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Local

Australia leads way on commercial rate rises

Commercial lines premiums grew fastest in Australia in the second quarter, averaging 13.7%, according to broker Marsh’s Global Insurance Market Index.

Financial and professional liability pricing rose 23.3%, with directors’ and officers’ (D&O) cover producing the biggest rise amid a challenging claims environment and reduced capacity.

Financial institutions pricing was up 20-25% on average after several large losses and the fallout from the Hayne royal commission on financial misconduct.

Casualty and property, the two other major lines, gained 5.7% and 12.5% respectively in the June quarter.

Global commercial rates grew for the third consecutive quarter, underpinned by Australia and the UK.

The market index – a measure of commercial insurance premium change at renewal – climbed to 0.892 points from 0.89 points in the previous quarter, with prices up 1.2%.

Global property rates grew 2.3% as last year’s catastrophe losses continued to affect the market.

Casualty declined 1.4% and financial and professional increased 3.3%, driven by higher D&O pricing in multiple regions.

Data breach laws lift cyber take-up

Specialty insurer CFC says data breach notification rules have driven a 107% jump in new Australian cyber business this year.

“We attribute much of this growth to awareness of the… legislation surrounding notification, along with greater understanding of how policies respond in providing costs to manage such incidents,” International Cyber Team Leader Lindsey Nelson said.

The notifiable data breach laws, which took effect on February 22, require organisations to inform affected individuals if a breach is likely to result in serious harm.

They must also alert the Office of the Australian Information Commissioner, which says 242 breaches were reported in the three months to June after only 63 in the partial first quarter.

UK-based CFC, a Lloyd’s managing general agent, says businesses are recognising that cyber policies provide post-remediation services and training tools to prevent problems caused by human error.

Dive In unveils festival program

Tickets can now be booked for events in Australia and New Zealand for the fourth Lloyd’s Dive In Festival of diversity and inclusion.

This year’s festival is the biggest to date, with 50 events across 26 countries, including 16 in Australia and New Zealand.

Presentations, panels and networking events will be held on September 25-27 in Sydney, Melbourne, Perth, Adelaide, Brisbane, Auckland and Wellington, covering subjects including LGBTIQ+ inclusion, mental health, and gender and cultural diversity.

The theme for the festival is #time4inclusion, as the emphasis shifts from talk to action.

The second survey of diversity in the insurance industry is also under way, with results due to be presented at the festival opening in Sydney at 8am on September 25.

To take part in the survey before Friday, click here. To book tickets for Dive In events, visit here.

See ANALYSIS and a full list of events.

QBE loses NZ court appeal on quake cost sharing

New Zealand’s Court of Appeal has dismissed a QBE case arguing that Allianz should share costs for a Christchurch earthquake claim because both companies were providing cover when the catastrophe struck the city.

The earthquake that hit at 4.35am on September 4 2010 caused significant damage to a property insured by QBE under a policy due to expire at 4pm.

A broker had previously organised new cover with Allianz that commenced the day of the earthquake, without specifying a start time.  The Allianz policy says it would expire at 4pm on September 4 2011.

QBE sought a 50% contribution from Allianz for the claim, arguing the policy began from midnight, so both companies were liable for costs at the time of the catastrophe.

The Court of Appeal said it was immaterial that the broker and Allianz had not discussed a specific start time, and it was accepted that the building’s body corporate never sought to obtain double insurance.

“Viewing the communications objectively, what was sought and what was agreed to be provided was a policy that incepted on the expiry of the QBE policy,” the judgment says.

Lending crackdown hits LMI premiums

The number of new lenders’ mortgage insurance premiums has contracted for three consecutive years as risk appetites shrink amid tightened lending standards.

Demand for mortgage insurance should remain subdued this year, according to an S&P Global Ratings report.

The ratings agency warns product risk remains high as prudential lending caps and tighter underwriting standards lead to soft demand in the housing market and, consequently, mortgage insurance. Declining prices, slow wage growth, high debt and a potential interest rate increase may exacerbate credit losses.

The industry carries an intermediate risk, thanks to barriers to entry, profitability and a strong institutional framework, S&P says.

It notes Australia provides a stable environment for mortgage insurers, limiting the effect of significant downturns or domestic external shocks.

AI strategies ‘require more ambition’

Insurers have been urged to fully embrace artificial intelligence (AI) to gain maximum benefit.

Accenture Insurance Lead Australia and New Zealand Ravi Malhotra says much industry AI activity is limited to improving current processes or “seeking low-hanging fruit”.

“There is value in exploring these opportunities,” he said. “However, if we were to set our ambitions a bit higher, there is potentially so much more to uncover.

“Only once we reframe what we are trying to achieve, and rethink what work needs to be done, will AI truly make an enormous difference.

“It’s not just about doing the same things differently.”

AI is an evolving technology that may herald an era of “extraordinary” benefits including faster underwriting, quicker claims settlement and improved customer experience.

But patience is key. Insurers willing to take a long-term approach to AI investment will achieve the most.

“In approaching this fundamental shift in thinking, it’s important to recognise that it won’t be achieved overnight,” Mr Malhotra said.

“It will take some time and must be done thoughtfully and strategically.”

Paperwork deters travel claims: survey

Travellers are failing to lodge claims for overseas incidents because they view the process as too laborious, a TravelCard survey has found.

Among respondents who paid for medical costs overseas, 55% did not make a claim on their return.

About 82% of travellers say they have had issues with the process, with 44% criticising claims for involving too much paperwork.

Some 32% say claims are only partially reimbursed and 31% think they take too long to settle.

TravelCard, which has introduced a policy that pays claims in real time, says 1000 people were surveyed about incidents overseas and “pain points” with insurance providers.

Travellers are most likely to claim when they are forced to cancel a trip before departing.

The most common incidents during trips are delayed flights, receiving medical treatment, losing and damaging goods and suffering thefts.

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Corporate

Cunningham Lindsey shake-up brings shock CEO exit

Asia-Pacific CEO Damon Bennett will leave Cunningham Lindsey, despite having been confirmed in the position just weeks ago.

