OCTOBER 2021
NAVIGATING A TRANSFORMING LANDSCAPE The 2021 Warren Tickle Memorial Award finalists
CLADDING LITIGATION
The challenges that await
PANDEMIC PAIN
In the events insurance sector
AFCA’S EMMA CURTIS On setting up robust IDRs
WE ARE YOUR VOICE
Australia’s Number 1 in Marine
#1 for Local Experts
#1 in Claims Management
We have Australia’s largest team of marine claims experts in local offices across the country.
#1 Wordings in market
partner.nti.com.au Insurance products are provided by National Transport Insurance, a joint venture of the insurers Insurance Australia Limited trading as CGU Insurance ABN 11000016722 AFSL 227681 and AAI Limited trading as Vero Insurance ABN 48005297807 AFSL 230859 each holding a 50% share. National Transport Insurance is administered on behalf of insurers by its manager NTI Limited ABN 84000746109 AFSL 237246. Terms and Conditions apply. NTI.M049.1.20092021.
CONTENTS October 2021
ACN 006 093 849 ABN 94 006 093 849
FEATURES
Insurance Adviser magazine is the monthly magazine of the National Insurance Brokers Association (NIBA). Insurance Adviser magazine is published by NIBA
Publisher
Dallas Booth, CEO, NIBA T: (02) 9964 9400 E: dbooth@niba.com.au W: niba.com.au
Communications Manager Wendy Martin
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
PROFESSIONALISM + RESILIENCE = OPPORTUNITY #NIBA2021: The biggest event on the insurance broking calendar
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.
26
EXCELLENCE AMID TRANSFORMATION
Meet the 2021 Warren Tickle Memorial Award finalists NIBA.COM.AU / 3
CONTENTS October 2021
FEATURES 32
CHALLENGES AWAIT
Talking to clients about EPS / cladding
40 ADAPTING TO
EVOLVING RISKS
Events insurance and its changing landscape
IN EVERY ISSUE NIBA CEO Welcome ..................................... 6 Representation................................................ 8 Why be a NIBA member?............................ 10 Insurance Journey: Jeff Booth..................... 58
NEWS Industry bulletin............................................ 12
PROFESSIONALISM AFCA Case study.......................................... 16 A note from Michael Gill.............................. 17 Regulatory reminders.................................... 18
EVENTS Forthcoming events....................................... 55
REFERENCE Community hub............................................ 48 Insurer strength ratings................................. 56
4 / INSURANCE ADVISER OCTOBER 2021
NEXT-LEVEL CONSTRUCTION COVER. With a national specialist team of Construction & Engineering underwriters, market-leading products and capacity, plus experienced claims professionals, we have all the tools to help you build the right protection for your clients’ construction projects. And, with the power of our online platform, UBUILD, you’ll enjoy a streamlined quote and bind experience every time. Speak to your CGU Account Partner to find out more.
Always consider the Product Disclosure Statement available from the product issuer, Insurance Australia Limited trading as CGU Insurance.
CEO / Welcome
A CELEBRATION OF INSURANCE BROKING
E
arlier this year, one of my contacts in the London insurance market made a very strong comment about the importance of insurance brokers needing to be at the centre of issues relating to climate change and associated challenges. His comment surprised me a little, but the more I thought about it, the more correct I believed he was. There is now very strong evidence from a wide range of national and international scientific centres of excellence that climate change is real, and is most likely going to result in major issues and challenges for all areas of society in the coming years. As recently as 3 September 2021, the Australian Prudential Regulation Authority (APRA) issued an information paper on a project called Climate Vulnerability Assessment (CVA). The primary purpose of the project is to help regulated entities understand and manage the financial risks associated with climate change. Initially, the project will focus on the five major Australian banks. APRA Chair Wayne Byres said, “APRA began the CVA program in the banking sector due to its centrality to the Australian financial system, as well as the potential impacts associated with climate risk across the portfolios, from household mortgages to business exposures.”
Why is this important for insurance brokers?
and insurance brokers have to be able to inform and advise their clients on the current and likely future impact of weatherrelated events on their risk exposure and their insurance needs. We will cover these matters at the forthcoming NIBA Convention. I urge all insurance brokers to pay close attention to these presentations. It is highly likely the issues discussed will be directly relevant to the conversations you will have with your clients over the next 5-10 years.
Farewell, and thank you
This is my last column as NIBA CEO. I will leave the role on 31 October 2021 and hand over the keys to the office to our incoming CEO, Phil Kewin. It has been a real honour and a privilege to have had the opportunity to serve the Board and members of NIBA for the past 10 years. I have enjoyed the role immensely, and I will let others determine whether I have left the organisation in a better place over that period. I’d like to express my very sincere appreciation to the Presidents I have had the privilege to work with during the past 10 years: David Duffield, David Wyner, Graham Stevens, Tim Wedlock, Eric Harris, and Diane Phelan. Each has been a strong support, providing deep industry knowledge and wise counsel, whenever needed. The regular “how is it going”, “is everything OK” chats were really appreciated. I am also very grateful for the support I have received from all NIBA Directors. The NIBA Board is a wonderful institution, and the foundation on which all the good work of NIBA is based. Yes, some big and powerful organisations are represented around the board table, but the brands were always left outside the boardroom door, and regardless of the issue being discussed, the question was always: What is best for insurance broking in Australia? Finally, I want to sincerely thank everyone I have had the pleasure of working with over the past 10 years. Please give your encouragement, support, and wisdom to Phil. I am sure he will do a great job and will take NIBA to new heights in the coming years. I look forward to catching up with as many members as I can once lockdowns finish, and borders are re-opened. See you then.
For some time now, we have been describing the central role of insurance brokers as advising and assisting their clients in the areas of risk, risk assessment, risk management, and risk financing. Of course, insurance brokers also play a leading role when an insured event occurs, and a claim needs to be made under the client’s policy. Large weather-related events have become a significant feature of the Australian experience in the past 10 years, including cyclones, floods, fires, storms, and drought. All these events have given rise to multi-billion-dollar losses, and the Australian community has been very well served by the insurance companies and their associated reinsurers. However, in many cases, the insurers are quite rightly asking the question: what is the correct approach in the future, with major weather events becoming more frequent and more expensive? Around Easter this year, the Australian Academy of Science published a paper that raised the prospect of parts of Australia becoming uninsurable. These concerns have manifested themselves in the insurance issues being experienced across northern Australia, leading to the Australian Competition and Consumer Commission (ACCC) reports and the Federal Government’s announcement of a Cyclone Reinsurance Pool. Insurance brokers sit in the middle of all of this. They are working with clients on a regular basis to help them understand, manage, and insure their risks. Insurance brokers also have a key role to play when insurance is becoming difficult to obtain or is more costly than the client is prepared to pay. DALLAS BOOTH The Australian experience with weather and other Chief Executive Officer, NIBA natural disasters is something we all have to fully appreciate,
6 / INSURANCE ADVISER OCTOBER 2021
Commercial Motor claims that put you back in the driver’s seat
Vero’s Commercial and Motor Fleet claims service provide a market leading network of repairers who pride themselves on quality workmanship. With reduced repair costs that ultimately drive and influence premiums, as well as fast repair times – we help you get your clients back on the road and back to business.
vero.com.au/broker
Insurance issued by AAI Limited ABN 48 005 297 807 trading as Vero Insurance. Read the Product Disclosure Statement before buying this insurance. The TMD is also available. Go to vero.com.au for a copy.
NEWS / Representation
WE ARE YOUR VOICE!
There is a lot happening at the present time. The following are a few key developments that insurance brokers need to be aware of.
N
IBA 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 our members and their clients. Some of the major projects we were working on this past month include:
Review of Tasmanian Fire Services Act In keeping with their election commitment, the Tasmanian Government has announced a review of the Fires Service Act (1979). As part of the review, the government will consider alternative funding models for the state’s fire and emergency services. NIBA is currently preparing a submission to the consultation, and will be providing Tasmanian members with details on how they can support NIBA’s work to abolish the levy on insurance premiums.
Royal Commission Legislation
NIBA continues to engage with the Australian Securities and Investment Commission (ASIC) and Treasury on a number of outstanding issues relating to the Royal Commission reforms, including breach reporting obligations, anti-hawking, deferred sales model, and design and distribution obligations, all of which commence this month. NIBA has previously provided members with guidance on a number of Royal Commission reforms, and a summary has been included on page 18 and 19 of this issue. Members can access materials outlining these reforms, and the actions they will need to take to remain compliant on the NIBA website’s Media Hub.
The Role and Value of Insurance Brokers
NIBA continues to meet with State and Federal MP’s, ministers and business
8 / INSURANCE ADVISER OCTOBER 2021
representatives, as well as consumer groups to promote the Deloitte Report, The Economic Value of Insurance Broking and to communicate the value of brokers more broadly ahead of the 2022 review into the intermediated insurance industry. NIBA is already preparing for the review, and we look forward to sharing more information with you over the coming months.
WA Workers’ Compensation
The NIBA WA Divisional Committee
working group is continuing to examine the proposed Workers’ Compensation and Injury Management Bill 2021 and its impact on the intermediated insurance market. The working group includes brokers from across the WA broking community, all of whom have considerable experience in the workers’ compensation space. Interested members are invited to provide their feedback on the draft Bill to NIBA’s Policy and Research Manager, Allyssa Hextell at ahextell@niba.com.au.
CONTACT NIBA
As always, brokers who have questions about these or any other government or regulatory matters should feel free to contact NIBA CEO Philip Kewin at: pkewin@niba.com.au
Why award-winning claims matter
We’d like to thank our broker partners for their feedback, we are very proud to have received gold for Overall Claims Excellence at the prestigious 2021 Mansfield Awards for the second year running. It’s a great reflection of the focus and dedication the Vero team has on delivering claims excellence. But most importantly, it means we are supporting our brokers and their clients when they need us most. Our claims support includes Vero OneTouch* and dedicated locally based claims officers, giving you confidence when recommending Vero to your valued clients. Creating positive claims experiences is extremely important to us, and we look forward to continuing to support our brokers and their clients.
vero.com.au/broker/claims
The Mansfield Awards winners are decided on by a survey completed by brokers, who share their experiences on insurers’ claims handling. This is coupled with supporting data from Australian Securities & Investments Commission (ASIC) and Australian Financial Complaints Authority (AFCA).*The OneTouch claims process applies only to Vero Small to Medium Business up to $10,000. Time-frames quoted are based on the assumption that all supporting information and payment details are provided at the initial claim lodgement. Insurer is AAI Limited (ABN 48 005 297 807) trading as Vero Insurance. Read the PDS before buying this insurance. TMD is also available. Go to vero.com.au for a copy.
NIBA / Member Benefits
WHY NIBA MATTERS TO ME Members share why NIBA is important to them and the broking industry.
“NIBA is where I can obtain knowledge to be a better broker, and it regulates the industry by providing a benchmark for professionalism, which is so very important. As a member, they can offer me support which is vital, the opportunity to meet new people in the same industry, and provide up-to-date news through various communication sources. NIBA gives us brokers uniform representation. I can learn so much through what NIBA can offer, even after 22 years in the industry, and for that I am thankful.” KAREN SKINNER MGA Insurance Brokers The 2021 Broker of the Year for SA/NT
WELCOME TO NIBA
NIBA is thrilled to have the following new principal member on board: • Knight Management Services Pty Ltd from WA
ABOUT NIBA OUR MISSION
NIBA is the one voice for insurance brokers in Australia, representing their interests and promoting high standards of professionalism and competence.
OUR OBJECTIVES Representation
We represent the interests of members and their clients to governments, regulators, industry stakeholders, the media and the community in a manner that is respected and relevant. We have forged strong relationships at state and national level to ensure that your interests are represented.
10 / INSURANCE ADVISER OCTOBER 2021
Professionalism
We set and promote high standards of professional practice for insurance brokers for the benefit of their clients and the community through the development of professional standards, QPIB, CPD accreditation and the Insurance Brokers Code of Practice.
Community
We provide members with opportunities to meet, share, grow and prosper and build professional networks with the wider intermediated insurance community that will last throughout whole careers.
GET IN TOUCH!
Whatever your age, or level of experience, NIBA ha s brokers’ best interests at the core of everything we do. Fin d out what we can do to help be nefit your business and your tea m at niba.com.au/membe rship
ADVERTORIAL / QBE
HOW WORKING WITH QBE CAN HELP YOU ACHIEVE YOUR SUSTAINABILITY GOALS
A
few years ago, many businesses were focused on delivering shareholder value in the form of profit – usually above all else. The world has changed. People want more from the businesses they work for, and work with. People expect more from the brands they consume. “Societal expectations have changed really quickly,” says Rob Kosova, QBE’s General Manager, People and Risk. In 2015, the UN set 17 Sustainable Development Goals (SDGs). These goals affect us all, from a single consumer to a multinational, and we can all contribute to achieving them. “With businesses and customers looking for solutions to support their own SDG ambitions, QBE’s commitment to sustainability and our values in supporting people, businesses, and community is a logical alignment,” Kosova says. “At QBE we help businesses better respond to change and, while we have our own plans for building sustainability, we’re also supporting our partners and customers by sharing our knowledge and insights to support their journey.”
WHAT QBE’S SUSTAINABILITY GOALS MEAN FOR BROKERS
From a broker’s perspective, initiatives that focus on these goals provide a rather compelling story to tell to customers. Over recent times QBE has launched a number of people-and-risk-related initiatives that directly link the day-to-day business – and premise – of insurance and help us deliver sustainable development. So what initiatives are we delivering that can help you achieve your sustainability goals?
Q ACADEMY
To enable QBE to keep helping and educating customers and partners during the pandemic, QBE’s online professional development portal, Q Academy, was launched. It offers courses and training to
build expertise in risk and leadership, with a host of resources to support that learning. “Our company purpose is to give people the confidence to achieve their ambitions,” Kosova says. “We’re providing high-value courses and it has generated tremendous feedback.”
