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Next code may protect vulnerable consumers

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The General Insurance Code of Practice may be strengthened with standards to improve outcomes for vulnerable consumers and victims of family violence, under priority areas identified in an interim report.

Other key areas for inclusion relate to disclosure, claims investigations and amendments to facilitate approval of the code by the Australian Securities and Investments Commission (ASIC).

The Insurance Council of Australia (ICA) released the report last week.

“We now invite submissions from stakeholders on the interim report and propose an eight-week consultation period to ensure there is time for proper consideration,” ICA CEO Rob Whelan said.

ICA will also conduct workshops with stakeholders to further discuss the practical effects of various proposals.

The code, first introduced in 1994, has been reviewed four times previously. The most recent version, introduced after a sometimes-contentious review by lawyer Ian Enright, started on July 1 2014.

ICA has appointed former ASIC GM and Cameron Ralph Khoury MD Phil Khoury to provide independent oversight of the current review.

His role includes advising on whether the interim report appropriately takes into account submissions received and external developments.

ICA says it is committed to ensuring the review is as thorough as possible, while also remaining practical.

“The code represents the general insurance industry’s strong commitment to improving consumer outcomes,” Mr Whelan said.

Submissions on the interim report are due by January 8 and can be lodged here.


Industry hails Queensland cyclone mitigation vow

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Insurers have welcomed Queensland Labor’s $20 million pledge to improve cyclone resilience for older homes in the state’s north if re-elected on November 25.

Treasurer Curtis Pitt says the Household Resilience Program will cover 75% of costs required to improve pre-1980s buildings, through means-tested grants of up to $11,250.

“The initial $20 million, two-year program was funded in this year’s state budget,” he said.

“With our help, low-income households will be able to take preventative measures that should flow through to lower insurance premiums.”

The program is due to begin early next year and will fund inspections and grants.

Suncorp Insurance CEO Gary Dransfield says the scheme builds on the insurer’s own resilience initiatives. “Through its Protecting the North program, Suncorp has demonstrated the benefits of a household resilience scheme, providing compelling evidence to encourage government investment,” he said.

Suncorp has worked with James Cook University to study the impact of cyclones and how simple, low-cost retrofits to homes pay for themselves after just one major event.

Its Cyclone Resilience Benefit has so far reduced premiums by up to 20% for about 35,000 customers in northern Queensland who have upgraded roofs, covered windows and strengthened doors.

The Insurance Council of Australia has also welcomed Queensland Labor’s proposal, which could serve “as a template for improving resilience of pre-1980s homes across the whole of northern Australia”.

Industry logs almost $4 billion in profit

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The general insurance industry has recorded an annual after-tax net profit of about $3.92 billion, according to a calculation based on latest statistics released by the Australian Prudential Regulation Authority.

Gross earned premium totalled $58.39 billion and gross incurred claims were $42.09 billion, the calculations by show.

The regulator published the general insurance institution-level statistics based on audited regulatory returns submitted by authorised insurers and reinsurers.

The data covers various financial years across the 12-month period to June 30.

Results from key insurers (in alphabetical order) include:

  • AIG Australia had gross earned premium of $611 million, gross incurred claims of $502 million and net profit of $37 million
  • Allianz Australia recorded $4.44 billion in gross earned premium, $3.36 billion in gross incurred claims and $324 million in net profit
  • Calliden Insurance posted gross earned premium of $20 million, gross incurred claims of $30 million and a net loss of $1 million
  • Genworth Mortgage Insurance Australia had $525 million in gross earned premium, $171 million in gross incurred claims and $203 million in net profit
  • Hollard Holdings Australia logged $629 million in gross earned premium, $446 million in gross incurred claims and $16 million in net profit
  • IAG recorded $11.69 billion in gross earned premium, $8.64 billion in gross incurred claims and $1.03 billion in net profit
  • QBE Insurance Group had gross earned premium of $19.2 billion, gross incurred claims of $12.5 billion and net profit of $1.14 billion
  • Suncorp Insurance recorded $9.33 billion in gross earned premium, $8.26 billion in gross incurred claims and $659 million in net profit
  • Youi’s gross earned premium totalled $694 million, gross incurred claims were $475 million and net profit was $59 million
  • Zurich Australia achieved $972 million in gross earned premium, $511 million in gross incurred claims and $10 million in profit.

Results from key reinsurers include:

  • Gen Re Australia’s gross earned premium was $78 million, gross incurred claims were $34 million and net profit was $17 million
  • Munich Re recorded $1.03 billion in gross earned premium, $705 million in gross incurred claims and a net loss of $71 million
  • Swiss Re International had $151 million in gross earned premium, $95 million in gross incurred claims and a net loss of $21 million.

Suncorp warns of disruption, regulation ‘pincer movement’

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Financial services incumbents face a two-pronged assault from regulation and disruption, Suncorp CFO Steve Johnston says.

In a speech on global disruption to the Committee for the Economic Development of Australia, Mr Johnston warns the digital economy will break down established institutions, market structures and business models.

But while dealing with agile start-ups and disruptors, companies face the threat of tightening regulation as governments react to voter sentiment, he says.

“Financial services is a case in point: under attack from fintechs but simultaneously facing a tsunami of government-imposed regulation.”

Mr Johnston says Suncorp is dealing with the challenges, transforming from a preoccupation with threats and risks to “an opportunity mindset”.

He highlights driverless vehicles as an example.

“In isolation, they could be seen as a major threat to a business model reliant on accidents, repairs and car insurance. However, assuming a digital and opportunity mindset, how can we capitalise on our current market-leading position to be a major part of the digitised vehicle and the digital attention that will be unlocked in an automated driving world?

“A similar argument can be made for home insurance, where the connected home will be a key digital platform for the future.”

Mr Johnston also warns that dealing with governments “is about to get a whole lot harder”, as populist leaders come to the fore.

“The society created by the disrupted globe has established a vulnerable and impatient electorate, one seeking simple solutions to complex problems.

“This, in turn, has created perhaps the most volatile electorate in history – one likely to continue to install into higher public office those unlikely or ill-prepared to lead and, in my view, to potentially render as extinct the two to three-party structure as we know it today.

“For those relying on established means of influence and policy development, you had better find a new playbook.”

Fintech comes of age as consumers embrace change

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The number of fintechs has more than doubled since 2015 to about 600 and revenue is rising, indicating the sector is maturing, according to the latest EY Fintech Australia Census.

The proportion that have been in business for more than three years has increased, along with the percentage now in the “post-revenue” stage (71% compared with 57% last year), indicating products and service offerings are in demand and filling market gaps.

Another indicator of a flourishing sector is that monthly median revenue among fintech businesses tripled between June last year and June this year.

The census shows insurtech accounts for 5% of fintechs, and Australia is the world’s sixth most developed insurtech market.

The “fintech” banner is now much broader, covering regtech, cyber and digital security, and data analytics. Businesses that would consider themselves as fintech stretch far and wide into other tech industries such as “agtech”.

EY’s Fintech Adoption Index shows the Australian public has a high level of receptiveness to fintechs: Australia ranks fifth worldwide with a 37% “fintech adoption rating”, compared with the global average of 33%.

“This level of adoption shows fintech is now at a tipping point where it is poised for mainstream adoption,” the census report says.

