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Insurers, banks set for parliamentary committee scrutiny

The Federal Parliament Trade and Investment Growth Committee has called for insurance and banking representatives to appear at a hearing tomorrow as it continues an inquiry into the prudential regulation of investment in Australia’s export industries.

The inquiry’s first hearing day last month heard from coal industry companies and associations about problems gaining insurance cover and financing.

Committee Chairman George Christensen says this time the inquiry will hear from financial and investment groups about risks and opportunities associated with export industries.

“Australia’s export industries rely on financial institutions for investment, insurance, and to launch new projects,” he said today. “The committee is looking forward to hearing how these institutions can support growth in Australia’s export industries, which contribute so much to Australia’s economy.”

The Australian Banking Association and the big four banks, are scheduled for the first session tomorrow, while the Insurance Council of Australia will appear after lunch. The superannuation sector, unions, and investor advisory groups will also attend.

The inquiry was launched following a referral from Minister for Resources and Water Keith Pitt, a member of the Nationals party room, who has been pushing for Parliament to look into the climate policies of banks and insurers.

Wet spring chances rise as Indian Ocean driver confirmed

The Bureau of Meteorology has confirmed that a negative Indian Ocean Dipole (IOD) is underway, increasing the likelihood of above average winter-spring rainfall for much of southern and eastern Australia.

“Most climate models surveyed by the bureau predict a negative IOD pattern is likely to persist until at least mid-spring,” the latest climate driver update says.

The IOD Index, which reflects differences in sea surface temperatures between the eastern and western tropical Indian Ocean, has been below the IOD threshold for eight of the past nine weeks, reaching the point at which an event is declared.

In the Pacific Ocean, three of seven models surveyed by the bureau indicate cooling temperatures will be enough to reach La Nina thresholds in the spring, with the remaining four models staying neutral.

“This forecast cooling may also be contributing to the outlook for above median rainfall for much of Australia in the coming months,” the bureau says.

The climate driver update could indicate an increased risk of heavy rain, flooding and thunderstorms, while there could also be a reduced risk of early season bushfires for eastern and south-east mainland Australia.

PI reserve strengthening trend aligns with class actions rise: APRA data

The Australian Prudential Regulation Authority (APRA) has released its 2020 financial year general insurance claims data.

APRA says the professional indemnity (PI) product line saw reserve strengthening across all recent accident years, with the trend aligning with an increase in class action activity.

Premium increases were offset by increases in future expected future claims, APRA says.

The estimated ultimate loss ratio for PI in the 2020 accident year is 67%, with about $2.58 billion in gross earned premium. In the 2019 accident year, the estimated loss ratio was 65.2% with $2.11 billion in gross earned premium.

PI gross claim payments in the 2020 accident year reached $114 million, compared with $104 million in the 2019 accident year.

For the compulsory third party (CTP) motor vehicle line, significant reserve releases occurred consistently across all prior accident years in the 2020 financial year.

APRA says these reserve strengthening were mainly concentrated in the accident years up to five years prior.

The estimated ultimate loss ratio for the 2020 accident year is 84.1%, compared with 83.2% in the 2019 accident year.

The CTP line recorded about $3.37 billion in gross earned premium in the 2020 accident year versus $3.58 billion in the 2019 accident year.

Gross claim payments in the 2020 accident year reached $102 million, compared with $95 million in the prior accident year.

Public and product liability saw some reserve strengthening across recent accident years, according to the APRA data.

The estimated ultimate loss ratio for the 2020 accident year is 55.9%, compared with 53.7% in the 2019 accident year.

Gross claim payments in the 2020 accident year amounted to $99 million, little changed from the $100 million recorded in the previous accident year.

Houseowners/householders reported an estimated ultimate loss ratio of 81% for the 2020 accident year, higher than the 10-year average of 59%, due mostly to the negative impact of natural catastrophe events on insurers’ claims costs, APRA says.

Gross claim payments in the 2020 accident year reached $4.79 billion, compared with $3.42 billion in the 2019 accident year.

Gross earned premium in the 2020 accident year totalled $9.71 billion, versus $9.21 billion in the prior year.

Click here for more on other product lines.

ICA says urgent repairs allowed during Sydney lockdown

Emergency make-safe works and other critical building repairs are allowed to proceed in the current lockdown in Sydney, the Insurance Council of Australia (ICA) says.

ICA says the same applies to SA, which has been in a seven-day lockdown since last week with Premier Steven Marshall indicating the state is poised to end the curbs tomorrow night.

The update on essential insurance repair work from the ICA last week came as the country seeks to contain the latest COVID outbreak, with the Delta variant plunging NSW into its strictest lockdown since the pandemic broke out in March last year.

Victoria is also in a lockdown which may ease tomorrow night after the state recorded 11 new cases today.

NSW Premier Gladys Berejiklian said this morning it is uncertain as to when the Sydney lockdown will end as the state reported today 145 new cases. Greater Sydney’s stay-at-home orders have now entered their fifth week.

She says the lockdown was a “day-to-day” issue and that her government was assessing whether some restrictions could be eased from July 31.

ICA says all non-urgent repairs in Sydney will cease until July 31 in support of the NSW Public Health Order.

The industry body also says repair of motor vehicles during the current pandemic restrictions is necessary to support essential workers and emergency and health services, as well as essential travel for all residents.

It says insurers have therefore been advised motor repairs are permitted and that those living within the Fairfield, Canterbury Bankstown and Liverpool local government areas (LGAs) undertaking this work are authorised workers who will be able to leave their homes to conduct this essential function.

“Accidents and damage will still occur during these lockdowns, so customers should not hesitate to contact their insurer if they are looking for assistance or to make a claim,” ICA CEO Andrew Hall said.

“While we play an essential function, we are extremely mindful of the intent of the Government’s Health Order and where possible will limit movement of staff and contractors both into and out of impacted LGAs and across greater Sydney.

“Prior to these current restrictions a shortage of trades and goods and state border closures, on top of a number of natural disasters such as the recent NSW floods, have been impacting insurance repairs and remediation times for customers.”

He says insurers are working hard with suppliers to ensure they can continue important work on customers’ claims while also seeking to comply with restrictions.

ICA says urgent building repairs include emergency make-safes, necessary repairs to ensure a home is habitable, critical repairs that are required to mitigate the risk of further damage and urgent repairs to damaged business premises if required to ensure the safety or security of the building.

Canterbury floods trigger more than 3500 claims

Insurance customers in New Zealand’s Canterbury region have so far lodged 3538 claims worth $NZ43.8 million ($41.41 million) following floods during May 29-June 1, the Insurance Council of New Zealand (ICNZ) says.

The total includes 2327 home and contents claims, 288 motor claims, 842 commercial and business-related claims, and 77 crop and other claims, such as livestock.

ICNZ CEO Tim Grafton says the floods began what is proving to be a stormy winter for the country.

“We can expect to see more frequent and disruptive weather events as the effects of climate change increase and sadly we are starting to see that pattern emerge,” he said.

“It has never been more important to look at how we manage this and what steps we need to take to control, adapt, avoid and accept the risks they present.”

ICNZ is urging that infrastructure such as stormwater systems be improved, more resilient residential and commercial buildings be constructed, and that new properties not be consented to in higher risk areas.

Insurer Tower has said it faces an ultimate cost of about $NZ2.8-3 million ($2.6-2.8 million) from the recent floods.

The entire Canterbury region was declared a state of emergency as the heavy rains and flooding prompted the evacuation of hundreds of residents. MetService issued a red warning for only the second time due to the heavy rain.

Corrections:

Early versions of two articles in last Monday’s insuranceNEWS.com.au bulletin contained inaccuracies.

An article in our Local section about the upcoming second business interruption test case said Special Counsel Sophy Woodward works with Maurice Blackburn. In fact Ms Woodward is with HFW.

An article in the Professional section called Technical Assessing the largest loss adjuster in Australia. It is the largest Australian-owned loss adjuster.

The articles were corrected immediately after the errors were brought to our attention.

Lockdown support measures available for affected customers: insurers

A range of support measures such as temporary premium relief plans is in place to support customers through the latest COVID lockdowns, major insurers say.

