45 minute read
Upcoming regulatory changes
UPCOMING REGULATORY CHANGES
October is fast approaching and with it a raft of sweeping regulatory changes that all brokers need to be aware of. These changes will affect almost every broker, so it is critical that NIBA members have a thorough understanding of the changes and the impact they will have on their business.
Reference checking and information
sharing: The new provisions will require AFS licence holders to comply with new reference checking and information sharing protocols which will shortly be released by ASIC. These requirements will apply to authorised representatives of life risk brokers, and do not apply to representatives giving advice only in relation to general insurance products. The new rules take effect on 1 October 2021.
Hawking of financial products:
Complex new provisions relating to the “hawking” of insurance products will take effect on 5 October 2021. The provisions do not apply when an insurance broker is giving personal advice to a retail client, but they will apply to insurance brokers operating under a general advice model.
The provisions will prevent the unsolicited marketing and sale of financial products to retail clients. The definitions and concepts are difficult and complex, NIBA is currently seeking clarity from Treasury on a number of issues relating to the proposed provisions and will provide further information to members once these matters are resolved.
Duty to take reasonable care not to make a misrepresentation:
These reforms relate to a newly defined category of “consumer insurance contracts”. They apply to insurance obtained wholly or predominantly for the personal, domestic, or household purposes of the insured.
Where the new definition applies, the insured only has a duty to take reasonable care not to make a misrepresentation to the insurer before entering the consumer insurance contract. The changes relate to insurance contracts entered into on or after 5 October 2021. For non-consumer insurance contracts, the existing provisions in sections 21 and 22 of the Insurance Contracts Act (duty of disclosure obligations and misrepresentation provisions) apply.
NIBA will provide more information on these reforms to members.
Design and distribution legislation:
The new legislation requires every financial services product covered by the regime to have a corresponding ‘target market determination (TMD)’. The products captured under the regime include all products that currently require a Product Disclosure Statement.
It is crucial that broker firms who use “broker wordings”, or their own schemes where the broker has been involved in the design of the policy and the development of the cover that is provided, work closely with the insurer/underwriter to determine how the Design and Distribution obligations will operate in respect of those policies, who will be responsible for the preparation of the Target Market Determination, and how the product review obligations will be implemented.
NIBA strongly encourages firms to obtain legal assistance for this process, in order to ensure they are meeting the new legislative obligations. There is no room for complacency, the legislation will take effect on 5 October 2021.
ASIC has released a regulatory guide, RG 274 Product design and distribution obligations, outlining their interpretation of the obligations, compliance expectations and its approach to administering the obligations.
Deferred sales model for add-on
insurance products: These reforms implement an industry-wide deferred sales model for add-on insurance products. The legislation introduces a complex array of obligations which defer the insurance transaction for a period of four days.
The legislation applies to any insurance product sold incidentally to a primary good or service – e.g. insurance sold in conjunction with the rental of a motor vehicle or travel insurance sold after the sale of a travel product. The reforms do not apply to comprehensive motor insurance, or products recommended by financial advisers in a very limited personal advice situation.
NIBA is currently liaising with Treasury to seek exemptions for a number of broker products where the immediate supply of cover provides genuine protection for consumers.
The legislation is due to take effect on 5 October 2021.
ASIC 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.
ASIC has issued a new regulatory guide, RG 271 Internal dispute resolution, setting out its dispute resolution standards and requirements. A number of the standards and requirements set out in the RG are enforceable, so it is critical that members are aware of the new obligations.
NIBA has previously provided information to its members on this issue, which can also be accessed from the media hub on the new NIBA website under “Members only content”.
The requirements only apply to complaints received on or after 5 October 2021. For complaints received by firms before 5 October 2021, Regulatory Guide 165 Licensing: Internal and external dispute resolution applies.
New Breach Reporting Obligations
These changes strengthen the breach reporting regime for financial services licensees, by replacing the current reporting obligations.
Under the new licences, licensees will be required to notify ASIC within 30 days after the AFS Licensee first knows, or is reckless with respect to whether, there are reasonable grounds to believe a reportable situation has arisen.
A reportable situation arises when; • the licensee or its representative has breached/ or is likely to have breached a core obligation and the breach is significant; • the licensee has commenced an investigation into whether the licensee or representative has breached a core obligation and the breach is significant and the investigation has continued for more than 30 days; or • in the course of providing a financial service, the AFS licensee or representative has engaged in conduct constituting gross negligence; or committed serious fraud.
The test for significance has also changed. A breach of a core obligation is deemed to be significant if: 1. the provision breached is an offence that may involve imprisonment (3+ months for dishonesty offences, 12+ months for others); 2. the provision breached is a civil penalty provision, or s1041H(1) of the Corporations Act or s12DA(1) of the ASIC Act (misleading or
deceptive conduct in relation to a financial product or service); or 3. the breach results, or is likely to result, in material loss or damage to clients or members.
The legislation also introduces new obligations on AFS Licensees to investigate reportable situations that may cause loss or damage to retail clients who received personal advice, to notify those potentially affected clients, and to pay compensation to affected clients within 30 days of completing the investigation.
Members will need to assess their breach reporting practices in light of the new regime and, if necessary, seek advice on how to build practices into their business that comply with the new regimes.
ASIC has released draft Regulatory Guide 78, to help members understand and comply with the new changes. The changes are scheduled to take effect on 1 October 2021.
