important to note that implementation of this legislation has NOT been deferred by the Federal Government. The reforms will take effect in early April 2021. By that time all retail policies will need to be reviewed to identify and remove any potential unfair terms.
8 / INSURANCE ADVISER JULY/AUGUST 2020
Claims Handling as a Financial Service
NIBA has provided a submission to treasury in response to draft legislation designed to implement the Royal Commission recommendation to make claims handling a financial service. The draft legislation will require those handling claims under insurance policies, on behalf of insurance companies, to operate under an Australian Financial Services Licence. NIBA is pleased that the legislation will not apply to insurance brokers acting for and on behalf of their clients in relation to claims and related matters. At the time of writing NIBA is continuing to discuss the proposals and our concerns with Treasury and other interested parties.
Add-on Insurance Reforms
The Government has undertaken consultation on Royal Commission proposals to ban virtually all forms of general insurance sold at the same time as a non-insurance product (for example, travel insurance sold when a customer purchases an air ticket or an overseas holiday). NIBA has provided a detailed submission to treasury indicating the proposed approach is far too wide and ultimately likely to cause damage in the community by preventing people having access to insurance products and services at the time they need those services.
Anti-hawking Reforms
One of the Royal Commission recommendations was to prohibit the hawking of financial products. The Government has released draft legislation to implement this proposal. NIBA is concerned that the
recommendation as drafted is likely to seriously impair the ability of insurance brokers to properly advise their clients on their business or other risks, and their insurance needs and cover more broadly. This is because the proposed legislation restricts the broker to discussing the topic raised by the client, and only that topic. NIBA has made a strong submission to the Government to urge further consideration of this matter. Our position is that the insurance broker must be able to discuss any risk or insurance needs of the client at any time, in order to properly perform their function as the trusted adviser on risk and insurance matters.
Proposals to Restrict the Use of the Terms ‘Insurance’ and ‘Insurer’
The Royal Commission recommended clarification of the ability for ASIC to fully regulate funeral insurance, where serious misconduct had been identified. However, the Government has taken a broader approach to extend restrictions on the use of the words insurance and insurer. NIBA has provided a submission to treasury to challenge the government’s proposals, as they are not consistent with the Royal Commission recommendation in this area.
Last-resort Compensation Scheme
The Federal Government has published a consultation paper on the Royal Commission recommendation to establish a last resort compensation scheme. This scheme is designed to respond to circumstances where the Australian Financial Complaints Authority (AFCA) makes an award against a financial services provider, but the provider has gone out of business and is unable to satisfy the award
NEWS / Representation
in favour of the client. The government is committed to proceeding with this reform, and the NIBA Board has discussed the matter at length. NIBA has provided a submission to the government indicating our preferred approach for the funding of the scheme. We will provide further information when it comes to hand.
General Insurance Code of Practice
The Insurance Council of Australia has released the new 2020 General Insurance Code of Practice, which is available at: codeofpractice.com.au The new General Insurance Code was formally launched in February 2020. Code subscribers were required to implement a family violence policy by 1 July 2020, and the Insurance Council of Australia has announced that insurers will aim to implement vulnerable persons and distressed client provisions from 1 July 2020. The remainder of the new Code will formally take effect on 1 July 2021. Any insurance broker operating under a binder on behalf of insurers will need to undertake training on the new Code of Practice and to implement procedures to adopt the General Insurance Code in respect of those operations. This is particularly important for the new Code provisions relating to vulnerable persons and clients in distress. NIBA also believes that any insurance broker acting on behalf of their clients should have a good general knowledge of the insurer Code of Practice, especially the provisions regarding family violence and vulnerable customers. The new General Insurance Code also contains new provisions dealing with insurance and mental health, disclosure of information and the sale of insurance products through motor dealers. A summary of key features of the new General Insurance Code of Practice is available at: insurancecouncil.com.au/ assets/media_release/2019/311019%20 Key%20features%20of%20the%20new%20 General%20Insurance%20Code%20of%20 Practice.pdf
Insurance Brokers Code of Practice The review of the Insurance Brokers Code of Practice is continuing. The NIBA Board of Directors has started to discuss the feedback that has been received to date from a range of stakeholders.
NIBA will shortly be seeking the views of members on the operation of the Code of Practice, and the future development of the Code, taking account of what is happening in other areas of financial services, the recommendations of the Royal Commission, and the work being done by the Insurance Council of Australia in its review of the General Insurance Code of Practice.
AFCA Datacube
AFCA is now publishing quite detailed information about the complaints and disputes it receives, including information regarding complaints to specific companies. The AFCA Datacube is available at: data.afca.org.au/at-a-glance
ASIC
Product Intervention Powers
The Australian Securities and Investment Commission (ASIC) has released information on how it proposes to exercise the new product intervention powers. These powers are designed to give ASIC the power to intervene and prevent the sale of products likely to cause detriment to customers. NIBA is reviewing the discussion paper and will make a response as appropriate.
ASIC Cost Recovery
ASIC has recently released information relating to the likely level of cost recovery for the 2019/2020 financial year. The information indicates there will be small increases in the amount of cost recoveries for firms providing financial advice, insurance product distributors and firms giving risk management and related advice. Mostly insurance brokers pay a flat fee in these areas.
APRA
Please note: The person in every insurance broking firm responsible for providing data to the Australian Prudential Regulation Authority (APRA) must review the new procedures set out on their
website: apra.gov.au/apra-replacing-d2a Every insurance broking firm should by now have made arrangements for a key manager to have myGovID credentials and to appoint a Relationship Authorisation Manager, in order to be able to continue to provide relevant reports to APRA. Information about myGovID is available at: ato.gov.au/General/Gen/myGovID Please note that the existing AUSkey arrangements were due to expire on 31 March 2020. New arrangements should have been in place prior to that date. We again strongly urge all members to become familiar with the new requirements, and start to develop procedures to implement the new system.
NEW SOUTH WALES
NIBA has provided information to Members regarding the abolition of the office of the Emergency Services Levy Insurance Monitor from 1 July 2020. NIBA has also provided information relating to new legislation which purports to ban insurance coverage for fines and penalties for breaches of certain work health and safety laws. These matters need to be understood and explained to clients where appropriate. The NSW Parliament will be reviewing the operation of the workers compensation scheme in July 2020. NIBA is considering making a submission to this inquiry. NIBA has been very active in recent weeks making submissions to a number of federal and state inquiries into the summer bushfires. Our goal has been to point out the unfair and inequitable impact of the emergency services levy on insurance premiums, and the resulting impact on underinsurance and non-insurance. It has been reported that 27 per cent of the houses totally destroyed by the summer fires did not have insurance cover. This constitutes a massive loss for the people involved, and for their communities. NIBA will be giving evidence to a Senate Inquiry into the handling of the bushfires in early July 2020. 
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 provides support, education and opportunities to brokers at all stages of our careers, allowing us to grow and develop as professionals.” MEAGHAN SELLINGS Senior Client Service Broker at Austbrokers ABS
WELCOME TO NIBA
NIBA is thrilled to have the following new principal members on board: • AIIRS Pty Ltd • GI Insurance Brokers Pty Ltd • Auzi Pty Ltd • RAIGLIS Pty Ltd
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 JULY/AUGUST 2020
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
WE’RE HERE TO SUPPORT YOU AND YOUR CUSTOMERS
Keeping you safe during COVID-19.
We’ve made some changes to how we support you while we work towards keeping our employees, customers and community safe. For the latest information on our response to COVID-19 visit www.cgu.com.au/for-brokers.
NEWS / Industry bulletin
2020 NIBA VIRTUAL CONVENTION
26-30 OCTOBER 2020
BRAVE NEW WORLD
NAVIGATING THE WINDS OF CHANGE
JOIN US AT THE 2020 NIBA VIRTUAL CONVENTION
T
he National Insurance Brokers Association (NIBA) is thrilled to invite the entire insurance community to connect with one another at the 2020 NIBA Virtual Convention. This online event will be held from Monday 26 October to Friday 30 October, providing plenty of opportunity for brokers to learn from and interact with one another. Like our face-to-face conventions, delegates can expect to hear from industry leaders, regulators and thought-provoking presenters in scintillating sessions on a range of highly relevant topics.
12 / INSURANCE ADVISER JULY/AUGUST 2020
The theme? Brave New World – Navigating the Winds of Change. The NIBA Convention Committee has carefully designed a program that will prepare brokers for ongoing dynamic change, difficult economic conditions, pressures from the insurance markets, along with digital and IT developments. Furthermore, a virtual marketplace will provide brokers with an opportunity
to make new connections to benefit their businesses. Whether you’re an account manager, principal or young professional, you’ll get to maximise your CPD points and walk away from the 2020 NIBA Virtual Convention equipped with practical tools. More information is coming soon – be sure to subscribe to the weekly Broker Buzz e-newsletter at info@niba.com.au.
To discuss sponsorship and exhibition opportunities, please contact Tony May, NIBA National Advertising Sales Manager, at tmay@niba.com.au.
NEWS / Industry bulletin
INSURANCE SUPPORT FOR CUSTOMERS EXPERIENCING FAMILY VIOLENCE, FINANCIAL HARDSHIP AND VULNERABILITY
A
s of 1 July 2020, subscribers to the General Insurance Code of Practice are required to have family violence policies available online for their customers. Insurance Council of Australia CEO Rob Whelan said family violence policies were particularly important at present, with domestic violence support organisations reporting a sharp rise in cases during COVID-19. “Customer-facing staff are being trained to identify those customers who may need extra support. Insurers are also offering support to staff affected by family violence,” he said. National Insurance Brokers Association (NIBA) CEO, Dallas Booth said, “Insurance brokers who act as an agent of an insurer in relation to a retail General Insurance Contract, must speak to the insurer about these measures being implemented.”
He said, “We at NIBA also encourage all insurance brokers who act for and on behalf of clients to undertake vulnerable customer GI Code training, and to be aware of the Code commitments by insurers and the benefits the industry has committed to delivering to policyholders.” Whelan said insurers were putting in place measures to achieve the consumer outcomes intended by these Code provisions, and were being guided by the principles that preface the 2020 Code including transparency, fairness, support and integrity. The deadline for full technical compliance for Parts 9 (Supporting customers experiencing vulnerability) and 10 (Financial hardship) of the new 2020 Code remains 1 January 2021 and the 2020 Code will be adopted in full by 1 July 2021. The General Insurance Code of Practice 2014 remains in place until then.
ASIC RELEASES GUIDANCE ON THE ADMINISTRATION OF ITS PRODUCT INTERVENTION POWER
T
he Australian Securities and Investment Commission (ASIC) has released a new regulatory guide on the administration of its product intervention power. ASIC Deputy Chair Karen Chester said, “The product intervention allows us to intervene where we are satisfied that a product (or class of products) is likely to result in significant consumer detriment. The power enables us to confront, and respond to, harms in the financial sector in a targeted and timely way. But there are important checks and balances – it is a temporary intervention power and we must consult before each and every use.” The National Insurance Brokers Association (NIBA) CEO, Dallas Booth said, “We at NIBA are reviewing the guidance closely in consultation with our legal adviser and will advise members in due course.”