The support for customers comes as the country looks to quell the Delta variant, which sparked the worst outbreak concerns since the pandemic broke out in March last year.

NSW Premier Gladys Berejiklian said this morning her government was still working on an exit strategy, refusing to commit to a firm date out of the current lockdown. Greater Sydney is in the second month of its current lockdown, with the state reporting 145 new cases today.

Victoria and SA are poised to lift some curbs tomorrow night amid signs of a stabilisation in new community transmissions in those states.

Suncorp says its Suncorp Insurance, AAMI, Apia and GIO customers who are experiencing financial hardship can apply for flexible premium options and there will be no fees for customers who wish to change premium payments from annual to monthly.

It also has dedicated teams on hand to support customers experiencing financial hardship and has set up an “insurance health checks” service to help them save premium through options such as reduced vehicle usage.

QBE says it is supporting its customers and partners through the current lockdown.

A spokesman told insuranceNEWS.com.au the insurer is providing support for clients experiencing vulnerability, which enables those in financial hardship to seek relief in deferring premium payments or transitioning to monthly instalments.

“In addition to this, we are supporting requests from our commercial and SME customers to maintain cover on unoccupied buildings that have closed due to lockdown and laid up vehicles that are not on the road during this period,” the spokesman said.

“We’re continuing to review our support for customers as these lockdown scenarios evolve and encourage anyone experiencing financial hardship to reach out to us to discuss how we can help.”

A spokesman for Allianz says a range of provisions is in place for customers in need of support during the lockdown.

These provisions include the option for home and motor customers to put their monthly payment on hold for up to 60 days, no cancellation fees and the option for policyholders to defer or pay their excess in instalments if they need to make a claim.

“Allianz understands this is a very difficult time for many Australians impacted by the current lockdowns, and we want to reassure our customers we are by their side if they need us,” the spokesman told insuranceNEWS.com.au.

“We strongly encourage any customer experiencing financial hardship to call us for a free policy health check to ensure their policy still meets their needs, our dedicated support teams will also help to see if any reductions can be made in order to reduce their premium.”

IAG has also reaffirmed its commitment to support customers with a range of measures.

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Corporate

IAG targets improved intermediated performance

IAG is taking action to improve the performance of its Australian intermediated business with its profitability well short of expectations, CEO Nick Hawkins has told a briefing.

“We are looking at significant change in that over the next couple of years to really return the profitability there,” he told a preliminary full-year results briefing on Friday.

IAG last year split its Australian operation in two and in March announced the appointment of Julie Batch to Head Direct Insurance Australia, while Jarrod Hill will join from Chubb in September to lead the intermediated division.

Results for the divisions will be reported when IAG releases its finalised financial figures on August 11 but restated comparative results for the financial 2020 period provided on Friday show Intermediated Insurance Australia would have had an underwriting loss of $263 million that year, with Direct Insurance Australia making a profit of $557 million.

“Our direct insurance businesses in Australia and New Zealand are growing and we expect this growth to continue as we build out our premium brands across Australia,” Mr Hawkins said.

“We recognise that our intermediated business has underperformed which is why I have set specific goals for this business to simplify its structure, upgrade its risk and underwriting disciplines, further strengthen relationships with broker partners and improve its financial returns.”

Mr Hawkins told the briefing that his expectation is that the intermediated business should be able to generate profit of around $250 million.

IAG last week reported a $427 million full-year loss, based on preliminary figures, down from a net profit of $435 million in the previous corresponding period.

The result includes the $1.15 billion business interruption provision announced at the half-year as well as additional second-half provisions totalling $200 million mainly due to customer refunds and payroll compliance. IAG was also affected by strengthened reserving for long-tail classes following sharp increases in average claim size.

S&P Global Ratings says the preliminary loss figure is largely from one-off factors and does not detract from its opinion on the solid underlying business performance.

“Overall, we see ongoing underlying business strength contributing to solid cash earnings and very strong capital metrics,” it says. “The unusual items contributing to the fiscal 2021 loss are conservative in our view, with the new CEO looking to rule off any further deterioration from COVID-19 or consumer remediation initiatives.”

IAG expects fiscal 2022 gross written premium to achieve “low single-digit growth, while the reported insurance margin is anticipated to reach 13.5-15.5%. The natural perils allowance will increase to $765 million, post quota share, from $658 million.

See ANALYSIS.

IAG recruits Tim Plant for new strategic role

IAG says it has recruited Tim Plant as Chief Insurance and Strategy Officer, and he is expected to start in the newly created role before the end of the year.

As reported in a Breaking News bulletin last week, IAG announced the appointment of Mr Plant, who will be leaving his role as Zurich Australia General Insurance CEO after three years with the Swiss insurer.

Before Zurich, Mr Plant was Group Executive Insurance for icare with responsibility for the largest public sector self-insurer in Australia. And prior to icare, he held senior roles at QBE between 2009 and 2016.

When he starts at IAG, he will be part of the executive team led by MD and CEO Nick Hawkins.

Mr Plant will be accountable for group governance across underwriting, claims and customer experience, together with developing and driving the implementation of IAG’s strategy. He will also be responsible for IAG’s innovation and ventures activities.

“[He] brings a considerable depth of underwriting and insurance experience, as well as a deep understanding of customer needs through his leadership roles in the Australian and New Zealand general insurance markets,” Mr Hawkins said.

“[His] experience will further bolster IAG’s leadership and I look forward to welcoming [him] to the team.”

One insurance analyst, who asked not to be named, says the appointment of Mr Plant shows Mr Hawkins is still strengthening his senior management team since taking on the CEO role last November.

The analyst told insuranceNEWS.com.au he sees the appointment also as possibly a long-term strategic move by IAG.

“Clearly IAG is in the process of strengthening its senior management bench, creating a broad range of highly respectable internal candidates to eventually succeed its recently appointed CEO years down the track when the board again needs to consider management succession,” the analyst said.

Zurich names Country CEO

Zurich CEO Life and Investments Justin Delaney has been elevated to Country CEO, following the announcement that the insurer’s Australia General Insurance CEO Tim Plant is leaving to join IAG before the end of the year.

Zurich says Mr Delaney started in the role last Tuesday, the same day IAG announced Mr Plant would be joining the business.

Mr Delaney, who joined Zurich in December 2019, will oversee the General Insurance (GI) and Life and Investments businesses in Australia and New Zealand.

Zurich Chief Underwriting Officer of GI Australia & New Zealand Sean Walker will support Mr Delaney in the management of the GI business, the insurer says in a statement.

Head of Communications and Marketing General Insurance Nina Mills says it is “business as usual at Zurich” and that the GI business “is in a strong position”.

“Our customers and broker partners can continue to expect quality products and services from us,” she told insuranceNEWS.com.au.

“Country CEO, Justin Delaney, will be supported by Sean Walker, Chief Underwriting Officer of GI Australia & New Zealand, to manage the GI business.

“[Mr Walker] is a highly respected and long-standing member of the GI Executive team and is well known by many of our broker partners already.”

Steadfast moves into NT

Steadfast Group has completed its acquisition of a majority stake in Darwin-based AFA Insurance Brokers, giving the business a platform to further increase its NT presence.

The listed broking network says the AFA investment is its first in the NT.

“We are excited to have a majority stake in AFA Insurance Brokers, as this is our first equity business in the [NT] and will be the stepping stone to grow our presence in the NT,” MD and CEO Robert Kelly said.

“AFA Insurance Brokers have been operating for more than 20 years. It gives me great confidence that together, with the team at [AFA Insurance Brokers], we will continue together to succeed in driving the business forward by meeting the needs and exceeding the expectations of [AFA Insurance Brokers] clients.”

Consistent with Steadfast’s equity acquisition strategy, the business says the Darwin broker’s management team of Fernando Di Toro, Riccardo Lelli and Lance Schmidt will maintain a significant shareholding and continue to oversee the day-to-day running of the operations.

Mr Kelly says the trio are “longstanding Territorians [who] are highly respected in the business community as having strong technical expertise and claims experience, coupled with extensive knowledge of the region’s economic environment”.

Mr Lelli says the business is “extremely excited to partner with Steadfast and believes this next stage will provide a significant benefit to growing client base and reach within the [NT]”.

