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RMS enhances quake, cyclone models

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RMS has updated its earthquake and cyclone models for Australia.

The cyclone model includes the most recent market and meteorological data from Yasi in 2011, Marcia in 2015 and Debbie last year.

It shows the number of at-risk dwellings has risen 15% between 2005 and 2016.

The quake model reflects the latest scientific views on seismic hazards, event rates and ground motion data.

The new models are among improvements to RMS’ catastrophe risk management software for Australia.

“The Version 18 release provides the latest modelling insights to drive growth across the varied markets of the Asia-Pacific region, particularly in Australia,” MD Australia and New Zealand Pierre Wiart said.

Meanwhile, Risk Frontiers’ new earthquake model, incorporating Geoscience Australia’s latest seismic modelling changes, has prompted a general reduction in insurance loss estimates.

Geoscience Australia’s new modelling counts half as many quakes above magnitude 4.5 or 5 on the east coast since 1900 compared with previous modelling.

Risk Frontiers’ updated quake model incorporates a new active fault model, based on rare and large prehistoric events that do not show up in the short historical record of quakes in Australia. It also includes updates to exposure data and soil classification.

Chief Geoscientist Paul Somerville says Sydney now shows a drastic reduction in estimated losses across every return period, while in Adelaide losses are lower for short return periods. Losses in Melbourne have slightly increased.

Bega review urges improved fire response co-ordination

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A review of this year’s fires in the NSW south-east coastal area of Bega Valley has recommended statewide changes to strengthen collaboration between different emergency agencies and departments.

It says NSW should establish a fully integrated call and dispatch service for all emergencies and possibly set up a multi-agency emergency management operations complex.

Better options for call and dispatch, telecommunications and information-sharing across the departments should be explored.

Boundaries between fire departments should be eliminated so the nearest available truck can be dispatched.

The review also recommends the fire service fleet be fitted with automatic vehicle locator devices to provide a clearer picture of where resources are deployed.

The State Government has referred most recommendations to the Emergency Services Board of Commissioners for consideration and to develop possible implementation plans.

The Rural Fire Service will trial automatic vehicle locator devices within the next three months.

Macquarie launches Dive In survey

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Macquarie Bank’s second diversity and inclusion survey is open from today, as Lloyd’s Dive In Festival was officially launched.

The results of the inaugural survey, powered by Macquarie and in conjunction with Dive In, were unveiled at last year’s festival, and organisers hope this year’s results will show improvement.

The survey takes about five minutes to complete and all responses will be anonymous.

Organisations that receive more than 50 responses will receive a personalised report compared with the industry benchmark. To take the survey, click here.

The full results will be presented at the Dive In Festival, which runs from September 25-27.

The festival will head to New Zealand this year for the first time, as the celebration of industry diversity and inclusion continues to enjoy industry-wide support.

Preparations are under way, with events scheduled in Wellington and Auckland, plus Sydney, Melbourne, Brisbane, Adelaide and Perth.

Events are built around the #time4inclusion theme.

Key industry supporters of the annual festival include QBE, XL Catlin, Zurich, Willis Towers Watson, Aon, Steadfast, JLT, Marsh and the National Insurance Brokers Association.

“After three years raising awareness of the business case for diversity and inclusion, the global movement now looks to harness the energy of previous years to encourage action across the sector,” Lloyd’s says.

This year’s festival will take place in 26 countries and 50 cities, a huge expansion from its 2015 debut in the UK only. For more information, click here.

NZ’s north suffers flooding, high winds

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Wild weather hit New Zealand’s North Island at the weekend, with flooding and road closures in Coromandel, Thames and Auckland.

Rainfall passed 100mm in some areas, while the MetService issued strong wind warnings. The weather front was moving away to the southeast by this morning.

The Insurance Council of New Zealand (ICNZ) says it is too soon to calculate losses from the severe weather.

CEO Tim Grafton says residents should report damage to insurers as soon as possible, and he recommends providing photos of damage when safe to do so.

ICNZ has continued to stress the importance of improving community resilience and says the country must plan and adapt to reduce the impact of natural disasters.

Liberty warns on reputation damage from food recalls

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A few days after supermarkets pulled sliced mushroom packets off their shelves following a plastic contamination scare, a product liability insurer has warned that food companies suffer more than monetary losses during product recalls.

Liberty International Underwriters says while the recall itself is expensive, “the two major issues companies face after recalls are a damaged reputation, followed by a hit to the bottom line”.

“Recalls cause significant impact on a business because costs can run into the millions. This can even occur from products with a reasonably low turnover.”

The 2015 recall of contaminated frozen berries cost Patties Foods more than $9 million, with the Victorian company quitting the frozen fruit market a year later.

Liberty says 626 food-related recalls were recorded between 2008 and last year – about 63 a year on average. Three-quarters of food recalls in the past three years related to undeclared allergens, microbial contamination and foreign matter.

EQC locks in $4 billion reinsurance program

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International reinsurers have agreed to provide about $NZ5 billion ($4.6 billion) of cover for New Zealand’s Earthquake Commission (EQC) this financial year.

The premium is $NZ179 million ($163.8 million) for the year to May 31, the commission says.

“The ongoing support of international reinsurers shows they continue to have confidence in the EQC and their support underpins New Zealand’s insurance market,” CEO Sid Miller said.