CLAIMS INNOVATION
A workers’ compensation claim can be an incredibly challenging time for the claimant – and QBE has rebuilt its claims processes by combining empathy with innovation and analytics to deliver a claimant-centric experience, powered by machine learning, artificial intelligence, behavioural insights and wearable devices.
RISK INSIGHTS AND EXPERTISE
Of course, it’s far better for all concerned if incidents are reduced and prevented from happening in the first place, so QBE is harnessing the power of its claims data and working proactively with its customers and partners to deliver industry specific risk prevention insight and expertise through our Q Risk Insights hub.
WEARABLE TECH
QBE’s partnership with wearable technology brand dorsaVI aims to help reduce the number of injuries in the workplace. The brand provides motion sensor technology that monitors postures, repetitive movements, sustained movements and muscle activity with the aim of identifying unsafe work practices and flagging risks early. “The whole idea is to prevent an incident happening in the first place,” says Kosova. “
PREMIUMS4GOOD
Premiums4Good sees a portion of customer premiums channelled into investments that have additional social or environmental benefits – with the aim of having US$2bn of impact investments by 2025. Already this has impacted areas including sustainable energy, financial inclusion, social inclusion, diversity and gender and urban and community development. “It doesn’t cost customers anything, and it genuinely does good,” Kosova says. “It’s not about the warm and fuzzy stuff anymore, it’s about making a real impact and a real difference to our society. By partnering with QBE, we can achieve these ambitions together.”
NIBA.COM.AU / 11
NEWS / Industry Bulletin
JOIN US IN CELEBRATING BROKING EXCELLENCE AND PROFESSIONALISM T he 2021 NIBA Awards will be held on 28 October 2021, to acknowledge the achievements of brokers and their underwriting partners. CEO Dallas Booth said, “Around this time every year we celebrate the outstanding work that insurance brokers across the country do to support their clients and this year is no different; it is time to recognise excellence. #NIBA2021 has been postponed to early next year but acknowledging the dedicated people in the intermediary profession is the need of the hour. We invite everyone in the insurance community to be a part of the online festivities.”
“We are very thankful to our award sponsors, QBE and Vero who have supported us every step of the way, as well as to NIBA members who completed the 2021 Annual Broker Market Survey. Your votes will be counted to determine the winner of the General Insurer of the Year award.” You can register on the NIBA website (niba.com.au/event/2021-nibanational-award-ceremony/) for the ceremony this year, that will be hosted virtually via Zoom and will include the following award announcements: • NIBA Warren Tickle Memorial Award, sponsored by Vero
•
NIBA Stephen Ball Memorial Award, sponsored by QBE • NIBA Underwriting Agency of the Year • NIBA General Insurer of the Year • NIBA Lex McKeown Award. After more than 10 years of service as the NIBA Chief Executive Officer, Dallas Booth will be retiring on 31 October 2021. The ceremony will conclude with a tribute to celebrate and acknowledge the significant contribution he has made to the broking profession over this time. We will also welcome incoming Chief Executive Officer, Phil Kewin.
For breaking news and updates curated specially for insurance brokers please visit: niba.com.au/articles
12 / INSURANCE ADVISER OCTOBER 2021
NEWS / Industry Bulletin
DALLAS BOOTH TO LEAD ICA BUSINESS ADVISORY COUNCIL
N
IBA has announced that CEO Dallas Booth will chair the Insurance Council of Australia (ICA) Business Advisory Council that will include representatives from the ICA, the Council of Small Business Organisations Australia, the Australian Chamber of Commerce and Industry, the Australian Small Business and Family Enterprise Ombudsman, and the Office of the NSW Small Business Commissioner. The Advisory Council will bring together business and insurance sectors with the aim of working through practical solutions to insurance availability and affordability issues, particularly for professional indemnity, public liability, and business interruption cover. Booth said, “It is an honour to have been invited to chair the new Business Advisory Committee announced by the Insurance Council of Australia, and I look forward to making a contribution to these important issues.” “My goal is to build on the excellent work undertaken by Mr John Trowbridge to better understand the factors behind the difficult market conditions where they exist, and to explore potential solutions with our leading insurance executives. There are no silver bullets here, but I share Mr Trowbridge’s view that collaboration and understanding will lead to good outcomes for all concerned.” “As this work will commence shortly, I have asked incoming NIBA CEO Phil Kewin to take the lead on these matters on behalf of NIBA.” The Business Advisory Council is one of many measures that the ICA has announced to improve the affordability and availability of commercial insurance products for the small and medium-sized business sector. The measures are in response to recommendations contained in the final report of the Independent Strategic Review (Review) into the role of the private commercial insurance market undertaken by industry expert John Trowbridge.
Role of the Private Insurance Market – Independent Strategic Review: Commercial Insurance Final report 1 insurancecouncil.com.au September 2021: Commissioned by the Insurance Council of Australia Insurance Council of Australia: Document Title Goes Here
ICA CEO Andrew Hall said, “The ICA welcomes the final report of the Review into the role of the private commercial insurance market and thanks John Trowbridge for this important piece of
work. In establishing the Business Advisory Committee and other measures the ICA is responding to a key theme of the Review: solutions, where they exist, will require a concerted effort between the insurance sector, small business, and government. “We are pleased this high-calibre group will be chaired by Dallas Booth, whose extensive experience in insurance and broking brings to the table the vital intermediary skill needed.” Trowbridge’s final Review found that in the context of a hardening insurance market there is no one-sizefits-all solution to issues of affordability and availability for SMEs and that solutions require collaboration and goodwill between the insurance sector, SME sectors, and governments. The final Review includes 13 recommendations that broadly fall into three categories: improved engagement between insurers and SME sectors; better understanding of insurance by SME policyholders; and advocacy to government and transparency. The ICA supports all recommendations of the Review. NIBA and the Underwriting Agencies Council (UAC) will participate as required, and will separately work with the ICA to facilitate greater access by brokers to underwriters to enable more understanding of and dialogue on underwriting decisions. You can access Trowbridge’s final report titled Role of the Private Insurance Market – Independent Strategic Review: Commercial Insurance on the ICA website: insurancecouncil.com.au/wp-content/ uploads/2021/09/210920_CommericalLines-Final-Report-Final.pdf, or scan the QR code below.
NIBA.COM.AU / 13
NEWS / Industry Bulletin
SECOND BUSINESS INTERRUPTION TEST CASE
T
he hearing of the second business interruption (BI) test case concluded on 15 September 2021, following eight days of submissions from insurers and policyholders before Justice Jagot of the Federal Court. The judgment was not available at the time of going to press but is being expedited, and the court has allocated time to hear any appeal in November 2021.
In the interim, the ICA has encouraged brokers to speak to their clients about collating documents necessary for any BI claims lodged or being lodged – including profit and loss statements. Once the court determinations are known on the meaning of policy wordings around disease definition, COVID-19 outbreak proximity, the impact of government
mandates, and other policy wording matters, insurers have processes in place to quickly assess and manage claims. The insurance industry’s intention throughout both test cases has been to maximise the certainty to be provided on business interruption policy matters for the benefit of the industry and policyholders alike.
NIBA BACKS THE ICA ON NATIONAL BORDER APPROACH
N
IBA CEO, Dallas Booth, has welcomed an ICA report calling for a national approach for the movement of essential disaster recovery and management personnel across state borders. The Insurance Catastrophe Resilience Report: 2020-21 states that policyholders are likely to face lengthy delays for repairs and rebuilds unless a national approach is agreed to enable essential disaster recovery and management workers across state borders. “Insurance brokers are essential in helping their clients navigate preparations for, and recovery from, natural disasters and major weather events. They are on the front line and have seen first-hand the challenges presented by state border restrictions, as they help their clients navigate the recovery from natural disasters. Insurance brokers serve their local communities and regions, regardless of the existence of state and territory borders,” said Booth. “NIBA strongly supports the ICA call for a national approach in this area, as it will not only lessen the impact of future natural
disasters, but also enable insurance brokers to be on the ground supporting their clients through the recovery process,” Booth added.
“NIBA strongly supports the ICA call for a national approach in this area, as it will not only lessen the impact of future natural disasters, but also enable insurance brokers to be on the ground supporting their clients”
The Insurance Catastrophe Resilience Report: 2020-21 sets out in clear terms the impact of natural disasters on individuals and communities. Since October 2020, there have been five declared insurance catastrophes which have given rise to 134,000 claims totalling almost $2.3 billion. The Insurance Catastrophe Resilience Report will be produced annually to provide an update on recent natural disasters. The 2020-21 edition is available at insurancecouncil.com.au
For breaking news and updates curated specially for insurance brokers please visit: niba.com.au/articles
14 / INSURANCE ADVISER OCTOBER 2021
THE CHANGING FACE OF SAFETY With driver fatigue and distraction major causes of fatal accidents on Australian roads, GT Insurance actively encourages the use of Facial Recognition Technology (FRT). FRT means inward facing cameras that are specifically designed to detect driver distraction and/or fatigue and provide real time in-cabin alerts. What are some of the potential benefits of FRT? •
• • • • •
HELPS drivers stay focused and alert ALERTS if the driver is showing signs of fatigue DETECTS if the driver becomes distracted IMPROVES driver habits ASSISTS in compliance with Chain of Responsibility legislation ENHANCES workplace safety practices and culture
Increased safety. Reduced costs. GT Insurance offers significant additional policy benefits and potential savings to transport Clients and motor vehicle fleet customers who install approved FRT systems in their vehicles. For eligible customers, these may include: •
• • • • •
REMOVAL of driver restrictions REDUCED basic excess AMENDED age or inexperienced driver excesses ENHANCED replacement vehicle hire INCREASED limit for non-owned trailer liability 3 YEAR vehicle replacement from original registration date
If you're interested in learning more about the potential benefits and savings of FRT, please contact us today or visit our website gtins.com.au Insurance products are issued by Global Transport & Automotive Insurance Solutions Pty Ltd trading as GT Insurance ABN 93 069 048 255 AFS Licence No 240714 as agent for the Insurer Allianz Australia Insurance Limited ABN 15 000 122 850 AFS Licence No 234708. Neither we nor the Insurer provide any advice on this insurance based on any consideration of your objectives, financial situation or needs. Policy terms, conditions, limits, exclusions and underwriting criteria apply. Before making a decision about it please refer to the relevant Product Disclosure Statement or Policy wording available from our website (www.gtins.com.au) or by calling us. A Target Market Determination for each product is available from our website (www.gtins.com.au). If you purchase this insurance, we will receive a commission that is a percentage of the premium. Ask us for more details before we provide you with any services.
PROFESSIONALISM / AFCA Case Study
LETTER OF APPOINTMENT AND A BROKER’S DUTY OF CARE This determination involved an allegation against an insurance broker that it had followed the instructions of an unauthorised representative to the client’s detriment.
BACKGROUND FACTS
The complainant engaged the broker to arrange several policies, which included a policy to cover the complainant’s fleet of trucks. On 5 February 2018, the broker was instructed by DP, an alleged representative of the complainant, to remove 24 vehicles from this policy. The broker followed these instructions before reinstating these vehicles on 13 March 2018. However, on 7 March 2018, one of the vehicles had been involved in an accident. The complainant sought to lodge a claim under the policy, but failed as the vehicle had not been covered by the policy at the time of the accident. The complainant claimed that DP was not an employee or someone who was authorised to provide instructions to the broker and so, claimed that the broker acted without proper instructions and breached its duty of care towards the complainant. The complainant sought compensation from the broker for the loss suffered from being unable to make a claim on the vehicle that had been involved in the accident. The broker submitted that it had not breached its duty of care towards the complainant as DP was authorised to provide instructions to it and it had followed these instructions. To support this argument, the broker noted that: • DP had signed a letter of appointment as the complainant’s authorised agent which had authorised the broker to act on the complainant’s behalf; • an endorsement had been completed in June 2018 based on DP’s instructions; • an invoice renewal, PDS and FSG had been sent to DP via email in August 2018; • DP had completed a financial loan application worth $224, 529.65 which also had DP as the main point of contact;
16 / INSURANCE ADVISER OCTOBER 2021
•
the complainant had raised no concerns over a public liability certificate that had been sent to DP and another representative of the complainant in April 2019; and • an email had been sent to the complainant on 18 November 2019 which noted DP’s possible involvement on a particular point, which the broker claimed was indicative of DP being a representative of the complainant. The complainant responded noting that: • the letter of appointment was not signed on the company’s proper letterhead; • the complainant had maintained a relationship with the broker prior to the signing of the letter of appointment; and • DP had not been employed or authorised by the complainant to act on its behalf. There was no dispute regarding the validity of the loan agreement. No evidence was provided to support the claim that there had been a relationship between the broker and the complainant before the letter of appointment was signed.
THE AFCA DECISION
AFCA confirmed its position regarding the duty of care owed by an insurance broker: • An insurance broker must exercise reasonable care and skills while performing their duties and the relevant standard that is expected of a competent and experienced professional insurance broker. o In determining reasonableness, the AFCA takes into account the requirements set out in the Code, as well as good industry practice. • As insurance brokers provide services under an AFSL, a broker must do all things necessary to ensure that their services are provided efficiently, honestly,
BY MARK RADFORD
Principal, Radford Lawyers
and fairly. It also requires brokers to act in the best interests of their clients. • To pursue a claim for compensation against a broker, a complainant must generally establish that the broker had breached a duty owed to the complainant and that the loss claimed was caused by the breach. AFCA held that the available evidence showed that DP was authorised to act as the complainant’s representative. This was because: • there was not enough evidence to establish that the complainant had been in a relationship with the broker prior to the letter of appointment. • the available evidence was consistent with the broker’s claim in that it was only able to act for the complainant, based on the letter of appointment signed by DP as the complainant’s authorised agent. • of the loan application, which supported the view that DP was the complainant’s representative, because: o the amount financed was $224,529.65, which was a significant amount of money; o the application for this significant amount had been arranged by DP; o the application had DP’s contact details as the main point of contact; and o the complainant did not dispute the validity of the agreement. • the fact that the insurance documents (i.e. PDS and FSG) were sent to DP and the email from the complainant dated 18 November 2019 suggested that DP was the complainant’s representative. AFCA held in favour of the broker, accepting that a broker exercising reasonable care and skill would have accepted that DP was authorised to act for the complainant in these circumstances.