CHECK THE ACCURACY OF WHAT YOU TELL A CLIENT
If you make an error, try and remedy it as soon as possible and let the customer know what options exist and obtain their instructions (also apologise). Even if it can’t be fixed you may not be liable if, as in this case, the complainant could not prove there was an alternative policy available.
BY MARK RADFORD
Principal, Radford Lawyers
The broker’s case
The broker submitted that: • it had made a mistake, but this had been an honest mistake and it had already apologised to the complainant. • following the detection of the error, it had immediately attempted to negotiate with the insurer to reduce the excess, but the insurer had refused and had instead offered the complainant 14 days to find an alternative policy. • on 8 December 2020, the complainant had instead instructed the broker not to seek alternative cover on 8 December 2020. • the renewal report was merely a summary of offers made by various insurers and the broker’s recommendation and was not a legally binding offer by the insurer. • even if the broker had known of the correct excess, it still would have recommended the policy to the complainant. • even if it had been in breach of its duty of care, the complainant had not suffered any loss as there was no better policy available. • email correspondence between the broker and the complainant was submitted as evidence.
The complainant’s case
The complainant submitted that the broker had been in breach of their duty of care because: • the complainant would suffer a loss if an excess more than $250 was charged at the location with the $5,000 excess. • the insurance contract was based on the offer in the insurance renewal report. • the renewal contract was finalised on 26
November 2020 and so, any action taken by the broker on 1 December 2020 in providing the Schedule was irrelevant. • the premium had been deducted on 1 December 2020, which was indicative of the accepted policy being the current one. • the 14 day period to find alternative cover was irrelevant. • the broker had engaged in misleading and deceptive conduct by suggesting the complainant could not rely on the renewal report to conclude the renewal. • the complainant had relied on the insurance renewal report to bind cover as the broker had not provided anything else by way of a renewal offer. • even if the complainant had not suffered loss yet, the broker had not acted in good faith and so, the complainant sought indemnity from the broker for $4,750 per claim, if the quantum exceeds $5,000, for any and all claims that may be made at the location in question.
The AFCA decision
AFCA confirmed its position regarding the duty of care owed by an insurance broker. • An insurance broker owed a duty of care when acting on a client’s behalf, with the standard of care being that of a competent and experienced broker. • A broker must ensure that the policy being arranged for their client protects the client against relevant risks, and the broker must use reasonable care and skill in determining the needs of the clients, with this including obtaining client instructions. • When a policy exclusion or limitation impacts a client’s needs, the broker must properly inform the client of this, so long as it would be reasonable to do so in the circumstances. o In determining reasonableness, the
AFCA will consider the requirements in the Insurance Brokers Code of Practice and good industry practice. • The onus of proof is on the complainant to establish that a broker has breached duty of care, and if established, the broker will
be liable to compensate the complainant for any losses arising from the breach. • In determining whether a broker’s breach caused a complaint’s loss, the AFCA will consider the loss to be the amount necessary to restore the complainant to the position it would have been in had the breach not occurred. o However, the complainant will not be awarded compensation if the complainant is found to be no worse off than if the failure had not occurred.
AFCA concluded that: • the broker had an obligation to provide correct information to the complainant regarding the excess, and it had failed to do so by failing to communicate the correct excess to the complainant prior to the renewal period of 1 December 2020. o It was also clear the complainant had brought the error to the broker’s attention. • it was not satisfied a valid contract existed between the complainant and the insurer with the $250 excess applicable, as this had not been offered by the insurer themselves. • however, the complainant had failed to establish a loss based on the broker’s error, because it had failed to show that it would have done anything differently had it been aware of the correct excess, as the provided information indicates that there was no alternative policy options available to the complainant. • although the broker did make an error, its actions in attempting to remedy its mistake by attempting to negotiate a lower excess with the insurer were reasonable in the circumstances. • thus, the complainant was not entitled to any compensation from the broker as the complainant could not establish it had suffered any loss due to the broker’s actions.
BREACHES SHOULD GUIDE THE WAY FORWARD
Code breaches and complaints should prompt subscribers to seek out root causes and act to prevent similar instances. Here, we share examples of good practices found in the latest Annual Compliance Statement.
Consumer expectations evolve, laws change, mergers occur, IT systems are updated, products develop, and staff come, go, and move. Mistakes and problems in this everchanging industry are inevitable, but when responded to meaningfully, Code breaches and complaints should drive improvements that lead to better practice and greater consumer trust.
Every year, the Insurance Brokers Code Compliance Committee (the Committee) seeks data about complaints and breaches of the Insurance Brokers Code of Practice (the Code) from subscribers. At its best, this self-reported information should reflect robust compliance frameworks and a culture that regards breach and complaint reporting as triggers for ongoing improvement.
What do the examples demonstrate? • The subscribers involved had multiple systems in place for detecting breaches. • They routinely analyse breach and complaint data to identify the root cause (and the main Service
Standard breached). • Most importantly, they had addressed underlying issues as well as fixing the problem in each case. • However, some of the 1,700-plus instances reported in the 2020
Annual Compliance Statement (ACS) were miscategorised by
Service Standard and showed little evidence of rectification beyond an immediate fix, such as an apology or reimbursement.
