Insurance Adviser - December 2020/January 2021

DECEMBER 2020 / JANUARY 2021 SUPPLY CHAIN

Dramas hit brokers hard

NIBA AWARDS

Crafting a legacy

TRADE CREDIT INSURANCE

The canary in the mine

#NIBA2020: PART TWO

We reflect on an insightful week

WE ARE YOUR VOICE

THANKS FOR VOTING US

1ST IN 23 CATEGORIES 2020 NIBA Broker Market Survey

OVERALL

BEST BROKER EXPERIENCE

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

Overall satisfaction*

Overall opinion versus other insurers*

Responsiveness

Work with me to find a solution for my client

Understand underwriting for my client’s needs

Have expert knowledge in specific product areas

Are comfortable having complex or challenging conversations

Communicate when underwriting appetite has changed

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

Willingness to negotiate for the benefit of my client

Takes the time to learn about my business and client needs

Strong product knowledge and technical expertise

ACCOUNT MANAGEMENT

Account management overall satisfaction

Responsiveness to my needs and the needs of my clients

PRODUCT EXPERIENCE

Underwriting flexibility

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

Product coverage and wording that suits the needs of my client

Policy conditions and cover

CLAIMS EXPERIENCE

BRAND EXPERIENCE

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

Develops and maintains strong relationships

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

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

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

CONTENTS

December 2020 / January 2021

ACN 006 093 849 ABN 94 006 093 849

FEATURES

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

Insurance Adviser magazine is published by NIBA

Publisher

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

Communications Manager Tiffany Eastland

NIBA Editor Tanaya Das

Editorial enquiries

E: editor@niba.com.au

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

Design

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

20

#NIBA2020 WRAP UP: PART TWO

We reflect on insightful discussions and fabulous entertainment

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

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

Cover image: Philip Gostelow

24

CRAFTING A LEGACY

Introducing the 2020 Stephen Ball Memorial Award Winner NIBA.COM.AU / 3

CONTENTS

December 2020 / January 2021

FEATURES

28 SUPPLY CHAIN INSURANCE

An increasingly challenging segment

IN EVERY ISSUE NIBA CEO welcome.................................... 6 Why be a NIBA member?.......................... 8 Representation........................................... 10 Brokers: A force for good .......................... 12 Forthcoming events ..................................50 Insurance Journey: Robert Cooper...... 54

NEWS

Industry bulletin.........................................14

PROFESSIONALISM

Acting appropriately when cancelling policy.............................................. 18

ANALYSIS

Legal: ‘Testing’ for COVID-19: An Australian diagnosis ............................... 19

36 TRADE CREDIT INSURANCE Novel challenges in a new era

4 / INSURANCE ADVISER DECEMBER 2020 / JANUARY 2021

REFERENCE Community hub .........................................42 Insurer strength ratings ..........................52

CEO / Welcome

A BRAVE NEW WORLD – NIBA VIRTUAL CONVENTION 2020

I

would like to sincerely thank all who supported our virtual Convention in the last week of October 2020, whether as sponsors, exhibitors, and more importantly, delegates.

As with other organisations, we had to take the difficult decision to cancel our face-to-face Convention, which we had intended to hold in Melbourne, also in October. It took us some time to consider alternative options, but I am delighted we were able to proceed with the virtual Convention.

This was a new experience for us. I am sure it was a new experience for many associated with the Convention, too, including many of our delegates.

I do need to record my sincere appreciation for the efforts of everyone at NIBA – they all contributed to the challenge of making the virtual Convention happen and making it a success. I am particularly grateful for the efforts of Arianne Bath in our events team for the work she did on the project.

Why did we do this?

When COVID-19 hit hard in March 2020, the words I was hearing were unprecedented, uncertainty, unforeseen, what is next, what is on the other side. At the same time, with lockdowns and restrictions on movement, many people started to face real challenges in their day-to-day lives, and many businesses – both insurance broking businesses and their clients – faced significant new challenges.

What was most interesting to watch was the fact that virtually everyone started working from home with virtually no notice. At NIBA, we all went home on 19 March 2020, after a COVID scare in our building, and most of us have been working from home ever since.

This brought out another key word: resilience. The resilience of people working in the world of insurance, and insurance broking in particular; and the resilience of businesses in challenging and difficult times.

I felt we had an obligation to support our members in times of such uncertainty, so they could continue to support and advise their clients during the time of a very difficult insurance market. I was pleased when we identified a conference platform which would allow us to do this.

We very quickly worked on a conference program with a wide range of speakers dealing with the challenge of leading and managing in times of uncertainty, explaining the state of the economy and the likely prospects for the next year or so, as well as a number of industry speakers who could speak about current developments in the insurance market. We were also keen to hear from our regulators once again.

I am delighted with the range of speakers we were able to present at the NIBA Virtual Convention. Time and again, I heard the following words: flexible, pragmatic, empathy, resilience, dynamic, adaptive. These words, and the ideas and suggestions that went with them, provided an extremely positive encouragement for all of us.

6 / INSURANCE ADVISER DECEMBER 2020 / JANUARY 2021

Some other themes we regularly heard about at the Convention included – • Looking after our staff, keeping them healthy and engaged in difficult and challenging times. You cannot look after your clients if your staff are not engaged and contributing positively to the business.

• Challenging business models and finding new ways to operate and new ways to work. This became compulsory when everyone had to work from home, and we all now have the opportunity to re-design how we work in the future.

• Expect the unexpected, learn to deal with uncertainty, and take current challenges as an opportunity to shine, to show clients the real value insurance brokers can bring to their relationship.

• Get closer to your clients – truly understand their needs, work out ways to help, and help them through the economic and other challenges they are no doubt facing. There was a strong feeling that those who stay close to their clients, and provide real value, will continue to be appreciated and will survive all the current uncertainty.

I found all these messages and presentations especially positive and encouraging. I was amazed by the positive enthusiasm of Bernard Salt. When talking about prospects for the economy, he was not just a glass half full, he was overflowing with enthusiasm and confidence. This was very uplifting indeed.

I do need to acknowledge that there were technical difficulties with the platform we were operating on.

We are doing a very careful review of how the platform worked, and the difficulties that people encountered.

We are very grateful for those who persevered through the week.

Hopefully, we did set out the Brave New World we all now face, and we also gave lots of ideas and suggestions for how to navigate the changes in front of us.

DALLAS BOOTH Chief Executive Officer, NIBA

NIBA / Member benefits

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

“I feel insurance brokers are guarded and protected by all the work that NIBA does.”

JAMES SKIADAS IMC Insurance Brokers 2020 Vic/Tas Broker of the Year finalist

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.

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.

8 / INSURANCE ADVISER DECEMBER 2020 / JANUARY 2021

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

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NEWS / Representation

WE ARE YOUR VOICE! Lots still happening…

COVID-19

The Insurance Council of Australia, in consultation with AFCA and ASIC, commenced proceedings in the Supreme Court of NSW seeking clarification of issues relating to the interpretation of certain pandemic exclusion clauses which refer to the now repealed Quarantine Act. The proceedings have been heard by the Court, and at the time of writing the Court’s decision was pending.

The financial services regulator in the United Kingdom had commenced a test case in the UK courts seeking clarification of the pandemic exclusion clauses in a number of London market policies. An initial decision has been handed down by the Court, and it is understood both the regulator and a number of insurers have lodged appeals against that decision.

NIBA continues to provide information to members in relation to government support for business, and the continuation of restrictions on community activity for health protection reasons.

FEDERAL

Royal Commission Reforms

At the time of writing (mid November 2020) the series of Bills implementing the Royal Commission recommendations affecting general insurance have not been introduced into the Federal Parliament. NIBA is waiting to see the outcome of submissions lodged with the government earlier this year, and our discussions with treasury and others since that time.

Senate Bushfire Inquiry

The Senate Committee inquiring into the summer bushfires has released its report. The important role of insurance was noted by the committee, which indicated the performance of the insurance industry had been “exemplary”. The committee urged state and territory governments to review insurance

taxes and levies in order to keep insurance affordable for as many people as possible.

Federal Bushfire Royal Commission

The Bushfire Royal Commission has also issued its report to government and has emphasised the need for much more preparation for natural disasters, and much greater efforts on the mitigation of risks and making communities more resilient. NIBA has been supporting this position for many years.

Small Business Ombudsman Insurance Inquiry

As recently advised, the Australian Small Business and Family Enterprise Ombudsman has commenced an inquiry into the availability and affordability of general insurance cover for SME businesses.

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

NIBA provided a detailed submission to the Inquiry and has met with the Small Business Ombudsman and her officials to discuss the role of insurance brokers, and current market conditions in relation to the supply and cost of general insurance cover.

It was pleasing to hear the Ombudsman has a good understanding of the role of insurance brokers (as a previous small business owner herself ).

NIBA continues to liaise with the Ombudsman’s office in relation to this inquiry.

A report is due before the end of 2020.

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

Unfair Contracts Terms Legislation

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

10 / INSURANCE ADVISER DECEMBER 2020 / JANUARY 2021

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

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

As noted above in relation to Design and Distribution obligations, where brokers have policies with their own wordings and cover, they will need to review the terms of cover and the wording of the policies to determine whether the policies might be caught by the Unfair Contract Terms legislation. This should be done in collaboration with the relevant underwriter. We also note that these are technical legal questions, and we strongly urge brokers to get legal support for this purpose.

Add-on Insurance Reforms

The Government has undertaken consultation on Royal Commission proposals to ban virtually all forms of general insurance sold at the same time as a non-insurance product (for example, travel insurance sold when a customer purchases an air ticket or an overseas holiday, or insurance taken out when a rental car is hired).

NIBA has provided a detailed submission to treasury indicating the proposed approach is far too wide. We have spoken with treasury on this recently and have been given an assurance that the main concerns have been taken into account in the drafting of the legislation.

NIBA will review the matter further when the Bill is tabled in Parliament.

Anti-hawking Reforms

One of the Royal Commission recommendations was to prohibit the hawking of financial

NEWS / Representation

products. The Government has released draft legislation to implement this proposal.

NIBA is concerned that the recommendation as drafted is likely to seriously impair the ability of insurance brokers to properly advise their clients on their business or other risks, and their insurance needs and cover more broadly.

This is because the proposed legislation restricts the broker to discussing the topic raised by the client, and only that topic.