PROFESSIONALISM / A Note From IBCCC Chair
WHY MAKE IT DIFFICULT?
The Independent Chair of the Insurance Brokers Code Compliance Committee, Michael Gill, who drafted the original Insurance Brokers Code in 1994, shares learning and insights from his career. MICHAEL GILL Chair, IBCCC
A
s I conclude my role as the Chair of the Insurance Brokers Code Compliance Committee (IBCCC), I am asked to reflect on the role, the Code and, to some degree, my long association with the world of insurance broking. One article would be insufficient to discuss my broker heroes. So, I turned to Dallas Booth to help me focus. That he did. So, here are just a few brief things that are not new or revolutionary. As is the case with so many government licences, authorisations and the like, they are granted on behalf of Australian society to further the common good of society, to provide for its needs. Their primary purpose isn’t to increase personal wealth or service capital. Although in recent times, one would be forgiven for believing that has become the preferred business model. That purpose needs to be at the centre of all business culture and behaviour. It fits neatly with the Australian personal culture of a fair go. When we leave home and enter our workplaces (pre-COVID-19), we do not change personality – or at least we should not. We are not Dr Jekyll and Mr Hyde. We all know the challenges, and frustrations and feelings of unfairness as we confront so many institutions in our ordinary daily lives. So, at work, when we wear the shoe on the other foot, empathy should not be difficult. “Do unto others, etc.” should not be far away. So many people and businesses are good at this, but not all. Maybe some are better suited to other careers. For insurance brokers, it should be so much easier than for many others
who sell products. You sell a special set of services, critical services, on which people might rely for their very survival. Your interests are often aligned with those of your clients, as you seek fairness and justice for them. The numbers of Code compliance and dispute statistics each year largely bear this out. Especially in the broader financial services context where most of the others sell banking or insurance products. There is always room for improvement. And the best people and businesses set their own standards and create behaviour expectations of a high standard, which is both informed by their culture and informs their culture. It’s the same in all professional service sectors. It has to do with much more than law and regulation which, by definition, is always playing catch. These businesses are led by intelligent people of integrity who long ago recognised the seamless connection between having a successful business, a fulfilling life, happy staff and customers, good risk management practices and service standards that not only go well beyond the law, but also define their businesses in the marketplace. And all of this is done in a professional context which understands the value of the right reputation for the profession as a whole. Or it should, if all brokers are to be of a profession. In short, they are outstanding in most senses. So coming back to Dallas, his question to help my focus was: you have mentioned that the Committee does not set best practice standards – it notes what best
practice brokers do, and adopts their position. Can you expand on this? The standards set by the best are obviously both attainable and considered to be appropriate in the above contexts. They are not the artificiality of those who don’t practice, who may be purely academic or seek to impose as a regulator. We should never expect those solutions to always be the best. Best brokers are best placed to know what should be reasonably expected of all brokers. They live in that space 24/7 as they handle the many personal and business issues I have referred to. So, we at the Code don’t need to invent things for you. We just need to accurately identify what the best of you already do and then spread the word, encouraging all to do likewise. The best will, by definition, is always seeking to do things better. And once again, the profession/industry will be establishing a new aspirational benchmark. That’s one reason why the law is always playing catch up. In my more than 50 years in legal practice working with the insurance industry, the volume of law and regulation applicable to the insurance industry has expanded exponentially (figuratively). And, despite the wise and cautionary words of Kenneth Hayne in the Royal Commission Report, the legal/regulatory spread has galloped a pace since then. Time alone will not prove whether it has had the desired effect. It never has. New and more law might create good feelings in some. Beyond that? Surely our objectives must always be better outcomes for the common good.
NIBA.COM.AU / 17
PROFESSIONALISM / Regulatory Reforms
POST OCTOBER 2021 REGULATORY REFORMS REMINDER FOR INSURANCE BROKERS
BY MARK RADFORD
Principal, Radford Lawyers
From October 2021, a number of significant reforms come into effect that members need to take reasonable steps to comply with. NIBA has released various guidance to assist members in preparing for these changes.
U
nfortunately, various aspects of these laws are yet to be finalised by the Australian Government. ASIC Guidance has not been released in final form as of the date this article has been prepared, which is not ideal. Despite the above, the Government has chosen not to delay implementation. ASIC has issued a media release recognising that, “There will be a period of transition as industry finalises the implementation of additional compliance measures, and ASIC will take a reasonable approach in the early stages of these reforms, provided industry participants are using their best efforts to comply.” The October changes relevant to general insurance and intermediaries are:
New breach reporting obligations – Corporations Act – 1 October 2021
The new breach reporting obligations change the existing licensee breach reporting regime and create “reportable situations” that will either be automatically reportable to ASIC, or only reportable if there is a breach of a new defined concept of ‘core obligation’ that is ‘significant’. Breaches of a core obligation will be deemed significant in some cases and in other cases need to be considered against a significance test. Licensees need to update breach reporting documents and procedures to comply with these new onerous obligations. ASIC Guidance has only just been released, asic. gov.au/about-asic/news-centre/find-amedia-release/2021-releases/21-235mr-asicpublishes-guidance-on-breach-reporting/
New deferred sales model (DSM) for add-on insurance – ASIC Act – 5 October 2021
This reform applies a new DSM for defined ‘add-on insurance products’ i.e. essentially
18 / INSURANCE ADVISER OCTOBER 2021
insurance sold to consumers, as defined in the Act, in connection with a principal product or service that covers risks that relate to that product or service (subject to certain carve-outs – only recently released in the Regulations – legislation.gov.au/ Details/F2021L01279). It effectively imposes on the principal product or service provider, or relevant third parties wishing to offer and sell the add-on insurance, an obligation to provide an ASIC prescribed notice, and a clear four-day waiting period afterwards before a sale can be made. It also applies other restrictions on conduct and forms of contact, by such persons prior to that time. To this extent, the DSM operates the anti-hawking obligations discussed below won’t apply. Identify what products may be caught and consider the impact on current models and changes that may be required. For further ASIC Guidance see RG 275.
Anti-hawking changes – Corporations Act – 5 October 2021
The reform changes existing s992A to provide for a new broader anti-hawking regime in relation to retail clients. It provides that a person must not offer a financial product for issue or sale to a retail client, or invite the client to ask or apply for a financial product or to purchase a
financial product, if the offer, request or invitation is made in the course of, or because of, an unsolicited contact with the client, unless one of the exceptions apply. Consider where you might contact customers as a result of unsolicited contact, based on the new definition, and update procedures and documents to comply. The ASIC Guidance for this reform has now been released in its final form: asic.gov.au/about-asic/news-centre/find-amedia-release/2021-releases/21-257mr-asicpublishes-guidance-on-hawking-reforms/
New design and distribution obligations (DDO) changes – Corporations Act – 5 October 2021
The DDO changes introduce principlesbased design and distribution obligations on insurers and other regulated persons (e.g. agents of insurers and insurance brokers, and other distributors) in relation to retail client insurance business. These obligations are intended to help retail clients obtain appropriate financial products by requiring issuers and distributors to take a more consumer-centric approach. Insurers principally need to create a target market determination (TMD) which identifies its target market and includes other prescribed content
“There will be a period of transition as industry finalises the implementation of additional compliance measures. ASIC will take a reasonable approach in the early stages of these reforms provided industry participants are using their best efforts to comply”
PROFESSIONALISM / Regulatory Reforms
relevant to distribution conditions, reporting and review, and ensure the TMD is appropriate, and if not, address this. Other regulated persons are principally required to take reasonable steps to act consistently with the TMD, keep records and report certain matters to the insurer, and cease distribution where a TMD is not appropriate. For ASIC Guidance, see ASIC RG 274 and Information Sheet 264 FAQs: Design and distribution obligations for advice licensees and financial advisers. The government still intends to make a number of amendments to the DDO to clarify the law, to ensure a consistent application of the law, so that the regime remains fit-for-purpose particularly regarding complaint reporting. Treasury will consult on these changes with stakeholders in due course. The proposed changes can be reviewed on the Treasury website: treasury.gov.au/consultation/ c2019-t408904/update-ddo-regime Insurers and agents need to identify the products affected, prepare TMDs, and amend documents and procedures to meet other DDO obligations. Insurance brokers need to liaise with insurers and their agents on what will be expected of them relevant to the TMD, and amend documents and procedures to meet their DDO obligations. The content of an insurer’s TMD can have a significant impact on an insurance broker’s obligations.
IDR requirements changes – Corporations Act – 5 October 2021
These changes affect a licensee’s IDR obligations. ASIC RG 271 imposes certain ‘enforceable’ obligations and provides other ‘guidance’ to help firms comply with their legal obligations. ASIC has broadened the definitions of ‘complaint’ and ‘small business’, and imposed a new obligation to comply with the requirements rather than just having the procedures in place. They have also set minimum content for IDR responses, reduced the maximum IDR timeframe for providing an IDR response from 45 to 30 days, and made some changes to the timing exceptions. It also imposes requirements regarding interaction with AFCA, identifying and escalating systemic issues, outsourcing IDR processes and complaints standards. IDR data reporting obligations will also be imposed (not as at 5 October 2021). asic.gov.au/regulatoryresources/find-a-document/regulatoryguides/rg-271-internal-dispute-resolution and legislation.gov.au/Details/F2020L00962 Licensees must review and update their IDR procedures and documents to address these changes.
Change to Insurance Contracts Act pre contractual duty of disclosure and misrepresentation regimes – Insurance Contracts Act – 5 October 2021 This: • removes the existing eligible contracts
of insurance duty of disclosure and applies a new duty for ‘consumer insurance contracts’ (CIC). CIC is insurance obtained wholly or predominantly for the personal, domestic or household purposes of the insured, or a contract the insurer opts in as CIC. The duty is for the insured to take reasonable care not to make a misrepresentation to the insurer before entering into the CIC; and • applies the existing duty of disclosure (s21 and s22) and misrepresentation (s23-27) to non-CIC contracts. Insurers and their agents need to identify what contracts are CIC, and amend procedures and documents to take account of the new duty. Insurance brokers need to identify how they will assist clients in understanding and meeting the new duty, and update their procedures and documents in this regard. No ASIC Guidance has been released at the time of print. IMPORTANT NOTICE This document is designed to provide helpful general guidance on some key issues relevant to this topic. It should not be relied on as legal advice. It does not cover everything that may be relevant to you and does not take into account your particular circumstances. It is only current as at the date of release. You must ensure that you seek appropriate professional advice in relation to this topic as well as to the currency, accuracy and relevance of this material for you. Liability limited by a scheme approved under Professional Standards Legislation.
NIBA.COM.AU / 19
COMMUNITY / Mental Health
HOW TO SUPPORT YOUR STAFF DURING COVID-19 COVID-19 has created dramatic changes in the workplace. Depending on your organisation, you and your team may now be working remotely, running staggered rosters, or working modified duties on site.
T
hese changes, coupled with the ongoing health and economic threat of COVID-19, can have a significant impact on employee wellbeing. As a manager, it’s important to think about how to support your staff, particularly those struggling with stress and other emotions. Here’s what you can do. Maintain regular catchups with your team Regular team catch-ups are an excellent starting point for maintaining a sense of connection with your team. While your current work setup may make these catch-ups trickier to implement than normal, they’re worth scheduling. “Having regular contact from early on means you build up a rapport, you get to understand your staff, your team, and then you’re more in tune to picking up those little changes that may indicate that someone’s having a particularly hard time,” says Dr Aimee Gayed, a psychologist and Postdoctoral Research Fellow in workplace mental health at Black Dog Institute. Look out for signs of struggle When it comes to assessing how employees are coping, keep an eye out for changes in demeanour. Body language (if you’re still seeing staff in person) can be a fairly reliable indicator of mood, as can the underlying tone of emails and phone calls and the speed at which employees respond. Changes in attitude towards work and changes in productivity can also be signs that something isn’t right, although Gayed cautions that some productivity fluctuations are likely given that almost everyone is dealing with significant workplace changes.
20 / INSURANCE ADVISER OCTOBER 2021
“Judging by work output alone may not be as reliable as it would be in a normal setting, and reassuring staff that changes in productivity at this time are normal can help reduce the pressure on them, but if it’s coupled with other signs, it’s worth following up,” she says. “For example, if a staff member has a change in mood and also seems to be struggling with workload, that’s a fair enough reason for a manager to be able to say, ‘How’s it going at home? Is there anything else I can do or someone else in the team can do to help reduce the pressure at this point in time?’” Set up regular 1:1 meetings with staff you’re concerned about If you’re getting a sense that someone in your team needs support, make sure you follow up, preferably in a private setting or on a 1:1 phone/video meeting where you can encourage them to speak openly about their feelings. “Regular check-ins in a one-on-one capacity from early on is recommended and will make these discussions easier,” Gayed says. Be conscious of asking open-ended questions (such as ‘Tell me about the new remote working arrangement – how is it working out for you?’) rather than queries with a yes/no answer – this will help you better gauge what might be going on. Provide support, both in and beyond the workplace If one of your employees is struggling, be responsive. Where possible, approve requests for leave or consider arranging modified duties that will reduce the immediate pressure while
enabling the staff member to stay connected to work. If they need more structured support, connect them to your employee assistance program (if you have one) or to other high-quality mental health resources and services external to your organisation – it’s not your job to try and counsel them yourself but it is part of your role as manager to support them. “Managers should be aware of the support services available from within their organisation, as well as in the public domain, so they can promote and facilitate help-seeking for their employees,” Gayed says. Whatever arrangements you end up making, don’t leave the conversation
there – schedule the next follow-up session before ending your catch-up so you can continue checking in, even if your staff member is on leave. Keep an eye on your own mental health As a manager, it’s easy to get distracted by meeting the needs of those around you while forgetting about your own, but it’s important
to take the time to check in with your own feelings and make sure you’re still on track. Maintain regular catchups with your own manager or a trusted colleague who has some insights into your professional situation, and be frank about the challenges you’re experiencing both at and beyond work. Sharing your experiences with your team can also be beneficial – acknowledging the
“Managers should be aware of the support services available from within their organisation, as well as in the public domain, so they can promote and facilitate help-seeking for their employees,” Gayed says
difficulties you are experiencing with this new arrangement can help staff feel more comfortable speaking to you about their difficulties early on and can also help you clarify your own feelings. If you need extra support, use the channels available to you both in and beyond your workplace. “Being in tune with changes in your own behaviour or ability to manage workload is important,” Gayed says. “The resources that you would hopefully be across for your employees are also relevant for you.” This article was originally published on the blackdoginstitute.org.au website on 1 May 2021 and has been republished with permission.