About 54% of Australian fintechs surveyed have plans for overseas expansion within the next year – up from 38% last year.

Government policy initiatives most popular among census respondents include improving research and development initiatives (87%), government-mandated open-data controls (85%) and capital gains tax relief (85%). Open data in particular has come under the spotlight, rising to second on the ranking from fifth last year.

APRA publishes claims stats

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The Australian Prudential Regulation Authority has released the first edition of its General Insurance Claims Development Statistics.

The publication outlines trends in claims payments and reserves across the general insurance industry by class of business, and was introduced following industry consultation on the regulator publishing more relevant data.

Statistics to December last year show the estimated ultimate loss ratio for the 2016 accident year in compulsory motor vehicle (97%), public and product liability (58.4%) and employers’ liability (83.9%) are in line with recent accident years at the same stage of development.

However, the ratio in professional indemnity (78.7%) is higher than recent accident years at the same stage of development.

To see the full report, click here.

ICNZ conference presents varied insights

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A wide range of speakers gave the 340 participants at the Insurance Council of New Zealand (ICNZ) conference in Auckland last week plenty to think about.

“It was a highly successful conference,” CEO Tim Grafton told

“It was our largest yet, and the biggest insurance conference in New Zealand by a significant margin.”

Keynote speaker Alastair Newton, expert on international geo-political issues and their impact on financial markets, gave an overview of the US-China dynamic under the Trump administration.

“He pointed out that while the focus is on North Korea, we mustn’t take our eye off the ball with Iran,” Mr Grafton said.

“You don’t often get that level of insight on these issues in New Zealand.”

Guy Carpenter CEO Asia Pacific Tony Gallagher spoke about the uncertain and changing world of capital and the role it will play in changing the types of products available to manage risks.

A session on insurtech featured KPMG’s Steve Graham and Andrew Stead from IAG’s Firemark Lab, with an overview of international developments from Munich Re MD Australia and New Zealand Ralph Ronnenberg.

Resilience in the face of volatility was the theme for the afternoon, with Wellington City’s Chief Resilience Officer Mike Mendonca explaining that arguably New Zealand’s most earthquake-exposed city is also its most resilient.

The conference ended with a panel of industry leadersIAG EGM Consumer New Zealand Kevin Hughes, QBE GM New Zealand Bill Donovan, FMG’s Chris Black and Mr Ronnenberg.

Choice runs rule over comprehensive car cover

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Perth-based insurer RAC’s comprehensive car insurance policy has topped a Choice ranking, and is among only six comprehensive offerings the consumer advocate recommends from 34 tested.

The WA mutual scores 75% on Choice’s scale, followed by APIA (73%), TIO (70%), CGU (68%), SA insurer RAA (67%) and GIO (65%).

While Youi also scored 65%, Choice has not recommended it because it could not verify the quotes it gave.

“We believe consumers should always be able to get a quote online without being subject to a call centre sales pitch,” Choice says.

At the bottom of the list are supermarket offerings from Woolworths (45%) and Coles, with its “comprehensive plus” (44%) and comprehensive (41%) policies.

Choice scores each policy according to product features (70% of the final rating), price (20%) and satisfaction (10%). It asked insurers to quote for several scenarios involving young people, families, good drivers, bad drivers and retirees.

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Suncorp quits Tower takeover appeal

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Suncorp has dropped an appeal against the New Zealand regulator’s decision to block its proposed takeover of insurer Tower.

It continues to hold a 19.99% stake in Tower through its Vero Insurance New Zealand subsidiary, but has reconsidered the appeal due to the risk of proceeding and the lapse of an agreed arrangement.

Tower last Monday advised it will terminate a scheme implementation agreement, but says it is willing to negotiate a new version which may result in changes to key terms, after it completes plans to raise capital.

A Suncorp spokesman says the company has now reviewed the full decision by New Zealand’s Commerce Commission.

“While we were confident that we have a strong case, there was significant litigation risk to proceeding with an appeal,” he told

“We have decided to act in the best interests of our shareholders and not take the appeal any further.”

Suncorp says it is focused on maximising the value of its Tower shareholding.

Commerce Commission Chairman Mark Berry said in July the merger could “substantially lessen” competition in the personal insurance market, leaving only Vero and IAG as significant insurers in the space.

Borden departs as QBE restructures workers’ comp

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QBE workers’ compensation GM Andrew Borden has left the company following a review and restructure.

The workers’ compensation portfolio has been moved into the Consumer and Retail Partners business unit, led by EGM Andrew Broughton. The portfolio will report to Adam Farr, GM Consumer Distribution.

“Unfortunately, this change means the role of GM workers’ compensation is no longer required,” QBE says in a note to the market.

The insurer’s involvement as an agent of NSW workers’ compensation will cease at the end of this year, after Insurance & Care NSW (icare) selected EML as its sole agent for new claims.

“We made the strategic decision to move our workers’ compensation portfolio into the Consumer and Retail Partnership business unit to ensure we have a dedicated focus on this key part of our business,” a QBE spokesman told

Mr Borden took on the workers’ compensation role in March last year. He was formerly regional manager intermediary distribution for Victoria and Tasmania – a role in which QBE said he “established an exceptional reputation in the broker market”.

The spokesman says Mr Borden’s role has been the only one affected by the restructure, and the icare decision will not result in significant job cuts.

“QBE continues to be a major provider of workers’ compensation insurance across Australia, including underwritten workers’ compensation, NSW Treasury Managed Fund and self-insurance claims management services.”

“While icare’s decision regarding the management of NSW workers’ compensation claims was disappointing, we’ve retained the majority of our people through redeployment opportunities within the business.”

S&P confirms Allianz Australia rating

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S&P Global Ratings has affirmed its AA- financial strength and issuer credit ratings for Allianz Australia, with a stable outlook.

“We expect Allianz Australia to remain a highly strategically important subsidiary of Allianz SE, the insurer's ultimate parent,” the ratings agency said.

S&P notes the company’s “solid business profile” across key property and casualty market segments, which makes it one of Australia’s “top four P&C insurers”.

“We have assessed Allianz Australia’s financial risk profile as sound, taking into account the capital adequacy that we assess at a BBB level under our insurance capital model.

“We also expect support from the parent would be forthcoming in case of need, or if growth warrants, as has been the provided in the recent past.”

S&P considers Allianz’s enterprise risk management to be “very strong”.

Beazley retreat from Australia hits GWP

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Beazley says the sale earlier this year of its accident and health portfolio in Australia led to a $US10 million ($13.04 million) gross written premium (GWP) hit.

The global specialty insurer has revealed the figure in a trading statement for the nine months to September 30.

As reported by in May, Beazley sold its accident and health portfolio to Blend, a new underwriting agency backed by Steadfast and Fairfax Financial subsidiary Advent Capital. It retains its local contingency business.

“Our decision to cease writing business in Australia had a negative impact on premium of about $US10 million during the period,” the report says.

See other story.

Westpac reports fall in insurance earnings

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Westpac’s insurance business reported $293 million in overall cash earnings for the year to September 30, down from $309 million the previous year.

General insurance cash earnings fell 20% to $94 million as income declined by $32 million because of higher claims, including from Cyclone Debbie.

Gross written premium grew 1% to $508 million.

