Insurance Adviser - May 2021

MAY 2021

FOCUSSED ON COMMUNITY Dianne Phelan and Sue Houghton discuss NIBA & ICA collaboration

CHALLENGES GALORE

Turmoil for the construction sector

TRADE CREDIT INSURANCE

Complicated processing and diminished supply

AGILITY IS KEY

Heather Peirano and Ward Dedman on effective engagement during uncertainty

WE ARE YOUR VOICE

CONTENTS May 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.

22

COLLABORATION FOR COMMUNITY NIBA and the ICA discuss common goals

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: Renee Nowytarger

26

IMPACTING CHANGE

Interview: Ward Dedman and Heather Peirano NIBA.COM.AU / 3

CONTENTS May 2021

FEATURES 30 CHALLENGE CENTRAL The construction sector

38 TIGHTENED TERMS

AND REDUCED SUPPLY Shining a spotlight on trade credit insurance

Please add image and make this go over two columns

IN EVERY ISSUE NIBA CEO welcome.................................... 6 Why be a NIBA member?......................... 10 Insurance journey: Prudence Chang ... 58

NEWS

Representation............................................ 8 Industry bulletin........................................ 12 Upcoming regulatory changes ............... 16

PROFESSIONALISM

AFCA Case Study ....................................... 18 Legal Analysis: Cyber ............................... 19 Technology: Insurtech for intermediaries .......................................... 20

EVENTS

Forthcoming events ..................................54 Event pictorials ..........................................55

REFERENCE

Community Hub ........................................46 Insurer strength ratings ..........................56

4 / INSURANCE ADVISER MAY 2021

CEO / Welcome

BROKERS AND CLIMATE CHANGE RISK

I

saw a comment recently (out of the United Kingdom) to the effect that insurance brokers are ideally placed to assist their clients with the potential impacts of climate change. I must say, I had to think twice about this.

And then for Easter, I had the opportunity to have a look at two important documents.

The first one was from Swiss Re, their annual Sigma report from the Swiss Re Institute on the topic of natural catastrophes and man-made disasters. The report mainly covers events occurring in 2020.

The following was enough to get my focus and attention: We already have a high degree of certainty around some of the effects (and observations) relating to climate change. For example, global average temperatures have increased by 1.1 degrees since 1880 (even more in Australia), polar ice caps are melting, and sea levels are rising.

The most extreme weather phenomena are also directly or indirectly influenced by the temperature of the atmosphere and oceans. A warming climate may cause stronger cyclones; more intense rainfall and flooding (especially flash flood); more intense convective storms; longer and more severe bushfire seasons. Further, we can expect to see events occur in areas where they have previously not been experienced – cyclone and hail zones are expected to move poleward, and bushfires will occur in regions not previously vulnerable for fires.1 As the climate is changing, the number of Australians living near the coastline increases, and the value of their property is also increasing. This means that the potential level of insured losses continues to increase when major events occur. All of this has to be funded from the available insurance premium pool.

The Swiss Re publication also goes on to look at Australia in particular, with some excellent commentary on the recent impact of fire, hail and flooding. All of these are important contributors to the level of insured losses in the Australian market.

The second report I read was from the Australian Academy of Science and was potentially alarming. The report was called “The risks to Australia of a 3°C warmer world”.

On the one hand the report provides a lot of important information about the scientific basis of climate change.

More importantly, science stresses “the need for the world to reach net zero emissions by 2050 as an absolute minimum, if Australia is to avoid potentially insurmountable challenges to its cities, ecosystems, industries and food and health systems”.2 Deep within the report (section 9.5 refers) is the following statement: Climate change poses a significant investment risk to businesses and the financial sector. Insurance firms are already facing substantially increased claims, many of which are partially or fully a result of climate related impacts. One in every 19 property owners face the prospect of insurance premiums that will be effectively unaffordable by 2030, costing 1 per cent or more of the property value per year. (my emphasis) The availability and affordability of insurance cover for climate and weatherrelated events is already a major challenge for many parts of Australia. The reports mentioned in this article suggest that the challenges are only going to increase.

I do think it is important that insurance brokers make themselves aware of these risks and develop knowledge and expertise to allow them to discuss these matters with their clients, and to provide advice on how best to manage and mitigate some of those potential losses. It may be that in the future, the insurance industry will not be able to carry those risks.

That is not something I would like to think about.

DALLAS BOOTH Chief Executive Officer, NIBA

https://www.swissre.com/risk-knowledge/mitigating-climate-risk/climate-is-changing-the-insurance-risk-landscape.html https://www.science.org.au/news-and-events/news-and-media-releases/risks-australia-warmer-world

1

2

6 / INSURANCE ADVISER MAY 2021

NEWS / Representation

WE ARE YOUR VOICE!

There is a lot happening at the present time. The following are key developments that insurance brokers need to be aware of. For urgent regulatory updates, please visit page 16 of this magazine.

Add-on insurance

Following our submission seeking exemptions for brokers under the new add-on insurance legislation, Treasury has sought more information from NIBA as to insurance products that would be impacted by the legislation and the potential for harm to Australian consumers.

NIBA will continue to work with Treasury over the coming months to ensure that brokers and their clients are not negatively impacted by the changes which are scheduled to commence in October this year. .

NIBA submission on AFCA operations

NIBA has provided a submission on behalf of members to the review of the Australian Financial Complaints Authority (AFCA).

In the submission, NIBA reiterated members calls for a more robust complaint triage system. As brokers operate as an intermediary between insurers and clients, brokers are often party to complaints, arising from actions taken by insurers.

Despite this, broking firms bear the costs of complaints which are often disproportionate to the amounts in dispute.

NIBA also highlighted that a lack of complaint triage allows disingenuous complainants to “game the system” in order to obtain an outcome in their favour regardless of the validity of their complaint – simply because it is far simpler and cheaper for the broking firm to make a payment and not face the cost of a formal decision.

Emergency Services Funding in NSW & TAS

NIBA continues to encourage all brokers with clients in New South Wales and Tasmania to visit the Emergency Services Funding Hub on the NIBA website. NIBA has prepared materials for

8 / INSURANCE ADVISER MAY 2021

NIBA continues to encourage all brokers with clients in New South Wales and Tasmania to visit the Emergency Services Funding Hub on the NIBA website.

CELEBRATING 25 YEARS both NSW and Tasmanian members to provide to clients, including a template letter that brokers and clients can send to their local MP, calling for the abolition of insurance-based taxes and a more equitable system for the funding of state fire and emergency services.

The Role and Value of Insurance Brokers

NIBA continues to meet with State and Federal MP’s, ministers and business and consumer groups to promote the Deloitte report, The Economic Value of Insurance Broking and the value of intermediaries more broadly ahead of the 2022 review into the intermediated insurance industry.

Property Resilience

Last month, NIBA participated in the third Building Stronger Homes Roundtable.

The Roundtables are a joint initiative of the Master Builders Association and the Insurance Council of Australia (ICA), with the aim to create a pathway towards national policies that improve property resilience.

The Roundtable focused on issues surrounding building codes and standards, new property developments and land-use planning and was attended by representatives of the building and insurance industries, government, emergency services and other key sectors.

Australian Law Reform Commission – Financial Services Inquiry

NIBA has begun engaging with the Australian Law Reform Commission’s Financial Services Inquiry. The inquiry aims to: • ensure that Australia’s Corporate and Financial legal framework supports a productive and agile financial services sector while protecting consumers; • reduce unnecessary complexity, including overlapping, inconsistent, and overly prescriptive rules, making legislation more navigable and easier to understand; • create a technology-neutral, manageable regulatory framework for regulators and government agencies to administer, and for industry to implement and comply with, efficiently and effectively.

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 / Member Benefits

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

“NIBA is more than an industry association, it is a trusted voice that is shaping the future of insurance broking.

NIBA is supporting its members by delivering continuous training, support, vital industry knowledge and regular updates on changes in the legislative landscape for brokers.”

PATRICK SELLE Arcuri and Associates 2020 Vic/Tas Young Professional Broker of the Year

ABOUT NIBA OUR MISSION

NIBA is the one voice for insurance brokers in Australia, representing their interests and promoting high standards of professionalism and competence.

OUR OBJECTIVES Representation

We represent the interests of members and their clients to governments, regulators, industry stakeholders, the media and the community in a manner that is respected and relevant. We have forged strong relationships at state and national level to ensure that your interests are represented.

10 / INSURANCE ADVISER APRIL 2021

Professionalism

We set and promote high standards of professional practice for insurance brokers for the benefit of their clients and the community through the development of professional standards, QPIB, CPD accreditation and the Insurance Brokers Code of Practice.

Community

We provide members with opportunities to meet, share, grow and prosper and build professional networks with the wider intermediated insurance community that will last throughout whole careers.

GET IN TOUCH!

Whatever your age, or level of experience, NIBA ha s brokers’ best interests at the core of everything we do. Fin d out what we can do to help be nefit your business and your tea m at niba.com.au/membe rship

NEWS / Industry Bulletin

NEWS / Industry Bulletin

UPCOMING CHANGES TO THE RESIDENTIAL BUILDING INDUSTRY IN NSW

I

NIBA ACHIEVES BROAD CARVE OUT FOR INSURANCE BROKERS

T

he Financial Sector Reform (Hayne Royal Commission Response) (Claimant Intermediaries) Regulations 2021 have been issued and include a broad carve out for intermediaries known as Insurance Broker – Claimant Intermediary exemption.

In its previous advice to members in relation to the claims handing and settling changes, National Insurance Brokers Association (NIBA) advised that it was liaising with Treasury in relation to the broadening of the insurance broker exemption as it related to the category of persons who would be caught by the Act in relation to claims handling and settling services when acting as a “claimant intermediary”.

A “claimant intermediary” is defined as a person who carries on a business of

12 / INSURANCE ADVISER MAY 2021

representing an insured under an insurance contract for a reward (see section 761CAA of the Corporations Act 2001).

NIBA CEO Dallas Booth has advised that NIBA has been successful in this endeavour.

What this means practically The end result is insurance brokers will only be caught by the new claims handling and settling services regime if acting on behalf of insurers in providing claims handling and settling services. NIBA’s previous advice on this topic carries more information about this.

Those insurance brokers acting for insurers need to identify if and when they may be providing a claims handling and settlement service on behalf of insurers and

generally determine whether: (i) they need to vary their AFSL for this service; (ii) they fall within one of the relevant exemptions; and (iii) they need to act as an authorised representative of a licensee or in another representative capacity.

Those seeking to apply for a claims handling and settling services authorisation will need to refer to ASIC’s AFS Licensing Kit (Regulatory Guides 1,2 and 3) and sample AFS eLicensing application. They also must complete the C12 Proof: Insurance Claims Handling and Settling Service Statement in Regulatory Guide 3.