The Committee has urged all subscribers to use the examples from 2020 to spark discussions about areas that could be improved and to consider “At its best, this self-reported information should reflect robust compliance frameworks and a culture that regards breach and complaint reporting as triggers for ongoing improvement”
whether any of the long-term remediations, could be of value. While the examples deal with specific cases, the Committee draws attention to a few broader points: • Consider all potential sources of breach data, rather than relying too heavily, or exclusively, on complaint and incident registers.
Breaches can be identified through audits (targeted internal audits, spot check audits by managers, and internal and external audits); reviews of policies, procedures, and products; monitoring and quality assurance; and, thirdparty feedback. • Institutions should record all complaints, including dissatisfaction with a third party’s product or service (these can provide useful information about arrangements with that party). A culture and framework that supports complaintreporting is essential; as is staff training and communication. • Privacy protections are important, yet breaches were common – and mostly attributed to human error or a failure to follow procedures. In many cases, they
were reported as being isolated incidents requiring no broader remediation. Such breaches flag the need for ongoing and refresher training, as well as routine alerts and reminders for staff. Privacy breaches involving a system error show that regular system checks and testing are essential. • When privacy is breached, affected clients should be advised and, to maintain trust, this advice should state how the breach was rectified.
You can access a range of breach examples from the 2020 ACS by Service Standard on the IBCCC website at insurancebrokerscode.com.au or by scanning the QR code below.
GREAT CUSTOMER SERVICE DOES NOT HAVE TO BE FACE-TO-FACE
As some areas of the country find themselves in an extended lockdown and everywhere else appears to have the potential for being in and out of lockdowns, ensuring effective communication with your clients is more important than ever.
NICK HILL
Director, Hillster Marketing
Be mindful
Everyone has different circumstances. If you know someone’s circumstances, you can communicate with them more effectively. Remember that just because you may be calm on the home front, others may be up to their necks in home schooling and chaos. So, think about the time you call and whether it is the right time to be calling for a sales pitch, instead of checking in to see if they are coping okay.
Look at digital transformation options
The pace of digitalisation has increased substantially. If you haven’t looked at options to improve your team and your clients’ access to information, then you should. For example, it may be improved claims management, reducing the double entry of data through an updated insurance system, developing client portals for 24-hour access, or utilising a CRM effectively so you know who has said what to whom. People are more comfortable with using digital solutions than ever before and every hour of data entry/data search you can save, is an hour you can use to deliver greater service to your clients.
Keep communicating respectfully
There is a strong argument to boost the amount of communication you are giving to your clients. You may just need to refocus on what you are saying to move away from purely sales communications. Last year, one of my clients decided to refocus their messaging and pull back some of the more general information to focus on delivering important information to clients.
Have a light-hearted moment
We all need a bit of light relief from time to time, so, whether it is a daily dad joke, sharing photos of your pets, or a more extensive video, it is a great time to put a smile on people’s faces.
Don’t forget your team
It is easy to focus on clients and forget to make sure your employees are doing okay. It is part welfare and part checking they have everything they need to keep delighting the client. One of the most successful changes made by a business I work with was to create a daily rhythm of 15-minute zoom calls every morning for the executive team. This boosted team morale during a long period of time working from home and increased the effectiveness of client service through everyone being better informed.
These tips are always relevant and if you are already doing all of this then great. If not, think about how you can make some changes to give your clients, and your employees, the best possible experience from working with you during a difficult time.
Work together with your teams, underwriters and clients to get through this. Savour every face-to-face moment you do have and, above all, take care.
THE HEAVY MOTOR TRANSPORT INDUSTRY IS CHANGING
The pressures of the pandemic have led to the digital transformation of the HMIA team and their clients.
For the heavy motor transport industry, the necessity to provide Australians with the supplies they need has never been greater.
At HMIA, while we’re very thankful not to have been an industry in decline, we recognise that the increased volume of transport work, and subsequent pressure on everyone in our industry, has meant making some key changes to our own business. This has included hiring key staff, investing further in technology, and expanding our on-theground presence in several states.
We are also increasing our support for the mental health of the workforce that is truly keeping Australia’s wheels in motion right now through our sponsorship of Healthy Heads in Trucks & Sheds. If you’ve been following us on LinkedIn, you would have seen that Healthy Heads in Trucks & Sheds have launched their free National Mental Health and Wellbeing Roadmap for the road transport, warehousing, and logistics industries. We’re proud to support this incredible not-for-profit as it continues to address one of the biggest challenges facing the health and wellbeing of our industry’s most important resource: its people.
To meet the growing demands for our services, our team has grown too. Cameron Smith has relocated from Sydney to Queensland to work closely with our Queensland partners as their dedicated Client Relationship Manager. We’re particularly excited to have the highly regarded Client Relationship Manager Meaghan Dell join our team in Victoria. And our very own Kathleen Richards has been promoted to Claims Manager in Sydney. We congratulate to assist in managing operational risks and reducing occurrences of claims. If you haven’t yet taken advantage of our technology excess discount, be sure to raise it with your Client Relationship Manager.
If you want to stay ahead of industry news, make sure you follow us on LinkedIn at linkedin.com/company/
heavy-motor-insurance-australia
or scan the QR code below.
all three on their recent appointments and wish them well in the future.
Like many of you, our team is currently working remotely through various lockdowns. Rather than let it get us down, it’s been a wonderful reminder of just how agile and innovative our team has become. Thanks to our ongoing investment in digital transformation, we’re proud to say our team is still here for you whenever you need them.
Given the increased pressures on heavy motor transport, our ability to not just maintain our service, but also increase it, is something we’ve been especially proud of over the past few months.