“Securing reinsurance at rates comparable to recent years is a great vote of confidence in the EQC from reinsurers.”

The commission last year paid about $NZ165 million ($150.3 million) in reinsurance premiums for $NZ4.8 billion ($4.4 billion) of cover, a spokesman told insuranceNEWS.com.au.

The EQC says it has helped reinsurers understand New Zealand risks, using claims information and scientific research it funds on earthquake, volcano, tsunami, landslip and hydrothermal hazards.

Its Minerva earthquake impact modelling system also estimates likely losses from events.

The EQC has an excess of $NZ1.75 billion ($1.6 billion), meaning it mostly pays claims from the National Disaster Fund rather than recovering from the reinsurance program.

“Our reinsurance is to help pay claims when something really big, like the Canterbury earthquake sequence, happens,” Mr Miller said.

The commission expects to spend $NZ10-11 billion ($9.2-10.1 billion) managing and paying claims from Canterbury, with $NZ3.5-4 billion ($3.2-3.7 billion) recovered from reinsurers.

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Corporate

Axa opens global service to Australian customers

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Axa Corporate Solutions has unveiled its suite of insurance offerings and support services in the Australasian market for clients with global operations.

“This move greatly enhances the products and services we can offer to local companies doing business overseas,” Australia CEO Hubert Jumel said.

“The feedback from brokers we have presented the capabilities to so far has been overwhelmingly positive. Some of them have remarked how they have been looking for just these kind of solutions.” 

The full range of products and services includes insurance solutions in 150 countries, support from 500 claims specialists and online tools to track program implementation in real time.

Clients can also seek risk management advice from 160 qualified experts.

The Australian team is briefing broker partners in detail.

Meanwhile, XL Catlin in Australia will trade as XL Insurance, under global changes to follow Axa’s acquisition of Bermuda-based XL Group.

The change will also see Axa Corporate Solutions – which has a growing operation in Australia – being brought under the new brand.

The $US15.3 billion ($20.7 billion) acquisition announced in March shifts Axa’s business from predominantly life cover and savings to mainly property and casualty (P&C). The combined group will operate under the Axa master brand.

XL Group and Axa will remain separate companies until the deal closes sometime before the end of the year. Shareholders in the XL Group approved the acquisition last month.

The Paris-based company says the new division dedicated to large P&C commercial insurance and specialty risks will be named Axa XL.

Offerings within the division will be identified along three main lines.

XL Insurance will comprise XL Group’s insurance business and Axa Corporation Solutions, and will also include XL Art and Lifestyle.

The other two lines will be XL Reinsurance and XL Risk Consulting.

The primary Lloyd’s syndicate will continue to be known as XL Catlin Syndicate 2003.

The Australian XL Catlin business has offices in Sydney, Melbourne and Brisbane.

CBL probe reveals possible breaches as chairman quits

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CBL Corporation may have violated corporate and regulatory laws, the Financial Markets Authority (FMA) has found.

Areas of possible misconduct include disclosures made under an initial public offering in 2015, financial reporting and directors’ duties.

The New Zealand regulator’s preliminary probe also flags disclosure of information from the middle of last year as a trouble spot.

It is now considering the conduct of CBL’s auditor Deloitte.

The FMA says it will continue to liaise with the Reserve Bank and Serious Fraud Office in their ongoing investigation.

It will seek information from CBL’s voluntary administrator, the liquidator of subsidiary CBL Insurance and relevant overseas regulators.

“Given the involvement of these other agencies and the complexity of the issues, the investigation process is likely to take some time,” the FMA says.

The formerly high-flying insurer faced another setback last Friday when CBL Chairman and director John Wells announced he will step down and relinquish similar roles at CBL Insurance. Two other independent non-executive directors, based overseas, are also resigning.

“We now feel we can simply do no more for shareholders and, with little power or authority, our resignation is the appropriate option in these circumstances and provides clarity and certainty over our position," Mr Wells said.

Hollard adds ex-Allianz risk chief to board

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Former Allianz chief risk officer and chief actuary Noeline Woof has joined Hollard as a non-executive director.

Her appointment means women occupy four out of the nine Hollard board seats.

Before working at Allianz Ms Woof was a partner in actuarial services at PwC for more than 12 years and a senior policy adviser with the Australian Prudential Regulation Authority.

“Our industry is under a great deal of scrutiny and is facing a war for talent,” Hollard CEO Richard Enthoven said.

“[Ms Woof’s] deep risk management and actuarial expertise will enhance the mix of skills on the board and continue to bring valuable cognitive diversity into the boardroom.”

Gallagher outlines specialist focus following acquisition

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Gallagher says specialist lines are a priority for the business and further acquisitions could follow the Milne Alexander deal.

As previously reported by insuranceNEWS.com.au, Gallagher is delighted with the “significant” acquisition of Milne Alexander, which it calls “one of the last independent heritage Sydney insurance brokers”.

MD Specialisms Paul Harvey says specialist lines are “absolutely” a focus, and conversations are taking place “with a number of parties”.

“Milne Alexander is a well-respected brand that has had 40 years of growth and a specialised approach that offers some skill sets that are new to Gallagher,” he said.

“It operates in a number of niche markets and adds incredible strength to what we do.”