Booth also urged brokers to pay heed to the ASIC reminder urging haste for AFS licence applications on page 13.

nsurance broking clients in the building and construction industry may have new obligations under the Design and Building Practitioners Act 2020, which commences on 1 July 2021.

Among the changes are two new registration schemes for practitioners working on class 2 buildings – one for Professional Engineers and one for Design and Building Practitioners.

Some practitioners will also need to declare that their designs comply with the Building Code of Australia, and lodge them on the NSW Planning Portal before work can start.

These changes start from 1 July 2021 but you can get your clients ready now: fairtrading.nsw.gov.au/housing-andproperty/changes-to-class-2-buildings The NSW Fair Trading website will be regularly updated with more resources.

NIBA CONVEYS MEMBER CONCERNS TO AFCA

T

he National Insurance Brokers Association (NIBA) has provided a submission on behalf of members to the review of the Australian Financial Complaints Authority (AFCA).

In the submission, NIBA reiterated members calls for a more robust complaint triage system. As brokers operate as an intermediary between insurers and clients, brokers are often party to complaints arising from actions taken by insurers. Despite this, broking firms bear the costs of complaints which are often disproportionate to the amounts in dispute.

The submission states, “Broking firms bear the cost of AFCA’s complaint, even when there is no real basis for the complaint against the broker. If the broking firm needs to take the matter to a decision stage in order to obtain an appropriate decision in their favour, the cost of the process is substantial, and is often disproportionate to amount in dispute.”

NIBA also highlighted that a lack of complaint triage allows disingenuous complainants to “game the system” in order to obtain an outcome in their favour, regardless of the validity of their complaint,

simply because it is far simpler and cheaper for the broking firm to make a payment and not face the cost of a formal decision.

The submission mentions that it is the Association’s strong view that any further changes to AFCA’s monetary jurisdiction should only occur in conjunction with the ability of the financial services provider to have the determination reviewed by a competent appellant body.

ASIC URGES HASTE FOR INSURANCE CLAIMS HANDLING AFS LICENCE APPLICATIONS The Australian Securities and Investment Commission (ASIC) has called on insurance claims handling firms to lodge licence applications (new and varied) as soon as possible, and by no later than 7 May 2021.

Since 1 January 2021, claims handling and settling is a financial service which requires a licence by 1 January 2022.

ASIC Deputy Chair Karen Chester said, “Time is running out for firms to lodge their applications with ASIC. To date we’ve received fewer than 15 applications for the new claims handling and settling service. Some applications received have also needed to be resubmitted because of their poor quality.

“We are concerned that firms are running the risk of not submitting a complete application in time to get the benefit of the legislated transition period.

Firms need to submit an application no later than 7 May 2021. Failing to do so poses a real risk that these firms will have to stop providing claims handling and settling services after 30 June 2021.”

The National Insurance Brokers Association (NIBA) CEO Dallas Booth confirmed that NIBA members have been provided further detailed comments on 13 April regarding this topic.

Applications submitted after 7 May 2021 risk being rejected at the deadline of 30

June 2021 which is the legislative deadline to access transitional arrangements.

The regulator has indicated that it will reject an application if it is incomplete.

Rejections occurring close to the 30 June 2021 deadline may mean that the applicant has insufficient time to rectify and resubmit their application.

A complete application accepted by 30 June 2021 can proceed to assessment and a decision can then be made whether to grant or vary an AFS licence. These applicants can continue to provide claims handling and settling services while ASIC assesses the application during the sixmonth transition period.

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

NIBA.COM.AU / 13

NEWS / Industry Bulletin

BROKERS PLACING MORE THAN 14 BILLION IN PREMIUMS: APRA

T

he Australian Prudential Regulation Authority (APRA) has released its Intermediated General Insurance Statistics publication for the six months to December 2020.

The Intermediated General Insurance Statistics publication provides an overview of intermediated general insurance placed with APRA-authorised general insurers, Lloyd’s underwriters and unauthorised foreign insurers (UFIs).

Business placed by intermediaries and authorised insurers Six months ended

Dec 2018

Jun 2019

Dec 2019

Jun Dec 2020 2020

Intermediated general insurance business

Total premium invoiced in the period, of which:

11,685

11,644

13,670

12,371

14,850

Business placed with APRA-authorised general insurers ($m)

9,571

9,724

11,155

10,164

11,859

Business placed with Lloyd’s underwriters ($m)

1,370

1,293

1,660

1,386

1.934

Business placed with unauthorised foreign insurers ($m)

744

626

856

822

1,057

Total number of intermediaries, of which:

1,657

1,657

1,668

1,655

1,662

Number that placed business with an underwriter, of which:

797

767

784

782

772

Number that placed business with APRA-authorised general insurers

746

728

742

747

738

Number that placed business with Lloyd’s underwriters

286

270

297

282

296

Number that placed business with unauthorised foreign insurers

84

81

82

86

95

Number that placed business only through other Australian intermediaries

30

24

25

25

33

Number of intermediaries that placed no business

830

866

859

848

857

The entire December 2020 Intermediated General Insurance Statistics publication can be accessed on the AFCA website: apra.gov.au/intermediated-general-insurance-statistics For breaking news and updates curated specially for insurance brokers please visit: insuranceandrisk.com.au/category/news/

14 / INSURANCE ADVISER MAY 2021

NIBA’S DALLAS BOOTH TO RETIRE FROM HIS ROLE AS CEO LATER THIS YEAR

T

he President of the National Insurance Brokers Association (NIBA), Dianne Phelan, has revealed that the NIBA CEO, Dallas Booth, has advised the Association’s Board of his intention to retire from the CEO role later this year.

This will complete in excess of 10 years’ service by Dallas to NIBA and the insurance brokers of Australia.

Phelan said that the NIBA Board has been discussing this matter with Booth, and that a succession process (by way of executive search to find a replacement Chief Executive Officer) has now commenced.

“In addition, Dallas has indicated to the Board that he will remain available to assist the Board and the new Chief Executive Officer with the forthcoming 2022 review of general insurance remuneration arrangements, including insurance broker commissions,” Phelan said.

“The Board will continue to utilise Dallas’ support and expertise on this and any other projects where his support is likely to be needed.

“The Board has been extremely lucky to have had Dallas as our CEO and we thank him for his dedication to representing and acting in the best interest of our members.

“Over the coming months, we invite you to join us in celebrating Dallas’ tremendous contribution to NIBA and the insurance industry as a whole,” she added.

The Board will provide further information to members in due course, when the search process has concluded.

NEWS / Upcoming Regulatory Changes

NEWS / 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 members have a thorough understanding of the changes and the impact they will have on their business.

Claims handling as a financial service: These reforms make insurance claims handling and settling services a financial service, and therefore they must operate under a financial services licence. Any insurance broker who provides claims handling and settlement services on behalf of an insurer must discuss the matter with the relevant insurance company and must take steps to either obtain a claims handling endorsement on their AFS licence or become an authorised representative of the insurer.

Insurance brokers have until 30 June to apply to ASIC for a variation of their AFS licence, after which a transition period will commence from 1 July to 31 December.

During this time claims handing and settling services can only be provided if a complete application was lodged by 30 June 2021, and it has either been granted or is still pending.

From 1 January 2022 claims handling and settling services can only be provided if the application has been granted.

It is important for members to note that ASIC may reject applications if they do not contain sufficient information or are incomplete. Rejections occurring close to the deadline may mean that the applicant has insufficient time to rectify and re-submit their application before the cut-off after which they will have to cease providing claims handling and settling services. In order to ensure applicants have sufficient time to rectify

and re-submit their application, ASIC has requested that applications be submitted no later than 7 May 2021.

NIBA has previously provided information to its members on this issue, which can also be accessed from the media hub on the NIBA website under “members only content”. ASIC has also released an information sheet outlining the new regulation and the application process, which can be accessed on the regulator’s website.

It is important for members to note that ASIC may reject applications if they do not contain sufficient information or are incomplete.

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,

16 / INSURANCE ADVISER MAY 2021

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.

Breach reporting and remediation: Detailed new laws in relation to breach reporting and remediation take effect on 1 October 2021. All member principals will need to thoroughly review their breach monitoring and reporting processes and procedures prior to this date to ensure the policies and processes are compliant.

NIBA will provide detailed information to members on this matter.

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 will provide further information to members in relation to these changes.

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 schemeswhere 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 their approach to administering the obligations.

complaints and disputes, preferably before they are elevated to AFCA. ASIC has issued a new regulatory guide, RG 271 Internal dispute resolution, setting out their 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

ASIC has issued a new regulatory guide, RG 271 Internal dispute resolution, setting out their dispute resolution standards and requirements.

issue, which can also be accessed on 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.

Other reforms In addition to the above, a number of other reforms were passed by parliament that have the potential to impact a small number of members including insurer avoidance of life insurance contracts and caps on commissions for products sold in conjunction with the sale or long-term lease of motor vehicles. Brokers that operate in these areas are advised to familiarise themselves with the upcoming changes.

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 purchased after the purchase 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

NIBA.COM.AU / 17

PROFESSIONALISM / AFCA Case Study

COMPENSATION APPROPRIATE ONLY WHEN BREACH IS SUBSTANTIAL

ANALYSIS / Legal

This case shows that the Australian Financial Complaints Authority (AFCA) awards compensation to clients if the breach is substantial enough to result in the client’s injured feelings or humiliation.

Key lessons

• Typically, a complaint relating to a general insurance broker arises from the provision of a “financial service” to the complainant, by the broker. In this case the broker did not provide a financial service to the complainant.

• Brokers should note that AFCA does however have the ability to consider under its rules whether a broker has breached its obligations arising from the operation of the Privacy Act under rule B2.1 and if so, whether injury has occurred to the complainant’s feelings or if the complainant has suffered humiliation per rule D3.3.

• Compensation will only be awarded to the client in question if the breach was substantial enough to result in the client’s injured feelings or humiliation.

Facts

The complainant was the owner of one unit out of four which made up a strata plan.

The strata plan insurance was arranged by the broker on behalf of all unit owners.

The complainant obtained a quote for insurance and intended to forward this to one of the other owners, however, he accidentally sent it to the broker. The complainant says he then emailed the broker requesting the broker disregard the email, however, instead of doing this, the broker replied to the email copying in the other owners in the strata plan.

The complainant says the broker was not entitled to do this. Whilst the nature of the complaint by the complainant was not clear, the issue AFCA considered was whether the broker had breached the complainant’s privacy which the broker denied based on its jurisdiction in rule B2.1 above.

BY MARK RADFORD

Principal, Radford Lawyers

The AFCA decision

AFCA found in favour of the broker and was not satisfied that the broker had breached the complainant’s privacy as: • the email forwarded by the broker only contained the complainant’s name, phone numbers, email address; • the insurance quote did not contain any personal information about the complainant; and • the other owners of the strata plan already had the information in the email.