We’re glad to see so many more of our clients recognise the benefits of risk management, particularly in these uncertain times. We’ve seen a strong growth in the demand for our risk management services
This document is intended for Insurance Intermediaries only. HMIA Pty Ltd (ABN 11 169 198 323, AR 462126) is an Authorised Representative of SGUAS Pty Ltd (ABN 15 096 726 895, AFSL 234437) and acts under a binding authority as agent for the insurer of the product, HDI Global Specialty SE – Australia (ABN 58 129 395 544 AFSL 458776). Terms, conditions, limits and exclusions apply to the products referred to above. Any advice that may be contained in this document is general advice only and does not take into account your client’s objectives‚ financial situation or needs. Before making a decision to purchase the product we recommend that your client consider whether it is appropriate for their circumstances and read the Product Disclosure Statement and Policy Wording (‘PDS’). A copy of the PDS can be obtained by contacting HMIA on 02 9227 8400 or visiting www.hmia.com.au.
A continuation, not a shift
On 16 August 2021, Philip Kewin began his journey as NIBA’s new Chief Executive Officer working alongside the outgoing Chief Excutive Officer, Dallas Booth. They discuss the legacy of NIBA and the regulatory groundwork they plan to continue building on.
INTERVIEW BY TANAYA DAS
After 10 years leading the team at the National Insurance Brokers Association (NIBA) in the role of Chief Executive Officer, Dallas Booth is now ready to hand over the reins to his successor, Philip Kewin. Insurance Adviser caught up with them to discuss their plans for NIBA going forward. Booth and Kewin’s visions for the future of NIBA are remarkably similar. They both believe that in a world defined by multiple challenges faced by insurance brokers, an industry body like NIBA exists to equip members with the tools for the future and to ensure that their interests are well represented. They both view the vital role that insurance brokers play as absolutely crucial to the health of the economy.
THE ROLE AND VALUE OF INSURANCE BROKERS
Booth believes the key accomplishment that he is most proud of during his long tenure is The Economic Value of Insurance Broking Report, developed by Deloitte Access Economics about the role and value of insurance brokers. It is a report that is the first of its kind in the world, and has been received enthusiastically by equivalent associations in Europe and North America. He says, “In some ways, we have struggled for a long time to find ways to communicate the real value of brokers and the immense benefit that they provide to their clients and the community. Then Deloitte Access Economics came in and did a thorough analysis of what brokers do, how they work, how they interrelate with their clients and insurers, and how that process benefits individuals, businesses, communities, and the economy. I think it is a really important report that provides a foundation statement of the true value of intermediaries and insurance broking in Australia. “Most of the literature about insurance is either technical, with a focus on underwriting or actuarial insights, or it is legal or insurance law analysis. But there’s very little, if any literature on the value brokers bring from an economist’s perspective.”
In absolute sync with Booth, Kewin adds, “Even though insurance generally has a poor public perception, there is an opportunity
“Dallas and the Board have done an excellent job in the planning and preparation of the NIBA Strategy which we have started to share with our members. My role is to further implement that strategy, in conjunction with all key stakeholders. I am confident that together we will forge a strong future for insurance brokers.”
– PHILIP KEWIN
to help change the narrative, so people see the good experiences and not the fewer bad ones that tend to get more publicity.”
“More people seeking insurance, particularly through a broker, is better for individuals, businesses, the community and the government. TheEconomic Value of Insurance Broking Report absolutely backs up the phenomenal benefits that insurance intermediaries bring to the table. Now is the time to create public awareness of the value of a broker and this report is going to help us do that.”
ONE VOICE FOR BROKERS
Kewin observes that NIBA’s biggest strength right now is that generally all stakeholders are working together and NIBA is a credible and trusted representative for the insurance broker community. “Right now, we have a great opportunity to set minimum education standards, introduce an updated Code of Practice and establish ourselves as a true profession,” he says. Booth adds that he has massive confidence in insurance brokers and their commitment to their clients. This had made him proud to serve the membership for the last decade. Kewin expresses the same sentiment and adds that his immediate plans are to continue to strengthen NIBA’s mission of being the one voice for representing insurance brokers and the value they provide to Australian consumers. He says, “I aim to build on the goals and objectives of representation, professionalism and community. Right now, we have the opportunity to future proof broking by establishing intermediaries as the trusted advisers to clients, government and regulators.”
The only blip on the horizon that Booth is concerned about is the policy processes over the past five years which have placed an incredible legislative and regulatory burden on the broking and insurance professions. He says, “This overwhelming burden will have very little benefit for the clients. I hope that the current Australian Law Reform Commission project will find ways to simplify the law, particularly chapter seven of the Corporations Act, which is beneficial to financial services clients.”
Kewin adds that he wants to try and be ahead of any other regulatory
“I have offered to the Board and Phil my support as required to help NIBA continue to meet its challenges. There are some big projects that will go into 2022. There are other things that will happen beyond 2022, especially the ongoing implementation of the new Code of Practice. Phil is the new Chief Executive Officer of NIBA, he sits in the hot seat, but I will give him every support I can.”
– DALLAS BOOTH
and legislative curveballs coming in the general direction of brokers, “and the way to do that is by implementing the Code of Practice and preparing for the upcoming remuneration review. Minimum education standards are also a good way to ensure that insurance brokers remain future proof.”