The product intervention power regulatory guide sets out: • the scope of the power, including products that can be subject to an intervention order and the types of orders ASIC may consider making; • when and how ASIC may exercise the power, including how we may determine when consumer detriment is significant and how we may intervene; and • the process for making an intervention order, including how we may consult with affected parties, when an order will commence, the process by which an order can be extended, amended or revoked, and the consequences of breaching an order. You can access the complete documents on the ASIC website: asic.gov.au/regulatoryresources/find-a-document/regulatory-guides/ rg-272-product-intervention-power
NIBA PRESENTS TO IPART HOME BUILDING INQUIRY The National Insurance Brokers Association (NIBA) has provided a submission to the Independent Pricing and Regulatory Tribunal (IPART) inquiry into the Home Building Compensation Fund (HBCF), calling for drastic reforms to guarantee the future of the fund. NIBA’s submission to the IPART inquiry echoed its concerns regarding the economic viability of icare as a state insurer, drawing attention to the increasing losses incurred by the fund due to historic under–pricing of premiums. NIBA’s submission also highlighted the need for holistic reforms to the home building protections framework. It highlighted the need for underwriters to be able to accurately identify and price risks. NIBA noted that illegal phoenix activity remains an impediment to the efficient operating of the fund, as the nature of this activity means that the HBCF is the only recourse available to affected homeowners. In the submission NIBA called for a number of reforms including real-time monitoring of builders’ financial positions, the splitting of the current HBCF product into separate defects and insolvency products, better use of data analytics to help underwriters identify illegal phoenix activity and the ability for private insurers to limit insurance to high risk builders, should they re-enter the market. You can access the entire submission on the NIBA website: niba.com.au/html/submissions.cfm
For breaking news and updates curated specially for insurance brokers please visit: insuranceandrisk.com.au/category/news/
NIBA.COM.AU / 13
NEWS / Industry bulletin
SUPPORT MEASURES FOR ALL AUSTRALIANS
T
he following key government support measures have come into effect from 1 July 2020 to help Australians transition through the health and economic impacts from COVID-19:
discount will increase from 8 per cent to 13 per cent to ensure that sole traders benefit from the corporate tax cut.
Tax Relief for Low and Middle-income Earners
Under the Local Roads and Community Infrastructure Program, the Government will provide $500 million to local councils and other bodies who are responsible for the provision of local council services to support the delivery of priority local road and community infrastructure projects.
The Government passed its updated Personal Income Tax Plan announced in the 2019-20 budget last year, ensuring that Australians pay lower taxes. Low and middle income earners will receive a benefit when they lodge returns from 1 July 2020, with millions more to benefit over the next decade. Under the already legislated part of the plan, the Low and Middle Income Tax Offset (LMITO) will provide tax relief of up to $1080 at the end of each tax year to 2021-22, assisting more than 10 million Australians.
Small Business Tax Cuts
The tax rate for small businesses structured as companies with turnovers of less than $50 million will decrease from 27.5 per cent to 26 per cent while the unincorporated tax
Local Roads and Community Infrastructure Program
Second Economic Support Payment
The Government is providing two separate $750 payments to social security, veteran and other income support recipients and eligible concession card holders. Around half of those that benefit are pensioners. These payments support households to manage the economic impact of the Coronavirus. The second payment (announced on 22 March 2020) will be available to people who are eligible payment recipients and concession card holders on 10 July 2020.
Extension of the Instant Asset Write-Off
The Government has extended the $150,000 instant asset write-off for six months from 1 July 2020 to 31 December 2020 for Australian businesses with annual turnover of less than $500 million.
First Home Loan Deposit Scheme
Building on the initial success of the scheme, which saw it fully subscribed, a further 10,000 guarantees will become available to first home buyers from 1 July 2020.
Consumer Data Right
Australians will be able to unleash the power of their own data to compare and switch banking products with the Consumer Data Right officially launching on 1 July 2020.
Increase the Medicare Levy Low Income Thresholds
The Government has increased the Medicare levy low income thresholds for individuals and families, and individuals and families eligible for Senior and Pensioner Tax Offset in line with movements in the CPI.
Temporary Early Access to Superannuation
While superannuation helps people save for retirement, the Government recognises that for those significantly financially affected
For breaking news and updates curated specially for insurance brokers please visit: insuranceandrisk.com.au/category/news/
14 / INSURANCE ADVISER JULY/AUGUST 2020
2018 & 2019 WINNER Authorised Representative Group of the Year
NEWS / Industry bulletin
by COVID-19, accessing some of their superannuation today may outweigh the benefits of maintaining those savings until retirement. Eligible Australian and New Zealand citizens and permanent residents will be able to apply online through myGov to access up to $10,000 of their superannuation from 1 July 2020 until 24 September 2020.
Parental Leave Pay — Flexibility
This measure adds flexibility to Paid Parental Leave (PPL) by allowing families to split their PPL into blocks of leave, with an initial PPL period of up to 12 weeks to be taken within the first 12 months without returning to work within this time.
Curious Minds Program
Curious Minds provides summer schools and follow-up activities including a mentoring program for high potential female students in Years 9 and 10. The program aims to ignite girls’ passion and participation in STEM. Grant opportunity guidelines were published in December 2019, and the program provider submitted a proposal in response in March 2020.
NDIS Available Across Australia
From 1 July 2020 the NDIS is available across all Australian states, territories and regions. The last regions to enter the Scheme were Christmas Island and Keeling Island.
Future Drought Fund
From 1 July 2020, the Government will drawdown $100 million from the Future Drought Fund Special Account for programs and projects to build farmers’ and communities’ resilience and preparedness for future droughts.
two years from 2020-21 to expand Way Back and other programs to increase the coverage of aftercare services • Expansion of the StandBy Support After Suicide Service: $10 million over two years from 2020-21 to ensure more Australians have access to the critical care they need after losing a loved one to suicide • Extension of the National Suicide Prevention Trial sites: $13.4 million in 2020-21 to extend the National Suicide Prevention Trial sites for a further year • Boosting investment in peer support for young people through organisations such as the Raise Foundation and Reach Out ($4.6m in 2020-21) • Extending support for the headspace National Youth Mental Health Foundation to deliver suicide prevention training and education sessions in schools ($4.4m from 2020-21)
Bushfire Wildlife Recovery
Over the next two years $150 million will be targeted for native wildlife and habitat recovery across bushfire-affected regions.
Indexation of MBS Rebates for Ultrasound and Diagnostic Radiology Services
In the 2019-20 Budget the Government announced it would index the Medicare Benefits Schedule rebates for ultrasound and diagnostic radiology (x-ray) services from 1 July 2020. This is in addition to
targeted diagnostic imaging services including mammography, fluoroscopy, CT scans and interventional procedures, already scheduled for indexation from 1 July 2020. The changes will mean that more than 90 per cent of diagnostic imaging services will be indexed from 1 July 2020.
National Aerial Firefighting Capability
The Government is providing an additional $11 million a year, indexed, with the first payment in 2020-21 to the National Aerial Firefighting Centre, to support fleet standing costs and to increase access to large air tankers across all jurisdictions.
Additional Funding for eSafety Commissioner
COVID-19 has seen an increase in the use of communications technology for work, education and entertainment. There has been an equivalent increase in exposure to online harms. The Government is providing an additional $10 million in funding for the eSafety Commissioner to help eSafety to equip Australians with practical tips on how to stay safe online, to boost its investigative and support teams working on image-based abuse and cyberbullying and enable a 24 hour response capability for online crisis events. The COVID-19 section starting from page 49 has critical information on the federal and state governments’ initiatives that support small- to medium-sized businesses impacted by COVID-19.
Extension of National Partnership Agreement on Public Dental Services for Adults The National Partnership Agreement on Adult Public Dental Service supports the states and territories in delivering public dental services.
Suicide prevention and mental health initiatives – 2020-21 measures
As part of the response to initial advice from the National Suicide Prevention Adviser, the Government agreed to an: • Expansion of the Beyond Blue Way Back Support Service: $7 million over
Above Over the next two years $150 million will be targeted for native wildlife and habitat recovery across bushfire-affected regions.
For breaking news and updates curated specially for insurance brokers please visit: insuranceandrisk.com.au/category/news/
16 / INSURANCE ADVISER JULY/AUGUST 2020
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PROFESSIONALISM / IBCCC 2019 Annual Compliance Statement data
A SNAPSHOT OF 2019 ACS DATA CAN HELP SHAPE YOUR FUTURE
Use the data to review your business and work towards meaningful long-term improvement.
S
ubscribers to the Insurance Broker’s Code of Practice (the Code) complete a Compliance Statement each year detailing how they dealt with consumer complaints during the previous 12 months and the number of times when the Code was breached. The Insurance Brokers Code Compliance Committee (the Committee), the independent body that monitors the Code, has begun analysing the 2019 data and presents a preliminary overview here. A complete report will be published later this year when the Committee publishes its Annual Review. The ACS is the key element of the Committee’s monitoring work. Data and percentages are based on the 284 brokerages subscribing to the Code in 2019. Code breach data collected for 2019 indicates a rise in self-reported Code breaches over the previous year from 1,821 to 2,006, an increase of 10 per cent. Given that self-reporting breaches is a sign of a healthy compliance framework, the Committee was encouraged to see that the percentage of breaches had risen and also noted that the number of subscribers self-reporting breaches rose to 51 per cent in 2019 from 43 per cent. The number of breaches by Code subscriber size is detailed below. We also detail the average number of breaches per Code subscriber based on their size.
Size of Code subscriber
Number of breaches
Average number of breaches
Over 100 staff
454
15.7
51-100 staff
155
8.6
31-50 staff
469
13.4
21-30 staff
376
15.0
Up to 20 staff
552
3.1
2006
7.1
Total
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The Committee is concerned that whilst 51 per cent of subscribers reported breaches, 49 per cent of brokers reported nil breaches. This may indicate that many subscribers’ internal frameworks are not robust enough to identify Code breaches. We urge Code subscribers reporting nil breaches to review their recording trigger points, assess their frameworks for recording complaints and breaches, monitor how these are recorded in practice, and to consider how staff are trained to identify Code breaches. Whilst the Committee is yet to analyse the detailed breach data reports, we can report that the most self-reported breaches by far were associated with buying insurance (Service Standard 5), at 869 breaches or 43 per cent of total breaches. The top three breaches which account for 80 per cent of all breaches are detailed below: Buying insurance (Service Standard 5): 869 of self-reported Code breaches
Professionalism (Service Standard 12): 100 of self-reported Code breaches.
5% 5.5% 43.3% 13.4%
Money handling (Service Standard 7): 111 of selfreported Code breaches
23.4%
Legal obligations (Service Standard 1): 469 of self-reported Code breaches.
Scope of covered Services (Service Standard 4): 269 of self-reported Code breaches.
Subscriber self-reported that 10,255 consumers were impacted by Code breaches, including a financial impact of over $1.2m. The main root causes for Code breaches included process and procedures not followed and manual error. In the area of complaints, 1,292 complaints were self-reported by subscribers, an increase of 23 per cent over the 1,049 complaints reported in 2018. These came from 60 per cent of Code subscribers, with 108 Code subscribers reporting no complaints at all. Of the complaints, 463 (36 per cent) related to poor claims service, similar to 2018. The percentage of complaints resolved within 21 days dropped slightly from the previous year, down from 63 per cent in 2018 to 59 per cent. • 59 per cent of complaints resolved within 21 days, down from 63 per cent in 2018. • 24 per cent of self-reported complaints involved small business policies, up from 21 per cent in 2018. 19 per cent involved motor vehicle, split 10 per cent for personal and 9 per cent for commercial motor vehicle complaints. 8 per cent involved Home Building complaints. • 36 per cent of self-reported complaints concerned poor claims service, similar to 37 per cent in 2018. • 18 per cent of self-reported complaints concerned poor general service, down from 23 per cent in 2018. 9 per cent concerned incorrect advice and 7 per cent concerned charges. The Committee hopes these early insights will spark discussion about how Code subscribers are meeting the service standards set out in the Code, addressing consumer concerns and embracing Code obligations as a crucial means of improving professional behaviour and enhancing service to clients.