AFCA further held that even if the broker had been in breach of the complainant’s privacy (which they were not), AFCA was not satisfied that the breach caused injury to the complainant’s feelings or caused the complainant to suffer humiliation to the extent where an award of compensation would be appropriate.

“QPIB represents competence and the will to strive for excellence.”

ING IS

U

RA

K

ER

QPIB

S

APPLY ONLINE

D PRAC IE T IF

IN

QPIB – A STATEMENT OF PROFESSIONALISM

• QUA L

– CAITLIN CARSON, 2019 YOUNG PROFESSIONAL BROKER OF THE YEAR

NCE BR

O

WHEN THE (COMPUTER) CHIPS ARE DOWN, ARE YOU PROTECTED?

Since cyber insurance products entered the Australian market some years ago, the legislative framework governing cyber security and privacy in Australian has shifted significantly.

A

gainst a backdrop of change, the scope of cover available to Australian policyholders under cyber insurance policies today has remained relatively constant. In particular, insurers continue to offer cover for business interruption loss consequent upon a cyber event which, for many policyholders, is the most valuable component of the insurance.

Cover under the business interruption limb of a cyber policy is triggered by an interruption to the business directly caused by a cyber event. The scope and nature of this term varies but it includes, for example, unauthorised access to the insured’s system by a third party which causes a shutdown, or suspension of the computer system due to a cyber attack. Loss of customer data and resultant remediation costs are also core elements of the cover.

Business interruption losses consequent upon a cyber event are not ordinarily covered under the more traditional property and business interruption insurance policies. Cover for business interruption is usually triggered only when there is material damage to insured property. To make doubly certain, the Mark V Industrial Special Risks (ISR) Insurance Policy has a very clear and unequivocal exclusion which means there is no cover for, among other things, damage, loss, theft, or unauthorised manipulation of electronic data. Stand-alone business interruption policies may include limited cover in respect of cyber risks, however, such cover may be disjointed or inadequate. Despite some attempts over the years by policyholders to contrive

arguments that business interruption losses resulting from cyber events fall for cover under ISR or Fire and Perils property policies, the current market wordings now make that near impossible.

ISR insurance contains Basis of Settlement clauses with welldefined terms such as “Gross Profit”, “Increased Cost of Working” and “Turnover”. The calculation is so complex that we even have a text book solely dedicated to the topic.2 Unlike the ISR policies, cyber policy wordings tend to provide less clear guidance for calculation of business interruption losses. The policies generally cover loss of net profit before income taxes, plus normal operating expenses such as payroll to the extent that they would have been paid or accrued had the business not been interrupted by a cyber event and are not saved in consequence of it. Although the cover under most cyber policies is broadly similar, there are certainly variations in policy definitions and terms relating to the business interruption cover and these variations may lead to different claims experiences and outcomes for policyholders. The focus for brokers and policyholders should, of course, be to ensure that the business interruption cover will replace the cash flow that the insured business lost due to the cyber event, enable it to restore its systems and comply with any resultant legal obligations. Only variable costs saved should be excluded from the business interruption loss calculation.

BY LUCY TERRACALL

Partner, Clayton Utz1

Other key considerations

Aside from the language of insuring agreements under the cyber polices, the following matters are also key to understanding the scope of the cover, including for business interruption: 1. The indemnity period – there is significant variation among cyber policies as to the period during which the policyholder can claim business interruption losses. We have seen policies with anywhere between 90 - 120 day indemnity periods.

2. The waiting period – cyber insurance policies usually stipulate an initial waiting period before the business interruption cover is triggered. The policyholder must bear losses incurred during the waiting period. The impact of a cyber event is usually immediate and, accordingly, even a relatively short waiting period can significantly undermine the utility of the cover.

3. Policy exclusions – exclusions must be carefully considered in light of the business activities of the policyholder. One common exclusion is betterment, which removes all cover for updating, upgrading, enhancing or replacing any computer system to a level beyond that which existed prior to the event. This is obviously relevant if policyholders have been using outdated systems immediately prior to a cyber event.

Brokers need to be mindful of the above considerations, in explaining to their policyholder clients what the various cyber insurance policies do and do not offer to them and their businesses.

The author would like to acknowledge Rachel Rothfield, Lawyer, and Fred Hawke, Consultant, of Clayton Utz for their contribution to this article.

Riley on Business Interruption Insurance, Harry Roberts, Sweet & Maxwell, UK, 2016.

1

2

18 / INSURANCE ADVISER MAY 2021

NIBA.COM.AU / 19

PROFESSIONALISM / Claims handling and settling service

ANALYSIS / Legal

AN OVERVIEW OF CHANGES

Schedule 7 of the Financial Sector Reform (Hayne Royal Commission Response) Act 2020 (FSRA) and regulations, make “claims handling and settling services” (CHSS) a NEW financial service under Chapter 7 of the Corporations Act 2001 (‘Corporations Act’) and apply certain requirements of Chapter 7 to those providing CHSS.

C

HSS captures a broad range of claims activities, from an initial inquiry before an insurance claim is lodged to the formal lodgement, assessment and settlement of an insurance claim in relation to both retail and wholesale clients (See s766G for the full definition). It only catches insurance products subject to the Corporations Act, not discretionary arrangements or selfinsured retentions.

The following are some key matters for insurance brokers to consider.

• Does an insurance broker need an AFS licence? vAn insurance broker entity (i.e., a person who carries on the business of arranging contracts of insurance, whether in Australia or elsewhere, as agent for intending insureds) can be only caught if they are acting on behalf of insurers in providing CHSS. • There is no obligation on an insurance broker to hold an AFS licence if it only acts for insureds in providing CHSS. Note that a separate company in a broking group that is not an insurance broker as defined above (e.g underwriting agency) will need to consider its position separately. This article only covers insurance brokers.

Where an insurance broker is acting on behalf of an insurer in providing CHSS, they must:

• obtain an AFS licence for CHSS/ vary an existing AFSL to cover CHSS – but only for the CHSS they provide for the insurer (which might be very limited); or • act as an Authorised Representative (AR) of a person that has an AFSL for

20 / INSURANCE ADVISER MAY 2021

CHSS e.g get the insurer to appoint you as its AR for the limited CHSS you may provide for them; or • fall within one of the relevant exemptions – for insurance brokers, this would typically only be likely to be where they or only provide CHSS in relation to wholesale clients for an APRA regulated insurer that is acting under the APRA regulated insurer wholesale client exemption.

The other exemptions seem unlikely to apply for insurance brokers providing CHSS on behalf of an insurer for retail client business.

For insurance brokers acting for Lloyd’s Underwriters for retail client business, an AFSL covering the CHSS will be expected and the arrangement will need to be structured to fit within the retail client exemption in section 911A(2)(el).

When considering whether you provide services to wholesale clients for the purposes of the above exemption, remember that the law has extended the retail client definition for CHSS to apply to third party beneficiaries (not just contracting insureds) that are provided with the retail client type of cover in the Act.

When does an insurance broker need to apply for an AFSL/ variation to AFSL?

The obligation to obtain an AFSL/ AFSL variation for CHSS won’t apply before the end of 30 June 2021 as part of the transition period which may be extended until the end of 31 December 2021 (or later by application), where a person has lodged an application for a variation on their AFS License before

‘TESTING’ FOR COVID-19: THE CURRENT SPREAD

BY MARK RADFORD

Principal, Radford Lawyers

As the quest to ascertain the extent to which business interruption losses are covered by insurance continues, it is useful to reflect on the current position, both at home and abroad.

BY CLANCY O’DONOVAN

Senior Associate, DLA Piper Australia

the end of 30 June 2021 (which has not been rejected).

ASIC has however asked all persons seeking to rely on the transition period to lodge the application before 7 May 2021 as rejections occurring close to the 30 June 2021 deadline may mean that the applicant has insufficient time to rectify and re-submit their application and may not be able to access the transition period as a result if ASIC rejects it.

See ASIC INFO 253 for details on the AFSL process.

Who do you have to appoint as your representatives in relation to CHSS if you get an AFSL/vary for CHSS?

Typically, an insurance broker:

• would only need to authorise any employee/director providing a CHSS as their representative – not an Authorised Representative; • could appoint another AFSL holder with CHSS to acting for them under their own AFSL and not that of the broker; • would need to appoint as their Authorised Representative anyone that will provide CHSS on their behalf that is with the category of persons required to get an AFSL( see s911A(2)(ek)) but does not wish to get the AFSL. This may not be possible if that person holds an AFSL but it does not cover CHSS; and • would only need to appoint persons who are not within the above CHSS AFSL categories or who are exempt under the lawyer licensing exemption, as their representative not as an AR. • The transition period provides that licensees can give notice of Authorised Representatives under s916A during the transition period authorising them to provide claims handling and settling

T

he UK Supreme Court’s judgment in January 2021 was the first non-appealable decision in a test case to be handed down globally – a terminus yet to be reached in Australia. Since delivery of that judgment, the UK Financial Conduct Authority (FCA) has continued to closely monitor insurers’ assessment and resolution of business interruption claims.

In January 2021, the FCA issued a “Dear CEO” letter, directing insurers to reassess and pay valid claims as soon as possible. In March 2021, the FCA published a list of over 400 wordings, held by over 200,000 policyholders, which are considered “in principle, capable of responding to the COVID-19 pandemic”.

This list is accompanied by a ‘policy checker’ developed by the FCA, which small businesses can use to check whether their policy “may cover business interruption losses”, together with guidance as to the types of evidence and methodologies which policyholders may use in support of their claims. The FCA continues to collect and publish data from insurers relating to their acceptance and settlement (including initial or interim payments) of business interruption claims.

In Australia, the extent to which business interruption cover is available for loss flowing from the pandemic continues to be explored via both ‘organised’ test case proceedings and satellite litigation. The ‘Quarantine Act Test Case’, initiated in August 2020 by the Australian Financial Complaints Authority (AFCA) and the Insurance Council of Australia (ICA) was decided

in favour of policyholders by the NSW Court of Appeal in November 2020.

Insurers’ application for leave to appeal that decision to the High Court is expected to be heard in the next couple of months.

In the meantime, a further test case, dubbed the ‘second test case’, has been commenced in the Federal Court. Also, a product of joint effort

by AFCA and the ICA, the second test case presently comprises nine sets of proceedings, issued by five different insurers, seeking declarations relating to the operation of certain policies.

Broadly speaking, it is anticipated that the second test case will involve consideration of the three main species of insuring provisions (which were also considered in the FCA Test Case), being: ‘Disease Clauses’ (which provide cover for business interruption resulting from the occurrence of disease within the vicinity, or a specified radius, of insured premises), ‘Prevention of Access Clauses’ (which provide cover for business interruption resulting from access to, or use of, insured premises being prevented due to restrictions imposed by, or the action, advice or order(s) of an authority) and ‘Hybrid Clauses’ (which broadly reflect a blend of the first two types of clauses and respond to business interruption resulting from closure of insured premises due to the occurrence of disease within a vicinity, or a particular radius, of insured premises).