As previously reported by insuranceNEWS.com.au, the Cunningham Lindsey name is to disappear from Australia following the loss adjuster’s acquisition by US-based claims manager Sedgwick late last year.

In late June Sedgwick said Mr Bennett would remain as Asia-Pacific CEO, taking responsibility for Australia, New Zealand and nine Asian countries, while Diego Ascani would continue as COO.

However, sources say Mr Bennett’s exit was confirmed to staff on Thursday.

The sources say Sedgwick is working on a restructure that would see separate CEOs appointed for Australia, New Zealand and Singapore. Mr Ascani is understood to be taking over as Australia CEO.

The company’s US-based communications team did not respond to requests from insuranceNEWS.com.au for comment.

Mr Bennett, who joined Cunningham Lindsey in 2002 and was made Asia-Pacific CEO in 2014, told insuranceNEWS.com.au he cannot comment at this stage.

StarStone heads new casualty offering

Global specialty insurer StarStone has established a casualty consortium targeted at the Australian and New Zealand markets.

It will initially offer $50 million capacity, shared between StarStone and four Lloyd’s syndicates, and focus on middle-market casualty risks not usually underwritten in London.

StarStone Australia Casualty Underwriter Mark Hunt will lead the consortium, with claims support provided by the company’s network already in Australia and New Zealand.

“We have identified clear market and broker demand for a solution that combines Lloyd’s expertise and local knowledge,” StarStone MD Robin Barham said.

StarStone, part of the Enstar Group, has been building its presence in the local market in the past couple of years.

Mr Hunt, who has more than 30 years’ experience in the insurance sector, says the consortium will support a tailored and client-centric approach that will allow brokers and customers to transact deals as though in the underwriting room of Lloyd’s in London.

“The collective expertise of those involved in this consortium will significantly increase the local capabilities and profile of Lloyd’s within the casualty space,” he said.

Suncorp hails ‘momentum’ despite profit dip

Suncorp’s net profit declined 1.5% to $1.06 billion last financial year, but the company says the second half improved sharply on the first and business investments will drive stronger results.

CEO Michael Cameron says Suncorp is ahead of target on an improvement program and seeing early benefits from digitisation changes that provide easier access for customers.

“We have made significant progress in transforming the business,” he said. “We have got really good momentum that will see us deliver further uplift in shareholder returns.”

Australian general insurance gross written premium (GWP) grew 0.3% to $8.14 billion, while net profit declined 1.2% to $681 million.

Home and motor achieved average premium increases of 3.8%, while compulsory third party GWP fell 17.1% due mainly to NSW reforms.

Commercial GWP grew 0.8% to $1.51 billion as margin was prioritised over growth.

Mr Cameron says percentage rate gains across the portfolio ranged from high single digits to mid-to-high teens in the mid-year renewals, with repricing still required in the commercial sector.

The company says claims inflation in motor is well below industry levels, with initiatives such as the SMART repair network delivering results.

Suncorp is also seeking to step up efficiencies from a home repair operation that co-ordinates work.

“While it is still small, it is also delivering benefits for us,” Mr Cameron said.

Australian natural hazard costs were $625 million, $36 million below the full-year allowance.

Victorian hailstorms in December were the largest event and weighed on the first-half result, while conditions were more benign in the second half.

Regulatory spending increased by $40 million to $54 million for the year and Suncorp has budgeted for an increase to $90 million this year.

New Zealand general and life insurance net profit grew 70% to $NZ148 million ($132.7 million), despite increased weather events and natural hazard volatility.

“Strong growth, claims management and expense control have all contributed to a more positive result compared to the prior year, which was significantly affected by the Kaikoura earthquake,” New Zealand CEO Paul Smeaton said.

General insurance GWP grew 10.2% after adjusting for the sale of the Autosure motor warranty book in March, and the division delivered an after-tax profit of $NZ109 million ($97.7 million).

Suncorp says it will sell its Australian life insurance business to TAL Dai-ichi for about $725 million.

See OTHER STORY.

Symetri result leaves Stream fearing for earnout

Claims services company Stream has announced “highly disappointing” first-half results for its former New Zealand business Symetri.

Symetri was sold to Gallagher Bassett in April last year under an earnout agreement.

Under the deal, a portion of the sale price is paid on condition the business achieves a predetermined level of future earnings. Such an agreement is used when the buyer believes the business should be valued below the seller’s price.

Stream has told the Australian Securities Exchange it is working with Gallagher Bassett to improve performance in the second half, warning there is a chance it will not achieve an earnout payment unless the business improves.

Stream’s Australian operations went into administration in December 2015 and were liquidated. Its UK business was sold the following May.

It continues to provide software services to the New Zealand and UK businesses.

Chubb, Swiss Re join forces on flight delay cover

Chubb has partnered with Swiss Re, data supplier FlightStats and United Networks to provide insurance that automatically pays $100 for flight delays as short as 30 minutes.

Policy options also include delays of 45 and 60 minutes, with premiums priced according to the duration. Flight cancellations and diversions also trigger a payment, mostly processed within an hour but at most within 72 hours of arrival at the destination airport.

The insurance is available through the Chubb Connect app, introduced in October with listed telecommunications company United Networks.

Delays are validated by Swiss Re using real-time data from FlightStats, with funds paid into PayPal accounts without the need to file claims or submit supporting documents.

Chubb says flight delays are the leading disrupter of travel plans and the payments help with unexpected costs for ground transport, refreshments, books, magazines and other expenses.

“With more air travel, Chubb recognises their need for tailored insurance protection and efficient service,” Chubb Asia-Pacific Head of Travel Insurance Donna Dorairajoo says.

The cover is the first insurtech product for United Networks, which will be paid a percentage of policy net premium.

5Star takes up Sura brand

Motor dealership underwriter 5Star Underwriting has rebranded as Sura Motor Dealers.

The agency, one of Sura’s specialist underwriters, has provided tailored cover for dealers since 1992.

“Sura Motor Dealers’ promise will be the same: providing automotive industry clients with the same broad, tailored cover they’ve come to depend on,” it says in a note to clients.

