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Queensland floods add to weather claims influx

Queensland storms over the past week have led to a further influx of claims as the industry deals with impacts from this year’s record-breaking flooding.

Rivers and creeks in saturated catchments rose quickly last week and hundreds of properties were inundated as heavy rainfall spread from Queensland’s north and interior to reach the southeast.

RACQ says it has so far received 376 claims from the recent wet weather, while IAG has received 221 claims, including 171 for property damage, 38 for motor vehicles and 12 from impacted businesses.

"The storms and floods are devastating for the communities impacted," an IAG spokesman told insuranceNEWS.com.au.

"Our partner repairers are on the ground in the impacted areas conducting emergency make-safe repairs for our customers with property damage where it is safe to do so. We’re also providing emergency financial support and temporary accommodation, if required.

"We’re encouraging our customers to contact us as soon as possible so we can provide them with the help they need."

The Bureau of Meteorology still had major flood warnings in place today for the Condamine, Balonne and Mary rivers as well as a number of moderate and minor warnings after conditions eased over the weekend.

Queensland Fire and Emergency Services (QFES) said this morning that although the sky has mostly cleared, SES crews received more than 75 requests for assistance in the past 24 hours, and damage assessments are continuing in hardest hit areas including Laidley and the Southern Downs region.

“With catchments still flooded, QFES is continuing to monitor weather forecasts, working closely with the Bureau of Meteorology,” it said. “Any rain has the potential to cause rapid rises in waterways.”

Amusement parks group vows to push on with mutual plan

The Australian Amusement, Leisure and Recreation Association (AALARA) has pledged to push on with its proposed discretionary mutual fund (DMF) to address the insurance crisis facing its members, despite a Federal Government decision not to back it.

AALARA President Shane McGrath says the peak body was told the Government will not be supporting the insurance solution, one that has been flagged as the “only suitable” answer to the industry’s premium affordability challenge by the Australian Small Business and Family Enterprise Ombudsman.

“We were certainly expecting the Government to back its own report and provide us with some funding to get it off the ground,” Mr McGrath told insuranceNEWS.com.au today.

“We’re not taking ‘no’ for an answer. We are certainly looking for them to reconsider their position and we’re certainly calling on the Opposition to provide some bipartisan support as well.”

A Government spokesman says it is considering the recommendations of the Ombudsman on the “most appropriate” mechanism to support the industry.

The Ombudsman concluded in a final report in December that AALARA’s plan offers the only suitable answer to an industry that has been struggling to secure public liability insurance as premiums have soared sharply, in some cases by as much as 200%.

But the final report also says operating a DMF is not easy as it requires exceptional governance practices, including ensuring an appropriate balance of member representation with independent directors and specialist expertise.

Ride operators in NSW and Queensland recently took part in a 15-minute ride stoppage exercise to highlight their insurance challenges. For many in the industry, public liability insurance is mandatory for them to carry on operating.

“The show must go on,” the Showmen’s Guild of Australasia says in a Facebook post. “We need our mutual fund recognised as sufficient insurance for councils and trust.”

Mr McGrath says AALARA is now looking to regroup and work proactively with the Government and Opposition to find support for the DMF plan.

“We think the DMF – and the Ombudsman supports our position – provides the best strategic solution to the industry long term,” Mr McGrath said.

“We’ve invested significant member funds in the feasibility study. The Government’s own report suggests that this is the right solution. We’ve got to see this through.”

Climate, class actions, regulation top concerns

Climate change and class actions if left unchecked could be a major contributor to rising insurance costs and are key issues on the Australian risk radar, along with the pace of regulatory change, a Global Insurance Law Connect (GILC) report says.

The fourth annual Risk Radar report provides insights from law firms in 23 countries on issues that will impact insurers, with Sparke Helmore providing commentary from Australia.

“The global issues of climate change and sweeping regulatory reforms particularly resonate in Australia, while we have seen limited traction in our market from global insurance trends such as M&A activity, disruptor insurtechs and the social inflation phenomenon,” Sparke Helmore Partner and National Practice Group Leader Commercial Insurance Malcolm Cameron said.

“With the current annual cost of $38 billion attributed to natural disasters, the insurance industry is committed to a proactive approach to climate resilience, with the affordability and availability of insurance an area of focus.”

The latest report includes a contribution on New Zealand for the first time, with law firm Duncan Cotterill identifying key issues as new legislation governing insurance contracts, directors’ and officers’ (D&O) insurance in the covid environment and the response to trade and supply problems.

The GILC board says that with the pandemic largely seen as receding, many members are now considering its longer-term implications.

“Of particular concern is the risk that senior management’s decisions made during the pandemic may come under the spotlight, which will have consequences for the D&O market,” it says.

In England and Wales top issues were the climate agenda, a changing motor insurance market and customer service post-covid.

The contribution from the US identified pressures created by inflation, environment, social and governance related risks and talent retention.

The impact of the war in Ukraine was highlighted for France while challenges created by economic sanctions against Russia was a top issue for Switzerland.

Perils shaves southern Australia storms loss estimate

Catastrophe data company Perils has slightly reduced its loss estimate for southern Australia severe storms that lashed three states with hail, heavy rainfall and wild winds.

The third estimate for the October 28-30 event pegs losses at $1.016 billion compared to the previous figure of $1.028 billion.

“Whilst the focus has understandably been on the recent eastern Australia flood losses, the southern Australia severe storms event is a reminder of the ongoing challenges the industry faces in managing Australian natural catastrophe risks,” Head of Perils Asia Pacific Darryl Pidcock said.

“This event is not only one of the largest on record for southern Australia, but also a rather complex occurrence with a mix of hail, wind and rainfall-related losses.”

The storms were caused by a low-pressure system moving in a south easterly direction across SA, Victoria and Tasmania.

Personal lines property and motor represents 78% of the total industry loss, while SA accounts for 62% of the total.

Perils says its report will enable the industry to break the losses down by line of business, post code and intensity.

“Given the increased industry focus on improving catastrophe modelling for secondary perils we believe this report will further support efforts on this front,” Mr Pidcock said.

The next estimate will be released on October 31, marking a year after the event.

NTI develops 'spilt milk' dairy tanker safety program

Transport and logistics specialist insurer National Transport Insurance (NTI) is creating a new training program to improve road safety in the dairy industry.

NTI will design and deliver the “spilt milk” national crash reduction program over the next two years with government funding.

The Australian dairy industry produces milk worth $4.4 billion each year and NTI data shows on average dairy tankers are 2.4 times more likely to be involved in a major crash than other freight transport – equivalent to one in 17 dairy tankers compared with one in 41 other heavy vehicles.

The goal is to reduce dairy tanker rollovers and improve road safety by working with drivers, fleet managers and maintenance consignors. The insurer will work with experts to test training programs, resources and workshops.

A similar education program in Victoria’s forestry industry cut rollovers from 29 in a year to none in 2020.

“It is about improving road safety and protecting the environment. Dairy tanker crashes not only put drivers and road users at risk, but can cause milk and diesel spills,” NTI Head of Customer and Industry Strategy Staci Clark said.

Auckland-region flood claims top $70 million

Torrential rain, thunderstorms and flash flooding across Auckland and much of New Zealand’s North Island in March has led to 7647 claims so far worth an estimated $NZ79.61 million ($72.12 million), Insurance Council of New Zealand (ICNZ) says.