The Federal Court has indicated that it intends to hear the second test case in September this year, with any ensuing appeal to the full court to be

heard in November.

In addition to the ‘organised’ test case proceedings presently being conducted, ‘stand alone’ litigation has been commenced, seeking to determine how certain policies respond to business interruption loss sustained by particular insureds. Earlier this year, it was reported that a ‘Jetts Fitness’ franchisee in Victoria had commenced proceedings, challenging its insurer’s decision to decline indemnity for business interruption loss sustained as a consequence of government-ordered lockdowns in 2020. Similarly, in August 2020, entities associated with The Star Casino commenced proceedings against their insurers, seeking a declaration of cover. The matter is now part heard. Furthermore, it was reported in April 2021 that another insurer has commenced Federal Court proceedings against the liquidator of Educational World Travel, seeking a declaration that its policy does not respond to loss sustained by the business as a result of the pandemic.

The proceedings are expected to test the operation and interpretation of exclusion clauses which refer to the Quarantine Act 1908 (Cth), in the context of Victorian law.

Whilst there are a number of different proceedings on foot, advancing simultaneously and at different stages, the current ‘state of play’ places the insurance industry on a trajectory whereby the extent to which cover is available for business interruption loss caused by the pandemic is likely to be substantially clearer by the end of this year, or in the early part of next year.

NIBA.COM.AU / 21

COVER STORY / NIBA & the ICA

A commitment to collaboration and community The President of the Insurance Council of Australia (ICA), Sue Houghton and the President of the National Insurance Brokers Association (NIBA), Dianne Phelan met recently to discuss the current landscape faced by insurance professionals and what the proverbial North Star is for the two industry leaders.

BY TANAYA DAS

I

nsurance professionals are currently faced with a range of challenges across multiple areas including a hard market, increasing regulatory scrutiny, global uncertainty, natural catastrophes, the COVID pandemic and so on. They are having to evolve at a rapid pace to keep up with community expectations. NIBA President Dianne Phelan recently caught up with the President of the ICA Sue Houghton for a chat on the key role both organisations play in the current climate.

In a world defined by multiple crises hitting us simultaneously, Phelan believes that industry associations exist to provide benefits to members and by extension the larger community. She says, “Never have I

seen this level of change before alongside this degree of uncertainty. A focus on continued and improved professionalism will play a significant part in the of future of insurance broking. NIBA will need to continue to send out clear directions, to ensure that members’ procedures are compliant, and in accordance with community expectations.”

Houghton agrees that there is a lot happening at the moment as we come to terms with the post Royal Commission changes and the multiple challenges caused

by COVID-19. She says, “At the ICA we recognise the sheer gamut of important reforms coming out at the moment that flow on from the Royal Commission, it’s really

“I BELIEVE A STRONG FOCUS ON KEEPING AUSTRALIANS AND WHAT’S IMPORTANT TO THEM SAFE, IS HOW WE’LL GET BETTER OUTCOMES FOR CUSTOMERS, AND THE COMMUNITY.” SUE HOUGHTON, ICA PRESIDENT 22 / INSURANCE ADVISER MAY 2021

important that we work collaboratively with government, regulators and key stakeholders to ensure that regulatory regime supports products and practices that are going to meet community needs.”

Houghton also stressed that community expectations are really important and industry associations play a critical role in enabling that collaboration between the industry and community and external stakeholders. “We are able to canvass views, address issues, and really provide that kind of intelligence back to our members, which is important. The two business interruption test cases are a good example of this, we need them to provide certainty for insurers and policyholders alike.”

ONE COMMON GOAL

Both Presidents are highly regarded by the insurance industry. Phelan is Group Operations Manager at BJS Insurance Group and Houghton is Managing Director, Insurance at Westpac. In their roles as business and thought leaders, both are uniquely positioned to balance interests of different stakeholders.

They both agree on one North Star to point all their efforts towards. Phelan says, “Insurance brokers have one major stakeholder; their client and as uncertainty increases, we double down on representing the best interests of said client.”

Houghton says there is a common goal for everybody, whether it is insurers or insurance brokers, the government, or the regulators; helping Australians protect the things that matter to them, “Business, government, regulators and the insurance industry, we all have to intersect in a way that can drive the best outcome to that common goal. I believe a strong focus on keeping Australians and what’s important to them safe, is how we’ll get better outcomes for customers, and the community.”

RISK MITIGATION AND CLIMATE CHANGE

The frequent catastrophes in Australia are contributing to reshaping prudential risks and insurance professionals are in the thick of things every time there are bushfires, floods, cyclones, hailstorms or any other disaster.

Phelan says, “There is no doubt that disasters are impacting results but even in this instance our main goal is not just recovery after an event, it is to make sure we do everything possible to mitigate disasters.”

Houghton is also of the same view, “Year after year we witness communities coming together to manage relief and rebuilding after these major catastrophe events, but the frequency of these events and the size of the losses continues to grow.

“Insurers have paid $7 billion in claims related to natural disasters in the last three years. The impact of what has been happening is enormous.

The insurance industry in Australia is well capitalised and we are able to deliver but we need to get serious about mitigation and we definitely need to address the effects of climate change.”

Phelan says, “Yes, it is important that we all keep moving on this journey towards supporting Australian communities, and helping them understand, manage and mitigate their risks of significant loss. We at NIBA have been putting our weight

behind the ICA programs to encourage risk mitigation and building community resilience, to ensure that insurance is the final safety net not the only thing keeping people safe.

“It is important that climate change is discussed logically – risk mitigation becomes an important part of disaster resilience, keeping in mind that rampant destruction doesn’t have to be inevitable, we can still get ahead of this.

“It is by having such a focus that the client impact of continued premium increases and/or availability of necessary cover will be best managed. We are already experiencing issues with clients where covers are being withdrawn or premium increases are having a direct impact on the ability of the business to survive. This is certainly heartbreaking news that brokers are having to deliver and not the outcome anyone wants to see.”

Houghton adds, “Currently 97 per cent of the disaster funding is spent after the weather event, fixing things and only three per cent is spent on mitigation beforehand. And that’s the discussion we’re having with stakeholders, we

NIBA.COM.AU / 23

what’s the

COVER STORY / NIBA & the ICA

attraction to McLardy McShane?

Come find out.

need to move more towards mitigation, and exactly how to do that so that the community benefits the most.”

DEVELOPING ROBUST INDUSTRY CODES

Both Phelan and Houghton are of the opinion that it is exceedingly important to have a robust industry Code of Practice for insurers as well as intermediaries to get better outcomes for customers.

Phelan says, “We have a new Insurance Brokers Code of Practice currently undergoing independent review. The introduction of this code will be an opportunity for all NIBA members to embed the expected conduct into their staff training and as a result see an improvement in the compliance reporting members provide to the Code Committee.

“We have also embraced the parts of the GI Code that were released last year and have encouraged brokers to undergo training to be able to assist vulnerable clients better.”

Houghton states, “It holds the industry to a really high and professional standard and I think that’s really important. With the GI Code we did a major review before bringing it out and took a substantial amount of time to canvass stakeholders’

24 / INSURANCE ADVISER MAY 2021

views. It will deliver enhanced standards and stronger enforcement powers going forward. We have also updated our commitments to customers through the course of this, so whether they’re buying or renewing insurance, or whether it’s at claim time or complaints, this new Code has our customers at the heart of it.”

COLLABORATION IS KEY

Houghton believes that with so much change happening at the present time both the ICA and NIBA should take the opportunity to work closely together and meet the challenges coming our way. “At the end of the day, we are all here to help our customers, so a closer collaboration will be really important going forward. And I think it is just a great opportunity for both

insurers and for brokers to work together in this new world that we are entering. It is an exciting time where collaboration will be vital.”

Phelan agrees, “Insurance brokers have a firsthand knowledge of the risk and insurance needs of their clients, and they have historically worked closely with underwriters and insurers to ensure the right products are available to meet those needs. This underscores the importance of brokers and insurers working closely together to provide the risk financing solutions the community needs and expects. While the ICA focuses on the goals and objectives of its members, and NIBA does the same, we both ultimately look to providing solutions expected by clients and the community more broadly.”

Fun, flexible, forward thinking and growing fast.

AUTHORISED REP | JOINT VENTURE | BRANCH | EMPLOYEE | BUSINESS IDEAS

Call Don or Meg for a confidential discussion.

Don McLardy M. 0411 868 092 E. don@mclardymcshane.com.au Meg Long M. 0434 613 546 E. meg@mclardymcshane.com.au

“YES, IT IS IMPORTANT THAT WE ALL KEEP MOVING ON THIS JOURNEY TOWARDS SUPPORTING AUSTRALIAN COMMUNITIES, AND HELPING THEM UNDERSTAND, MANAGE AND MITIGATE THEIR RISKS OF SIGNIFICANT LOSS.” DIANNE PHELAN, NIBA PRESIDENT

mclardymcshane.com.au

INTERVIEW / Ward Dedman & Heather Peirano

INTERVIEW / Ward Dedman & Heather Peirano

CREATING MEANINGFUL CHANGE

“Insurance is vital, and we provide essential risk management services to the communities we are a part of personally and professionally.”

HEATHER PEIRANO, PIRANHA INSURANCE BROKERS

In Australia we may have been spared the acute COVID-19 public health emergencies unfolding in other parts of the world, but businesses and communities have been taking a hammering on multiple fronts. Two broking leaders believe this is the time to create impactful change that will last.

BY TANAYA DAS

F

or many executives in Australia, the toughest leadership decisions are now looming on the horizon on how to bring normalcy back to organisations and it is a complicated navigation for business leaders.

Ward Dedman of EBM Insurance Brokers believes engagement, constant collaboration, and, pulse-checking, with one’s teams to discover what works best for all is the best way to remain agile and adapt to the uncertain environment we are operating in.

He says flexibility and agility is the name of the game to support broking clients, “We have now learnt, that does not have to be strictly from an office environment.

So far, we have been forward-thinking and successfully adapted more efficient and balanced ways of working, using a great deal of flexibility and operational agility, from both a client service, employee resourcing and wider stakeholder perspective.”

Heather Peirano of Piranha Insurance Brokers (PIB) says that their business has been fortunate to be in Rockhampton, “We have been able to continue operating from our premises due to several factors;

26 / INSURANCE ADVISER MAY 2021

everyone travels to work in their own vehicles, we are a small team of nine who operate from our own building, which means we do not share lifts or space with anyone other than the Piranha team.

