9 December 2019
Several parts of NSW face very high fire danger today and tomorrow, the NSW Rural Fire Service (RFS) has warned, as crews try to contain dozens of blazes in the state.
At least 683 residential properties have been confirmed destroyed by the bushfires, according to the RFS.
“There is a very high fire danger forecast for a number of areas in NSW today,” it tweeted this morning. “Fire dangers are set to increase tomorrow with hot, dry and windy conditions forecast.”
A live map on the RFS website shows dozens of fires are still burning including several north of the Blue Mountains National Park.
In an update today, the Bureau of Meteorology forecast “heatwave-like conditions” will hit the NSW inland areas over the next few days.
The Insurance Council of Australia says claims from the NSW and Queensland bushfire catastrophe have increased to 2000 since the last update on November 22, when insurers reported they had received 1525 claims.
Insured losses up to today have been estimated at about $165 million, little changed from the November 22 estimate.
A council spokesman says insurers are awaiting more accurate information on the number and estimated cost of losses, which is not unusual in bushfire situations where access to affected areas is often delayed.
This summer of 2019-20 is shaping up as a “terrible trifecta” of heatwaves, drought and bushfires exacerbated by inaction on climate change, the Climate Council says.
The burning of coal, oil and gas is supercharging extreme weather events, putting Australian lives, and the economy and environment at risk, the Council’s latest report says.
“There is no leadership, no national plan, no vision, and no coherent policies,” it says. “The catastrophic events that are unfolding in Australia are not ‘normal’. Now is the time to act decisively and swiftly.”
The council says states, territories, towns and cities are leading the way on climate action while the Federal Government “has no credible pathway for reducing emissions.”
“Australia must contribute to the global effort to deeply and rapidly reduce greenhouse gas emissions and we must prepare our fire and emergency services and communities for worsening extreme weather events,” the report says.
Eastern Australia is currently in the grip of prolonged drought and the latest Bureau of Meteorology outlook is for hot conditions for most of Australia and a dry eastern Australia in summer.
The Association of Litigation Funders of Australia (ALFA) says a High Court ruling that may prevent some class actions going ahead is disappointing.
The court last week ruled against the validity of making “common fund orders”, which have meant all beneficiaries of an action must pay the litigation funder out of proceeds, even if they had not individually signed up.
Without the orders, funders and plaintiff law firms would typically engage in a “book building” process that involves alerting potential participants and signing them individually.
“The impact of the High Court decision will be felt by claimants and funders with the book build increasing the costs of the litigation and slowing the litigation down,” ALFA CEO Pip Murphy told insuranceNEWS.com.au.
“There may be some class actions which don’t proceed in future due to funders and lawyers making an economic assessment that the case cannot proceed due to the costs of bringing the claim. It is disappointing that access to justice is being compromised in this way.”
Increasing class action activity that has caused directors’ and officers’ (D&O) premiums to soar has been blamed on the rising number of litigation funders operating in Australia, and the ease with which actions can commence.
Meridian Lawyers Principal Andrew Sharpe says the court ruling will mostly affect cases where there is a large number of potential participants but the individual losses are relatively small.
“In those circumstances it is difficult to build a book and very costly,” he said. “The securities class actions are probably less likely to be affected.
“In cases against listed companies there are typically large institutional investors who will join an action as well as the small retail shareholders, improving the economics of the bookbuild process.”
Australian Industry Group CEO Innes Willox says other challenges are also looming, with the Victorian Government proposing to allow lawyers to charge contingency fees.
“This would only exacerbate the situation and put the fox in the henhouse by allowing lawyers to be incentivised to earn the type of huge unregulated commissions currently enjoyed by litigation funders,” he said.
The Insurance Council of Australia has previously expressed concerns about the impact class actions can have on D&O claims and on premiums, and says insurers that offer those types of products will review the court decision for its implications.
The High Court decision is available here.
A Suncorp customer has failed in his bid to have his damaged TV replaced with a similar top-of-the-range model or be compensated $2300, the amount that he paid 11 years ago for the item.
The Australian Financial Complaints Authority (AFCA) ruled the insurer is not obligated to pay equal value for a high-end replacement TV.
“A TV purchased for $2300 in 2008 will not have the same features and specifications as a TV valued at $2300 in today’s market,” AFCA says in the case document.
“Invariably, a current TV will have more features and be cheaper than an older TV of the same price, given advancements in technology.”
The complainant had taken his case to AFCA after Suncorp proposed a replacement from the same manufacturer that cost significantly less than $2300.
He argued the new TV should also be a superior model or be retailing at the same price.
But AFCA ruled the insurer has chosen to settle the claim according to the building and contents policy terms.
“The insurer’s proposed model is reasonably equivalent, if not superior, to that which it replaces,” AFCA says. “Based on the available information, I am satisfied that the replacement model identified by the insurer adequately discharges its liability under the terms of the policy.”
The NSW and Queensland spring bushfires caught everyone by surprise, and now the states – and insurers – are bracing for a summer like no other Australia has ever experienced. In the December/January edition of Insurance News magazine our editorial team talks to victims, firefighters and scientists to understand the causes and the consequences as we prepare for a fiery summer.
The magazine also examines the insurance industry’s performance over the past 12 months and probes the reasons behind a slowdown, falling profitability and continuing premium rises.
Our popular informal look at the Top 20 influencers and influences on Australia insurance continues for the 10th year, we talk to industry leaders across the wide world of insurance, and we provide background to issues like how a reinsurance pool for northern Australia was resurrected and how codes of practice will survive the chilly winds of regulatory change.
Australia’s most popular insurance print publication is being mailed out to subscribers this week, with the online version set to go online shortly after.
The deployment of high definition cameras in NSW to catch drivers illegally using mobile phones has the backing of the insurance industry.
The Insurance Council of Australia (ICA) and leading motor insurers, IAG and Suncorp, say the measure will improve road safety for drivers and pedestrians, as well as drive down claims costs.
“Using a mobile phone while driving is illegal and can impair and distract a driver, potentially leading to fatal accidents,” an IAG spokesman told insuranceNEWS.com.au.
“The introduction of drivers being penalised if caught by a mobile phone detection camera can help improve and change drivers’ behaviours.”
The NSW Government this month began using all-weather surveillance cameras to clamp down on the offence, becoming the first jurisdiction in the world to do so using the devices.
The state has seen about 182 crashes since 2012 – including 13 deaths and 243 injuries – that were linked to drivers or riders using a mobile phone.
Independent modelling has shown the cameras could prevent around 100 fatal and serious injury crashes over five years, NSW Centre for Road Safety Executive Director of Transport Bernard Carlon said.
“There is strong community support for more enforcement, with 80% of people surveyed supporting the use of detection cameras to stop illegal mobile phone use,” he said.
New Zealand’s Earthquake Commission will provide funding of $NZ1 million ($959,340) for 16 research projects that could help reduce the impact of natural disasters.