WORKING IN CONJUNCTION
Even after he steps away from the dayto-day responsibilities of leading the association, Booth will continue his involvement with NIBA and consult on regulatory and legislative matters.
He says, “I have offered to the Board and Phil my support, as required to help NIBA continue to meet its challenges. There are some big projects that will go into 2022. We’re doing a lot of work to prepare for those projects. There are other things that will happen beyond 2022, especially the ongoing implementation of the new Code of Practice. Phil is the new Chief Executive Officer of NIBA, he sits in the hot seat, but I will give him every support I can.”
Kewin believes that the current transition is more of a continuation of what NIBA has stood for, not a radical shift towards a major change. “Dallas and the Board have done an excellent job in the planning and preparation of the NIBA strategy, The Future of Broking 2025, which we have started to share with members. My role is to further implement that strategy, in conjunction with all key stakeholders. I am confident that together we will forge a strong future for insurance brokers,” he says. “We are uniquely placed to provide true market intelligence directly from clients to the insurers, so that they can adapt to changing market needs. If we implement the Code, minimum education standards, retain commissions and provide certainty, we can also define a clear career path and attract more talent to the broking profession.”
“Importantly, rather than waiting to see if the further change is forced upon us, the NIBA strategy is about getting on the front foot and proactively shaping the future for the insurance broking profession,” Kewin concludes.
#NIBA2021: A note from Dallas Booth
NIBA has made the difficult decision to postpone the 2021.2 NIBA Convention currently scheduled to take place from 28 September – 28 October 2021. The Convention will now be held from 7–21 February 2022.
We have been monitoring the COVID-19 situation and advice from health authorities closely to ensure that we protect the health, safety, and wellbeing of our staff, delegates, sponsors, exhibitors, and suppliers.
With the ongoing COVID-19 lockdowns and border closures, it is very unlikely that NIBA will be able to hold a face-to-face event in Sydney in October. Similarly, the situation in Melbourne and Brisbane is uncertain, and a face-to-face event may not be feasible during September and October.
This uncertainty is likely to be reduced in the new year as the community reaches higher levels of vaccination, and as such, travel and events will hopefully become more feasible.
NIBA has considered proceeding with the Convention in Perth and Adelaide, however, it would be logistically challenging and delegates from COVID-19 lockdown areas do not have the opportunity to attend in person at this time.
NIBA believes that this decision will enable our members, sponsors, and exhibitors to have the best opportunity to connect and enjoy the Convention faceto-face, while also maximising the online virtual component of the Convention.
I encourage you all to register for #NIBA2021 on the website: niba.com.au/convention/.
The new dates are provided below, and full program details are available on the convention page above. Conference delegates will still have the option of attending one day face-to-face and four days virtually, or all five days virtually. Please mark the relevant date(s) in your calendar now.
7 FEBRUARY – ADELAIDE 8 FEBRUARY – MELBOURNE 14 FEBRUARY – PERTH 16 FEBRUARY – BRISBANE 21 FEBRUARY – SYDNEY, WITH A CONCLUDING DINNER.
If you have any questions about the 2021.2 NIBA Convention, please contact us at events@niba.com.au
A GUIDE TO #NIBA2021
This year we are bringing the NIBA Convention to you. Delegates will have the option of attending one day face-to-face and four days virtually, or all five days virtually.
BY TANAYA DAS
The following is a tête-àtête with #NIBA2021.2 convention speaker; John Trowbridge – insurance industry expert and a previous APRA Member. John is conducting an independent review for the Insurance Council of Australia (ICA) on tackling the availability and affordability of commercial lines of insurance, particularly for small and medium-sized enterprises (SMEs).
Insurance Adviser: Based on your study of the insurance landscape, what are your thoughts on the state of the industry in Australia in 2021? John Trowbridge: The industry is attempting to recover from some past losses and previous under-pricing in several classes of business that affect SMEs in particular. Insurance companies are also grappling with what they see as claim costs that continue to show increasing frequency or increasing settlements. In longtail business, that is a difficult assessment. Some market segments are also becoming regarded as inherently higher risk, e.g., southern New South Wales and into Victoria as a result of the 2019 bushfires.
It is not surprising then that most insurers are acting defensively in making their underwriting assessments of many types of risk, particularly professional indemnity, public liability and, where weather events are seen to generate risk. Hence, capacity is reduced, with most Lloyd’s syndicates and some local insurers withdrawing from some market segments and others imposing major price increases, larger deductibles, and/or more restrictive terms and conditions. IA: So far in your independent review, what are your findings in regard to the availability and affordability of insurance for SMEs in Australia? JT: The outcome in some market segments is, as we all know, a lack of availability or else awkward affordability problems for many buyers of insurance. We have even seen businesses close where insurance cannot be obtained at a price that is economic for the business or just not obtainable at all. The nature of insurance, whereby businesses transfer risk to insurers, and the structure of the insurance market, whereby individual insurers are free to underwrite and price their offerings according to their own business strategies and commercial considerations, make these affordability and availability problems difficult to solve. Insurers
are also of course banned from colluding on price and other matters. As a result, we have not yet seen collective industry initiatives aimed at solving these problems.
In many cases, the buyers are calling for government intervention of some kind but in most market segments that is not justifiable, is not happening, and is not likely to happen.
There are also buyer groups looking for alternatives to conventional insurance, such as through Discretionary Mutual Finds (DMFs). Some of these kinds of initiatives may come to fruition, but mostly they are difficult to orchestrate and do not suit all buyer groups.