Life insurance cash earnings increased 2% to $159 million and inforce premium grew 10% to almost $1.07 billion.

New business gained 10% to $234 million and lapses increased 5% to $139 million.

Ex-minister joins Suncorp board

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Former finance minister Lindsay Tanner will join the Suncorp board as a non-executive director from January, filling one of two vacancies.

“Lindsay brings a wide range of relevant public and private sector experience in financial services, with an acute appreciation of the technological, regulatory and political changes shaping the industry,” Chairman Ziggy Switkowski said.

Mr Tanner was finance minister in the Rudd and Gillard governments, retiring before the 2010 election. Since leaving Parliament he has held business roles in areas including mergers and acquisitions, fintech, life insurance and cyber security.

He began his professional career as a personal injuries lawyer.

The board vacancies were created by the retirements of Bill Bartlett and Ewoud Kulk after the annual general meeting in September.

Allstate Underwriting picks new MD

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Farm insurance specialist Allstate Underwriting says Chris Madell will take over as MD from Grant Brokenshire, who is leaving at the end of the month to pursue other interests.

Mr Madell was recently head of alternative distribution for Chubb in Australia, and played a key role in linking Chubb and Allstate last year. Allstate’s products are underwritten by Chubb.

Mr Madell says there are opportunities to “expand our product offering and grow our national footprint”.

Allstate says there are no other planned changes to its management or operational teams.

Vero NZ introduces ‘data-driven’ claims tool

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Vero Insurance New Zealand has partnered with property data and analytics company CoreLogic to automate claims processes, offering quicker home repairs and transparency.

Symbility Solutions is a data-driven, cloud-based claims assessment and management tool that “vastly improves” efficiencies, according to Corelogic’s Richard Deakin.

“Often the biggest cause of frustration among policyholders is not knowing where the claim is at, or what the outcome is likely to be – something often remembered very clearly at renewal time,” Mr Deakin says.

“Symbility turns this on its head, instead offering full visibility of the claim to all participants.”

Vero EGM Claims Jimmy Higgins says the insurer wanted a tool that is easy to use and offers assessment and pricing accuracy, improved claims management, and reduced revisits and variations.

“We trialled Symbility and were delighted with the way it improved outcomes for our customers, so we’re looking forward to seeing the very real benefits it will have for our claims handling process, and for our customers,” he says.

Hello Claims partners with Splend

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Claim Central subsidiary Hello Claims has announced a two-year partnership with Splend, which provides rental vehicles for Uber drivers.

Under the deal Splend will adopt Hello Claims’ smart assessing technology to manage its motor insurance claims across Australia.

Hello Claims says repairs will be completed within an average of five days, compared with the industry average of 16 days.

Splend agreed to the partnership after a successful trial period.

Ensurance directors step down

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Grant Priest and Neil Pinner have resigned as a non-executive directors of broker and insurance technology group Ensurance, effective immediately.

Executive Chairman Tony Leibowitz has thanked both men for their contributions and wished them both “all the very best for the future”.

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Regulatory & Government

NSW greenslip reforms ‘deliver savings’

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The NSW Government has introduced its new compulsory third party (CTP) motor scheme, along with a price comparison website.

Premier Gladys Berejiklian says the reformed program will save drivers up to $172 a year from next month and Sydney taxi drivers more than $3000.

“The new scheme will deliver much-needed savings,” she said. “Without the Government’s reforms, average premiums would have been $654 [next year].”

The average greenslip price will be $543 for Sydney drivers and $414 for country motorists.

The average premium for Sydney taxi owners will fall to $5007 from $8836. It drops to $2923 from $5203 for country taxis.

“We are also delivering refunds to eligible motorists who renewed their greenslip during [this year,” Ms Berejiklian said. “They will be delivered through Service NSW, with further announcements about the process expected shortly.”

The new scheme allows all injured road users to access benefits for loss of income and medical expenses for up to six months, with lump sum compensation retained for those with long-term injuries. The comparison website is here.

Treasurer pledges support for mutuals

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The Turnbull Government has given strong backing to mutuals as it strives to inject more competition into the financial services and banking sectors.

Treasurer Scott Morrison says the Government supports all recommendations contained in the recently published review by industry adviser Greg Hammond.

“Co-operatives, mutuals and member-owned firms make a significant contribution to GDP in Australia,” Mr Morrison said.

“They represent a real alternative model for delivering important customer and community-focused services, especially banking and financial services.

“I want to see more competitive markets by putting customers at the centre. These organisations are all about the customer, because they are owned by them.

“Unleashing a stronger co-operatives and mutuals sector through implementation of the Hammond review recommendations will provide Australian consumers with better choices and more cost-effective options.”

The review recommends legislative changes to improve mutuals’ access to capital, and suggests inserting a definition of “mutual company” or similar into the Corporations Act 2001 to deliver greater certainty.

It also recommends changes to income tax legislation to help mutual enterprises raise capital. Further consultation will be carried out on the detail and implementation of the recommendations.

Taskforce urges tougher ‘real-time’ enforcement powers for ASIC

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The Australian Securities and Investments Commission (ASIC) could order businesses to immediately act to prevent licence breaches under proposed enhanced enforcement powers.

The ASIC Enforcement Review Taskforce says current arrangements may leave consumers at risk while the regulator must undertake surveillance and hearings before it can suspend, cancel or alter a licence.

“To the extent practicable, ASIC should be able to require compliance with Australian financial services or credit licence obligations in real time,” the taskforce says in a positions paper.

“The regulator should be given power to direct licensees to take or refrain from taking actions where appropriate for this purpose.”

The report also highlights problems when a licensee has taken some steps, but not enough action, to address ASIC concerns.

“The proposed directions power would allow ASIC to take steps to protect consumers by preventing harm before the damage is done,” Revenue and Financial Services Minister Kelly O’Dwyer says.

The taskforce says ASIC should have the power to immediately order a licensee to stop appointing authorised representatives or accepting new clients.

Under the proposals, the regulator could demand an audit, require a licensee to engage qualified compliance staff, cease transferring business to another licence and stop making specific representations about products and services.

ASIC could apply to a court to enforce its directions if a licensee does not comply.

The positions paper, which follows recommendations from the Financial System Inquiry, is the last of eight papers to be released by the taskforce. A final report is due at the end of this month.

Submissions on the enhanced directions powers are due by November 20.

AFCA consultation paper released

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A consultation paper has been released on terms of reference, governance and funding arrangements for the Australian Financial Complaints Authority (AFCA), the new one-stop dispute resolution body for all financial matters.

AFCA will commence from July 1 next year and aims to provide free, fast and binding dispute resolution for consumers and small businesses.

A transition team, chaired by former Reserve Bank assistant governor Malcolm Edey, has been set up to facilitate a smooth process.

Feedback from the consultation paper will provide the basis of Dr Edey’s advice to the Government. Submissions close on November 20. The paper is available here.

ICA flags concerns over whistleblower reforms

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The Insurance Council of Australia (ICA) supports streamlining whistleblower rules into a single regime, but is concerned about other aspects of draft proposals.

Broadening categories of eligible whistleblowers and expanding “disclosees” to include third parties such as reporters and MPs are among the concerns, ICA says in a submission to Treasury.