PROFESSIONALISM / AFCA case study
MAKING YOUR CLIENT AWARE OF A TERM THAT IS NOT OBVIOUS OR STANDARD
Whilst a broker is not obliged to draw its client’s attention to matters that are inherently clear, they must make an exception for terms that their client may be unfamiliar with.
Facts
The complainant’s commercial property was insured under a business insurance policy arranged by the broker. The complainant advised the broker in an email that he wanted to insure the cost of replacing an air conditioning unit on the property if it were to break down. The broker told the complainant that the air conditioner had been added to the policy and issued a certificate of insurance showing the air conditioner was insured. The sum of $15,250 was listed as the “limit of liability” and the “declared value” of the air conditioner. After the policy came into effect, the air conditioner broke down, and the complainant lodged a claim. No repairs could be done because the air conditioner was over 20 years old, and replacement parts were no longer available. In settling the claim, the insurer applied clause 3.5 of the policy which provided, if parts of an insured item were damaged, the insurer would only pay the cost of replacement parts. Even if replacement parts were not available (meaning the entire item has to be replaced), the insurer will only pay the theoretical cost of replacement parts, not the actual cost of a replacement item. The cost of replacement was quoted as $13,215 (ex GST) however, the insurer only paid the theoretical cost of repairs $5,538 (ex GST). As part of the process the broker advised the complainant to “[be] familiar with the terms and conditions of the policy and contact us immediately if you require any changes”. The broker did not specifically draw the complainant’s attention to clause 3.5. The complainant submitted that: • the broker breached its duty by failing to arrange a policy that would cover the entire cost of replacing the air conditioner;
• according to the insurer, the complainant may have recovered the cost of replacing the air conditioner if it was insured under a different section of the policy; • if the broker had told him the policy might not cover the full replacement cost of the air conditioner, he would have insured it under a different section of the policy or another policy; and • as a result, the broker should pay the shortfall. The broker submitted that: • there was “nothing unusual” about clause 3.5, and it was “an obvious/ standard term which would be expected to be included in a policy of this kind” and thus did not need to specifically bring it to the complainant’s attention; • before the claim was made, it could not have foreseen that clause 3.5 would become relevant, so it would be unreasonable to expect it to advise the complainant on its potential application; and • it could not have carried out the complainant’s instructions by insuring the air conditioner under a different section of the policy.
The AFCA decision
AFCA concluded that the broker breached its duty to the complainant because: • it failed to advise the complainant that the policy may not cover the full replacement cost and did not specifically draw the complainant’s attention to clause 3.5. AFCA was not satisfied that clause 3.5 was an obvious or standard term because for most insurance policies, claim settlements are based on the reasonable cost of repairs, if this is less than the cost
BY MARK RADFORD
Principal, Radford Lawyers
of replacement. However, clause 3.5 limited the insurer’s liability to the theoretical cost of repairs, even when no repairs can actually be done. AFCA was not satisfied that this was an obvious or standard term; • given that the air conditioner was over 20 years old, AFCA considered that it was a foreseeable scenario that clause 3.5 would become relevant because it would apply when an insured item needed replacement parts that were unavailable or obsolete; and • the broker failed to carry out the complainant’s instructions to provide a policy that covered for “the cost of replacing the air conditioning unit if it were to break down”. In AFCA’s view, the broker should have explained the potential application of clause 3.5 to the complainant, or at least directed the complainant to the section of the policy that would determine the basis of settlement. Further, AFCA considered that given that the broker wrote the PDS, it should have thoroughly understood its terms, and been able to direct the complainant to the section that was relevant to the complainant’s inquiry.
Was the broker liable for the complainant’s loss?
AFCA was satisfied that the broker breached its duty to the complainant, but it was not liable for the complainant’s loss. The regulator concluded that the complainant has not established that he could have obtained a policy that would have provided a greater benefit than the policy arranged by the broker. Therefore, the complainant did not establish that the broker caused him to suffer a loss, and the broker was not required to pay compensation.
NIBA.COM.AU / 19
PROFESSIONALISM / Breach reporting
CORPORATIONS ACT BREACHES – TO REPORT OR NOT TO REPORT?
Prevention should be uppermost to stop us from copping some of the hefty fines that accompany breaches if they end up at AFCA or turn up as a professional indemnity (PI) claim.
W
hen we think about breaches within our operations, hopefully it triggers thought patterns around: • identifying the cause/s of the breach • how to remedy them • beyond that - ensuring they do not happen again There is no clear definition in the Corporations Act as to what a ‘significant breach’ means; each case is considered independently. Australian Securities and Investment Commission (ASIC) recommends processes that will help you and your organisation identify a ‘likely’ or ‘significant’ breach which involves keeping a register; we will talk about a breach register a bit later. A breach notification to ASIC is required to be submitted within 10 days of becoming aware of the breach; this is the legal obligation. It is important to note that ASIC is not influenced by whether or not a notification has been made. What is of interest to ASIC is when the notification was made; a late notification is not only breaking the law, but it may indicate how the owner of the breach approaches their compliance obligations in general.
What is considered a significant breach?
What isn’t considered a significant breach?
Breach Registers
A variety of conduct can fall into this category, for example: a once-off failure to provide a Financial Services Guide (FSG). Such breaches do not need to be reported to ASIC but the decision whether a breach is reportable or significant should be made by whoever carries the responsibility for compliance and risk management in your organisation, rather than team members.
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To determine whether a breach is significant you need to consider: • The frequency of similar breaches • The impact the breach would make on the financial services the licensee is able to provide • The extent of inadequacy of the licensee’s obligations and/or • The potential loss to clients or the Licensee themselves So, the above quoted example of the failure to provide a FSG may not be considered significant; but a failure to provide them over a sustained period of time may well be considered systemic and so should be reported. Examples of breaches that ASIC considers significant include: • Failure to maintain PI Insurance • Failure to prepare cash flow prediction • Provision of regular or major inappropriate advice • Representatives acting outside the scope of their authorisations • Fraud • Failure to report a significant breach ASIC recommends keeping a breach register to help identify and report likely or significant breaches. In our daily work at Gold Seal, we come across brokerages that do not have breach registers or do not have anything recorded in them. Some brokers are unaware of what needs to be recorded in them. A nil return on a breach register is better record keeping than simply not recording anything in one.
BY SHEILA BAKER
Managing Director, Gold Seal
Breach Procedures
It helps to have breach procedures in place and for your staff to be trained in those procedures. This will ensure a uniform approach to breach reporting. If any of your staff or authorised representatives (AR) identifies a non-adherence to a policy or procedure, they should follow your established breach reporting process. It is easier if you have one. The development of a compliance culture will help encourage staff to report breaches, complaints, conflict situations and errors and omission (E&O) issues. Ensure your team knows you want them to be proactive in response to identifying one of these situations. To secure their confidence and co-operation, avoid a ‘blame and shame’ approach in your business – investigations should be conducted in a non-threatening manner and encourage staff to report breaches in a collaborative, supportive environment. The success of your system depends on principals, representatives, ARs and staff reporting breaches truthfully, accurately and without fear of retribution. To understand what constitutes a breach, the best place to start is to understand your AFS Licence obligations and compliance rules. The key to this is to always return to the three tenets of FSR – honesty, fairness and efficiency. To understand our obligations, helps us to do our job and to protect our clients. Once a breach has occurred the negative impact to your brand can do more damage even after you pay the penalties. As the saying goes, prevention is way better than a cure. Should you have additional queries or require guidance on a specific matter, please contact Gold Seal on 03 9510 5100 or email compliance@goldseal.com.au.
FEATURE / Warren Tickle Memorial Award
Celebrating professionalism in the lockdown era While the NIBA Convention and the Awards go virtual this year, the spirit of celebrating the best and the brightest in broking remain as strong as ever. BY MELIA BURROWS
E
very year NIBA in association with Vero recognises high performing young broking professionals via five individual regional awards culminating in a national award for the Warren Tickle Memorial Award for Young Professional Insurance Broker of the Year. As the world grapples with a pandemic that has brought almost every industry to a grinding halt, NIBA along with Vero decided that there will be no cancellation of the NIBA Awards this year. Anthony Pagano, Head of Commercial Intermediaries at Vero says, “Despite all the uncertainty at the moment it is important to continue recognising the important role brokers play with SMEs who need insurance and risk protection now more than ever.” “Vero is proud to support NIBA, for its 31st consecutive year, in acknowledging young professionals in our industry. The awards are an excellent opportunity to recognise outstanding young brokers and to provide career and professional development opportunities.” In celebration of the awards continuing in a tumultuous year, we spoke with the winner of the 2019 Warren Tickle Memorial Award, Caitlin Carson from Marsh to find out more about her Young Broker Alumni experience, what it felt like
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to win the national award, and the journey which has followed. Being acknowledged as a Young Professional Broker of the Year at a regional level was just the start of the experience for Carson, who was humbled to go on to receive the Warren Tickle Memorial Award last October. The award recognises a young insurance broker who exhibits an outstanding level of professionalism and integrity and is the pinnacle of achievement for Australian’s young broker community. She reflects fondly on the experience and recalls the surprise and delight in being part of the experience. “I felt honoured to be part of the Young Broker Alumni experience and valued
“The Red Centre Experience was definitely a highlight of the Young Broker Alumni experience as it enabled the 2019 Alumni group and winners of previous years to come together in Alice Springs and share a truly unique experience.” “We learnt a lot about personal development, leadership, each other, and the impact we can have on not only our customers but also community.” In October, her success continued to be recognised when Caitlin received the Verosponsored Warren Tickle Memorial Award at the NIBA Convention on the Gold Coast. “It was a shock to win the award, and honestly quite surreal as I had a huge amount of respect and admiration for the other finalists. I felt really grateful to
“Despite all the uncertainty at the moment it is important to continue recognising the important role brokers play with SMEs who need insurance and risk protection now more than ever.” – Anthony Pagano, Vero standing alongside my peers as I gained skills, grew relationships and connected with my peers, industry executives and members of the community,” Carson recalls.