Projects supported under a biennial awards program include detecting signs of volcanic eruption, development of low-cost early earthquake warning sensors and investigation of a newly discovered fault on the Hauraki Plains.
Recipients are scientists at Auckland, Victoria, Massey and Canterbury universities, GNS Science, building and construction research group BRANZ and consultancy and research enterprise Resilient Organisations.
The 2020 EQC Biennial Awards program is part of the government-owned insurer’s annual $17 million research funding expenditure.
“EQC has a unique position as both an insurer and a science funder,” Head of Resilience Strategy and Research Jo Horrocks said.
“This means we can identify essential research outcomes that can be used now and also look at some of the big challenges for New Zealand that may take more than one generation of scientists to solve.”
Drive through assessment stations have been set up and specialists brought in from Australia to help with repairs after thousands of vehicles and other property in the South Island city of Timaru were pummelled by oversized hailstones on November 20.
Damage of this scale could take many months to repair, ICNZ CEO Tim Grafton says.
"While we won’t have full details about the extent of claims until early January, we know there are thousands of vehicles that will need to have repairs managed by insurers, as well as damage to conservatories, skylights, roofing and guttering,” he said.
The response from the industry so far has focused helping those with vehicles that aren’t driveable – usually because of severely damaged windscreens.
ICNZ is urging owners to contact their insurers so arrangements can be made to assess damage or losses, progress claims and schedule repairs.
AUB has abandoned its planned acquisition of Coverforce Holdings after failing to gain access to key documents required to finalise the proposed $150-200 million deal.
The company said in August it had agreed to buy a 49% stake held by private equity investor Pemba Capital Partners and would then acquire the remaining equity.
The takeover deal conditions include delivery of due diligence materials to AUB by a date agreed with Pemba, but Coverforce shareholding levels and associated sale rights have been in dispute in the NSW Supreme Court.
As reported in a Breaking News bulletin earlier today, the materials have not been delivered and AUB has not waived its right to due diligence.
“In consequence, and as the parties have been unable to reach agreement on an amended date for delivery of due diligence materials, the conditional sale agreement has terminated.” Group General Counsel and Company Secretary Freya Smith says in a market release.
Under the initial timetable, due diligence was due to be completed by the end of September, paving the way for the acquisition to be wrapped up in the fourth quarter.
AUB has previously said it is protected by “walk-away rights” if the deal did not go ahead.
South African-owned Pemba acquired a stake in Coverforce in 2012 and maintains it properly triggered exit clauses after receiving a proposal from AUB in May.
But Coverforce founder Jim Angelis disputed Pemba’s right to trigger a sale and took court action.
The case before Justice James Stevenson in Sydney is yet to be decided and includes a dispute over contested shareholding agreements involving Adrian Kitchin, Drue Castanelli and Ben Hastie, who this year completed a buyout of authorised representative company Resilium from Suncorp.
Coverforce was established in 1994 and is the largest privately owned insurance broker in Australia, focusing on the SME, mid-market and large corporate clients.
AUB said today it will continue to apply a disciplined approach to its mergers and acquisitions strategy as it looks to acquire businesses that accelerate scale and growth, leverage and expand its expertise and add to its core capabilities.
Underwriting agency Blue Zebra will grow its product suite next year, and is also considering expanding into Asia after approaches from Hong Kong and Singapore.
The company, led by former QBE executives Colin Fagen and Blair Nicholls, aims to bring personal lines back to brokers and uses smart technology to increase efficiency.
Launched last year, the agency now has 17 staff and is handling $125 million annual gross written premium.
“We’ve been approached by players in Asia and North America to discuss anything from a full MGA model to just using our technology,” Mr Fagen told insuranceNEWS.com.au.
“Most of the interest is coming from markets like Hong Kong and Singapore. We’re also looking at opportunities in New Zealand. This is all at the preliminary stages – we want to bed down the Australian operation first.”
Blue Zebra currently offers landlord, household and motor products, but aims to add SME, cyber, commercial motor and fleet.
It is currently backed by Zurich, but Mr Fagen says the agency could work with other underwriters on new products.
“We are keen to develop current partnerships, but every organisation has a different appetite for different products,” he said.
Mr Fagen says the current market hardening is impacting on rates. “We are pushing up rates a little bit because the loss ratio needs improvement.”
But he says positive feedback from brokers shows the agency is nimble and able to adapt.
“Brokers have a lot of clients that are looking for these products,” Mr Fagen told insuranceNEWS.com.au. “We give them an opportunity to pull back a lot of personal lines business from the direct market.”
Highly regarded marine underwriter Jill Murphy has set up an independent underwriting agency, RedSky Insurance, with a portfolio acquired from her previous employer, Agile Underwriting.
Sydney-based RedSky is offering an array of marine-focused products including cargo, yacht, pleasure craft and hull and machinery.
The agency's other co-founders and specialists are Heather Roberts, previously NTI corporate development specialist, and Jodie Drinnan, formerly QBE’s national distribution manager for marine specialty risks.
“Our message to the clients is that it is business as usual but with greater resources,” Ms Murphy told insuranceNEWS.com.au.
“The security is the same but with more resources to ensure that we cope with the growing portfolio.”
Ms Murphy was a marine underwriter at Agile before embarking on the new business venture. She has held senior positions overseeing marine including at Aon and AIG during her career.
“We are passionate about what we do, and we have the experience and relationships to create tailor-made marine insurance for our corporate customers whilst also offering online solutions for products such as pleasure craft,” Ms Murphy said.
“Marine insurance can be difficult to understand because it is different to the other general insurance lines. This has resulted in a lot of insurers pulling back or offering a beige, one size fits all, product.
“Our goal is to bring some colour back into the market and help clients find innovative solutions.”
Claims specialist 360Globalnet has built a digital claims platform for Queensland-based Insuret, an underwriting agency that provides claims management services to the rental car sector.
The new system facilitates the lodgement of claims directly from mobile devices and other digital sources, and also enables the immediate upload of videos, photos and other supporting data linked to claims.
“This will provide all stakeholders with a streamlined claims process that creates efficiencies in expediting claims and delivering better outcomes,” Insuret MD Jason McDonnell said.
“Throughout 2020 and beyond, we will roll out our digital claims proposition to our customers, including supporting the intermediaries we partner with in commercial motor products.”
Since expanding to Australia last year, UK-based 360Globalnet has secured contracts with key insurance-linked companies Last month it launched a digital claims facility for Allianz-owned TIO. Other clients include Gallagher and repair specialist AMA Group.
Community Underwriting will open an office in Brisbane next month to support the agency’s growing business in Queensland.
Chief Underwriting Officer Sarogini Millott will relocate from Sydney to oversee the operations.
The agency has seen a steady increase in business from Queensland over the past five years, according to a company statement.
Community Underwriting is majority-owned by its non-profit clients.
Australian litigation funder IMF Bentham has filed an application in the High Court in Auckland to commence a shareholder class action against failed New Zealand insurer CBL Corporation.