“For brokers, the new name is a symbol of a willingness to innovate, embrace change and push the boundaries of underwriting, to give them the edge they need in a competitive niche market.”

Scott Woolley is National Manager and Troy Donnelly is National Underwriter at the rebranded company.

Fair weather lifts CommInsure

Commonwealth Bank’s general insurance arm CommInsure has posted a 51% jump in income to $183 million for the year to June 30.

It says lower weather-related claims were a key factor in the result.

Overall insurance income on a cash basis grew 31% to $293 million.

The bank announced in June a strategic review of its general insurance business, which may lead to a potential sale of the operations.

CBL creditors’ meeting put back again

Creditors of CBL Corporation will now convene sometime before November 17 after voluntary administrator KordaMentha secured court approval to adjourn this Friday’s meeting.

The creditors’ meeting has been held back several times for various reasons.

KordaMentha’s Brendon Gibson and Neale Jackson say the latest delay is needed to take into account a Reserve Bank application to liquidate CBL subsidiary CBL Insurance.

The liquidation hearing in the High Court, planned for last month, has been put back.

“The late adjournment of the CBL Insurance liquidation hearing has necessitated extending the watershed meetings to allow time to consider the impact the deferral has on the options available to the companies we control,” Mr Jackson said.

“One of the options we are considering is whether to proceed with resolving the position of the companies that are in administration, despite not knowing the outcome for CBL Insurance.

“But at this stage that is not our preferred option.”

Takeover trend inspires new Marsh W&I cover

Marsh says insurance issues faced by private equity groups seeking to buy public companies have prompted it to introduce a warranty and indemnity (W&I) product for such deals.

“W&I Insurance has traditionally serviced as a facilitative tool for private company transactions,” Chris McDermott, the Pacific Practice Leader for Marsh’s private equity and mergers and acquisition team, said.

“We saw a real opportunity to extend the benefits of W&I to transactions involving listed businesses and have already seen significant interest in this product from private equity firms scoping public targets.”

The number of hostile bids by cashed-up private equity groups is increasing and businesses are seeking to enhance their negotiating position, protect their purchase price and improve certainty in public to private deals, Marsh says.

Public to private ownership deals represented about one in 12 transactions last year, and activity this year is pointing to a higher relative volume of such deals.

Marsh’s W&I product is deployed through insurance partners AIG, Ironshore, Tokio Marine subsidiary HCC and Bond & Credit Co.

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Regulatory & Government

ICA calls for levy monitor role to be reconsidered

The Insurance Council of Australia (ICA) has called for the NSW Government to reconsider the continuing role of the Emergency Services Levy Insurance Monitor.

ICA CEO Rob Whelan told a NSW parliamentary inquiry hearing that ongoing information requirements imposed by the monitor are extensive and costly to meet.

“It is hard to see a connection between much of the monitor’s current activity, such as a report on insurance and big data, and his levy monitoring role,” he told the hearing today.

“Given the insureds pay for the monitor through the ESL, the Insurance Council recommends that this role be reconsidered in light of the Government’s ultimate policy intentions.”

Monitor Allan Fels and Deputy Monitor David Cousins were appointed to ensure savings were passed on as the state shifted from an insurance-based levy to a property-linked charge collected through local government rates.

But the Government, led by the Liberals’ Gladys Berejiklian, backflipped on the change last year and reintroduced the levy, while the monitors’ role is set to continue until June 2020.

The National Insurance Brokers Association (NIBA) said warnings of bill shock from the reintroduction of the levy had proved correct this year, with many buyers hit hard by the increases.

“With the reinstatement of the insurance levy for renewals in May and June, that had a very significant impact on business owners and property owners, and in some cases went to the very heart of the affordability of their insurance cover,” CEO Dallas Booth told insuranceNEWS.com.au after the inquiry’s morning session.

The ICA and NIBA highlighted that NSW continues to be the only mainland state that funds its fire and emergency services through an insurance-based levy.

The NSW inquiry was established on June 22 last year to report on the funding of the fire and emergency services levy. A second round of hearings will be held next Monday.

Mr Booth said there was a risk the issue could get caught up in politically motivated arguments leading into the March 23 election next year, despite strong support for change in submissions to the inquiry.

Elders pair banned after QBE uncovers crimes

Two Elders Insurance brokers have been permanently banned by the Australian Securities and Investments Commission (ASIC) after being convicted of fraud and theft.

Tony Bashford, of Talbingo in NSW, and Brody Glenn Jarman, of Yarrawonga in Victoria, were reported to police and ASIC after internal investigations by Elders and parent QBE.

A QBE spokesman told insuranceNEWS.com.au its protective services team uncovered fraudulent claims Bashford made without clients’ knowledge, keeping the payments for himself. He subsequently paid some funds back to the business.

Elders revoked Bashford’s licence as an authorised representative. He operated four insurance agencies under the Elders brand.

Bashford was convicted of seven counts of dishonestly obtaining a financial advantage and sentenced to 14 months in jail. He is appealing his sentence.

ASIC has permanently banned him from providing financial services or engaging in credit activities.

Jarman was found by Elders to have stolen client funds between 2012 and 2015 while he was insurance manager at Albury Insurances in Yarrawonga.

He admitted seven counts of theft in 2016, and was given a good behaviour bond and ordered to pay compensation.

The QBE spokesman told insuranceNEWS.com.au no customers were adversely affected by the men’s actions.

NSW cracks down on cladding

NSW will ban the use of dangerous cladding on high-rise buildings this week, following public submissions by the state’s Commissioner for Fair Trading.

The ban will cover aluminium cladding panels with a core mass greater than 30% polyethylene in certain multistorey buildings. It will apply to external cladding, walls, external insulation, facades or rendered finishes.

Companies found using banned building products will be fined up to $1.1 million, and individuals up to $220,000.

Victoria announced a similar ban in March.

Regulatory burdens stifle innovation: ICA

Increased regulatory requirements are holding back industry innovation as insurers expend more resources on compliance, the Insurance Council of Australia has warned a federal parliamentary committee.