NIBA has made a strong submission to the government to urge further consideration of this matter. Our position is that the insurance broker must be able to discuss any risk or insurance needs of the client at any time, in order to properly perform their function as the trusted adviser on risk and insurance matters.

ASIC in relation to a number of aspects of the product intervention powers.

Proposals to Restrict the use of the Terms “Insurance” and “Insurer”

APRA

The Royal Commission recommended clarification of the ability for ASIC to fully regulate funeral insurance, where serious misconduct had been identified. However, the government has taken a broader approach to extend restrictions on the use of the words “insurance” and “insurer”.

NIBA has provided a submission to treasury to challenge the government’s proposals, as they are not consistent with the Royal Commission recommendation in this area.

Last Resort Compensation Scheme

The Federal Government has published a consultation paper on the Royal Commission recommendation to establish a last resort compensation scheme.

This scheme is designed to respond to circumstances where AFCA makes an award against a financial services provider, but the provider has gone out of business and is unable to satisfy the award in favour of the client.

The government is committed to proceeding with this reform, and the NIBA Board has discussed the matter at length. NIBA has provided a submission to the government indicating our preferred approach for the funding of the scheme. We will provide further information when it comes to hand.

ASIC

Product Intervention Powers

ASIC has released an updated Regulatory Guide relating to the proposed exercise of its Product Intervention Powers in relation to add-on insurance products sold by motor dealers.

NIBA continues to have discussions with

Internal Complaints and Disputes

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

NIBA has provided a detailed overview of the new Regulatory Guide to members, and we strongly recommend all members review their internal complaints and disputes handling policies in order to ensure the new requirements will be implemented.

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

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

NEW SOUTH WALES

Major Review of Workers Compensation

The NSW Government has launched a major review of workers compensation, including the operation and management of icare, and the operation of the NSW workers compensation scheme more broadly. NIBA has provided a submission to this review.

Review of NSW Home Warranty Insurance

NIBA has provided a submission to the Independent Pricing and Regulatory Tribunal inquiry into the NSW home warranty insurance scheme.

NIBA has also made representations to

NSW icare in relation to the tender they are running for the provision of distribution services for home warranty insurance.

General Insurance Code of Practice

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

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

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

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

Insurance Brokers Code of Practice

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

NIBA will shortly seek the views of members on the operation of the Code of Practice, and the future development of the Code, taking account of what is happening in other areas of financial services, the recommendations of the Royal Commission, and the work being done by the Insurance Council of Australia in its review of the General Insurance Code of Practice.

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

NIBA.COM.AU / 11

REPRESENTATION / Thought leadership

BROKERS: A FORCE FOR GOOD

Insurance broking clients are acutely aware of the benefits their risk adviser provides, which is why so many clients return to their brokers year after year.

I

nsurance brokers are able to explain in detail the value they provide to their clients, but what about the value brokers provide to others? In particular, the important service brokers provide to government and broader society.

As part of their core offering, brokers help their clients select the most appropriate risk-management solution, provide support during the claims process and assist with risk management. By providing these services brokers can help businesses to recover from incidents quicker and/or avoid them in the first place, supporting local economies and communities to recover.

Brokers also play a key role in finding appropriate insurance for difficult-to-insure

risks, particularly in markets where there is limited access to insurance products.

Policyholders in many parts of Australia have likely already felt the effects of the hardening insurance market, with some risks becoming increasingly difficult to place.

Where risks cannot be placed with insurers, government and the broader society act as ‘insurers of last resort’ by providing financial support most commonly in the form of disaster relief recovery.

Brokers are able to work with their clients and insurers to reduce instances of underinsurance or non-insurance for these difficult-to-insure risks, reducing the financial burden on government and society.

Insurance brokers also play a critical

12 / INSURANCE ADVISER DECEMBER 2020 / JANUARY 2021

BY DALLAS BOOTH

Chief Executive Officer, National Insurance Brokers Association

role in disaster recovery. This year alone, brokers have supported their clients through bushfires, floods, cyclones and hailstorms. By supporting clients through the claims process, broking professionals are able to advocate for better outcomes for their clients and the timely release of claims payments. This helps to support the recovery of local economies and can play a significant role in offsetting the initial impact of disaster events.

In more regional areas, the ability for local economies to absorb the economic losses of a natural disaster is reduced, making access to timely claims payouts even more critical to the return of normal economic activity.

In the absence of the risk solutions provided by broking professionals, disasters such as these would take far longer for the economy to recover from and would likely come at a much higher cost for governments who ultimately bear the burden of funding natural disaster recovery.

In my role as CEO, I witness the important work brokers do every day.

Unfortunately, it is often only during the most challenging of times that the broader value of brokers becomes clear.

As communities around Australia begin to bounce back from yet another major loss event this year, the need for community resilience and strong local economies is more apparent than ever, as is the important role brokers continue to play in helping communities rebuild.

The evidence of the broker value proposition is set out in the Deloitte Access Economics report: The economic value of insurance brokers in Australia.

This report on the role and economic value of insurance broking in Australia is available online: niba.com.au 

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NEWS / Industry bulletin

ASIC DRAFT INFORMATION SHEET FOR INSURANCE CLAIMS HANDLING

T

he Australian Securities and Investment Commission (ASIC) has released a draft information sheet on insurance claims handling and settling.

The following industry participants are required to obtain an AFS license for claims handling and settling, or be authorised by another AFS licensee: • insurers; • insurance claims managers; • tradespersons (referred to as ‘insurance fulfilment providers’) who can reject claims on behalf of an insurer; • insurance brokers who handle claims on

behalf of an insurer; • financial advisers who handle claims on behalf of an insurer; and • people that carry on a business of representing people to pursue insurance claims for reward (referred to as ‘claimant intermediaries’).

Entities that already hold an AFS licence will need to apply for a variation to their licence so it covers the new financial service of claims handling and settling.

The draft information sheet: • sets out who needs to be authorised to provide claims handling and settling

NIBA WELCOMES INSURANCE PREMIUM FUNDING CODE OF PRACTICE The Australian Finance Industry Association (AFIA) and its Insurance Premium Funding (IPF) members – Hunter Premium Funding, IQumulate, BOQ Finance, Principal Finance, Attvest, Premium Funding, Elantis and Westpac – have come together and proposed a Code of Practice for the IPF sector.

The National Insurance on Association (NIBA) CEO, Dallas Booth said, “NIBA welcomes the draft Code of Practice for premium funders, and we will review the draft Code and respond in due course. NIBA supports the moves by premium funders to proactively meet Royal Commission guidelines and recommendations in relation to disclosure and transparency.

“NIBA will very shortly release the consultation draft of the proposed Insurance Brokers Code of Practice in order to gain feedback from members, external stakeholders and other interested parties.”

AFIA commenced a six-week public consultation on 16 November 2020 for stakeholders to provide feedback and aims to have the Code operating by July 2021.

services for insurance products and who can act on an AFS licensee’s behalf; • explains how and when to apply for an AFS licence, or variation to an existing AFS licence, including materials that are needed to support an application; and • refers to existing regulatory guidance on how to meet the general obligations under section 912A of the Act, and indicates how the obligations may be tailored to claims handling.

ASIC expects to start taking applications for AFS licences, and variations to existing licences, from 1 January 2021 (subject to the Bill’s passage before the end of this year).

WHAT SHOULD PERSONAL ADVICE LOOK LIKE?

T

he Australian Securities and Investment Commission (ASIC) has released a very important Consultation Paper, Promoting access to affordable advice for consumers on the issue of personal advice, and what can be done to facilitate the provision of quality advice in a cost effective manner.

National Insurance Brokers Association (NIBA) CEO, Dallas Booth believes that this consultation goes to the heart of what ‘personal advice’ should look like, and what regulatory requirements should exist in this area.

He said, “Many insurance brokers have said in the past that they are reluctant to operate under a personal advice model for retail clients, because of the cost and complexity of regulatory obligations in this area. This current consultation gives insurance brokers and NIBA the opportunity to indicate what is needed in this area, in order to allow insurance brokers to advise and assist their clients without excessive and expensive regulatory obligations.

“NIBA will give very careful consideration to this consultation and will respond to ASIC in due course. We welcome comments and suggestions from members on this topic.”

ASIC is keen to receive feedback on the impediments to providing affordable and limited advice that ASIC and industry are able to address. Feedback on industry’s experience in providing limited, digital and strategic advice is of particular interest.

ASIC Commissioner Danielle Press said, “Good-quality affordable personal advice may help consumers make better financial decisions, especially during times of heightened vulnerability. We welcome feedback from the financial advice industry and others with an interest in making advice more accessible to consumers.

“Your feedback is vital for us to better understand the impediments on the supply side. It will help us determine what meaningful steps we can take to help industry better provide good-quality affordable advice that meets consumers’ needs,” Press said.

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

14 / INSURANCE ADVISER DECEMBER 2020 / JANUARY 2021

NEWS / Industry bulletin

APRA RELEASES GENERAL INSURANCE STATISTICS FOR SEPTEMBER 2020

T

he Australian Prudential Regulation Authority (APRA) has released its Quarterly General Insurance Performance Statistics and Quarterly General Insurance Institution Level Statistics publications for the September 2020 quarter.

The Quarterly General Insurance Performance Statistics publication provides industry aggregate summaries of financial performance, financial position, capital adequacy and key ratios. The publication also includes detailed statistics at a class-of-business level, a breakdown of operating income and expenses, and more granular solvency information.

Industry net profit after tax of $0.9 billion and return on net assets of 3.2 per cent were significantly lower during the year ended

September 2020. This was due to lower underwriting results from the catastrophic bushfire and storm events in late December / early 2020, and large falls in investment income mainly from the negative impact of the COVID-19 pandemic on investment markets in the March quarter.

Within the underwriting results, insurers reported increases in gross earned premium in most classes of business. This was particularly evident in the Householders, Fire and ISR, and Professional Indemnity classes as premiums increased in response to rising claims costs.

Industry net profit after tax was $836 million in the September quarter, supported in large part by domestic motor underwriting profits of $514 million, and

investment income of $626 million. Gross incurred claims costs for the domestic motor class continued to decrease in Victoria, but are increasing in other states and territories as social restrictions in response to COVID-19 ease.

The Quarterly General Insurance Institution-level Statistics publication contains individual insurer information about financial performance, financial position, capital adequacy and key ratios.