There were 5634 domestic claims, 1310 commercial, 588 vehicle, 51 business interruption and 64 other claims.

Badly affected coastal community Tairawhiti had fewer than 100 insurance claims for the event, in which several schools closed and streets and motorways were awash with flooding across the Auckland region.

ICNZ CEO Tim Grafton says dense urban areas that are highly paved with inadequate stormwater systems lead to flooding and ongoing risks and costs. Taking action with how cities are built and maintained is essential as climate change impacts become more frequent and severe, Mr Grafton says.

“At-risk urban communities should be just as concerned about this as coastal communities are about sea level rise,” Mr Grafton said. "Pro-active, co-ordinated action to reduce the risks of climate change must be given much higher priority than it has been.”

Mr Grafton noted insurance losses from February’s Cyclone Dovi totalled $NZ44.43 million ($40.9 million), following a record $NZ324.1 million ($298.7 million) in general insurance pay-outs for extreme weather events last year.

Separately, the provisional impact within New Zealand from January’s Hunga Tonga-Hunga Haʻapai underwater volcano eruption and tsunami was 69 claims totalling $NZ5.94 million ($5.38 million).

The volcano erupted about 65km north of Tonga’s capital Nuku’alofa, causing a cloud of ash and triggering tsunami warnings for Tonga, America Samoa, Fiji, Vanuatu, New Zealand, the US, Canada, Japan, Chile and Australia.

Wave damage to the Tutukaka marina on New Zealand’s North Island left some boats submerged and other vessels and infrastructure damaged.

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Corporate

QBE names Group CIO to deliver tech transformation

QBE has appointed David Germain as Group Chief Information Officer, based in the insurer’s London office.

Mr Germain will lead QBE’s global Technology Services function to deliver “transformative technology change”.

Joining from RSA Group, he reports to Group Executive Operations and Technology Matt Mansour.

“QBE has made great strides executing on our modernisation agenda over the past three years and David will continue to drive our strategic priority areas as we move into the next phase of our modernisation and digitisation initiatives,” Mr Mansour said.

“As technology becomes ever more central to driving value in the insurance sector, I’m excited to bring someone of David’s calibre into the senior executive team.”

BMS expanding operations in New Zealand

UK-based insurance and reinsurance broker BMS Group says it has started operations in New Zealand with the establishment of BMS Risk Solutions (BMSRS).

The business has started with offices in Christchurch and Dunedin, expects to open in Auckland next year and says its team is set to “expand significantly” by the end of this year.

BMSRS is described as an independent New Zealand owned and operated extension of BMS Group. It has been established by experienced industry leaders Storm McVay, Paul Meehan and David Gibbons.

The UK company says the relationship between BMSRS executives and BMS Group dates back to 2008, and BMS Group provides wholesale broking services to a number of New Zealand corporate and institutional clients with requirements for tailored risk financing solutions, including London market placements.

“BMS has had a close working relationship with them and their clients for many years so this is a natural progression as we look to broaden our global footprint,” BMS Group CEO Nick Cook said.

People to have joined the team also include Wayne Henderson from Aon, Brett Gerrard (Gallagher), Sue Hale (Black Peak Risk), Josh Thomson (Willis Towers Watson) and Dominic Sheehan (Marsh).

“The collaboration from our Australian and UK colleagues has been exceptional and lays a solid platform for future success,” Ms McVay said. “Since commencing operations we have been humbled by the support of clients, and insurers who have backed our vision and desire to establish a viable alternative to the traditional market players.”

Genworth sees higher home values buffering claims

Australia’s leading provider of lenders mortgage insurance (LMI) expects mortgage delinquencies to gradually increase this year and for claims incurred to rise to more normal levels, though it says improved borrower equity from a jump in house prices should provide a “helpful buffer” for the insurer.

Genworth, which wrote 72,000 new LMI polices last year and has a 43% share of the market, says 2021 was an exceptional year for the core business and early 2022 has seen a continued subdued claims environment in which first-quarter delinquencies and paid claims remained low.

“When I started with Genworth just over two years ago, I was drawn to the great potential I saw in the business,“ CEO and MD Pauline Blight-Johnston said. "Just over two years later, Genworth’s impact and potential has surpassed my expectations.”

The insurer has previously forecast 2022 net earned premium of $315-375 million, after it jumped 19% last year to $371 million.

Net earned premium remained strong in the first quarter, though mortgage lending growth slowed after unprecedented re-financing last year as homebuyers chased low rates. That churn had added a $75.5 million windfall to Genworth’s 2021 premium revenue.

Chairman Ian MacDonald told shareholders last week Genworth approved 8134 hardship requests to assist borrowers who were experiencing difficulties in the past year and had more than 1.1 million policies with insurance in-force of $304.5 billion.

Genworth plans to reveal a new name later this year in a rebranding to “mark a new chapter” after NYSE-listed Genworth Financial Inc, which listed Genworth in 2014, sold its entire 52% stake in March.

Liberty-backed Stand Underwriting launches

Stand Underwriting, backed by Liberty Special Markets, has launched with Balance Sheet Protection (BSP) as its initial product.

The product brings together statutory, employment practices and organisation liability as well as directors’ and officers’ cover.

The agency is aiming at SMEs, with cover available via brokers through an online portal, developed by insurtech uBind, or traditional processes.

Development Underwriter Scott Robertson says the portal provides a faster turnaround in an area where time-consuming processes are more often the norm.

“There are not many statutory liability players where you can get a quote online and bind online,” Mr Robertson tells insuranceNEWS.com.au. “BSP fills the gaps in a conservative market to provide brokers and their clients with a quality product for a wide range of occupations.”

Stand’s website says it was founded by insurance industry veteran Peter Apolakiatis. Network Insurance Group in partnership with Steadfast are backing the venture.

Stand’s binder with Liberty Special Markets is for businesses with up to $100 million turnover.

Assetinsure acquires stake in lease bond distributor

Assetinsure has today announced the acquisition of a 25% stake in eGuarantee, the distributor of the specialist insurer’s lease bond product.

Lease bonds are a digitised, non-collateralised alternative to bank guarantees traditionally used to secure commercial leases.

While the product is popular in North America and Europe, Assetinsure and eGuarantee say their solution, launched early last year, was the first to become widely available in Australia and New Zealand.

Assetinsure is the underwriting agent for the lease bond product on behalf of an international insurance and reinsurance structure.

eGuarantee co-founder and Executive Chairman Cedric Fuchs, a property industry veteran and cofounder of property group Charter Hall, says the strategic investment by Assetinsure is a “powerful endorsement”.

“Assetinsure shares our vision for the potential to disrupt what is currently an antiquated, inefficient and costly lease guarantee system in Australia,” Mr Fuchs said.

Assetinsure CEO Martin McConnell, says lease bonds are rapidly gaining acceptance as they became better understood.

“We see enormous potential for lease bonds in Australia and New Zealand – the market is eager for something that replaces and unlocks the capital tied up in bank guarantees,” he said.

“Locking away more than $7 billion of working capital just to secure commercial leases makes no sense when there is an alternative available that does not require collateral.”

Allianz Partners Australia encouraged by travel uptake

Allianz Partners Australia CEO Chris McHugh says the specialty niche insurance and assistance business is well positioned for a rebound in demand as borders continue to open after restrictions.

Asia-Pacific was the only region that did not improve its performance in 2021, Allianz Partners says, held back by the continuing impact of covid on the business, especially in Australia and China.