AFA Insurance Brokers was established in 1999, offering a range of general insurance products including commercial, industrial and domestic insurance.

Envest 'always on lookout' for investments: MD

Envest MD Greg Mullins says the business is constantly keeping an eye out for potential acquisitions, following its latest investment in Perth-based broker Grange Insurance Solutions.

Last week the private insurance investment group announced it has become a shareholder in the broker. The investment is one of many Envest has made in recent weeks, including taking a majority stake in Wymark Insurance Brokers and the purchase of insurtech Evari’s underwriting portfolio.

“Envest has acquired a meaningful stake in Grange, with an option to move to a majority position,” Mr Mullins told insuranceNEWS.com.au. “Envest is very targeted in our acquisitions.

“We are always on the lookout for good businesses that care about their customers, have good people and are a good cultural fit for our group.”

He says most of Envest’s recent acquisitions have been made through existing relationships that have naturally progressed over time.

“Undoubtedly, there are businesses owners out there at the moment who are looking closely at their options and we’re open to speaking with them,” Mr Mullins said.

“Insurance is a resilient and essential industry, particularly in times of crisis, and we are committed to growing an innovative and dynamic network of insurance businesses.”

Envest says Grange will be the 13th business to join its Aviso Group broking network, taking its overall gross written premium to $400 million annually.

It also means the broking group now has more than 240 employees and 20 principals across 20 offices nationally.

Aviso Group CEO Craig Robson says the business has performed “exceptionally well” in the past year, despite the pandemic disruption.

All companies in the group have grown their customer base and market presence, Mr Robson says.

“Like many other brokerages, our group is seeing some negative impacts from lockdowns on small to medium-sized retail business and we’ve been working closely with our customers to manage their insurance needs,” he told insuranceNEWS.com.au. “But we are also seeing growth in other businesses areas.”

Former IAG CEO joins AUB, Nib boards

AUB Group says former IAG CEO Peter Harmer has been appointed Non-Executive Director as Ray Carless retires from the board at the end of August.

Mr Harmer will stand for election when the annual general meeting takes place in November, in accordance with the company’s constitution, AUB said in a statement.

“[He] is an experienced executive and non-executive director with over 40 years’ experience in the insurance industry,” Chairman David Clarke said.

“His strong background in customer service, innovation, regulatory and governance will ensure that these critical skills are both maintained and strengthened on the board.”

Nib Holdings says the former IAG boss has also joined its board, taking up the position of Independent Non-Executive Director.

Nib says Mr Harmer will serve on the board as an additional director and will stand for election at the 2021 annual general meeting in November.

Mr Harmer left IAG last November, five years after he took on the CEO role in 2015.

Nib Chairman Steve Crane steps down on Thursday and will be succeeded by Independent Non-Executive Director David Gordon.

IAG nears Asia exit completion with Malaysia sale

IAG is moving towards completion of its exit from Asia with a deal agreed that will allow the firm to sell its joint venture holding in Malaysia.

AmGeneral Holdings Berhad, owned 49% by IAG and 51% by AMMB Group (AMBank), has signed an agreement for the sale of the insurance business to Liberty Insurance Berhad.

Liberty will acquire all the shares in AmGeneral under the proposed transaction, with AmBank to end up holding a 30% interest in the insurance operations, while IAG will exit with expected sale proceeds of $340 million.

The deal, to be completed this financial year, is conditional on the Malaysian High Court approving a capital reduction and distribution of sale proceeds to IAG and is subject to clearances from Bank Negara Malaysia and the Minister for Finance.

IAG entered Malaysia in 2006 through an initial 30% interest as part of a previous Asia expansion strategy that also targeted India, Thailand, Vietnam, Indonesia and China.

In 2018 the company launched a strategic review of the region’s businesses, leading to the sale of interests in India, Thailand and Indonesia. The Malaysian joint venture was its largest remaining investment in Asia, while it still has small interests in China and Vietnam.

IAG expects to incur a $90 million impairment in the fiscal 20021 results, reflecting the asset being classified as “held-for-sale”, while a $150 million regulatory capital increase is expected following completion.

Tower assessing NZ severe floods impact

New Zealand insurer Tower says it is in the early stages of assessing the financial impact from severe flooding that hit the West Coast, Wellington, Marlborough and Auckland regions.

The insurer had received 142 claims as of Thursday, with more expected to be lodged. Assessors were on the ground from last Monday providing practical support and advice.

“As the financial impact of previous large events over the years has reached $NZ14 million ($13.2 million), being Tower’s excess for its aggregate reinsurance program, this event will be covered by reinsurance for up to $NZ7.5 million ($7.1 million),” it said.

Parts of the West Coast and Marlborough areas received rainfall of 400mm in 24 hours after the MetService declared a red warning for the region, with subsequent flooding particularly affecting the town of Westport.

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Regulatory & Government

ASIC estimates industry funding levy at $24.7 million

The Australian Securities and Investments Commission (ASIC) estimates about $24.702 million in total levy will be recovered from the general and life insurance industries to fund the cost of regulating the sectors in the last financial year.

Around $16.113 million will come from the cost recoveries levy and the other $8.589 million from statutory levies.

The draft statement forecasts overall funding levies of $359.6 million will be collected from the financial services industry to support ASIC’s 2020/21 regulatory costs.

ASIC released the estimates last week in its draft Cost Recovery Implementation Statement, seeking feedback on its estimated regulatory costs for the 2020/21 financial year and how these will be recovered as industry levies under the industry funding model.

The corporate regulator is seeking feedback on the estimates and expects to publish the final levies in December, with invoices to be issued in January.

ASIC has been consulting on its draft cost recovery statement annually since the government announced in 2016 the introduction of an industry funding model for the corporate regulator.

The regulator says its insurance focus areas in the 2020/21 financial year include claims handling, mis-selling, hardship assistance, small business insurance cover, Hayne royal commission reforms implementation and unfair contract terms review.

“We continue to consult with and develop information for industry on our expectations of fair and transparent behaviour,” ASIC says in the draft statement.

“We will review specific market sectors and products, and we will take regulatory and enforcement actions where necessary.”

Closing date for submissions is August 13.

Click here for the ASIC cost recovery statement.

'Much improvement needed': NZ's FMA unhappy with conduct reviews

New Zealand’s Financial Markets Authority (FMA) will write to 40 insurers after they lodged “poor” reviews of their own conduct in dealings with consumers.

Only two out of 42 insurers – IAG and Medical Assurance Society – met expectations in their responses to the FMA’s 2019 conduct and culture review of the fire, general and health insurance sector.

Many insurers fail to actively monitor product suitability or withdraw poor value or legacy products and have over-charged some customers, it found.

Examples included insurers double charging customers a number of times, not giving customers promised multi-policy discounts and significantly overcharging some premiums due to poor IT systems.

The FMA concluded general insurers are “ill-prepared” for the Financial Markets (Conduct of Institutions) Amendment Bill (COFI) – due to come into force in early 2023 – and they must establish systems and processes to ensure fair treatment of customers.

“Unfortunately, we were not happy with the response that the industry provided when we ask for the results of their reviews,” FMA Director of Banking and Insurance Clare Bolingford said.

“We were disappointed that the reviews were not conducted adequately on many occasions. We put this down to firms not really understanding the conduct risk that they are running in practice and how their customers can come to harm.

“The majority of the medium and smaller sized institutions have a lot of work to do if they are going to meet the new regime’s requirements,” she said.

The Bill will expand the FMA’s remit to regulate and license the conduct of the insurance sector.

The Insurance Council of New Zealand (ICNZ), which represents 16 of the insurers approached, said there was a need for constant improvement in the sector.

ICNZ CEO Tim Grafton says the review makes clear that “much improvement” is needed before the new regime is introduced, though the timeframe allowed the sector “18 months to get it right".

“This gives the insurance sector the opportunity to work proactively with the FMA to address all areas of concern so we can meet their expectations at that time.”

The 2019 report did not reflect the current state of ICNZ members, he said, as much had been done since it was undertaken almost two years ago. The ICNZ is fully supportive of steps to ensure good customer outcomes and confident its members share this commitment.