IA: Can you make any comments on the recommendations based on your findings? JT: My recommendations are based around the idea of bringing insurance buyers, and particularly buyer groups, to the table with insurer representatives. Together, they need to seek an improved mutual understanding of each side’s difficulties, goals and assessments of the circumstances, and to be followed by more efforts on both sides to find workable solutions. I am encouraging insurers to recognise the economic and social importance of responding to the market problems, living up to the industry’s social licence if you will, and to invest in responding in constructive ways. I am also encouraging buyers, and particularly buyer groups, to explore in-depth their risk management and risk transfer goals in efforts to find better ways of approaching insurers and dealing with them. Both sides should be thinking broadly and innovatively. IA: What role do you see insurance brokers playing in the current scenario? JT: Insurance brokers can and do play a key role in this marketplace. Buyers need to be able to rely on them for their expertise regarding the types of cover they want or need, and also for their market knowledge: the right underwriter for a specific risk and the best way to ensure proper cover. In hard markets, as we have now, the broker’s role is more valuable than ever.
In the context of group schemes and overcoming the market problems, brokers can also take on a consultative role, on their own or with independent specialists, regarding the introduction of new group schemes and the restructuring of existing ones.
– JOHN TROWBRIDGE, INSURANCE INDUSTRY EXPERT
IA: What do you think the recent natural calamities and the COVID-19 pandemic have revealed about the insurance industry in Australia? JT: The natural calamities have been costly to many insurers and have led to predictable consequences of higher prices, reduced capacity or risk appetite, and greater scrutiny of many risks. Insurers have become more cautious, such that the vibrant competitiveness of softer markets has given way for the time being to greater risk averseness and protection of capital, with less concern about competitive market positions. The pandemic has opened everyone’s eyes to types and levels of risk that were not foreseen, or not on many people’s radars. This includes cyber risk and other commercial risks that emerge as our economy and our society take on some new characteristics to which we all must adapt.
SPONSOR OR EXHIBIT AT #NIBA2021
To discuss sponsorship and exhibition opportunities, please contact us:
Helen McGowan
Waldron Smith Management T: 03 9645 6311 E: helen@wsm.com.au
Tony May
NIBA National Advertising Sales Manager T: 02 9459 4320 M: 0401 485 188 E: tmay@niba.com.au
REGISTRATION FEES
REGISTRATION TYPE EARLY BIRD RATE INC GST STANDARD RATE INC GST
Available until 20 December 2021 Available from 21 December 2021
Member $385
Non Member $495
Virtual Only – Member
$285 Virtual Only – Non Member $395 $495 $605 $395 $505
WITH THANKS TO OUR PRINCIPAL SPONSORS
Creating time with tech
Ensuring that tech creates more time for human interaction – rather than replaces it – is key to a successful broking tech launch.
BY MARTIN WANLESS
“D igital transformation” has been on the tips of insurance brokers’ tongues for a few years now, and the need for robust, reliable and secure systems and processes has been highlighted with a vengeance during the global pandemic.
As well as needing reliable, portable technology simply to keep the business ticking over, brokers also need to meet the needs and desires of their customers.
The face-to-face (or Zoom-to-Zoom) contact is still vitally important for many – if not most – broker-client relationships. And that’s never going to change.
However, as general consumers, those same clients expect a stellar digital experience with the businesses they deal with – the change in consumer behaviour as a consequence of COVID-19 underlines this notion. They expect to be able to log on at any time of day or night and see their information. They want to be able to interact with a business on their terms. They want to receive relevant information that’s personal to them.
“A lot of brokers have a good understanding of what technology could do to their business,” says David Hampton, CEO at BAIS insurance technology.
“One of the limiting factors that they run up against is the lack of integrated data in their computer system – simple systems record simple data and limit what can be done. Data is the key.”
The prospect of implementing technology in a business can be a daunting one. While brokers may know what could be achieved – and would like to achieve that outcome – the sizeable task of undergoing a tech implementation can be off-putting.
The notion that some of the broker-client relationship might have to be sacrificed is also jotted down in the ‘against’ column.
Gurbaj Pawar, who has an extensive background in consulting, finance and insurance, is the Head of Strategy at AUB Group, parent entity of Austbrokers,
BE WARY OF THE CYBER RISKS
While many brokers are wellversed in the cyber risks their clients face, their own digital platforms may leave something to be desired.
An evolution of software in a number of businesses has resulted in a patchwork quilt of solutions, with a number of consequential vulnerabilities.
“Many brokers have a few different pieces of technology – a server, some cloud-based solutions – and often when you look at it I could pick holes through it in minutes,” says Andrew Barbara, Managing Director of FocusNet.
“If they were targeted by a cyberattack they would be in serious trouble.”
Barbara advises that, even if brokers aren’t in a position to invest in new technology at present, investing in cybersecurity is a requirement.
and a business that has multiple digital initiatives underway with a focus on enhancing the client and broker proposition across its network of brokerages in Australia and New Zealand.
“How would the insurance broking industry be impacted if Google or Apple came to play? How would the client and broker experience change? That’s the ‘North Star’ I keep in the back of my mind when thinking about our response,” he says.
“Brokers will continue to evolve to meet the needs of clients but the pace of change will only get faster… client expectations may force our hand to change the way we do things, including processes that have served us well historically.