Mr McHugh, who took the top role last year and was formerly Suncorp EGM Personal Injury Insurance, says good travel uptake and “significant wins” in the elderly care market in Australia are paving the way for growth this year.

“We are encouraged by the growing numbers of Australians travelling overseas, as well as the return of international students for our Health line of business,” Mr McHugh said.

“Together with new opportunities in the aged care sector, we look forward to continuing to expand our footprint ... over the coming year.”

Globally, Allianz Partners revenue jumped 16% to €6.2 billion ($9.29 billion) last year. The combined ratio improved by 1.7 percentage points to 96%.

Travel Insurance revenues jumped 55%, driven by sales in the US, while Assistance division revenue grew 6%.

The new Allyz digital platform, a one-stop-shop service shop that includes a destination explorer, travel insurance, flight alerts, flight delay compensation, lounge access, telehealth services and 24/7 assistance, is being rolled out globally this year.

QBE signs up to gender diverse leadership initiative

QBE is the first insurer to pledge support for the 40:40 Vision initiative, promising to achieve and maintain a balance of 40% women and 40% men in executive leadership by 2030.

The remaining 20% can be any gender.

Group CEO Andrew Horton says QBE already meets the criteria after appointing Sue Houghton as CEO Australia Pacific, Amanda Hughes as Group Chief People Officer and Yasmin Allen to the QBE board.

QBE joins a growing number of Australian companies led by Industry Super Fund HESTA committing to have ASX-listed executive teams achieve the 40:40 goal. ANZ, BHP, Bluescope, Domino’s, IDP Education, IGO, Mirvac, NextDC, Origin, Pendal, Ramsay Health, SkyCity, South32, Tabcorp, Viva Energy, Webjet and Westpac have also taken the pledge.

“Women in leadership has been a focus for QBE and while there’s more to do, we have made great strides forward and can proudly say we have met this target at an executive level and will now commit to maintaining it,” Mr Horton said.

“By supporting gender equality we are also prioritising pay equity, recognising that a key driver of gender pay gaps in many organisations is under-representation of women in leadership.”

QBE says it is actively working to remove the systemic barriers to women’s career development, including “addressing outdated gendered caring roles”, and ensuring a workplace culture where all views and perspectives are welcomed and respected.

First Genworth reconciliation plan endorsed

The first Reconciliation Action Plan (RAP) by Genworth was endorsed last month as the insurer joins fellow industry leaders IAG, Suncorp, Zurich, Willis Towers Watson and Allianz.

Genworth says the endorsement by Reconciliation Australia will “help to guide us on the incremental steps we will take over time as we progress our awareness, actions, and approach to reconciliation.”

Since 2006, RAPs have provided a framework for organisations to leverage their influence to support the national reconciliation movement. Over 2.3 million people now work or study in an organisation with a RAP.

“Genworth was very pleased to have our Reconciliation Action Plan (RAP) endorsed,” a spokeswoman tells insuranceNEWS.com.au.

“We are now working through our RAP Actions and look forward to sharing our approach more widely soon.”

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Regulatory & Government

APRA flags 'poor product design' in affordability debate

The Australian Prudential Regulation Authority (APRA) says “poor product design” is contributing to insurance affordability issues, and has pledged to work with insurers to make improvements.

APRA Chairman Wayne Byres told the Financial Services Institute of Australasia’s “The Regulators” event that affordability and availability is “at the heart” of APRA’s insurance strategy.

He says a common theme across general, life and health insurance is unaffordability and unavailability.

“Be it because of poor product design, rising claim costs, increasing litigation, or a changing climate, insurers are increasingly raising the price and/or reducing the coverage of the policies they sell,” he said.

“While that may be a sensible business decision for individual insurers in the short run, in the long run it leads to premiums that become unaffordable, cover that is poor value, or even products that are simply not available.”

Mr Byres says APRA has an important role to play in averting poor outcomes.

“There isn’t a single solution, but we can make sure insurers improve their product design, pricing, claims and exposure management.

“We can work with our public sector colleagues to examine the underlying drivers of the problem and explore ways in which the trends can be reversed.

“And we can encourage the provision of information to policyholders to help them understand how they can contribute to risk mitigation.

“Addressing this issue is at the heart of our insurance industry strategy.”

AFCA work aims for clarity around key fairness role

The Australian Financial Complaints Authority (AFCA) has completed a program of work to provide greater clarity around its fairness responsibilities while providing tools to assist all parties involved in the disputes process.

AFCA last week published a report concluding the Fairness Jurisdiction Project, which has developed resources for staff, financial sector industry members, and complainants.

The organisation, introduced in 2018, is required by legislation to operate in a way that is accessible, independent, fair, accountable, efficient and effective.

“We recognise that fairness as a concept means different things to different people,” Deputy Chief Ombudsman June Smith says in the report.

“AFCA’s project did not set out to define what is fair or unfair in the provision of financial services or create new standards of conduct for financial services firms. AFCA’s role is to apply the law, codes of practice and regulatory guidance in place at the time the conduct complained about occurred.”

Work has included development of a decision template to clearly explain how AFCA has applied the fairness tests in complaint handling and why decisions made are fair in all the circumstances.

An apprehended bias policy ensures AFCA’s people remain impartial when working with parties to resolve complaints, while a fairness jurisdiction tool aims to ensure AFCA can discuss important issues in plain English.

Looking ahead, work will include providing greater clarity about AFCA’s role to assist parties during the process, including the accessibility of services, and clarifying its jurisdiction in relation to sophisticated investors.

Dr Smith says under its rules AFCA is required to do what is fair in all the circumstances in handling and determining complaints, including delivering a fair process and fair outcomes for all parties.

“AFCA’s jurisdiction is unique in that sense. AFCA is not a court of law,” she says.

NSW launches investigation over Mascot Towers

The NSW Government is launching an investigation into the conduct of the former City of Botany Bay regarding Mascot Towers, which was evacuated in 2019 after fears the building was unsafe.

The defects were highlighted about six months after structural issues forced residents out of Opal Tower in Olympic Park, adding to flammable cladding and building quality concerns that have led to insurance coverage issues in the sector.

Local Government Minister Wendy Tuckerman said last week that the investigation would focus on the role played by the former City of Botany and shine a light on any information it could reveal to prevent a similar situation happening again.

“We are advised relevant Council documents from that period cannot be located and may be missing,” she said. “We are determined to gather as much information as possible on the issues that led to the defects in Mascot Towers.”

NSW is also extending an accommodation assistance package for another year contingent on the owners’ corporation lodging documentation with the Supreme Court to terminate the strata scheme.

Queensland launches $740 million home resilience scheme

Queensland’s Resilient Homes Fund is open, with residents invited to apply for buy-backs or grants to raise, repair, or retrofit their home.

Premier Annastacia Palaszczuk says the $741 million scheme, which insurers have been consulted on, will help make properties more flood resilient following the recent devastating catastrophe.

“This is the largest home resilience program of its kind to ever be delivered in Australia,” she said. “We can’t stop floods from occurring, but we can take steps to reduce their impact.”

The scheme will be jointly funded by the Commonwealth Government. Prime Minister Scott Morrison initially declined to help fund it but was forced into a u-turn following criticism of that decision.

Deputy Premier Steven Miles says Queensland is the most disaster-impacted state in Australia, with flooding being the highest risk to communities.