Milne Alexander was formed in 1973. It was a non-equity member of Steadfast and one of the founding Steadfast members.

It has 20 specialist insurance and risk advisers across two locations in Sydney and SA, and a diverse portfolio of SME, mid-market and corporate clients with specialist capability in transport, manufacturing, aquaculture and Australian ski resorts.

Mr Harvey says the business will trade as Milne Alexander for now, but in future it will be merged with Gallagher and the Sydney offices will be combined.

Darren Milne, the son of founder John Milne, told insuranceNEWS.com.au the deal creates “tremendous opportunity” for growth.

“There are certain clients that will only deal with a global broker. It’s the right fit and we are budgeting for growth going forward.”

Mr Harvey says Gallagher will give Milne Alexander “the capacity to reach into the global market”.

WTW fills regional broking roles

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Willis Towers Watson has promoted Trent Williams to Head of Broking Australasia and Juan Florez to Head of Carrier Management Asia-Pacific.

Mr Williams, who was most recently construction broking director, will be responsible for identifying and implementing innovative broking solutions across the company.

Mr Florez was previously manager of carrier engagement and platforms in Australasia.

He will work with Willis Towers Watson’s carriers to enhance their insurance offerings, reporting to Mr Williams.

Mr Florez’s role is a newly created position.

A WTW spokesman told insuranceNEWS.com.au the role of Head of Broking has been expanded to include new responsibilities as the company strategically reinforces its expertise in this key area.

Helene Madell, who is now with Aon, previously held a similar function.

Suncorp to unite staff at Brisbane HQ

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Suncorp will consolidate its Brisbane workforce in one building from 2022, moving to 80 Ann Street in the city.

It follows similar moves in Sydney, Melbourne and Auckland. Suncorp says the Sydney move reduced costs by 30%.

CEO Michael Cameron says the purpose-built office will provide flexibility for the workforce. The site will align with the city council’s “Buildings that Breathe” principles for sub-tropical architecture.

Lloyd’s puts Bridge platform to test

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Lloyd’s has introduced its Bridge digital distribution platform to Australia, under a pilot that also includes New Zealand and the UK.

The electronic platform aims to match insurance businesses with underwriters from the Lloyd’s market in a more efficient and cost-effective way.

“Lloyd’s already has a significant coverholder network in Australia, with more than 130 established businesses,” Country Manager Chris Mackinnon said.

“Coverholder distribution is a cornerstone of our Australian business, so we are delighted Australia is included in the pilot program.”

Lloyd’s plans to expand the platform globally next year.

Bridge is one of many digital initiatives at Lloyd’s, which is pursuing a modernisation program to cut costs and stay competitive.

“As we continue to grow and expand our international business we are committed to enhancing the service and access we provide to our customers’ changing needs,” Chief Commercial Officer Vincent Vandendael said. 

“By providing coverholders with quick and easy access to our market, Lloyd’s Bridge will transform how we do business.”

IAG’s top lawyer to depart

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IAG’s Group General Counsel Chris Bertuch will leave the insurer in September.

The departure has attracted attention since the Australian Financial Review questioned why Mr Bertuch had been on leave since “at least the start of June”, and the company said he had decided to resign while on leave.

Mr Bertuch was instrumental in selling IAG’s southeast Asian operations last month, plus the acquisition of Wesfarmers’ underwriting business and the relationship with Berkshire Hathaway in 2015.

He also helped establish IAG’s Reconciliation Action Plan in 2013 and founded the insurer’s ethics committee in 2016.

Acting Group General Counsel Rebecca Farrell will fill the position while a replacement is sought.

Zurich simplifies broker platform

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Zurich has revamped its Z.Stream trading platform following feedback from brokers seeking property, liability and fleet motor covers.

“It’s about making ourselves easy to work with, and feedback from brokers says they want clarity about how to best access Zurich’s range of propositions,” Head of Commercial Insurance Giles Crowley said. 

“Instead of going to three different places to access our property, liability and fleet motor offerings, brokers now only go to two.”

The changes mean products that underpinned the ZCI suite of offerings have been repointed.

Meanwhile, Zurich has this month stopped writing new policies for chauffeur vehicles, and will no longer renew the cover from September.

“Our chauffeur portfolio was sub-scale and was diverting attention and underwriting capability from lines where we know we can compete strongly for market leadership,” Mr Crowley said.

“To be credible in the market, it’s important to be clear and consistent about your appetite and the segments you want to serve, and this decision is entirely aligned to that.”

Agile moves into PI space

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Insurtech Agile Underwriting Services has entered the financial lines market with the introduction of Lloyd’s-backed professional indemnity insurance.

The Sydney-based agency has appointed Clive Davidson as Financial Lines GM to oversee the business.

Mr Davidson has more than 35 years’ industry experience, including as regional manager for financial lines with Arch Underwriting.

“Our strategy is twofold: we aim to give brokers solutions for both commodity and complex [professional indemnity],” Mr Davidson said.

“Relationships and expertise are at the core of our offering, and we aim to provide our partners with systems efficiencies that benefit their business.”

Agile also offers aviation and marine cover and cyber insurance.

McLarens recruits for new Perth office

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Global loss adjuster McLarens has hired Desmond Lee as Executive Loss Adjuster for its new Perth office.