Ms Bolingford says firms need to put more time and energy into focusing on their systems, governance and processes to make sure that customers are “treated fairly in practice”.

“We will be writing back to each firm individually to set out what those areas are and we expect them to make progress on those before the new regime comes into force.”

In mid-2019, the regulator asked providers of house, contents, vehicle, travel, commercial, liability and health insurance to review their operations.

“The tone of some of the responses suggested that a number of insurers did not consider conduct and culture to be relevant to their organisation, treating the task as a tick-box exercise rather than an opportunity to genuinely evaluate their business,” the FMA said.

The FMA said:

  • The level of conduct maturity was low
  • Product and policy-holder processes need to be improved
  • Insurers should have greater oversight of intermediaries and their commissions
  • Many boards are yet to back an organisational structure that promotes good conduct
  • Not enough has been done to ensure prompt remediation and address the root cause.

Industry 'struggling' with regulatory reforms

Many in the insurance industry are “struggling” to implement the raft of regulatory reforms made by the Hayne royal commission in its final report submitted in 2019 to the government, according to Xceedance.

The insurance consulting firm says insurers’ chief risk officers and IT departments need assistance to bolster compliance with the new regulatory landscape.

“The regulations are well-founded,” Vice President and Country Manager Stephen Browne said. “However, there is significant effort required to onboard new [governance, risk and compliance] solutions or modify legacy core systems to ensure compliance, and RG 271 is just the tip of the iceberg.”

RG271 refers to the Internal Dispute Resolution (IDR) regulatory guide from the Australian Securities and Investments Commission (ASIC) setting out what financial firms must do to have an IDR system in place that meets the regulator’s standards and requirements.

The IDR guide comes into effect on October 5.

Xceedance says the IDR guidance requires insurers to leverage technology and data analytics to improve their internal dispute resolution process, including improved timeliness and efficiency as well as enhanced written communications.

Business advisory firm Grant Thornton says insurers must make managing change a core competency.

“It must be budgeted and capability allocated to the three lines of defence - customer-facing personnel who need the skills and technology for compliance; a robust risk management framework; and sound audit and assurance functions,” National Head of Financial Services Madeleine Mattera said.

“Financial institutions need systems and controls in place to maintain their social licence to operate.”

She says insurers need the tools and technology to support the organisation to manage its obligations cost effectively. They also need to train people to use the technology and be confident and capable with it.

ASIC poses questions on hawking reforms

The Australian Securities and Investments Commission (ASIC) has posed 12 questions for feedback in a consultation paper released with draft regulation guidance for new hawking reforms.

The paper asks for input on forms of communication subject to prohibition and on which products are commonly bundled together or cross-sold and whether the laws will raise practical issues in those instances.

It seeks feedback on whether organisations agree with proposed guidance on offering products “that are within reasonable scope of a consumer’s consent” and whether giving refunds raises any practical issues in cases where hawking laws have been breached.

The laws, which take effect from October 5, extend strengthened prohibitions across financial products and update bans to take account of technological changes.

“These reforms will give consumers greater control over the circumstances in which they are offered products, and prevent consumers being approached with unwanted products on cold-calls or through other unsolicited contacts,” ASIC Commissioner Danielle Press said last week. “They will also prevent businesses relying indefinitely on consents from consumers.”

Responses on the regulatory guidance are due by August 17, with ASIC to publish its updated version in September.

Consultation details are available  here.

Treasury releases draft add-on regulations

Treasury has released add-on reform draft regulations for feedback after the Federal Government this month announced a number of insurance product classes that would not fall under the regime.

Parliament last year passed the deferred sales reform legislation, which from October 5 will generally prohibit the sale of add-on products for at least four days after a customer has entered into a commitment to acquire the main item or service.

The draft regulations released last week set out the classes where exemptions will apply for a five-year period, including compulsory third party cover, home and contents, landlord insurance and travel.

Add-on insurance bought by consumers in the course of carrying on a business are also exempt from the deferred sales model if the premium payable exceeds $40,000.

Feedback on the regulations is due by the end of next week. Details are available here.

RBNZ consults on interim insurance solvency standard

Insurers are “strongly encouraged” to engage with the Reserve Bank of New Zealand (RBNZ) as it invites views on an interim Solvency Standard designed to determine minimum amounts of capital cover providers must hold.

The interim standard, which takes account of upcoming changes to IFRS 17 accounting rules, will take effect from early 2022 and be in-force for around three years.

RBNZ will host a webinar to discuss the draft interim standard on August 5 and consultation is open for 10 weeks until October 1.

RBNZ, which also published a feedback statement from earlier consultation run over summer, says the draft does not incorporate a re-calibration of capital charges as that is the primary task for stage two of the Review in 2022-2023.

It is not primarily designed to alter capital requirements but will have “some implications for capital”.

“We will be carrying out a Quantitative Impact Assessment in conjunction with this consultation in order to understand any unexpected or undesirable effects, establish a format for the solvency return going forward and inform the calibration of risk charges as part of stage two of the review,” it said.

Deputy Governor and GM Financial Stability Geoff Bascand says the changes bring the method for capturing risks into line with international standards and further analysis will be undertaken in consultation with industry to understand the impact on insurers.

“We have modified some of the ways that we require insurers to calculate their capital needs. This is to ensure greater consistency and clarity in our requirements, and to deal with new accounting standards for the insurance industry,” Mr Bascand says.

The interim standard is part of a multi-year review of the Insurance Prudential Supervision Act (IPSA) 2010 and its associated Insurer Solvency Standards.

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Life Insurance

ASIC industry funding levy formula 'not equitable': planners

Financial advisers and planners are concerned about the estimated levy the industry will pay to support the corporate regulator’s supervision work in the 2020/21 financial year.

The Financial Planning Association (FPA) says the estimates from the Australian Securities and Investments Commission (ASIC) supports the peak body’s position that the current formula for calculating the levy is “not equitable or sustainable”.

ASIC released its Cost Recovery Implementation Statement last week, estimating it will collect about $72.246 million in overall levy from the financial advice sector. About $54.281 million will come from cost recovery levies and the other $17.965 million from statutory levies.

FPA says the levy formula needs to be reviewed or more financial planning practices, already struggling under a weight of regulatory reform costs, will be forced to close.

It says the ASIC estimate points to a further 31% increase from the previous financial year.

“The ASIC industry levy for financial planners has gone up over 340% in the last four years and is on an unsustainable trajectory,” FPA said.

“As a first step in addressing these challenges of [unpredictability] and dramatic levy increases, we call for the government to urgently and immediately undertake a review of the ASIC industry levy.

“It has been four years since the levy was first introduced, and it is now critical to review its implementation and impact on the financial services sector.”

FPA says the increases over the last few years have come as the number of registered financial planners in Australia continues to decline.

Click here for the ASIC recovery statement.

AFA names new CEO

The Association of Financial Advisers (AFA) announced today it has appointed Helen Morgan-Banda as CEO, replacing Philip Kewin who will lead the National Insurance Brokers Association.

AFA says its CEO appointee will start on August 2.

She was most recently Law Society of New Zealand CEO and prior to this, Royal New Zealand College of General Practitioners CEO.

Ms Morgan-Banda has previously held corporate affairs positions in New Zealand with ANZ and AMP.

She will relocate from Wellington to Sydney as soon as practicable.

“Over the course of her career, [she] has managed significant disruption, akin to that currently being experienced by financial advisers,” AFA National President Michael Nowak said.

“She has demonstrated a deep understanding of the issues being faced by our members and the broader industry and we believe she is the right person to lead us into the future.”

Advisers flag concerns over cost of proposed compensation scheme

The Association of Financial Advisers (AFA) says it is “very concerned” about the cost of the proposed Compensation Scheme of Last Resort, in particular the potential risk in the event of a black swan product failure.

AFA spoke out after Treasury released draft documents for the scheme for industry consultation. The scheme is a recommendation from the Hayne royal commission.

“The [Compensation Scheme of Last Resort] is a scheme to meet the cost of unpaid [Australian Financial Complaints Authority] determinations that arise as a result of a licensee being unable to pay or refusing to pay,” AFA said.