The lawsuit will allege the parent company of CBL Insurance breached its obligations to keep investors “properly informed” about its French insurance business.
CBL Insurance, which went into liquidation a year ago, was involved in the underwriting of French construction insurance.
“We have continued to receive strong interest in the IMF-funded action from both retail and institutional investors in New Zealand and abroad,” IMF Bentham Investment Manager Ewen McNee said.
“We have signed up a significant number of shareholders who together purchased tens of millions of shares in CBL and whose investment has been lost due to the company’s alleged misconduct.”
The class action is one of two that CBL faces. New Zealand’s LPF Group is funding the other legal action against the company’s former directors.
Former Hanover Insurance Group President and CEO and QBE non-executive director Fred Eppinger has retired from the board after less than a year.
QBE announced last week in a brief investor update that Mr Eppinger recently took up a CEO role in the US, which made it challenging for him to “devote the appropriate amount of time” to QBE.
According to his LinkedIn profile, Mr Eppinger is presently CEO of Stewart Title, a US provider of residential services such as title insurance, escrow and settlement services.
He joined the QBE board early this year. He led the Hanover Insurance Group for 13 years until 2016.
Suncorp New Zealand and its other subsidiaries, Vero and Asteron Life, have joined the Shielded Site network, an initiative that offers online support services for victims of domestic violence.
The websites of the three businesses now bear the Shielded Site icon. Clicking on the icon will allow a victim to safely access information and help without fearing the online activity will show up in the computer’s browser history.
“Joining the Shielded Site is an important way we’re supporting New Zealanders experiencing vulnerability and building the resilience of our communities,” EGM People Experience Catherine Dixon said.
“As insurers we have solid online reach and a very real focus on being there for people in the moments that matter.”
The Victorian Government will review the outsourcing of workers’ compensation complex claims to agents that include insurers after an Ombudsman report said the current system is delivering some results that are unjust and “downright immoral”.
The Ombudsman report calls for the review to consider alternative options such as complex claims being handled by the Government agency responsible for the scheme.
“Although most other Australian state and territory workers’ compensation schemes outsource claims management to agents, many other international schemes do not,” it says. “In these jurisdictions claims are managed in-house by the relevant government authority.”
The Victorian Government has accepted a recommendation for an independent review to consider “how and by whom complex claims should be managed”, taking into account other national and international schemes, including that run by Victoria’s Transport Accident Commission.
Workplace Safety Minister Jill Hennessy says the Ombudsman’s report shows a systemic problem with the current model, and insufficient oversight and review mechanisms.
The Victorian scheme is administered by WorkSafe with claims management outsourced to Allianz, CGU, EML, Gallagher Bassett and Xchanging under contracts ending on June 30 2021.
The agents were critical of parts of the draft version of the report and defended their performance in comments included in the final version.
Gallagher Bassett notes that using a significant number of disputed decisions or those arising from complaints skews the conclusions, and failures in single cases have been extrapolated where there’s no evidence of scheme-wide systemic failure.
CGU in its draft report response notes the Ombudsman criticises actions taken to break a reliance on compensation and to assist injured workers.
“In some cases, those actions are highlighted in the report as provocative, unreasonable or inappropriate,” it said. “However, the purpose of these actions is genuinely aimed to disrupt the compensation cycle and activate return to work opportunities.”
Allianz says the Ombudsman investigation reviewed 102 complex claims made since a 2016 review, of which 13 were managed by the company. Over the same period, Allianz managed 8442 claims and facilitated the return to work of 4951 Victorian workers and saw a rise in positive customer sentiment.
“Since the 2016 report, Allianz has worked with WorkSafe to implement a number of improvements across our service program, people practices and internal processes for both complex and non-complex claims,” Senior Manager Regulatory and Corporate Affairs Sunila Prasad told insuranceNEWS.com.au.
New Zealand will consult further on plans to remove unfair contract terms insurance exemptions as it considers aligning the rules with proposed changes in Australia.
An earlier options paper didn’t include consultation on the Australian proposal, which provides for a narrow definition of the main subject matter of a contract, with the reform timing in both countries overlapping.
Commerce and Consumer Affairs Minister Kris Faafoi will ask the NZ Parliamentary Counsel to draft alternate options for whether the main subject matter is defined narrowly or more widely.
“I consider how the main subject matter is defined for insurance would benefit from further stakeholder consultation on an exposure draft, given the high level of interest in this matter from both insurers and consumer stakeholders,” he says in a Cabinet paper released last week.
A Business, Innovation and Employment Ministry impact statement says a narrow definition, in line with Australian draft legislation, would provide consistency for insurers such as IAG and Suncorp that operate in both countries.
The unfair contract terms provision will be part of broader insurance contract law reforms that are set to be introduced into the New Zealand Parliament in about 12 months. Draft legislation will be released for consultation next year.
The New Zealand Government has agreed on other key changes including improvements to disclosure requirements and enshrining the duty of utmost good faith in the legislation.
Consumers will be required “to take reasonable care” not to make a misrepresentation, while businesses would need to make a “fair presentation”.
Insurers would have to inform consumers before they access third-party records, such as health information, and ensure policies can be clearly understood.
The proposed reforms will overhaul rules currently spread across six pieces of legislation, which in some cases date back a century.
Insurance Council of New Zealand CEO Tim Grafton says the existing legislation is outdated and needs to be consolidated into a single piece of law, but has called for a “balanced and careful approach” towards reforms.
“This is a highly technical area and we support the Minister’s decision to consult on a draft piece of legislation, a process that we will engage in constructively,” he said.
Cold call telephone sales of direct life insurance and consumer credit insurance (CCI) will be banned from the middle of next month.
Announcing the move last week, Australian Securities and Investments Commission (ASIC) Commissioner Sean Hughes said the action “draws a clear line in the sand”.
“From January firms will no longer be able to call consumers out of the blue and use sophisticated sales tactics to pressure people into buying life insurance and CCI products.”
The Hayne royal commission recommended that hawking of all insurance and superannuation products should be prohibited and a legislated definition of “unsolicited” introduced.
The regulator says its ban, which takes effect from January 13, provides greater protection for consumers and complements proposed broader law reform.
“ASIC will intervene to stop practices that lead to poor consumer outcomes and destroy trust in the financial system,” Mr Hughes said.
Under the existing rules firms can engage in unsolicited telephone calls if certain requirements are met, such as giving consumers the option of having product disclosure statement information read out.
CommInsure last month was fined $700,000 after pleading guilty to 87 counts of mis-selling life insurance products over the phone. It separately agreed to refund more than $12 million to around 30,000 customers.
Consumer groups want a stronger crackdown on unsolicited online contact, emails, letters door-knocking and product cross-selling.
“We can’t let banks, insurers and other businesses use purchased marketing lists and tricky consent tactics to pressure people into worthless products,” Consumer Action Law Centre Senior Policy Officer Cat Newton said.