“This isn’t just about building back, it’s about building back better,” he said.

“We know from initial assessments following the South East Queensland floods that there were nearly 7000 homes with some degree of damage and more than 3600 of these were uninhabitable.

“That’s why we fought so hard to ensure we could provide as much support to as many flood-affected Queenslanders as possible.”

Minister for Public Works Mick de Brenni says the program is “nation-leading”.

“It is a significant program and we’re working with councils, industry and insurers to ensure the right assistance is provided to maximise the benefit to every affected homeowner,” he said.

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ICNZ seeks graduated climate change reporting

The Insurance Council of New Zealand (ICNZ) has proposed a more graduated approach to reporting climate change impacts on financials, as disclosure rules are considered ahead of new reforms coming into effect.

The New Zealand External Reporting Board (XRB), which is responsible for accounting, auditing and climate standards, has been consulting on disclosure as part of action to understand and mitigate potential financial risks.

ICNZ says in a submission that it supports disclosures but proposed plans will create challenges for climate reporting entities (CREs).

“Overall, the XRB’s draft is weighted to requiring the maximum information to be disclosed from the outset in most instances,” it says. “We question whether the XRB has fully anticipated how much work and resource this will require of CREs, many of whom will be starting from a reasonably immature base.”

ICNZ proposes a three-year approach, introducing qualitative reporting as a minimum in the first year, quantitative date on actual impacts from the next year and year three requiring both actual and potential quantitative impacts.

The expected level of disclosure would also create tensions between what is commercially sensitive to support a competitive market, and what is needed to inform users of the information, it warns.

“We would also recommend more guidance and examples to assist CREs to get the balance right between confidentiality and disclosure,” it says.

The XRB aims to issue its first climate standard in December, paving the way for entities to make disclosures alongside wider year-end reporting next year at the earliest.

Firms affected would include large listed companies with a market capitalisation of more than $NZ60 million ($54 million); large licensed insurers, registered banks, credit unions, building societies and managers of investment schemes with more than $NZ1 billion ($906 million) in assets; and some Crown financial institutions.

“ICNZ members in particular recognise the need to focus more on climate change and emissions reduction, given the effect we are already seeing through increasingly severe and frequent weather events,” the submission says.

“Our feedback here is not intended to detract from the level of ambition, and our country’s net zero goal, but to manage the technicalities around reporting of this information.”

The Reserve Bank of New Zealand says climate-related risks will have a significant effect on the economy and financial system and it is “a strong supporter” of XRB’s work in implementing climate-related disclosures.

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Life Insurance

ASIC proceedings against AMP set for December trial

The corporate regulator’s civil penalty proceedings against AMP over the alleged deductions of life premiums and advice fees from deceased customers’ accounts are listed for trial later this year in the Federal Court.

insuranceNEWS.com.au understands the case has been listed for December.

An AMP spokesperson says following identification of the issue, the business self-reported to the regulators in 2018 and updated its processes and policies.

“We apologised to beneficiaries who were impacted by these issues, and remediation of all impacted customer accounts was completed in 2020,” the spokesperson said.

The Australian Securities and Investments Commission (ASIC) announced in May last year that it had commenced civil penalty proceedings in the Federal Court against five companies that are, or were, part of the AMP Limited group.

ASIC alleges that these entities were involved in charging life insurance premiums and advice fees to more than 2000 customers despite being notified of their death.

The companies named in the notice of filing are AMP Superannuation, NM Superannuation Proprietary, AMP Life Limited (which is now owned by Resolution Life Group but was part of AMP when the conduct took place), AMP Financial Planning Proprietary and AMP Services.

Husband loses dispute over wife's death cover

A man whose wife’s $97,200 death cover in her super fund was cancelled and replaced by a more restrictive policy has lost a dispute after a claim was denied.

The woman had default cover due to membership of a HESTA fund, but legislation starting in March 2019 meant the cover would cease, unless she responded to a notice saying she wanted it to continue.

The trustee says it complied with legislation by emailing the notice, but the complainant said it was not received.

The old cover ceased on July 1 2019, and the member then asked for new cover, which started on March 5 2020.

The member died on February 12 2021 and the complainant made a claim for the death benefit.

But the insurer, AIA, refused the claim because the new cover excluded pre-existing medical conditions, and it determined that she had died from such a condition.

The complainant argued that he should be paid the death benefit but the trustee declined to do so.

“It was never our intention to cancel the death benefit and in fact we were relying on the benefit as part of her final estate for the family,” the complainant wrote.

“My complaint is that [the trustee] failed to appropriately notify us that the death benefit would be cancelled.

“[We] had not been initially made aware that the death benefit had ceased. When we did become aware, via online account, that the death benefit had ceased, we contacted [the trustee] to have it reinstated immediately.”

He also said that the trustee did not explain that the new cover would exclude pre-existing conditions.

However, the Australian Financial Complaints Authority (AFCA) said it is satisfied the notice was emailed to the correct email address, and the new cover was explained in the PDS. The decision to decline the claim was fair and reasonable, it said.

Click here for the full ruling.

Laureola Advisors expands Australia presence

Life settlements fund manager Laureola Advisors is scaling up its presence in Australia, two years after it launched a “soft entrance”.

The business says it has opened a Sydney office on Martin Place and Nathan Wares has joined as MD Australia and New Zealand.

Mr Wares has more than 25 years’ experience in funds management, investment banking, financial markets and private banking, including as a director of Westpac and St George Private Bank managing people and ultra high net worth client portfolios.

Laureola Advisors Director John Swallow says Mr Wares is a “valued” appointment for the US-based specialist asset manager, which is focused exclusively on life settlements, expanding on its initial discussions in Australia with investors and family offices.

“No other asset in the current marketplace is uncorrelated to the wider financial markets and we expect strong interest from super funds, institutions and cashed-up SMSFs looking for alternative defensive assets,” Mr Swallow said.

He says a life settlement describes the transaction where an insured person sells a life insurance policy to an investor for a cash sum, with the investor to take over the obligation to pay premiums on the policy and collecting the death benefit when the insured eventually dies.

The legal basis for this was confirmed by a US Supreme Court ruling in 1911 and the life settlement market is well established in the US, he said.

Laureola Advisors says life settlement funds pay policyholders three or four times the amount offered by the issuing life company to surrender the policy.

“A well-structured fund of life settlements, which derives its returns from maturities as opposed to artificial accounting gains, is expected to deliver positive returns in all market conditions,” Laureola Advisors says.

AIA New Zealand unveils new digital-only offerings

AIA New Zealand has announced new online offerings that it says are designed to address the 71% insurance protection gap in the country.

The three new digital AIA Starter Plans will offer solutions targeting New Zealanders who are most affected by the protection gap, the life insurer said. The protection gap refers to the shortfall in financial resources many households would experience should their primary earner be unable to continue to work.

AIA says the online-only AIA Starter Plans are a first for AIA New Zealand, which traditionally uses an advice-only model to sell insurance policies according to a client’s specific individual circumstances.

“At AIA we have a dream for New Zealand to become one of the healthiest and best protected nations in the world,” AIA New Zealand CEO Nick Stanhope said.

“Currently 71% of our population are underinsured with either insufficient insurance cover or no cover at all.

“While we may not be the first insurer to offer insurance through online channels, AIA Starter Plans will change the game when it comes to competitive, affordable, and rewarding basic cover.”