“As noted in [ICA’s] submission to the consultation earlier this year, the regulators are best placed to review disclosures, determine whether misconduct has occurred and commence litigation or stipulate sanctions where appropriate,” the submission says.

“We question the utility of broadening protections to disclosures made to third parties who would not be in a position to take similar action.”

ICA is also concerned about a proposal to change regulations on compensation rights, as outlined in the Exposure Draft Treasury Laws Amendment (Whistleblowers) Bill.

“Under the existing law, our understanding of the offence of ‘victimisation’ prohibits conduct that intentionally causes detriment,” ICA says. “The draft Bill makes it clear that the victimiser need not intend that the conduct cause detriment and removes the requirement for victims to prove an offence has been committed.

“As such, it is our understanding that as long as the victim can prove they suffered damage because of the regulated entity’s conduct, the onus is on the regulated entity to prove a disclosure was not in any part a reason for their conduct.”

ASIC adds China to growing fintech network

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The Australian Securities and Investments Commission (ASIC) has signed an agreement with its Chinese counterpart to jointly promote fintech across the two markets.

The deal with the China Securities Regulatory Commission offers insights on a national market that accounts for almost half the world’s digital payment volumes.

“Co-operation between regulators is essential to realise the benefits of the technological revolution,” ASIC Chairman Greg Medcraft said.

“This agreement represents an exciting opportunity for us to learn more about the Chinese fintech sector, which is renowned for its success and dynamism.”

The two regulators will share information on emerging market trends and developments, and regulatory changes around innovation in financial services.

ASIC has signed similar deals with other regulators in the past year, including in Japan, Singapore, Hong Kong, the UK and the Canadian province of Ontario.

ASIC names 18 for misconduct panel

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The Australian Securities and Investments Commission has appointed 18 members to a new Financial Services and Credit Panel (FSCP) that will be make misconduct decisions.

The peer review panel will provide a range of financial services and credit sector knowledge and experience, Chairman Greg Medcraft said.

“Our administrative decisions will benefit from the input of professionals who have a thorough understanding of current industry practices and standards,” he said.

The FSCP provides a pool of people that ASIC can draw upon to create separate sitting panels that will hold hearings and decide on banning orders.

Sitting panels will comprise two FSCP members and an ASIC representative.

FSCP members named were Brad Fox, Annette Spencer, Gaye Simpson, Gayle Cilfone, Bruce Debenham, Jennifer Diggle, Calvert Duffy, Johanna Turner, Christine McArthur, Naomi Layton, Dacian Moses, Peter Wade, Don Crellin, Stephen Cavanagh, Fiona Rowland, Brian Salter, Gabrielle Bouffler and Cherie Feher.

Brokers invited to WorkCover WA seminar

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WorkCover WA will host a breakfast seminar for insurance brokers on December 8 at Crown Perth.

The free event gives an overview of the workers’ compensation and injury management scheme, and an update on current developments.

Social researcher Claire Madden will discuss trends redefining the future of work, and guests will hear from members of WorkCover WA’s corporate executive.

Attendees will receive two continuing professional development points from the National Insurance Brokers Association. Registrations close on November 27.

To register, click here.

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Life Insurance

Life insurers ‘decline 8% of claims’

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Life insurers admitted 92% of finalised claims last year and declined about 8%, according to pilot industry data released by the Australian Prudential Regulation Authority (APRA) and Australian Securities and Investments Commission (ASIC).

The regulators are developing the data collection to improve public reporting on the sector’s claims performance.

“Significant progress has been made to date on this initiative to develop a consistent public reporting regime for claims data and claims outcomes, which will improve transparency and accountability in the life insurance industry,” APRA Member Geoff Summerhayes said.

The data shows 126,300 claims were reported last year, with 103,100 finalised and 6400 withdrawn.

Admitted claims totalled 95,000, and there were 8100 declined claims.

There were 4400 disputes lodged, with some likely to relate to claims reported and finalised before last year.

ASIC and APRA have also released a paper providing feedback on common data quality issues and outlining plans for a second round of the pilot. The regulators say the project marks the first time common definitions have been formalised across the industry.

“We are now focusing on the ability of insurers to report according to these common definitions, including how they can do their best to manage system constraints,” Mr Summerhayes said.

“While significant progress has been made, there is more work to be done to fully embed the definitions across the industry.”

ASIC and APRA say meaningful comparisons are difficult due to a wide range of differing systems, products and processes, including varying definitions for reported, declined or withdrawn claims.

Group cover code must have teeth, lawyers warn

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Maurice Blackburn Lawyers says a code of practice for insurance provided within superannuation must be binding and enforceable from the start to be effective in driving higher standards.

Principal Josh Mennen says any concerns that mean the code – developed by the Insurance in Superannuation Working Group (ISWG) – may not be enforceable due to conflicts for trustees should be resolved.

“The ISWG process must ensure any final code from the get-go has teeth, or it risks having all the bite of a month-old lettuce,” he said. “It must be enforceable with regulatory oversight and binding.”

Mr Mennen says the draft document states laws and regulations will prevail where there is any inconsistency with the code, which should avert the potential for conflict.

Concerns over proposed caps on premiums could also be addressed within making the whole code non-mandatory for trustees, he says.

The working group has been assessing submissions after releasing the draft in September.

It aims to have a final version ready by the end of the year, before implementation on July 1. There will be a transition period until June 30 2019.

“To the extent that the concerns raised in submissions have merit, they can and should be resolved to ensure all trustees are on board when the code comes into force,” Mr Mennen said.

Freedom anticipates first-half sales growth

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Freedom Insurance Group expects a 3-11% rise in first-half net revenue compared with the corresponding period last year.

The direct life insurer says higher trail commissions and favourable retention experience partly offset the impact of lower upfront revenue from sales.

Operating costs are projected to rise to $19-$20 million from $14.6 million, to support the sale of new products and increased maintenance expenses on the larger inforce book.

Earnings before interest, taxation, depreciation and amortisation are expected to be $7.5-$9 million, excluding a $3.3 million gain from the sale of its Noble Oak investment.

“Freedom continues to expect second-half sales and earnings to grow compared with the previous corresponding period… costs are also expected to increase, reflecting ongoing investment in lead generation, marketing and sales, as well as enhancements to the distribution capability to support growth,” the insurer says.

Market reception to new products has been encouraging, with about $1 million in anticipated first-half sales contribution, Freedom says.

ASIC acts against two NSW firms

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The Australian Securities and Investments Commission (ASIC) has cancelled the financial services licence of one company and suspended another following continued breaches.

NSW-based Divitiarum Audax had its licence cancelled following a suspension in May for continued failure to lodge financial statements and auditors’ reports over four years.

Mackellar Financial Services, also in NSW, had its licence suspended until April next year for failing to lodge financial statements and auditors’ reports over two years.

“Licensees are required to lodge financial statements and auditors’ reports with ASIC to demonstrate their capacity to provide financial services,” commission Deputy Chairman Peter Kell said.

“Failure to comply with reporting obligations can be an indicator of a poor compliance culture.

“ASIC won’t hesitate to act against licensees who do not meet these important requirements.”

Ex-CBA planner admits forgery

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Former Commonwealth Bank planner Ricky David Gillespie, previously banned from providing financial services, has pleaded guilty to forgery.