The office is McLarens’ fifth local branch, adding to operations in Brisbane, Melbourne, Newcastle and Sydney.

CHU sets up post-disaster recovery arm

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Strata and community title insurer CHU has established a business unit dedicated to speeding the recovery process for clients after disasters.

CHUAssess will provide on-site approval work to panel builders and make decisions on assessor reports, a role typically taken by claims consultants.

“The need for speed is vital for strata owners and their tenants when disaster strikes,” Head of Claims Andy Martindale said. “CHU’s goal is to drive good customer experience.

“The decision is made on the spot by a CHU assessor, so the claim is handled by the assessor, not claims consultants, removing another layer in the process.”

The insurer is introducing CHUAssess in NSW this month, with other eastern states to follow.

WTW taps AI to increase customer retention

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Willis Towers Watson has recruited machine learning and artificial intelligence insurance technology group Relativity6 to raise customer retention in Australia.

US-based Relativity6’s automated platform of behavioural listening algorithms analyses various data sources to predict purchasing patterns at individual corporate level.

“Relativity6’s product offerings are a good fit to accomplish our strategic objectives across the organisation, so we are very excited to partner with it, to take full advantage of the data we have accumulated within our core systems in Australia,” GM Affinity and Commercial Australasia Brent Lehmann said.

Nautilus drops anchor in NZ

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Boat specialist Nautilus Insurance has launched in New Zealand, taking its systems and infrastructure across the Tasman to further expand.

Nautilus will offer pleasurecraft insurance across New Zealand, and policy wordings will continue on an all-risks basis.

The business offers insurance to 30,000 boat owners across the region.

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Regulatory & Government

Canberra extends unfair contract terms consultation

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The Federal Government has extended a deadline for submissions on controversial proposals to make insurance subject to unfair contract terms legislation.

Its consultation now has a closing date of August 24, after requests were received for additional time. Submissions on the Treasury paper were initially due by July 27.

The Insurance Council of Australia says the proposed model could have profound implications for insurance contracts and lead to sharp price rises.

“This particular proposal would be detrimental and would lead to perverse outcomes that would actually harm the ability of Australian households and small business to buy insurance,” spokesman Campbell Fuller told insuranceNEWS.com.au.

The paper, which includes 32 questions for consultation, follows recommendations from a Senate inquiry into general insurance last year.

See ANALYSIS.

ACCC chief Sims warns on corporate misbehaviour

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Australian Competition and Consumer Commission Chairman Rod Sims says companies too often behave badly and regulators must act to reveal and avert actions that harm customers.

“The greater the likelihood that bad behaviour will be exposed and made public, the more companies will do to guard against such behaviours,” he said in a speech in Tasmania.

“A key value of the [Hayne] royal commission has been to expose the poor behaviour of financial institutions to public scrutiny.”

Incentives to maximise shareholder returns too often result in behaviour that causes customers to lose out, he says.

“It is often said that companies succeed by looking after the needs of their customers.

“However, I have been surprised over very many years at the way in which many businesses often do precisely the opposite.

“We have observed firms winning customers through misrepresenting their offers and employing high-pressure selling tactics. In addition to hurting consumers, this type of behaviour hurts rival firms.”

Mr Sims says bad behaviour is more likely to be “punished” in competitive markets and the ACCC has increased its focus on studies exploring ways to increase competition. Projects on its agenda include the examination of northern Australian insurance.

Companies can act out of step with community perceptions while believing they are behaving rationally, he says.

Examples include charging new customers less than those continuing to pay for a service.

“The common reaction from loyal customers is outrage when they discover they have, for years, been paying more than they needed to,” he said.

SA council body revamps insurance scheme oversight

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The Local Government Association (LGA) of SA has established a subsidiary to oversee its insurance schemes, following an Auditor-General’s report recommending changes.

LGASA Mutual will oversee the mutual liability and workers’ compensation schemes, with long-term insurance provider JLT contracted to run day-to-day operations.

“Across both schemes, savings of $4.6 million are predicted over the next three years, and $43.4 million over the coming decade,” LGA CEO Matt Pinnegar said.

A skills-based board will work with JLT, and the structure is expected to be operational by September. Member benefits will be applied from the start of this financial year.

JLT Public Sector Global Head Leo Demer says organisation of the schemes dates back to the 1980s and change is due.

“It is a modernisation of the arrangements, and it will be more efficient, ” he told insuranceNEWS.com.au.

The LGA says the schemes, set up when councils found it difficult to secure insurance through traditional providers, have saved the sector more than $500 million over the past 20 years.

The group reviewed the schemes after the Auditor-General’s report in 2015.

All SA councils are voluntary members of the mutual liability and workers’ compensation schemes. JLT provides insurance services to more than 500 councils across Australia.

“When we aggregate all the schemes we look after for local government, it would be more than $2 billion that would have been saved over the past 20 years,” Mr Demer said.

ACCC to consult on consumer data right

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A consultation paper on rules for the proposed consumer data right (CDR) program will be released next month.

The program was announced last November, and aims to give people greater control over their data.

“It is essentially a data portability right,” Australian Competition and Consumer Commission Chairman Rod Sims said.

“The CDR will give consumers the right to safely access data about them held by businesses, and direct that this information be transferred to trusted third parties of their choice.