have been given this acknowledgement so set my sights on making the most of this opportunity and award,” she says. As the recipient of the Warren Tickle
FEATURE / Warren Tickle Memorial Award
Memorial Award, Caitlin was able to take advantage of a development trip to the destination of her choice thanks to Vero. She harnessed this opportunity, travelling to the Yale School of Management’s Women Leadership Program in New Haven, Connecticut (USA). The esteemed course was held across four days during February and connected participants from across the world to embark on a journey of discovery, leadership and learning. Carson explains that each of the attendees came from different walks of life. From software experts at the very best firms, academics, doctors, nurses, journalists, marketing managers, engineers and even an artificial intelligence specialist. Throughout the course, Carson and the group of women were exposed to lectures and training and tested with challenges, assignments and exercises to build their skills and leadership. It focused on the strengths of different styles of leaders and how each individual could harness their existing skills. “The course acknowledged that women possess certain strengths when it comes to leadership generally in terms of interpersonal skills, emotional intelligence and communication. The course helped me deepen my understanding of how others viewed me and my leadership skills,” she explains. “Yale was incredible, in terms of the content, the calibre of the lectures and the challenges. I knew I was in for something big, but I didn’t realise just how big until I had a chance to reflect a few days after the course concluded.” “A more unexpected highlight was having dinner with the dean in a museum next to a full-size tyrannosaurus rex fossil whilst being serenaded by an acapella group,” she says. On reflection back in Australia, Carson recalls her expectations going into the course. “I thought I’d learn some technical management and leadership skills that would benefit my team, and that perhaps I could share with other brokers.” Instead, Caitlin returned feeling inspired and with lessons learnt that could benefit not
only her career but those around her. “The course taught me a lot about how I currently lead my team, and how I want to lead into the future. For example, according to Yale’s studies, younger managers tend
know I was lacking.” Her advice to other professionals following her experience is to be realistic about their capabilities and maintain a sense of self, “Seize the opportunities
“Development is integral for each of us and we will continue to support brokers in building their careers and servicing their customers.” – Sarah Moltzen, Vero to be autocratic in their decision making, wanting to control every decision and often believing they are protecting their teams from stress by doing so, but in fact this lowers participation, engagement in decision making, stumps development and confidence,” she says. “I was no exception to this rule, and the desire for everything to be ‘perfect’ has created many sleepless nights. So I’ve told my team that I’ll be giving them more room to make their own decisions, and letting them develop in their own way, letting them fail a little bit in order to learn but always supporting them so they know that it is safe to do so.” “I came away with a greater understanding of how people viewed me, and the power that gave me as a person. It has made me more confident and helped me find strength in myself that I didn’t
available to you and don’t apologise for being good at what you do.” Vero National Manager Strategic Relationships, Sarah Moltzen says Vero is proud to work with NIBA in supporting young brokers such as Carson in growing their skills and harnessing their potential. “We are thrilled that Caitlin had such a terrific experience and look forward to seeing what she achieves over the coming months and years.” “While NIBA’s Young Broker of the Year Awards may be virtual this year due to COVID-19, we will still be recognising and celebrating the achievements of emerging talented brokers.” “Development is integral for each of us and we will continue to support brokers in building their careers and servicing their customers,” Moltzen adds.
NIBA.COM.AU / 23
FEATURE / Marine Insurance
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FEATURE / Marine Insurance
STAYING AFLOAT:
RUNNING A BUSINESS ON THE HIGH SEAS Problems can escalate quickly on the water, with costs blowing out quickly. Insurers know only too well that the marine sector can be a high-risk gamble. BY NINA HENDY
NIBA.COM.AU / 25
FEATURE / Marine Insurance
“WE’RE SEEING SCRUTINY AGAINST SHIPPERS, CHARTERERS AND CARGO OWNERS THAT EMANATE FROM POLLUTION INCIDENTS.” – LINDSAY METCALF, AON
A
ustralia relies on shipping trade to bring goods into our ports every single week of the year. But the fact is that shipping is always a risky business due to the unpredictability of the high seas. And Australian shipping operators seem to be in a particularly stormy place right now. The fact is that issues tend to escalate quickly on the water, which can end up being costly. Insurance brokers that have waded into these murky waters understand the risks can be large and often unforeseen – until it’s too late. The high-profile case of the Ruby Princess generated huge controversy in Australia when passengers were allowed to disembark in Sydney on 19 May
without health checks. Around 10 per cent of Australia’s confirmed COVID-19 cases could be traced back to this vessel, prompting separate criminal, coronial and government investigations. The other major issue is extreme weather risks. A recent maritime incident that unfolded in Australian waters made global headlines. The media reported that a cargo vessel lost 40 containers in rough seas near Sydney. The ship was en route from China to Melbourne, with the incident forcing the ship to turn around and head back to Brisbane. As the containers poured into the sea and smashed open, face masks and flexible ducting used in heating and cooling systems washed up on beaches along
the Eastern seaboard, sparking cleanup efforts as part of the ship’s marine pollution responsibilities. Cybercrime is another major risk for shipping operators, while supply chains being cut through political events, or manmade disasters have subsequent knock-on effects for all sorts of other business.
The high seas
Barely a week goes by without new cyber events affecting the maritime sector, Willis Towers Watson Global Head of Marine Ben Abraham says. “Many are minor and unreported, but the major cases have caused consequential commercial losses in the hundreds of millions of dollars,” he says. The increasing need to adequate cover prompted Willis Towers Watson to recently launch a customised cyber cover for ship owners. The new product addresses the growing need for an explicit marine solution, built from the ground up to specifically address ship operators’ exposures, rather than
STORMY WEATHER While COVID-19 is causing delays in cargo delivery and heavily affecting the entire cruise industry, the most recent losses in the maritime sector have come from weather events. STORM 1: Severe Tropical Cycle Damian which struck the North West Coast of Western Australia on 8 February, 2020 caused a significant loss to coastal workboat floats. Vessels secured on cyclone moorings were dragged and swamped to the point that up to 10 vessels incurred significant damage and most were considered a total loss. Salvage efforts and temporary repairs were still under way months later, and total insurance claims were run in the tens of millions.
STORM 2: The container ship APL England experienced heavy weather off the coast of NSW while underway from China to Australia on 24 May, 2020. Forty containers were reported as lost overboard while twice that number were reported as damaged. Container losses from seas conditions such as this are becoming more and more frequent, and investigations are under way to determine the cause of the loss. This incident will see insurance claims for lost cargo plus liability claims against P&I and General Average (if declared).
SOURCE: LINDSAY METCALF, NATIONAL MARINE DIRECTOR AND PRACTICE GROUP LEADER, AON
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Your local marine experts. Australia’s leading marine insurance specialist. With the largest team of experts in marine insurance claims, underwriting and sales in Australia, we’re responsive whenever you need us. The marine industries never stop, and neither do we.
To get to know your local experts, visit
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FEATURE / Marine Insurance
TOP RISKS FOR MARINE OPERATORS: WEATHER: Weather events are increasingly common, including storms and cyclones. CYBERCRIME: Being on the water doesn’t prevent ship operators from being targeted by cyber criminals, which is increasingly common. MIS-DECLARATION OF GOODS: When contents are not declared correctly, containers are at risk of being stowed in an incorrect position on vessels, causing increased risks to the vessel, other cargo and the crew. LEGISLATION: The rules are constantly changing, which can open up costly new procedural considerations for shipping operators, and impact global trade. UNFORESEEN HOLD-UPS: Events no-one could foresee such as COVID-19 can send shockwaves through the marine sector on a global scale, with cargo held up around the world due to lockdowns.
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trying to use pre-existing generic cyber products amended marginally to fit marine exposures. “In an environment of increasing ingenuity of cyber criminals and increasing levels of cyber security governance in the maritime industry, our new product CyNav anticipates the protection that shipowners need to mitigate their cyber risk,” Abraham says. His colleague, Willis Tower Watson’s Executive Director Lewis Hart adds that shipping operators can also overlook the need for business interruption insurance as a critical cover, he says. “Crashing a cruise liner into a busy port or pier can be a hugely expensive exercise that can blow out to costing many thousands a day in downtime, he says. “There’s a myth is that it won’t happen to us. But it does. The good news is that ship owners are increasingly aware of the risks out there. However, most ship companies haven’t yet purchased cyber-specific policies,” Hart says. Meanwhile, Zurich Group has also just rolled out a new marine insurance product for small and medium cargo after trials in four countries last year were successful. The Zurich Swift Insurance Platform allows brokers and intermediaries to manage the full policy lifecycle for single shipment and annual cargo insurance policies.
Amended laws
There’s also the unexpected need to adhere to constantly changing legislation, with shipping laws constantly under the microscope, and several amendments in the past decade, the National Maritime Director and Practice Group Leader of Commercial Risk Solutions at Aon, Lindsay Metcalf says. “Most of these changes have already been integrated into our insurance products. More recently, however, we’re seeing scrutiny against shippers, charterers and cargo owners that emanate from pollution incidents,” he says. One of the key issues facing marine insurers is the increased use of multimodal transport, including a 20 per cent increase in coastal shipping, and greater use of inland ports, adds Luke Muller, the Marketing Communications Manager for specialist insurer, NTI. While this helps ease congestion on busy roads into and out of ports, it’s also added efficiency to logistics chains through greater utilisation of rail and sea, Muller says. “This allows a greater number of containers to be moved at the same time. This also allows easier access of large trucks via highways and major arterial roads, rather than congested metro or residential roads,” he says. However, the mis-declaration of
assis ng assis ng beyond beyyond expecta on expecta on
FEATURE / Marine Insurance
fires. As vessels become larger and carry “THE GOOD NEWS cargo, so too do the risks and financial IS THAT SHIP OWNERS more impacts increase, along with salvage ARE INCREASINGLY solutions becoming far more complex and AWARE OF THE dangerous,” Muller says. RISKS OUT THERE. COVID-19 HOWEVER, MOST This year, COVID-19 has thrown an SHIP COMPANIES economic curve-ball to the entire shipping HAVEN’T YET sector around the world, and its impact will be felt for many months. Various countries PURCHASED are in different stages of lockdown CYBER-SPECIFIC due to COVID-19, ports and transport POLICIES.” infrastructure are directly impacted, explains Muller. – LEWIS HART, WILLIS In March this year, Maritime Safety TOWERS WATSON Queensland banned all commercial ships dangerous goods in containers continues to pose increased risks of fires on board everlarger container vessels. “We’re seeing this issue globally as the cause of an increasing number of vessel
from entering ports in Queensland if any person onboard had been in any other country in the last 14 days in a bid to stop the spread of coronavirus. Similar measures were quickly put in place in other ports. Not surprisingly, this health and
economic crisis exposes the potential absence of coverage for many ship companies, he says. “With some ports closed, or transport links stopped, containers are impacted and, of course, facing delays. Additionally, with factories and shops closed, the need for inventory has increased, with buyers not wanting their goods at the original delivery time,” Muller says. In many cases, containers are being stored mid-transit, at ports or in warehouses. The disruptions have also created an accumulation of goods at certain locations, which again means customers need to ensure their sums insured and duration clauses are adequately structured, Muller explains. “Less ships moving is impacting the earnings of shipping companies, while the costs remain consistent, so they can’t avoid the resulting impact on their financial positions,” Muller says.
“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 IF
ING IS
QPIB – A STATEMENT OF PROFESSIONALISM
• QUA L
– CRAIG ANDERSON, 2018 YOUNG PROFESSIONAL BROKER OF THE YEAR
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QPIB NCE BR
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FEATURE / Financial Solutions
WHEN THE RUBBER MEETS THE ROAD In an increasingly litigious world, directors and officers premiums have increased exponentially, leaving insurers and brokers in a rather tricky situation. Little wonder the Government’s stepped in. BY MARTIN WANLESS
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FEATURE / Financial Solutions
NIBA.COM.AU / 33
FEATURE / Financial Solutions
I
t’s no secret that directors and officers (D&O) premiums have not so much been creeping up, but they’ve been skyrocketing – driven primarily by shareholder class actions. In late May, the Government stepped in after lobbying from the business world, putting tighter regulation on litigation funders and adjusting the Corporations Act to make continuous disclosure less onerous – albeit temporarily at this stage. “That intervention is a good thing, but it needs to be the first step,” says Craig Claughton, Head of Financial and Professional Services at Marsh, a major D&O insurance broker to ASX200 companies. “The continuous disclosure regime is very onerous, and in some respects facilitates court action. Sometimes as a director, you feel damned if you do, and damned if you don’t. “The requirement that litigation funders get an AFS licence is somewhat procedural. They will all get their licences – they’re all run by big corporations.” In addition to litigation, other issues are at play. “Changing business models such as the urbanisation of industry, cyber and online entities have created new business types with different corporate structures,” says Campbell Fuller, Head of Communications and Media Relations at the Insurance Council of Australia. “These new corporate structures often
create new exceptions that can increase the complexity and price model per policy and, while these issues may be relatively minor now, they’re only going to become more prevalent.” Of course, these factors have had a major impact on the line of insurance, with premiums rising significantly. “Over the past two years, we’ve seen a steady increase in premiums in the 50-100 per cent range, but that still hasn’t been enough,” says Claughton. “This year, insurers have almost said, ‘We don’t care what you’ve paid in the past, this is what it needs to cost now.’ If you’re a broker or a client, you look at the renewal and say, ‘Hang on, that’s 250 per cent more than I paid last year!’ “The reality is, however, if insurers don’t charge prices like that, they can’t offer the product.”