“The AFA has previously agreed to the introduction of a [Compensation Scheme of Last Resort], however that support was on the basis that it would be broadly based and that financial advisers would not be expected to pick up the cost of product failures.

“Unfortunately that is not the case.”

AFA says the proposed scheme, as outlined in the draft documents, means financial advice will “seemingly be expected” to pick up three-quarters of the cost of the program.

It says the range of included products and services is very narrow, including financial advisers, credit providers, credit intermediaries, insurance distributors, and securities dealers.

“Some members will fit into multiple categories,” AFA said.

The Compensation Scheme of Last Resort, to be funded by industry levies, aims to ensure consumers receive compensation decided by the Australian Financial Complaints Authority even if a financial firm involved in a dispute has become insolvent.

The closing date for submissions to the Treasury consultation is August 13.

Click here for the AFA statement.

AMP unveils new advice service model

AMP announced today a new advice service model, saying it marks a “new era” for financial advice at the business.

The model has been developed in collaboration with AMP adviser associations and will be progressively introduced, with the aim of giving advisers increased choice, flexibility, and transparency with how they partner with AMP and how they continue to operate their business.

AMP says the new model prioritises clients with AMP providing services to advisers to support the delivery of quality advice, improve practice efficiency and help advisers grow their businesses.

“Today’s announcement is another major step in the transformation of AMP’s advice business,” MD Advice Matt Lawler said. “It is a new era for financial advice at AMP.”

The new model includes three key components:

A new service proposition and fee model for advice practices, which has been competitively benchmarked against the industry and reflects the services offered. It includes a set of core services as well as user pay services. The new fee model will be phased in from January 1 2022 to January 1 2023.

The release of institutional ownership of clients from AMP Financial Planning to advisers, with the ability to transfer clients out of the AMP network. This change will take effect from January 1 2022.

The conclusion of client register buy back arrangements from December 31, with practice principals able to take advantage of current terms remaining in place until this date.

Mr Lawler says over the past few years the business has worked with its financial adviser network to complete significant reforms, build robust and modern processes and strengthen its compliance regime.

“With a lot of that hard work now embedded, it is the right time for AMP and our financial advisers to look to the future,” Mr Lawler said.

“We will be providing access to resources, technology and support to fulfil our two core promises to our financial advisers: to assist them to deliver a great client experience; and to support them manage and grow their business.

“The new model releases institutional ownership. Buyback arrangements will also cease, with advisers having between now and the end of the year to make the decision to leave the network under their existing arrangements.”

AMP says while further advice practice exits are anticipated before the conclusion of its buy back arrangements, its expectation is these commitments will be covered by the existing provisions and capital allowances as part of its Buyer of Last Resort program.

“AMP is committed to the future of advice and building a stronger financial advice profession together,” Mr Lawler said. “Importantly these changes recognise that the financial advisers should be in control of their business.

“It is their business, it is their clients and with our support we are determined to be working with our financial advisers long into the future.”

Gold Coast adviser banned for five years

The corporate regulator has imposed a five-year ban on former adviser Adam Bevan for failing to act in the best interests of clients when he was an authorised representative of Gold Coast-based Trade Wind Financial Services between July 2017 and May last year.

He was also the sole director of the business during the period, ASIC said in a statement.

The Australian Securities and Investments Commission (ASIC) says he did not make reasonable enquiries about his clients’ existing superannuation funds and failed to put in place measures to ensure their funds were transferred in accordance with his advice.

ASIC says he is also “not a fit and proper person”, having regard to his connection to a refusal or failure to give effect to a determination by the Australian Financial Complaints Authority (AFCA).

The corporate regulator has cancelled the licence of Trade Wind, effective May 26, because of the firm’s failure to co-operate with AFCA and pay two complaint determinations on time.

ASIC says the firm failed to lodge its 2019 and 2020 audited financial accounts and comply with several licence conditions including failing to notify the regulator of the change in the key person for the licensee.

“[Australian financial services licence] holders must comply with their licence conditions and have adequate resources to provide the financial services covered by their licence,” ASIC said.

“ASIC may suspend or cancel [a licence] if a licensee fails to meet its obligations.”

ASIC says Mr Bevan has applied to the Administrative Appeals Tribunal for a review of the regulator’s decision to ban him.

WT Financial seals Sentry acquisition

Diversified financial services group WT Financial Group has completed its acquisition of advisory dealer group Sentry and placement of new shares for facilitating the purchase, the listed group announced in a brief investor update.

Last month WT announced it entered into a share purchase agreement to acquire the entire issued share capital of Sentry for an initial price of $7 million. Half of the acquisition will be paid for in cash and the remaining 50% in the form of WT shares to Sentry shareholders.

The cash portion payable on completion of the acquisition is being funded through the placement of new shares.

Under the terms of the agreement, a further maximum of $3 million will be payable if base fee revenue contributed by Sentry for the 2021/22 financial year exceeds an agreed milestone as certified by auditors.

WT said in a statement announcing the acquisition that the move is “transformational for [the business], is substantially accretive and will position the company well for future organic and inorganic growth”.

“On completion, the company will emerge with around 275 advisers across 200 practices Australia-wide,” WT said in the statement.

“Both the company and Sentry broadly provide the same suite of licensing solutions within their respective dealer group operations.”

ASIC releases adviser reference checking protocol

The Australian Securities and Investments Commission (ASIC) has finalised its reference checking and information sharing protocol for advisers, taking into account industry feedback from a consultation it launched last November.

ASIC last week released details of the protocol - which applies also to mortgage brokers - setting out obligations for Australian financial services and credit licensees.

The reference checking and information sharing protocol is a Hayne royal commission reform measure that will take effect on October 1.

The royal commission proposed the measure in its 2019 final report after it found licensees were not doing enough to share information about the background of prospective financial advisers.

“The ASIC Protocol sets out obligations for licensees to undertake a reference check and share information on an individual seeking to be employed or authorised as a financial adviser or mortgage broker,” the corporate regulator said.

“The reforms will promote better information sharing about the performance history of financial advisers and mortgage brokers, focusing on compliance, conduct and risk management.”

In relation to the advice profession, ASIC says the protocol applies to a “recruiting licensee” that is defined as one who is considering employing or authorising a prospective representative as a financial adviser.

It applies also to a “referee licensee”, meaning a prospective representative’s current and/or former licensee(s) in the last five years from whom a reference is sought.

While the protocol does not prohibit the employment or authorisation of a prospective representative, ASIC says one will need to consider and be able to demonstrate that they have complied with their general conduct obligations as a licensee if they decide to employ or authorise the prospective representative.

The protocol also does not prohibit employing or authorising a prospective representative if one has taken reasonable steps and a referee licensee fails to comply with their obligation to give the reference as requested or if a reference contains adverse information about a prospective representative.

“In these circumstances, you will similarly need to consider, and be able to demonstrate that you complied with, your general conduct obligations if you decide to employ or authorise the prospective representative,” ASIC says.

Click here for the protocol information sheet and here for the ASIC example of a completed template reference request for an adviser.

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The Professional

NIBA names full set of broker awards candidates

The National Insurance Brokers Association (NIBA) has revealed the full set of 10 finalists for this year’s industry awards – five for the QBE-sponsored Stephen Ball Memorial Award and five for the Vero-sponsored Warren Tickle Memorial Award.

The final pair of regional winners was announced on Friday at a SA/NT virtual award ceremony.

Karen Skinner, who co-owns MGA Insurance Brokers Ceduna with her brother – located almost 800km northwest of Adelaide – won SA/NT Broker of the Year.

Adelaide-based Aon Client executive Patrick McCole won SA/NT Young Professional Broker of the Year.

“We congratulate all the finalists who exemplify the highest standards of professionalism and competence in the broking industry,” CEO Dallas Booth said.

Due to COVID restrictions, NIBA will this year host a five-day hybrid annual convention – when the national winners will be crowned – visiting Perth, Adelaide, Melbourne, Brisbane, and Sydney from September 28 to October 28.

Ms Skinner now competes for national honours against Marsh’s Sydney-based Head of Financial and Professional Services Pacific Craig Claughton; Queensland’s Crucial Insurance & Risk Advisors MD Tony Venning; WA’s GSK Insurance Brokers Senior Account Manager Jeff Booth; and Tasmania’s Capital Innovation Chairman Ian Goninon.