“A ‘don’t fix something that ain’t broke’ will be fine in the near term but in due time, we’ll likely need to adopt more technologydriven digital ways of working – processes that lead to better client experiences, reduced cost, and an even stronger ‘trusted partner’ client relationship.”
FORCED INTO A FIX
The pandemic has, in some cases, fast-tracked the appetite for change –after all, you cannot mobilise huge filing cabinets and servers too readily.
“We’ve spoken with a lot of brokers over the past 18 months, and that realisation has hit them very hard,” says Irene Kendall, Director of Technosoft Solutions.
“They’ve quickly realised they can’t operate very effectively as there’s only one person who can take a file home, so it’s really forced people to think about their systems and processes.”
The benefits of operating at a group level with over 60 brokerages across the country, however, means Pawar has test cases at his fingertips. And, when it comes to taking the plunge, it turns out data-based evidence – rather than a theoretical notion of potential benefit – can be rather compelling.
“Access to quality data and the ability to analyse and drive insight from the data is critical,” says Pawar. “Without data, we tend to rely on instinct and personal experiences, which are important, but make it difficult to create broad alignment.
“If I go out and show brokers how much effort they’re spending and what they’re getting in return, as well as a business case for how that could be improved, the discussion becomes real, and people are interested. Using real-life examples is key, so showing how a process could be faster, better, and putting a dollar value behind the benefit helps,” he says.
“Once we’re on the same page about the benefits, having a chat about the ‘how’ and talking about technology, digitisation, bots, process improvement becomes much easier.”
RELINQUISHING THE REPETITIVE
By automating the mundane, day-to-day tasks, brokers’ time can be invested in what really matters – those face-to-face relationships that truly add value to the business.
For example, says Andrew Barbara, Managing Director of FocusNet, automation can save hours that can be reinvested into other areas of the business.
“We’ve recently worked on a project to automate refunds linked to policy cancellations,” he says. “By automating that laborious process, which is typically a manual one, the brokerage was able to save a lot of time, as well as ensuring it was doing the right thing from a compliance perspective.”
And that compliance aspect is something that brokers need to keep in mind too, because while tech can help keep an audit trail, it has to adhere to the same stringent requirements as any other aspect of the business.
– GURBAJ PAWAR, AUB GROUP
HAVE TO HAVE IT.” – IRENE KENDALL, TECHNOSOFT SOLUTIONS
“AFS licensing is designed to be technology-neutral,” says Samantha O’Brien, Partner at DLA Piper.
“The same obligations and measures that you’d put in place for a non-technological solution must be in place for a technological solution.”
And this becomes particularly pertinent when you’re licensing technology from a provider – as most businesses today do.
“As far as the regulation goes, that doesn’t change your responsibilities – something you outsource is treated as though you were doing it. So you need to manage the risks that tech creates, including data protection.”
Overall, however, technology is critically important to simply do business today – and a well-planned, strategic implementation can deliver numerous benefits.
As well as making broking businesses more robust and efficient today, and attracting new clients tomorrow, having a strong tech platform in the business also serves a longer-term purpose, too.
“If you want to encourage young people into the industry and to join your business, you have to have the technology – you simply have to have it,” says Kendall.
Young professionals are used to using the best technology out there, and the reality is that they’re not going to choose to work in an environment with second-class digital solutions.
Ultimately, the technology is out there to help create significant efficiencies in your business, and enable you to invest in doing what you do best – spending time with your clients, analysing their risks, and being there when they need you to be.
Technology should complement the way you work – not compete against it.
THREE STEPS TO A SMOOTH TECH IMPLEMENTATION
David Hampton of BAIS insurance technology says three things are critically important when introducing new technology into your brokerage.
Understand what you want: If you haven’t got a clear idea of what you want the technology to do (for example, automate certain processes, and provide a portal for clients to log in to self-serve) then the project will not deliver the business benefit you need it to.
Allocate your best resources:
Often a tech project is allocated to someone who has the capacity to take it on, or even someone who’s exiting the business. Your best people know the business, have ideas and will help make the project happen.
Find a partner you can form a
relationship with: You need to work with people who can quickly learn about your business, get to know it and be there to evolve the tech you have over time. Insurance is a complex industry, and your tech partner needs to understand the intricacies of insurance broking.
HOW INSURTECHS ARE RESHAPING BROKING
Insurtechs are taking the insurance sector on a journey of rapid transformation.
BY NINA HENDY
Insurance brokers are turning to insurtechs to help with some of the heavy lifting, resulting in better service and greater efficiencies.
There are over 1,000 insurtechs operating around the world, and around 80 insurtech startups in Australia are counted as members of Insurtech Australia.
Growth has been evident across all six key insurance spaces where insurtechs offer their digital solutions. This includes claims, smarter loss prevention, pricing and underwriting agility, efficient insurance administration, innovative marketing and distribution, and new products for better customer value.
Rita Yates, co-founder and CEO of Insurtech Australia, said in a recent interview that insurers have always had a lot of data at hand, but have not had the tools to analyse it effectively and to drill down into the granular detail. This is where insurtechs come in, she says.
Meanwhile, the huge amount of regulatory change post-Royal Commission in the insurance sector could be more conductive to insurtechs, she says. “On a positive, there is a regulatory sandbox, which was developed some time ago, where essentially insurtechs and fintechs can test their
“THERE IS A REGULATORY SANDBOX, WHICH WAS DEVELOPED SOME TIME AGO, WHERE ESSENTIALLY INSURTECHS AND FINTECHS CAN TEST THEIR INNOVATIONS. IT WOULD BE GREAT TO SEE THAT EXPANDED, BECAUSE IT’S QUITE LIMITED AT THE MOMENT.”