The quarterly performance statistics of insurers may be impacted by factors outside of their control, such as natural catastrophe events, as well as those driven by their internal processes, such as the timing of actuarial valuations. Users should take these factors into account when interpreting the statistics. 

Key performance statistics for the general insurance industry in the year ended 30 September: SEPTEMBER 2019

SEPTEMBER 2020

CHANGE (ANNUAL)

$38.8bn

$43.2bn

+11.4 per cent

Underwriting result

$1.9bn

$1.6bn

-16.4 per cent

Investment income

$3.9bn

$1.2bn

-68.2 per cent

Net profit after tax

$3.4bn

$0.9bn

-73.3 per cent

Gross claims expense

Key performance statistics for the general insurance industry in the quarter ended 30 September: JUNE 2020

SEPTEMBER 2020

CHANGE (QUARTERLY)

Gross claims expense

$8.4bn

$9.0bn

7.7 per cent

Underwriting result

$1.0bn

$1.1bn

9.0 per cent

Investment income

$683m

$626m

-8.3 per cent

Net profit after tax

$860m

$836m

-2.8 per cent

Key ratios for the general insurance industry: SEPTEMBER 2019

SEPTEMBER 2020

CHANGE (ANNUAL)

CHANGE (QUARTERLY)

Net loss ratio

70 per cent

70 per cent

Unchanged

Unchanged

Return on net assets

12.1 per cent

3.2 per cent

-8.9 pp

-0.8 pp

1.74x

1.74x

Unchanged

+0.06x

Prescribed capital amount coverage ratio

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

NIBA.COM.AU / 15

NEWS / Industry bulletin

ASIC CONSULTATION ON REFERENCE CHECKING AND INFORMATION SHARING PROTOCOL

T

he Australian Securities and Investment Commission (ASIC) has released a consultation paper seeking feedback on a new reference checking and information sharing protocol for financial advisers.

Mandating reference checking for financial advisers and mortgage brokers was a recommendation of the Financial Services Royal Commission.

The Royal Commission found that Australian financial services (AFS) licensees were not doing enough to communicate between themselves about the background of prospective employees. In its final report, the Royal Commission recommended that AFS licensees undertake reference checking and information sharing for financial

advisers to the same effect of the Australian Banking Association’s (ABA) Reference Checking and Information Sharing protocol.

The Government accepted the Royal Commission recommendations on reference checking and, on 12 November 2020, introduced the Financial Sector Reform (Hayne Royal Commission Response) Bill 2020 (the Bill) into Parliament.

The Bill includes obligations on AFS licensees to comply with an ASIC reference checking and information sharing protocol (ASIC Protocol).

ASIC has developed a draft ASIC Protocol, which sets out obligations for licensees in relation to undertaking a reference check on an individual seeking to be employed or authorised as a financial adviser or

mortgage broker. ASIC has also prepared a draft information sheet to help licensees understand their reference checking and information sharing obligations.

ASIC is now consulting on both the draft ASIC Protocol and the accompanying information sheet through Consultation Paper 333 Implementing the Royal Commission recommendations: Reference checking and information sharing.

Industry and other interested stakeholders have until 29 January 2021 to provide feedback on this consultation. ASIC will consider the feedback and finalise the ASIC Protocol and information sheet before the new reference checking and information sharing obligations in the Bill commence on 1 October 2021.

ROYAL COMMISSION REFORMS GO INTO PARLIAMENT A number of reforms arising from the Royal Commission into Misconduct in Financial Services have been tabled in the Federal Parliament.

The National Insurance Brokers Association (NIBA) CEO has indicated that they are currently examining the legislation in detail, to see how the Bill compares to draft legislation circulated earlier in the year, “Any issues or concerns will be communicated to treasury in the near future.”

Below is a schedule indicating when the reforms are intended to take effect.

For reforms starting on 1 January 2021, this will of course require the passage of the legislation through the Parliament prior to Christmas 2020.

Booth said, “NIBA is pleased that the anti-hawking reforms and the proposed ‘deferred sales model’ reforms will not take effect until October 2021. This will give insurers and insurance brokers time to understand the impact of the reforms and develop procedures to give effect to the new requirements.

“NIBA will provide more detailed information on each of the reforms once our examination of the Bill is complete, and it is clear when the legislation will be passed by the Parliament.”

Enforceable Code Provisions (recommendation 1.15) Date of effect: commences on the later of the day after Royal Assent and 1 January 2021.

formalising ASIC meeting procedures (recommendation 6.9 and 6.11) Date of effect: commences on the later of the day after Royal Assent and 1 January 2021.

Caps on commissions (recommendation 4.4) Date of effect: commences on the later of the day after Royal Assent and 1 January 2021.

Reference checking and information sharing protocol, and Breach reporting and remediation (recommendations 1.6, 2.7, 2.8, 2.9 and 7.2) Date of effect: generally apply from 1 October 2021.

Use of terms “insurance” and “insurer” (additional commitment in relation to recommendation 4.2) Date of effect: commences on the later of the day after Royal Assent and 1 January 2021.

Insurer avoidance of life insurance contracts and duty to take reasonable care not to make a misrepresentation (recommendations 4.6 and 4.5) Date of effect: Part 1 applies to any life insurance contract that is entered into from the later of Royal Assent and 1 January 2021.

Part 2 (relating to recommendation 4.5) applies to consumer insurance contracts that are entered into on or after 5 October 2021.

Adjustment of APRA and ASIC’s roles in superannuation (recommendations 3.8, 6.3, 6.4 and 6.5) Date of effect: commences on the later of the day after Royal Assent and 1 January 2021.

Statutory obligation to cooperate and

Deferred sales model for add-on insurance and Corporations (Fees) Amendment (Hayne Royal Commission Response) Bill 2020 (recommendation 4.3) Date of effect: Later of the day after Royal Assent and 5 October 2021 Hawking of financial products (recommendations 3.4 and 4.1) Date of effect: Later of the day after Royal Assent and 5 October 2021.

Claims handling and settling services (recommendation 4.8) Date of effect: commences on the later of the day after Royal Assent and 1 January 2021.

Trustees of registrable superannuation entities should have no other duty (recommendation 3.1) Date of effect: commences on the later of the day after Royal Assent and 1 July 2021.

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

16 / INSURANCE ADVISER DECEMBER 2020 / JANUARY 2021

Merry Christmas from the Blue Zebra team What a year it has been! We are happy to share some great news with you about our exciting new product range, now LIVE on our Zebra Lounge: •

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•

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PROFESSIONALISM / AFCA case study

ACTING APPROPRIATELY WHEN CANCELLING A POLICY This Determination involved a complaint against the insurer and broker. AFCA found in favour of the broker and against the insurer.

BY MARK RADFORD

Principal, Radford Lawyers

Lessons

Some key lessons for brokers based on AFCA’s Determination are: • Be clear on any request from a premium funder to cancel a policy and the authority/right to do so – improper cancellation can leave the broker exposed; • Where requested to cancel by a premium funder, clearly notify the customer of the consequences of nonpayment and cancellation and whether you will cease to act on their behalf (at least more than once); and • Take good file notes and keep documentation as evidence to counter any assertions of the complainant contrary to your own.

Facts

The broker placed a number of policies with the insurer on behalf of the complainant which were premium funded.

The broker cancelled the policies following the request from the premium funder as part of the funder’s attempt to recoup costs due to non-payment of the funding contract loan. The broker had sent emails to the complainant’s employee on numerous occasions clearly explaining that the consequences of further non-payment.

The broker lodged a claim on behalf of the complainant for tenant related loss and damage to the complainant’s property (E). A second claim was lodged by the complainant for tenant related damage to property (Y) after the broker ceased to act for them.

The claims were denied by the insurer who said the policies had been cancelled due to non-payment of premium and as a result refused the claim because the damage did not occur in the period of insurance.

The complainant lodged a complaint against the broker, insurer and premium funder.

The Complainant’s Case

The complainant submitted that the broker failed its duty of care due by: • creating incorrect policies (there were a variety of different policy numbers) and duplicate policies (as listed in the funding schedule); • avoidance in communication and delays/mistakes in lodging and handling the claims (they believed the broker was aware of before ceasing to act, and should have lodged claim Y); • non-transparent contracts and excessive commissions; • funds misappropriated and policies cancelled without authority.

The Broker’s Case

The broker submitted that: • In terms of coverage and premium issues: o the broker acted in the best interest of the complainant to provide adequate coverage for the complainant’s trailer; o the broker explained to the complainant that it is not uncommon for start dates to vary given the policies started at separate times and with many different insurers.

• In terms of commission, the broker submitted commission received was consistent with industry standards and not excessive.

• In terms of premium funding: o monies received from the funding contract loan from the premium funder were paid to the insurer and not misappropriated; o after the complainant defaulted on the funding loan contract, the premium funder requested the broker to cancel the policy mid-term.

• In terms of claim lodgement, the broker was not aware of the potential

18 / INSURANCE ADVISER DECEMBER 2020 / JANUARY 2021

claim to property (Y) before it ceased to represent the complainant and cancelled all policies and thus did not have any obligations in that regard.

The AFCA Decision

AFCA was satisfied, based on the evidence provided, that: • the broker did not breach its duty of care when arranging policies and did not arrange duplicate or unsuitable policies for the complainant’s requirements; • the explanation for the variation of policy start dates was reasonable; • the complainant had the opportunity to review the policies and elect whether to proceed with cover and the commission received was consistent with industry standards and not excessive; • the broker did not misappropriate funds and provided a remittance from its bank account showing the transfer of the funds to the insurer; • the broker acted appropriately when cancelling the policies; • any claims and re-insurance became the responsibility of the complainant after the broker’s resignation; • the large delay in the claim was a result of the complainant’s failure to actively pursue the claim following the resignation of the broker due to the non-payment of premiums. The broker’s conduct did not justify any award of compensation for non-financial loss.

In relation to the insurer, as the insurer had adequate information available to show property (E) was damaged within the period of insurance and it took 33 months from the date of the claim being lodged to the claim being accepted by the insurer, AFCA found that the insurer had to pay the complainant $2,000 for compensation for non-financial loss.

ANALYSIS / Legal

‘TESTING’ FOR COVID-19: AN AUSTRALIAN DIAGNOSIS The scale of economic loss caused by the COVID-19 pandemic has prompted regulators, insurers and industry bodies alike to seek early answers as to how policies of business interruption insurance respond.