NIBA.COM.AU / 21
Early registr bird ations still op are en NIBA C for the 202 1. o the cou nvention ac 2 ross ntry, ta ke a of the fantast dvantage ic sa and th e CPD vings p on offe oints r.
COMMUNITY / #NIBA2021
PROFESSIONALISM + RESILIENCE = OPPORTUNITY The 2021.2 NIBA Convention is shaping up to become the mustattend event for a world in transition, featuring exclusive insights, inspirational speakers, and exciting networking opportunities. BY TANAYA DAS
T
he following is a tête-àtête with Emma Curtis, Lead Ombudsman, Insurance at the Australian Financial Complaints Authority (AFCA). Insurance Adviser: You have been involved with the Australian Securities and Investments Commission (ASIC), International Association of Insurance Supervisors (IAIS) and now AFCA – all organisations that advocate and regulate for consumer protection. What insights have you learnt along the way? Emma Curtis: Working at ASIC, I honed my skills as a conduct and consumer protection regulator. Representing ASIC at the IAIS, I had the opportunity to learn about the approaches of international conduct regulators. Now at AFCA, I’m part of the same Australian financial ecosystem, but with a very different hat on. I’m shifting my gaze from systemic issues to individual disputes. Undoubtedly, AFCA’s work helping individual consumers with their disputes can lead to broad improvements in practice. I’d encourage firms to take learnings from dispute outcomes and look to improve product design and claims processes. Many disputes arise from a mismatch in expectations between the customer and the firm, and firms can help address these issues by designing products that suit customers’ 22 / INSURANCE ADVISER OCTOBER 2021
needs and by providing consistent service – particularly at claim time. IA: What do you think the future of dispute resolution will look like for AFCA? EC: Three years into its existence, AFCA has more than 41,000 member firms and handles around 70,000 complaints a year, up from the 52,000 the Financial Ombudsman Service, Superannuation Complaints Tribunal and the Credit and Investments Ombudsman received in total in their final year – so, we’re talking about big numbers.
General insurance disputes are the second largest group of complaints, after banking and finance, accounting for about a quarter of the complaints we receive (24 per cent). AFCA has gone through a period of rapid growth, merging those predecessor schemes and their systems, people and processes. Coming out of that intense ‘startup’ phase, AFCA is now heading into an exciting time and fine-tuning the way it operates. There are some interesting initiatives underway to improve technology and processes, which will enhance our ability to deliver fair, independent and timely outcomes. One thing I already know about AFCA, it is always striving for operational excellence and great customer service. Everyone here is committed to dealing transparently with the parties involved in disputes, and to resolving as many disputes as possible by agreement or, where that isn’t possible, through consistent and fair decisions. IA: What are some key observations of the current insurance landscape? EC: The past few years have shaken up the financial services industry, with the Hayne Royal Commission and the raft of law reforms that have followed. The Royal Commission made Australian consumers sit up and take notice – my BBQ conversations certainly changed,
with friends and family very familiar with the witnesses and their evidence. Even for sectors not directly covered by the Royal Commission, the case studies and the evidence, and the final report were a wakeup call and a reminder of the need to ensure high standards, accountability and to put customers first. Now customer expectations are higher, and law reforms have increased obligations on firms, and the powers of regulators. Particularly for insurance, the sector is now subject to more regulation and regulatory oversight. Ideally, this should be good for consumers, increasing protections and clarifying expectations of firms’ conduct. Once the reforms are in place, the focus will shift to bedding down the changes and moving into business as usual – it has been a tough few years for the industry. IA: Do you have any highlights about your session at the 2021.2 NIBA Convention? EC: I’d like to position AFCA and its role for the sector, and give brokers a view of the type of disputes we see and the themes that are emerging, along with some key data points. I expect business interruption insurance will be a key and timely issue for discussion. All going to plan, I should be able to provide an update on where AFCA is at in terms of progressing BI insurance disputes, and what sort of numbers we are seeing. IA: Do you have any tips or advice to give to insurance brokers on setting up robust Internal Dispute Resolution (IDR) systems? EC: My key tip is, if you can resolve customer disputes at IDR then you won’t need to deal with AFCA. While everyone here is lovely, I’m sure you’d rather be building your business and helping clients than spending time with us on issues that could have been resolved earlier. Of course, some disputes will end up at AFCA,
“By continuously improving professional standards and approaches, and being present for clients through these demanding times, we should all be able to help strengthen the industry” – EMMA CURTIS, AFCA and that’s why we’re here – but challenge yourself to get on top of them early. The other key tip is – learn from those disputes: see them as providing valuable insights into what’s not working for your clients, what they’re concerned about, how you can change what you do to make sure you’re providing great value for your clients. IA: The theme of the NIBA Convention this year is Professionalism + Resilience = Opportunity. What does professionalism and resilience mean to you? EC: Since March 2020, we’ve all been tested beyond what we could have ever anticipated. On top of that, there have been several catastrophic natural disasters, and ongoing demands on business from the law reform program. It may sound trite, but by continuously improving professional standards and approaches, and being present for clients through these demanding times, we should all be able to help strengthen the industry in the long term. The NIBA Convention in February 2022 will continue the tradition of featuring a session called “Meet the Regulators” that Emma Curtis, will speak at. #NIBA2021 attendees can look forward to insights from her in relation to the recent AFCA experience with insurance brokers.
DATES FOR THE DIARY ADELAIDE, SOUTH AUSTRALIA – 7 FEBRUARY 2022 MELBOURNE, VICTORIA – 8 FEBRUARY 2022 PERTH, WESTERN AUSTRALIA – 14 FEBRUARY 2022 BRISBANE, QUEENSLAND – 16 FEBRUARY 2022 SYDNEY, NEW SOUTH WALES – 21 FEBRUARY 2022
THE MARKETPLACE #NIBA2021 will bring the Convention Expo Hall experience across Australia, presenting a great opportunity to learn about the latest cutting-edge products and services. Some of the wonderful businesses exhibiting at the conference include: • Biz Cover • GT Insurance • Elantis • Berkley insurance • NTI • iQumulate • CHU • Technosoft Solutions • Blue Zebra • Virtual Broking • Innovation
SPONSOR OR EXHIBIT AT #NIBA2021 To discuss sponsorship and exhibition opportunities, please contact us:
Helen McGowan Waldron Smith Management T: 03 9645 6311 E: helen@wsm.com.au
Tony May NIBA National Advertising Sales Manager T: 02 9459 4320 M: 0401 485 188 E: tmay@niba.com.au
WITH THANKS TO OUR PRINCIPAL SPONSORS
NIBA.COM.AU / 23
COMMUNITY / #NIBA2021
A GUIDE TO #NIBA2021
TOPIC SPEAKER ADELAIDE 7-FEB-22
ADELAIDE MC: Rebecca Morse 1:00pm – 1:30pm Presidents Address & State of the Industry 2021 Dianne Phelan 1:30pm – 2:00pm ICA project of availability and affordability of insurance Dianne Phelan and John Trowbridge 2:00pm – 2:30pm 2022 General Insurance Renumeration Review Dianne Phelan and Dallas Booth 2:30pm – 2:45pm Introducing technology to streamline claims Presented by Sedgwick 2:45pm – 3:00pm DDO and technology to keep up with regulatory burden To be announced MELBOURNE 8-FEB-22
MELBOURNE MC: Jordana Borensztajn 1:00pm – 1:15pm Future of Financial Services regulation Dr Rhys Bollen, Senior Executive Leader, Insurers, Australian Securities and Investments Commission (ASIC) 1:15pm – 1:30pm The regulatory environment: Meet the key players – ASIC Dr Rhys Bollen, Senior Executive Leader, Insurers, Australian Securities and Investments Commission (ASIC) 1:30pm – 1:45pm The regulatory environment: Meet the key players – AFCA Emma Curtis, Lead Ombudsman Insurance at Australian Financial Complaints Authority (AFCA) 1:45pm – 2:00pm The regulatory environment: Meet the key players – IBCCC Michael Gill 2:00pm – 2:30pm Working practices post COVID-19 Mark Carter, Presenter l Author l Trainer l Coach l Igniting Human Potential 2:30pm – 3:00pm Working practices post COVID-19 – a HR perspective Mel Costello PERTH 14-FEB-22
PERTH MC: Chrissy Morrissy 1:00pm – 2:00pm Keynote – Professionalism + Resilience = Opportunity Dr Fiona Wood 2:00pm – 2:30pm Insurance brokers and workers’ compensation system NIBA WA in conjunction with WorkCover WA 2:30pm – 3:00pm COVID-19 related Business Interruption claims and test cases Adam Squire, Gallagher & Ken Wise, Marsh BRISBANE 16-FEB-22
BRISBANE MC: Bill Mcdonald 1:00pm – 1:30pm Storms, floods, fires: insurance for weather related incidents | Ryan Crompton, Risk Frontiers on the nature and trends on major risks from an insurance perspective 1:30pm – 2:00pm Storms, floods, fires: insurance for weather related incidents | David Henderson Chief Engineer, Cyclone Testing Station, on mitigation and resilience measures for domestic, strata James Cook University and SME 2:00pm – 2:20pm Storms, floods, fires: insurance for weather related incidents Stephen McShane, Northern Region Technical Property Specialist, CGU 2:20pm – 2:40pm Northern Australia Cyclone reinsurance pool: Presented by Suncorp perspective from insurers 2:40pm – 3:00pm Northern Australia Cyclone reinsurance pool: Steven Hill to interview Ron Bellert perspective from brokers SYDNEY 21-FEB-22
SYDNEY MC: Andrew Klein 1:00pm – 2:00pm To be announced To be announced 2:00pm – 2:45pm Closing Keynote Chris ‘Boo’ Boucousis 2:45pm – 3:00pm Convention Close Philip Kewin 24 / INSURANCE ADVISER OCTOBER 2021
PROPERTY PROPERTY | ENGINEERING | LIABILITY | STRATA | MOTOR
CHAR TERED LOSS ADJUSTERS claims@astagroup.com.au
Our core business is Property Loss Adjusting and the provision of loss adjusting services to Insurer’s around Australia and New Zealand will always be the primary focus of our operation. From residential, strata, and SME business through to major commercial and corporate facilities, the ASTA Property Team has you covered.
www.astagroup.com.au
COVER STORY / Meet the 2021 Warren Tickle Memorial Award finalists
The Young Profe Brokers of th
FACILITATING TRANSFORMATION VIA ADVICE:
26 / INSURANCE ADVISER OCTOBER 2021
essional the Year
As we live through one of the most challenging periods in Australia’s history, the 2021 national finalists for the Vero-sponsored Warren Tickle Memorial Award are redefining insurance broking professionalism and excellence. INTERVIEWS BY TANAYA DAS
ENSURING PEACE OF MIND
Alishia Oliver, QLD Insurance Adviser: What has the COVID-19 pandemic taught you about resilience and supporting clients through tough times? Alishia Oliver: COVID-19 very much proved ‘if there is a will there is a way’ to be 100 per cent true. We saw so many of our clients transform and adapt their businesses, in so many different ways, to allow them to stay afloat during a time of such uncertainty. The strength and innovation of the Australian business community is truly awe-inspiring. COVID-19 made us think outside the box to find and negotiate differing arrangements for each and everyone of our affected clients. IA: What do you think the insurance broking profession will look like in the future? AO: I believe the insurance broking profession will be advice driven, not price driven; or as Steadfast says, ‘Advice not price’. More open conversations and discussions on what is available, what could be of concern for the client, how to tackle any concerns that are present, and risk mitigation options.
LEFT TO RIGHT:
Mitchell Wight, Luke Cameron, Megan Farmer, Patrick McCole, Alishia Oliver
IA: What is the most important lesson you have learnt in your career so far? AO: If you can’t explain it simply, you don’t understand it well enough – ask more questions! IA: What role has the Young Professional Broker of the Year award played in your development as a risk management professional? AO: The confidence I’ve started to find during my Warren Tickle Award journey has played a key part in being able to fly past hurdles that I felt my age may have put in front of me in the past. NIBA.COM.AU / 27
COVER STORY / Meet the 2021 Warren Tickle Memorial Award finalists
ADVICE EXCELLENCE TO MANAGE UNCERTAINTY
COMBINING AGILITY AND GENUINE CARE FOR CLIENTS
Mitchell Wight, VIC/TAS
Luke Cameron, WA
Insurance Adviser: What has the COVID-19 pandemic taught you about resilience and supporting clients through tough times? Mitchell Wight: The incredible way in which our clients have been able to pivot and discover ways to ensure that their businesses survive into the future has been truly inspiring. Through the various financial and emotional challenges they have faced, and their determination to succeed has never wavered. The day-to-day involvement that I have had with our clients has helped me understand the depths of their adversity and has reinforced just how important our role is to the success of their business. Being there to support, problem solve, and to guide our clients through these tough times, is something that will stay with me for the rest of my life.