“ASIC’s cold-calling ban is a good interim step. Now we need the Government to ban harmful unsolicited selling practices economy-wide.”
RACQ Insurance has welcomed new laws stopping uninvited phone calls from “claim farmers” relating to car crashes, but says the new legislation does not go far enough.
The Motor Accident Insurance and Other Legislation Amendment Bill 2019 came into effect on Thursday. It protects private information and stamps out unsolicited scam calls for Queenslanders.
“These callers – often from overseas or interstate call centres – use nefarious tactics and misleading information to solicit or induce someone to divulge personal details which are then on-sold for profit,” Queensland Deputy Premier and Treasurer Jackie Trad said.
Research collected by the state’s Motor Accident Insurance Commission, which regulates compulsory third-party insurance (CTP), found more than 1.5 million Queenslanders have been targeted by claim farmers with calls to solicit information.
Claim farming is causing significant stress with some people receiving 10 calls a week or more.
A maximum penalty of $40,000 for an individual and $200,000 for a corporation are now in place.
RACQ spokesperson Renee Smith says the state government would need to remain vigilant to ensure the new rules are enforced.
“While this legislation is a good start and long overdue, we don’t think it goes far enough,” Ms Smith said. “Claim farmers enlist clever tactics and it won’t take long for them to find a way to work around the legalities.”
In robocalls, for example, the person called is required to make a choice to proceed with the call or not by pushing a number on their phone. They could thus be seen as agreeing to the call.
The NSW State Insurance Regulatory Authority (SIRA) is seeking injury management consultants in the workers’ compensation system and authorised health practitioners for the compulsory third party scheme.
For more information, click here.
WA is preparing residents for a high-risk bushfire season with a media blitz to raise awareness, while Victoria has gone on the attack with the formation of a fleet of 50 firefighting aircraft.
WA Emergency Services Minister Francis Logan launched an updated "I Am Fire" bushfire advertising campaign on the first day of summer after a survey found only a third of West Australians accept they are at risk of bushfire, despite the state being 90% bushfire-prone.
The survey also found only 18% of households in WA have made a bushfire plan.
"Given what we have seen already in the eastern states, no-one can afford to be complacent and think it won't happen to them,” Mr Logan said. "These fires are getting bigger, running faster, lasting longer and can be unstoppable despite significant resources. Our climate is changing.”
The campaign urges all residents to create a plan if they live in, or travel to, bushfire-prone areas, which can include parts of metropolitan Perth.
In Victoria, a record fleet of 50 firefighting aircraft was unveiled on Thursday at Avalon Airport.
Two large air tankers able to carry up to 15,000 litres of water or retardant each have been secured for the summer, and will be based at Avalon. In addition, two Air Crane helicopters, based at Essendon and Moorabbin, can carry up to 7500 litres of water and support other aircraft that are being positioned across the state. Apart from fire bombers the fleet also includes air supervision and intelligence-gathering aircraft.
Guides to creating a bushfire plan are available at Firechat.wa.gov.au and www.vic.gov.au/knowfire.
More stringent regulation is the top challenge faced by life insurers in Australia and scrutiny of commissions here may limit investment in technology, a new report from EY says.
Australia’s life insurance penetration rate has dropped to 2.1%, down from 3.1% in 2013, while non-life market penetration has increased to 3.5%, from 2.2% in 2013.
“While a number of common challenges – such as global economic uncertainty – confront life insurers across the region, local conditions differentiate individual markets. In Australia, more stringent regulation is the main challenge,” EY says.
Regulatory scrutiny of commissions in Australia may limit the ability of insurers to invest in technology, especially for advisers, the report warns, noting the Hayne royal commission findings recommended the elimination of commissions from the sale of life insurance unless insurers can make “clear justification” for their existence.
“In the past, insurers were able to recoup some of these investments through ad hoc negotiation on embedded commissions,” EY said.
It says the return on investment for digitisation initiatives has not been as large as hoped given the size of the investments, but things are changing quickly, especially in mature markets such as Australia.
Locally, life insurers are focusing more on platform transformation than their regional peers and direct-to-consumer channels are more prevalent as brokers and agents gradually “cede ground” to digital.
“Consumer preference for interactions and relationships with insurers skews strongly towards digital,” EY says. “That’s true even for life insurers, particularly in mainland China, Thailand and Australia, where consumers prefer digital channels over traditional agencies by significant margins.”
Co-ordination among regulatory bodies across the globe is leading to a “waterfall effect” of best practices.
EY says Australian customer protection laws follow the UK template.
“While regulatory compliance is often burdensome, it can align well with insurers’ goals in terms of meeting consumer needs. Insurers need efficient systems and processes in place, as well as rich and relevant data sets and strong analytical capabilities.”
TAL must pay a trauma claim for a customer who suffered a heart attack even though he wasn’t covered by the policy, in a decision influenced by the emerging controversy over universal terms and conditions and criticising the Life Insurance Code of Practice.
In rejecting the man’s 2017 claim on his trauma insurance, TAL argued the policy only covered more severe heart attacks. However, the policy doesn’t state that in plain language, and this was the focus of a decision by the Australian Financial Complaints Authority (AFCA).
It criticised the vagueness of TAL’s policy terms, saying the policy was “full of medical jargon” and “unable to be fully understood by anyone that wasn’t a medical expert”.
Even though AFCA acknowledged the heart attack wasn’t severe enough to be covered by either the Life Insurance Code of Practice or the trauma policy, it noted the “significant public controversy” around trauma cover for heart attacks, and ordered TAL to pay out the claim.
“Good industry practice was to align definitions of heart attack with the universal definition of heart attack,” its decision says. “Alternatively, the insurer could have made it clear to policyholders that only severe heart attacks were covered.”
AFCA rejected TAL’s defence that the customer’s financial adviser should have told him the policy only covered severe heart attacks, saying a planner wouldn’t have the medical expertise to know the definition only covered severe heart attacks.
AFCA also harshly criticised the Life Insurance Code of Practice, saying its clauses dealing with heart attacks are “fundamentally flawed”.
The clause says an insurer should assess a customer under the minimum standard medical definition of heart attack, but then lists a definition of heart attack with severe muscle damage.
The code just entrenches the ongoing problems with terms and conditions in trauma cover for heart attacks, AFCA says.
“The code provisions do not reflect good industry practice. On the contrary, they reflect poor industry practice of the past.”
TAL declined to comment on the case but told insuranceNEWS.com.au it supports AFCA’s work providing policyholders with an independent dispute resolution service.
AMP Life is defending its claims-handling for group insurance after Choice subsidiary Super Consumers Australia labelled delays “abhorrent” in an open letter.
Recent Australian Prudential Regulation Authority (APRA) statistics show AMP takes an average of six months to process death claims, and 12.4% of them take more than a year. The average wait in the industry is two weeks, Super Consumers says.
“Given AMP’s abhorrent insurance claims-handling delays, we have serious doubts whether they are acting in the best interests of their members,” Super Consumers Director Xavier O’Halloran said in a statement.