GM Policy Regulation John Anning says the insurance industry is keen to develop new products for the digital economy.

“The customer experience with general insurance is currently changing greatly, with growing customer empowerment driven by widespread use of the internet, interactive digital technology and social networks,” he told the Standing Committee on Economics’ inquiry into business investment impediments. 

“These developments hold great promise for better customer outcomes.

“However, our members tell us the greatest impediment to investment in innovation is the increasing need over recent years to devote resources to regulatory compliance.”

Mr Anning says the industry is not against reviews and inquiries, which are productive if outcomes are duly considered and acted upon. But the tendency to address issues via regulation, “regardless of whether it is necessary or the most appropriate” policy response, is a concern.

Northern Australia’s long-running insurance woes are, to a degree, tied to a reliance on repetitive reviews and inquiries instead of action, he says.

“The impact of natural disasters on the pricing of insurance in northern Australia has been looked at numerous times, but it appears easier to initiate another inquiry by a different regulator than tackle questions about appropriate land use and mitigation in the face of disaster risk.

“It is difficult to see that new insurers would be willing to invest in offering insurance in northern Australia when the regulatory regime may be dramatically altered with the introduction of a government-backed reinsurance pool or mutual insurer.”

Driverless vehicle study flags ‘profound benefits’, challenges

Infrastructure Victoria has published a study on the potential economic impact of autonomous vehicles, including health, environment, land use and road use findings.

The independent statutory body now wants community and stakeholder feedback to help prepare its final advice to the Victorian Government.

Adopting automated vehicles could bring economic benefits of $14.9 billion, the study shows.

Road deaths could be cut by up to 94%, or 400 a year, in 2046 – reference year for the research.

“There is a lot of hype around driverless and zero-emissions vehicles, and our research shows that while they could deliver profound benefits, they also present challenges that need to be addressed,” Automated and Zero-Emissions Vehicles Advice Project Director Allison Stewart said.

“Our advice to government will focus on how best to manage the broad range of impacts these new technologies could have, to maximise their potential.”

Submissions must be received by August 31. For more details, click here.

FMA ‘losing patience’ on conduct

New Zealand’s Financial Markets Authority (FMA) has warned the industry to improve governance practices and root out misconduct and conflicts of interest.

In his annual corporate plan, CEO Rob Everett says the regulator is “increasingly impatient” with companies disregarding customer outcomes and strong conduct frameworks.

Misconduct in trading, inadequate or ineffective disclosure, poor auditor work and dishonest engagement with the regulator are areas of concern.

The FMA expects to investigate and enforce compliance in these areas, and in terrorism financing and money laundering, according to the corporate plan. 

The regulator says it has identified concerns including “lack of appreciation of the presence of conflicts of interest, lack of appropriate disclosure, insufficient record-keeping and lack of appropriate communication with clients”.

Mr Everett said: “The FMA expects companies to be able to provide concrete evidence of progress they’ve made in putting good conduct outcomes at the heart of their business.”

Boards and senior managers must develop a strong governance culture with customers at the centre, the FMA says. It wants to see incentive structures and practices, sales and advice designed and implemented with a focus on customer needs and outcomes.

ASIC secures $70 million funding boost

The Australian Securities and Investments Commission (ASIC) will receive an extra $70.1 million to help combat misconduct.

The funding injection follows a decision by new Chairman James Shipton to refocus on “proactive” enforcement and increased on-site supervision, the Government says.

The package provides $26.2 million to enhance ASIC’s capacity to “pursue actions for serious misconduct against well-funded litigants”.

It will also receive $6.8 million for a taskforce to identify and pursue corporate governance failings in large listed companies, with the role to include deploying staff for on-site surveillance and investigations.

There is $6.6 million for whistleblower protection law reforms and $6 million to promote Australia as a leader in financial services regulatory technology.

The big four banks and AMP are singled out, with $8 million for a supervisory approach that will, for the first time, embed ASIC staff to monitor governance and compliance.

Funding is also directed towards improved consumer access to the Financial Advisers Register, enforcement of unfair contract term protections for small business, and compliance with Future of Financial Advice laws.

ASIC has drawn fire for failing to adequately fight poor corporate behaviour, after revelations during the Hayne royal commission on financial services misconduct.

ASIC forces $250 million in H1 compo

The financial services sector paid nearly $257 million in compensation and remediation to consumers and investors in the first half of this year.

An Australian Securities and Investments Commission enforcement report shows the regulator removed or restricted 68 individuals or companies from providing financial services or credit, and issued 16 infringement notices.

It also collected $20.44 million in civil penalties. Financial services misconduct accounted for 42% of enforcement actions, credit 32%, dishonest misconduct and misleading statements 18%, and misappropriation, theft and fraud 7%.

NIBA seeks feedback on aviation framework

The National Insurance Brokers Association (NIBA) wants members to provide feedback to the Government’s review of the civil aviation insurance and liability framework.

They have until August 24 to send comments to CEO Dallas Booth, and NIBA will likely make a submission to the review.

The Department of Infrastructure, Regional Development and Cities has released a discussion paper that focuses on civil aviation carriers’ liability.

Liability thresholds under the Civil Aviation (Carriers’ Liability) Act, insurance exclusions, particularly war risk, and civil aviation carriers’ liability regulations are the main topics.

To see the paper, click here.

ASIC helps consult on global fintech network

Financial regulators are consulting on creating a global innovation network to promote fintech collaboration and testing.

The network could provide a more efficient way for fintechs to interact with regulators and expand across countries. It would also create a co-operative framework for regulators on innovation-related topics, including business models and new technologies.

In February the UK’s Financial Conduct Authority proposed a “global sandbox” for fintechs to test products across jurisdictions.

The Australian Securities and Investments Commission is involved in the consultation, along with regulators from Abu Dhabi, Canada, Bahrain, the US, Dubai, the UK and Guernsey, Hong Kong and Singapore, along with global finance partnership the Consultative Group to Assist the Poor.