I

n the UK, the Financial Conduct Authority (FCA) sought determination of issues arising from numerous wordings issued by eight different insurers.

Whilst this expansive approach has not yet been replicated in Australia, on 18 November 2020, judgment was delivered in Australia’s first test case relating to the pandemic – known as the ‘Quarantine Act Test Case’.

In August 2020, a joint effort by the Insurance Council of Australia and the Australian Financial Complaints Authority saw a test case filed in the Supreme Court of NSW (later transferred to the Court of Appeal) concerning certain policies issued to businesses in the tourism and retail sectors. Each policy provided cover for business interruption loss arising from infectious disease, which was limited by an exclusion for loss resulting from diseases declared to be quarantinable diseases under the Quarantine Act 1908 (Cth) (QA) “and subsequent amendments”.

However, on 16 June 2016, years before each of the policies incepted, the QA had been repealed and the Biosecurity Act 2015 (Cth) (BA) came into force. The Court was tasked with determining two issues: 1. whether the reference to diseases declared to be quarantinable diseases under the QA “and subsequent amendments” should be read so as to include diseases listed under the BA (Issue 1); and 2. if so, whether the exclusion encompassed only those diseases which had been listed prior to inception of the policies, or whether the exclusion also applied to diseases (such as COVID-19) listed during their currency (Issue 2).

Insurers advanced two main lines of argument. Firstly, they argued the words

“and subsequent amendments” encompass not only amendment of the QA itself, but also the repeal and replacement of the QA with the BA. Secondly, they argued it is self-evident that the parties did not intend to refer to repealed legislation and it would be an “absurd” (in the legal sense of the word) outcome if the exclusion were interpreted that way. In response, the policyholders argued the word “amendments”, properly interpreted, encompasses only amendments of the QA and does not embrace the replacement of the QA with another piece of legislation.

As to the insurers’ second argument, policyholders asserted that the reference to the QA, as it is, makes sense and involves no “absurdity”. Rather, it demonstrates the parties’ agreement to exclude a fixed number of diseases which had been declared under the QA prior to its repeal.

The Court unanimously determined Issue 1 in favour of the policyholders.

Applying well-established principles of contractual interpretation, the Court determined the phrase “and subsequent amendments” encompasses only amendments of the QA and, even though the QA and the BA have broadly the same purpose, it is a step too far to say the phrase should be read so as to include replacement of the QA with a new piece of legislation.

Hammerschlag J noted that, for the insurers to succeed on their “absurdity” argument, it must be obvious that the parties did not mean to refer to the QA and actually meant to refer to the BA. His Honour was not prepared to make this finding in circumstances where the repeal of the QA did not affect the list of diseases which had been declared at the time of its repeal and, consequently,

BY CLANCY O’DONOVAN

Senior Associate, DLA Piper Australia

the exclusion functioned coherently by reference to the diseases which had been listed as at that time. This interpretation means that any new pandemics which might occur after the QA was repealed are not excluded from cover. However, in the words of Meagher JA and Ball J, whilst “[s] uch a result might be regarded as sub-optimal or uncommercial … it could hardly be said to be absurd”. In circumstances where the Court resolved Issue 1 in favour of the policyholders, it declined to address Issue 2.

The possibility and prospects of an appeal by insurers are no doubt presently being considered. For the moment though, and while the precise ramifications of the Court’s decision will differ from policy to policy, the decision eliminates for policyholders what was otherwise, in many instances, a threshold impediment to cover.

However, does it guarantee policyholders cover for their business interruption loss arising from the pandemic? Not necessarily.

Claims will, as always, fall for determination based on all of the terms and conditions of cover. Different policies may contain other terms (including differently-worded disease exclusions) which present additional hurdles policyholders will have to confront.

Many locally-issued policies contain clauses which are comparable to those tested in the FCA Test Case and there is real potential for further test cases to be filed in Australia, seeking guidance on the interpretation of such clauses. Nevertheless, the decision in the ‘Quarantine Act Test Case’ serves to reinforce that, when construing policies of insurance, courts will give priority to ordinary principles of contractual interpretation and, in many cases, issues of commercial preference or subjective underwriting intent will run a distant second.

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COMMUNITY / #NIBA2020

#NIBA2020 WRAP UP: PART 2

BRAVE NEW WORLD

NAVIGATING THE WINDS OF CHANGE In Part Two of the #NIBA2020 wrap up, we reflect on the insightful discussions of NIBA’s first entirely virtual Convention – here are some of the highlights.

FIT FOR THE FUTURE

Leadership futurist, Gihan Perera delivered an opening keynote address to #NIBA2020 delegates about getting fit for the future; to understand, plan, and create the world we want to see.

Perera said, “COVID-19 has disrupted our lives in so many ways, but – for better or worse – we’ll mostly go back to the way things were when this is over. But some of those changes will stay with us forever.

“All of us across the world are currently all navigating the same storm but in our own individual boats in our own ways.”

He stressed the importance that active learning and thoughtful decision-making can play in the future success of companies. With many real-life examples, pop culture reference and management anecdotes, Perera really brought home the importance of scenario planning and including a wider range of perspectives to lead effectively in uncertain times.

“Scan wider, observe trends unrelated to you, gain a broader perspective and then narrow in on the path you are going take. But always plan for a course of action when something unexpected happens,” Perera said.

Interacting throughout during the session, Perera reminded delegates to not aim for perfection but for agility and effective decision-making that will make them fit for the future.

He said, “You get to pick the problem you want to solve for your clients. It should start with creating solutions that enhance customer value, and then work backwards to how you design and develop those solutions in your organisation.”

His advice to insurance brokers is, “Don’t wait for things to line up, start before you’re ready to make decisions that benefit you.”

Perera concluded by reminding delegates, “It is disruption when it happens to you and innovation when you do it yourself.”

20 / INSURANCE ADVISER DECEMBER 2020 / JANUARY 2021

A PROSPEROUS AND WELL MANAGED NATION Demographer and leading social commentator, Bernard Salt AM, told #NIBA2020 delegates that they should have faith in the future of Australia.

Salt said Australia is a prosperous well managed nation that will be regarded as a safe harbour, a refuge, by immigrants, students, visitors and business investors during the 2020s.

“At the end of the day, I have faith in the Australian product, that we are safe, we are secure, we are well managed. We may not say that, we may not think that, but in a relative sense, where else on the planet would you rather have weathered the COVID-19 storm?”

In his presentation, Salt acknowledged that post-COVID Australia will be different. He said there will be a greater emphasis on healthcare, on technology, on logistics, on high-end manufacturing, and on agribusiness, the latter not so much related to COVID-19, but to the drought busting rains of January and February.

“Australia will be increasingly concerned about supply chain security leading to the formation of new and expanded businesses.

“The point here is, if you look at the figures, there are opportunities and you need to configure your business to maximise your exposure to those parts of the economy that are expanding, and reduce your exposure to those parts of the economy that are contracting.”

Salt said you need to adopt the shape of a key, where the ridge lines of the key align with the demography of the Australian workforce.

He continued that post-COVID Australia will be shaped by the aspirational values of Millennials in their late 30s and early 40s, driving up their asset base and moving into the business formation stage of the life cycle.

Salt also believes that with the coming of the coronavirus, the whole

COMMUNITY / #NIBA2020

narrative of the city shifts, and this is where you work from home, shop from home, study from home, and you’re entertained from home.

“Prior to the pandemic, one worker in 20 worked from home, during the peak of the lockdown, it was about 45 per cent, and after the lockdown, I thinks it’s going back down to 15 per cent.

“This is going to have a big impact on the way the home is organised, and that’s going to shift the focus of business from the city, to the suburbs.”

Salt concluded his keynote by saying that Australia is a fundamentally good proposition, “People will want to come here and bring their entrepreneurial energy and aspiration to Australia – that will drive Australia in the 2020s.”

A NEW AGE DEMANDS BETTER LEADERSHIP Award-winning leadership expert and board adviser, Dr Kirstin Ferguson spoke to delegates about leading ethically through crises on day two of the 2020 NIBA Virtual Convention.

Dr Ferguson believes that the legacy of every leader is being written right now as we work through this current crisis.

She said, “All leaders across the world have an opportunity, right now, to assess their leadership style through understanding that the collective experience we’re going through will not just impact the way we work in the future but also what we expect from our leaders.”

Now is the time for leaders who are adaptable and agile, transparent but decisive, empathetic but honest and above all else, self-aware, she explained.

Dr Ferguson believes that leaders need to shift from being reactive to become more comfortable with the unknown and reinvent what organisations do and how they do it.

She said these trying times have shown us that leaders must learn to be more attuned to their impact on their teams. She added, “The most valued leaders around the world during this crisis have been those who have been self-aware and therefore able to lead decisively and courageously while doing so ethically and compassionately.

Sheer intellect has not, and has never been, enough and leaders do

need emotional intelligence to navigate a crisis effectively.”

“It is up to leaders to create a safe space for employees – make people less anxious and not more. Bring your whole self to work, it will help your team be themselves.”

LEADING THROUGH COVID-19 Day three of #NIBA2020 kicked off with the industry leaders discussing Leading in the time of COVID. The insurance broking leaders were asked: What are the key challenges you are facing in this area at the present time? and How do you see things developing in the next year or so in relation to this topic?

Sarah Lyons, Chief Executive at Gallagher Australia said there’s been a significant shift in leadership dynamic as we progress through 2020.

“At the start of the crisis, it was very much a challenge of reaction.

There was so much happening, that each of us had to react and develop plans accordingly.”

She continued, “As leaders we look forward, and that’s becoming increasingly difficult when you don’t know what will happen from one day to the next.

“The sheer pace and complexity of change we’ve seen throughout COVID has shown us that even the simple problems are much more difficult to solve. And the way we solve those problems has changed as well.”

Lyons concluded that leaders must be strong, resilient and comfortable with ambiguity, especially for the rising stars and emerging leaders.

Robert Kelly, Managing Director and Chief Executive Officer at Steadfast, said he’s been impressed by the role NIBA’s taken in terms of bringing together the leaders in the broking industry.

“I’ve been incredibly impressed by how the egos are left outside the door, and that the people who run the major distribution

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COMMUNITY / #NIBA2020

businesses in Australia are aligned.”

Mike Emmett, Chief Executive Officer and Managing Director of AUB Group, said he has the good fortune of having many leaders across the business and network.