The Australian Securities and Investments Commission (ASIC) alleged Gillespie forged clients’ signatures on documents when he was a senior financial planner at the Broadbeach branch in Queensland between January 1 2007 and June 13 2009.

The signatures appeared on financial product applications and internal Commonwealth Financial Planning Limited (CFPL) documents, and their purpose was to meet audit requirements, ASIC says.

Gillespie pleaded guilty at Southport Magistrates Court to one “rolled-up” charge of forgery on 33 documents, and will appear again for sentencing on December 12.

ASIC permanently banned Gillespie in 2012 after an investigation found he failed to comply with financial services laws, forged signatures, created false file notes, provided advice that was not appropriate and charged excessive fees.

The regulator says he also engaged in misleading and deceptive conduct, issuing financial product information via a marketing letter that contained false representations.

ASIC has previously taken action against other former CFPL financial advisers.

Premium deductions don’t raise many complaints

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Concerns about the deduction of insurance premiums from wages and salaries prompted 6.9% of complaints received by the Superannuation Complaints Tribunal in the third quarter.

A further 4.3% related to declined total and permanent disability (TPD) benefits due to medical evidence.

Death benefit distributions typically account for most complaints received, and in the third quarter represented 27.5% of the total.

Deduction of insurance premiums accounted for 8% of complaints resolved in the quarter, while TPD benefit decision-making delays represented 5.5%, and cases declined on medical evidence 5.3%.

The tribunal is due to be rolled into the new Australian Financial Complaints Authority (AFCA) next July, along with the Financial Ombudsman Service and Credit and Investments Ombudsman.

“Until the legislation passes and AFCA becomes operational, the tribunal remains the external dispute resolution service for superannuation-related complaints, and continues to accept and resolve complaints,” Chairman Helen Davis said.

AFG announces Lifebroker partnership

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Australian Finance Group (AFG) has appointed comparator Lifebroker to its life insurance referral program.

AFG says the tie-up with the TAL Group company will make it easier for its 2850 brokers to offer life insurance referrals to clients.

“This new arrangement strengthens our 10-year relationship with TAL and I’m pleased we have been able to evolve our life insurance offering to better meet the needs of our brokers’ clients,” AFG GM Broker and Residential Mark Hewitt said.

“Lifebroker offers specialist life insurance comparison services, featuring eight of Australia’s leading life insurance companies.”

Clients will have access to Lifebroker’s price and product comparison services across life insurance, income protection, total and permanent disability insurance, trauma cover, business expense insurance and cover through superannuation.

AMP upgrades to Face ID

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AMP customers can securely log on to the life insurer’s apps on Apple’s iPhone X using facial recognition technology.

It follows early adoption by AMP of fingerprint technology, which continues to be available on earlier-model iPhone and Android devices.

“Face recognition ID further enhances the experience for those using [the apps] Bett3r and My AMP,” Director of Digital and Design Michael Weeding said.

“We’ll continue to provide digital experiences that are seamless, intuitive and secure.”

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Asian Claims Convention opens Bali registrations

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Registrations are open for next year’s Asian Claims Convention at the Grand Hyatt in Nusa Dua, Bali, from April 11-13.

Organised by Australasian Institute of Chartered Loss Adjusters (AICLA), the conference continues to grow year on year, and has become a fixture on the Asian insurance calendar. Insurance executives, brokers, reinsurers, loss adjusters, professional consultants, insurance lawyers, suppliers and service providers are all invited.

The convention will cover such topics as emerging insurance risks, fraud and cyber crime, engineering claims, marine issues and vexatious claimants.

A discount registration is available for members and for bookings of three or more from one organisation. For more information and to register, click here.

Brooklyn director steps down

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Brooklyn Underwriting director David Porteous has announced his resignation, about a year after XL Catlin acquired the business.

He has been with the specialist underwriting agency and Lloyd’s coverholder since January 2011 and spent the past four years as director.

XL Catlin’s CEO Asia-Pacific Craig Langham says Mr Porteous will remain in the role while the management structure is reviewed, to ensure a smooth transition.

“David has guided the business and developed it into a multi-award-winning and nationally recognised underwriting agency,” Mr Langham said.

NTI veteran retires

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National Transport Insurance (NTI) National Manager of Industry and Government Relations Owen Driscoll has announced his retirement after 43 years with the company.

Mr Driscoll joined NTI – formerly R&G Insurance Consultants – in 1974 and has held several roles, including acting CEO.

His achievements include overseeing NTI’s appointment as a Lloyd’s Brokers representative in Australia, setting up offices in Newcastle, Melbourne, Parramatta and Perth, establishing the Roadteam network and founding the National Truck Accident Research Centre in 2002.

“The research centre was an evolution of a feeling that we were under-utilising the accident information and the corresponding statistics available to us,” Mr Driscoll said. “Ultimately, we realised you can’t fix a problem if you don’t know where it starts.”

Mr Driscoll was given the Don Watson Memorial Award in 2006 for commitment to road safety and the transport industry, and was recognised in 2015 by the National Road Transport Hall of Fame.

Grant Burley funeral details

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The funeral for former insurance industry figure Grant Burley will be held in Sydney on Friday.

Mr Burley, who was an influential force in insurance and built Pacific Premium Funding, died on October 28 when the aircraft he was piloting crashed at Johns River, near Port Macquarie.

The funeral will be held at the Uniting Church, 10 Clanwilliam Street, Willoughby, at 1pm on Friday, followed by a private cremation.

Austbrokers SPT boss elected to key Uniba role

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Austbrokers SPT MD Brian Salisbury has been elected President of the Uniba Partners’ board for the Asia-Pacific region.

Mr Salisbury, who is based in southern Sydney, will also serve his third and final term as a director, until 2019.

Formed in 1987, Uniba bills itself as one of the world’s largest independent providers of risk management, insurance broking and employee benefits services.

It operates in more than 130 countries through affiliated broking businesses and places client premiums in excess of €3 billion ($4.57 billion) a year.

CBL appoints NZ events expert as culture boss

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Jennah Wootten has been appointed GM People, Culture and Strategy at CBL.

She will report to the CEO, and her role is to oversee the New Zealand specialty insurer’s core culture, commercial competencies and values.

For the past four years Ms Wootten has been CEO of the 2017 World Masters Games multi-sport event, delivering the strongest commercial results for a major international event in New Zealand.

Before that she was manager of major events at Auckland Tourism, Events and Economic Development, and manager of major events at Auckland City Council.

Claims start-up’s co-founder becomes GM

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New claims, legal and risk management company Paratus has appointed one of its founders, Sean Hayes, as GM.

Mr Hayes was previously CGU’s national agencies and self-insurance manager.

He founded Paratus in June with Geoff Brookes and HBA Legal founders Brett Ablong and Nathan Hepple.

Paratus says it challenges traditional claims management models by integrating legal services and continual risk assessment.

Mr Hayes will drive the company’s “pathway” approach, combining legal and risk expertise from HBA Legal with IT solutions to help mostly London clients.

“Lawyers have always been considered the costly part of the equation, but we’re showing that legal integration is the key to cost reduction,” he said. “Long claims durations and inflated costs are no longer tolerated and no longer acceptable.”