She believes that being in constant contact through multiple crises has been important for her team’s mental health and her ability to be able to monitor their wellbeing.

During the pandemic, businesses have worked faster and sometimes better than thought possible pre-COVID, and now it is up to business leaders to help sustain high levels of productivity as well as motivation while ensuring employee wellbeing.

Dedman says, “The pandemic certainly necessitated rapid deviations from the status quo we were used to with a sense of urgency that was completely unavoidable, we had to make bold decisions quickly and our people rose to the challenge.

“I think removing bureaucracy from decision making and empowering people are very important aspects to continue as we have now experienced what can be achieved in a short amount of time. The pandemic certainly put into perspective what is truly

important and necessary in many facets of business and personal life.”

Peirano’s experience has shown that insurance brokers have had to wait longer for responses from insurers.

She says, “These delays are creating problems with our clients, who require the usual service we at PIB have supplied.

“The longer delays in responses have created anxiety within the team. It is important we keep our clients updated of any delays, which can be non-productive conversations. We do not receive an income until all information is processed and delays have an adverse impact on our revenue.”

The many catastrophes across Australia have taken a toll on businesses, however in many cases the pandemic has made organisations deeply rethink their business plans.

Dedman agrees that there has been a shift in focus to the most important components of his business’ plans, “Fortunately we have not had to move our plans too far, so that’s been a good stress test. We stood to gain the most in being agile and flexible in quickly and efficiently implementing and understanding the desires of our clients

NIBA.COM.AU / 27

INTERVIEW / Ward Dedman & Heather Peirano

and people. By embracing new technologies and innovative ways of doing business we stayed connected with colleagues and clients which we believe is paramount to a brokerage’s continued success.”

A little over a year from when the World Health Organisation declared COVID-19 a pandemic, there have been many changes across the world and in the insurance industry. Dedman thinks there has been a genuine refocus on the people and on clients, “Outside of that, the very hard market cycle we are currently experiencing, and the intense pace of regulatory changes have certainly been the dominant focal points. While occurrences of natural catastrophes are on the increase, changes to the insurance market will remain on the horizon.”

Peirano has observed that the majority of major insurers not returning in force to their buildings has affected the efficiency of replies to the broker’s request for assistance, “I look forward to one day in the future when we are all working together to improve the reputation of the insurance profession.”

Both Dedman and Peirano believe that there are things insurance professionals

should focus on to withstand any similar crisis in the future.

Within the insurance broking profession, building and maintaining a solid network of good people to confide in has always been beneficial to withstanding adversity, says Dedman. “Being open to the feedback and support your network can provide is equally as important as having the network,” he adds.

“Insurance professionals could place a stronger emphasis on scenario planning to future-proof the industry’s service and product offerings. This will certainly mitigate some of the challenges that inevitably arise with the unpredictability of a crisis.”

For Peirano, it is imperative that intermediaries are recognised as educated, consummate professionals who are an asset to the communities they live in. “Insurance is vital, and we provide essential risk management services to the communities we are a part of personally and professionally,” she says.

In the contemporary context, workplace resilience has taken on a very important meaning and, along with it, the role of emotional intelligence in a leader’s ability to navigate uncertain times successfully.

Dedman says to him workplace resilience really means being able to deal with the ups and downs we all experience in our work lives, “Our people have and continue to be unbelievably buoyant through quite choppy waters. As a leader, I believe emotional intelligence and empathy play a huge part in leading connected, motivated and resilient teams.”

“Empathy goes beyond basic kindness and generosity of spirit, it helps us identify and overcome challenges through open, transparent and productive discussions that lead to true collaboration. None of us can manage to overcome multiple crises on our own but as a team that takes a 360-degree view of wellbeing, we can face greater challenges.”

For Peirano every day in the office is work in progress, “It is so important to listen to the office buzz in these times. Every single person in our organisation is focussed on doing the absolute best for our clients and as a leader I believe in providing them with all the tools they need to do so. Whether it is via education or ensuring that the work environment encourages self-care, it is up to us to do what needs to be done to ensure the wellbeing of our employees, clients and the greater community.”

“The pandemic certainly necessitated rapid deviations from the status quo we were used to with a sense of urgency that was completely unavoidable,” WARD DEDMAN

28 / INSURANCE ADVISER MAY 2021

ADVERTORIAL / Broker Co-op

CALLING ALL INDEPENDENT BROKERS TO EXERCISE THEIR INDEPENDENCE

BY CHARLES GOW-GATES

Independent Broker and Founding Member of Broker Co-op

B

roker Co-op, an Australian cluster group formed exclusively for independent brokers, launched on 20 April 2021, with a call out to independent brokers across the nation to join as ‘Founding Members’. This new chapter in Australian insurance broking history sees Broker Co-op launch as Australia’s only co-operative cluster.

Broker Co-op In 2020, a group of like-minded independent brokers set out on a mission to establish a cluster that was completely member focussed. It was agreed that each activity and service provided by the cluster would be judged on whether it added value to the underlying members’ business. In doing so, the success of the cluster would directly correlate to the success of its members.

It was important that the cluster enabled all members to have a voice and be listened to irrespective of their size or location, because that degree of inclusiveness would only strengthen the voice of independent brokers and reassert their position in the market. This inclusiveness would also be an important way to ensure the members’ funds were spent on services that were desired by the membership.

In April 2021, Broker Co-op launched to incorporate these values. The support from all sectors of the market has been overwhelming.

Broker Co-op – representing the voice of independents Broker Co-op’s mandate is simple – to put the member first.

Broker Co-op will be owned by its members and run for the benefit of its members with no external shareholders to pay in the form of dividends. As such, members work together to achieve mutual business success and all proceeds are returned to members.

Broker Co-op will operate using the traditional model – an antecedent of the co-operative structure dating back to medieval France, which endures five centuries on, and is gaining attention as a preferred model, particularly in the financial services sector where conflicts of interest can compromise outcomes.

Broker Co-op is controlled by its member shareholders through a Board of Directors and all membership applications must be endorsed by the Board. Member-elected directors hold the Board majority, ensuring complete business transparency and accountability to members. All members have equal voting rights with one vote per member.

Broker Co-0p value proposition 1. A voice: Members retain their independence and have a say in what services they

need to run their business, service their customers and improve their bottom line.

2. L everage scale via aggregation of key services: Broker Co-op aggregates the procurement of key services to its member brokers through partnerships with key suppliers, leveraging the consolidated scale benefits to deliver cost efficiencies and superior terms of engagement.

3. N o fees and direct ownership: Members do not pay joining or annual membership fees while also becoming a shareholder in the cluster, aligning financial and nonfinancial interests.

4. S ervice offerings: Members will have access to a full suite of key broking business services, at no cost. A detailed list of benefits can be requested at www.broker.coop.

Apply by 31 July 2021 Independent brokers across Australia are invited to apply to become founding members by completing the application form on www.broker.coop by 31 July 2021.

Mr. Charles Gow-Gates is the founding member of Broker Co-Op and an experienced and proudly independent Australian broker passionate about creating and championing a strong voice in the interest of independent brokers.

The importance of strong influential independent brokers Independent brokers represent a significant part of the insurance market and are an important component of a diverse and successful broking industry in Australia.

They invest in their clients, participate in their communities and meet demand for specialised services in diverse locations all across the nation. As such, it is imperative that they have a strong and influential voice and that the Australian spirit of independence is supported.

NIBA.COM.AU / 29

FEATURE / Construction Insurance

SPONSORED BY

CONSTRUCTION SECTOR COPS A HAMMERING It’s been a year of turmoil for anyone connected to the construction industry.

But is the worst behind us?

BY NINA HENDY

30 / INSURANCE ADVISER MAY 2021

NIBA.COM.AU / 31

FEATURE / Construction Insurance

T

he construction sector has taken a hammering in the past year. Despite being deemed an essential service, the Australian construction industry suffered. During the peak of the pandemic, the Australian Performance of Construction Index (PCI) hit its lowest ever point – indicating serious contraction at 21.6 points for April 2020.

Industry pundits say the pandemic played havoc with the already weak domestic construction sector, with no end in sight for the disruptions.

A recent report by The Australian Construction Industry Forum (ACIF) reveals that the measures taken to control the spread of COVID-19 sent the message to hold or defer many new building projects, with falls of 3.2 per cent expected over 2020/21.

This will drive the loss of 42,000 jobs in construction, mostly in Victoria, New South Wales and Queensland.

Bob Richardson, Chair of ACIF’s Construction Forecasting Council says:

SPONSORED BY

“Cash is king in a time of uncertainty, and many planned building projects are on hold or deferred indefinitely. We haven’t seen much growth in new major projects to make up for the work being finished now. The pipeline of new projects in some sectors is drying up.”

Of course, Federal and State Governments stepped up their infrastructure development plans, with a focus on smaller, shovel-ready initiatives. Construction work on bridges, railways and harbours are expected to rise by 15 per cent. And if governments are able to translate announcements into action, works in water, sewerage, electricity and pipelines are expected to surge by more than 20 per cent this year.

ROLLING UP THE SLEEVES

The CEO of MECON Insurance, Glenn Ross has witnessed the ebbs and flows of the construction sector for more than 30 years.

The other major issue facing the sector is a

WHEN THINGS GO WRONG, WHEN THINGS GO WRONG, MECON PUTS IT RIGHT. MECON PUTS IT RIGHT.

For more information, speak to Milos Skopljak, National Claims Manager milos @mecon.com.au or cal 02 9252 1040 or contact your local office.

critical lack of understanding of the nuances of this sector, he says.

The quality of information accompanying a claim has a direct correlation to the time it takes for the claim to be processed, he adds.

“The better and more comprehensive the initial information supplied, generally the quicker the claim can be processed.

When information is scant, and drip-fed, claims will take far longer to settle. “If all parts of the jigsaw are available, the puzzle can be completed. If pieces are missing, solving the puzzle will take a lot longer.”

Brokers can assist their clients by rolling up their sleeves when a claim occurs, visiting the scene of the occurrence if possible, understanding what happened and knowing and providing the information an insurer will require.

“The broker also gets to meet his client and show the client that he cares enough to be in attendance in their time of need.

We get assessors out as quickly as we can – particularly for large losses, and

www.mecon.com.au MECON has a dedicated claims team based in Australia, with more than 80 years combined claims experience, MECONproviding has a dedicated claims team based in Australia, more than a one stop, end-to-end, award winning claimswith service. hasclaims a dedicated claimsproviding team based in Australia, with more thanservice.