Insurance Adviser: What has the COVID-19 pandemic taught you about resilience and supporting clients through tough times? Luke Cameron: The COVID-19 pandemic has taught me that our role is so important. As a broker, you should always ensure that the product is adequate. If you can support your clients in every way through the tough times, they’ll be there when the tide turns.
IA: What are the biggest challenges facing the insurance broking profession today and how do you think these challenges will evolve going forward? MW: There are a number of challenges we are facing in the current environment as insurance professionals. The world today is full of uncertainty due to the COVID-19 pandemic, and the turbulent nature of the various nations’ economies have forced insurers in the market to shrink capacity/ appetite as a whole. For this reason, the role of an insurance professional has never been more important. Being able to navigate these complexities, sets us apart and gives us the chance to shine and promote our profession to clients. A broader challenge, that stands out, is the importance of promoting the insurance broking profession to younger members of the community. It is important that we continue to invest in young brokers to ensure that our new and future industry leaders are able to harness and build upon the knowledge passed on from our senior colleagues.
IA: What is the most important lesson you have learnt in your career so far? MW: The most important lesson I have learnt in my career thus far has been to take every opportunity that is thrown your way. Every opportunity turned down, is an opportunity missed! IA: What role has the Young Professional Broker of the Year award played in your development as a risk management professional? MW: Being a finalist in the Young Professional Broker of the Year award has helped foster relationships with peers that will last long into the future. The program has been fantastic at providing insights into my own personal development, while helping to equip young professionals with tools that we can use to further our careers within the industry. Being a finalist has opened doors and access to a range of experienced professionals within the industry who are more than willing to assist and mentor us through an exciting part of our careers. 28 / INSURANCE ADVISER OCTOBER 2021
IA: What do you think the insurance broking profession will look like in the future? LC: In the short term, I can see the hard market remaining for some time. Long term, as the economy is moving so quickly, the role of a broker is only going to become more technical. Our responsibility will only increase through risk management and market limitations, but at the same time I hope risk appetite eases among all underwriters. I don’t think anyone can forecast life post COVID-19, so we must be agile and adapt promptly. IA: What are the biggest challenges facing the insurance broking profession today, and how do you think these challenges will evolve going forward? LC: Cyber risk is a big one at the moment – we are going through a period like no other, with attacks more frequent and premiums skyrocketing; it is severely challenging the insurance market. With no end to lockdowns in sight, mental health among insurance staff servicing a struggling economy is also very concerning. I do have faith we will evolve to overcome all issues however; this will take some strategic planning and genuine care. IA: What are the major technical advancements you have seen in the profession and what current trends do you think will have an impact on insurance brokers? LC: Underwriting platforms are a big one. Using clients’ risk information to obtain multiple quotes at once through multiple insurers has been game changing. This trend will only increase with all products being available to quote in this manner. Not only does it reduce an intermediary’s quoting times, but it also ensures product is more adequate through the insurers’ underwriting criteria.
IA: What is the most important lesson you have learnt in your career so far? LC: Service is everything in this profession. Ensure that the end result is the best for the client and the rest will take care of itself.
HIGH SPEED ACCESS ANYWHERE
ENTERPRISE LEVEL SECURITY
24/7 DEDICATED SUPPORT
99% UPTIME GUARANTEE
INSURANCE TECH SPECIALISTS
ENGINEERED FOR INSURANCE Looking for a bespoke cloud hosting solution tailored to suit your business? How about a foreward thinking tech partner that works with you to develop I.T.C. strategies that align with your goals? ...or maybe you have a question of data security and compliance that needs to be handled by the experts?
% % % % % % % % %
Enterprise-grade secure cloud platform Compatible with all major broking software Fully compliant with AFSL requirements Access to intelligent insurance automation tools Highly resillient & scalable with your business Top-grade datacentres located in Australia Multi-level data backup and redundancies Monthly fixed price per user model Proactive I.T. consulting & strategy
1300 077 777 insurance@focusnet.com.au focusnet.com.au
COVER STORY / Meet the 2021 Warren Tickle Memorial Award finalists
HARNESSING TECHNOLOGY TO COMPLEMENT RISK ADVICE
COMMITTED TO PROFESSIONAL DEVELOPMENT
Megan Farmer, NSW/ ACT
Patrick McCole, SA/NT
Insurance Adviser: What has the COVID-19 pandemic taught you about resilience and supporting clients through tough times? Megan Farmer: I feel right now our relationships with our clients are more important than ever. To engage with them so they understand their changing risks and exposures during these difficult times, and assist them to navigate their insurance program accordingly.
Insurance Adviser: What has the COVID-19 pandemic taught you about resilience and supporting clients through tough times? Patrick McCole: The COVID-19 pandemic has demonstrated how vulnerable our clients can be, with closures of their businesses and loss of income, which has resulted in employee termination and loss of livelihood. All of which has taken a large toll on mental health. We have had to learn to adapt to the hybrid working environment with lockdowns, and it has been vital that we have been able to keep the same level of service for our clients, and in some cases, more than ever.
IA: What are the biggest challenges facing the insurance broking profession today, and how do you think these challenges will evolve going forward? MF: I feel the general public perception of the insurance industry is a sustained challenge, and the Royal Commission outcomes have certainly impacted the industry as a whole. With the continued dedication from the broking industry, as led by NIBA, to adhere to a high level of professionalism, we will continue to strengthen the understanding and importance of the role of a broker and the industry as whole. IA: What are the major technical advancements you have seen in the profession, and what current trends do you think will have an impact on insurance brokers? MF: With the development of technology over the years, we have seen a positive impact on the resources available. The COVID-19 pandemic has certainly highlighted the importance of being able to conduct certain aspects of business remotely at times. The capability to remotely conduct detailed surveys and risk management reviews allows us to have the ability to provide our clients with detailed advice and understanding to their risks and exposures, whilst ensuring the appropriate insurance outcome. These technological advancements have the capacity to support us in our role as brokers to ensure the best outcomes for our clients. IA: What is the most important lesson you have learnt in your career so far? MF: Delaying a difficult discussion doesn’t make it any less difficult. I think the biggest takeaway from this lesson, is that seemingly tough conversations can also be a great opportunity to understand and manage expectations.
IA: What role has the Young Professional Broker of the Year award played in your development as a risk management professional? MF: The Young Professional Broker of the Year Award have had a formidable impact on my career as a risk management professional. Both support the continued growth, progression and professionalism of our industry as a whole. These development programs and expectations set ensure we can best represent our clients. 30 / INSURANCE ADVISER OCTOBER 2021
IA: What are the biggest challenges facing the insurance broking profession today, and how do you think these challenges will evolve going forward? PM: One of the biggest challenges the broking industry is facing is the use of online and direct insurers. As the premiums may be cheaper than what a broker may be able to provide, this is really going to affect the broking industry, as sole traders and SME clients will use these aggregators rather than seeking the advice of brokers. I think we will see quite an uplift in claims that will be denied, and clients subsequently being uninsurable, as they will not have the backing and advice of an insurance professional. IA: What do you think the insurance broking profession will look like in the future? PM: I think that there will be a move away from the traditional face-to-face broking that is currently being practiced. Due to the ever-evolving use of online meetings, I feel that client meetings will become more focussed around this. I also feel that brokers will become more specialised in certain areas. IA: What is the most important lesson you have learnt in your career so far? PM: You always need to position yourself with great mentors. It can be such a difficult industry at times, and it is always important to have someone seek advice from. Whether it be advice with clients or developing professionally.
IA: What role has the Young Professional Broker of the Year award played in your development as a risk management professional? PM: For me, being nominated for Young Professional Broker of the Year has ensured that I continue not only with my own personal development as an insurance professional, but to also to be a mentor and to speak to others who are either very early in their careers, or to people considering entering the insurance industry.
Specialist Underwriter
YOUR CLIENT’S EXPOSURES IN CYBER ARE CONSTANTLY CHANGING AND SO TOO IS OUR COMPREHENSIVE CYBER PRODUCT. Contact Rob Collyer to find out more about our additional coverage options including: • Social Engineering Fraud • Accidental Damage • PCI Fines and Penalties Providing you access to global best practice cyber risk management experts, we can help you navigate the new mandatory data breach notification laws.
Experience and expertise that you and your clients deserve. Professional Indemnity Cyber IT Liability Association Liability Commercial Crime
Nova Underwriting Pty Ltd
NOVA16930
novaunderwriting.com.au rob@novaunderwriting.com.au
FEATURE / Cladding
Preparing for the second wave There’s a second wave of cladding litigation coming – and insurance brokers need to have robust conversations with clients about the need to act. Now. BY MARTIN WANLESS
32 / INSURANCE ADVISER OCTOBER 2021
NIBA.COM.AU / 33
FEATURE / Cladding
J
ust last month, the cladding issue that’s been rumbling along ever since the 2017 Grenfell Tower disaster in London, was brought back to the forefront of everyone’s minds as footage was broadcast from the Italian city of Milan. A 20-storey apartment building up in flames; the fire rapidly fuelled by cladding. Fortunately – miraculously – no one was seriously hurt, and no lives were lost: but that was down to good fortune, rather than good planning. And it’s a stark reminder for all of those involved in buildings with cladding – from consultants to builders, owners to strata committees – that this is still very much a ‘live’ issue, which states are addressing through different rectification schemes. And the rectification work is likely to see a ‘second wave’ of legal activity. “Victoria alone is doing $600m of cladding rectification,” says Todd Woodard, Professional & Financial Risks, Portfolio Manager – Commercial PI Asia Pacific of Liberty Specialty Markets. “There are a lot of building owners waiting around for guidance from the government, and a lot of litigation that was waiting on the Lacrosse decision (see breakout on page 36). “Over the next 18 months the industry will see a number of claims being paid out, and some Australian underwriters are putting a framework together about how to deal with cladding claims, in order to reduce costs.” “There’s an enormous pipeline of litigation, and a substantial number of cases already 34 / INSURANCE ADVISER OCTOBER 2021
underway,” confirms Jonathan Newby, Partner at Colin, Biggers & Paisley Lawyers. Newby was involved in the Lacrosse case, which was the first to go through the court system. Victoria alone has committed $600m to fixing non-compliant cladding, however this money will be recovered from somewhere, and the Victorian Government has said this will be pursued from builders and building consultants. “However, they won’t go down that path until they actually know how much money they’re going to spend,” says Woodard. “There’ll be exposure on the strata side, on property managers, on the real estate side of the industry, whereas previously there’s been more talk about the construction side of things. “Construction companies are always near the top of the list for insolvencies, and if the builder, engineering firm or contractor has gone out of business, it’s going to be the strata owners who are left.” It’s expensive business, and it’s no surprise insurers are taking a very cautious approach.
“The NSW Government is estimating each residential building is going to cost $4m to fix,” says Newby. “That’s not my experience. Yes, there are some that can be done for the low millions, but there are buildings that will cost in the region of $20m to rectify. “If the contractor bears the cost of that initially, then there’ll be subsequent proceedings to try to get contributions from the fire engineer who signed off on the use, the architect who nominated the use of the material in the first place and the certifier, who should have caught the problem. “You then get the snowball effect, and the aggregate cost would be in the billions and that’s more than the insurance market can bear. I can understand why many have walked away.”
THE CHALLENGES THAT AWAIT
For building owners and strata committees that haven’t yet begun the rectification process, the onus is on them to identify whether or not work is necessary – and
“Construction companies are always near the top of the list for insolvencies, and if the builder, engineering firm or contractor has gone out of business, it’s going to be the strata owners who are left.” – TODD WOODARD, LIBERTY SPECIAL MARKETS
Local Presence, Global Strength www.brooklynunderwriting.com.au
FEATURE / Cladding
“Quite simply, if you’re involved with a building that has cladding, you have to do something. At the very least, you need to get it signed off verifying it is compliant.” – STEVEN TCHEPAK, CHU UNDERWRITING Steven Tchepak, National Underwriting Manager of CHU Underwriting, says it’s not an issue that can be ignored any longer. “A few years ago, if a client wasn’t fully aware about the cladding issue you would excuse that. But over the past few years there has been plenty of media coverage on the topic, and the need to check and rectify cladding is what we as insurers would call ‘material fact’ – it’s something that people are aware of. “Quite simply, if you’re involved with a building that has cladding, you have to do something. At the very least, you need to get it signed off verifying it is compliant.” For brokers, having a comprehensive understanding of the risk exposure created by non-compliant cladding on a client’s property is incredibly important, says Peter Ooi, Manager, Underwriting Strategy at SUU. “Having that detailed understanding will help support an insurer’s assessment of the exposure relative to their specific underwriting appetite. “Further to having a comprehensive understanding of the risk exposure, it is vital to be able to share a plan for remediation work, if remediation work is necessary, as well as risk mitigation steps taken to address the exposure in the short term. “It’s important for brokers and their clients to know that a lack of information, lack of remediation planning, if warranted, and a lack of risk mitigation will further increase challenges with insurance placement on top of an already difficult position.”
THE LACROSSE APPEAL In April this year, the Court of Appeal of the Supreme Court of Victoria gave judgment in various appeals related to the Lacrosse Apartment fire in 2014, providing some insight into how future litigation may proceed. Colin, Biggers and Paisley represented builder L.U. Simon, who had successfully been sued by the owners of the building. The court of appeal ruled that L.U Simon was entitled to pass through 97 per cent of its exposure to the owners to the building surveyor, Gardner Group, the architect, Elenberg
36 / INSURANCE ADVISER OCTOBER 2021
Fraser and the fire engineer, Tanah Merah, with L.U. Simon retaining three per cent. This decision set out three key findings, according to Colin, Biggers & Paisley: • T he debate over whether or not ACPs ever complied with the ‘deemed to satisfy’ criteria of the BCA has been settled, with the court holding that they did not and do not. • W hether a builder took reasonable care in the discharge of its duties is to be looked at in all the circumstances.