“What I’ve seen is how responsive, entrepreneurial and creative the different parts of the business are – that’s the benefit of a diverse portfolio of businesses.”

James Baum, Chief Executive Officer at Aon Australia, said he would swap the word challenging for exciting.

“We’re clearly going through an unprecedented time and I’m sure lots of us have said, ‘there’s no training manual on how to lead remotely’. But I think if leadership is something you’re passionate about, and you care about the development and wellbeing of your colleagues, then this is actually, and it might sound bizarre to say, but I actually find this time really exciting.”

Baum also highlighted the importance of authentic communication, “As we learn about this ‘new better’, and what this could mean, I think as leaders, you’ve got to listen to more people in your organisation – you need to get deeper into the layers of your organisation and hear about the things that are challenging colleagues.”

Nick Harris, Chief Executive Officer, Pacific, at Marsh, said COVID has taught him that there’s a big difference between leading and managing.

“I think you manage during the good times…but during the tough times, you have to step up and lead.”

He continued, “Sometimes we get caught up in the numbers, caught up in the budget and the day-to-day, but that’ll take care of itself if you look after your people.”

Finally, Simon Weaver, Head of Australasia at Willis Towers Watson, said he’s also learnt a huge amount throughout this process, but admits he doesn’t have all the answers.

“How do you maintain your business culture if people aren’t interacting with one another, day in, day out, in an office environment? We don’t have the answers yet, but we’ve certainly got to learn and adapt,” he concluded.

22 / INSURANCE ADVISER DECEMBER 2020 / JANUARY 2021

A REPORT FROM THE REGULATORS

Day four of the 2020 NIBA Virtual Convention ended with an overview from regulators.

Emma Curtis, Commissioner of the Australian Securities and Investments Commission (ASIC), David Locke, CEO and Chief Ombudsmen of the Australian Financial Complaints Authority (AFCA), and Michael Gill, Chair of the independent Insurance Brokers Code Compliance Committee (IBCCC) discussed the current regulatory landscape and what it means for insurance brokers.

In opening the regulatory session, Curtis revealed that despite deferring work on a number of Royal Commission outcomes and reducing the regulatory burden on brokers due to COVID-19, ASIC is still hard at work on the 17 financial services bills introduced prior to the announced deferral.

When talking on opportunities for brokers under the new Design and Distribution Obligations (DDO) she said that brokers were well placed to understand how clients use these products and that it is critically important for brokers and insurers to begin engaging and establishing communication channels early, as broker feedback will allow insurers to further refine their products.

Curtis also clarified the expectations ASIC has of insurance brokers with the regulator identifying a number of policies that did not have effective pandemic exclusion clauses. ASIC has communicated to insurers and brokers their expectations under these policies where claims may be able to be made. This is done to ensure small businesses can continue to trade through the pandemic.

When speaking on the future of broking she stressed the expectation that intermediaries will continue to put clients first, she also stressed the need for a strong, aspirational broking code of practice that is reflective of where brokers would like their industry to head, adding that this will place the industry on “a good path to rebuilding consumer trust”.

ASIC also expressed concerns about the adequacy of breach reporting mechanisms and culture within firms as self-reporting figures under the code remain low. “There needs to be a cultural acceptance within businesses that breaches should be reported and

COMMUNITY / #NIBA2020

that it is important to learn from mistakes.”

David Locke said that AFCA received 80,000 complaints, up 14 per cent from those received in the previous year.

He also revealed that there have been 19,000 complaints against general insurance providers, up 17 per cent, out of which 48 per cent have been resolved at registration and referral (first stage), with over 70 per cent of matters resolved by agreement or in favour of the complainant.

In terms of numbers, Locke clarified that brokers are “hardly on our radar”. Out of the 9193 COVID-related disputes, only 21 relate to brokers.

However, he did question if brokers are directing their clients to AFCA if they are unhappy.

His advice for brokers was to focus on the following based on the complaints AFCA had received; • Knowledge of products and the needs of clients; and • Communicating with clients about their needs and confirming these conversations in writing, and then re-confirming their needs again at renewal.

Finally, IBCCC Chair, Michael Gill, told brokers that in terms of other parts of the financial services sector, brokers aren’t the problem, “Sensible, well-trained brokers walk alongside their clients to achieve good outcomes.”

Gill told audiences that legislation and regulation were not the whole answer when it comes to addressing issues within the insurance broking space, Gill said that self-regulation would play an important role as it allows businesses and the industry as a whole to have conversations about genuine changes in behaviour.

He believes that there is an opportunity to build in the good parts of the Royal Commission Legislation into the Insurance Brokers Code of Practice.

He said, “The biggest job for the committee is to carve out space of how we can build in matters of fairness. Not just about compliance but about genuine, encultured behaviour of always doing the right thing.”

Gill also remains concerned about lack of self-reporting but admitted that there is growth in these numbers. He also revealed that four code subscribers were responsible for two thirds of the breaches.

In concluding, the IBCCC Chair said that empathy and emotional intelligence were key for brokers to be able to live the code in everything they do, adding that if something didn’t seem fair, it likely wasn’t.

THE POWER OF PURPOSE

Australia’s most in-demand professional mentor and mindset coach, Ben Crowe, delivered an inspiring closing keynote at the 2020 NIBA Virtual Convention.

Crowe’s presentation covered three themes: purpose mindset, connection mindset and performance mindset.

Crowe began his presentation by identifying, “What you do, doesn’t define who you are.”

He said every generation has its challenges – today its depth of meaning.

Crowe used The Hero’s Journey to talk delegates through the three themes.

He said chapter one is “all about me”. It’s here that people transform from “I” to “we”.

He reminded delegates that “our greatest growth comes from our darkest times” – it unlocks humility.

Crowe said this chapter also sees a shift from achievement to fulfilment. “Achievement without fulfillment is the greatest failure in life,” he added.

Turning his attention to chapter two and the theme of connection, Crowe said it’s why we’re here. “Shames is the fear of disconnection,” he explained.

Crowe took this opportunity to highlight the fact that imperfections connect humans the most. He added the it’s important to celebrate imperfections and celebrate your unconditional self-worth.

“When you embrace vulnerability as a strength, your entire life turns around.”

Finally, Crowe explained performance mindset and the difference between our conscious mind, which we have direct control of, and the unconscious mind, which is 10 times more powerful, but not in our direct control.”

He said, “The good news is, the unconscious mind will do whatever the conscious tells it to. You are therefore in total control of your emotions.

“If you decide to be calm, it‘s medically impossible to be anxious,” he explained.

Crowe said that when we’re required to “perform”, we must accept the uncontrollables and focus only on things we can control.”

He concluded his presentation by encouraging delegates to reclaim their purpose statement: “How can I be the best part of someone else’s day?

“Stop achieving for self-worth and just start being.”

THANK YOU TO OUR SPONSORS, WITHOUT YOUR SUPPORT, #NIBA2020 WOULD NOT HAVE BEEN POSSIBLE

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COMMUNITY / NIBA Awards

Crafting a legacy one client at a time The winner of the QBE-sponsored 2020 Stephen Ball Memorial Award for Broker of the Year, Shelley Hymas of Phoenix Insurance Brokers in WA, is an expert at recognising possibilities, where no one else sees any, and turning them into stupendous successes.

BY TANAYA DAS PHOTOGRAPHY BY PHILIP GOSTELOW

Insurance Adviser: What do you believe is the secret to your success as an insurance broker?

Shelley Hymas: Fundamentally we are a relationship business, therefore being passionate about my clients and their businesses and taking a real interest in them both personally and professionally has worked well for me, and is something that I genuinely enjoy.

When dealing with clients I constantly ask myself how am I adding value? Being an insurance broker for me is not just about the transaction it is also about providing additional services and solutions throughout the year for my clients.

I have a real thirst for learning so I ensure that I invest time in my own professional development each year. Every year for me is about being better than the previous one, so if you are not continuing to learn how are you evolving?

Our clients come to us as we are the experts so we need to ensure that we have the technical knowhow to

assist them in any way we can.

It is also about working with a team of people that are as passionate as I am about our clients, and I am extremely lucky to have that at Phoenix.

And last but not the least, a sense of humour is also a must.

IA: What has been your greatest learning from this year?

SH: For me personally it has been about re-evaluating what is important to me and ensuring that those areas of my life are getting the time and the focus that they deserve.

IA: What is it about insurance broking that gets you out of bed every morning?

SH: The fact that I never know what is going to happen. I always have an idea of what I would like to achieve in any given day, however one phone call or email can change the entire trajectory of my day. I also love the fact that no two days are ever the same.

IA: What immediate and not-so immediate challenges do you foresee for the insurance broking profession?

SH: The immediate challenges I foresee are around the pace of change that we are experiencing. Presently we seem to be experiencing more change in a short period of time than we have ever seen. Whether it is the landslide of legislation that we are working our way through, or the recovery from COVID-19. Furthermore, the digital transformation that has picked up pace this year has us considering how we can utilise it to assist in improving our clients overall experience.

Climate change appears to be finally getting the focus it deserves. However, this is not just a challenge for our industry.

We need support from the government and communities if we are going to have any chance of insurance being viable and affordable into the future.

IA: What would you like young professionals in the industry to know?

SH: Take your time to really learn your craft as it will set you up for success in the long term. Education is key and continually improving your knowledge by actively participating in learning opportunities will help not only you but also your clients.

“Being an insurance broker for me is not just about the transaction it is also about providing additional services and solutions throughout the year for my clients.�

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COMMUNITY / NIBA Awards

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COMMUNITY / NIBA Awards

Rapid fire questions 1. How would you describe your leadership style? Inclusive whilst trying to have as much fun as possible.

2. What would you tell your younger self? You will get there just be patient.

3. What is the most important question when hiring someone?

I do not have a specific question. For me I want to know what they are passionate about and what motivates them.

4. What is your favourite holiday destination? Bora Bora, its even more beautiful than the photos.

5. What do you do to unwind?

Exercise (be it boxing or yoga) 6. What excites you right now?

As cliché as it sounds its all about the future for me. I am excited to see where I will be in 10 years’ time and if I have achieved everything, I have set out to. I am also excited about all of the things we have going on at Phoenix at the moment.

Attraction and retention of talent needs to be on the agenda if we want to future proof our industry. We need to do more to promote ourselves as an industry of choice and be clearer about the importance of the role of a broker and the value that we add for clients.

“We need to do more to promote ourselves as an industry of choice and be clearer about the importance of the role of a broker and the value that we add for clients.”