In the under-35 category, Mr McCole is up against NSW/ACT winner Markey Insurance & Risk Senior Account Executive Megan Farmer; Queensland’s Crucial Insurance & Risk Advisors Broker Alishia Oliver; Albany District Insurance Brokers Account Executive Luke Cameron; and Victoria’s Integral Insurance Services Senior Broking Executive Mitchell Wight.

RACQ appoints former Suncorp executive

Josh Cooney has started with RACQ as Head of Insurance Business Resilience after he left Suncorp last month.

Mr Cooney had spent eight years with Suncorp, most recently as Executive Manager Government, Industry & Public Policy.

“We’re excited to welcome Josh Cooney to RACQ,” Group Executive Tracy Green said.

“Josh has many years’ experience in insurance and will be a valuable asset as we look to the future.

“Josh will play a key role in RACQ’s push to help make Queensland properties safer and more resilient to disaster as well as our goal to make insurance, particularly in north Queensland, more affordable.”

Premium Funding, Principal Finance appoint Chairman

Mike Cutter has been appointed Chairman at Premium Funding and Principal Finance.

Mr Cutter, a former National Insurance Brokers Association (NIBA) board member, has more than 34 years’ experience in financial services locally and internationally, most recently as the Group MD of Equifax ANZ.

“His vast experience and leadership will be invaluable in the next stage of development of our business,” said group company CEO Daniel Gronert.

At the start of the year, Premium Funding and Principal Finance revealed they are merging under a new ownership arrangement that also sees private equity investor Pemba Capital Partners take a key stake. They will operate under their respective names until a completion date, which is still to be determined.

Mr Cutter is a Director at Sezzle, a US based finance company, and non-bank mortgage provider Pepper Money. He is also an adviser to Credit Clear, an Australian collections technology provider and a co-founder of Kadre, a credit risk management consultancy.

He has previously served on the boards of the Women’s Cancer Foundation, Ovarian Cancer Institute, the Australian Finance Congress, and the Australian Retail Credit Association.

‘‘With an outstanding blend of technology and the team’s expertise, the group company is well placed to service both business and client needs for funding solutions, now and into the future,” Mr Cutter said.

AILA seeks 2021 Gill Award submissions

The Australian Insurance Law Association (AILA) is seeking submissions for this year’s Gill Award, which honours co-founder Michael Gill and offers a $10,000 prize.

AILA President Cameron Roberts says the award enables applicants to showcase their knowledge of emerging insurance trends and markets.

Applicants, who must be AILA members and Australian residents, sign up via the AILA website before August 20 and submit a written paper of 3000 to 4500 words by September 17. A judging panel will select the winner from short-listed contenders who will present via Zoom.

The winner will also have an opportunity to deliver the paper on an international stage once border restrictions permit.

Papers should address one of the following topics: consumer protection and dispute resolution, marine insurance, credit insurance and surety, motor insurance, personal insurance and pensions, new technologies, distribution of insurance products, accumulation of claims and subrogation, climate change, reinsurance, civil liability insurance, and state supervision and insurance.

Last year, Wotton + Kearney Solicitor Jessica Chapman took home the inaugural Gill Award with her essay on the crypto-currency industry and the opportunities it provides to insurers globally.

Mr Gill co-founded AILA after attending the AIDA World Congress in London in 1982. He is a past president of AIDA, AILA life member and chairman of the National Insurance Brokers Association code compliance committee.

Entries open for Young Insurance Professionals award

Entries have opened for the Next Gen Insurance Leader 2021 Awards, which are an initiative of law firm Barry.Nilsson and Young Insurance Professionals (YIPs).

The awards aim to support the career development of young professionals in Australia and New Zealand. Entrants must be younger than 35 or have less than five years’ industry experience and be a member of YIPs. The winner will receive $5000.

Applicants must submit a 2000-word essay, choosing from the topics: disruptors, globalisation, legal litigation, proactivity versus reactivity, talent development in the insurance industry, and work environment.

“With much of Australia working from home or in lockdown, a number of the topics are very timely so I expect entrants will easily be able to relate to the topics, and we will get to see some very creative approaches to conventional ideologies and issues,” YIPS spokesman Jackson McDonald said.

The winners, to be decided by an independent panel of six judges, will be announced at the annual awards ceremony on August 26. Submissions close on August 8.

NTI appoints new WA state manager

Ross Lambrick has been promoted to the role of WA state manager at transport and logistics specialist insurer NTI, effective next week.

Mr Lambrick, who joined NTI in 2014 and has held various senior business development roles nationally, will relocate to Perth from Melbourne to work closely with customers, partners and industry associations.

He was formerly state manager Victoria/Tasmania at Club Marine and also held positions at several credit unions.

“Ross has an extensive and impressive leadership and sales history,” NTI GM Commercial Mike Edmonds said.

“Teamed with his familiarity of our intermediaries, customers and their industries, and a rich knowledge of our business, there’s no doubt he’ll hit the ground running in his new role.”

Sure Insurance makes two appointments

Gabby Fenech has been appointed Claims Manager at underwriting agency Sure Insurance, while Rebecca Taylor has taken the role of Financial Controller.

Sure launched two years ago, backed by Liberty Mutual, and offers home and residential strata insurance in Queensland.

Brisbane-based Ms Fenech has two decades of experience in claims management and was previously National Procurement and Supply Manager at Auto & General and held management positions at Allianz and RACQ.

At Sure, she is responsible for the claims and repair process for policyholders and insurers while managing a specialist team of claims consultants.

Ms Taylor formerly held positions at Aviation Insurance Brokers of Australia and Trilby Misso Lawyers.

WTP appoints head of intelligence in Brisbane

World Travel Protection (WTP), part of Zurich-owned Cover-More, has appointed Paul Trotter to the newly created role of Security and Intelligence Lead, based in Brisbane.

Mr Trotter has worked most recently as an adviser in Iraq and previously spent almost a decade with the Australian Defence Force.

WTP provides emergency assistance, including medical evacuation, repatriation and mental health support, and also trains businesses to mitigate risks before employees depart.

GM Global Security Services Rodger Cook says Mr Trotter’s personal experience working in complex political environments gave him a unique understanding.

“Paul has experienced what it’s like to be an Australian travelling internationally during the pandemic and the related challenges this can present,” Mr Cook said.

Mr Trotter will support new business, design new risk-management tools, produce reports on various countries and conduct due diligence checks.

“The pandemic demonstrated that when things go wrong, they can go very wrong quickly,” he said.

“Being left without support – whether from a health perspective or getting caught up in political unrest – can be very dangerous and distressing. Having that safety net and expert advice is essential in ensuring safe travel and making sure personnel get home.”

WTP recently opened a new Brisbane Command Centre, bringing together a team of expert medical, security, logistical and case management personnel. It also has centres in Toronto, Shanghai, Buenos Aires and will soon open one in London.

Technical Assessing adds marine adjuster to WA team

Perth-based marine adjuster Ben Foo-Collyer has joined the WA team at Technical Assessing (TA) as the firm continues to expand after a management buy-out a year ago.

In recent weeks, TA also opened an office in Canberra and expanded in Brisbane and NSW.

Mr Foo-Collyer, a former Senior Marine Surveyor at Sedgwick and senior loss adjuster at Crawford & Company, has 17 years of experience in marine insurance, gaining extensive knowledge in cargo surveying and managing losses for underwriters, insurers, brokers, carriers and cargo owners.

He has worked for loss adjusting companies in Australia and the UK and spent the past seven years as MD and Principal Marine Surveyor at FOCOL Marine, specialising in Commercial Cargo/Hull and Pleasurecraft Hull/Liability.

TA, established in 1986, says it is the largest independent locally-owned national loss adjuster and has offices in Sydney, Melbourne, Brisbane, Launceston, Hobart, Perth, and is internationally affiliated.

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Insurtech

Global funding rounds 'rain money' as insurance plays catch up

Insurtech Gateway Australia says global investment activity in the first half has seen records broken as funders see attractive insurance opportunities, and has called for more local activity.