But an AMP spokeswoman told insuranceNEWS.com.au the company previously captured data differently to the industry, which partly accounts for the difference in the statistics.
It includes the time taken to identify or confirm beneficiaries for death claims and the time after being notified, rather than after receiving initial claims forms, and holding aged claims open while waiting for a customer response.
AMP is planning an upgrade of its claims management technology platform next year to increase automation across death and total and permanent disability claims, the spokeswoman said.
“This will reduce the complexity of processing claims and improve the experience for our customers,” she told insuranceNEWS.com.au.
“These initiatives and the alignment of data capture will take time to show in the reported data. However, we expect AMP Life statistics to improve and reflect accordingly as initiatives are implemented and completed over the next twelve months.”
AMP has a 92.6% claims acceptance rate and paid out $1.21 billion in claims last year.
Mr O’Halloran says there is currently very little scrutiny on whether superfunds are providing appropriate insurance services to their members.
Super Consumers is also expressing concern over claims processing delays in cases where AMP is both the super trustee and insurance provider.
“It’s not good enough that families who are dealing with the tragedy of losing a loved one and paying funeral costs are being left at the mercy of this tardy insurer,” Mr O’Halloran adds.
Choice recently named AMP Superannuation in its Shonky Awards for “ruined retirements” for its long claims-handling delays and so-called “zombie” accounts.
Life insurance policies are rated as key employee benefits, yet only 60% of employees understand how they work, a MetLife report says.
Employers focus primarily on plan details and payouts and miss the chance to show how benefits can work together as a whole package in workers’ lives, the report says. Employers should be communicating more with their staff about the benefits of insurance
“Personal finances” is the main source of employee stress in the workplace, the study finds.
Nearly 80% of employees think total and permanent disability insurance is a “must have” or “nice to have”, compared with a slightly larger proportion for income protection.
About 63% think extended insurance coverage is a must-have or nice-to-have for the workplace, while 73% think the same thing about life insurance.
Some 72% of workers want access to financial planning workshops or tools, yet only 24% of employers are offering financial wellness classes like how to save or budget.
Meanwhile, 37% of workers say their bosses have a responsibility for their financial wellbeing, and 35% think their bosses should help them save for retirement.
Three out of five top financial concerns in the workplace relate directly to retirement, and 39% expect their retirement to be postponed due to their finances, the report says.
The corporate regulator is warning superfunds providing scaled advice to members to address members’ insurance needs, after uncovering a number of cases where advisers inappropriately excluded insurance from discussions.
A review of financial advice by 25 superfunds by the Australian Securities and Investments Commission (ASIC) exposed a number of examples where insurance advice was excluded from the advice scope, despite a need for insurance being identified by the adviser.
“If an advice provider identifies insurance as an advice need or relevant to the advice being provided, they must deal adequately with the member’s insurance needs,” ASIC warns.
This includes discussing their existing level of insurance, what they will need in the future, affordability and how to best implement the right insurance strategy, including looking at the costs and benefits of changing insurance arrangements, it says.
“When insurance is excluded from the scope of advice, the advice provider must make it clear to the member that no insurance advice is being provided and explain the potential downside and risks, if any, to the member of choosing not to receive advice on this aspect of their personal circumstances,” the report says.
Advisers that don’t have the expertise to provide insurance advice should refer the member to someone who does.
ASIC says if an adviser cannot act in a member’s best interests because of the limits of the advice model, they should say so and refer the member elsewhere.
OnePath must pay extra interest on a total and permanent disability (TPD) benefit amount for a claim that it took more than three years to accept, the Australian Financial Complaints Authority (AFCA) says.
The female claimant lodged a TPD claim in June 2014 for a car accident she suffered more than three years before. OnePath accepted the claim on December 12 2017, and paid the benefit amount of $750,000 on January 3 2018.
OnePath determined that interest was only payable from December 12 to January 3, while the claimant believed she should be paid interest from August 2014 until the claim was paid in 2018.
Section 57 of the Insurance Contracts Act states that an insurer is liable to pay interest when it unreasonably withholds payment of the benefit amount to the insured. The claimant said that as she lodged the claim and met the TPD definition on August 2 2014, interest payable should be calculated from this date.
However, OnePath said it became clear in 2017 that the claimant intended to follow her doctor’s advice and use powerful opioid painkillers long-term, giving her a permanent medication-induced disability and rendering her unable to work. As a result, interest payable should only be from December 12 2017.
In its decision, AFCA says the insurer failed to contact the claimant in 2015 or try to get information about the claim as part of its assessment.
“If the insurer had properly investigated the claim and obtained [the doctor’s] report dated September 2015, the insurer could have assessed the complainant as TPD on 11 October 2015. The insurer unreasonably withheld payment of the TPD benefit amount,” AFCA says.
OnePath should also have been aware that she had income protection claims with other companies and it could have obtained more documents in 2015.
AFCA determined the TPD definition was met in September 2015 and ruled that interest on the $750,000 was payable from that date.
Some superannuation members in dangerous jobs may be left uninsured in a workplace accident if their superfund decides it is too difficult to apply an exemption in recent super insurance legislation, according to a new paper.
The Putting Member’s Interests First bill exempts workers in dangerous jobs from opt-in insurance. However, thinktank Rice Warner warns it will be notoriously difficult for superfund trustees to identify its members’ occupations.
Superannuation administration system SuperStream has an occupation field for employers to complete, but it is optional. The trustee may decide that it cannot seek an exemption from the legislation if it can’t accurately identify members in dangerous jobs, the paper warns. Such exemptions must be sought in writing.
Rice Warner says superfunds need to try and reduce the risk that members were misclassified, or if members are not recorded as working in dangerous fields. This is a potential high-risk area for administration errors.
“The actual certification process is a new concept and will require some careful consideration,” the paper says. “It is fair to say that data does currently not exist that meets the exact requirements of the Act.”
The bill stipulates using information from the most recent five years when certifying that the job is in the riskiest quintile of Australian occupations, but claims data often has a few years’ time lag.
Opt-in rates for young members and low-account balances have been some of the lowest experienced across the industry. Default insurance must be opt-in for members under 25 or for balances of $6000 or less from April 1 2020.
It will be a challenge for funds to consider and execute exemptions in time for this deadline, Rice Warner says.
Life insurer TAL is raising skin-cancer awareness with free pop-up skin check clinics at three of Australia’s most popular beaches as summer gets underway.
The national skin check initiative, now in its fourth year, kicked off with TAL’s SpotChecker service at Sydney’s Bondi Beach on the last weekend in November. It continued in Melbourne’s St Kilda South Beach Reserve on Saturday and Sunday and moves to Perth’s Cottesloe Beach on January 11.
TAL is encouraging more Australians to embrace skin safety with free access to qualified professionals and education on the importance of preventative health and getting a skin check.
The life insurer has created a hub of online resources to help Australians find a local GP and learn how to self-check using the Firstcheck app.