80 yearsMECON combined experience, a one stop end-to-end claims 80 years combined claims experience, providing a one stop end-to-end claims service.

nd t he a on i t p u err t “Businesusenintial loss covers ared conseq es poorl y understooe sometimied, which ca n causcur.” or appl ons when claims oc complicati LENN ROSS, MECON G

32 / INSURANCE ADVISER MAY 2021

99.5% claim approval Fast turnaround times Decisions on indemnity In 2020, MECON was the only underwriting agency to be times awarded forindemnity our10 internal claims rate over the past all new claims are are rating madeon within 99.5% claim approval Fast turnaround - a 5-star Decisions service across Contractors Plant, Contract Works and Liability by LMI Claims Comparison three registered within 24are hours days 10 website. rate overyears the past all new claims areworking made within We were also honoured to receive the Excellence Award from Insurance three years registered within 24 hours workingBusiness. days This award recognises the best claims team within an underwriting agency operating in Australia.

For more information, speak to Milos Skopljak, National Claims Manager miloss@mecon.com.au or call 9252 1040 orNational contactClaims your local office.For more information, speak to02 Milos Skopljak, Manager miloss@mecon.com.au or call 02 9252 1040 or contact your local office.

3457 FPC Claims Ad v3.indd 1

www.mecon.com.au www.mecon.com.au

15/4/19 9:2

FEATURE / Construction Insurance

certainly for the small to medium claims – brokers can do a lot to accelerate the claims process,” Ross says.

It sounds simple, but Ross explains that business interruption and the consequential loss covers are sometimes poorly understood or applied, which can cause complications when claims occur. In order to provide the right covers and advice, it’s imperative that brokers understand their clients’ business.

“Brokers can capitalise on this ‘weakness’ by taking the time to scratch the surface with their clients and/or by obtaining specific training on the cons loss covers available,” he says.

SPONSORED BY

“Clients know their business.

They employ and rely on brokers to advise them on the covers they need to protect that business. In order to do that comprehensively, brokers simply must understand their clients’ business too.”

This protocol applies to all forms of insurance covering all businesses, and encourages specialisation, he says.

SPARE PARTS DELAYS

Issues facing this sector do not stop there. Delays to spare parts required to repair equipment have been particularly challenging over the past year, adds the

National Construction Practice Leader for Aon, Alister Burley.

Equipment is usually sourced from specialist manufacturers from Europe or Asia, where plants have been operating at reduced levels through the pandemic, he explains.

“We’re seeing increases in business interruption exposures where key equipment, that is heavily relied upon in major construction projects or in mining operations, is unable to operate while waiting for repairs. In these situations, brokers are working with their clients to help identify key items of equipment and put in place risk transfer options,” Burley says.

Hello Yellow Mobile plant and equipment are welcome at Zurich.

Customers can simplify their insurance by including plant and equipment along with all other vehicles under the one world-class, motor policy.

zurich.com.au/uw

“We haven’t seen much growth in new major projects to make up for the work being finished now. The pipeline of new projects in some sectors is drying up” BOB RICHARDSON, CONSTRUCTION FORECASTING COUNCIL

Zurich Insurance 34 / INSURANCE ADVISER MAY 2021

This information is general advice only and does not take into account your objectives, financial situations or needs. You should obtain and consider the relevant Product Disclosure Statement and Policy Wording (as applicable) from zurich.com.au before making a decision. The issuer of general insurance products is Zurich Australian Insurance Limited (ZAIL), ABN 13 000 296 640, AFS Licence Number 232507 of 118 Mount Street, North Sydney NSW 2060.24171 V1 103/21 TFMC-016590-2021

FEATURE / Construction Insurance

While driverless plant has been around for a number of years, the new emerging risk is through insurers imposing cyberbased exclusions to plant and equipment insurance policies, he adds.

“The driverless equipment relies heavily on technology-based platforms with remote operations and could suffer significant exposures to loss if these systems were compromised. Tailored cyber-based products can provide additional protection in covering these emerging exposures.”

It’s meant that the role of the broker is evolving, he says. For one, brokers are required to be more proactive in managing construction plant and equipment, he says.

“Given the market cycle with poor claims performance and reductions in capacity, we have seen a significant shift to hard market conditions. Insurers are imposing pricing and rate increases as well as looking to reduce coverage and in particular to

additional coverage extensions that were previously available,” Burley says.

This is resulting in brokers working with their clients to understand these potential uninsured risks and quantify these exposures, he says.

“As excess levels are increasing across the board, brokers are undertaking loss modelling to understand how new retention levels will impact clients from a financial perspective. On some of the larger construction plant and equipment fleets, brokers are working with their clients to look at alternative risk financing measures such as captives.”

PI INSURANCE LIMITED

Another primary issue for the local industry is the limited availability of professional indemnity (PI) insurance for building practitioners (particularly certifiers/ surveyors), according to a legal expert.

NSW is leading the charge for consumer protection in the residential home unit sector, where the Design and Building Practitioners Act 2020 comes into further effect on 1 July 2021.

SPONSORED BY

“Although temporary regulations enacted in some states currently permit certifiers to hold PI insurance with a cladding exemption, the underlying problems for the market have not gone away,” partner of construction and engineering team at legal firm Carter Newell, David Rodighiero says.

NSW is leading the charge for consumer protection in the residential home unit sector, where the Design and Building Practitioners Act 2020 comes into further effect on 1 July 2021.

Although the financial regulations have not been released, ‘adequate insurance’ requirements are set to be introduced for design practitioners, professional engineers and building practitioners for certain compliance declarations and building work.

The retrospective 10-year duty of care for pure economic loss introduced by the same legislation is another important topic for both brokers and insureds in NSW, he concludes.

A CASE IN POINT The spate of claims arising from high-rise apartment defects continues to focus attention on contractual indemnities and the apportionment of responsibility between the various practitioners, suppliers and consultants involved in a project.

The Court of Appeal in Victoria recently handed down its judgment in the Lacrosse Tower case, which largely endorses the lower VCAT decision.

In this case, although the builder was primarily responsible to the apartment

owners under contractual and statutory warranties, it was entitled to an indemnity of 97 per cent of its liability from the building surveyor, fire engineer and architect involved in the project.

Close attention must accordingly be given to contractually assumed indemnity obligations, liability arising outside a contract and the extent to which insurance is available to cover those risks.

SOURCE: CARTER NEWELL

ATC are the specialists in plant and machinery insurance, with competitive options for: • Earthmoving Equipment • Access Equipment • Drill Rigs • Cranes • Dry Hire.

ATC offers a broad product with some great benefits to ensure your clients are appropriately covered including: • Automatic financial protection cover following a loss, such as: • Substitute Hire Costs • Ongoing Hire Costs • Finance Payment Protection • Underground services cover whether or not the insureds use ‘dial before you dig’.

• Dry hire without an operator is a standard inclusion.

Contacts:

Rachel Lilliott (VIC, SA, TAS) T 0499 899 345 E rachell@atcis.com.au

Rachel Stephens (QLD, NT, WA) T 0436 697 349 E rachels@atcis.com.au

James O’Donohue (NSW, ACT) T 0418 346 404 E jameso@atcis.com.au

36 / INSURANCE ADVISER MAY 2021

ATC Insurance Solutions Pty Ltd ABN 25 121 360 978 AFSL 305802 www.atcis.com.au

NIBA.COM.AU / 37

FEATURE / Trade Credit Insurance

FEATURE / Trade Credit Insurance

More important than ever A convergence of COVID-19 containment measures and political manoeuvring in countries such as China has focused the spotlight on the form of insurance that underpins cash flow and supply chain security for many businesses.

BY ROSALEA RYAN

38 / INSURANCE ADVISER MAY 2021

N

ow is not the time for Australian business operators – least of all those in the import/export sector – to drop trade credit insurance, industry experts caution.

“Global GDP contracted by 3.5 per cent in 2020 and as businesses around the world struggle to deal with reduced revenues, increased costs and constrained cash flows the risk of not being paid for goods sold or services rendered is arguably higher than ever,” Dan Chapman, Director of Credit Solutions at Aon, says.

“This insurance plays a key role in liquidity by giving businesses the confidence to trade on credit rather than cash on delivery.”

Lee Garvey, Willis Towers Watson’s Head of Financial Solutions for Australia– New Zealand, says trade credit insurers, “can be quite exposed to overall movements in an economy.”

“If there’s a downturn, then that can impact the trade credit market because

credit becomes more challenging from banks and some buyers have difficulty repaying or, worst-case scenario, may become insolvent.”

Chapman says while the governments of the United Kingdom, Italy, Canada, France, Germany, the Netherlands and New Zealand have stepped in to provide credit reinsurance or supplemental capacity schemes, to date this has not occurred in Australia.

Here, however, the Commonwealth’s issuing of financial stimulus packages and temporary shielding of businesses through amendments to bankruptcy law have been a buffer against COVID-19, staving off the insolvency surge that was predicted when much of the world first entered lockdown 14 months ago.

ORDERS TURNED AWAY

Repudiation has emerged as a major frustration for some exporters – particularly those dealing with buyers in China – the Head of Trade Credit in the Pacific for Marsh, Ewan Berkemeier, says.

The glut of local crayfish enjoyed by Aussie diners at Christmas is one example; others include the cancelling of Chinese orders for wine and the delay off port for many vessels waiting to discharge bulk shipments of Australian minerals.

“There’s been a greater prevalence in the past 12 months of repudiation claims – as a result of buyers effectively disappearing or because a change in the political landscape or the implementation of tariffs makes it no longer viable for them to take product. They refuse to accept it or they can’t even clear it at port,” Berkemeier says.

“Out of this companies have realised the need to diversify their relationships by negotiating new trading arrangements with suppliers and buyers in alternate markets to de-risk their position: to not have that concentration in particular countries.”

“One of the biggest challenges for businesses – assessing the credit risk of each counterparty – is exacerbated for exporters with clients operating in

NIBA.COM.AU / 39

FEATURE / Trade Credit Insurance

many different markets around the world,” Chapman says.

“When assessing credit risk, companies normally focus on historical information such as audited accounts and their own trading experience. However, in such a volatile environment this is very quickly out of date.

“Credit insurers are global businesses and have analysts and underwriters operating in each of these markets with access to up-to-the-minute information, meaning

they’re expertly placed to steer clients away from high-risk buyers. This creates a huge opportunity for exporters by giving them confidence to increase sales to new and existing clients knowing that they will ultimately get paid – and in turn brokers can educate clients about the benefits that a trade credit program can provide.”

Kirk Cheesman, Managing Director of National Credit Insurance, agrees: “This is not only a useful tool for protecting against a

potential insolvency but offers excellent intel on individual company and country risks.”

TIGHT SUPPLY

For clients not fortunate enough to be in long-term agreements, premiums are now about 10 per cent above those of the pre-pandemic early weeks of 2020, Berkemeier says.

Some insurers are not willing to consider writing new business or

“This insurance plays a key role in liquidity by giving businesses the confidence to trade on credit rather than cash on delivery.”