“This will enable consumers to benefit from the data businesses hold about them.”

The CDR will be introduced in banking next year, followed by energy and telecommunications.

NZ accident scheme tests automated claims process

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New Zealand’s Accident Compensation Corporation expects faster processing of simple claims when a new system is introduced later this year.

The no-fault accident insurer is currently testing the system, which uses a statistical model to determine the probability a given claim will be accepted.

Data from 12 million anonymised claims lodged between 2010 and 2016 is being used to gauge the system’s accuracy.

“Our new system is looking to fast-track as many simple claims as possible where it is fairly obvious the injury was caused by an accident,” COO Mike Tully said.

“Less straightforward claims – such as sensitive claims and treatment injury claims that wouldn’t meet the criteria for fast-tracked processing – will be reviewed in person by a staff member, as all claims are now.”

NT reviews WorkSafe practices

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The NT Government has begun a six-month review of workplace regulator WorkSafe.

It will examine policies, procedures and activities that enforce the Work Health and Safety Act, and consider how best practice can be implemented to support staff and stakeholders.

Former union leader Tim Lyons will lead the review, after conducting a similar program in Queensland.

Submissions close on August 31. A final report will be submitted to the Government in December.

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Life Insurance

Opt-in reform promotes underinsurance: AFA

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The Association of Financial Advisers (AFA) has criticised proposed opt-in arrangements for life cover in superannuation.

In a submission to the Senate committee considering the plans, it warns of a substantial increase in underinsurance and greater reliance upon social security.

While the reforms may lead to an increase in people buying retail life insurance – which the AFA says is a better option than group cover – many people who experience life-changing events will be disadvantaged.

The AFA also questions why the reforms are being “pushed through” when the Productivity Commission is still reviewing default super.

“There are many potential negative consequences that could flow from this package and we caution against it being pushed through without adequate consultation and consideration of the objectives and the likely consequences.”

The AFA acknowledges that some insurance is ineffective, particularly when members have duplicate income protection policies, but it does not believe removing insurance for these members is the best outcome.

It says most young people do not appreciate the value of insurance, and as more people who have family health issues or previous health problems opt in, it will increase the risk pool.

The AFA also questions whether people will drop their insurance in response to an expected increase in premiums.

It urges the Senate committee to hold public hearings, to better understand the implications of the proposed reforms, and hear from super funds, insurers, the Australian Prudential Regulation Authority and independent experts.

Measure to address duplicate accounts will go a long way to solving problems the reforms seek to address, the AFA says.

Heavyweights join opposition to opt-in proposal

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Industry opposition to opt-in insurance in superannuation is growing, with TAL Life, Munich Re, MetLife and RGA Reinsurance making submissions to the Government.

TAL has told the Senate committee considering the reform that fund members with shorter or more irregular employment tenures will be excluded from the insurance benefits enjoyed by those making regular contributions, creating a two-tier, discriminatory system.

The proposed legislation does not take account of changing work patterns, including the move to more flexible, less routine employment, and the rise of the gig economy, TAL says.

TAL and Munich Re raise concerns that the legislation fails to protect fund members who have already made active decisions to take up a group insurance benefit.

Munich Re says clear action by a member to maintain their insurance – either through modifying their insurance arrangements or undertaking an underwriting process – will not be considered an active choice under the legislation.

If members cannot immediately be contacted, their cover will also unintentionally cease, Munich Re warns. Legislation wording should be rectified to fix this, it says.

MetLife warns the need to devote more marketing and administrative costs to encourage opt-in will drive up premiums. The reform will also inject instability into the group insurance system by disrupting the risk pools that drive pricing, it says.

RGA Reinsurance warns the change will increase operational risk for insurers and trustees, by forcing them to quickly restructure their group insurance offerings.

The industry is not resourced to undertake such pricing changes simultaneously, it says.

“We are aware of at least one superannuation fund that has already deferred a planned update of its insurance arrangements due to the announcements,” RGA Reinsurance says.

APRA backs industry over super concerns

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The Australian Prudential Regulatory Authority (APRA) has echoed industry concerns that opt-in cover in superannuation will have a material effect on group life insurers.

In a letter to the Economics Legislation Committee, APRA says it is assessing potential short and medium-term impacts, taking industry input into account.

“Appropriate transitional arrangements that are well targeted may be required to enable the superannuation and life insurance industries to implement the measures in… a manner that minimises unintended consequences and adverse outcomes for members,” it says.

KPMG and AIA say the proposed changes fail to address the issue of retirement balance erosion.

APRA also wants to identify practical barriers to implementing the proposal within set timeframes. It says changes may be required by all super entities, working with their insurers, around the design, pricing and communication to members of insurance arrangements.

FPA members urged to submit exam feedback

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The Financial Planning Association is seeking member feedback on the Financial Adviser Standards and Ethics Authority’s proposed guidance for the industry exam.

All advisers will be required to pass the exam before they can provide personal advice.

It will test concepts, laws and standards that are universal to all advice provided.

CEO Dante De Gori wants all members to complete the association’s questionnaire before the deadline on Friday.

TAL offers diabetes webinar for advisers

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TAL has developed a webinar on diabetes to help financial advisers better understand the condition when making claims.