“A lack of time is a contributing factor to not getting checked, TAL GM of Health Services Sally Phillips said. “Through TAL SpotChecker, we’re aiming to encourage Australians to take a more proactive approach.”
New research by TAL shows 56% of Australians consider themselves sun smart, yet 87% have not had a skin check in the past 12 months and 28% have never had one.
Two in three Australians are diagnosed with some form of skin cancer, which is one of the most easily detectable and preventable cancers, by the age 70.
At Bondi on November 30 and December 1 TAL completed 287 skin checks, with only 18 referred on for further checks. This 6% referral rate was down substantially from 2018 when 1 in 5 people were referred on.
Around 4000 free TAL skin checks have been notched up since the initiative began.
The National Insurance Brokers Association (NIBA) is inviting nominations for its 2020 Broker of the Year and Young Professional Broker of the Year awards until February 29.
The prestigious national awards recognise high-performing broker professionals. QBE and Vero will again be sponsors.
“I encourage you all to put forward names of brokers who are doing a tremendous job looking after the needs of their clients,” NIBA CEO Dallas Booth said.
There are five individual regional awards made after entries are assessed by the state/territory judging panel throughout May.
Broker of the year finalists, announced at regional events running from May to July, are then eligible for the Stephen Ball Memorial Award for Insurance Broker of the Year. Mr Ball was a JLT Australia Chairman and NIBA president who died in 2016.
The winner, to be revealed at the NIBA Convention in Melbourne in October, will receive a prize valued at $20,000.
Each nominee must be a member of NIBA and a Qualified Practising Insurance Broker, have spent a minimum of three of the last five years living in Australia and travel to Sydney for a two-day selection interview for the national judging process. Click here to nominate.
The Young Professional Broker of the Year Award/Warren Tickle Memorial Award goes to an insurance broker below the age of 35 who exhibits an outstanding level of professionalism and integrity.
The winner receives a tailored personal and business development experience to the value of $10,000. This award began in 1990 in honour of Warren Tickle, a former Insurance Commissioner and insurance lecturer responsible for the implementation of the Insurance (Agents & Brokers) Act 1984. Click here to nominate.
In both categories, industry members should nominate professionals who have demonstrated an outstanding commitment to client advocacy, technical excellence, customer service and personal development.
Insurance House Claims Manager Tracey Hind has been crowned the 2019 winner of the Bright Light Award for her ‘Ethics and Procurement’ competition entry.
Now in its second year, the Australian and New Zealand Institute of Insurance and Finance’s (ANZIIF’s) Bright Light Award gives individuals and teams an opportunity to pitch an innovative idea to a panel of insurance industry leaders.
Ms Hind, who won $5000 cash and $1500 to spend on coaching and professional development, submitted a video presentation outlining the environmental impact of claims.
Her ideas to solve this challenge, which will be further developed alongside award sponsor TurksLegal and ANZIIF, include a tiered approach of increasing rates of repair over replacement, increasing use of ethical supply chains and improving salvage rights and participation by insurers in recycling.
The runner-up prize was awarded to Sedgwick adjusters Andrew Walsh and Christopher McAuliffe for their ‘Claim Time’ idea, which focused on providing video format loss adjuster’s reports to insurers.
Applications for the 2020 Bright Light Award open in September next year. Entries can either be a short video, an 800-word essay or a PowerPoint or voiceover image presentation.
Rural firefighters, cancer patients, remote Australians and those in crisis are among the first recipients of grants from the TravelCard Giving Partnership, which has kicked off by donating $21,000 to be shared across eight nominated charities.
The Giving Partnership committee, which includes TravelCard CEO Peter Klemt and CFO Daniel Taback, meets three times a year to assess applications and distribute funds. Brokers who wish to nominate for the next round of grants can email email@example.com or download the application form.
The inaugural recipients are Rural Fire Services, Sober in the Country, Blue Dot Army, Love Me Love You, Tour de Cure, Chaplainwatch, The Melbourne Therapy Association and Surf Lifesaving Queensland.
Travelcard, which launched in Australia last year, was awarded the 2019 Mansfield Award for Claims Excellence in the specialty claims category. The insurer is underwritten by Hollard.
Popular Melbourne-based Sedgwick Executive Adjuster Rob Robinson has been named the Loss Adjuster of the Year by his industry peers in Victoria.
The presentation was made on Thursday night at the annual dinner of the Australasian Institute of Chartered Loss Adjusters (AICLA) Victorian branch. More than 500 people attended the event at the Crown Palladium Ballroom in Melbourne.
Mr Robinson, a major and complex loss specialist, has been employed by Sedgwick for the past three years. He was previously with Crawford and Company, and prior to that worked for McLarens for 24 years.
The inaugural Bob Richards Award, which was presented by the long-serving industry veteran, went to young McLarens loss adjuster John Burmeister.
Other award winners were:
Nine brokers have been selected for Zurich’s NextGen program and will fly to the insurer’s head office in Switzerland this month for an intensive three-day visit.
The Zurich 1872 NextGen Leadership Academy kicked off for its third year after 35 applicants were whittled down to nine. The program targets emerging leaders in Australia and New Zealand and aims to equip brokers with the skills to achieve future excellence in an evolving industry.
The selected brokers will meet with some of Zurich’s global management team to learn more about the international insurance market, strategic business issues and associated challenges.
The nine successful program participants are:
Specialist underwriting agency Sterling has appointed Greg Leeman as Aviation Underwriter.
Mr Leeman starts in January and will report to Queensland Director James Emerson. He was previously Aerospace Insurance Underwriter at Swiss Re, according to his LinkedIn account.
“Sterling has been writing aviation risks for three years and with the changing market we are in a fortunate position to grow our portfolio,” MD Tony Parington said.
The insurance industry remains resilient, is continuing to generate growth around the world and maintaining overall profitability despite turbulence in the global economy, a new study by Deloitte says.
As insurers adapt to maturing markets and economic turbulence, the ability to integrate technology and business-model innovation into legacy environments may be the key to future success, Deloitte’s 2020 insurance outlook says.
Nonlife premiums were up 3% in real terms last year, above the 10-year average of around 2%, and close to 3% growth is expected again for 2019 and 2020, the report says.
Still, nonlife premiums in advanced markets are only expected to rise 1.8% through 2020, compared to 7% in emerging markets.
The hardening property & casualty (P&C) market is a worldwide phenomenon, with increases in all major geographic regions for the third straight quarter, led by the Pacific region at 18%, versus 6% in the UK and 5% in the US, with continental Europe trailing at only 2%.
“P&C insurers around the world are indeed growing premium volume simply by raising rates, in part to compensate for mounting liability and catastrophe losses as well as lower yields on fixed-income securities,” the report says.
Increases were most prominent in financial and professional liability (nearly 10%), driven in part by higher directors’ & officers’ losses due to escalating securities and derivatives suits.
Property coverage also saw significant increases of 8%, given higher disaster losses over the last few years.