“So why is it raining money for insurtech?” Gateway CEO Simon O’Dell says in a July update. “Insurance is one of the most resilient and fundamentally essential industries of our time but it still has a long way to go to catch up to today’s consumer expectations.”

Innovation and flexibility in insurance are sought after commodities in a COVID-19 world, he says.

In Europe over €1.7 billion ($2.7 billion) was invested across 52 deals in the first half of the year, while Willis Towers Watson reported first quarter funding globally rose 180% to $US2.55 billion ($3.5 billion).

New York and Singapore based firm bolttech recently completed an oversubscribed $US180 million ($244 million) series A funding round, which it said was the largest ever for an insurtech and valued the firm at more than $US1 billion ($1.4 billion), giving it “unicorn status” a year after launch.

“We're seeing similar indicators here in Australia, with Honey, raising a record breaking $15m for its seed round in June but we're still working on a subdued scale,” Mr O’Dell said.

Honey, which aims to shake-up the home and contents market, received financial backing from underwriting partner RACQ and other institutional investors.

Texas-based Solera acquires Brisbane's ENData

Texas-based Solera Holdings has agreed to buy Brisbane-based insurance technology company ENData, providing claims and supply chain management solutions to the top five general insurers operating in Australia.

Solera CEO Darko Dejanovic says a global increase in property insurance claims, combined with a lack of standardisation, creates “significant opportunity for Solera's AI-driven technology to reduce variability, accelerate business outcomes and improve the customer experience”.

"ENData will further expand Solera's position in Australia, and globally, as the leading provider of innovative solutions across the entire insurance claims ecosystem,” he said.

ENData automates claims tasks and consolidates builders, restorers, contents suppliers, loss adjusters and claim specialists. Its web-based systems facilitate insurance property repairs and contents replacement, partnering with insurers to dynamically allocate workstreams, providing optimal cost, quality, workloads and claim resolution speeds.

Solera is active in over 90 countries, processing digital transactions for over 235,000 customers and partners each year.

ENData CEO Mike Lee says his customers will benefit from Solera's ability to scale their solutions to meet insurers' expanding needs across both property and auto claims.

"We are excited that ENData will be joining Solera, the undisputed global leader in insurance claims, allowing the newly-combined team the opportunity to continue to drive innovation and growth," Mr Lee said.

The acquisition is expected to close in the third quarter.

Preventure's wearable sensors automate risk-prevention training

Insurers are being invited to take advantage of data collected by wearable sensors across workforces revealing where musculoskeletal injury risks are hidden across sites and occupations.

Australian startup Preventure has spent five years translating knowledge from elite athlete injuries into a solution that helps workers. The business expanded globally with a remote service model last year and now has a team in the US and more than 30 clients.

Back, shoulder and lower limb injuries are a significant cost and Preventure says harnessing sensor technology can assist claims management and return-to-work teams.

“We can use wearable sensors and data to help workers return to full duties with the lowest possible risk of re-injury,” founder and CEO Scott Coleman, formerly a Queensland sports physiotherapist, said.

Technological progress in workers’ compensation is catching up to that seen in motor insurance, where uptake of sensor technology and predictive data tools has been strong, he says.

Preventure technology is the same that is stitched into athlete jerseys but does not track GPS or data like heart rate. Workers, who own their own account, get alerts highlighting any movement habits that excessively load their body.

Workers only need to use the sensors for a week or two, helping affordability across large workforces. They see daily data insights and receive individual micro-training modules via an app.

“We are teaching them injury prevention concepts used in sport but coupling that with actual video of tasks that they perform,” said Mr Coleman, who moved into the insurtech sphere when his mother sustained a back injury.

“I knew her injury was preventable and that we already had a lot of the answers in our very well-funded field of professional sport,” he said.

Preventure conducted software pilot programs across logistics, healthcare, manufacturing and aviation, working with employers, workers and allied health professionals. International manual handling standards are built into its algorithms.

Claim Central's Insurx secures licence under new ASIC regime

Global claims solutions provider Claim Central Consolidated’s (CCC’s) third-party administration division Insurx has been granted an Australian Financial Services Licence to provide claims handling and settling services.

Group CEO and MD Eben le Roux, who took the role at the start of this month, says Insurx and property and motor repair entities Claim Central and Hello Claims will now be regulated, meaning more robust internal controls and procedures.

“We are pleased to be one of the first organisations to be successful in receiving authorisation,” he said.

The handling and settling of insurance claims was historically excluded from being a financial service under the Corporations Act, limiting the ability of regulator the Australian Securities and Investments Commission (ASIC) to intervene.

ASIC introduced new regulations last year requiring claims handling and settling service providers to hold the licence.

Mr le Roux replaced Brian Siemsen, who moved into the newly created position of Executive Director to focus on the strategic oversight of new ventures, business development and marketing and launching new technology brand Wilbur, which provides modular products in Australia, the US, New Zealand and South Africa.

Digicall Assist expands leadership team

Duncan Hardie has been appointed to the newly-created role of COO at Digicall Assist.

The roadside assistance provider has also added four team leader roles within its contact centre, a new customer experience manager and a new finance team role.

CEO Michael Curtin says the COO appointment comes at a time of “huge growth and opportunity” and further appointments will be made soon.

"Duncan’s impeccable credentials and leadership experience strengthen our capability as we drive ground-breaking customer experience outcomes for our clients,” he said.

Digicall counts AAMI and Suncorp among its clients and has created a new motorist support app called ‘InQ-IQ’ and says its cloud-based contact centre system and integrated roadside intelligence technology has “shifted the goalposts in roadside assistance”.

Mr Hardie spent a decade at International SOS Group companies, most recently as Regional GM Middle East, Africa, India and Turkey, developing international markets and creating new services.

“Digital transformation coupled with an overall enhanced customer experience continues to accelerate across all industries and the assistance services sector is no exception,” Mr Hardie said.

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International

Natural disaster first-half claims top 10-year average

Natural catastrophe insurance losses reached an estimated $US42 billion ($57 billion) in the first half of the year to rise above the 10-year average while economic losses were lower, Aon’s Impact Forecasting says in a Global Catastrophe Recap.

Impact Forecasting MD and Head of Catastrophe Insight Steve Bowen says it was the costliest first six months of the year since 2011 for insurance losses, despite a below-average number of events.

The prolonged February freeze in North America associated with the Polar Vortex was the most significant, becoming the costliest winter weather-related event recorded, with $US22 billion ($30 billion) in economic losses and up to $US15 billion ($20 billion) in losses covered by insurance.

“The juxtaposition of observed record heat and cold around the globe highlighted the humanitarian and structural stresses from temperature extremes,” Mr Bowen said.

“As climate change continues to amplify the severity of weather events, it becomes more imperative to explore ways to better manage the physical and non-physical risks that are more urgently requiring actionable solutions.”

Total economic losses associated with the natural disaster events were estimated at $93 billion ($127 billion), 32% lower than the 10-year average.

The 163 notable natural disaster events recorded by Impact Forecast for the half was below the average this century of 191 and the median of 197.

Insured losses in the US were 76% above the 21st century average and for Europe, the Middle East and Africa were 32% higher. Losses were 1% lower in the Asia Pacific and 54% lower in the Americas.

Natural disasters were responsible for about 3000 fatalities during the half, well below the long-term average of 38,900 since 1980 and the median of 7600.

The estimated insurance impact figures are preliminary and will change as the losses continue to develop.

Germany expects most damaging year since 2002

Storms, flooding, heavy rain and hail across June and July position this year to be the most damaging for Germany since 2002, when insured storm damage was €10.9 billion ($17.46 billion) in what were, prior to this month, deemed to be the worst floods in Europe this century.

The German Insurance Association (GDV) puts insured losses near €5 billion ($8 billion) in an initial preliminary estimate covering last week's flood disaster in North Rhine-Westphalia and Rhineland-Palatinate. Damage in Saxony and Bavaria is not yet included.

June rains and hail had already caused an estimated insured loss of €1.7 billion ($2.72 billion).

Since July 12, countries in Europe have been struck by catastrophic floods, killing at least 180. Belgium and Germany - as well as Austria, Luxembourg, the Netherlands, Switzerland and Italy - were all severely affected.