They have released a consultation paper on an operating framework for the proposed network, including its functions and role supporting innovation.

The paper says regulators can conduct joint policy work and regulatory trials, support standard-setting bodies and share knowledge on emerging trends, trials and experimentation.

Consultation responses are due by October 14.

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Financial Services

TAL hails Suncorp life purchase, distribution deal

TAL Dai-ichi will acquire Suncorp’s Australian life insurance business for about $725 million, in a deal that includes a 20-year distribution alliance.

The transaction will see TAL offer life cover through Suncorp sales channels, including its store network, contact centres and digital platforms.

“We look forward to extending our life insurance expertise to provide high-quality… solutions to Suncorp customers and distribution partners,” TAL Group CEO Brett Clark said.

Suncorp, which announced early last year it was reviewing options for the life division, says the sale will simplify its business model, release capital to shareholders and be marginally accretive to cash return on equity this year.

As reported by insuranceNEWS.com.au in a Breaking News bulletin last week, the group has flagged a $600 million capital return to shareholders, with details to be determined after the sales agreement is finalised and before completion, expected by the end of December.

Suncorp will book a non-cash writedown to goodwill and net assets of about $880 million this financial year.

The Australian life business reported an underlying profit of $76 million for the year to June 30, up 43.4% on the previous year.

Net profit after tax grew 70.6% to $58 million, including the impact of market adjustments for policy discount rate changes and investments.

Suncorp CEO Michael Cameron says the company is not planning to sell its New Zealand life operations.

“In New Zealand we will continue to manufacture those products and services ourselves,” he said.

“We have a very robust business there. It generates great outcomes for our customers. It is growing and it delivered a very solid return on equity from a shareholder perspective.”

The business, which includes Asteron Life and the AA Life joint venture with the New Zealand Automobile Association, recorded net profit of $NZ39 million ($35 million) last financial year, down $NZ1 million ($908,000) on the previous year due to lapse and claims volatility.

Suncorp New Zealand CEO Paul Smeaton says further inforce premium growth is expected after a 4.9% gain last year, while underlying profit is also expected to increase.

‘Grudge’ buyers quick to dump life insurers

About 242,000 customers switched life insurance providers in the year to June, with another 766,000 investigating other providers for a better deal, a study shows.

Researcher Roy Morgan says the results reflect a lack of brand loyalty.

The cost of premiums is the biggest driver, with 42.8% of policyholders seeking a cheaper offering. About 26% look for alternatives because they “always shop around”.

Respondents aged 35-49 are most likely to switch insurance providers, at 42.2% of the total moving, followed by those aged 50-64 at 35.7%.

About 28% of those who switched or considered doing so were earning $60,000-$90,000, with those earning $30,000-$59,000 making up 22%.

Roy Morgan director Norman Morris says life insurance is likely seen as a “grudge purchase” and is switched due to price.

The study’s findings stem from interviews with more than 50,000 people.

Earnings plunge as AMP feels Hayne pain

Scandal-hit AMP expects further fallout from the Hayne royal commission, which has exposed the group’s poor conduct and corporate deceit.

First-half net profit plunged 74.2% to $115 million as about $312 million was set aside for advice remediation and related costs. Commission-related expenses were $13 million. Underlying profit fell 7.1% to $495 million.

“The events around the [Hayne commission] on financial services have challenged our reputation, and while we continue to monitor the impacts, we have taken action to stabilise the business and move forward,” Acting CEO Mike Wilkins said.

“Headwinds remain for the second half of the year, but our focus is clear. We’re driving change right across the business… helping to earn back trust in AMP.”

The wealth protection arm, which sells individual and group life cover, suffered a 98.1% slump in operating earnings to $1 million. The individual risk lapse rate grew 1.3 percentage points to 14.7%, partly amid fallout from the Hayne hearings.

Earnings were also affected by higher-than-expected claims activity and reserve strengthening on a large terminated group plan.

The business lost another group plan last month and expects this to reduce annual premium inforce by a further $100 million.

Individual risk annual premium inforce increased 0.3% to nearly $1.5 billion, but group risk declined 15.7% to $371 million. Total wealth protection cash inflows fell 2.2% to $933 million and outflows declined by 16.4% to $518 million.

Fee scandal payouts pass $250 million

Customers caught in the fees-for-no-service scandal have been offered or paid $259.56 million in refunds and interest, according to the corporate regulator.

AMP, ANZ, Commonwealth, NAB and Westpac have paid $222.3 million, up $6.4 million since last October.

The rest of the sum comes from financial advice groups’ compensation programs, including Bendigo Financial Planning, Police Financial Services, StatePlus and Yellow Brick Road Wealth Management.

The Australian Securities and Investments Commission is overseeing the compensation programs.

Five other advice groups have set aside funds for compensation, which if paid could take the overall amount past $850 million.

Commonwealth has paid more than $118 million, ANZ $50.79 million, StatePlus $37.22 million and NAB super funds trustee Nulis Nominees $35.9 million. AMP, NAB and Westpac have paid $5.01 million, $5.69 million and $6.9 million respectively.

MetLife fills roles in growing retail team

MetLife has expanded its retail sales team, making seven appointments across underwriting and relationship management roles.

Richard Holt has been promoted to Head of Service Delivery, responsible for MetLife’s retail offering and supporting intermediaries across underwriting, new business and policy administration.

He was previously head of sales development and has held roles with MLC, BT and Deutsche Bank.

Rachel Towell and Stuart White have been appointed as state managers for NSW/ACT and Queensland respectively. They were both previously at AIA Australia.

Simon Dent has been made National Retail Underwriting Manager for NSW and Queensland. He was previously head of underwriting and new business at MLC.

Adrian Young becomes National Retail Underwriting Manager for Victoria, Tasmania, SA and WA. He was previously at BT Financial Group.

Fiona Quinn and Hadley Fredericks have been appointed Senior Retail Underwriters.

Ms Quinn was previously manager of underwriting services and operations in Victoria, SA and WA, while Mr Fredericks was a senior underwriter at Zurich Life.