AIA says advisers will remain instrumental in ensuring customers receive tailored advice to meet their needs.

“AIA Starter Plans complement the advice channel by helping those who traditionally do not engage with the financial advice model to get on the valuable protection ladder sooner in life,” the life insurer said.

The Starter Plans products – AIA Healthy Starter, AIA Starter Life, and AIA Starter Life Plus – are built for young adults and families, those who are most likely to be underinsured or not insured at all.

They come with an AIA Vitality Starter membership and offer basic life, rent or mortgage protection, with an optional add-on of Specialist and Diagnostic Testing for medical conditions.

Integrity Life appoints technology chief

Integrity Life says Ashish Khurana has joined as Chief Technology Officer.

The life insurer announced his appointment on its LinkedIn account, saying he will be responsible for continuing the development of the firm’s technology capabilities.

Mr Khurana has spent the last four years with Saxo Bank in Denmark as Chief Technology Officer, where he defined their technology strategy with commercial product and service owners, according to his career bio on Integrity Life’s website.

Before Saxo Bank, he held various executive roles at Westpac Banking Group and Macquarie Group in Sydney.

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The Professional

Awards announced at AUB conference

Finsura Insurance Broking veteran Barry Sonter has won the Frank Earl Award, re-established this year in memory of the Austbrokers’ director who passed away in 2010 aged 63.

The 2022 award winners were announced at a gala dinner last week as more than 250 insurance professionals congregated at the Austbrokers conference at NSW’s Kingscliff.

Sydney-based Senior Account Manager Mr Sonter has been at Finsura 29 years.

“Barry has been a fantastic contributor to the Austbrokers network for many years and is highly regarded by clients and peers across Australia. He has also played an important role in mentoring young brokers within the industry,” Austbrokers said.

Bendigo-based Adroit Insurance & Risk Managing Principal Jesse Thorp won the Austbrokers Young Professional Award, while the Austbrokers Life Adviser Award went to Sydney-based Austbrokers Financial Solutions (ABFS) Principal Ben Donald.

“The conference was a great success and reinforced the benefit of engagement with all of our partners and experiencing (the conference theme) ‘stronger together’ in action,” Austbrokers Chief Broking Officer Ben Bessell said.

Over three days, brokers and partners listened to inspiring keynote speaker Alex Nobel, a former NSW Rugby Sevens trainee who in 2018 became a quadriplegic at age 16, and mindset coach Ben Crowe, and participated in educational breakout sessions hosted by their insurer partners.

The Frank Earl award recognises outstanding performance in client service, business retention and growth, professional development and engagement with the insurance industry. Mr Earl played a key role in the development of professional indemnity cover and was well known in the local and Lloyd’s markets.

Ardonagh Group launches education academy

Ardonagh Group has launched an education academy that will benefit operations and staff across its global businesses including in Australia.

The Ardonagh Academy will provide programs through a blend of virtual and in-person learning, in partnership with the not-for-profit Centre for Creative Leadership, offering opportunities for people at various stages of their careers.

A paid internship program and structured graduate scheme will start next year and use the group’s footprint of offices to connect regional talent with diverse career pathways on offer across the global insurance chain.

Two new global courses will also identify and develop the skills of emerging leaders and create a cohort of future C-suite members equipped with responsible leadership skills, Ardonagh says.

Recognising the pipeline of merger and acquisition activity in the industry, Ardonagh Development Director and former Ireland rugby captain Rory Best and human strategist Bo Mills will deliver a coaching program aimed at newly formed leadership teams within the group.

Ardonagh Group CEO David Ross says company growth has been driven by people who want to leave projects, teams and clients in a better place than previously.

“This is sustainable leadership at its core and launching the Ardonagh Academy is our public commitment to seek out and develop the talented individuals to take this mindset into the future for the benefit of our industry and our clients,” he said.

Mr Ross says it’s also the group’s responsibility to ensure no-one leaves the company due to a lack of opportunity and support.

More details on the internship and graduate programs and emerging leadership programs will be available later this year.

Mansfield Awards ceremony returns with additional category

The Mansfield Awards, which recognise claims excellence, will this year include an additional category to recognise extraordinary acts of generosity, ingenuity and heart displayed by insurance professionals.

The new Purple Mansfield is a humanitarian award for a company or individual that has gone above and beyond and provided service that has made a real difference to a client or a community, organisers say.

The awards, now in their sixth year, recognise claims performance in personal lines, SME property and casualty, corporate property and casualty and specialty. A Gold Mansfield is presented to the insurance company that scores highest overall.

This year’s awards, organised by LMI Group as a not-for-profit event, return as an in-person presentation after moving online amid the pandemic.

The event will be held at The Establishment Ballroom in Sydney on September 15, with any additional funds raised donated to the Amal Mulia Orphanage in Sumatra, Indonesia.

Survey submissions for the awards must be completed by July 31, with further details available here.

360 appoints strategic relationships head

Sydney-based Sarah Moltzen has been appointed Head of Strategic Relationships and Engagement at 360 Underwriting Solutions.

Ms Moltzen was most recently 360’s National Sales, Operations and Marketing Manager and formerly spent five years as National Manager Strategic Relationships at Vero, after senior roles at GIO and Suncorp.

Director and co-founder Denis Morrissey says Ms Moltzen will take a “big picture approach” to development of the 360 Group distribution strategy.

“We are looking forward to more aligned initiatives, further enhancing our broker partnerships,” he said.

AMA executive receives lifetime achievement award

AMA Group Heavy Motor EGM Darren Wales has been presented with a Lifetime Achievement Award in recognition of his work in setting high standards in commercial vehicle collision repairs and driving best practice.

Judges announcing the award in The National Collision Repairer Magazine said Mr Wales was the driving force behind formation of the Australian Heavy Vehicle Repairers Association.

Mr Wales, leader of the Wales Group of Companies for more than 30 years, was commended for his commitment to best-practice safety and repair methodology, providing quality workmanship to customers and coaching and mentoring apprentices from all walks of life.

“Darren is an asset to the industry and a fantastic ambassador of the AMA Group,” CEO Carl Bizon said. “We are delighted to see his achievements recognised by the industry in this way.”

Sportscover expands with Queensland appointment

Sportscover Australia has appointed Veronica Dawson as Senior Underwriter based in southeast Queensland.

The sports and leisure insurer says Ms Dawson brings extensive experience across casualty, property and financial lines. She has previously worked at Ansvar, Brooklyn Underwriting, QBE and Suncorp.

Sportscover says the appointment is its first in southeast Queensland for more than 10 years.

“This is a significant step in our corporate strategy and an exciting appointment for Sportscover,” Underwriting Manager Jarrod Bell said.

“With so many changes within the insurance and sports/leisure markets since the beginning of the pandemic, having Veronica join our team will bolster our plans for expansion in Australia, New Zealand and South East Asia whilst also ensuring we continue to provide strong local support for brokers.”

Ms Dawson will report to Mr Bell and work alongside Melbourne and Sydney branch managers Luke Grasic and John Torcasio.

'We're not just for lawyers': AILA

The Australian Insurance Law Association (AILA) has rebranded as part of efforts to emphasise that it’s “an association for everyone involved in the insurance industry, not just lawyers”.

President Cameron Roberts says a survey of current, lapsed and non-members “identified an erroneous perception that AILA was an organisation only for insurance lawyers”.

“We’re an association for everyone,” he said.