There were certain findings as to the builder’s state of knowledge around ACPs that aggrieved some parties but sustained the finding that the builder had sought out and deferred to subject matter experts. • The court also took up a point upon which there has been some judicial uncertainty concerning the proportionate liability regime. Based on the reasons, if a claim by its character is not one that relies on a failure to take reasonable care, it is not apportionable.
CELEBRATING 25 YEARS
FEATURE / EPS/ Cladding
“However, we need to see these issues being addressed. Understandably, COVID-19 has delayed some work happening, however, building owners need to have a plan in place to deal with any cladding issues – and begin that work.” PROACTIVITY IS KEY
Those conversations around cladding and the risks that come hand in hand are critical, because in every aspect of this being proactive is essential: especially when it comes to insurance. “What we look for when we’re providing insurance is a level of proactivity,” says Tchepak. “We are prepared to continue to support clients in this market, if they can diligently show that they are taking all steps that a reasonable person should be expected to take. We actually haven’t declined to offer cover exclusively because of cladding – we may have due to a combination of cladding and other defects – but not purely based on the cladding. “However, we need to see these issues being addressed. Understandably, COVID-19 has delayed some work happening, however, building owners need to have a plan in place to deal with any cladding issues – and begin that work.” CHU prices the risk of cladding into the premiums and excesses offered to the insured.
Many other insurers, however, have put cladding exclusions into policies, which Tchepak views as potentially problematic moving forward. “The strata legislation, regardless of where you are, does require owners corporations to ensure full replacement and reinstatement value, so if you’re providing an insurance policy that excludes a component of a building, it would require legal advice as to whether it’s meeting a requirement of the Act.” From a risk management perspective, the need to take action certainly falls into the ‘urgent’ category. “If an incident did occur, everyone who may be a party to the claim will become involved,” says Tchepak. “So, if you’re in charge of actioning matters on behalf of a building, and evidence comes out that you were aware of a hazard or had noncompliant cladding and chose to not do something about it, it may not end well.” Far from being old news, cladding is about to make headlines again – and all of those involved, from brokers to building owners, builders to certifiers, must be prepared to act.
INSURANCE COUNCIL OF AUSTRALIA ACP CATEGORIES Last year, the Insurance Council of Australia published four general categories of ACPs (aluminium composite panels), ranging from A (high fire risk) to D (non-combustible). A. 30-100 per cent Organic Polymer and 0-70 per cent inert – similar to Category 3 in the BRE appendix. Inert materials are considered those that do not contribute to combustion. ACPs in this category typically have close to 100 per cent organic polymer in their core and were identified by most manufacturers as PE (Polyethylene) core. Some core binders are polymers other than PE. B. 8-29 per cent Organic Polymer and 71-92 per cent inert – similar to Category 2 in the BRE appendix. Typically identified by ACP manufacturers as fr, FR, Plus or rated Class B per EN 13501, and typically have around 30 per cent organic polymer in the core. However, some State Regulations limit the PE content to less than 30 per cent for this category. C. 1-7 per cent Organic Polymer and 93-99 per cent inert – similar to Category 1 in the BRE appendix. Typically identified by ACP manufacturers as A2, rated as Class A2 per EN 13501. These are considered as having very limited combustibility. Testing to EN 13501 and obtaining class A2 is a valid alternative. D. 0 per cent Organic Polymer and 100 per cent inert – similar to Category 1 in the BRE appendix. Typically, panels tested or deemed noncombustible by the building code (National Construction Code). These could be aluminium skins with low adhesive aluminium honeycomb cores, compressed fibre cement core or even compressed fibre cement panel. Steel panels with calcium silicate or similar core.
38 / INSURANCE ADVISER OCTOBER 2021
ADVERTORIAL / Wotton + Kearney
LEGAL DEVELOPMENTS IN THE BUILDING AND CONSTRUCTION INDUSTRY
NICK LUX AND ROBERT FINNIGAN
Partners, Wotton + Kearney
W
otton + Kearney’s national team of Construction PI specialists is closely following the reform of Australia’s building and construction industry, including key regulatory and risk developments affecting the sector.
Regulatory and legislative developments
Australia is seeing sweeping state-based legislative reform intended to regain public confidence in the building and construction industry. Next year, there are also likely to be sweeping changes to the National Construction Code, which may include significant reforms for houses and low-rise apartments. In NSW, the Design and Building Practitioners Act 2020 is having a significant effect on establishing the liability of design and building practitioners within the construction industry and how they are insured. The Office of the NSW Building Commissioner has also advanced its digital reform initiatives and continues to refine these. For example, its Strata Hub, which will allow people living or intending to live in a strata scheme to access basic information about a particular building, is expected to be launched later this year. In contrast, the Victorian Government has established the Building Reform Expert Panel to lead its review of the building legislative and regulatory system. The resulting changes will occur over two years and ultimately lead to a new Building Act in 2023. Within the scope of its review, The Building Reform Expert Panel is considering the introduction of project-based insurance as it can provide a “single, first resort, insurance instrument that unites the interests and strengthens the accountability of all parties involved in a single building project”. In Victoria, another key legislative development is that building owners have been given more time to commence legal proceedings against builders responsible for installing combustible cladding, with the time limit for commencing a claim increasing from the previously extended 12 years to 15 years.
From a broking perspective, these changes have effectively broadened the potential scope of an insured’s liability, both in terms of exposure to an additional cohort of claimants (for example, subsequent owners of defective buildings in the case of the NSW legislative reforms) or a longer tail to exposures (in the case of the extended limitation period in Victoria for cladding actions). As such, it is imperative that insureds are adequately insured against these emerging risks. In particular, caution needs to be exercised to ensure that insureds are not left exposed through limitations imposed by retroactive date exclusions or the lack of continuous cover where these risks are becoming broader and with longer tails.
Construction defects landscape
Over the past 18 months, there has been a strong demand for home construction and renovation, fuelled by discretionary spend savings and low interest rates during the pandemic. This demand is expected to ease from mid-2022. However, in the short-term, the increased demand for building supplies and the loss of local timber due to the 2020 bushfires has meant that many builders are facing unforeseen increased material costs and significant delays in completing works. This has invariably placed pressure on the construction sector, in particular head contractors as they face exposure to their principals either by way of liquidated damages or delays in start-up. It has also placed financial constraints on contractors as invariably their margins have been squeezed. From an insurance perspective, brokers need to be aware of the extent of cover afforded to their insureds, which will often exclude liability
for liquidated damages and rarely provide protection against business or financial losses. Similarly, delay in start-up (DSU) insurance will not typically cover insureds for revenue losses based solely on rising materials costs.
Technology and digitisation in construction
Post COVID-19, Australia has a massive pipeline of infrastructure work. Technology may play an important role in both the planning of projects and determining which projects should proceed. The Australian Government has announced that it is investing $110 billion into public assets as part of its 10-year infrastructure program. It is already leveraging smart technologies, including aerial data capture technology, digital engineering, digital twins, virtual reality and Cloud-based project management software, to deliver infrastructure projects. Clearly the seemingly insatiable appetite for large infrastructure has underscored the need for appropriate insurance cover. Single project professional indemnity (SPPI) cover has certainly been in demand, although it remains a somewhat misunderstood product at times. In arranging any SPPI, it is important that the contractual arrangements among the contractor and consultant group are appropriately drafted to account for the common project insurance programme (including an emphasis of subrogation waivers and proscriptive and proactive processes for the management of any defects in the project). For more W+K commentary on the building and construction industry, visit: wottonkearney.com.au/resource-hubdevelopments-and-updates-in-the-buildingand-construction-industry/
“From a broking perspective, these changes have effectively broadened the potential scope of an insured’s liability.” NIBA.COM.AU / 39
FEATURE / Events Insurance
COVID-19 2020 / 2021 CNTR 94.3 MILLION
CNTR
32
737 CNTR
COVID-19 2020 / 2021 94.3 M2I0L2L2I?ON
CNTR
32
737
32
738
CATASTRO COURT CA AND DESP 32
737
Brokers were caug ht off guard by t resulting in cases sp illing in
***********
P O R T S CATA CAS COURT ESP AND D BY NINA HENDY
ard by the p u g ff o t h g u a c e Brokers wer to the in g n li il p s s e s a resulting in c A HENDY* * *
******** BY NIN
2022? 40 / INSURANCE ADVISER OCTOBER 2021
94.3 MILLION
OPHE, ASES, PAIR PHE, SES, R I A P
the nto
COVID-19 2020 / 2021
CNTR
COVID-19 2020 / 2021
94.3 MILLION
32
pandemic, the courts
pandemic, e courts
CNTR 737 32
737
NIBA.COM.AU / 41
FEATURE / Events Insurance
I
nsurance brokers have been slammed with enquiries over the past 18 months, as COVID-19 forces the cancellation of thousands of events scheduled for across the country. Iconic events such as the Australian Grand Prix, the Falls Festival, performances by the Australian Ballet and a number of high-profile concerts and stage shows have all suffered the same fate. Cancelled in 2020. And many again in 2021.
For some, it has been a financially crippling period for insurers in the events space, with some insurance policies covering for COVID-19-related cancellations, while others did not – depending on the fine print.
ADAPTING TO RISKS
The events industry was already adapting to a changing risk landscape, following the impact of the devastating Australian bushfires before the pandemic hit,
PANDEMIC PAIN
CNTR
737
19 COVID-2021 2020 / ILLION 94.3 M
CNTR
32
2022?
32 737 ILLION 94.3 M
# # # # # ## TIONAL A N A IN RVEY OF SU 3,000 OVER SIONALS, S PROFE737 GIGS 32, EVENTS AND ERE W ED L L E C CAN YEAR, THIS ATING EQU ARLY TO NEMILLION $94.3F LOST O NCE I S E INCOMLY 2021. 1 JU ##### ##
a Marsh Insights report published in June 2020 states. The key learning has been that organisers, promoters and their events need to be prepared for the unexpected. Simon Calabrese, Marsh Australia’s National Manager for Entertainment, Leisure and Events states that extreme weather conditions are a continued and growing risk for event promoters. Even indoor events can even be affected by extreme weather, due to transport delays, denial of access or damage to the venue themselves. “Drug-related fatalities at music festivals over the last few years have also put additional legislative requirements on event promoters and hence additional time and cost have resulted in some events being cancelled,” Allianz’s Regional Entertainment Manager, Damian Kerin also revealed in the report. But the game-changer for the events insurance (and closely related business interruption) space has been COVID-19. Social restrictions imposed by governments to curb the spread of the disease have made event planning an almost impossible task – particularly given that each state government has taken their own unique approach to dealing with outbreaks. But many events companies have had little choice but to try and host events – it’s that or go bust. In a national survey of over 3,000 professionals, 32,737 gigs and events were found to have been cancelled this year, equating to nearly $94.3 million of lost income since 1 July 2021. Of this lost revenue, survey results showed 99 per cent had no income protection or event cancellation insurance. As the disease spread around the world and entered Australia’s borders, insurance brokers scrambled to reach out to clients to clarify where they stood in relation to COVID-19related cover for events. Ian Stack is the Senior Account Manager and Associate Director of Action Entertainment Insurance, which counts leading bands, events and music festivals, production
COV 2020
FEATURE / Events Insurance
COURT ACTION
Meanwhile, brokers are on tenterhooks as a claim is played out in the courts. The owners of several of Melbourne’s theatres mounted the court action against Ansvar Insurance to recover more than $20 million after a number of events in the form of stage shows (including Harry Potter and
32 CNTR
N
44 / INSURANCE ADVISER
32
INSUR ANCE
94. 3 M I L LIO
“IF C 19-RE OVIDMATTE LATED UNFORRS ARISE, TUNAT ELY THIS UNINS IS U R ABLE THE M O IS CO MENT AS AT KNOWN NSIDERED IT WE NE RISK. SO A REALL ED TO B , TO WH Y CLEAR E AT TH A ORGAN E EVENS WANTI ISER I T AND W NG TO CO S V H IS INETHER THIER S SURAB L OR NO T.” E
737
The reality is that the pandemic caught insurance brokers unawares, with mixed responses from players. This is perhaps why some key industry players declined to comment when contacted by Insurance Adviser. Last year, AON Risk Solutions publicly declared that it would refund premiums, including commissions, for any events cancelled due to the COVID-19 restrictions. While the company’s senior client manager, commercial risk solutions, Phillip Sunshine announced at the time that the work had already been done and therefore the commission had been earned, the company decided to refund its commission entitlement. Sunshine said at the time it was ‘the right thing to do’. The Marsh Insight report, published last year, stated that almost all communicable diseases (such as COVID-19) are excluded from policies within policy wording. However, if a communicable disease extension was purchased prior to an outbreak, then this outbreak would most likely not be excluded, depending on the policy terms. Marsh has been educating its customers on hosting COVID-safe events, posting a checklist on its website so that policyholders can bear some of the brunt. – IAN However, policy wording STACK , ACT ION E has been vague, catching out NTERT AINME Insurance Australia Group NT
COV 202 ID-19 0 / 2 021 94. 3 M I L LION
CNTR
737
IN THE FINE PRINT
(IAG), with Chief Executive Nick Hawkins admitting its business interruption policies (which relate to events insurance) were not clearly written after the insurer reported a $460 million loss for the December half. The devastating financial result was due to a flood of claims from business owners impacted by COVID-19 restrictions.
2022?
companies, recording studios and film producers among its client base. The challenge for underwriters, he says, is understanding what the event activities include. “Certain event activities will be considered higher risk than others, such as events held on rural properties versus events in purpose-built entertainment venues. So it’s all about asking the relevant questions and providing the underwriting information to the insurers so that they can easily understand their exposure and price accordingly,” he says. Stack continued: “If COVID-19related matters arise, unfortunately this is uninsurable at the moment, as it is considered a known risk. So, we need to be really clear as to what the event organiser is wanting to cover and whether this is insurable or not.”