It focuses on the prevalence, diagnosis and treatment of diabetes, and medical terminology relevant to underwriting and product definitions. It is similar to TAL’s cancer course.

GM Health Services Sally Phillips says the course will help advisers choose the right cover for clients. It also examines support mechanisms the insurer offers clients with diabetes.

The webinar is accessed through the TAL Risk Academy.

Centrepoint appoints research chief

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Wealth manager Centrepoint Alliance has appointed Miriam Herold as Head of Research.

Ms Herold was most recently head of managed fund research for IOOF Holdings and has more than 18 years’ experience in research, portfolio management and investment analysis.

Her previous positions include portfolio manager at AMP, focusing on investment of the group’s statutory funds in listed and unlisted assets.

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The Professional

BMS recruits national director

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Specialist insurance broker BMS has appointed Danny Gluszkiewicz as Director of Operations in Australia.

He will be based in Brisbane and report to Australian CEO Andrew Godden, who was appointed in May.

Mr Gluszkiewicz was most recently MD at broker InterRisk Queensland, according to his LinkedIn profile.

NIBA names NSW award winners

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John Duncan has won the National Insurance Brokers Association (NIBA) broker of the year award for the NSW and ACT region.

Mr Duncan is CEO of JMD Ross Insurance Brokers in St Leonards, Sydney, and has worked in the industry since 1977.

The award was announced at a gala lunch at the Hyatt Regency in Sydney on Friday, where three finalists were in the running.

The young professional broker award was presented to Craig Anderson of Austbrokers ABS.

Winners of the national Stephen Ball Memorial Award for broker of the year and Warren Tickle Memorial Award for best young professional broker will be chosen from five regional winners and announced at the NIBA Convention in Hobart on September 4.

Industry workers prone to mental strain

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Nearly half of all financial services workers face ongoing stress in their jobs, rating slightly above the national average, a new study shows.

Workplace mental health organisation SuperFriend says 44% of workers in the industry leave their jobs due to the poor mental health environment.

About 45% believe employers lack the time to take action on mental health.

More than 66% believe investing in workplace mental health will improve productivity, and 63% say it will reduce absenteeism. Both figures are 5% above the national average.

SuperFriend CEO Margo Lydon says industry workers face stress in striving to be empathetic, supportive and on top of technical matters when customers are experiencing redundancy, illness, death or major life changes.

NIBA mentor scheme to return

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The National Insurance Brokers Association’s mentoring program will run from next month to November, pairing young professionals with industry role models.

About 15 pairs take part in each program, held twice a year.

Mentors must be committed to the personal and professional development of their proteges, and be involved with all aspects of the scheme. Many mentors have joined the program several times.

Association CEO Dallas Booth told insuranceNEWS.com.au mentees gain confidence and become stronger, more effective and well-rounded professionals.

They can talk about their professional development and career opportunities, and learn how the industry works, he says. For information, click here.

AILA opens Perth conference registrations

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The Australian Insurance Law Association has opened registrations for its national conference in Perth.

The event, themed “evolution and revolution”, is at the Perth Convention and Exhibition Centre from October 31 to November 2.

Speakers include Head of Catastrophe Analytics at Willis Re International Karl Jones; Swiss Re Claims Manager David North; and Australian Securities and Investments Commission Group Senior Manager for Insurance Emma Curtis.

Paul Evans from Quinn Emanuel Urquhart & Sullivan and IMF Bentham Executive Director Hugh McLernon will discuss class actions in Australia, while Clyde & Co partner John Moran and Marsh Cyber Specialist Kelly Butler will examine the new data breach reporting scheme.

The conference dinner is at Perth’s Optus Stadium on November 1.

Early bird registration ends on September 5. For more information, click here.

icare names award finalists

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Insurance & Care NSW (icare) has announced finalists for its annual awards, which recognise standout performers in the government risk management and work, health and safety field.

Finalists across five categories – risk frameworks and processes, claims innovation, risk reporting, excellence in prevention and risk leadership – include South Western Sydney Local Health District, NSW Police, NSW Health and the Museum of Applied Arts & Sciences.

Awards will be presented at the icare conference on September 12, where Risk 2 Solution CEO Gav Schneider will speak alongside Olympic champion cyclist Anna Meares.

New board members join EQC

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New Zealand’s Earthquake Commission has appointed Toni Ferrier and Erica Seville as board members.

They replace former Vero NZ CEO Roger Bell and Gordon Smith, whose terms ended last month.

Ms Ferrier was most recently an executive with Crombie Lockwood, part of the Gallagher broking group. Before that she ran the Lumley Canterbury quake recovery business unit.

Ms Seville is an engineer and risk management expert who started social enterprise Resilient Organisations. She is also a principal investigator with research centre QuakeCoRE.

Gallagher extends motor sport partnership

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Gallagher and the Confederation of Australian Motor Sport (CAMS) have announced a three-year extension to their partnership.

Gallagher offers public liability and professional indemnity cover to CAMS and its insured representatives, plus personal accident cover for those injured at CAMS events.

CAMS CEO Eugene Arocca has welcomed the extension.