DAN CHAPMAN, AON

FIVE TRENDS TO WATCH Tightened terms: Some insurers have increased not only premiums but also deductibles and at the same time slashed no-claim and low-claim bonuses.

Reduced supply: Purchasing options have contracted as a result of companies becoming highly selective and choosing not to write new business and/or compete on renewals. Clients who allow cover to lapse may face difficulties when they later want to have it reinstated.

Non-renewal: Businesses seeking to reduce their outgoings may be tempted to let go of trade credit cover, which some operators view as a discretionary spend rather than an essential financial tool.

Repudiation: Altered trading conditions due to COVID-19 closures and/or the imposition or raising of import tariffs is leading higher numbers of foreign buyers to reject orders, in some cases leaving Australian goods stranded at port.

Insolvency rates: As government support and financial stimuli both domestically and overseas are wound back, insolvency declarations are likely to rise.

40 / INSURANCE ADVISER MAY 2021

#1 in claims management

#1 wording in market

Our Premium Repairers get trucks back on the road 9 days faster.

#1 Fleet on Sunrise

partner.nti.com.au Insurance products are provided by National Transport Insurance, a joint venture of the insurers Insurance Australia Limited trading as CGU Insurance ABN 11 000 016 722 AFSL 227681 and AAI Limited trading as Vero Insurance ABN 48 005 297 807 AFSL 230859 each holding a 50% share. National Transport Insurance is administered on behalf of the insurers by its manager NTI Limited ABN 84 000 746 109 AFSL 237246. Our Premium Repairers get trucks back on the road 9 days faster based on Independent Audit conducted in 2020.

FEATURE / Trade Credit Insurance

FEATURE / Trade Credit Insurance

“This is not only a useful tool for protecting against a potential insolvency but offers excellent intel on individual company and country risks.”

KIRK CHEESMAN, NATIONAL CREDIT INSURANCE competing on renewals, and at the same time terms are being tightened, hiking deductibles, decreasing flexibility and building in binding contracts or notificationof-withdrawal periods.

Chapman says that as credit risk and demand for appropriate insurance rose in 2020, the market hardened. “Rates have stabilised – albeit well above pre-pandemic levels – but volatility when it comes to credit

42 / INSURANCE ADVISER MAY 2021

limits on specific buyers will remain over the next 12–24 months as insurers react to the release of financial information or changes in payment behaviours.”

According to Berkemeier, one flow-on effect is that some clients are questioning the relevance of trade credit insurance.

“We experienced a higher incidence of lapses over 2020 among business weighing up those costs or forming the opinion that

given the reductions in coverage it didn’t make sense.”

Cheesman sees light on the horizon: “Insurers have become more confident. The tsunami of insolvencies didn’t occur and, due to government financial supporting mechanisms, insurers were protected on a macro level.”

There are notable exceptions in which the impact of lockdowns and lack of

Connect with the Trade Credit Solution Specialists.

Navigating credit risk management requires expert advice.

That’s what you’ll get with NCI.

35 years of experience

Australia wide coverage

To find out how we can help you call 1800 882 820.

Trade Credit Insurance | Credit Recommendations | Business Reporting | PPSR Management | Online Credit Applications National Credit Insurance (Brokers) Pty Ltd | ABN 68 008 090 702 | AFS Licence No 233817

FEATURE / Trade Credit Insurance

ANOTHER EXPORTER OPTION “Particularly where exporters are having to look at new markets, we work to offer political risk insurance to cover against circumstances where contracts might be reneged on or in some ways impaired because of political circumstances,” Lee Garvey says.

“There’s been a lot of trade into China these past years but in certain sectors that’s become more challenging so we’ve seen clients having to consider new markets which sometimes may be not as familiar. It might be exporting into parts of Asia that they’ve not worked with before or even into the Middle East. Some of these may be more developing nations or frontier markets, and it can be difficult to fully quantify all the things that might happen.

“Political risk insurance is a tool for clients to use to potentially mitigate some of the exposures that can come out of nowhere.”

cash flow still dominate: tourism, travel, entertainment, hospitality and some high-street retail.

“We’re working as brokers to minimise the impacts of the changes overall when we come up to renewal negotiations,” Berkemeier says. “It’s not only about price; we want to ensure that the structures and the terms are maintained or not changed materially and that the coverage and limits are in place.”

LOOKING AHEAD

These experts urge operators not to discard trade credit insurance in a bid to save dollars in the short term. “To date local insolvencies have remained artificially low but this shouldn’t be a reason for businesses to become complacent,” Chapman warns.

Insuring Not for Profits it’s all we do

Since our humble beginnings in 2014 and with support from our insurer partners, we have now donated more than $5.1m back to the Not for Profit sector

Berkemeier concurs: “The question mark from an outward-looking perspective is where normalcy will be as time trends on and that stimulus reduces down.”

“There’s still some nervousness around the impact of JobKeeper ceasing and what this will do to businesses that have been in ‘insolvency hibernation’ and may shortly wave the white flag,” says Cheesman.

Garvey has the final word on outbound trade: “In certain examples there’s a tendency for countries to be slightly more inward-looking post-COVID because there’s a need to protect their own economies and populations, so we’ve seen potential amplification to tariffs and quotas being imposed, and that particularly impacts Australia’s strong export market.”

“It’s not only about price; [as brokers] we want to ensure that the structures and the terms are maintained or not changed materially and that the coverage and limits are in place.”

EWAN BERKEMEIER, MARSH

44 / INSURANCE ADVISER MAY 2021

Association Liability Motor Vehicle

General Liability Business Package

Event Liability Industrial Special Risks

Voluntary Workers

COMMUNITY HUB

COMMUNITY HUB MAY 2021

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

INDEX AB Phillips ..................................................... 46 ASR Underwriting...................................... 47 MGA Insurance Brokers.......................... 48 Moran Insurance Brokers ...................... 48

Newline Group............................................ 49 Affinity Insurance Brokers...................... 49 Tudor Insurance .......................................... 50 Brookvale Insurance Brokers.................50 Wellington Underwriting.......................... 51

Pollard Insurance Brokers......................... 51 AIBI..................................................................... 51 Marsh & McLennan Agency.................. 52 All Parks Insurance...................................... 52 NIBA Mentoring........................................... 53

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

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

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

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

Commission is paid on placements.

For more information please contact Rose Dee on:

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

COMMUNITY HUB

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

48 / INSURANCE ADVISER MAY 2021

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 / 49

AFS License No. 214 185

COMMUNITY HUB

COMMUNITY HUB

Wellington Underwriting Agencies specialise in labour hire/recruitment, complex liability risks and niche property solutions.

Benefits of dealing with LSM:

Demolition and Asbestos Removal Liability Insurance

$20M Asbestos Liability now available Security of dealing with local office of a major insurer

Contact us for a confidential review of your clients insurance needs.

Local claims and underwriting service working closely with you to meet your clients business needs Automatic addition of Errors & Omissions coverage when Asbestos Liability is purchased

service@tudorinsurance.com.au

You can also apply for enhancements when you purchase this policy - coverage for Statutory Fines & Penalties, coverage for Shoring & Underpinning and coverage for transportation of asbestos (clean-up-costs)

(03) 9707 3033

15% commission of all placements

Tudor Insurance Australia Cameron McKerchar tudorinsurance.com.au

Labour Force includes Broadform Liability, Professional Indemnity and Management Liability and has been developed for: • labour hire companies • recruitment companies • group training and registered training organisations Our Combined General Liability wording has been tailored for complex risks including: • construction • manufacturing • rail • resource sector; and • other hard to underwrite risks Wellington’s Property capabilities are focussed on niche exposures including: • catastrophe-exposed properties • mining sector

Contact our Underwriters today or visit our website at

www.wellingtonu.com.au

�aibi

MOBILE BUSINESS SCHEME (Food Vans, Coffee Trailers, Dog Grooming, Mobile Offices, Mobile Dentists etc. all considered)

Advertise with the most influential and trusted voice in the Australian intermediated insurance industry

• Security 100% Australian Insurer • Combined Package (Motor & Business Combined) • All Motor Vehicles Trucks & Trailers cover includes Fitout (Reinstatement & Replacement Coverage) • Public & Products Liability • Optional Downtime (loss of income) Machinery Breakdown, General property & Money Covers • Dedicated Internal Claims staff

Contact: Tom Saddington (02 9934 9700) toms@bib.com.au

50NIBA_Classifieds_Brookvale_HPH.indd / INSURANCE ADVISER MAY 2021 1

Adult Industry Business Insurance

Also at Brookvale we have a National Motorcycle Dealership Scheme, with competitive rates and comprehensive offerings. Your contact is Peter Timosevski on 02 9934 9700 / 0421 440 552 or pt@bib.com.au

18/2/21 3:43 pm

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

NIBA.COM.AU / 51

COMMUNITY HUB

MARSH& MCLENNAN A G E N C Y OUR INSURANCE PRODUCTS INCLUDE:

■ ■ ■ ■ ■ ■ ■

Demolition & Asbestos Liability - demolition, asbestos removal and transport, asbestos and environmental consultancies and similar occupations Kidnap, Ransom & Extortion Personal Accident & Illness Income Protection Motor Trades - public and products liability Tyre Retailers - property Window Cleaners - public and products liability

PLEASE VISIT OUR WEBSITE, AND CLICK ON "PRODUCTS AND SERVICES" FOR MORE DETAILS www.marshmc.com.au

CONTACT Michael Beveridge

08 8385 3630 or

Tara Nadge

08 8385 3583 enquiries@marshmc.com

Advertise with the most influential and trusted voice in the Australian intermediated insurance industry · Insurance Adviser · Insurance and Risk website · Broker Buzz · Need a Broker website · Targeted eDMs · NIBA events (Annual Convention)

Marsh and McLennan Agency Pty Ltd ABN 33 000 668 584 / AFSL 238984

517-3776

52 / INSURANCE ADVISER MAY 2021

Contact Tony May National Advertising Sales Manager T: 02 9459 4303 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.