CFO quits Centrepoint

Centrepoint Alliance CFO John Cowan will leave in November after nearly four years with the company.

The wealth manager has engaged a recruitment company to search for his replacement.

It is also undertaking an operational restructure and expects to provide more details when annual financial results are released.

FPA announces keynote speaker

American author and financial services expert Mitch Anthony will be a keynote speaker at the Financial Planning Association’s Professionals Congress in Sydney in November.

He will discuss the way his business model ties every product and service directly to a client’s life transitions and goals.

Mr Anthony has written a series of books for financial advisers and consumers.

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The Professional

Zurich hires commercial relationship head

Zurich has appointed Edward Newson as Global Relationship Leader in its commercial insurance business.

Mr Newson was previously head of client engagement at Curwoods Lawyers, and has held roles with AIG and QBE.

He worked for Zurich from 2005-10 in business development and underwriting.

Claims Convention tackles best practice

The annual Australasian Institute of Chartered Loss Adjusters and Australian and New Zealand Institute of Insurance and Finance Claims Convention will be held on September 27 in Sydney.

The theme is Best Practice in Claims – Preparing for the Future.

Speakers include Insurance Council of Australia CEO Rob Whelan, CSIRO analyst Dr Wen Wu, Allianz Australia GM Long Tail Claims Donna Stewart, and Sparke Helmore Lawyers consultant Colin Pausey. Clyde and Co Partner Tim Searle will present on the complex insurance liability issues of building cladding.

To register for the conference at the Sheraton on the Park, click here.

Quill Club raises $45,000 for autism charity

Melbourne’s Quill Club raised $45,000 at its annual charity lunch last Friday – an event believed to be the largest annual insurance gathering in Melbourne.

The money will go to Yellow Ladybugs, a community group that helps autistic girls and women.

More than 530 guests attended, including brokers, loss adjusters, premium funders and insurance lawyers.

“We wanted to say from the Quill Club a very big thank you to all those associated with the day, particularly our sponsor Scott Winton Insurance Brokers and those who bought tables for the event,” committee member Tony Carmusciano told insuranceNEWS.com.au.

Yellow Ladybugs ambassador Chloe Hayden was the guest speaker.

“The feedback we received from those who attended is that they were very touched by the charity,” Mr Carmusciano said. “We have achieved our highest raffle sales and also contributions to takings from the [live] auction.”

An Argentinian soccer shirt signed by superstars Lionel Messi and Diego Maradona sold in the auction for $3000.

Next year’s fundraiser will be on August 9 at the same venue, Central Pier in Melbourne’s Docklands.

The Quill Club was established in 1977 as a social and charitable organisation for insurance professionals.

NTI boss prepares for Everest fundraiser

National Transport Insurance (NTI) CEO Tony Clark will join an Everest Base Camp expedition next month to raise money for charity.

He is supporting motor neurone disease researcher the MND and Me Foundation, which has added meaning for the specialist truck insurer after former CEO Wayne Patterson was diagnosed with the condition in 2015.

“My contribution this year is to walk to Everest, with every cent that is raised going to [the foundation],” Mr Clark told insuranceNEWS.com.au.

He hopes to raise at least $8000, and supporters have so far chipped in more than $6000.

NTI also plans to restore another vintage truck to raffle next year for the foundation. It raised more than $55,000 last year through a similar project.

“That’s going to be an annual thing for us,” Mr Clark said. “As an organisation, we have decided to make that our cause.”

To support Mr Clark’s Everest trek, click here.

Allianz appoints crisis specialist

Allianz Global Corporate & Specialty (AGCS) has appointed Shelley Devane as Senior Underwriter Crisis Management for Asia-Pacific, based in Sydney.

She was head of crisis management at XL Catlin, and has worked at AIG.

CEO Willem van Wyk says Ms Devane’s experience in political violence, terrorism, malicious product tampering and recall insurance will suit AGCS’ suite of liability products.

icare shares tips for healthy workplaces

Insurance & Care NSW (icare) held an event today showing employers how to build social cohesion in the workplace.

The session in Ballina was one of five being held across the state by the public insurance group.

“icare has been conducting research for more than two years to understand the drivers of social connection,” Manager of Research and Design Caroline Howe said. “We’ve also built up a stockpile of tools to help employers improve social connections and create a healthier workplace for their employees.

“We’ll be bringing fresh perspectives, new tools and practical tips.”

The events form part of icare’s contribution to the $55 million Mentally Healthy Workplaces 2018-22 strategy, a joint initiative with SafeWork NSW and the State Insurance Regulatory Authority.

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International

Insurers brace for ‘hard Brexit’

British insurers are activating Brexit contingency measures as time runs out for the UK and European Union to adopt legally binding transition plans.

A report from Kennedys Law says if the legal status of the UK’s exit is assured only next year, insurers will have to activate plans based on a “hard Brexit” outcome.

This will result in harsher economic impacts, the insurance law firm says.

One company has committed about $50 million to new IT infrastructure, relocation costs, hiring, regulatory authorisation and other fees.

Maintaining market access with EU trading partners remains the top priority for insurance companies, according to Kennedys.

The report says access to the EU’s single market is a major part of what makes the UK an attractive destination for investment from US insurers.

The industry consensus is that the UK will not maintain current market access under any post-Brexit trade scenario. At present, EU countries can access the UK market through a “passport” system

Many insurance companies are already moving parts of their businesses out of the UK, with Dublin the preferred location for many due to its sound financial regulation, common language and continued passporting rights as an EU member state.

Supporting legal and professional services may also relocate to Dublin.

Kennedys says Brexit will also lead to a research and development funding gap of €1.6 billion ($2.5 billion) in the insurtech and healthtech market.

The UK must regulate innovative technologies in a way that is not a barrier to EU market entry, the paper says.

Any bid to restrict the movement of graphic design, computing and technology professionals to the UK from the EU will affect the insurance industry’s ability to innovate, according to Kennedys.

California wildfire sets record as losses mount

A wildfire in California has become the largest in the state’s history, as several uncontrolled blazes cause damage to homes and businesses amid record-breaking summer temperatures.