“The recent reduction in excess payments on public liability insurance is evidence of our terrific partnership with Gallagher, and it is very clear to us that it has a significant understanding of the motor sport industry and the coverage our members require,” he said.

icare backs Aboriginal leadership scheme

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Insurance & Care NSW (icare) has hosted 12 emerging Aboriginal leaders as part of the KARI Leadership Program.

KARI helps Aboriginal people from different industries and backgrounds achieve personal or professional goals, and icare is sponsoring a place on this year’s program.

GM Health and Community Engagement Eugene McGarrell says the partnership will help icare learn from and engage with Aboriginal communities, develop its knowledge of Aboriginal culture and support Indigenous employees.

The program features four workshops, five webinars and three coaching sessions.

AILA honours top students

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Four students have won Australian Insurance Law Association prizes for outstanding results.

NewSouthern Capital director Peter Righetti won in Victoria for his studies in liability insurance, as part of his masters of law at Melbourne Law School.

Chris Hartcher, a graduate at law firm Colin Biggers & Paisley, took the NSW chapter prize for his work in insurance law at the University of Technology.

In SA, Helen Kremmidiotis and Lydia Rose Hart won for achieving top marks in advanced contract law at Flinders University.

Prizes for WA and Tasmania will be awarded later this year, with Queensland awards to follow early next year.

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International

Motor, property lead US commercial rate rises

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US commercial motor rates recorded the largest rise by line in the second quarter at 6%, followed by commercial property at 4%, industry analyst MarketScout says.

The average commercial composite rate was plus 2.5%.

All commercial lines improved in the period with the exception of workers’ compensation, which declined 3%.

Business interruption, business owner policies, umbrella/excess, professional liability and directors’ and officers’ liability recorded 2% rate rises.

Employment practices liability insurance increased 3% and remaining lines including inland marine, general liability, fiduciary, crime and surety gained 1%.

In personal lines, the average rate was plus 2.5%.

Personal motor rates gained 4%, matching rises seen in the first quarter.

Earnings volatility drives reinsurance decisions

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Reinsurance is increasingly important as a tool for reducing earnings volatility, as investors pressure insurers to meet profitability targets, a Willis Towers Watson survey finds.

About 80% of insurers consider their risk appetite statements when defining reinsurance strategies, as they optimise capital management and profitability targets.

“Managing the volatility of underwriting results is of prime importance to insurers and reinsurance strategy measured by risk appetite is key to that,” Willis Re CEO James Kent says.

“This is particularly relevant for public companies where perceived volatility can severely impact share price.”

Changes to the global regulatory environment have increased the emphasis on capital measures and targets for insurers, which are also moving to more sophisticated performance metrics such as return on equity and economic capital.

The survey also shows cyber is insurers’ main risk concern, due to difficulties defining and managing the issue both from an underwriting and operational perspective.

Willis Towers Watson surveyed 260 executives in 51 countries covering life and general insurance. More than three-quarters of insurers surveyed have formal risk management statements in place, while 22% plan to adopt one in the next three years.

Japanese insurers set to ride out flood claims

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Japan’s general insurers will not be significantly affected by the worst floods to hit the country in more than 30 years, Moody’s says.

The credit impact will be small because the industry has strong underwriting discipline in commercial flood policies and reinsurance programs will mitigate net losses.

The flooding is limited to areas near peripheral rivers, the ratings agency says.

“This implies that only smaller rivers were subjected to flooding. As a result, we do not expect significant related insured losses.”

A Moody’s spokesman told insuranceNEWS.com.au it has yet to estimate the damage bill from the floods, which caused extensive property losses.

It says insurers face high uncertainty around loss estimates as recovery and rebuilding efforts begin.

Modeller AIR Worldwide says the death toll has passed 180 and the Government has deployed more than 70,000 emergency personnel to aid the recovery.

The floods are the worst disaster in Japan since the 2011 tsunami and earthquake.

“In just a few days, parts of Japan received four times the rainfall typically expected in… July,” AIR Worldwide Principal Scientist Hemant Chowdhary said.

“Many locations set records for rainfall during a 24-hour, 48-hour and 72-hour period.”

Thunderstorms cost US insurers $4 billion

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Eight spells of severe thunderstorms last month left US insurers with a bill exceeding $US3 billion ($4 billion), Impact Forecasting says in its monthly catastrophe recap.

Economic losses from widespread convective storm and flood damage are expected to reach $US4 billion ($5.4 billion).

Elsewhere, insurers in Japan will pay out at least $US125 million ($169 million) for claims arising from a 5.5-magitude quake in Osaka prefecture, the Aon Benfield subsidiary says.

Friederike tops first-half cat losses

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Insurers sustained losses of $US2.1 billion ($2.8 billion) from Storm Friederike, making it the industry’s most costly natural disaster in the first half of the year, Munich Re says.

The storm, which hit Europe in January, also inflicted the heaviest overall damage in the period, at $US2.7 billion ($3.6 billion).

Insured losses fell to $US17 billion ($22.9 billion) from $US25.5 billion ($34.4 billion) in the corresponding half last year, and overall losses declined by half to $US33 billion ($44.5 billion) – the lowest figure since 2005.

Overall winter losses in Europe totalled $US4.8 billion ($6.5 billion), with $US3.6 billion ($4.9 billion) borne by insurers.

ABI demands better Brexit deal

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The Association of British Insurers has urged the UK Government to negotiate a better Brexit outcome, following a white paper on its future relationship with the European Union.