– RITA YATES, INSURTECH AUSTRALIA
innovations. It would be great to see that expanded, because it’s quite limited at the moment,” Yates says.
Blue Zebra Insurance’s Chief Technology Officer, Amar Roomi, predicts that in the near future, collaboration with insurtechs will be decisive right across the value chain.
Innovation opportunities will extend far further than the usual paradigm of saving time and money – the advent of the Internet of Things (IoT) devices can create change in the way the insurance industry helps to manage and mitigate risks for individuals and businesses, he says.
“Large incumbents continue to struggle with deeply embedded legacy systems and processes. Successful insurtechs are unencumbered by this baggage, and coupled with a clear strategy, are able to drive innovation at pace,” he says.
Blue Zebra Insurance has understood the significant value that intermediaries provide to policyholders, leveraging data, robotics and artificial intelligence (AI) to reduce transaction friction.
“Technology, in this context, serves to augment and allow brokers to focus on articulating risk at the point of acquisition and provide their invaluable expertise and support at the moment of truth – claim time,” he says.
“Whether as private individuals or business owners, clients appreciate expertise in a subject that is not always well understood,” he says.
Cover Genius Co-Founder and CEO, Angus McDonald, agrees. Innovative solutions co-created with partners such as eBay, Booking Holdings and Skyscanner have enabled the firm to expand operational capabilities across more verticals and create fully customisable embedded insurance solutions.
Research by Cover Genius reveals that 70 per cent of Australian digital bank customers would be highly interested in receiving embedded insurance offers based on their transaction data, he says.
– AMAR ROOMI, BLUE ZEBRA
It also revealed interest in receiving offers for property insurance such as renters, homeowners and landlords – keen for travel insurance, auto insurance and a range of warranties for highvalue personal and household items.
“Rather than providing insurance as a ‘second step’, the survey points to the opportunities for brokers to find ways of harnessing data to deliver real-time opportunities that fit with clients’ current needs,” McDonald says.
This approach would deliver relevant offers to customers and free up more time for brokers to provide further personalised support.
Cover Genius has customer-centric tech solutions that help deliver a digitalised customer experience. For example, its XClaim platform applies AI to reduce end-to-end claims
ACCORDING TO A REPORT BY EY, THE INSURTECH SECTOR IS RIPE FOR INNOVATION
The report found that: • Partnership is the way forward • There are major opportunities for future value creation
• Insurers will move beyond alliance models and develop the infrastructure to create true ecosystems • Deploying insurtech at scale is the only way to keep up with the pace of change.
Source: EY Australia insurtech ecosystem
SEPTEMBER
handling to three days, compared to the traditional average of 22 days.
“Through XClaim, we are also able to assess items via video, which not only lets us provide speedy resolutions, but also helps us cater to the end customer, by making things more convenient for them,” McDonald says.
“While much of the world was experiencing lockdown and strict stay-at-home measures, this feature ensured we were able to provide safe service to customers while keeping warranty claims moving quickly.”
These solutions have helped Cover Genius improve its processes and guarantee customer satisfaction. “Brokers need to start embracing digital transformation and shouldn’t fear all insurtechs. By utilising the strength and shininess of those insurtechs aimed at the broker market, they should be able to provide significant value-adds and improve their own efficiency in the process.”
But a big part of the challenge when implementing insurtech solutions is working out how to ensure they mesh seamlessly, according to David Hampton, CEO of BAIS Insurance Technology. BAIS has been in the market for two decades.
“One of the major challenges faced by insurtechs looking to provide value to insurers is the clash of cultures. After all, some insurance companies are over 300 years old, while some insurtech startups are less than 300 days old. They can be strange bedfellows,” Hampton says.
Given each one has its own niche, you could end up with a patchwork quilt of solutions, which has the potential to get messy and lead to a loss of data integrity, Hampton says. “Also, many insurtechs would benefit from a robust chassis to showcase their bling. In other words, utilising proven back-office technology to support their product service or offering.”
For example, BAIS has a partnership with claims management technology firm Wilbur. “It gives clients, brokers and underwriters a virtuous circle of data and analytics, to deliver a complete view of their key data, from policy information and general ledgers through to granular claims detail in real time.”
Whether through mergers and acquisitions or strategic partnerships between insurtechs, similar to that between BAIS and Wilbur, working together offers brokers and the insurance industry broader, more valueadding solutions, Hampton says.
AUSTRALIAN INSURTECHS TO WATCH
Cover Genius: Uses machine learning to optimise insurance pricing
Flamingo: The AI Insurance chatbot can remove friction by guiding consumers through the complexity of choice
Huddle: Promises straight through claims processing
Manner: A matchmaking service that connects brokers and underwriters to improve efficiency
Evari: Online business insurance for cafes, restaurants and retailers.
Source: Macquarie
– ANGUS MCDONALD, COVER GENIUS
Healthcare businesses are under extreme pressure
Give your clients the protection and support they deserve:
• Compensation and defence costs for claims made by patients • Limits of cover available from $1m to $20m1 with one automatic reinstatement • Competitive premiums geared to their practice type • Free medico-legal advice and support available to the practice (24/7 in emergencies).