2
737
FEATURE / Events Insurance
Moulin Rouge!) were put on hold due to the COVID-19 outbreak, as reported in The Age. The media reports reveal that the venues, owned by the Marriner Group, hope to claw back more than $20 million to cover all venues under their business interruption insurance policy. It comes after the insurance sector claimed that business interruption policies are not meant to apply to pandemics, so the court case will thrash out the wording of policies. According to The Age, many policies noted pandemics as an exclusion
under the Quarantine Act. But in 2016, this Act was repealed and replaced by the Biosecurity Act. The pandemic was declared a pandemic under the Biosecurity Act. Some insurers became aware of the change and amended policies, but others did not realise the change would impact their policies and didn’t make any changes. Meanwhile, there are calls for the Federal Government to step in to cover insurance payments in the event of cancellations due to future lockdowns. The calls come after a national survey found that the nation’s
live entertainment industry lost nearly $64 million in revenue in July due to the cancellation of around 23,000 events. Iconic Byron Bay event Bluesfest organiser Peter Noble has been vocal about the concept, which has gained momentum within the broader live music and entertainment industry, which is still reeling from the adverse impacts of the pandemic and resulting lockdowns. But just like COVID-19, it’s a wait and see as to whether this suggestion will ever materialise.
32
2022?
ID-1 / 2092 1 MILLI ON CNTR 32 737
94. 3 M I LLI
46 / INSURANCE ADVISER OCTOBER 2021
CO 2020V 94.3
CNTR
737
***** THE C ** COME ALLS NATIO AFTER FOUNDNAL SUR A NATIO THAT TVEY ENTER N’S LIVHE E T INDUASINMENT LOST TRY $64 M NEARLY IN RE ILLION JULY VENUE CANCDEUE TO TIN HE L L A T O I 23,0F0 AROUNDON 0 EVE ***** NTS. **
CASE STUDY EVENTS INSURANCE CANCELLATION The final day of a food and wine festival was rained out, resulting in a significant loss of income for the organiser. The event was scheduled to run over four days, with two ticketed sessions per day. The first three days proceeded without incident. But on the last day of the event, severe weather conditions resulted in the event being abandoned due to safety concerns for vendors and patrons. The event organiser provided refunds to ticketholders for the cancelled session, which led to its net profit earned from the event being significantly less than it would have been had the event proceeded as planned. However, the organiser held an Event Cancellation policy, which was purchased to cover the costs and expenses and the net profit associated with the event, putting the insured back in the same position that they would have been in, had the event not been affected by weather.
SOURCE: MARSH ADVANTAGE INSURANCE
O
The network The network you need. you need. The network freedom you The freedom you need. want. The freedom you want. you want.
Empowering your clients starts with empowering your business. As the largest Empowering your clients starts with Authorised Broker network in Australia, empowering business. As theguidance largest CBN providesyour unrivalled support, Empowering your clients starts with Authorised Broker network in Australia, and resources across everything from broking empowering business. As the largest CBN providesyour unrivalled support, guidance and strategy to marketing and professional Authorised Broker network in Australia, and resources across everything from broking development. CBN providesto unrivalled support, guidance and strategy marketing and professional and resourcesby across everything from broking development. Underpinned leading insurance and compliance strategy to marketing professional and technologyand platforms, Underpinned leading insurance development. we provide theby tools you need to grow your and compliance technology business and achieve the bestplatforms, outcome for Underpinned by leading insurance we provide your clients.the tools you need to grow your and compliance technology business and achieve the bestplatforms, outcome for we provide your clients.the tools you need to grow your business and achieve the best outcome for your clients.
Get the network advantage Join our community and find the freedom to be your own boss.
Get the network advantage
MAKE YOUR MOVE
Speak to your MAKE YOUR MOVE local business Speak to your partner MAKE YOUR MOVE local business VIC/TAS Speak to your partner Jonathan Lam local business m 0428 680 371 VIC/TAS QLD Jonathan Lam partner Michael Wennerbom m 0428 680 371 m 0404 841 319 VIC/TAS QLD Jonathan Lam SA/NT/ACT Michael Wennerbom m 0428 680 371 Nicky Dunkin m 0404 841 319 m 0419 411 152 QLD SA/NT/ACT Michael Wennerbom NSW Dunkin Nicky m 0404 841 319 Chris Macpherson m 0419 411 152 m 0420 990 720 SA/NT/ACT NSW Nicky Dunkin WA Chris Macpherson m 0419 411 152 Stephen Kidd m 0420 990 720 m 0439 910 790 NSW WA Chris Macpherson Stephen Kidd m 0420 990 720 m 0439 910 790 WA Stephen Kidd cbnet.com.au m 0439 910 790
Join our community and find the freedom to be your own boss.
cbnet.com.au
Join our community and find the freedom to be your own boss.
cbnet.com.au/discover-cbn
Get the network advantage
COMMUNITY HUB
COMMUNITY HUB OCTOBER 2021
The COMMUNITY HUB is your space to showcase your products and services to a specialist audience.
INDEX AB Phillips ..................................................... 48 ASR Underwriting...................................... 49 Affinity Insurance Brokers...................... 50 Newline Group............................................ 50
Tudor Insurance............................................. 51 AIBI.................................................................... 51 Australasia Underwriting......................... 51 Moran Insurance Brokers......................... 52
MGA Insurance Brokers........................... 52 Marsh & McLennan Agency.................. 53 NIBA advertising......................................... 53
WANT TO ADVERTISE IN THE INSURANCE ADVISER? If you’re a NIBA member with a product or scheme you’d like to promote to a broker audience in our Community Hub section, please contact Tony May E: tmay@niba.com.au
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
AFFINITY EQUINE, ADVENTURE COMMUNITY HUB & LEISURE LIABILITY Abseiling Accommodation Agistment Animal & Petting Zoo Archery Bush Walking Camping Campsites Canyoning Caving Team Building
Equine Associations Equine Events Equine Therapists Farriers & Dentists Fishing & Boat Cruises Four Wheel Driving Flying Fox Horse Carriage Driving Horse Trainers Initiatives Kayaking
Mountain Biking Orienteering/Rogaining Paddle Boarding Pony Rides Paintball & Skirmish Riding Schools River Rafting Rock Climbing Ropes Course Rowing Sailing
Sports Associations Sea Kayaking Scuba Snorkelling Snow Skiing Surfing Swimming Trail Running
1300 130 535 www.affinityib.com.au Affinity Insurance Brokers is an Authorised Representative (No 1288354) of Aon Risk Services Australia Limited AFSL 241141
Key Liability Industries:
Key PI Occupations:
Key FI Occupations:
• Alternate & Complementary medicines • Automotive • Biotechnology • Clinical Trials / Research • Defence – machinery, weaponry & protective equipment • Life Science / Pharmaceuticals • Medical & Surgical Devices (including invasive implants) • Medical Cannabis • Medical Equipment / Products • Mining • Rail, Products, Maintenance, Locomotive Engineering, operators, Rolling Stocks & Engine Manufacturers • Tyres – new, re-threading, lugging, repair & sales • Universities • Veterinary Medicines
• Accountants • Architects • Engineers • Environmental Consultants • Insurance Brokers / Underwriting Agencies • Law Firms • Management Consultants • Miscellaneous Risks • Real Estate Agents • Valuers
• Fund Managers/Investment Managers • Insurance Companies • Managed Investment Schemes • Excess lines for Financial Planners
Chief Executive Officer / Underwriting Manager – Liability
Underwriting Manager - PI
Key D&O • Insured firms can be not-for-profit, privately held or publicly traded • Side A/DIC placements • Medical Cannabis risks • All industry sectors, both commercial and financial, are underwritten
Key Crime Commercial Crime Insurance is also offered alongside other Financial Lines products
Linda Sepala Underwriting Manager – D&O & FI
PH: 03 9998 1900
Newline Australia Insurance Pty Ltd ABN 81 118 089 651 PO Box 16208 Collins St West VIC 8007 PH: 03 9999 1901 FAX: 03 9670 0045 newlinegroup.com.au info@newlinegroup.com.au 50 / INSURANCE ADVISER AUGUST 2021
COMMUNITY HUB
Benefits of dealing with LSM:
Demolition and Asbestos Removal Liability Insurance Contact us for a confidential review of your clients insurance needs.
$20M Asbestos Liability now available Security of dealing with local office of a major insurer Local claims and underwriting service working closely with you to meet your clients business needs Automatic addition of Errors & Omissions coverage when Asbestos Liability is purchased
service@tudorinsurance.com.au
You can also apply for enhancements when you purchase this policy - coverage for Statutory Fines & Penalties, coverage for Shoring & Underpinning and coverage for transportation of asbestos (clean-up-costs)
(03) 9707 3033
15% commission of all placements
Tudor Insurance Australia Cameron McKerchar tudorinsurance.com.au
�aibi
Adult Industry Business Insurance
WE TOUGH INSURANCE For hard to place business we offer a solution Our Favourite Property Risks • Vacant Properties • EPS Risks / Distressed or Difficult Occupations • Remote and Timber Pubs • North Australian Risks • Wineries / Woodworkers • Waste Recyclers / Plastics Manufacturing o Lead / Follow / First Loss / Excess of loss. Our Favourite Liability Risks • Asbestos Removal/Demolition Contractors/Earthmoving • Abattoirs / Seafood Processing / Food & Beverage • Services to the Mining Industry / Welding & Fabrication • Chemicals & Fertiliser Manufacturing • Railway Equipment / Industrial Machinery & Equipment The AU Team Alan Mackay Frank Van Rooy Simon Bidey
AIBI is a registered trading name of Thurston Insurance Brokers Pty Ltd. Thurston 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.
Property Liability Underwriting
03 9559 3316 03 9559 3310 03 9559 3317
Email Contact: firstname@australasiaunderwriting.com.au For full appetite details please visit our website: AustralasiaUnderwriting.com.au
NIBA.COM.AU / 51
COMMUNITY HUB
52 / INSURANCE ADVISER OCTOBER 2021
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 enquiries@marshmc.com
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)
Marsh and McLennan Agency Pty Ltd ABN 33 000 668 584 / AFSL 238984
517-3776
Contact Tony May National Advertising Sales Manager T: 02 9459 4303 E: tmay@niba.com.au
NIBA.COM.AU / 53
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
NIBA / Forthcoming Events
STAY UPDATED!
NIBA EVENTS
NIBA stages a variety of educational and social events across Australia for the whole intermediated insurance community.
EVENTS UPDATE Mark your calendar to meet, share, learn and grow with your industry peers at NIBA events across the country.
2021 NIBA AWARDS CEREMONY WHERE: Virtual WHEN: Thursday 28 October 2021 Join us as we celebrate Australia’s best in broking. The QBE-sponsored Stephen Ball Memorial Award and the Vero-sponsored Warren Tickle Memorial Award will be announced at the ceremony, as well as the winners of the Lex McKeown Trophy, General Insurer of the Year and Underwriting Agency of the Year awards.
PROTECSURE NIBA PRESENTATION SKILLS PROGRAM WHERE: Sydney CBD WHEN: 9, 16, 23 and 30 November 2021 The Protecsure NIBA Presentation Skills Program offers a holistic approach to presentation skills, promoting technical awareness of the art of communication, and the importance of effective networking. The program, presented by Nikki Heald and Michael Kelly, aims to develop young professionals’ skills and performance in the art of verbal and non-verbal communication. Program structure: • Workshop 1 Nikki Heald (an introduction to networking): Tuesday 9 November 2021 from 4pm – 6pm
Check out what’s happening close to yo u and registe r via the events cale ndar at niba.com.a u/ events
Please note in light of COVID-19, NIBA will continue to follow and implement national and state health authorities’ recommendations.
• Workshop 2 Michael Kelly (unspoken technics to engage your audience): Tuesday 16 November 2021 from 9am – 1pm • Workshop 3 Nikki Heald (building your hook and presentation): Tuesday 23 November 2021 from 9am – 1pm • Workshop 4 Final Presentations: Tuesday 30 November from 4pm – 6pm Nikki Heald: Nikki is the Director of Corptraining, established to provide dynamic and modern presentations appropriate to the business needs of today. Her programs focus on developing interpersonal skills which enhance business relationships and professional visibility, resulting in increased credibility and sales. Michael Kelly: Michael is a leading body language and speech expert and holds a Master of Science degree in speech pathology. His programs help leaders communicate their ideas and vision with confidence, energy, and certainty. Leaders who work with Kelly deliver influential presentations, win more pitches, and grow thriving careers.
NIBA UAC WA UNDERWRITING EXPO WHERE: Crown Perth WHEN: Thursday 11 November 2021 The event normally sees up to 100
exhibitors, and NIBA and UAC are committed to provide this experience to the local WA market. The event will be open to a limited number of exhibitors, and we welcome all insurance brokers to walk through the room free of charge.
2021 NIBA SA CHRISTMAS COCKTAILS WHERE: Peter Rabbit, Adelaide WHEN: Friday 12 November 2021 The highly anticipated NIBA SA Christmas Cocktails couldn’t proceed in 2020, but returns in 2021 with a bang to mark the end of the year.
2021 NIBA QLD CHRISTMAS BOWLS & BBQ WHERE: The Boo, Newstead WHEN: Thursday 25 November 2021 Come along to celebrate the end of the year with the intermediated insurance industry, featuring a friendly tournament of lawn bowls and a BBQ inclusive of drinks.
2021 NIBA NSW CHRISTMAS COCKTAILS WHERE: Sydney CBD WHEN: Friday 26 November 2021 The NIBA NSW Young Professionals Committee is planning an intimate cocktails function to celebrate the end of the year. Save the date for this must-attend event.
DISPLAY ADVERTISING INDEX – OCTOBER 2021 NTI............................................................ IFC QBE................................................... 5, OFC Vero........................................................... 7, 9 CGU.............................................................. 11 GT................................................................. 15
ASTA........................................................... 25 Focusnet....................................................29 NOVA.......................................................... 31 Brooklyn.................................................... 35 Insurance Advisernet........................... 37
Wotton + Kearney..................................39 SLE..............................................................43 Arena..........................................................45 CBN............................................................ 47 Ebix..........................................................IBC
If you’d like to advertise your products and services through NIBA, please contact Tony May today on (02) 9459 4303.