“Having to comply with financial regulations we have no say over would be the worst possible scenario for our world-leading insurance sector,” Director-General Huw Evans said.

He says the UK insurance industry is too important to be a “rule-taker”.

The Government’s white paper proposes a new economic and regulatory arrangement for financial services, based on the principle of autonomy for each party over decisions regarding access to its market.

It features a framework of treaties to underpin operation of the relationship, ensure transparency and stability, and promote co-operation.

Swiss Re places $472 million cat bond

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Swiss Re has structured and placed a $US350 million ($472 million) catastrophe bond for Frontline Insurance ­ the largest catastrophe bond for a Florida insurer since 2014.

Subsidiary Swiss Re Capital Markets underwrote the transaction, which covers named storms in Alabama, Florida, North Carolina and South Carolina over four years from this month.

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Analysis

Clause out: last scrap looms over contract terms

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The war over the extension of unfair contract term laws to insurance may have reached its final battle, with the release of Treasury proposals that insurers say will have far-reaching repercussions.

After previous reprieves, the matter is back with a vengeance for insurers, who have maintained stiff opposition to any proposal that imposes the laws on them.

The industry says there is no need for the industry to be included because it is well covered by its own arrangements, including the duty of utmost good faith in the Insurance Contracts Act.

The Insurance Council of Australia (ICA) says the Treasury discussion paper goes beyond past proposals and has “profound implications” for the scope of cover offered and premium pricing.

“It will mean every insurance contract in Australia will have to be rewritten from the ground up,” ICA spokesman Campbell Fuller told insuranceNEWS.com.au. “The insurers will have to reassess every single risk they are either including or excluding from a policy.”

Alarms have sounded over terms covering property rebuilds or repairs, and choices around whether an insurer oversees work or a cash settlement is made.

Consumer groups argue individuals, who may not be able to organise repairs as cheaply as an insurer, are often disadvantaged by a cash settlement.

Insurers point out in response that the current approach has served the community well, with faster recovery and reduced costs. Policyholders accepting a cash settlement are advised of the risks. In some cases cash is paid because insufficient cover means a rebuild for the sum insured is impossible.

“The insurer has a responsibility to keep costs down because any increase in costs ends up leading to higher premiums across the board,” Mr Fuller said.

The discussion paper’s comparisons with the UK’s unfair contract regime and other overseas arrangements have also been questioned.

Unfair contract term laws were introduced in 2010 and extended to small business from 2016, but insurance – which has similar provisions in the Insurance Contracts Act – remained exempt. A proposed amendment to include the sector lapsed in 2013 when Parliament was dissolved for a federal election.

Norton Rose Fulbright lawyers David Frew and Ray Giblett say the Treasury paper may lead to the most significant insurance contract regulation changes since the Act was introduced.

In a blog post they also question whether exposing insurance to unfair contract term provisions could “effectively render centuries of jurisprudence regarding the duty of utmost good faith nugatory”.

National Insurance Brokers Association CEO Dallas Booth says insurance’s “utmost good faith” basis sets it apart from other financial services areas, where “buyer beware” is a fundamental principal.

“We have a different starting point, we have a different body of law and attempts to blend the two really worry me,” he said.

Nevertheless, the issue has not gone away. An Australian Consumer Law Review report last year recommended change, noting Insurance Contracts Act requirements “have not been shown to provide equal or greater consumer protection”.

It says the insurance exclusion is at odds with the intention for Australian Consumer Law to operate as a generic, economy-wide law that minimises exemptions where possible.

A recent Senate committee inquiry into the industry also recommended insurance come under unfair contract term provisions, paving the way for the matter to be referred to Treasury.

Financial Services Minister Kelly O’Dwyer warned insurers at their annual forum in March that the Government was pressing ahead on the issue.

“I know many of you… have consistently advocated that there is no need to extend the unfair contract term provisions to insurance contracts,” she said. “Yet many outside the industry disagree.”

Financial Rights Legal Centre Policy and Advocacy Officer Drew MacRae says the Treasury proposal paper is a positive result and insurers’ protests are unconvincing.

“Every other industry in Australia had to deal with this when the unfair contract term regime came in,” he told insuranceNEWS.com.au. “They survived and the insurance industry will survive.

“We have been arguing for years for unfair contract terms to be introduced into insurance and have never understood why insurers have had an exclusion.”

The Hayne royal commission, which will examine insurance in September, provides a different backdrop for the current review and potentially adds to pressure on the industry.

“I don’t think there is any chance in this political climate that these proposed changes are not going to go through in some form,” Barry.Nilsson Lawyers Principal Robert Samut says.

The proposals could place more responsibility on underwriters to clearly explain and justify the need for particular contract terms, while regulators would need to keep in mind that insurance has unique characteristics.

“The regulator has to be careful not to strike something out as unfair just because it is unusual,” Mr Samut says. “Insurance is a completely different product to others in the market because it is the sale of a promise. It is a special type of contract."

ICA CEO Rob Whelan says no compelling evidence has been presented in various inquiries and reviews that unfair contract term protections will benefit general insurance consumers.

“ICA will respond to the proposals paper and will continue to work with stakeholders on seeking mutually acceptable outcomes,” he said.

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