On the life insurance and annuity (L&A) side of the business, global premiums are forecast to rise 2.9% in each of the next two years, compared with a 0.6% annual average over the last decade. Emerging market life insurance premiums are forecast to rise by a robust 8.7%.
China is expected to contribute almost half of the increase in global life premiums over the next two years, with a rebound to 11% growth after a sharp 5.4% contraction in 2018 due to tightening of regulations.
Deloitte says the insurance industry is displaying an increasing sense of urgency toward innovation, with many insurers “beginning to focus on longer-term responses to avoid irrelevance”.
Many are “overly focused” on enhancing legacy systems, products and business models, while neglecting to devote enough resources to more disruptive innovations that might differentiate them in an increasingly customer-centric economy.
“Improved technology alone will not likely foster sustainable innovation unless accompanied by fundamental changes in insurance company strategy, operating models and culture, with an emphasis on enhancing their talent base.”
The report says only 4% of millennials are interested in working for the insurance industry, an obstacle in attracting new talent. It says integrating highly skilled people is a challenge “akin to the potential for tissue rejection in a transplant”.
“Will legacy personnel wedded to the way insurers have historically conducted business accept the different attitudes, approaches, and ideas of newcomers, and work together to create the insurer of the future?
“Despite all the talk and emphasis on emerging technologies, insurance remains a people business, both in terms of how it is sold and bought, as well as how insurers are managed.”
Resolving this emerging ‘synthesis challenge’ of how to integrate new tools, technologies, and techniques and recruits with time-honoured status quo practices may be the biggest factor for insurer success in the decade ahead, Deloitte says.
California has ruled that insurers cannot cancel or refuse to renew residential property policies due to wildfire risk for a year.
Insurers must also offer to rescind any notices of cancellation or non-renewals which were issued because of wildfire risk since state of emergency declarations in October, the Californian Government says.
Home insurers must offer to reinstate or renew the policies that were in place at the time of the declarations in nominated postal codes.
This is the first time the state has invoked a new law which took effect in January under the Wildfire Safety and Recovery Act. It established protection for those living adjacent to a declared wildfire emergency who did not suffer a total loss.
The mandatory one-year moratorium covers more than 800,000 policies in northern and southern California in postal codes next to 16 recently declared wildfire disasters. According to the US Forest Service, more than 3.6 million California households are located where wildfires are most likely to occur.
“Insurers shall not cancel or non-renew for one year policies of residential property insurance due to wildfire risk” in nominated postal codes, Insurance Commissioner Ricardo Lara said in a bulletin issued to all insurers writing residential property insurance in California.
Mr Lara, who described a “growing insurance availability crisis,” is also urging insurance companies to voluntarily cease all non-renewals related to wildfire risk statewide until December 5 next year.
Hundreds of thousands of Californians have found it almost impossible to find and afford home insurance after three straight years of extreme wildfires.
Significant fires broke out throughout California in late October, leading to the evacuation of more than 200,000 people and the declaration of a state of emergency. About 1.86 million hectares was lost in this year’s fires. A wildfire in Sonoma County which ignited on October 23 burned an area more than twice the size of San Francisco.
Insurers, which collect $US310 billion ($497.42 billion) in premiums annually in California, have “created considerable disruption” for California’s residents, Mr Lara says.
The number of non-renewals rose by more than 10% last year in seven counties from San Diego to Sierra and the number of consumers covered by the FAIR Plan, California’s insurer of last resort, has surged in areas with high wildfire risk.
“California’s property insurers are retreating from areas they identify as having higher wildfire risk,” the bulletin says. “In many communities across the state, finding affordable comprehensive fire insurance has become difficult. So difficult that real estate transactions have stalled or been cancelled.”
If continued, that trend could cause property values to decline, reducing tax revenue for community fire mitigation, law enforcement, road repairs and hospitals in these communities, Mr Lara says.
“I am calling on insurance companies to push the pause button on issuing non-renewals for one year to give breathing room to communities and homeowners while they adapt and mitigate risks, give the legislature time to work on additional lasting solutions and allow California's insurance market to stabilise.”
European flooding and inland storms led to economic losses estimated at €1.7 billion ($2.7 billion), Aon’s Impact Forecasting says in a November catastrophes recap.
Italy suffered the majority of losses, which included flooding of Venice by the second-highest tide since 1923.
“Despite a costly November resulting from major flooding events in the UK, France, Italy and Austria, European insurers have generally endured manageable losses thus far in 2019,” Catastrophe Analyst Michal Lorinc said.
Excessive rainfall and flooding was also experienced in East Africa, leading to significant humanitarian impacts.
“The issue of financial maturity remains an important topic in different parts of the world,” Mr Lorinc said.
“The insurance industry is expected to play an even more integral role in helping to introduce sustainable and tailored products and solutions to further promote resilience and preparedness.”
The November report highlights insured losses from bushfires and hail in Australia, which by November 22 had reached a combined $285 million.
At least three early season winter storms swept across most of the US during the month, with total insured losses expected to top $US100 million ($146 million). Economic losses from storms in Canada were estimated at up to $C365 million ($402 million).
A strong earthquake struck Albania on November 26, causing 51 fatalities. At least 1180 structures collapsed and nearly 10,000 sustained damage.
Worsening drought across South Africa affected at least 150,000 farms and direct economic costs associated with the dry conditions neared 2 billion rand ($200 million).
So-called “bad news” not linked to financial results will trigger more claims in the directors’ and officers’ (D&O) space, further straining what is already a loss-making line for insurers, according to Allianz Global Corporate & Specialty (AGCS).
“Scenarios include product problems, man-made disasters, environmental disasters, corruption and cyber-attacks,” AGCS says in a report.
“These types of “event-driven litigation” cases often result in significant securities or derivative claims from shareholders after the bad news causes a share price fall or a regulatory investigation.”
Cyber-related claims are increasingly a trigger for class actions, particularly in the US, the report says. In these legal actions, shareholders often allege management failed to disclose the business’s exposure to potential breaches and the lack of planning to deter hackers.
The impact of climate change, bankruptcies as well as the political and economic climate are the other factors that could also further trouble D&O insurers.
On climate change, AGCS says a failure to keep investors updated on potential financial implications linked to global warming could result in legal action.
“Climate change cases have already been brought in at least 28 countries around the world to date with three-quarters of those cases filed in the US,” AGCS says.
“There are an increasing number of cases alleging that companies have failed to adjust business practices in line with changing climate conditions. Environmental, social and governance failings can cause brand values to plummet.”
The global D&O market generated about $US15 billion ($22 billion) in premium annually but the growing number of lawsuits and deteriorating claims environment have made the line unprofitable.
Lloyd’s has introduced a new multi-million-pound insurance policy called Llift Space for the emerging private spaceflight industry.
The global space market could increase in value from $US300 billion ($438.68 billion) today to $1 trillion ($1.46 trillion) by 2040, driven by new space companies entering the sector, according to a Lloyd’s report published on Wednesday.