IA: What has been the most satisfying moment of your career to date?

SH: Apart from winning this award? It would be proving the 28-year-old woman that landed in Australia back in 2006 that she is right, she will become a shareholder in her own brokerage.

It may have taken me a few years to do so; however, the journey has almost been as much fun as the destination.

IA: What role has mentorship played in your career and why do you think it is essential to mentor young professionals?

SH: I have been mentoring people inside and outside of the industry for over 15 years. It is something that I am

26 / INSURANCE ADVISER DECEMBER 2020 / JANUARY 2021

always happy to dedicate time to.

Being a mentor is not just about passing on your knowledge or providing support, it’s also about learning from your mentee. I have kept an eye on the careers of all of my mentees over the years, and I take as much pride in their achievements as my own.

IA: What is the best career advice that you’ve ever received?

SH: Attention to detail, it was drilled into me at my first job, by my then boss Terry, and some 20 plus years later I still think about it every single day.

As we all know the devil is in the detail, therefore it has served me well in insurance broking considering that everything we do is about ensuring the details are correct.

Specialist Underwriter

FEATURE / Business Interruption

28 / INSURANCE ADVISER DECEMBER 2020 / JANUARY 2021

FEATURE / Business Interruption

Supply chain dramas hit brokers hard in 2020 Broken promises, financial loss and reputational damage due to supply chain disruptions and subsequent business interruption as a result of the global pandemic.

BY NINA HENDY

NIBA.COM.AU / 29

FEATURE / Business Interruption

S

upply chains crumbled this year as the worldwide COVID-19 lockdowns and subsequent economic crisis took hold, catching many companies off guard.

As a result, businesses across the world have incurred considerable uninsured business interruption and financial loss. And as Australia-China tensions escalate and trade relations sour, many businesses have been contemplating just how to reconfigure supply chains to keep their business afloat.

Take corporate giant Nestle, for example.

CEO Mark Schneider delivered a video message to the company’s global workforce warning that the business must ‘get ready for the storm’ as supply chain challenges intensified amid the pandemic.

“The COVID-19 situation has evolved further, and we’re dealing with a significant global challenge,” he observed.

Coles also reported a shortage of hand

sanitisers, stationary, electrical goods and clothing due to the Chinese shutdowns back in February.

And it’s not over, yet, with the impact of the pandemic set to reverberate through many industries for months to come, particularly given that souring trade relations with China haven’t fully played out yet. Whether or not they will recover in time is anyone’s guess.

Some of the immediate issues insurers and brokers were dealing with included coverage details, claims handling, loss control and more, reveals Gallagher Bassett.

A lot of clients were reaching out about their policies and asking if they’re covered for different aspects of their business, the company revealed as the pandemic hit. “The pandemic is revealing gaps in coverage that may prove to be costly. Many companies were caught off guard when COVID-19 hit, so there are a lot of risks that are challenging to the

supply chain,” it revealed on its website.

But what they found, in many cases, was that insurers had added specific exclusions for bacterial or viral infections to their coverage in the aftermath of the SARS epidemic.

COVERING LOSS

“A big issue has been that while most businesses are aware of the pandemic exclusions for local business interruption, often they don’t appreciate that these exclusions also apply to their supply chains,” Dave Bazen of Jarm Adjusting says.

The primary issue for adjusters is a lack of understanding about how supply chain failures can only be considered for business interruption losses where the cause of failure is a peril that would otherwise be covered had it occurred to the insured premises.

It’s critical that brokers familiarise themselves with these limitations and

It’s critical that brokers familiarise themselves with these limitations and have these discussions about renewal, so clients can prepare and consider these options for business continuation in the event of an uninsured supply chain failure.

DAVID BAZEM, JARM ADJUSTING

30 / INSURANCE ADVISER DECEMBER 2020 / JANUARY 2021

CHAR TERED LOSS ADJUSTERS claims@astagroup.com.au

BUSINESS INTERRUPTION PROPERTY | ENGINEERING | LIABILITY | STRATA www.astagroup.com.au

FEATURE / Business Interruption

Some businesses are being mistakenly led to believe that their policies will not cover them for COVID-19 because it falls within the ‘quarantinable disease’ exclusion.

MARK WALLER, CLAYTON UTZ

32 / INSURANCE ADVISER DECEMBER 2020 / JANUARY 2021

FEATURE / Business Interruption

have these discussions about renewal, so clients can prepare and consider these options for business continuation in the event of an uninsured supply chain failure,” Bazem says.

Flexibility is also needed so that brokers can advise clients on the developing risks, particularly with international markets and strained diplomatic relationships, and assist them with strategies for covering critical supply chains or finding new technology or alternatives, Bazen adds.

INTERPRETING COVER

Business interruption cover and how it relates to pandemics have come under the spotlight, testing policy inclusions for brokers.

Clayton Utz partner Mark Waller came out publicly advising clients that intend to claim under business interruption (BI) insurance as a result of the pandemic to check their policy carefully, as they may be covered despite the policy containing a ‘quarantinable diseases’ exclusion.

Some businesses are being mistakenly led to believe that their policies will not cover them for COVID-19 because it falls within the ‘quarantinable disease’ exclusion, which applies to ‘quarantinable diseases under the Quarantine Act 1908 and subsequent amendments’, he says.

Clayton Utz asserts that this view is not a correct interpretation of the exclusion, pointing out that the Quarantine Act was repealed nearly five years ago, so it does not apply to COVID-19.

It is an important matter of policy interpretation given that businesses that have been impacted by COVID-19 will need to carefully consider recovering BI losses under their insurance cover to help support their financial recovery. “Many businesses are suffering major losses, particularly where they have been designated nonessential businesses and have been forced to close. If there is any scope for these businesses to recoup some of these losses through their BI insurance, they should be able to do that,” Waller says.

LEGALLY SPEAKING

When arranging insurance for clients, brokers should be aware of the arrangements which insureds have in place to get their operations up and running again in the event of interference, DLA Piper Australia senior associate Clancy O’Donovan advises.

“Indemnity periods and sums insured should reflect the nature and availability of such arrangements. Brokers should also be aware of the insured’s downstream risk, including any guaranteed supply

NIBA.COM.AU / 33

FEATURE / Business Interruption

As the supply chain issues and how that impacts business interruption cover gradually unravels into 2021, insurance brokers will need to be very clear about where they draw the line in the sand before the next global pandemic hits.

Five supply chain risks outside of your control Demand risks – caused by unpredictable or misunderstood customer demand.

Supply risks – caused by any interruptions to the flow of product, whether raw material or parts.

Environmental risks – usually unrelated to economic, social, government, and climate factors, including the threat of terrorism.

Business risks – caused by factors such as a supplier’s financial or management stability, or purchase and sale of supplier companies.

Physical plant risks – caused by the condition of a supplier’s physical facility and regulatory compliance.

SOURCE: BUSINESS QUEENSLAND

34 / INSURANCE ADVISER DECEMBER 2020 / JANUARY 2021

obligations which they may have, and the impact that a material interruption to the insured’s business would have in terms of potential exposure to third party liability,” O’Donovan says.

One thing is for certain. As the supply chain issues and how that impacts business interruption cover gradually unravels into 2021, insurance brokers will need to be very clear about where they draw the line in the sand before the next global pandemic hits.

Of course, the approach taken by the Federal Government to handle strained Chinese relationships will trickle down and form the basis of the policies offered by brokers in the future.

But in the meantime, there are signs that businesses have been taking matters into their own hands, diversifying supply chains to plan for future risk.

However, experts agree that the pandemic will have a long tail. Bazem adds, “The effects of the current crisis will be long-felt in the supply chains of many industries, and some effects may not be felt for a considerable time yet.”

Find out how we can help you and your clients: P

02 9307 6659

M

underwriting@iua.com.au

W

www.iua.com.au

FEATURE / Trade Credit Insurance

THE CANARY IN THE MINE Trade credit insurance is something businesses across the country are likely to need increasingly. Not only does it add some certainty in an increasingly volatile world, but it also acts as an early warning system for potentially problematic clients. It can help businesses sharpen up their act, too.

BY MARTIN WANLESS

36 / INSURANCE ADVISER DECEMBER 2020 / JANUARY 2021

FEATURE / Trade Credit Insurance

NIBA.COM.AU / 37

FEATURE / Trade Credit Insurance

F

or many in the business world, this year’s been one like no other.

From the difficulties presented

by COVID-19 to the government stimulus packages and legislation that have helped keep businesses afloat, the challenges have been many.

And those challenges have brought an increased interest in trade credit insurance.

“The last time I saw this amount of interest in the product was during the global financial crisis,” says Chris Blake, Head of Trade Credit at insurer The Bond & Credit Co. “That increased level of uncertainty really does drive interest. Conversely, however, these are the times when insurers also become more risk-averse.”

RISK INCREASES IN COVID MARKET

At its core, trade credit insurance protects suppliers against the risk of non-payment of goods or services by their buyers, whether

AT ITS CORE, TRADE CREDIT INSURANCE PROTECTS SUPPLIERS AGAINST THE RISK OF NON-PAYMENT OF GOODS OR SERVICES BY THEIR BUYERS, WHETHER THEY ARE LOCATED WITHIN AUSTRALIA OR IN ANOTHER COUNTRY. they are located within Australia or in another country. That risk could be because the buyer has become insolvent or an agreed number of months after the due date has elapsed. At the same time, another major risk is non-payment following an event outside the control of the buyer or the seller.

And one of those ‘uncontrollable’ events has, of course, been COVID-19.

“Companies that have been receiving job keeper payments may not have been able to access premium funding, and therefore trade credit insurance become a lot more relevant than it was before,” says Dale

Hansen, CEO of Austbrokers Coast to Coast.

“It’s forced companies to re-examine their risk profile, and that’s meant that, as brokers, we’ve had a brand new opportunity to go in and demonstrate another aspect of our value and our work, as trade credit is a very necessary component of a properly-constructed risk program.”

The risk-averse nature of insurers generally – and trade credit insurers in particular – during times of financial stress means businesses face increased scrutiny. And that can be a good thing, particularly in the long term, as

LEARNING FROM MASTERS No name is too big to fall into financial difficulty, and its important businesses aren’t complacent with their credit management. Warning signs are warning signs.