Paratus is part of the HBA Group. It opened its Melbourne office last month.

Aon chief hosts ‘candid discussion’

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Aon Risk Solutions Australia CEO Lambros Lambrou will host Members of the NSW Young Insurance Professionals (YIPs) at a “fireside chat” on November 21.

YIPs members will gather at the Aon Tower in Sydney for “an evening of candid discussion”.

This event is being organised in collaboration with Aon, and will include Mr Lambrou’s views on the industry and the future for young professionals.

The evening will be followed by networking drinks and canapés.

Bookings for the event can be made at

Aviation law experts to meet

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The Victorian branch of the Aviation Law Association of Australia and New Zealand will hold a seminar on air cargo liability under the Montreal Convention this week.

The event will be followed by the branch’s annual general meeting.

Colin Biggers & Paisley partner Andrew Tulloch will lead a discussion on liability following a recent NSW Court of Appeal decision in the case Singapore Airlines Cargo v Principle International.

The seminar is on Thursday from 5-6.30pm at Colin Biggers & Paisley in William Street, Melbourne, and is free to members. Non-members are asked to donate $10.

Registration closes today. Click here.

PSC Connect raises $13,000 for mental health charity

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PSC Connect authorised representatives and directors raised $6500 for the Love Me Love You Foundation at their national conference in August.

The PSC Foundation matched the sum, taking the final donation to $13,000.

Former AFL footballer Lance Picioane established Love Me Love You in 2013 to help young people take control of their mental health.

“Due to the lack of awareness and the stigma surrounding mental health and substance abuse, many young adults choose to face their battles alone,” the charity says.

PSC Connect authorised representative Mike Cole and his wife are involved in the charity.

To learn more, click here.

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UK regulator begins wholesale broking probe

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The UK’s Financial Conduct Authority (FCA) has started a study of competition in the wholesale insurance broker sector.

The regulator wants to ensure the sector works well following significant changes, and fosters innovation and competition.

It says the London insurance market is a world-leading hub for large-scale, complex commercial and specialist risks, controlling more than £68 billion ($116.43 billion) in gross written premium.

“Given the size of the wholesale insurance sector and the type of large-scale risks it covers, the way it functions can have a wide-ranging impact on the broader economy,” FCA Executive Director of Strategy and Competition Christopher Woolard said.

“If businesses cannot get appropriate cover or pay more for services than they should, it can impact on their ability to operate and grow. Brokers play an important part in the wholesale insurance sector ensuring clients get appropriate coverage at good value.

“However, following significant changes in the sector, we are looking at the dynamics to ensure competition is working well.”

The FCA has published terms of reference and will take responses until January 19. An interim report will be published late next year.

Hurricanes tipped to push up US commercial rates

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Commercial insurance buyers will face rate increases next year after one of the most active and financially disruptive hurricane seasons, according to global broker Willis Towers Watson.

“Property rates for cat-exposed risks are going up, the multi-year streak of property rate reductions is probably over and insurers are going to be under pressure to raise rates in ways we haven’t seen for years,” Head of Broking for North America Joe Peiser said.

The extent of insured losses and impact on prices and capital levels remains uncertain, but the Willis Towers Watson Marketplace Realities report says property rates could rise 10-20% for catastrophe-exposed risks and 20-25% for risks with recent losses.

Other property cover buyers can expect flat rates or low single-digit increases amid a growing consensus that losses from recent catastrophes will top $US100 billion ($130 billion).

“Casualty rates, which had begun to drift downward for many organisations, are predicted to be flat or increase by small amounts as pressure from the recent catastrophe losses spills over into other lines of business,” the report says.

Factors that could dampen upward pressure include still-abundant capacity and “still eager” alternative capital providers.

Willis Towers Watson anticipates many specialty lines of business will follow their own supply and demand curves.

Cyber-insurance renewals average only single-digit rate rises despite a string of high-profile breaches, and experts forecast increases of up to 5% for next year.

Underwriters have offered premium reductions to organisations that can demonstrate increased security and internal policy controls.

For terrorism insurance, buyers should expect flat renewals, rather than the decreases they have seen recently, the report says.

Amazon’s customer relationships open door to disruption

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Amazon is well positioned to disrupt the European insurance market, potentially relegating insurers to “price-driven risk carriers” at the back end, according to data and analytics company GlobalData.

The e-commerce and cloud-computing giant is recruiting insurance professionals in London, with plans to penetrate the British, German, French, Italian and Spanish insurance markets.

GlobalData Financial Services Analyst Patricia Davies says Amazon has “a positive reputation for putting customers’ needs at the heart of its propositions. This level of trust is something the insurance industry has really struggled with.”

According to GlobalData’s latest General Insurance Survey, 18% of consumers would buy motor or home cover from Amazon.

Amazon’s customer-centric, transparent business model provides clear communication throughout the purchasing process, GlobalData says.

“The company is in a good position, having established itself as a key service provider for households with it’s Prime service, as well as offering a TV channel and movie service,” Ms Davies says. “We are already seeing a number of new propositions moving away from annual renewal to a monthly subscription basis, which would fit well with Amazon’s current business model.”

The company recently introduced the Echo voice-activated device that uses artificial intelligence to help people with everyday tasks from scheduling appointments to turning off the lights of their smart homes.

This positions Amazon to meet insurance needs, because home tech will soon define households’ insurance requirements, GlobalData says. Such a close, interactive relationship is a long way from the annual renewal or claims touch-points insurers work to.

“If insurers are not careful they may be pushed out of having a direct relationship with customers.”

Wildfires in US and Portugal set damage records

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Californian wildfires that killed 43 people, injured 185 and destroyed about 8560 structures last month were the costliest insured wildfires on record, according to Impact Forecasting.

The California Department of Insurance says at least 19,000 residential, commercial and motor claims have already been filed, with payouts exceeding $US3.32 billion ($4.33 billion).

This may rise to $US8 billion ($10.43 billion) as more claims are processed.

Central and northern Portugal also suffered devastating wildfires, with 45 deaths and insurance losses likely to reach €200 million ($303.21 million) – a record for the country – according to the Aon Benfield subsidiary’s monthly catastrophe recap.

Windstorm Xavier hit northern Germany and western Poland, causing moderate damage and at least seven deaths, while extra-tropical remnants of Ophelia, the Atlantic’s easternmost major hurricane on record, hit the British isles. Windstorm Herwart swept through central Europe, causing at least 10 deaths and an insurance bill in the hundreds of millions of US dollars.

Super Typhoon Lan left extensive damage in the Philippines and caused economic losses above $US1 billion ($1.3 billion) in Japan. Hurricane Nate caused at least 46 deaths and extensive material losses in Central America, inflicting minor damage in US Gulf and Mid-Atlantic states.

Rainfall caused floods in China, Thailand and Vietnam, killing at least 98 people and damaging 121,000 Thai homes. Flooding in southern Norway prompted more than 2000 claims, with economic losses believed to exceed $US100 million ($130.44 million).

Flooding in Queensland followed powerful thunderstorms last month.

Severe weather in US central and eastern regions caused more than $US350 million ($456.56 million) in economic losses, while the remnants of Tropical Storm Philippe brought widespread damage to the US and Canada.