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

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

SAVE THE DATE FOR YOUR STATE’S GALA LUNCH

2021 NIBA UAC VICTORIAN UNDERWRITING EXPO & LUNCH WHEN: Friday, 21 May 2021 WHERE: Crown Melbourne

You can register for the above now on the NIBA website: niba.com.au/ event/2021-niba-vic-gala-launch

2021 NIBA WA GALA LUNCH

2021 NIBA NSW GALA LUNCH

WHEN: Friday, 9 July 2021 WHERE: Crown Perth

WHEN: Friday, 16 July 2021 WHERE: Doltone House Jones Bay Wharf

2021 NIBA QLD GALA LUNCH

2021 NIBA SA GALA LUNCH

WHEN: Wednesday, 14 July 2021 WHERE: Royal International Convention Centre

WHEN: Friday, 23 July 2021 WHERE: Adelaide Convention Centre

DISPLAY ADVERTISING INDEX – MAY 2021 BAIS..................................................IFC Vero........................................................5 GT Insurance...................................... 7 Insurance Advisernet......................9 SLE Worldwide Australia...............11 ANZIIF.................................................15

Focusnet..............................................21 McLardy McShane.........................25 Broker Co-op advertorial........... 29 MECON............................................ 33 Zurich..................................................35 ATC.......................................................37

NTI........................................................ 41 NCI...................................................... 43 Community Underwriting.......... 45 Ebix.................................................. IBC QBE................................................OBC

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

54 / INSURANCE ADVISER MAY 2021

NIBA / Events

NIBA MENTORING PROGRAM The NIBA Mentoring Program’s second workshop was held in NSW, Vic, Qld and WA on Thursday 8 April. In NSW our esteemed panellists were: • Anthony Pagano, Head of Commercial Intermediaries, Commercial Intermediated Distribution, Vero • Adrian Kitchin, Managing Director, Resilium • Coralie Young, Executive Director, Procare Group • David Harry, Client Manager, Affinity, Not for Profit, Aon and 2020 NSW winner of the NIBA Young Professional Broker of the Year Award

NIBA.COM.AU / 55

INSURER STRENGTH RATINGS

INSURER STRENGTH RATINGS

AUSTRALIA

S&P GLOBAL

INSURER FINANCIAL STRENGTH RATINGS

The following list of S&P Global Ratings insurer financial strength ratings assigned to insurance companies in Australia and New Zealand. Ratings at 1 April, 2021.

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

NEW ZEALAND

RATING

NON-LIFE INSURERS

RATING

NON-LIFE INSURERS AAI Ltd.

A+/POSITIVE

AIG Australia Limited

A/CreditWatch Negative

Allianz Australia Insurance Ltd.

AA-/STABLE

BHP Billiton Marine & General Insurances Pty Ltd. A/STABLE Chubb Insurance Australia Ltd.

AA-/STABLE

Great Lakes Insurance S.E (Australia Branch)

AA-/STABLE

Hallmark General Insurance Co. Ltd.

BBB+/STABLE

Insurance Australia Ltd.

AA-/STABLE

Society of Lloyd's

A+/STABLE

AA Insurance Ltd.

A+/POSITIVE

Medical Insurance Australia Pty Ltd.

A-/STABLE

AIG Insurance New Zealand Ltd.

A/CreditWatch Negative

QBE Insurance (Australia) Ltd.

A+/STABLE

Chubb Insurance New Zealand Ltd.

AA-/STABLE

QBE Insurance (International) Ltd.

A+/STABLE

Zurich Australian Insurance Ltd.

AA-/POSITIVE

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

AA-/STABLE

Society of Lloyd's

A+/STABLE

Medical Insurance Society Ltd.

A-/POSITIVE

LENDERS MORTGAGE INSURERS Genworth Financial Mortgage Insurance Pty Ltd.

A/NEGATIVE

QBE Lenders' Mortgage Insurance Ltd.

A/STABLE

Westpac Lenders Mortgage Insurance Ltd.

A/CreditWatch Negative

NEW ZEALAND

BEST’S

FINANCIAL STRENGTH RATINGS

CIGNA Life Insurance New Zealand Limited

A/STABLE

Co-operative Life Limited

B++/STABLE

DPL Insurance Limited

B++/STABLE

Fidelity Life Assurance Company Limited

A-/STABLE

Foundation Life (NZ) Limited

A-/STABLE

General Reinsurance Life Australia Limited (New Zealand Branch)

A++/STABLE

LIFE, ANNUITY AND ACCIDENT

Kiwi Insurance Limited

A-/STABLE

General Reinsurance Life Australia Ltd.

Lifetime Income Limited

B u/NEGATIVE

Momentum Life Limited

B++/STABLE

Partners Life Limited

A- u/DEVELOPING

Pinnacle Life Limited

B/STABLE

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-/NEGATIVE

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

A+/STABLE

Pacific International Insurance Pty Limited

B++/NEGATIVE

Beneficial Insurance Limited

B++/STABLE

Brightsideco Insurance Limited

B/STABLE

Consumer Insurance Services Limited

B+/STABLE

First American Title Insurance Company of Australia Pty Limited (New Zealand Branch)

A/STABLE

FMG Insurance Limited

A/STABLE

General Reinsurance Australia Ltd (New Zealand Branch)

A++/STABLE

Health Services Welfare Society Limited

B+/STABLE

Mitsui Sumitomo Insurance Company Limited (New Zealand Branch)

A+/STABLE

New Zealand Medical Professionals Limited

B+/STABLE

Pacific International Insurance Pty Ltd (New Zealand Branch)

B++/NEGATIVE

Police Health Plan Limited

A-/STABLE

Provident Insurance Corporation Limited

B /STABLE

The Hollard Insurance Company Pty Ltd (New Zealand Branch)

A-/STABLE

The New India Assurance Company Limited (New Zealand Branch)

B++/STABLE

Tokio Marine & Nichido Fire Insurance Company Limited (New Zealand Branch)

A++/STABLE

Tower Insurance Limited

A-/STABLE

Union Medical Benefits Society Limited

A/STABLE

Virginia Surety Company, Inc. (New Zealand Branch)

A/STABLE

Teleco Insurance (NZ) Ltd.

BBB+/STABLE

LIFE INSURERS

Vero Insurance New Zealand Ltd.

A+/POSITIVE

AIA Australia Ltd.

A+/STABLE

A+/POSITIVE

AMP Life Ltd.

A-/NEGATIVE

The Hollard Insurance Company Pty Ltd

A-/STABLE

QBE Insurance (Australia) Ltd. (New Zealand Branch) A+/STABLE

Challenger Life Company Ltd.

A/STABLE

HEALTH INSURERS

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

The New India Assurance Company Limited (Australia Branch)

B++/STABLE

BBB+/STABLE

NIB NZ Ltd.

A-/STABLE

MetLife Insurance Ltd.

A+/STABLE

Westpac Life Insurance Services Ltd.

A+/STABLE

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

A/NEGATIVE

LIFE INSURERS Asteron Life Ltd.

A+/POSITIVE

Hallmark Life Insurance Co. Ltd. (NZ Branch)

BBB+/STABLE

Medical Life Assurance Society Ltd.

A-/POSITIVE

Westpac Life-NZ-Ltd.

A+/NEGATIVE

Resolution Life New Zealand Ltd.

A-/NEGATIVE

REINSURERS General Reinsurance Australia Ltd.

AA+/STABLE

General Reinsurance Life Australia Ltd.

AA+/STABLE

Hannover Life Re of Australasia Ltd.

AA-/STABLE

Munich Reinsurance Co. of Australasia Ltd.

AA-/STABLE

RGA Reinsurance Co. of Australia Ltd.

AA-/STABLE

SCOR Global Life Australia Pty Ltd.

AA-/STABLE

Swiss Re Life & Health Australia Ltd.

AA-/NEGATIVE

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

56 / INSURANCE ADVISER MAY 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.

LIFE, ANNUITY AND ACCIDENT

A u/NEGATIVE

A/STABLE

Hallmark Life Insurance Co. Ltd.

B/STABLE

BNZ Life Insurance Limited

A/STABLE

A+/STABLE

Quest Insurance Group Limited

A/ STABLE

Southern Cross Pet Insurance Ltd.

Southern Cross Medical Care Society

COMPOSITE

American Income Life Insurance Company (New Zealand Branch)

The following list of AM Best Financial Strength Ratings (FSRs) assigned to insurance companies in Australia and New Zealand. Ratings as at 6 April, 2021.

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

Southern Cross Benefits Ltd.

Vero Liability Insurance Ltd.

RATING

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

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

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

PROPERTY/CASUALTY

NIBA.COM.AU / 57

INSURANCE JOURNEY / Prudence Chang

PASSION SPEAKS

From navigating the world of real estate to manoeuvring the intricacies of trade credit insurance, the Vic/Tas NIBA Divisional Committee Member, Prudence Chang from National Credit Insurance (NCI) Brokers, is steadily emerging as a force to be reckoned with.

“I

was in real estate and was approached by the then state sales manager of NCI asking if I wanted a change in career. When I was told I did not have to work seven days a week, I jumped right in.

However, I chose to stay in trade credit insurance, because of the people. Not only do I get to meet a range of different sized companies but also a range of diverse businesses. Every day is different which keeps it exciting and interesting.

Insurance is a harder sell than real estate. It is not an emotional buy but a financial purchase, so we need to as brokers be good at identifying the needs and matching them to the right level of cover, type of policy at the most costeffective price. We need to listen to the clients and not assume what they want.

I believe that the different businesses we assist, as well as the types of claims we see, are what keep insurance interesting, not to mention working around policy keeps one on their toes.

The biggest lesson I have learnt in my career so far is to never assume anything and keep asking questions until I understand a client’s business. I think people are drawn to passion and if we speak passionately about insurance then we will attract talented people into the profession.

I would not change even the slightest detail about how my career has panned out so far. I feel that moving to NCI was the right move for me, it has been exciting and fun, making the last 15 years seem like a lot less.

Formal and informal mentorship has played a huge role in my career, I have external mentors and support others,

PROUDLY SUPPORTING

58 / INSURANCE ADVISER MAY 2021

so I believe passionately in the power of mentoring. I find brokers that have mentors are better at brainstorming and seeking alternative solutions.

They are also able to find strategic solutions for clients and are never afraid to ask for help themselves, which only ensures that the client is receiving the most valuable solution. I do believe that effective mentoring also deepens the relationship between a company and its employees.

Along with mentoring I am passionate about becoming a trusted adviser and professionalism to me as a broker means I am always the best I can be, not only with my knowledge, but my actions and my voice.

We need to always hold ourselves to a higher standard than anyone else. We are trusted advisers, and this is one of the greatest privileges we are bestowed.

Without acting with utmost professionalism, we will only create a culture which no one would want to be a part of.

Because I believe in the future of insurance broking as a profession, I am an enthusiastic advocate of diversity and inclusion – it is the future. No company can rely on one type of person to create an environment where new ideas can be created. We need differing people from varied backgrounds to do this and by having discussions on how to become more inclusive, we are opening doors to allow this to happen.

I decided many years ago I wanted to be part of NIBA to understand the industry on a wider level and be a part of change.

I wanted a voice and NIBA allows me to understand other brokerages whilst contributing on a larger scale outside of my normal role.”

FIVE QUICK QUESTIONS Tell us something most people don’t know about you? I am obsessed with musicals.

Favourite film? Shakespeare in Love Favourite book? Currently it would be Women and Leadership by Julia Gillard and Ngozi Okonjo-Iweala Favourite past-time? Other than spending time with my family, it would be soaking in the sun.

Favourite dish? Spaghetti Bolognese

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