Take the collapse of Masters, for example. The hardware chain, owned by Woolworths, was launched as a challenger to Bunnings back in 2011. Fast forward four years and 63 stores, the chain had amassed debt of $600m – leaving many suppliers floundering.

38 / INSURANCE ADVISER DECEMBER 2020 / JANUARY 2021

FEATURE / Trade Credit Insurance

THERE ARE, OF COURSE, WARNING SIGNS THAT ATTENTION SHOULD BE PAID TO – REGARDLESS OF THE ECONOMIC UPS OR DOWNS. INVOICES BEING PAID LATER THAN THEY ONCE WERE, FOR EXAMPLE, CAN HIGHLIGHT A NUMBER OF POTENTIAL ISSUES.

they’re forced to sharpen up their act.

“That’s one of the great things about trade credit insurance,” says Hansen, “it often provides the first inkling that there might be a problem.

“When a business applies to increase its credit limit and they get a negative answer, that’s telling you the insurer considers them – for whatever reason – to be an unacceptable risk profile.

“Companies still struggle to obtain that sort of information and insight in any other way.”

There are, of course, warning signs that attention should be paid to – regardless of the economic ups or downs. Invoices being paid later than they once were, for example, can highlight a number of potential issues.

“The immediate answer from businesses is usually, ‘Yeah, I know my clients well, they’re all good people,’ but we need to dig into that,” says Blake.

“Do they pay on time? Do you know your client’s clients? How secure are the businesses that owe your clients money?

“These are all questions that need to be answered. Ultimately, everyone’s a good payer until they don’t pay.”

40 / INSURANCE ADVISER DECEMBER 2020 / JANUARY 2021

When taking out a trade credit policy, an underwriter will review the top clients, and some valuable financial information can emerge.

“A client might have agreed to a deal with a big-name brand, but we might go back to them and say ‘three of their suppliers in the past 12 months have had to take judgements out to get paid,” Blake continues.

“It’s another layer of credit management and enhances existing credit procedures.”

LOOKING GLOBALLY

For the global business world, the coming months are certainly going to present their own challenges, which will continue to impact the trade credit market. However, Mike Kayes, National Manager Credit Specialties, Willis Towers Watson, says the right measures may help re-establish disrupted supply chains.

“During the varying periods of lockdowns adopted by many countries and the differences in phased

FEATURE / Trade Credit Insurance

re-openings we have seen key sectors of the economy, including commodities trading, agriculture, logistics and infrastructure slowly being restored.”

Here in Australia, the help issued by the government has certainly meant many businesses have survived over the past few months; however, Blake believes it’s a certainty that repercussions will follow.

“We believe there will be insolvencies when the government help runs out. However, we don’t know the scale and magnitude of it.

“It’s impossible to know what will happen. The Federal Government has pushed a lot of money into these schemes, and it would seem remiss of them if they then turned around in the face of a run of insolvencies to say they weren’t going to do anything about it.”

TRADE CREDIT – AN OPPORTUNITY TO ADD SIGNIFICANT VALUE The whole notion of becoming a business’s trusted adviser is almost cliched – however, it doesn’t make it any less true. And trade credit offers brokers the opportunity to add value in a strategic sense to their clients.

“We often find ourselves speaking with CFOs and the like who, as you’d expect, are very financially literate,” says Dale Hansen.

“I always wonder whether there’s a bit of a reluctance to have the conversation because we don’t want to be seen to not be an expert in this area.

“A broker needs to have better than just a generalised knowledge

– it’s a specialised product – but it can be a really significant weapon to have in your arsenal. You can have discussions about payment terms, about reducing their exposure and risk, and in turn you’re helping to improve their business operations.

“Many companies won’t have talked about this since 2007, the last time we had credit issues, but if you can have those conversations with clients it will improve your value to the point where you are really adding value. You’re increasing your own worth to the client and the policy count and remuneration.

“But more than that, you’ve gone into that trusted adviser space.”

WHEN A BUSINESS APPLIES TO INCREASE ITS CREDIT LIMIT AND THEY GET A NEGATIVE ANSWER, THAT’S TELLING YOU THE INSURER CONSIDERS THEM – FOR WHATEVER REASON – TO BE AN UNACCEPTABLE RISK PROFILE. Kayes says that many businesses are already seeking means to exit contracts due to insufficiency of funds or placing reliance on force majeure clauses.

“Considering the adverse effect nationwide lockdowns had on global supply chains, we can expect to see an increase in claims being notified by policyholders in the coming months.”

Which is why it’s prime time to have those conversations with clients.

This year’s presented its fair share of setbacks, but it’s also created opportunities too.

And trade credit is undoubtedly one of them.

NIBA.COM.AU / 41

COMMUNITY HUB

COMMUNITY HUB DECEMBER 2020 / JANUARY 2021

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

INDEX AB Phillips ..................................................... 42 ASR Underwriting ..................................... 43

MGA Insurance Brokers ........................ 44 Moran Insurance Brokers ..................... 44 Newline Group ........................................... 45 Affinity Insurance Brokers ..................... 45 AIBI .................................................................. 46

Tudor Insurance .......................................... 46 Trident Marine Insurance......................... 47 Marsh & McLennan Agency.................. 47 All Parks Insurance...................................... 47 NIBA Mentoring...........................................49

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

Exclusive timber and sawmill insurance facility AB Phillips has been insuring the Timber and Sawmilling industry for more than 25 years. We have an exclusive underwriting facility which is available to select brokers.

Our insurance facility is for clients in the following sectors: • • • • •

Timber yards Timber storage Timber processors Sawmills Roof truss and wall frame manufacturers

Commission is paid on placements.

For more information please contact Rose Dee on:

Phone: 1800 819 394 | Direct: 03 8586 9316 | Email: rose@abphillips.com.au AB Phillips Pty Ltd. Australian Financial Services Licence No. 234457. ABN: 91 007 075 934. PO Box 832 Moorabbin VIC 3189. 445 Warrigal Rd Moorabin VIC 3189. e: info@abphillips.com.au t: 03 8586 9333 f: 03 8586 9394 w: www.abphillips.com.au

COMMUNITY HUB

44 / INSURANCE ADVISER DECEMBER 2020 / JANUARY 2021

COMMUNITY HUB Key Liability Industries:

Key PI Occupations:

Key FI Occupations:

• Alternate & Complementary medicines • Automotive • Biotechnology • Clinical Trials / Research • Defence – machinery, weaponry & protective equipment • Life Science / Pharmaceuticals • Medical & Surgical Devices (including invasive implants) • Medical Cannabis • Medical Equipment / Products • Mining • Rail, Products, Maintenance, Locomotive Engineering, operators, Rolling Stocks & Engine Manufacturers • Tyres – new, re-threading, lugging, repair & sales • Universities • Veterinary Medicines

• Accountants • Architects • Engineers • Environmental Consultants • Insurance Brokers / Underwriting Agencies • Law Firms • Management Consultants • Miscellaneous Risks • Real Estate Agents • Valuers

• Fund Managers/Investment Managers • Insurance Companies • Managed Investment Schemes • Excess lines for Financial Planners

Chief Executive Officer / Underwriting Manager – Liability

Underwriting Manager - PI

Key D&O • Insured firms can be not-for-profit, privately held or publicly traded • Side A/DIC placements • Medical Cannabis risks • All industry sectors, both commercial and financial, are underwritten

Key Crime Commercial Crime Insurance is also offered alongside other Financial Lines products

Linda Sepala Underwriting Manager – D&O & FI

PH: 03 9998 1900

Newline Australia Insurance Pty Ltd ABN 81 118 089 651 PO Box 16208 Collins St West VIC 8007 PH: 03 9999 1901 FAX: 03 9670 0045 newlinegroup.com.au info@newlinegroup.com.au

NIBA_Newline_Sep20.indd 1

15/9/20 3:54 pm

AFFINITY EQUINE, ADVENTURE & LEISURE LIABILITY Abseiling Accommodation Agistment Animal & Petting Zoo Archery Bush Walking Camping Campsites Canyoning Caving Team Building

Equine Associations Equine Events Equine Therapists Farriers & Dentists Fishing & Boat Cruises Four Wheel Driving Flying Fox Horse Carriage Driving Horse Trainers Horse Riding Schools Initiatives

Kayaking Mountain Biking Orienteering/Rogaining Paddle Boarding Pony Rides Paintball & Skirmish Riding Schools River Rafting Rock Climbing Ropes Course Rowing

Sailing Sea Kayaking Snorkelling Snow Skiing Surfing Swimming Trail Running

1300 130 535 www.affinityib.com.au

NIBA.COM.AU / 45

AFS License No. 214 185

COMMUNITY HUB

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

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Adult Industry Business Insurance

Insurance Adviser · Insurance and Risk website Broker Buzz · Need a Broker website · Targeted eDMs · NIBA events (Annual Convention)

WE ARE YOUR VOICE Contact Tony May National Advertising Sales Manager T: 02 9459 4303 E: tmay@niba.com.au

AIBI is a registered trading name of Capital Mutual Insurance Brokers Pty Ltd. Capital Mutual Insurance Brokers Pty Ltd is a Corporate Authorised Representative of McLardy McShane Partners Pty Ltd, Australian Financial Services Licence No 232987 ABN 14 064 465 309.

McLardy McShane Partners Pty Ltd is a member of The Steadfast Group.

Benefits of dealing with LSM:

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$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

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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)

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15% commission of all placements

Tudor Insurance Australia Cameron McKerchar tudorinsurance.com.au

46 / INSURANCE ADVISER DECEMBER 2020 / JANUARY 2021

COMMUNITY HUB

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08 8385 3583 newbusiness@marshmc.com Marsh and McLennan Agency Pty Ltd ABN 33 000 668 584 / AFSL 238984

517-3776

NIBA.COM.AU / 47

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

· Insurance and Risk website · Broker Buzz · Need a Broker website · Targeted eDMs · NIBA events (Annual Convention)

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

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

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

CGU NIBA ON DEMAND WEBINAR SERIES: FACEBOOK FOR LEAD GENERATION

This event is free thanks to our sponsor CGU and is accredited for 1.5 CPD points.

In a world full of vast advertising options, one of the most readily and easily accessible is social media, specifically, Facebook.

Rowan Spincks has an extensive background in marketing and is a client partner at Facebook.

This 'Facebook for lead generation' presentation by Spincks will help you gain better insight and understanding as to how you can use Facebook to benefit you and your business, honing in on the areas of how to generate leads, how to find new prospects and how to convert them.