Allianz holds steady as cat claims rise

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Allianz says third-quarter net profit fell 17.3% to €1.6 billion ($2.4 billion) as hurricanes and other natural catastrophes pushed claims higher.

The combined operating ratio deteriorated 3.4 percentage points to 96.9%, while the property and casualty division’s operating profit dropped 28% to €1 billion ($1.5 billion).

The insurer says the results are “robust” despite the catastrophes, and it expects to deliver full-year operating profit in the upper half of its target range.

“The group absorbed claims stemming from hurricanes, storms and earthquakes in the quarter and still increased operating earnings in the nine-month period,” CEO Oliver Bate said.

Property and casualty gross written premium increased 2.2% to €11.5 billion ($17.5 billion), adjusted for foreign exchange and consolidation effects, while the natural catastrophes caused €529 million ($805 million) in losses.

In Australia operating profit jumped 111.3% to €96 million ($146 million), while the combined operating ratio improved six points to 92.7% after the corresponding period last year was hit by higher claims inflation and frequency in motor.

Revenue for Australia eased 1.3% to €878 million ($1.3 billion), with good growth in property offset by lower revenues in other lines of business.

The global group’s life and health insurance operating profit fell 10.3% to €1.1 billion ($1.7 billion), mainly due to a lower investment margin, while the value of new business increased 28.8% to €410 million ($624 million).

Allianz has announced plans for a further share buyback program of up to €2 billion ($3 billion) for the first six months of next year.

Zurich expects pricing uplift

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Zurich’s property and casualty gross written premium (GWP) hit $US25.35 billion ($33.02 billion) in the nine months to September 30, up 1% on the corresponding period last year.

Asia-Pacific GWP increased 8% in local currency to $US1.75 billion ($2.28 billion), “reflecting the incremental premium from underwriting the Cover-More travel [insurance] business in Australia”.

Aggregate claims in the third quarter from hurricanes Harvey, Irma and Maria are estimated at $US700 million ($911.77 million), net of reinsurance and before tax.

Group CFO George Quinn says third-quarter natural catastrophes are expected to “drive improvements in pricing across our business”.

“I am pleased with the development of our businesses in the year to date, particularly against a challenging industry backdrop,” he said.

Zurich’s interim management statement no longer includes a full earnings release, instead concentrating on “higher-level revenue metrics”.

Cat-heavy Q3 pushes Munich Re into red

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A catastrophic third quarter featuring hurricanes Harvey, Irma and Maria has led to Munich Re reporting a €1.43 billion ($2.16 billion) loss, down from a €685 million ($1.03 billion) profit in the corresponding three months last year.

The German reinsurer now assumes it will generate only a small profit for the full year, if it performs in line with fourth-quarter expectations.

Harvey, Irma and Maria caused natural catastrophe losses totalling €2.7 billion ($4.09 billion).

Munich Re estimates the three storms will cause market-wide insurance losses of about $US100 billion ($131 billion), although claims settlement will continue for many months.

Third-quarter gross written premium was €12.27 billion ($18.6 billion), down from €12.34 billion ($18.7 billion).

The investment result was €1.58 billion ($2.39 billion), down from €1.61 billion ($2.44 billion).

In property and casualty reinsurance, Munich Re forecasts a combined operating ratio of 112% for the full year. The combined operating ratio for the Ergo International unit is expected to improve one percentage point to 97%.

CFO Jorg Schneider says catastrophes substantially affected the group’s result.

“Despite business being otherwise good, this means we can only post a small profit [this year],” he said.

“But our capitalisation is strong, and we are able to take full advantage of opportunities arising from the likely market recovery.

“We expect prices to rise again in the forthcoming negotiations – particularly in the markets that have been hardest hit by recent natural catastrophes.”

Hannover Re sees silver lining amid storm clouds

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Hannover Re remains upbeat despite a sharp earnings hit from recent hurricanes and earthquakes.

The catastrophes, estimated by some analysts to have cost the industry about $US100 billion ($131 billion), may provide the catalyst for rate rises after years of sluggish growth.

“While Hannover Re’s result has been adversely impacted by the losses from natural disasters in the third quarter, they will not have any lasting effect on the company’s profitability or capital position,” the German reinsurer says. “On the contrary, the recent loss events should cause market conditions to improve again for reinsurers.

“Rates for catastrophe risks, in particular, are now likely to move higher and should generally prompt positive movements in other lines as well.”

Net income for the quarter to September 30 fell to €13.9 million ($21 million) from €303.9 million ($459 million) in the corresponding period last year, despite a 7.6% rise in gross written premium (GWP) to €4.49 billion ($6.7 billion).

The business made a net underwriting loss of €589.8 million ($890.2 million), down from a €47.2 million ($71.2 million) gain.

Its property and casualty reinsurance arm’s net income fell 98% to €4.8 million ($7.2 million) and the combined operating ratio blew out to 118.3% from 94.4%.

JLT follows organic revenue growth path

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JLT expects to make “sustained year-on-year financial progress” despite the series of natural catastrophes this year.

“The group continues to believe it will deliver full-year organic revenue growth more in line with historical rates,” it says in a market update covering the period July 1 to November 6.

“Due to the timing of insurance and reinsurance renewals, the group does not expect the recent series of natural disasters around the world to have an impact on its full-year outturn.

“With respect to the 2018 period, the initial marketplace response to these events has been inconsistent and it is premature to draw conclusions as to the effect these may have on the insurance rating environment.”

JLT says it remains pleased with trading in its risk and insurance businesses, despite “ongoing challenges and uncertainties in the economic, market and political environments”.

In the international specialty unit, Australia “started to realise the benefit of client wins announced at the interim results in July”, and Latin America performed well.

JLT Specialty Europe reported mixed revenue, with good results in construction, financial lines, and credit and political risks, but a weaker performance in energy and marine. 

JLT Re is building on momentum shown in the first half, and US specialty continues to grow revenue, bolstered by the strong performance of the Construction Risk Partners business acquired in January.

Hiscox grows GWP as rates rises emerge

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Specialty insurer Hiscox grew gross written premium (GWP) by 12.4% in the first nine months, amid signs of rate tightening driven by the catastrophe-packed third quarter.

It says rate rises are unsurprising given reductions seen over the past decade and the $US100 billion ($131 billion) industry-wide hit from recent hurricanes in the US and Caribbean.

“Price corrections are occurring in loss-affected and loss-exposed US property lines business, where we are seeing increases of 10-50% and sometimes more,” the Bermuda-based insurer says. “In other London market insurance lines, momentum is building ahead of the busy renewal season and reductions are coming to an end.”

In reinsurance, double-digit rate rises are expected on US catastrophe-exposed business at the important January renewals.

Hiscox GWP for the nine months to September 30 grew to £2.09 billion ($3.57 billion), up from £1.86 billion ($3.18 billion) in the corresponding period last year.

Hiscox Retail GWP increased 23.1% to £1.07 billion ($1.83 billion). Hiscox Re grew GWP by 18.5% to £553.3 million ($945.6 million), and Hiscox London Market declined 11% to £463 million ($791.2 million).

Combined net claims from hurricanes Harvey, Irma and Maria are about $US225 million ($293 million).

Ebix posts record Q3 revenue

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International insurance technology provider Ebix has reported record third-quarter revenue of $US92.8 million ($120.87 million), up 24.4% on the corresponding period last year.