Initial estimates by the Belgian Association of Insurers peg market-wide losses at several hundred million euros. So far, the highest recorded loss from floods in Belgium is around €150 million ($240.36 million), in 2016, Allianz says.

Allianz’s Swiss operations expects well over 28,000 claims to be filed in relation to the various weather events since mid-June.

Over 21,000 claims have already been received, most of them related to motor insurance, with the total loss estimate over 103 million Swiss francs ($152.68 million). In previous record years of 2009 and 2012, Allianz Suisse had annual claims of around 90 million Swiss francs ($133.41 million) from natural catastrophes.

For Austria, Allianz says its current claims estimate is around €55 million ($88.04 million), excluding the losses related to the recent heavy rainfall.

The weather system caused a tornado in the Hodonin district of the Czech Republic towards the end of June, with wind speeds reaching up to 320 kilometres an hour. It damaged or destroyed more than 1,200 buildings and several fatalities were reported. Allianz has nearly 20,000 customers in the affected area.

Ratings agency AM Best says German insurers' disciplined pricing means carriers should be well-positioned to absorb heightened weather-related losses, despite potential record natural catastrophe claims in 2021.

Across Germany, nearly all residential buildings are covered for windstorm and hail, though only 46% of homeowners have protection against other natural hazards such as heavy rain and floods.

"The damage is likely to be even higher than that of the August flood in 2002 of €4.65 billion ($7.45 billion),” GDV CEO Jörg Asmussen said. “Bernd is one of the most devastating storms in recent history.”

The association will update loss estimates for the storms this week.

Allianz in Germany is donating a million euros to the rescue organisations involved.

Canadian province declares wildfires emergency

Canada’s British Columbia province has declared a state of emergency as wildfires threaten properties amid hot and dry conditions, while large blazes are also affecting parts of the western US.

British Columbia’s declaration was made on Tuesday as 299 wildfires burned in the province and with forecasts of continuing difficult weather conditions.

As of Saturday, 58 evacuation orders covering 4403 properties and 81 evacuation alerts covering 17,489 properties were in place.

The Canadian Government last week announced the latest funding application phase under its Disaster Mitigation and Adaption Fund program, launched in 2018 to boost resilience. The fund received an additional $C1.375 billion ($1.48 billion) over ten years in this year’s Budget.

The Insurance Bureau of Canada (IBC) says the country needs to create a culture of preparedness as climate change presents a serious challenge and has a serious and growing impact on communities.

“More and bigger floods, wildfires, hailstorms and windstorms, influenced by our changing climate, are costing billions and putting people and property at risk,” IBC Vice President Federal Affairs Craig Stewart said. “These perils are having an outsized impact on indigenous peoples and other vulnerable communities.”

In the US, the National Interagency Fire Centre says 86 large fires have burned 1.5 million acres in 12 states, including California, Oregon, Montana, Washington and Idaho.

“The commitment of resources to wildfires continues as more than 22,200 wildland fire fighters and incident management teams are assigned,” it said.

Munich Re puts preliminary June quarter earnings at $1.8 billion

Munich Re says preliminary figures point to a second quarter net profit of €1.1 billion ($1.8 billion), taking overall half-year earnings to €1.7 billion ($2.7 billion).

The figures mean the business is on track to meet its full-year earnings target of €2.8 billion ($4.5 billion), the reinsurer said in an update ahead of the release of its June quarter results next month.

Munich Re says in the June quarter, major-loss expenditure in property-casualty (P&C) reinsurance business was below average because of comparatively low losses from natural catastrophes.

COVID-related P&C reinsurance were in line with expectations, it said.

The reinsurer made a net profit of €1.2 billion ($1.9 billion) last year, down 55.3% from 2019 as the pandemic fallout squeezed earnings.

Lloyd's appoints first female Deputy Chair

Vicky Carter has been appointed Deputy Chair of Lloyd’s Council, effective in September.

Ms Carter has sat as an elected member of Lloyd’s Council since February 2019 and worked for the Lloyd’s market for 40 years.

Lloyd’s Chairman Bruce Carnegie-Brown says the appointment recognises her extraordinary professional contribution to the Lloyd’s market and global insurance industry over many decades.

“Her leadership will be vital as we progress our work in building the world’s most advanced insurance marketplace,” he said.

Ms Carter, who started a career in medicine before moving to reinsurance broking in 1980, is Chairman of Global Capital Solutions, International at Guy Carpenter and also holds positions on the company’s executive committee and board. She also Chairs the Lloyd’s Charities Trust and Lloyd’s Community Programme and is a Trustee of the Sick Children’s Trust.

“I’m thrilled and proud to become Lloyd’s first female Deputy Chair,” Ms Carter said. “I am a huge advocate of the market’s global reach and its ability to respond to the changing risk needs of customers.”

Lloyd’s has committed to a target of 35% female representation in leadership positions across the market by the end of 2023.

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Analysis

Industry challenges highlighted as IAG resets

IAG jumped out the gates early to deliver preliminary full-year financial results last week and in doing so has offered a window into some of the issues that the industry is dealing with as insurance affordability and availability concerns show few signs of easing.

Liability claim costs, the rising impact of natural disasters and the repercussions from the COVID-19 pandemic for insurers were among the themes at the earnings briefing.

Nick Hawkins, delivering his first full-year results since becoming CEO in November, says adverse claim development across a number of long-tail classes has particularly affected the intermediated business.

The company has strengthened reserves in liability classes, professional risks and workers’ compensation while pointing to systemic national issues.

Average claim size is increasing, particularly related to “bodily-injury” claims and IAG says adverse trends appear to be driven by an environment where mixed economic conditions have enhanced focus on personal injury compensation.

Mr Hawkins says the firm is increasing pricing and assuming increased average claims costs are “the new world” looking ahead, with the issues being reflected in insurance cost issues for businesses and in discussions around affordability.

“This is not just an IAG issue, we are seeing average claims costs of bodily injury type claims going up across Australia,” he said.

The impact of Australia’s natural disaster vulnerabilities is also reflected in the results, following a period that has seen insurers grappling with costs that have exceeded allowance.

IAG reported net natural claim costs of $742 million for the past financial year, following June 16 guidance after the Victorian floods of $720 million to $743 million, topping the full-year allowance of $658 million. Industry-declared catastrophes in the second half also included the March flooding in NSW and Queensland and Cyclone Seroja in WA.

In the 2020 financial year, which included the Black Summer bushfires and major hailstorms, IAG reported perils of $904 million, well over a $641 million allowance as Australian insurers grappled with heavy losses from one of the worst catastrophe years on record.

In guidance for this financial year, IAG has assumed around an extra $100 million for natural perils, bumping up the allowance, post quota share, to $765 million.

“We know we have been playing catch-up on perils, us and the industry, and we have used this as a bit of an opportunity to make a step-change up,” Mr Hawkins told the briefing.

An update was also given on the COVID-19 pandemic and business interruption cover, an issue that has loomed over the industry since early last year.

IAG in the first-half made a provision of $1.15 billion for business interruption claims related to the pandemic, and has left the figure unchanged in its full-year result.

The first industry test case on outdated wordings citing the Quarantine Act went against insurers while the second case on other questions starts at the end of next month. Insurers have argued policies are not meant to cover pandemics, but are still waiting to see how much they are on the hook for claims, before wordings and exclusions were tightened.

IAG says it has only received just over 700 claims so far, with the final number depending on the second test case outcomes.

In relation to the Quarantine Act issue, wordings were changed as policies fell due, with the tail-end impact from that process set to linger for another couple of months for IAG.

Mr Hawkins says the latest state lockdowns in response to the Delta variant outbreaks won’t require additional provisioning.

“Any impact from the current lockdown is included within the existing business interruption provision that we put in place in November last year,” Mr Hawkins said. “We don’t believe there will be any additional cost from the tail from business interruption over and above the provision we have already booked.”

IAG says it’s been a challenging year for both the company and the industry. Issues such as claims experience trends in certain classes, natural catastrophe exposures and lingering repercussions from COVID-19 show insurers still have plenty on their plates looking ahead.