“Unlike organisations devoted to specific demographics within insurance, AILA embraces broader representation.”

AILA says it recognised that industry perception and branding were not meeting the needs of members and prospective members and in 2019 commissioned an external marketing agency to conduct a review, which included the survey.

A key strategy identified was a rebranding “to illustrate that AILA is a modern, collegial organisation dedicated to education for everyone in the insurance industry, regardless of whether they are direct participants – like brokers, underwriters, claims managers, reinsurers, and loss adjusters – or service providers, like lawyers”.

A new logo was designed by Brisbane-based Mino Design & Digital.

The predominant colour is navy, and the logo’s design emphasises the word “insurance” more than “law”.

Board director Luke Taylor, who is responsible for the marketing and promotional portfolio, says too many people saw AILA as “irrelevant and old-fashioned”.

“Consequently, the Board embarked on a journey of change and the rebranding is a bold step on that pathway,” Mr Taylor said.

“As we come out of the covid-19 pandemic, the time is right for AILA to embark on its goal of becoming a key industry player. This refreshed design epitomises what we are as an association and who we represent.”

Delta expands claims manager role to cover Australia, Singapore

Specialist New Zealand-headquartered underwriting agency Delta says Group Claims Manager Petra Lucioli will take up a broader global role for Delta International, which now has offices in Australia and Singapore.

Earlier this year, Delta opened a Brisbane office headed by GM Tesh Patel, building on recent Asia Pacific growth.

Group MD and co-founder Ian Pollard says Auckland-based Ms Lucioli’s expanded role acknowledged the strong claims division as a “competitive differentiator”.

“As the group grows internationally, it’s vital for us to provide a consistent and exceptional level of performance across our different offices and teams – and claims is one of the most important areas to manage well,” he said.

“Petra has led an award-winning team in this space and we’re thrilled to now have her … leading our group-wide claims activity.”

Delta also says Dasha Goryacheva has been appointed People and Operations Manager.

Arch appoints southern region underwriting managers

Arch Insurance Australia has promoted Aisling Hegarty to Southern Region Underwriting Manager Professional Indemnity (PI) and Steven Gaitanis to Southern Region Underwriting Manager Executive Assurance.

The Melbourne-based managers are responsible for building broker relationships and driving growth across Victoria, SA, WA and the NT.

Ms Hegarty joined Arch in 2019 as senior underwriter for PI after previously working at Vero, Chubb and Zurich.

“Aisling is a highly respected practitioner who has been central to the expansion of our PI business,” National Manager PI Anthony Hinde said. “Her promotion is thoroughly deserved, and she will play a leading role in further supporting our growth ambitions.”

Mr Gaitanis also joined Arch in 2019, after previously working as a senior underwriter at CGU and holding broking roles for Aon Risk Services.

“Steven has a deserved reputation for building lasting and responsive relationships and delivering informed solutions that respond to the needs of brokers and our mutual clients,” National Manager Executive Assurance Paula Ritchie said.

“I have no doubt that he will excel in his new role and play a major part in the further expansion of our executive assurance portfolio.”

The appointments took effect last Tuesday.

Kennedy appoints six new local partners

Kennedys has promoted six new partners in Australia, half specialising in insurance law which it says is a growing area of demand with clients.

Stephanie Cook, Peter Craney and Llinos Kent are the new insurance partners, while Nicholas Blackmore is an expert in cyber and data privacy, Persephone Forster in employment and Maya Parbhoo in healthcare.

Ms Cook specialises in property claims, especially high-value, complex first party property disputes, multi-party property liability claims, matters involving suspected fraud and professional indemnity claims, particularly against construction professionals.

Mr Craney is an insurance specialist with marine, aviation, casualty and property experience gained across Australia and the UK.

Ms Kent advises on policy response and coverage issues relating to D&O, professional indemnity, crime and trustee liability, investment management insurance, cyber and warranty and indemnity policies.

Kennedys says Australia is a growth market and the firm has invested significantly in its local team in the last five years, opening new offices in Perth and Victoria, and tripling headcount.

“Our global network has been invaluable to Australian clients looking for resources and insight into how the global insurance sector is evolving,” local Managing Partner Matt Andrews said.

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Insurtech

Life, health policyholders lead exploding insurtech uptake

The life and health insurance sectors are leading insurtech market share as new solutions connect brokers, providers and carriers, driven by growing health concerns and as insurers migrate to digital platforms, Future Market Insights (FMI) says.

The insurtech market will have compound annual growth of 26% to reach a net worth of US$165.4 billion ($238.3 billion) in 2032, FMI’s Insurtech Market Outlook report forecasts, up from US$16.6 billion ($23.92 billion) now.

Over the projection period, Asia Pacific is expected to be the fastest-growing insurtech market and DXC Technology Company – which this year signed a multi-year agreement to transform Lloyd’s digital capabilities – and Trov Insurance Solutions were among firms named as “major players” in global insurtech. Recently-acquired Trov was backed by Suncorp, Munich Re Ventures and Sompo Insurance and created Suncorp’s telematic-backed Bingle Go motor cover.

FMI says sales of insurtech solutions “grew immensely” during the covid pandemic as insurers increased use of drones, mobile applications and catastrophe models, and as remote working increased digitalisation throughout insurance.

FMI also says the emergence of a number of small and regional players operating in categories such as insurtech car or home insurance has “fragmented the market,” making it highly competitive.

Most key insurance players are establishing insurtech partnerships and collaborations, and insurers had to adopt new technology as their peers went online.

“Rapid digitisation of all major service sectors of economy has shifted the business model of insurance providing companies across the globe,” the report says.

“Addition of professional and consulting services to the potential customers over online platforms have necessitated the integration of insurance technology solutions, further propelling growth of the global insurtech market.”

The insurtech solution segment is now growing at a faster rate than the insurtech service segment, with compound growth of nearly 26% forecast for the coming decade.

“The rising demand for insurtech solutions in growing nations, particularly emerging economies such as Australia, China, India, Singapore and South Korea, provides considerable prospects for the sales of insurtech solutions to expand and develop the overall insurtech market,” the report said.

'Contagion threat': beware new risks from intertwined global finance

The landscape for systemic financial risk has been “rapidly and profoundly” changed by interconnectedness, and risk managers must now carefully monitor greater cross-border financial exposures, fintech innovations and reliance on third-party vendors, a new whitepaper says.

Cybersecurity threats and Non-Bank Financial Intermediation (NBFI) are further dangers in an increasingly intertwined global finance world, the paper from the Depository Trust & Clearing Corporation (DTCC) says.

“We strongly recommend organising cross-functional risk reviews and discussions to identify interconnections and make sure that the associated risks are assessed comprehensively,” it says.

Greater cross-border financial exposures make countries that rely heavily on foreign capital more vulnerable to systemic shocks, it says, while innovations like distributed ledger technology and cryptocurrencies are increasingly interconnected with the wider financial system.

The industry’s increased reliance on third-party vendors, and a rise in the volume and sophistication of cyberattacks, exacerbates operational risk challenges, while NBFI represents “yet another channel of risk transmission” and this sector might play a role in “transmitting stress” throughout the financial system.

“It is more crucial than ever that firms continue to evolve their approach to managing risk, ensuring they’re taking a holistic, comprehensive view of all the relevant factors,” DTCC MD and Chief Systemic Risk Officer Michael Leibrock said.