“COSTS OF PROFESSIONAL INDEMNITY ARE GOING UP AND UP.” - DON SHIELDS, GEELONG INSURANCE BROKERS
D&O ADVICE FROM AN UNDERWRITER
D&O certainly isn’t easy for anyone at present and, to place the most suitable policy for their clients, it’s important brokers are well prepared. Here’s what underwriters are looking for, according to Marcus Thomas, of Liberty Specialty Markets. • • • • • • •
Certain industries with unstable or lumpy revenue and cost cases are higher risk. Anything that may heighten risk – mergers and acquisitions (M&A), for example. If your client is planning M&A activity, show how they’ve demonstrated good due diligence. The quality and stability of a board. ‘Conservative’ financial structure and leverage positions. How your client has managed continuous disclosure obligations. Any forecasts in the market must be scrutinised - the less the better.
34 / INSURANCE ADVISER JULY/AUGUST 2020
CYBER INSURANCE
Know your risk. Know our response.
Louise Soutter Underwriter, Professional Risks
Thomas Miller Underwriter, Professional Risks
Jack Saunders Underwriter, Professional Risks
Direct: +61 7 3222 9104 Mobile: +61 484 621 418 Louise.Soutter@brooklynunderwriting.com.au
Direct: +61 2 8270 1741 Mobile: + 61 402 511 494 Thomas.Miller@brooklynunderwriting.com.au
Direct: +61 2 8270 1778 Mobile: +61 402 868 241 Jack.Saunders@brooklynunderwriting.com.au
FEATURE / Financial Solutions
“THE CONTINUOUS DISCLOSURE REGIME IS VERY ONEROUS, AND IN SOME RESPECTS FACILITATES COURT ACTION. SOMETIMES AS A DIRECTOR, YOU FEEL DAMNED IF YOU DO, AND DAMNED IF YOU DON’T.” - CRAIG CLAUGHTON, MARSH
The premium pool
At its heart, insurance is a simple proposition. The collective pays into the pool, and those who need it access it. For insurers to offer any line of insurance, it needs to be economically viable, and the pool needs to be deep enough to serve the needs of the contributors. The increasing demands on D&O have led to some insurers deciding it’s simply not worth it. Others have committed to it. “The D&O insurance market has become unprofitable for some with the current premium pool being inadequate to cover increasing and expensive claims,” says Fuller. “Insurers have been required to significantly increase premiums or exit this sector of the insurance market.” Marcus Thomas is Senior Vice President, Professional and Financial Risks at Liberty Specialty Markets, an insurer still actively writing the D&O market. He says, “If you go back five or six years the premium pool for D&O was totally inadequate. “You don’t have to be a mathematical genius to work out that if the insurance industry in Australia is only charging just under $300m for the total D&O pool,
36 / INSURANCE ADVISER JULY/AUGUST 2020
not just for publicly listed companies, and then is getting hit by securities class actions for over $100m, then that premium pool is completely inadequate. We have not even factored in attractional losses which are more than most would assume. “The legal costs associated with running and defending such actions are growing
and in some cases outrageously so. There are D&O cases where the forecast legal defence costs for purely Australian actions are in excess of $50m. If companies/ directors are going to let their lawyers run wild and submit bills like that, it’s not difficult to see why premiums continue to rise.”
CHANGES TO CONTINUOUS DISCLOSURE Treasurer Josh Frydenberg changed the continuous disclosure laws in late May, relieving directors of ASX-listed companies of their responsibility to disclose information to investors that’s market-sensitive – for example, changes to financial forecasts material transaction. The only liability now is if directors and companies have ‘knowledge, recklessness or negligence’ that the information they share is wrong. While it is intended this will help protect boards from classaction lawsuits, opponents have suggested it will disrupt investor confidence.
Insuring Not for Profits it’s all we do
Association Liability Motor Vehicle
General Liability Business Package
Event Liability Industrial Special Risks
Voluntary Workers
FEATURE / Financial Solutions
“WHEN THERE’S A RECESSION, THERE TENDS TO BE A SPIKE IN D&O CLAIMS.” - MARCUS THOMAS, LIBERTY SPECIALTY MARKETS
The challenge facing brokers
Regardless of the dynamics at play further up the chain, however, brokers are on the front line – and explaining a premium increase of, for example, 200 per cent, isn’t easy. “Our job is to prepare the clients and make sure that we educate them and keep them informed about what the market’s likely to do,” says Marsh’s Claughton. “We’re typically asking clients to start their renewal process earlier. We’re also asking them to present and meet with every insurer on the program.” The questioning from insurers is becoming much more detailed, says Claughton. “We need to prepare clients for that. Sometimes they might need to have their CEO or their CFO and the general counsel and their compliance people talk about governance. They need to be able to explain their own company and then differentiate it, explain why it’s better than one of their peers. “COVID has made them more nervous and more cautious, and there’s a whole new line of questioning around their business continuity plans. ‘Did you have one? Is it
working? What did you learn? What did work? What didn’t work?’ “Then they go on to talking about the liquidity of a particular firm. ‘Understanding this goes on for three, six or 12 months, what is the impact going to be on the company? Is it a sustainable business going forward?’.”
Looking to the future
How D&O plays out over the coming years will be interesting to watch – after all, companies need directors, and directors need D&O, so the demand isn’t going to wane. And it’s unlikely to be a period of no class actions either. “When there’s a recession, there tends to be a spike in D&O claims,” says Thomas. “Companies fail and share prices drop. There’s more employment-related actions, more regulator actions and, we’ll likely see an increase in claims in the post-COVID recession.” We’ll only see real change, says Craig Claughton of Marsh, when there’s even more control over litigation funding. “Only when they introduce caps on what you can earn as a litigation funder will it change for the long term.”
INCREASING LITIGATION AFFECTS PI MORE BROADLY As well as the problems impacting D&O at present, professional indemnity insurance more broadly is also in the spotlight, and facing similar challenges. Brokers are finding a number of professions, including construction and financial services, trickier to place than they were in the past. “Costs of professional indemnity are going up and up,” says Don Shields, Managing Director of Geelong Insurance Brokers. “It’s getting really difficult to place some occupations at affordable rates.” “In some respects, the government have enabled this by
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allowing ambulance chasing and contingency fees, so claims that wouldn’t have got up in the past are now coming front and centre. “When I first started in the industry, lawyers couldn’t advertise, and now they can. In the past, certain things would have happened and people would have thought ‘no problem, that was my fault,’ and taken ownership of things. Now everyone sees a potential claim. “Insurers don’t have a limitless pot of money - if claims go up, then that pool’s got to be increased.”
FEATURE / Financial Solutions
CASE STUDY: PROFESSIONAL INDEMNITY IN THE SPOTLIGHT As well as the problems impacting D&O at present, professional indemnity insurance more broadly is also in the spotlight, with brokers finding a number of professions, including construction and financial services, trickier to place than they were in the past.
for the failure to inform the client of the mistake as soon as they became aware of it.
“In that case, they brought proceedings against Pitcher Partners for deceit – not telling them earlier, and denying when they were confronted about it, amounted to deceit. As Andrew Sharpe, Principal a result Pitcher Partners - Insurance at Meridian were ordered to pay Lawyers, says, “Of significantly greater interest over the past 12 damages than would months, particularly in have been ordered in the the financial lines area, event that they had not was a case involving an sought to cover up their accounting firm, Pitcher error.” Partners. The key takeaway? If “They made an error you become aware that and continued to deal you’ve given incorrect with the client, and in advice, or you’ve made a continuing to deal with mistake, you have a duty the client discovered to speak up. their error, but defensively decided not “If you don’t,” says to tell the client.” Sharpe, “it may turn mere negligence into When the mistake was deceit, making matters discovered, the firm worse and potentially faced a double whammy. prejudicing the professional’s insurance “They were not only sued position.” for the mistake, but also
NIBA.COM.AU / 39
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FEATURE / Travel Insurance
WAITING TO TAKE OFF The COVID-19 pandemic has hit the travel and tourism industry hard; jobs – even highly skilled ones – are being lost in record numbers with no exact estimation of when the sector will return to its pre-pandemic state.
As countries slowly begin opening up, one thing is for sure, the way we travel, as well as how often we go overseas, might have changed for some time to come. BY TANAYA DAS 42 / INSURANCE ADVISER JULY/AUGUST 2020
FEATURE / Travel Insurance
I
t’s no secret that Australians love travel, for business as well as pleasure, but right now most of us are wondering what the future of travel, especially international movement, will look like. According to the Australian Bureau of Statistics (ABS) data, 2018-19 was the highest year on record for Australian residents returning from a short-term trip overseas, with 11.2 million trips. All signs predicted that 2020 would generate similar numbers for the travel and tourism sector, until the COVID-19 pandemic triggered an unprecedented
restriction of movement around the world. Insurance Adviser has spoken to three experts in the travel, accident and health (A&H) and income protection sectors for their perspective on what lies ahead.
THE FUTURE IS UNCERTAIN
TravelCard CEO Peter Klemt believes that as social animals humans have an innate desire to travel. He says, “In the short term, TravelCard is seeing business travellers looking to keep their policies active with the expectation that business travel will start again in the near
future. We appear happy to supplement our face-to-face meetings with technology, but we still want the real thing and are planning it as soon as possible, me included.” For leisure travel his observation is that largely people are looking at domestic travel in the short-term, “Customers are keen to support the drought and bushfire impacted regions and explore our beautiful country.” Klemt is of the view that long-term travel will pick up quickly when borders reopen and people become confident that it is ‘safe’ to travel. There is a significant amount NIBA.COM.AU / 43
FEATURE / Travel Insurance
“This crisis has really highlighted what the insurance industry already knows; that many leisure travel insurance customers do not read the PDS – the epidemic and pandemic exclusion has been a surprise for customers right across the industry.” – Peter Klemt, TravelCard of pent-up demand and commentators like IBISWorld predict a sharp v-shaped recovery for Australian travel and tourism. Richard Todd who leads the Accident & Health team at Liberty Specialty Markets, says it all depends on how well COVID-19 is managed by different countries around the world, “In the short-term, when borders first start opening, we expect limited business travel due to travel restrictions and a general reluctance to travel. A second wave or further shut-downs of borders will obviously restrict travel further.” TravelCard customers have indicated that older travellers and travellers with pre-existing conditions will be slower in
returning to travel. They want to wait out the short-term fall-out and see a decrease in COVID-19 numbers overseas before they feel comfortable travelling again. Todd also points out that it also remains to be seen how airlines and travel providers will schedule and price flights, which may impact uptake.