NIBA.COM.AU / 55
INSURER STRENGTH RATINGS
S&P GLOBAL
AUSTRALIA
INSURER FINANCIAL STRENGTH RATINGS
The following is a list of S&P Global Ratings insurer financial strength ratings assigned to insurance companies in Australia and New Zealand. Ratings at 1 September 2021. Contact: Craig Bennett, S&P Global Ratings Telephone: 03 9631 2197
RATING
NON-LIFE INSURERS AAI Ltd.
A+/POSITIVE
AIG Australia Limited
A/CreditWatch Negative
Allianz Australia Insurance Ltd.
AA-/STABLE
BHP Billiton Marine & General Insurances Pty Ltd. A/STABLE Chubb Insurance Australia Ltd.
AA-/STABLE
Great Lakes Insurance S.E (Australia Branch)
AA-/STABLE
Hallmark General Insurance Co. Ltd.
BBB+/STABLE
Insurance Australia Ltd.
AA-/STABLE
Society of Lloyd's
A+/STABLE
Medical Insurance Australia Pty Ltd.
A-/STABLE
QBE Insurance (Australia) Ltd.
A+/STABLE
QBE Insurance (International) Ltd.
A+/STABLE
Hallmark General Insurance Co. Ltd. (NZ Branch) BBB+/STABLE
Zurich Australian Insurance Ltd.
AA-/STABLE
IAG New Zealand Ltd.
AA-/STABLE
LENDERS MORTGAGE INSURERS
Society of Lloyd's
A+/STABLE
Genworth Financial Mortgage Insurance Pty Ltd.
A/NEGATIVE
Medical Insurance Society Ltd.
A-/POSITIVE
QBE Lenders' Mortgage Insurance Ltd.
A/STABLE
Southern Cross Benefits Ltd.
A/STABLE
Southern Cross Pet Insurance Ltd.
A/STABLE
Westpac Lenders Mortgage Insurance Ltd.
A/Negative
Teleco Insurance (NZ) Ltd.
BBB+/STABLE
Vero Insurance New Zealand Ltd.
A+/POSITIVE
Vero Liability Insurance Ltd.
A+/POSITIVE
NEW ZEALAND
RATING
NON-LIFE INSURERS AA Insurance Ltd.
A+/POSITIVE
AIG Insurance New Zealand Ltd.
A/CreditWatch Negative
Chubb Insurance New Zealand Ltd.
AA-/STABLE
QBE Insurance (Australia) Ltd. (New Zealand Branch) A+/STABLE
HEALTH INSURERS Southern Cross Medical Care Society
A+/STABLE
NIB NZ Ltd.
A-/STABLE
LENDERS MORTGAGE INSURERS Genworth Financial Mortgage Insurance Pty Ltd. (NZ Branch)
A/NEGATIVE
LIFE INSURERS
LIFE INSURERS AIA Australia Ltd.
A+/STABLE
AMP Life Ltd.
A-/NEGATIVE
Challenger Life Company Ltd.
A/STABLE
Hallmark Life Insurance Co. Ltd.
BBB+/STABLE
MetLife Insurance Ltd.
A+/STABLE
Westpac Life Insurance Services Ltd.
A+/STABLE
REINSURERS General Reinsurance Australia Ltd.
AA+/STABLE
General Reinsurance Life Australia Ltd.
AA+/STABLE
Hannover Life Re of Australasia Ltd.
AA-/STABLE
Asteron Life Ltd.
A+/POSITIVE
Munich Reinsurance Co. of Australasia Ltd.
AA-/STABLE
Hallmark Life Insurance Co. Ltd. (NZ Branch)
BBB+/STABLE
RGA Reinsurance Co. of Australia Ltd.
AA-/STABLE
Medical Life Assurance Society Ltd.
A-/POSITIVE
Westpac Life-NZ-Ltd.
A+/NEGATIVE
SCOR Global Life Australia Pty Ltd.
AA-/STABLE
Resolution Life New Zealand Ltd.
A-/NEGATIVE
Swiss Re Life & Health Australia Ltd.
AA-/NEGATIVE
*For the S&P Global Insurer Financial Strength Ratings Definitions visit: https://www.niba.com.au/resource/standardandpoors.pdf Copyright © 2021 S&P. This material is reproduced with the permission of S&P. Reproduction of this the S&P Information in any form is prohibited without S&P’s prior written permission. Neither S&P, its affiliates nor any of their thirdparty licensors: (a) guarantee the accuracy, completeness or availability of the S&P information, or (b) make any warranty, express or implied, as to the results to be obtained by Insurer Financial Strength Ratings or any other person from the use of the S&P information or any other data or information included therein or derived therefrom, or (c) make any express or implied warranties, including any warranty of merchantability or fitness for a particular purpose or use, or (d) shall in any way be liable to Insurer Financial Strength Ratings or any recipient of the S&P information for any inaccuracies, errors, or omissions, regardless of
56 / INSURANCE ADVISER OCTOBER 2021
cause, in the S&P information or for any damages, whether direct or indirect or consequential, punitive or exemplary resulting therefrom. Ratings are statements of opinion, not statements of fact or recommendations to buy, hold, or sell any securities. S&P Global (Australia) Pty. Ltd. holds Australian financial services licence number 337565 under the Corporations Act 2001. S&P Global credit ratings and related research are not intended for and must not be distributed to any person in Australia other than a wholesale client (as defined in Chapter 7 of the Corporations Act). Ratings are based on information received by Ratings Services. Other divisions of S&P Global may have information that is not available to Ratings Services.
INSURER STRENGTH RATINGS
NEW ZEALAND
BEST’S
FINANCIAL STRENGTH RATINGS
RATING
COMPOSITE Quest Insurance Group Limited
B/STABLE
LIFE, ANNUITY AND ACCIDENT American Income Life Insurance Company (New Zealand Branch)
A/ STABLE
BNZ Life Insurance Limited
A u/NEGATIVE
CIGNA Life Insurance New Zealand Limited
A/STABLE
Co-operative Life Limited
B++/STABLE
DPL Insurance Limited
B++/STABLE
Fidelity Life Assurance Company Limited
A- u/DEVELOPING
Foundation Life (NZ) Limited
A-/STABLE
General Reinsurance Life Australia Limited (New Zealand Branch)
A++/STABLE
LIFE, ANNUITY AND ACCIDENT
Kiwi Insurance Limited
A-/STABLE
General Reinsurance Life Australia Ltd.
Momentum Life Limited
B++/STABLE
Partners Life Limited
A- u/DEVELOPING
Pinnacle Life Limited
B/STABLE
The following is a list of AM Best Financial Strength Ratings (FSRs) assigned to insurance companies in Australia and New Zealand. Ratings as at 6 September 2021. Contact: Mr. Scott Ryrie Managing Director & Co-CEO A. M. Best Asia-Pacific (Singapore) Pte Ltd. Tel: +65 9636 3678 Email: scott.ryrie@ambest.com
AUSTRALIA
RATING A++/STABLE
PROPERTY/CASUALTY Ansvar Insurance Limited
A-/NEGATIVE
First American Title Insurance Company of Australia Pty Limited
A/STABLE
General Reinsurance Australia Ltd
A++/STABLE
Aioi Nissay Dowa Insurance Company, Limited (New Zealand Branch)
A+/STABLE
Guild Insurance Limited
A-/NEGATIVE
Beneficial Insurance Limited
B++/STABLE
Pacific International Insurance Pty Limited
B++/NEGATIVE
Brightsideco Insurance Limited
B/STABLE
The Hollard Insurance Company Pty Ltd
A-/STABLE
Consumer Insurance Services Limited
B+/STABLE
The New India Assurance Company Limited (Australia Branch)
B++/STABLE
First American Title Insurance Company of Australia Pty Limited (New Zealand Branch)
A/STABLE
FMG Insurance Limited
A/STABLE
General Reinsurance Australia Ltd (New Zealand Branch)
A++/STABLE
Health Services Welfare Society Limited
B+/NEGATIVE
Mitsui Sumitomo Insurance Company Limited (New Zealand Branch)
A+/STABLE
Rating Disclosure: Use and Limitations: A Best’s Credit Rating (BCR) is a forward-looking independent and objective opinion regarding an insurer’s, issuer’s, or financial obligation’s relative creditworthiness. The opinion represents a comprehensive analysis consisting of a quantitative and qualitative evaluation of balance sheet strength, operating performance and business profile or, where appropriate, the specific nature and details of a security. Because a BCR is a forward-looking opinion as of the date it is released, it cannot be considered as a fact or guarantee of future credit quality and therefore cannot be described as accurate or inaccurate. A BCR is a relative measure of risk that implies credit quality and is assigned using a scale with a defined population of categories and notches. Entities or obligations assigned the same BCR symbol developed using the same scale, should not be viewed as completely identical in terms of credit quality. Alternatively, they are alike in category (or notches within a category), but given there is a prescribed progression of categories (and notches) used in assigning the ratings of a much larger population of entities or obligations, the categories (notches) cannot mirror the precise subtleties of risk that are inherent within similarly rated entities or obligations. While a BCR reflects the opinion of A.M. Best Rating Services, Inc. (AMBRS) of relative creditworthiness, it is not an indicator or predictor of defined impairment or default probability with respect to any specific insurer, issuer, or financial obligation. A BCR is not investment advice, nor should it be construed as a consulting or advisory service, as such; it is not intended to be utilised as a recommendation to purchase, hold or terminate any insurance policy, contract, security, or any other financial obligation, nor does it address the suitability of any particular policy or contract for a specific purpose or purchaser. Users of a BCR should not rely on it in making any investment decision; however, if used, the BCR must be considered as only one factor. Users must make their own evaluation of each investment decision. A BCR opinion is provided on an “as is” basis without any expressed or implied warranty. In addition, a BCR may be changed, suspended, or withdrawn at any time for any reason at the sole discretion of AMBRS.
PROPERTY/CASUALTY
New Zealand Medical Indemnity Insurance Limited B+/STABLE Pacific International Insurance Pty Ltd (New Zealand Branch)
B++/NEGATIVE
Police Health Plan Limited
A-/STABLE
Provident Insurance Corporation Limited
B /STABLE
The Hollard Insurance Company Pty Ltd (New Zealand Branch)
A-/STABLE
The New India Assurance Company Limited (New Zealand Branch)
B++/STABLE
Tokio Marine & Nichido Fire Insurance Company Limited (New Zealand Branch)
A++/STABLE
Tower Insurance Limited
A-/STABLE
Union Medical Benefits Society Limited
A/STABLE
Virginia Surety Company, Inc. (New Zealand Branch)
A/STABLE
NIBA.COM.AU / 57
INSURANCE JOURNEY / Jeff Booth
FROM UNDERWRITING TO BROKING: THE BIG SWITCH OVER
The 2021 WA Broker of the Year, Jeff Booth from GSK Insurance Brokers talks about his journey across the world – from the London market to the shores of Australia – and from underwriting triumphs to finding success in insurance broking.
“I
joined the insurance industry in the early 1990s back in the United Kingdom. Having spent 12 months backpacking around Australia post-university, I needed a job. Luckily, my father was in the industry and lined up a ‘temporary’ job for me at National Vulcan, which was then part of Sun Alliance. My time there gave me great opportunities to learn from and work with many people who were prepared to spend the time to help develop my skills. I held several different roles, including five years in the London market. It also gave me the chance to deal with some major companies and different markets with clients in Europe and North America. I moved to Perth in 2005 and landed a business development manager role at CGU, after a few months in the country. I was with CGU for seven years, but I needed a new challenge and thought insurance broking would offer that. Working for an insurer for all those years had given me the opportunity to see some great insurance brokers in action, and I had picked up some good practices when I moved to GSK. As a risk management professional, I have always enjoyed the interactions with clients. Many of them are passionate about their business. It is great to spend time with these people, to get to know them, build a relationship, understand their business, and how we can help and advise them on their risks. I have clients in a wide variety of industries and every day provides different challenges. Their businesses are often transforming while the risks they are exposed to are constantly evolving. At the same time, the approach of many insurers
PROUDLY SUPPORTING
58 / INSURANCE ADVISER OCTOBER 2021
has significantly changed in the last few years. The combination makes our work continually challenging. The biggest lesson I’ve learnt in my career so far is: one must work hard to progress and develop oneself, but balance it with one’s life outside of work. For me, exercise plays a significant part in this. Not only does it help physically, but it also provides a mental break and links in with social activities with the people I train with. When I am back at work, there is then the additional benefit of better focus when my mind is refreshed from a break. I believe that the insurance industry provides fantastic opportunities for all types of people and skill sets – once in, not many people leave. We interact with great people, and operating in a global industry means there are opportunities overseas, if you want to look beyond Australia. I’ve really enjoyed my career journey so far. There have obviously been ups and downs, but many more ups than
downs, and plenty of things to learn along the way to where I am now. I don’t think I would change any of it. Mentorship has been incredibly important throughout my career. Having people from within the industry be there to bounce things off, guide, and advise has helped in my development. I’m sure most people who have had a mentor will have had similar benefits. I think mentees not only benefit from the experience of the mentor, but also having someone removed from their day-to-day can provide a more objective and less emotional approach when sometimes we can be too close to the issues in our own work. As an insurance broker, professionalism is the key component of our success and this encompasses all aspects of our role. In being the trusted adviser to our clients, we must have the knowledge and continually develop our skills to maintain a professional approach. If we fail to do this, we cannot expect to develop trust and fall back to becoming the ‘insurance salesman’.
FIVE QUICK QUESTIONS Favourite film? Casino Royale Favourite book? The Da Vinci Code by Dan Brown Favourite tipple? A nice glass of shiraz Favourite pastime? I do an open water swim in the Swan River a few times a week and also play water polo Favourite food? I love Indian food and usually go for a Lamb Saagwala
Share your insurance journey. Email editor@niba.com.au