The NewSpace sector is characterised by lower cost, easier routes to space that are opening the sector up to private enterprise, wealthy entrepreneurs and innovative start-ups. This is increasing the need for space insurance, Lloyd’s says.
“New aerospace companies and ventures…want access to easily scalable insurance that fits their needs and can be arranged quickly to support technological development and business growth,” Head of Innovation Trevor Maynard said.
Llift Space covers assets from the pre-launch phase, including transit, through to the launch phase and in-orbit operation. It is designed for satellites that weigh less than 300kg.
The policy is modular so customers can choose elements within each phase relevant to their coverage needs. It is backed by a consortium of 18 syndicates, led by Brit and Hiscox MGA, with a $US25 million ($36.56 million) capacity per risk.
The tussle for global supremacy between the US and China looms as the biggest political risk next year, according to a Willis Towers Watson global survey of 41 major companies.
Populism and nationalism, the geopolitical situation in the Middle East and increased tensions between businesses and the public over environmental, social and governance (ESG) policies are also ranked as top threats to the global economy.
“It is clear from our survey that political risk continues to increase, and that related financial losses are on the rise,” Chairman of Financial Solutions Paul Davidson said.
“Corporations now face a strategic choice: to either maintain their global business models while accepting, mitigating or transferring the political risks associated with them, or attempting to realign themselves with the emerging shape of a new and apparently more nationalist global landscape.”
About 71% of respondents say management is putting more emphasis on political risk management, and almost 40% feel investors are expecting more action be taken to address the issue.
“Political risks are now a defining feature of the modern age, and something every risk manager, CFO and CEO need to be aware of, understand and grapple with,” MD Financial Solutions Asia Pacific Stuart Ashworth said.
“With populism and protectionism on the march [and] instability, conflict and public disorder on the rise, companies need to remain vigilant and seek assistance where they can to better understand the changing risk landscape, identify the risks they face, quantify their exposures and where possible mitigate those risks.”
The global financial services sector is making progress on gender diversity in the workforce as mindsets evolve, a report from Guy Carpenter affiliate Oliver Wyman says.
Its latest Women in Financial Services report estimates the revenue opportunity from “better serving women as customers” is at least $US700 billion ($1024 billion).
“Supervisors and shareholders are increasingly applying pressure on firms to embed stability and drive better returns through diversity and inclusion,” which in turn “pushes the issue into the daily path of the CEO and executive committee”.
The report says mindsets are shifting but there is still a long way to go to create an industry in which women have equal access to opportunity. It says 20% representation of women on executive committees and 23% on boards is “not enough” and is calling for public commitment to gender equality in financial services.
“Many CEOs have taken up the challenge but we believe that…where gender balance becomes central to purpose, customer service, business strategy, your equity story, your supervisory relationships, and your brand, this will no longer be a choice for the CEO but a central part of their mandate.”
Victoria is set to become the latest state to begin a workers’ compensation review as the nation continues to grapple with a mish-mash of models, different levels of private and public participation and questions over their performance.
“It is time for the change that makes a difference,” Ombudsman Deborah Glass says in a report highly critical of Victoria’s handling of complex claims.
“I am pleased the Government has accepted my two key recommendations: an independent review of the agent model to determine how and by whom complex claims should be managed, and to introduce a new dispute resolution process which allows for binding determinations.”
Whether engaging in wholesale reforms or more minor adjustments, governments have been kept busy over the years trying to find the best way to deliver the benefits of workers’ compensation as efficiently as possible.
Australia has 11 major state, territory and commonwealth workers’ compensation schemes, with much variation between their policies and practices, the Compare project based at Monash University notes.
“We haven’t really settled on a best practice model in Australia,” Insurance Work and Health Research Group Director Alex Collie told insuranceNEWS.com.au. “You see different outcomes around the country based on all sorts of different factors.”
A Compare project report two years ago looked at 60 legislative changes across nine schemes over 2004 to 2015 to assess claims outcomes. The area remains a moveable feast.
“It is not as if we are comparing static entities,” Professor Collie says. “They change quite regularly, and these changes include some expected differences and unexpected differences to outcomes.
“There are so many different factors and things that influence the return to work and health outcomes and financial outcomes in these schemes that it requires a pretty close and nuanced look to really understand what is going on.”
The Victorian Ombudsman’s report on the handling of complex claims, which are outsourced to private agents with oversight by WorkSafe, suggests a focus on financial outcomes has come at the expense of fair decision-making.
“The financial viability of the scheme is imperative,” it says. “However, a balance must be struck so that the scheme can achieve both objectives of financial sustainability and appropriate compensation for injured workers.
“At present the system is failing to achieve the latter in too many complex claims.”
Ombudsman Deborah Glass has pointed to the state’s Transport Accident Commission and international jurisdictions as examples where claims are mostly managed by the relevant government authorities.
Flagging the in-house option reflects a long-running tug of war over the desired extent of private and public involvement from underwriting through to claims management.
The Insurance Council of Australia says it supports the involvement of insurers in workers’ compensation claims handling.
“It is the ICA’s long-held position that competition, in relation to both underwriting and claims management can aid and improve the performance of statutory insurance schemes,” spokesman Campbell Fuller said.
Philip Maguire, a principal at PFS Consulting and a former Insurance Council of Australia Deputy CEO, says there has long been tension between beliefs that workers’ compensation is a social service requiring government control, and beliefs that the private sector is best placed to deliver the service.
“Each can work, but it really just depends on the execution,” he told insuranceNEWS.com.au. “That is the challenge with all of these things.”
In the meantime, harsh findings in the Victorian Ombudsman’s report have not gone unchallenged by agents involved in the scheme.
Gallagher Bassett says in a response to a draft version of the report that “the imperfect path of reasoning and lack of supporting evidence makes the stated link between poor decision-making and financial considerations difficult to justify”.
The methodology of the report, and a focus on a small number of cases where a complaint has been made or a dispute is in progress, has been criticised for not reflecting overall performance or genuine efforts by agents to meet service objectives.
The Victorian Ombudsman’s report follows vocal criticism this year of the NSW system, which underwent major reforms in 2015 and where a review is underway.
The State Insurance Regulatory Authority (SIRA) has wrapped up consultations on the Nominal Insurer scheme, managed by icare, and is set to deliver its final report by the end of the year.
Many submissions have criticised poor claims management and communication through EML, appointed in 2017 as the sole agent for new claims. Last month icare said larger clients will now also have the option of engaging with Allianz, GIO or QBE under the “authorised provider” model.
The main NSW workers’ compensation scheme swung to a $876 million net loss last year amid falling bond yields and rising medical expenses. SIRA is also looking at healthcare costs affecting the workers’ compensation and compulsory third party schemes.
Whatever the outcomes, the various workers’ compensation schemes around Australia will keep separately changing as governments seek improvements, while hopes for a more unified approach remain elusive. The one thing certain about the latest Victorian review is that it won’t be the last.