THE PANDEMIC ISN’T THE ONLY CONCERN
Dave Fogarty, Managing Director, Point Underwriting Agency, says he doesn’t expect to see a lot of change in the A&H space, specifically relating to the income protection side of the product. But he believes that the true impact of
the COVID-19 crisis will be felt when the government initiatives are wound back. He says, that while no one could predict COVID-19, Point did see a need to evolve the A&H product, such as agreed value and a modern view on occupations. “With these improvements we have already seen that we are holding our product well in these challenging times.” Unrelated to COVID-19, but highly relevant to the A&H space is the recent statutory changes to the life space, making the product both much more expensive and harder to place. Fogarty says, “With these changes we expect to see a broadening of A&H, we have already begun to see enquiries for our type of product as a good alternative to life insurance for older professionals who wish to keep working.” Fogarty expects to see the market increasing rates in response to the impact of COVID-19 on global travel. He says, “The market was already hardening, and just as post-COVID travel will shift from being cheap and available, so too will travel insurance.”
FIVE THINGS TO CONSIDER WHEN PLACING TRAVEL INSURANCE IN THE CURRENT CLIMATE:
1.
Consider what pandemic cover is offered and whether it will meet your client’s needs – if included, is it medical only or does it also consider other aspects such as quarantine costs?
2.
Point your clients to the DFAT Smartraveller website for information on safe destinations, and encourage them to think very carefully about whether they want to travel to a destination if it is not clear of COVID-19.
3.
Seek timely information. We expect customers will have a lot of questions about what is and isn’t covered when travel resumes; push insurers for clear and concise information that you can share with your clients.
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4.
The COVID-19 crisis has really highlighted that many clients don’t really engage with the details of their insurance cover – and they certainly don’t read the PDS. Your expertise and experience as brokers is critical in helping clients to ensure that cover meets their needs and that they understand it.
Peter Klemt, TravelCard
5.
Consider how a travel insurer will support your clients while they’re travelling; particularly at the moment, people want to feel they will be looked after if their trip doesn’t go to plan.
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FEATURE / Travel Insurance
“I expect you will see some insurers emerge from this hungry for new business, and others will review their policy wordings to exercise more caution.” – Richard Todd, Liberty Specialty Markets A COVID-19 SPECIFIC COVER?
Corporate travel policies from Liberty have typically been very broad on travel and usually include pandemic cover. Todd says, “We tailor our policies to our client needs, so if brokers seek more flexibility in travel cover, we are happy to work with them to achieve the right outcome. In recent weeks we have already updated coverage for several clients to reflect their current needs. Klemt says that TravelCard customers have indicated that they would like cover for COVID-19. He is reluctant to confirm anything yet but says, “We know the industry in Australia is examining how best to respond and what type of COVID-19 cover is feasible. TravelCard is working hard on this and we expect to launch COVID-19 Cover later this year.” Todd adds, “I think we need to keep in mind that for travel insurers, COVID-19 is likely to be the largest global claims event in history. To compound the situation, many leisure travel insurers are not currently writing new policies due to travel restrictions. This means they are paying
out with no funds coming in. The industry faces an unusual situation that will impact some insurers’ appetites. I expect you will see some insurers emerge from this hungry for new business, and others will review their policy wordings to exercise more caution.”
LEARNINGS FROM THE CURRENT CRISIS
As the global community struggles to come to terms with the nature of this unknown beast and its impacts, a lot of us are focussing on the takeaways. This whole situation has been a huge learning experience for Fogarty, “The one thing COVID-19 has taught me is the unthinkable can happen, it has really brought home the fragility of the world economy.” He says, “From a business perspective we have learnt a great deal in adjusting to a new way, that being prepared and
flexible in our operation has really helped us navigate this time. We were able to adapt quickly to what our brokers needed from us, as well as new working practices.” On a personal level, Klemt has learnt that working from home is not only possible but very productive. On the business side he says, “This has definitely been a challenging time, we have had to stretch ourselves to continue to provide service to the standards we desire and it has brought home the need to be agile. The positive aspect of this is that it has given us the opportunity to identify system and process improvements for the future.” Todd considers that one of the most important lessons from this situation has been; relationships become even more important when times are tough. He says, “It is incredibly important to stay focused on normal work and to always remember that COVID-19 isn’t the only thing to focus on.”
“The true impact of the COVID-19 crisis will be felt when the government initiatives are wound back.” – Dave Fogarty, Point Underwriting Agency
DAVE FOGARTY BELIEVES THAT BROKERS WILL NEED TO BE AGILE AND LOOK CLOSELY AT MORE THAN JUST THE POLICY AS THE SITUATION UNFOLDS FURTHER. Here is list of things for brokers to consider before choosing an underwriter for your clients:
1. 2. 3.
Study the underwriter’s business attitude towards claims. Discuss with the insurer their view at present.
Consider if the insurer’s security is AAA rated and going to be stable in the long run.
46 / INSURANCE ADVISER JULY/AUGUST 2020
Specialist Underwriter
PRESENTS
AN UPDATED GUIDE TO ECONOMIC SUPPORT MEASURES
COVID-19 / Welcome
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VID-19
THE ONGOING CHALLENGES OF COVID-19 DALLAS BOOTH
Chief Executive Officer, National Insurance Brokers Association
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IBA continues to provide as much information as we can to help our members understand the challenges that exist at the present time, and to get the best information available to help them and their clients survive the crisis. Health continues to be the #1 priority. A comment was made recently that the easing of COVID restrictions is not a time for celebration – it is time for even higher levels of vigilance, and attention to observing all necessary health and hygiene practices at all times – at home, at work, when shopping, and in the community generally. The mid-June experience in Victoria shows how important it is to remain super vigilant, and to observe all relevant health warnings and recommendations. The health of ourselves, our families, our work colleagues, our friends and community networks remains the major challenge at the present time, and this will continue until there is a vaccine for the COVID-19 virus. Another commentator has said that regardless of our industry or profession, we are all now in the health business, whether we like it or not. Please be aware of all relevant recommendations from the health authorities in your state or territory. Please
The health of ourselves, our families, our work colleagues, our friends and community networks remains the major challenge at the present time, and this will continue until there is a vaccine for the COVID-19 virus. observe them at all times. Secondly, the federal, state and territory governments continue to offer support to most businesses. We have tried to identify these programs so that insurance broking firms can take advantage of them where appropriate and can discuss the programs with their clients as a value-added service. We will continue to update information about government support programs as each announcement is made. Finally, we will continue to provide up-to-date information about the easing of restrictions so brokers can support clients who are starting to go back to work and resume “normal” trading conditions. If there is anything else that readers feel NIBA can usefully help with at the present time, please do not hesitate to let us know.
CONTENTS COVID-19 PULLOUT 51 Federal Government Support for Businesses 52 State and Territory Government Support for Businesses
50 / INSURANCE ADVISER JULY/AUGUST 2020
COVID-19 / Government Support
GOVERNMENT SUPPORT FOR BUSINESSES AMID COVID-19
NIBA Policy Analyst, Allyssa Hextell, provides an update on the federal and state initiatives supporting small- and medium-sized businesses during these uncertain times.
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here have been a flurry of announcements, unveilings and media statements released in the past few weeks. With so much information to filter through, it can be hard to keep up with what our governments are doing to help support business at this time. NIBA is committed to supporting our members through the coronavirus outbreak and the uncharted territory that lies on the other side. To help navigate the various stimulus packages, NIBA has put together this helpful guide.
FEDERAL
SME Guarantee Scheme
The Government has established the Coronavirus SME Guarantee Scheme which helps small- and medium-sized enterprises (SMEs) gain access to working capital to help them get through the impact of the coronavirus. Under the Scheme, the Government will guarantee 50 per cent of new loans issued by eligible lenders to SMEs. The Government’s support will enhance lenders’ willingness and ability to provide credit to SMEs with the Scheme able to support $40 billion of lending to SMEs. The Scheme will be available for new loans made by participating lenders until 30 September 2020. For more information visit treasury.gov. au/coronavirus/sme-guarantee-scheme
Boosting Cashflow for Employers
The Federal Government is providing up to $100,000 to eligible small and medium sized businesses, and not-for-profits (including charities). Eligible employers will receive a payment equal to 100 per cent of their salary and wages withheld up to a maximum of $50,000 with a minimum payment of $10,000. Small and medium business entities with aggregated annual turnover under $50 million that employ workers are eligible.
Not-for-profit entities, including charities, with aggregated annual turnover under $50 million, that employ workers will also be eligible. The payments are tax free and will flow automatically through the ATO. An additional payment will also be made for the period of June-September. Eligible entities will receive an additional payment equal to the total of the Boosting Cash Flow for Employers payments received. For more information visit ato.gov.au/ Business/Business-activity-statements-(BAS)/ In-detail/Boosting-cash-flow-for-employers/
Extension of the Instant Asset Write-Off
The Government has extended the $150,000 instant asset write-off for six months from 1 July 2020 to 31 December 2020 for Australian businesses with annual turnover of less than $500 million. For more information visit ato.gov. au/Business/Depreciation-and-capitalexpenses-and-allowances/Simplerdepreciation-for-small-business/Instantasset-write-off/
Backing Business Investment (BBI)
Measures introduced in March 2020 provide an incentive to businesses with an aggregated turnover of less than $500 million for the 2019–20 and 2020–21 income years, to deduct the cost of depreciating assets at an accelerated rate. For each new asset, the accelerated depreciation deduction applies in the income year that the asset is first used or installed ready for use for a taxable purpose. The usual depreciating asset arrangements apply in the subsequent income years that the asset is held. For more information visit ato.gov. au/Business/Depreciation-and-capitalexpenses-and-allowances/Backing-businessinvestment---accelerated-depreciation/
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VID-19
Assistance to Help Retain Apprentices and Trainees
Eligible employers can apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage paid during the 9 months from 1 January 2020 to 30 September 2020. The subsidy is available to small businesses employing fewer than 20 full-time employees who retain an apprentice or trainee. Or employers of any size and Group Training Organisations that reengage an eligible outof-trade apprentice or trainee. The apprentice or trainee must have been in training with a small business as at 1 March 2020. Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee. Final claims for payment must be lodged by 31 December 2020.
Rent Relief Code of Conduct
The National Cabinet has agreed that state and federal governments will implement a set of good faith leasing principles for application to commercial tenancies (including retail, office and industrial) between owners/ operators/other landlords and tenants, in circumstances where the tenant is a smallmedium sized business (annual turnover of up to $50 million) and is an eligible business for the purpose of the Commonwealth Government’s JobKeeper programme. These principles will apply to negotiating amendments in good faith to existing leasing arrangements – to aid the management of cashflow for SME tenants and landlords on a proportionate basis – as a result of the impact and commercial disruption caused by the economic impacts of industry and government responses to the declared coronavirus (“COVID-19”) pandemic. National Cabinet has agreed that there would be a proportionality to rent reductions based on the tenant’s decline in turnover to ensure that the burden is shared between landlords and tenants. The Code provides a proportionate and measured burden share between the two parties while still allowing tenants and landlords to agree to tailored, bespoke and appropriate temporary arrangements that take account of their particular circumstances. The Rent Relief Policy will include a mutual obligation requirement on the smalland medium-sized enterprises and not-forprofit tenants to continue to engage their employees through the JobKeeper initiative where eligible, and if applicable, provide rent relief to their subtenants. How this code is regulated will be determined by the state.