Net income was up slightly to $US24.2 million ($31.52 million), with higher operating income offset by increasing interest expense and foreign exchange losses.

Chairman, President and CEO Robin Raina is excited by the growth momentum, and says further improvements are expected.

“Our aspirational goal for Ebix is to reach a quarterly revenue run rate above $US100 million ($130.25 million) by [first quarter] 2018, with operating margins at or above 30%,” he said.

Beazley grows GWP despite challenges

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Global specialty insurer Beazley reported gross written premium of $US1.76 billion ($2.3 billion) for the nine months to September 30, up 6% on the previous corresponding period.

Rates on renewal business decreased 1% during the period, reflecting an environment in which rates “continued to be challenged” in areas such as terrorism, energy and war.

Beazley warns natural catastrophe claims net of reinsurance may hit $US300 million ($391.21 million), and the expected combined operating ratio for the full year is about 100%.

The third quarter… was defined by the high frequency and severity of natural catastrophes,” CEO Andrew Horton said. “Beazley is in the catastrophe insurance business and paying natural catastrophe claims is part of what we do.

“These events will naturally affect our full-year results, but our diverse underwriting portfolio continues to serve us well.

“We also expect to see rate increases across some lines of business in the coming months.”

Aon risk ranking flags tech, innovation fears

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Disruptive technologies and failure to innovate have debuted in the top 10 risks facing financial institutions worldwide, according to an Aon survey.

The global financial industry views damage to reputation and brand as the biggest threat, followed by regulatory and legislative changes, similar to the last survey in 2015.

Cyber crime, hacking, viruses and malicious codes rank third, economic slowdown or weak recovery is fourth and failure to innovate and meet customer needs shares fifth spot with inability to hire or retain top talent.

Rounding out the 10 are rising competition, disruptive technologies and innovation, the growing burden and consequences of corporate governance and compliance, and technology or system failure.

“The risk environment for financial institutions continues to evolve rapidly as the magnitude, scope and complexity of risk increases globally,” Aon’s Chief Commercial Officer for Europe, the Middle East and Africa Specialty Enrico Nanni said.

“In particular, reputation remains critical for financial institutions, and this is demonstrated in the continued ranking of damage to brand as the No.1 risk.

“It is also interesting to see that the evolving economic landscape and trend towards disintermediation is reflected in the entry of failure to innovate and disruptive technologies to the top 10 risks, as financial institutions grapple with rapidly changing consumer and corporate habits.”

About 24% of financial businesses worldwide have suffered financial loss in the past year because they failed to keep up with customers’ needs or provide innovative products, the survey shows.

Risk management programs gaining traction: RIMS

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About 61% of companies use enterprise risk management programs to direct their corporate strategies, according to a Risk and Insurance Management Society (RIMS) survey.

This year’s survey shows a marked improvement on the previous one in 2013.

About 73% of respondents have a fully or partially integrated risk program in place, up from 63% in 2013, and the financial sector takes risk programs seriously, with 92% having one in place. Nearly one-quarter have a fully integrated program this year, up from 21% in 2013.

The results are encouraging, but there is room for more improvement, RIMS says.

“We have seen great progress in the effectiveness of [enterprise risk management], but there is still a large percentage of organisations that have yet to take advantage of the potential value of a fully integrated approach,” VP of Strategic Initiatives Carol Fox said.

“As more information becomes available, the onus is on the risk professional to communicate the benefits of [enterprise risk management] to gain critical buy-in and resources from leadership.”

The survey drew responses from 397 participants across more than 14 industries. The US accounted for 79% of respondents, Canada 12% and Australia 1%.

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Cracking the code: another step forward

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The wide-ranging fifth review of the General Insurance Code of Practice needs to show the industry can meet higher community and regulatory expectations amid an ever-sharper focus on financial sector standards and behaviour.

The Insurance Council of Australia’s (ICA) interim report on its review sets out eight priority proposals and another 11 themes for discussion, as it suggests new areas for inclusion and improvements to current standards.

“It’s vital we keep checking to see if our code measures up, and be brave enough to change it where it should be improved,” ICA CEO Rob Whelan said when announcing the review in February.

The code was introduced in 1994 and extensively rewritten in the most recent plain-English version, which took effect on July 1 2014, with a 12-month transition period.

That review, which started in 2012, responded to consumer frustrations arising from a series of natural catastrophes in previous years.

The current review sharpens focus on areas where the industry has recently drawn fire, including treatment of vulnerable consumers, inadequate disclosure, problems with add-on insurance and issues related to investigations and other service suppliers.

ICA has reviewed a range of submissions, including from consumer groups, and proposes enhancing the code with a new section on vulnerable consumers.

This would include guidance on best-practice mental health principles, recognising and responding to instances of family violence, and stronger standards on financial hardship.

“While we do not expect call centre staff to be counsellors or advisers, they should recognise when, for example, someone requires an interpreter, or how to identify when a customer’s issue requires escalation to someone equipped to respond appropriately,” it says.

ICA says it continues to work with family violence experts on complex legal issues that have been raised, while the industry is also working on matters related to mental health.

Proposals suggest the code should provide guidance on best-practice disclosure and on product design and distribution principles, including for add-on insurance, which has been on the regulatory agenda.

ICA says the code should strengthen standards relating to third-party distributors and service suppliers, and set out mandatory standards for investigations.

The updated code should also meet requirements for Australian Securities and Investments Commission approval, but ICA continues to grapple with the issue of remedies and sanctions.

The Insurance Council of New Zealand’s code allows a fine of up to $NZ100,000 ($90,590) for unresolved significant breaches, while an offender can also be reprimanded or expelled from membership.

“The ICA board could determine whether it wanted to hold the same power, and the basis on which it would require fines to be paid,” the interim report says, while calling for further feedback.

The current document says the Code Government Committee may require a compliance audit, rectification steps, corrective advertising or publication of non compliance, effectively giving it the option to publicly name and shame an insurer that breaches the standards.

The report says the code needs to be flexible, rather than becoming a narrow set of “prescriptive service standards” that could also restrict competition and innovation.

It asks for responses on more than 40 questions about the eight key proposals, and highlights at least another 40 discussion points on additional code review themes.

Some issues touched on in the code are also part of other reviews and processes under way, such as work to improve disclosure and product comparability.

“ICA views the purpose of the code as establishing valuable principles and standards of industry practice for the benefit of consumers,” it says. “However, ICA does not consider the code to be a catch-all for every issue raised in relation to general insurance.”

Submissions on the interim report are due by January 8, but a long road remains before an updated code is produced and comes into force.

ICA expects to publish a final report in May. An independent oversight report will be released in the middle of next year and the revised code will follow that, with an “appropriate” transition.

Mr Whelan told an industry conference last month he has never seen regulators so active and assertive, while expectations on the industry are continuing to change.

“Much of the focus in the industry is now on providing demonstrable value for the customer, and making the entire process of insurance faster, better, easier and simpler,” he said. “To future-proof the industry, we must look to our core behaviours, values and culture. Actions and deeds count.”

The code goes to the heart of the insurance industry’s social licence to operate. If the management of its own affairs falls short, it can expect more inquiries and increased intervention.

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