Managing risk in such a deeply interconnected and ever-changing environment requires a multi-disciplinary approach with insight from a wide array of subject matter experts and that is built on close coordination between all stakeholders, DTCC says.

“Staying on top of emerging threats requires constant vigilance,” DTCC Systemic Risk Executive Adrien Vanderlinden said. “Firms should adopt a multi-disciplinary approach that leverages insights from a diverse group of subject matter experts while ensuring close coordination between stakeholders.”

Kanopi makes two key appointments

Hollard-backed insurtech Kanopi has appointed Rishin Patel to the role of Head of Insurance and Micha Goldfine as Head of Design.

Mr Patel, who relocates to Sydney from London, was formerly Strategy Manager at esure and Engagement Manager at Oliver Wyman. He will lead the development of new insurance products for the Kanopi platform.

Sydney-based Mr Goldfine was most recently Digital product designer at the Australian Institute of Company Directors and Head of Design at Prospecta Software, and spent eight years at SiteMinder in senior design roles. He will lead Kanopi’s design and development work for the platform.

Kanopi Founder and CEO Nigel Fellowes-Freeman says recent natural disasters underscore “just how important innovation is” in the insurance sector.

“Using new and existing data points to ensure companies and individuals have the right level of coverage will be instrumental in an era where ongoing climate change makes unthinkable circumstances more common,” he said.

Founded in 2016, Kanopi says its platform intelligently anticipates consumer needs and its mission to create one common ecosystem that simplifies insurance.

Hollard invested in Melbourne-based Kanopi during a $4 million fund raising last year. The data-driven insurtech connects insurers and digital platforms to best tailor insurance to individual customers.

AI-driven flood insurer to monitor homes with satellite imagery

AI-backed US insurer Neptune Flood has partnered with satellite imagery firm ICEYE to monitor client properties in real-time for signs of flooding.

ICEYE will provide high-resolution flood hazard data after a flood event to enable monitoring of Neptune’s insured locations for changes in water depths. The pair are also exploring initiatives such as triggers for parametric insurance, which is offered by Neptune’s Jumpstart brand for earthquake.

ICEYE says it owns the world’s largest synthetic-aperture radar constellation and can monitor any location on earth for insurers, as well as clients in natural catastrophe response and recovery, security, maritime monitoring and finance. The data can be collected day or night and through cloud cover.

"This hazard insight not only enhances loss sizing and claims response capabilities, but also helps further accelerate flood insurance innovation,” CEO and co-founder Rafal Modrzewski said.

Neptune Flood CEO Trevor Burgess says the images will provide "unparalleled assurance”.

“We are excited to explore the possibility of broader coverage options for our clients made possible through the synchronisation of ICEYE’s data with our Jumpstart parametric technology,” Mr Burgess said.

Insurtech Australia to host future of mobility event series

Insurtech Australia (IA) will host a hybrid industry event on “Mobility in the cities of the future – what will it look like?” next month in part one of what is to be a series.

The event is a collaboration between Stone & Chalk, RAA, IA and sustainable design firm Arup.

Audience members and a panel of experts will discuss what future mobility looks like and what Australia needs to do to be a global leader in creating intelligent, sustainable and livable cities of the future.

IA says mobility and its place in “smart cities” is becoming an increasingly hot topic.

“Through this engaging format, expand your knowledge on the significant changes ahead for mobility, from breakthroughs in technology such as autonomous vehicles, innovative applications, and the policies and regulations which will shape – and be shaped by – consumer demands,” it said.

Participation at the Wednesday June 1 event can be online or in Adelaide at Stone & Chalk, Lot Fourteen, North Terrace at 5.30-6.30pm ACST. Register here.

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International

Swiss Re warns of rising income inequality

Swiss Re’s latest Sigma report says income inequality is rising in advanced nations and this is contributing to a massive loss in insurance protection.

The reinsurer says the issue has resulted in $US252 billion ($363 billion) of foregone insurance protection in 2019 alone.

The war in Ukraine has intensified the global cost of living crisis by pushing up food and energy prices when inflation is already high, the report says.

But insurance can play a key role in mitigating the problem.

“Insurance is effective in mitigating inequality by providing financial relief to households hit by shocks,” Swiss Re says.

“In the current high-inflation environment, product design and policy support that promote insurance affordability are particularly important.

“With new technologies, insurers can use a wide range of distribution channels to expand access to insurance coverage.

“For example, microinsurance can help reduce inequality and promote inclusive growth by providing affordable and efficient insurance products to underserved low-income households.”

See Analysis.

Allianz hit by $1 billion Q1 natural catastrophe bill

Allianz’s Australian operations suffered a €43 million ($64.46 million) loss in the first quarter, damaged by record flooding in NSW and Queensland which offset good growth in retail and commercial lines.

Globally, Allianz says claims from natural catastrophes nearly quadrupled in the quarter, leading to a decline in underwriting results in its property & casualty (P&C) business segment despite higher volumes and prices.

Allianz’s global P&C combined ratio rose to 94.7% as net natural catastrophe losses of €689 million ($1.03 billion) had a 5-percentage point impact, to be “significantly above” both the €186 million ($279 million) losses recorded a year earlier and the 10-year average percentage point average impact of 1.9%.

The losses were mostly “due to Australian floods and several storm events across Europe,” Allianz said.

Locally, the first-quarter combined ratio at Allianz Australia was 106.6%, a 9-percentage point deterioration from a year earlier. Natural catastrophes represented 20.8 percentage points, up from 12.9 a year earlier.

Revenue at Allianz Australia P&C jumped 21% to €887 million ($1.33 billion) in the first three months of 2022, helped by the acquisition of Westpac’s general insurance arm. Like-for-like growth was 8%.

Allianz says first-quarter rate P&C renewals in Australia were up 3.5%, compared with 4.8% in full-year 2021.

Allianz’s global operating profit slipped 2.9% to €3.2 billion euros ($4.8 billion) despite a 6% rise in revenue to €44 billion euros ($65.96 billion). It says it is still on track for 2022 operating profit of within a billion euros of €13.4 billion euros ($20.09 billion).

Munich Re earnings rise amid 'severe' Ukraine impacts

Munich Re first-quarter earnings rose 3% to €608 million ($922.9 million) as repercussions from the war on Ukraine offset benefits from higher premiums and reduced natural catastrophe major losses.

“The financial consequences of the war and the sanctions severely impacted our result in the first quarter,” CFO Christoph Jurecka said.

“We made writedowns for impairment losses on Russian and Ukrainian bonds alike and recorded the first claims. Despite the uncertainties of a challenging environment, Munich Re maintains its annual guidance of €3.3 billion ($5 billion).”

The reinsurance business contributed €511 million ($775.7 million) to the result, up 24.6% as improved property and casualty earnings outweighed a loss in the life operations.

Expenditure related to the war in Ukraine reached slightly more than €100 million ($152 million) in some specialty lines, while natural catastrophe major losses came to €481 million ($730 million), compared to €646 million ($981 million) a year earlier. Events included heavy rainfall in eastern Australia and winter storms in Europe.

Life and health reported a loss of €78 million ($118.4 million) as the Omicron wave in the US drove covid-related losses of €150 million ($227.7 million).

Earnings from the Ergo primary insurance business dropped to €96 million ($146 million) from €178 million ($270 million) amid adverse effects from volatile capital markets and major losses in Germany.