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COVID-19 / Government Support
JobKeeper and Workers Compensation
The introduction of Job Keeper has created uncertainty amongst businesses as to whether or not these payments need to be declared to the insurer as wages and whether these payments will affect the premiums paid by employers. The treatment of Job Keeper payments for the purposes of wages calculation differs across each state and territory. Aon have provided some useful information for business owners that details each states approach. The information can be found at aoninsights.com.au/covid-19-impactworkers-comp/
NEW SOUTH WALES
Payroll Tax Waiver and Deferral
The government has announced that they will bring forward scheduled payroll tax cuts by raising the payroll tax threshold to $1 million in 2020-21. Businesses with payrolls over $10 million will be able to defer their payroll tax payments for six months. Businesses with payrolls of $10 million or less will also receive a three-month deferral in addition to the three-month waiver. For more information visit revenue.nsw.gov. au/taxes-duties-levies-royalties/payroll-tax
NSW Rental Relief
The NSW Government has announced a number of measures in-line with their National Cabinet commitments on rental relief. The measures will apply to residential tenants who have had a 25 per cent reduction on income after tax and commercial tenants who have had a 30 per cent reduction in revenue as a result of COVID-19. The measures include; • A six-month moratorium on rental arrears eviction for those financially impacted by COVID-19 • Landlords will be required to negotiate new rental arrangements with the tenant in good faith and can only seek to issue a termination notice or apply for an eviction after the 60-day period has elapsed. • Commercial landlords will be offered a concession of up to 25 per cent of their 2020 land tax liability if they pass the savings on through a rent reduction. • Commercial landlords will not be able to terminate a lease due to unpaid rent, and must offer tenants rent relief proportionate to the tenant’s decline in turnover.
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Fee-free Courses
The NSW Government is offering fee-free vocational education courses, in areas impacted by the bushfires. The courses were originally introduced on the South Coast but have been extended to areas such as Port Macquarie, Taree, Tumut, Macksville and West Kempsey. The courses available include first aid, white card, dozer operations and more. The training will be delivered by TAFE NSW and other registered training organisations. For more information visit training.nsw.gov.au
Small Business Grants
From 1 July, eligible small businesses will be able to apply for a $3,000 grant to help them with reopening and operating safely under the COVID-19 restrictions. The grants can be used to cover marketing and advertising expenses, make fit-out changes and train staff in how to work safely under the current COVID-19 health conditions. The grants are funded from the existing Small Business Support Fund which closed on 30 June. Eligible business must apply on the Service NSW webpage by 16 August 2020.
VICTORIA
The Victorian Government has announced a number of measures in-line with their National Cabinet commitments on rental relief. These measures include; • Commercial and residential landlords will be offered a concession of up to 25 per cent of their 2020 land tax liability if they pass the savings on in the form of a rent reduction. • A six-month moratorium on evictions for non-payment of rent for commercial tenancies involving small- and mediumsized businesses. • A six-month ban on rental increases for residential and commercial properties.
Returning to Work
VID-19
• Rental waivers and deferrals for commercial tenants with an annual turnover under $50 million who have experienced more than a 30 per cent reduction in turnover due to coronavirus. For more information visit business.vic.gov. au/disputes-disasters-and-succession-planning/ coronavirus-covid-19/coronavirus-businesssupport/commercial-tenancy-relief-scheme
QUEENSLAND Payroll Tax Relief
Businesses with less than $6.5 million in Australian taxable wages may be eligible for a number of payroll tax relief measures from the Queensland government. These measures include: • refunds of payroll tax for two months; • a payroll tax holiday for three months; or • a deferral of payroll tax for the 2020 calendar year. Businesses that pay more than $6.5 million in wages and have been directly or indirectly affected by the coronavirus, can also apply for the refund and deferral. In order to take advantage of these measures businesses must apply online. For more information visit business.qld. gov.au/running-business/employing/payrolltax/lodging/coronavirus-tax-relief
Interest-free Loans
The Queensland state government is also offering low-interest loans of up to $250,000 to help small businesses retain employees and maintain operations during the coronavirus outbreak. The loans, which will be administered by the Queensland Rural and Industry Development Authority will be interest-free for the first 12 months. To apply, businesses must first register their interest with the authority. For more information visit qrida.qld.gov.au/ current-programs/covid-19-business-support/ queensland-covid19-jobs-support-scheme
The National Cabinet has agreed to a set of COVID-19 safe workplace principles, while Safe Work Australia is currently providing industry specific information for employers and employees on their website. The Safe Work Australia website contains a variety of resources for businesses including advice on social distancing, hygiene practices and coronavirus-related workplace compensation. Businesses are being encouraged to prepare for re-opening by having a solid COVID-safe work plan in place to protect employees and customers. Recommended measures include; staggering start and finish times to avoid crowding on public transport, frequent cleaning of all workspaces, avoiding face-to-face meetings and undertaking a risk assessment before recommencing operations. safeworkaustralia.gov.au
COVID-19 / Government Support
WESTERN AUSTRALIA
Payroll Tax Grants and Deferrals
The Western Australia state government is providing small businesses (payroll between $1 million and $4 million) with a one-off grant of $17,000. The grants will be paid automatically by cheque and are expected to start being distributed by July. Like NSW, Western Australia has also brought forward scheduled payroll tax cuts, increasing the payroll tax threshold to $1 million from 1 July 2020. Businesses must apply for this deferral online. For more information visit wa.gov.au/ government/multi-step-guides/payroll-taxemployer-guide/covid-19-relief-payroll-taxemployer-guide
Rental Relief
The Western Australian Government has announced a number of measures in-line with their National Cabinet commitments on rental relief. These measures include; • A six-month moratorium on evictions due to non-payment of rent. • A six-month freeze on rent increases for commercial properties. • A resolution mechanism for disputes arising out of, or in relation to, the operation of the legislation or code of conduct, including a mechanism to protect landlords where tenants are refusing to pay rent despite the capacity to do so. These measures also prohibit landlords progressing against a tenant for a breach that occurred after 30 March 2020, but before the new measures come into operation. For more information visit commerce.wa.gov.au/consumer-protection/ commercial-tenancies-covid-19-response
Rental Waiver for Government Tenants
The Western Australia state government has announced it will waive rental payments for small businesses and notfor-profit groups in Government-owned buildings for six months. For more information visit mediastatements.wa.gov.au/Pages/ McGowan/2020/03/Rent-relief-for-smallbusinesses-and-not-for-profits.aspx
NORTHERN TERRITORY Business Improvement Scheme
The Northern Territory Government has unveiled $20 million business improvement scheme. Under the scheme, $10,000 grants will be
made available for businesses to purchase goods and services to make permanent physical improvements to their premises. Any improvements made must help to improve business operations or customer experience. If business owners can also contribute $10,000 in capital, the Northern Territory Government will provide an additional $10,000. For more information visit business. gov.au/Grants-and-Programs/BusinessImprovement-Grant-NT
SOUTH AUSTRALIA
Payroll Tax Waiver and Deferral
Businesses with annual wages of less than $4 million will receive a six-month payroll tax waiver. Eligible businesses will be notified by RevenueSA through RevenueSA online. Monthly payroll tax returns must still be lodged to capture wages for the month, with no payment to be made. Businesses with annual Australian grouped wages above $4 million that can demonstrate they have been significantly impacted by COVID-19 will, upon application, be able to defer payroll tax payments for the six months from April to September 2020. For these eligible businesses, payroll tax payments that were due to be paid from April to September will now be due in October 2020. For more information visit treasury.sa.gov. au/Growing-South-Australia/stimulusmeasures-to-support-businesses-and-thecommunity-impacted-by-covid-19
Business and Jobs Support Fund
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VID-19
The Easing of Restrictions
While National Cabinet has unveiled a roadmap to easing COVID-19 restrictions, it will be up to each state and territory government to decide which restrictions will be eased and how quickly each state moves through the roadmap. Links for current restrictions in each state and territory can be found at each of the following websites: • covid19.act.gov.au/faq/faqs-changeto-restrictions • nsw.gov.au/covid-19/what-you-cantdo-under-rules • coronavirus.nt.gov.au/roadmapnew-normal • covid19.qld.gov.au/governmentactions/roadmap-to-easingqueenslands-restrictions • covid-19.sa.gov.au/restrictions-andresponsibilities • coronavirus.tas.gov.au/facts/ important-community-updates • vic.gov.au/coronavirus-covid-19restrictions-victoria • wa.gov.au/organisation/departmentof-the-premier-and-cabinat/covid-19coronavirus-wa-roadmap
business vehicle registrations for both light and heavy vehicles. Registrations can be reactivated at no cost to them when the business restarts. The maximum period that a registration can be frozen is 12 months.
The South Australian Government has Small Business Hardship Grants also created a $300 million business and The Tasmanian Government is providing jobs support fund. The priority of the fund grants to eligible small business impacted is the ongoing survival of businesses and by the coronavirus. Grants of $15,000 will minimising job losses. be available with applications accepted Businesses are encouraged to work with from businesses that employ fewer than 50 their representative bodies when making a full time equivalent staff. submission so that the broad impacts across Grants will be available to those each sector can be fully understood. businesses that: For more information visit treasury.sa.gov. • can meet the hardship test; and au/Growing-South-Australia/stimulus• can demonstrate an ability to continue to measures-to-support-businesses-and-theoperate in the current environment and community-impacted-by-covid-19 provide products or services necessary for the Tasmanian or Australian TASMANIA community; or Registration Freeze for Business • may need to temporarily cease operation Vehicles but can demonstrate strong prospects for Small businesses looking to suspend activity future jobs sustainment or growth. due to the COVID-19 business downturn For more information on these programs and trading restrictions can apply to the visit business.tas.gov.au/covid-19_business_ Registrar of Motor Vehicles to freeze their support_packages
NIBA.COM.AU / 53
COMMUNITY HUB
COMMUNITY HUB JULY/AUGUST 2020
The COMMUNITY HUB is your space to showcase your products and services to a specialist audience.
INDEX AB Phillips ..................................................... 54 ASR Underwriting ..................................... 55
MGA Insurance Brokers ........................ 56 Moran Insurance Brokers ..................... 56 Newline Group .............................................57 Affinity Insurance Brokers ..................... 57 Pollard Insurance Brokers........................ 58
AIBI .................................................................. 58 Tudor Insurance .......................................... 58 Trident Marine Insurance......................... 59 Marsh & McLennan Agency.................. 59 All Parks Insurance...................................... 59
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
56 / INSURANCE ADVISER JULY/AUGUST 2020
COMMUNITY HUB
Linda Sepala Chief Executive Officer / Underwriting Manager – Liability
Underwriting Manager – D&O & FI
Underwriting Manager - PI
PH: 03 9998 1900
TD00430 NEWLINE 210x146_OL.indd 1
20/4/17 2:16 pm
AFFINITY EQUINE, ADVENTURE & LEISURE LIABILITY
Untitled-20 1
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
21/3/19 10:30 am
Sailing Sea Kayaking Snorkelling Snow Skiing Surfing Swimming Trail Running
1300 130 535 www.affinityib.com.au
NIBA.COM.AU / 57
AFS License No. 214 185
COMMUNITY HUB
�aibi
Adult Industry Business Insurance
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.