The Mendocino Complex fire, which started late last month, has burned more than 120,000 hectares and destroyed more than 250 structures. US news reports say it may not be contained until next month.

The Carr fire, near Redding in the state’s north, has burned 72,000 hectares and has destroyed 1077 homes, 22 commercial structures and 500 outbuildings.

In southern California $US800 million ($1.1 billion) of commercial structures are threatened by the Holy Fire, the Federal Emergency Management Agency says.

Fires have also affected tourism centres, with parts of Yosemite National Park closed for more than two weeks.

More than 13,000 firefighters from California, 17 other US states, Australia and New Zealand are in action as high-risk weather conditions continue.

The National Oceanic and Atmospheric Administration says California experienced its hottest July and hottest month on record, while the US had its warmest May-July period.

Moody’s estimates insurance losses from the Carr fire alone likely reached $US1.5 billion ($2 billion) early this month.

Losses from Californian fires in October and December last year reached nearly $US12 billion ($16 billion).

European fires, drought take $5 billion toll

Drought and wildfires in Europe are likely to cause at least $US4 billion ($5.43 billion) of damage, according to Impact Forecasting’s monthly catastrophe report.

Many countries saw worsening drought and wildfire conditions last month, with hundreds of deaths and the agriculture, forestry, fisheries and water management industries affected.

Europe is suffering one of its deepest droughts on record. German farmers face economic losses of $US2.9 billion ($3.93 billion), according to various estimates.

Fires in Sweden caused more than $US100 million ($136 million) of damage last month.

Meanwhile, heatwaves killed more than 150 people in Japan and South Korea, while flash flooding in Japan killed 230 people and damaged nearly 50,000 homes.

Japan’s General Insurance Association reported 48,000 claims being paid at an initial cost of $US711 million ($964 million).

In the US, economic costs from Californian wildfires are expected to exceed $US1 billion ($1.36 billion).

Typhoon Maria in China caused nearly $US500 million ($678 million) of damage.

Flooding hit the US, Nigeria, Russia, India and south-east Asia and China last month, with economic losses nearing $US1 billion, according to Aon Benfield subsidiary Impact.

Australia lifts Zurich first-half earnings

Swiss-based Zurich Group increased its first-half net income by 19% to $US1.8 billion ($2.46 billion), partly on the back of strong performance in the Australian market.

It says growth in Australia was driven by travel lines after Zurich completed its acquisition of Cover-More last year.

“In the first six months of this year we strengthened market share in Latin America and Australia and established a powerful global platform in the highly dynamic and promising travel assistance business,” Group CEO Mario Greco said.

“I’m extremely pleased with our continued progress. Our businesses are showing great resilience and improved profitability despite challenging market conditions.”

The property and casualty (P&C) arm recorded an 11% rise in overall operating profit to $US1.14 billion ($1.56 billion) and gross written premium was 3% higher at $US18.54 billion ($25.3 billion).

The P&C combined operating ratio improved two percentage points to 97.5%.

Man-made disasters dent Munich Re Q2

Munich Re’s second-quarter net profit fell 0.6% to €728 million ($1.14 billion) amid a sharp rise in claims due to man-made disasters.

Man-made losses more than doubled to €501 million ($783 million), while claims costs from natural catastrophes grew 58% to €104 million ($162.5 million).

The property and casualty (P&C) reinsurance unit’s combined operating ratio blew out to 102% from 93.9% in the corresponding period last year.

P&C gross written premium increased 9.5% to €4.6 billion ($7.2 billion), but the business posted a 35.3% drop in earnings to €335 million ($523.5 million) because of the higher losses.

Chairman Joachim Wenning says the reinsurer is “most certainly” on track to earn €2.1-€2.5 billion ($3.3-$3.9 billion) net profit for the year as forecast, despite the slump in second-quarter earnings.

“We also made progress with the implementation of our strategy: Munich Re is becoming more profitable, more digital and leaner,” he said.

The reinsurer increased half-year profit by 20.5% to €1.6 billion ($2.5 billion).

Liberty profits as cat losses ease

Liberty Mutual’s profit jumped in the second quarter on the sale of a life business, increased revenue and a more benign natural catastrophe environment.

Net profit grew to $US981 million ($1.3 billion) from $US127 million ($171 million), while revenue gained 8% to $US10.3 billion ($13.9 billion).

The combined operating ratio improved by 4.9 percentage points to 97.9%.

This came as “global catastrophes returned to historical levels and core underwriting results improved across many business segments”, CEO David Long says.

The earnings included $US464 million ($626 million) from the sale of Liberty Life Assurance of Boston.

The company realigned its business earlier this year into two key divisions: global retail markets and global risk solutions.

In retail markets, net written premium from private passenger vehicles, the largest line, grew 3.9% to $US3.5 billion ($4.7 billion) on US rate rises, organic growth and higher retention in overseas markets. Homeowners net written premium grew 5.7% to $US1.79 billion ($2.42 billion), also on US rate increases.

Global risk solutions’ specialty insurance net written premium jumped 24.5% to $US1.2 billion ($1.6 billion) after last year’s acquisition of Ironshore.

For the first half, overall net profit increased to $US1.63 billion ($2.2 billion) from $US477 million ($643.7 million) in the corresponding period last year.

Lower catastrophe bill buoys Hannover Re

Hannover Re’s property and casualty (P&C) reinsurance arm posted a 37.4% rise in first-half underwriting profit to €204.7 million ($319.9 million), with catastrophe losses below expectations.

Net expenditure on large losses was €93.3 million ($145.80 million), about €258 million ($403.2 million) lower than was provisioned for.

Operating profit grew 8.6% to €688.8 million ($1.08 billion), but net income decreased 2.1% to €434.4 million ($678.9 million) due to higher tax charges.

Gross written premium surged 19.2% to €6.5 billion ($10.2 billion) on increased demand for structured reinsurance solutions in Europe and North America, plus rate rises in traditional reinsurance. The P&C combined operating ratio improved to 95.7% from 96.5%.