The group’s investment result decreased to €987 million ($1.5 billion) from €1.69 billion ($2.57 billion).

Munich Re raised its forecast for gross written premium this year to €64 billion ($97 billion) from €61 billion ($92.6 billion) while leaving other targets unchanged.

Zurich expects to exceed targets after strong quarter

Zurich expects to “exceed all financial targets” for this year after a jump in premiums underpinned a strong first quarter.

“We saw a rise in premiums across the group, most notably in our North American property and casualty business, where crop insurance and rate increases drove double-digit top-line growth,” CFO George Quinn said.

Despite inflationary pressures, Zurich anticipates rates will also exceed its loss-cost trend well into next year.

Zurich says its direct exposure to Russia and Ukraine through its property and casualty operations and investment portfolio is likely to be minimal.

“Although the effects of the war are expected to lead to significant losses for the insurance industry, we do not expect insurance claims to be significant for the group,” Mr Quinn said.

March quarter property and casualty gross written premium (GWP) rose 8% to $US11.93 billion ($17.12 billion) supported by commercial insurance, while higher prices for agricultural commodities contributed 2 percentage points.

In Asia Pacific, GWP increased 11% on a like-for-like basis compared, with rebounding travel insurance sales in Australia, higher retail sales in Japan and further growth in commercial insurance across the region the main contributors.

Zurich life annual premium equivalent increased 8% to $US996 million ($1.4 billion) and Farmers Exchanges GWP jumped 29% to $US6.88 billion ($9.87 billion), supported by the acquired MetLife US property and casualty operations as well as business growth.

The company says the Zurich Foundation has stepped up to help those impacted by the Ukraine events through fundraising and other initiatives across Europe.

“The war in Ukraine and the humanitarian crisis that it has triggered are almost beyond comprehension. The group and the Zurich Foundation have provided financial and logistical support,” Mr Quinn said.

“We are especially proud of our colleagues who have opened their homes to families fleeing the war.”

'Muddy waters': Ukraine war, mega ships among key maritime risks, AGCS says

Insurance claims impacts from the ongoing Russia-Ukraine military conflict may extend beyond specialist war policies, an annual Allianz Global Corporate & Specialty (AGCS) maritime review says.

The AGCS Safety and Shipping Review 2022 says mega container ships, pandemic-related challenges such as port bottlenecks, and decarbonisation of the shipping industry also carry risk challenges for the sector.

On the Ukraine war, the review says Russia’s invasion has caused widespread disruption to global shipping, exacerbating ongoing supply chain disruption, port congestion and crew crises caused by the Covid-19 pandemic.

While marine insurance losses are currently limited, the insurance industry is likely to see a number of claims under specialist war policies from vessels damaged or lost to sea mines, rocket attacks and bombings in the conflict zone in the Black Sea and Sea of Azov.

The review says insurers may also receive claims under marine war policies from vessels and cargo blocked or trapped in Ukrainian ports and coastal waters.

“More uncertain is the potential for non-war claims in hull and cargo insurance from vessels caught up in the conflict, which may ultimately involve complex legal questions and policy interpretation,” the review said.

The review says a prolonged Russia-Ukraine conflict is likely to have deeper economic and political consequences, potentially reshaping global trade in energy and other commodities.

“An expanded ban on Russian oil could push up the cost and availability of bunker fuel and potentially push ship owners to use alternative fuels,” the review said.

“If such fuels are substandard this may bring machinery breakdown claims in future.”

The review says the use of bigger container ships has translated into higher salvage costs, along with the burden of larger losses, if an incident occurs, as was seen in recent events such as the grounding of the Ever Given in the Suez Canal for nearly a week last year.

Such costs are increasingly borne by cargo owners and their insurers, the review said.

AGCS Global Head of Marine Claims Régis Broudin says general average – the legal process by which cargo owners proportionately share losses and the cost of saving a maritime venture – has become a frequency event.

He says it has also become a severity event, with the increase in the number of large ships involved in fires, groundings and container losses at sea compared with five years ago.

AGCS says over the past five years it has seen more and more claims in excess of $US100 million ($145 million), with the bulk of the cost due to wreck removal and pollution mitigation.

“Irrespective of the cause of an incident, when large vessels are in trouble, emergency response and finding a port of refuge can be challenging,” the review said.

The review says the decarbonisation of the industry will require big investments in green technology and alternative fuels but there will be challenges.

“Decarbonisation will transform the shipping industry over the coming decades, which will in turn alter the risk landscape,” the review said.

“As we have seen with container shipping, there can be unintended consequences with innovation. The transition to alternative fuels will likely bring heightened risk of machinery breakdown claims, as new technology beds down and as crews adapt to new procedures.”

Click here to access the report.

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Analysis

Off balance: rising income inequality equals falling insurance cover

The growing problem of income inequality is having a significant impact on insurance protection levels, and insurers can play a key role in solutions, Swiss Re says in a new Sigma study.

The war in Ukraine has intensified the global cost of living crisis by pushing up food and energy prices when inflation is already high, the report says.

Many are spending a greater proportion of their income on such essentials, risking poverty and ill health. There’s less money to spend on insurance cover, which means greater exposure to natural disasters or other economic shocks.

And if you thought countries like Australia were immune – think again. Income inequality has been rising across advanced economies for the past four decades.

The report – Reshaping the social contract: the role of insurance in reducing income inequality – says rising income inequality in advanced economies resulted in $US252 billion ($363 billion) of foregone insurance protection in 2019 alone.

This translates to about $US39 billion ($56 billion) in the form of claims paid for property & casualty (P&C) losses, and about $US213 billion ($307 billion) in life benefits.

In Australia, the figure was $US3.5 billion ($5 billion) – $US1.4 billion ($2 billion) for P&C and $US2.1 billion ($3 billion) for life.

The report says countries like Australia which have experienced very high growth in income inequality, as measured by the Gini coefficient, have experienced the slowest growth in insurance penetration.

The Gini coefficient, named after Italian statistician Corrado Gini, measures the distribution of income across population. A Gini coefficient of zero means perfect equality, while one (or 100%) means maximum inequality.

Australia’s Gini coefficient has been rising at 0.5% per year on average over the last 30 years, and its annual average growth in insurance penetration is below 0%.

But the report says the insurance industry has a “vital role” to play in the drive to lower inequality.

It can lower the cost of insurance for under-served communities through the use of technology, and also bring new distribution channels into play to widen access.

The report recommends extending the use of microinsurance coverage for low income households.

“Microinsurance can make affordable and efficient insurance products available to households through unconventional product design, and distribution and claims management processes.”

Swiss Re says that reversing advanced economies’ rising inequality trend “could significantly boost insurance demand”.

If the Gini coefficient decreased gradually by one point over the next decade (roughly the pace it has increased over the last three decades) then it would add about $US700 billion ($1 trillion) of additional insurance demand.

“Insurance is a powerful tool to promote economic growth, improve resilience and reduce inequality by providing financial protection,” Swiss Re Group Chief Economist Jerome Haegeli said.

“Insurance protection is particularly important for the most vulnerable because, without insurance, low- and even middle-income families can fall into poverty in the event of a severe disaster.

“By shifting financial risks away from individuals and increasing their resilience, the public and private sectors can work towards reducing inequality.

“Digitalisation also plays a key role in addressing underinsurance as innovation can make insurance more accessible and more affordable for more people.”

Click here to access the full report.