Demolition and Asbestos Removal Liability Insurance Benefits of dealing with LSM:
• • • • •
$20M Asbestos Liability now available Security of dealing with the local office of a major global 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 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) • 15% commission on all placements Tudor AFS License Number: 243 299
please contact:
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TUDOR INSURANCE AUSTRALIA t: (03) 9707 3033 f: (03) 9707 4568
58 / INSURANCE ADVISER JULY/AUGUST 2020
Tudor ABN: 19 876 513 568
Cameron McKerchar e: service@tudorinsurance.com.au
26/10/18 2:49 pm
COMMUNITY HUB
MARSH& MCLENNAN A G E N C Y OUR INSURANCE PRODUCTS INCLUDE:
■ ■ ■ ■ ■ ■ ■
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 newbusiness@marshmc.com Marsh and McLennan Agency Pty Ltd ABN 33 000 668 584 / AFSL 238984
517-3776
NIBA.COM.AU / 59
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
BE PART OF NIBA 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)
WE ARE YOUR VOICE Contact Tony May National Advertising Sales Manager E: tmay@niba.com.au
NIBA / Events
NIBA EVENTS
STAY UPDATED!
NIBA stages a variety of educational and social events across Australia for the whole intermediated insurance community.
Check out what’s happening close to yo u and registe r via the events cale ndar at niba.com.a u/ events
EVENTS UPDATE A new ‘virtual events’ space has recently been introduced by NIBA, hosting webinars across various topics. We thank all our guests that have joined us on the journey so far. As we progress into the second half of 2020 a program of virtual, and where possible, physical networking event opportunities will be showcased. NIBA will follow health authority recommendations as government restrictions ease over the next few months and plan some ‘face-to-face’ events with social distancing in place for later in the year. For the latest information on NIBA events – please visit our website, niba.com.au/events 2020 NIBA VIRTUAL CONVENTION
NATIONAL WEBINARS ON DEMAND - TO BE WATCHED AT YOUR LEISURE! 2020 CGU NIBA WEBINAR SERIES | THE TRUSTED RISK ADVISER COVID-19 EDITION
As economies and markets continue to be impacted by COVID-19, this webinar delivers key insights into the possible impacts on the insurance market and what this could mean for small to large businesses. The webinar aims to help you understand the possible impacts on your clients, whilst managing expectations of both end customer and the underwriting market.
2020 CGU NIBA WEBINAR SERIES | UNOCCUPIED BUSINESSES: DO’S & DON’TS
26-30 OCTOBER 2020
The objective of this session is to highlight the key concerns arising as businesses transition into and out of idle conditions due to the COVID-19 pandemic. Key risk factors are presented around unoccupied businesses and how to approach their management.
BRAVE NEW WORLD
NAVIGATING THE WINDS OF CHANGE
SAVE THE DATE 2020 NIBA/UAC PERTH UNDERWRITING EXPO
WHEN: Thursday, 12 November 2020 WHERE: Crown Complex, Great Eastern Highway, Burswood Preparations are underway to host the insurance industry coming together in Perth. This is a popular annual event which kicks off with a breakfast and then flows into the marketplace, where insurance brokers and national underwriters can interact under one roof. This event is subject to travel and gathering restrictions being lifted. NIBA will continue to provide further updates as we move closer to the date.
2020 NIBA QLD CHRISTMAS BOWLS
WHEN: Thursday, 26 November 2020 WHERE: New Farm Bowls Club, 969 Brunswick Street, New Farm Now becoming a happy tradition - this year marks our third year of holding this enjoyable relaxed event. You are invited to join us once again for an afternoon of barefoot bowls and a delicious BBQ lunch in the fresh air. Stay tuned for more information on this event.
DISPLAY ADVERTISING INDEX – JULY/AUGUST 2020 BAIS......................................................... IFC QBE................................................................5 Vero................................................................7 CGU.............................................................. 11 Insurance Advisernet............................ 15 Focusnet..................................................... 17
ASTA Group.............................................. 21 NTI............................................................... 27 Gold Seal...................................................29 UAC.............................................................. 31 Brooklyn Underwriting........................ 35 Community Underwriting.................. 37
Liberty Specialty Markets........... 40, 41 Point Underwriting................................45 NOVA Underwriting............................. 47 Ebix.............................................................48 World Business Forum.....................IBC Flex Insurance................................... OBC
If you’d like to advertise your products and services through NIBA, please contact Tony May today on (02) 9459 4303.
62 / INSURANCE ADVISER JULY/AUGUST 2020
“QPIB represents competence and the will to strive for excellence.”
ING IS
U
RA
K
ER
QPIB
S
Apply online at niba.com.au or email NIBA Memberships Manager Audi Witsen – awitsen@niba.com.au
D PRAC IE T F I
IN
QPIB – A STATEMENT OF PROFESSIONALISM
• QUA L
– CAITLIN CARSON, 2019 YOUNG PROFESSIONAL BROKER OF THE YEAR
NCE BR
O
INSURER STRENGTH RATINGS
S&P GLOBAL
INSURER FINANCIAL STRENGTH RATINGS
The following list of S&P Global Ratings insurer financial strength ratings assigned to insurance companies in Australia and New Zealand. Ratings at 29 June, 2020. Contact: Craig Bennett, S&P Global Ratings Telephone: 03 9631 2197
NEW ZEALAND
RATING
NON-LIFE INSURERS
AUSTRALIA
RATING
NON-LIFE INSURERS AAI Ltd.
A+/POSITIVE
AIG Australia Limited
A/STABLE
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
Medical Insurance Australia Pty Ltd.
A-/STABLE
QBE Insurance (Australia) Ltd.
A+/STABLE
QBE Insurance (International) Ltd.
A+/STABLE
Zurich Australian Insurance Ltd.
A+/POSITIVE
AA Insurance Ltd.
A+/POSITIVE
AIG Insurance New Zealand Ltd.
A/STABLE
Chubb Insurance New Zealand Ltd.
AA-/STABLE
Hallmark General Insurance Co. Ltd. (NZ Branch)
BBB+/STABLE
IAG New Zealand Ltd.
AA-/STABLE
Society of Lloyd's
A+/STABLE
Medical Insurance Society Ltd.
A-/POSITIVE
Southern Cross Benefits Ltd.
A/STABLE
Southern Cross Pet Insurance Ltd.
A/STABLE
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
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
HEALTH INSURERS Southern Cross Medical Care Society
A+/STABLE
NIB NZ Ltd.
A-/STABLE
LENDERS MORTGAGE INSURERS Genworth Financial Mortgage Insurance Pty Ltd. (NZ Branch)
A/STABLE
LIFE INSURERS
LENDERS MORTGAGE INSURERS Genworth Financial Mortgage Insurance Pty Ltd.
A/NEGATIVE
QBE Lenders' Mortgage Insurance Ltd.
A/STABLE
Westpac Lenders Mortgage Insurance Ltd.
AA-/NEGATIVE
REINSURERS 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
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
64 / INSURANCE ADVISER JULY/AUGUST 2020
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
BEST’S
NEW ZEALAND
FINANCIAL STRENGTH RATINGS
The following list of AM Best Financial Strength Ratings (FSRs) assigned to insurance companies in Australia and New Zealand. Ratings as at 26 June, 2020. 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
AUSTRALIA
RATING
LIFE, ANNUITY AND ACCIDENT General Reinsurance Life Australia Ltd.
A++/STABLE
PROPERTY/CASUALTY
RATING
COMPOSITE Quest Insurance Group Limited
B/STABLE
LIFE, ANNUITY AND ACCIDENT American Income Life Insurance Company (New Zealand Branch)
A+/ NEGATIVE
BNZ Life Insurance Limited
A/STABLE
CIGNA Life Insurance New Zealand Limited
A/STABLE
Co-operative Life Limited
B++/STABLE
DPL Insurance Limited
B+/POSITIVE
Fidelity Life Assurance Company Limited
A-/STABLE
Foundation Life (NZ) Limited
A-/STABLE
General Reinsurance Life Australia Limited (New Zealand Branch)
A++/STABLE
Kiwi Insurance Limited
A-/STABLE
Lifetime Income Limited
B/STABLE
Momentum Life Limited
B++/STABLE
Partners Life Limited
A-/STABLE
Pinnacle Life Limited
B/STABLE
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
The Hollard Insurance Company Pty Ltd
A-/STABLE
Beneficial Insurance Limited
B++/STABLE
The New India Assurance Company Limited (Australia Branch)
A-/NEGATIVE
Brightsideco Insurance Limited
B/STABLE
Pacific International Insurance Pty Limited
B++/STABLE
Consumer Insurance Services Limited
B+/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
First American Title Insurance Company of Australia A/STABLE Pty Limited (New Zealand Branch) FMG Insurance Limited
A/STABLE
General Reinsurance Australia Ltd (New Zealand Branch)
A++/STABLE
Health Services Welfare Society Limited
B+/STABLE
The Hollard Insurance Company Pty Ltd (New Zealand Branch)
A-/STABLE
Mitsui Sumitomo Insurance Company Limited (New Zealand Branch)
A+/STABLE
The New India Assurance Company Limited (New Zealand Branch)
A-/NEGATIVE
New Zealand Medical Professionals Limited
B+/STABLE
Pacific International Insurance Pty Ltd (New Zealand Branch)
B++/STABLE
Police Health Plan Limited
A-/STABLE
Provident Insurance Corporation Limited
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
NIBA.COM.AU / 65
INSURANCE JOURNEY / Megan Spiniello
RELATIONSHIPS ARE EVERYTHING
NIBA SA Young Professionals Committee Member, Megan Spiniello, from SSAA General Insurance Brokers tells us why being an insurance intermediary is something she loves.
M
y life in insurance began by chance, like many others, I fell into the industry as a teenager and built a career I am proud of. My first role was as a receptionist and over the past 14 years I have worked my way up from there. Even though I didn’t really choose to be a part of insurance, once I saw what being in the industry meant, I just could not think of leaving. We get to help people protect their livelihoods. Working in insurance is incredibly interesting as no two clients are the same. My job is to understand my client, find out what makes them tick and understand their risk better than anyone else. I then get to find the right solution for them which is always rewarding.
“The more you say yes, the more opportunities you are presented with. Whether that be meeting new people, participating in different aspects of the industry or just broadening your horizons.” In my opinion relationships are probably the most important aspect of this industry. Being an insurance broker is not going on a solo journey, there are so many people around to support you, help you grow and assist when things get tough. Relationships can be with insurers, colleagues, mentors, adjustors – the list goes on.
PROUDLY SUPPORTING
66 / INSURANCE ADVISER JULY/AUGUST 2020
I completely believe that insurance broking is a career that can take you anywhere you want. There are so many different roles from entry level, to claims, to broking, to team leading. You get to meet new people almost on a daily basis and you can travel the country – even the world. The only thing I would change about my career is to say yes to being a part of the insurance industry at an earlier stage. The more you say yes, the more opportunities you are presented with. Whether that be meeting new people, participating in different aspects of the industry or just broadening your horizons. Insurance broking as a profession is all about people and learning from
them. Mentorship in this profession takes one’s career to a whole new dimension. No one knows the answer to everything, so why not ask for help and guidance? I believe that we must take guidance from those that have been there before us and grow from their experience. There is always another side to every story and we only gain from opening our minds to another person’s perspective. Being a NIBA Committee member has played an important role in my career, it means that I get to play a part in helping shape and support new brokers. It is our duty to assist the NIBA young professional community with relevant learning and networking opportunities in which they can develop and grow.”
FOUR QUICK QUESTIONS Favourite film? You cant beat the Notebook, can you? It’s so cliché, but it’s the best. Favourite tipple? A nice glass of rosé shared with friends Favourite past-time? I enjoy nothing more than a lazy Sunday catching up with friends and watching my children play. Favourite cuisine? Mexican
Share your insurance journey. Email editor@niba.com.au
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