Overall net income, which includes life and health plus investment results, was up 3.8% at €555.3 million ($868 million).

Divestment hits Crawford earnings

Crawford & Company sank into the red in the second quarter as earnings fell and the sale of legal services arm Garden City Group incurred a $US17.8 million ($24 million) pre-tax loss.

The net loss for the June quarter was $US2.4 million ($3.2 million), compared with a $US10.2 million ($13.7 million) net profit in the corresponding period last year.

Consolidated operating earnings declined to $US21.6 million ($29.1 million) from $US29.2 million ($39.3 million).

The claims management group intends to increase its investment in Australia and other “Tier 1” countries such as the US and UK after selling the legal services business.

“Our sale of the Garden City Group in the second quarter is another key step that will further sharpen our focus as we move towards providing integrated end-to-end solutions for our clients,” CEO Harsha Agadi said.

“We will now be able to focus our entire organisation on our core client segments, which are corporates, brokers and carriers. Additionally, we have now realigned our sales teams in our major markets to more aggressively pursue these segments.

“We are also increasing our investment in our Tier 1 countries of the US, UK, Canada and Australia, where we are best positioned to leverage our strengths and more effectively sell ‘One Crawford’ to our clients.”

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Analysis

Dive In to help bring change

The Lloyd’s diversity and inclusion festival, Dive In, is getting bigger by the year.

Established in 2015 and inspired by CEO Inga Beale, it was initially restricted to the UK before expanding globally the following year.

Last year it attracted more than 7000 people across 17 countries and 32 cities.

This year it will take in 26 countries and 50 cities. In Australia and New Zealand 16 events will be held in Perth, Adelaide, Melbourne, Sydney, Brisbane, Wellington and Auckland.

Lloyd’s General Representative in Australia Chris Mackinnon told insuranceNEWS.com.au he has been overwhelmed by the local insurance industry’s support.

But that doesn’t mean we should become complacent. The theme for this year’s festival – #time4inclusion – represents a call to arms, a determination that it’s time to turn talk into action.

So if you haven’t supported the festival yet, now’s the time. Visit www.diveinfestival.com and book some tickets.

Support for the festival is important because the issues of diversity and inclusion in the insurance industry aren’t going to go away.

Despite much good work over the past few years, the gender pay gap in financial and insurance services, according to the Workplace Gender Equality Agency, remains at 26.1%. It’s the worst-performing sector.

And a new report from the University of Sydney Business School confirms about 90% of senior executives have Anglo-Celtic or European backgrounds, despite these groups accounting for only about 75% of the broader Australian population.

Mr Mackinnon has been delighted with the reception for Dive In over previous years.

“There was a huge amount of enthusiasm to get involved,” he says.

“It was fantastic to see because it was non-competitive – everyone came together and worked on the initiative for the greater good, rather than trying to kill each other, which is what we normally do Monday to Friday.

“I have no doubt that one of the reasons for the success of the Dive In Festival here is the nature of Australian society. We are a multicultural society, a diverse society.

“Generally, we are very inclusive and accepting of people with differences. However, it’s time to take the next step.

“We have had two years of talking about where we are and what we need to do,” Mr Mackinnon says. “We feel that [this year] the call to arms is about what practical steps we can take to start implementing change, to make sure the work we are doing is not just a talkfest but actually becomes actions.”

He says the diversity and inclusion survey, carried out again this year by Macquarie Bank, is a crucial resource.

“It will give us a view as to whether anything has changed in the past 12 months. If it has, which we hope to see, that will be fantastic news.

“It will also show where we are making progress and where we’re not making progress. That will be a really important discussion piece within the festival. We have some real data here, now let’s start working out what we can do to implement some change.”

Diversity and inclusion is good for business, and it’s the right thing to do. So get involved.

An article covering industry leaders’ views on diversity will feature in the August/September edition of Insurance News (the magazine)

Dive In program

September 25

8am, Sydney: Official opening and launch of the diversity and inclusion survey results, powered by Macquarie. This event is invitation only. Lead sponsor Lloyd’s.

Noon, Sydney: Out in the workplace: the power of LGBTIQ+ inclusion. Lead sponsor QBE, supported by Sparke Helmore Lawyers.

2.30pm, Auckland: The mental health stigma: ignorance or unconscious bias? Lead sponsor NZbrokers, supported by Wotton + Kearney and Ando Insurance.

4pm, Sydney: Finding opportunity through adversity. Lead sponsor XL Catlin, supported by Norton Rose Fulbright.

September 26

7am, Perth: Mental health for life. Lead sponsor NIBA Young Professionals, supported by Gilchrist Connell and AIG.

8.30am, Melbourne: Inclusive leadership. Lead sponsor Aon, supported by Swiss Re.

12.30pm, Sydney: Time for inclusion. Lead sponsor Willis Towers Watson.

4pm, Sydney: Remaining relevant: diversity in business is the key to success. Sponsored by Zurich.

September 27

7.30am, Sydney: Waking up to mental health: an open conversation with Lifeline. Lead sponsor JLT, supported by AUB Group.

7.30am, Adelaide: Policy construction: it’s a matter of interpretation. Event hosted by AILA, in conjunction with Dive In.

9am, Brisbane: Diversity doesn’t stick without inclusion. Lead sponsor NIBA Queensland, supported by Allianz, QBE, Marsh, Emberin and Nick Did This.

Noon, Sydney: Future of work. Sponsored by Steadfast.

3pm, Melbourne: Gender vs multiculturalism, the great unconscious bias debate. Lead sponsor Sura, supported by Wotton + Kearney and Liberty International Underwriters.

3.30pm, Sydney: Aboriginal and Torres Strait Islander inclusion: time for action. Lead sponsor Marsh, supported by AIG and DXC Technology.

4.30pm, Wellington: Creating an environment for inclusion. Lead sponsor Marsh New Zealand, supported by AIG and Mercer.

5.15pm, Perth: Cultural diversity within the insurance industry. Lead sponsor NIBA Young Professionals, supported by Gallagher and Hall & Wilcox.