This webinar will be followed by a 10-question quiz. The quiz must be completed, and participants must achieve 80 per cent to obtain NIBA's accredited 1.5 CPD points.

SAVE THE DATE 2021 REGULATORY LANDSCAPE EXPLAINED FOR YOUNG PROFESSIONALS – WHY IT MATTERS TO YOU

WHEN: Thursday, 11 February 2021, from 2.30pm WHERE: Live webinar Dallas Booth, CEO, NIBA and Mark Radford, Principal Lawyer, Radford Lawyers will provide a high level, easy to understand, overview of the Royal Commission for the benefit of Young Professionals. They will break down, what it was all about, what the commission found, key outcomes, and some of the recommendations relevant for insurance brokers and why it all matters to you.

2021 NIBA LEADERSHIP TRAINING COURSE

WHEN: Part One, 5 March 2021 & Part Two, 12 March 2021 WHERE: Live webinar

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

Part One will cover techniques for leading and engaging a virtual/ remote team.

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

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

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

Both participatory workshops will run for 2.5 hours each.

DISPLAY ADVERTISING INDEX – DECEMBER 2020 / JANUARY 2021 Liberty Specialty Markets............... IFC Vero................................................................5 QBE................................................................7 GT Insurance............................................. 9 NTI................................................................ 13 Blue Zebra................................................. 17 NOVA......................................................... 27

ASTA............................................................ 31 IUA............................................................... 35 Ebix.............................................................39 QPIB............................................................ 51 Allianz......................................................IBC BAIS...................................................... OBC

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

50 / INSURANCE ADVISER DECEMBER 2020 / JANUARY 2021

“QPIB has never been more relevant than right now.”

ING IS

U

RA

K

ER

QPIB

S

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

D PRAC IE T F I

IN

QPIB – A STATEMENT OF PROFESSIONALISM

• QUA L

– JORDYN GILBERT, 2019 WA YOUNG PROFESSIONAL BROKER OF THE YEAR

NCE BR

O

INSURER STRENGTH RATINGS

S&P GLOBAL

INSURER FINANCIAL STRENGTH RATINGS

The following list of S&P Global Ratings insurer financial strength ratings assigned to insurance companies in Australia and New Zealand. Ratings at 1 November, 2020.

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

NEW ZEALAND

RATING

NON-LIFE INSURERS AA Insurance Ltd.

A+/POSITIVE

AIG Insurance New Zealand Ltd.

CreditWatch Negative

Chubb Insurance New Zealand Ltd.

AA-/STABLE

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

AUSTRALIA

RATING

NON-LIFE INSURERS AAI Ltd.

A+/POSITIVE

AIG Australia Limited

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

Zurich Australian Insurance Ltd.

A+/POSITIVE

LENDERS MORTGAGE INSURERS

IAG New Zealand Ltd.

AA-/STABLE

Society of Lloyd's

A+/STABLE

Medical Insurance Society Ltd.

A-/POSITIVE

Southern Cross Benefits Ltd.

A/STABLE

Southern Cross Pet Insurance Ltd.

A/STABLE

LIFE INSURERS

Teleco Insurance (NZ) Ltd.

BBB+/STABLE

AIA Australia Ltd.

A+/STABLE

Vero Insurance New Zealand Ltd.

A+/POSITIVE

AMP Life Ltd.

A-/NEGATIVE

Vero Liability Insurance Ltd.

A+/POSITIVE

Challenger Life Company Ltd.

A/STABLE

A/NEGATIVE

QBE Lenders' Mortgage Insurance Ltd.

A/STABLE

Westpac Lenders Mortgage Insurance Ltd.

AA-/NEGATIVE

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

HEALTH INSURERS Southern Cross Medical Care Society

A+/STABLE

NIB NZ Ltd.

A-/STABLE

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

Genworth Financial Mortgage Insurance Pty Ltd.

A/NEGATIVE

LIFE INSURERS

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

Asteron Life Ltd.

A+/POSITIVE

Hannover Life Re of Australasia Ltd.

AA-/STABLE

Hallmark Life Insurance Co. Ltd. (NZ Branch)

BBB+/STABLE

Munich Reinsurance Co. of Australasia Ltd.

AA-/STABLE

Medical Life Assurance Society Ltd.

A-/POSITIVE

RGA Reinsurance Co. of Australia Ltd.

AA-/STABLE

Westpac Life-NZ-Ltd.

A+/NEGATIVE

SCOR Global Life Australia Pty Ltd.

AA-/STABLE

Resolution Life New Zealand Ltd.

A-/NEGATIVE

Swiss Re Life & Health Australia Ltd.

AA-/NEGATIVE

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

52 / INSURANCE ADVISER DECEMBER 2020 / JANUARY 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/STABLE

CIGNA Life Insurance New Zealand Limited

A/STABLE

Co-operative Life Limited

B++/STABLE

DPL Insurance Limited

B++/STABLE

Fidelity Life Assurance Company Limited

A-/STABLE

Foundation Life (NZ) Limited

A-/STABLE

General Reinsurance Life Australia Limited (New Zealand Branch)

A++/STABLE

LIFE, ANNUITY AND ACCIDENT

Kiwi Insurance Limited

A-/STABLE

General Reinsurance Life Australia Ltd.

Lifetime Income Limited

B u/NEGATIVE

Momentum Life Limited

B++/STABLE

Partners Life Limited

A-/STABLE

Pinnacle Life Limited

B/STABLE

The following list of AM Best Financial Strength Ratings (FSRs) assigned to insurance companies in Australia and New Zealand. Ratings as at 6 November, 2020.

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

AUSTRALIA

RATING A++/STABLE

PROPERTY/CASUALTY Ansvar Insurance Limited

A-/NEGATIVE

First American Title Insurance Company of Australia Pty Limited

A/STABLE

General Reinsurance Australia Ltd

A++/STABLE

Guild Insurance Limited

A-/STABLE

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

A+/STABLE

Pacific International Insurance Pty Limited

B++/STABLE

Beneficial Insurance Limited

B++/STABLE

The Hollard Insurance Company Pty Ltd

A-/STABLE

Brightsideco Insurance Limited

B/STABLE

The New India Assurance Company Limited (Australia Branch)

B++/STABLE

Consumer Insurance Services Limited

B+/STABLE

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

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

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

PROPERTY/CASUALTY

First American Title Insurance Company of Australia A/STABLE Pty Limited (New Zealand Branch) FMG Insurance Limited

A/STABLE

General Reinsurance Australia Ltd (New Zealand Branch)

A++/STABLE

Health Services Welfare Society Limited

B+/STABLE

Mitsui Sumitomo Insurance Company Limited (New Zealand Branch)

A+/STABLE

New Zealand Medical Professionals Limited

B+/STABLE

Pacific International Insurance Pty Ltd (New Zealand Branch)

B++/STABLE

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 / 53

INSURANCE JOURNEY / Robert Cooper

LOYALTY, EMPATHY AND RESPECT

For the 2020 NIBA Broker of the Year QLD Finalist, Robert Cooper of Cooper Professional Risks, the bedrocks for professionalism are age-old values that have stood the test of time.

“I

began my career with Lumley General Insurance starting in their mail room before moving to underwriting and spent 11 years there.

The original plan was to go to university but when I wanted to take a gap year my parents insisted I find a job.

When I got to learn all about the industry, I chose to study insurance and obtained my associateship at only 21 years of age.

When it became clear I was never going to progress any further on the underwriting side, I yearned for a new challenge.

It was Sedgwick James (as they were known then) who offered me a position that filled me with excitement.

I admit I initially found the sheer amount of knowledge and skill required an overwhelming prospect but many people at Sedgwick helped me develop into an insurance broker. Then I went to Willis and learnt even more by specialising in professional indemnity.

At school I had dreams of being a journalist or a teacher. I am glad I found insurance because it is an underrated but an extremely interesting and very important area of business and the economy.

There are so many areas of insurance that are interesting, I keep learning more and more every day. For example, the concept of indemnity.

I like the idea that an insurance policy is intended to put you back into the same position following a loss as you were prior to said loss. We are truly looking after those that may one day be dealt a bad hand by making sure they are indemnified.

I have learnt so many important lessons throughout my career, but the ability to establish relationships with clients and underwriters has been the most eye-opening.

Learning to cultivate empathy, developing the ability to demonstrate respect, and accepting that everyone is different to each other and deserve to be treated equally, has

enabled me to network in other business and community groups as well.

I was mentored by many people in my career, some did not even know that they were mentoring me. I watched them, asked questions, got them to point me in the right direction to learn and keep developing. Then in the last fifteen years I have been mentoring many others, not just my own staff but participating in the excellent NIBA Mentorship Program as well.

We must aim to encourage younger people into the profession and then inspire them, educate them on the technical skills needed as well as the expertise required as an insurance broker. It is a very interesting and fulfilling profession that very few people outside the industry know about.

The only thing I would change about my career is that I should have been more self-confident earlier on and left Lumleys a lot sooner to further my career.

Sometimes I am loyal to a fault.

I believe that all insurance brokers giving advice should have the QPIB designation. All the broking staff at Cooper Professional Risks do.

Getting the QPIB designation does not mean that you stop learning but that you have reached a standard of qualifications and experience that makes you a true broking professional. I also obtained a Fellowship of ANZIIF, a Graduate Diploma of Insurance and an MBA from Deakin University.

All of my qualifications have proven immensely valuable to what has been a truly fulfilling career in insurance.

QUICK QUESTIONS Tell us something most people do not know about you? I used to play Bass Guitar in various blues rock bands in Adelaide in the eighties and early nineties.

Secret ambition? To master Delta Blues finger picking acoustic guitar.

Favourite film? The Blues Brothers – I saw it again a few months ago and it is still brilliant.

Favourite book? A Fortunate Life

by AB Facey – just a wonderful inspirational human being.

Favourite tipple? A Tim Adams Shiraz from the Clare Valley. I should also mention Coopers Pale Ale too, shouldn’t I?

PROUDLY SUPPORTING

54 / INSURANCE ADVISER DECEMBER 2020 / JANUARY 2021

Favourite past-time? Playing the guitar, listening to music and reading.

Favourite food? I love so many different foods from so many countries, so it’s hard to pick. But you cannot beat a roast dinner, particularly roast beef, with vegetables, brussel sprouts, Yorkshire pudding and horse radish.

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