News and Current Issues
22 February 2012
SUNCORP CEO - HALF YEAR RESULTS
Suncorp CMCL sees harder market
INSURANCE INTERMEDIARIES can expect to see further hardening of
premium rates as the major insurers – especially the ASX listed insurers
– aim to lift their profits in the coming year.
This forecast follows comments by Anthony Day, CEO
Suncorp Commercial insurance, on the on half year results to December
31 announced today. Suncorp’s Commercial Insurance has led the market in pricing, rather than reducing prices to chase business, he said.
The Commercial Insurance division was well placed to capitalise on a hardening commercial insurance market.
Mr Day did not give a breakdown of the separate
companies, including the intermediated operation Vero, but overall the
general insurance
Division lifted GWP to $3855 million and NEP to $3359
million in the half year.
However, the report showed combined operating ratio was 107.3 – although this was down around 2% from the previous half year.
Mr Day avowed that momentum was building for
Suncorp’s Commercial Insurance with growth to its top line, strong
direct expense control, maintained underwriting discipline, and improved
claims experience.
There now growing signs that the market was
hardening. Both insurers and reinsurers have – and were still -
experiencing the effects of the continuous, widespread weather natural
catastrophes.
This, coupled with the uncertain global economic
issues which are unsettling the local stock market, business community
and consumers, has been reflected in the genuine signs of market
hardening.
Mr Day said that “In the broker space, the past few
years have seen the emergence of Broker Portals, where large broker
groups, particularly international brokers and cluster groups, have
invested in B2B technology to automate quoting and binding interactions
with insurers for higher volume, lower premium SME business.
“We made a strategic decision to participate in this
B2B technology, as it reduces costs by automating activities which
brokers and insures would otherwise perform manually.”
Source:
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21 February 2012
AFMA - IAAA CONFERENCE FEB 2012
QBE's Standfield Says "Tell More People"
INSURANCE BROKERS AND AUTHORISED REPRESENTATIVES have been urged to tell their clients and the public how much the industry pays out in claims each day - $95 million.
Shaun Standfield general manager QBE Intermediaries has called for better advice to clients on the key statistics of the industry.
Addressing the 17th AFMA IAAA conference on the Gold Coast last weekend, he questioned whether the industry was telling the public enough about the insurance industry.
He urged the intermediaries to tell more people of "the fact that we pay $95 million a day in claims, the fact that only 2% or personal lines claims were knocked back in the recent floods and the value the industry adds in the event of claims.
"We need to rebuff and rebuke the 2011 Choice (magazine) Shonky Award and this will be key to changing the public perception over time.
"Intermediaries add enormous value to clients. We all have to work together to get the real facts out there."
Mr Standfield of QBE asked that audience participants, and in effect the insurance sector: "What are we prepared to do to help our clients understand what we do and how we assist.
"What we do every day does matter and makes enormous difference to each and every client we touch."
Mr Standfield was speaking after the 17th (IAAA) annual conference with the designated catch phrase of "One is significant" opened as the inaugural combined AFMA and IAAA authorised representatives members' gathering on the Gold Coast got under way. AFMA is the Australian Fire Managers Association and IAAA is the Insurance Advisers Association of Australasia
Delegates were welcomed by new president Jacqui King. MC Martin walker introduced the first speaker Bob Cuneen - a member of AMP Capital Investors Multiple Asset Group.
Mr Cuneen covered events in USA, Europe and China and the global economy before addressing the Australian economy.
He cautioned that care with cash flow and accounts receivables needs to be exercised. -INAcom with special correspondent.
Source:
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21 February 2012
AFMA - IAAA CONFERENCE FEB 2012
CGU IS pushing the value of business interruption to Australia's regional SME businesses following its latest research showing such cover is badly lacking beyond the metropolitan areas.
It has the potential network of 1000 insurance brokers and authorised representatives to enlist in its campaign.
"While we do not have a plan for a specific business interruption campaign through intermediaries, we continue to investigate ways to assist them provide their customers with informed views on the types of insurance they should have and why," a CGU spokesman told InsuranceNewsAustralia.com .
"The importance of business interruption cover was the focus of our media campaign last year and we felt it was still an important message for our intermediaries and the broader community to hear."
To start its drive, CGU has put online a one-page flyer on how business interruption insurance can help a business: www.cgu.com.au/cgu/business-interruption-flyer
CGU'S research released yesterday showed that one in 4 businesses in regional and rural Australia would not survive if they had to close their doors for 3 months.
CGU's survey of small business owners in regional and rural NSW, Victoria and Queensland found that 25% would have to shut down if they had a major business disruption such as a fire or major machinery breakdown.
Some 38% would shut down if fire or breakdown happened during a busy period in the year. CGU said a further 23% of business owners said their business would struggle to cope with a 3-month closure and their business survival would be threatened.
Less than a quarter of business owners surveyed were covered by BI insurance. The research also reported that those employing less than 20 staff were the most fearful of their prospects if their business had a prolonged shutdown.
Some 62% of those with two to 4 full-time staff said their business could not survive or would have their survival threatened.
About 14% of all businesses surveyed had a shortfall in income because of a business interruption in the past 12 months.
CGU general manager retail Mark Searles said the research findings highlighted the devastating consequences of a business interruption for small businesses in regional and rural areas.
"Small businesses insure their premises, their employees and their equipment – they really need to insure the livelihood of their business too," Mr Searles said.
"Any business interruption could be a major setback that threatens its very survival, particularly when margins are already tight, as is the case in many businesses."
He said that small businesses were the backbone of their communities, particularly in regional and rural areas, so it was important for local operators to protect these valuable jobs.
The research was conducted in an online survey of 477 small business owners in Victoria, NSW and Queensland this month. It was conducted by QOR and commissioned by CGU Insurance.
Source:
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21 February 2012
AFMA - IAAA CONFERENCE FEB 2012
Governements "Dont Understand"
INSURANCE INTERMEDIARIES have been faced with a truth behind the massive amount of regulations that have been imposed on the general insurance industry because of government lack of understanding of the industry's place in society and the economy.
Andrew Beer, Director of Retail Distribution CGU, addressing delegates at the AFMA IAAA conference on the Gold Coast on the changing landscape of the insurance industry in 2012 said: "Governments don't really understand what it is we do.
"It is important that the industry finds solutions for our clients. Some of those solutions will come at a price. We have to make our products sustainable and no one wants to go through the pain and chaos of 2001 when HIH collapsed.
"2011 saw nearly $5 billion in insurable claims. It was the worst year on record for reinsurers and we have to determine if this was a one off event or is it the new norm."
Pricing would continue to increase as insurers and reinsurers sought to deliver underwriting outcomes.
"It will be a tough 12 months. it won't get easier. We need to get closer to our clients if we are to retain and grow our businesses."
Mark Tiernan from Macquarie encouraged delegates to consider using EBITDA instead of top line revenue as the appropriate valuation for the business.
Source:
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10 February 2012
ALLIANZ-NEWSPOLL FUTURE OPTIMISM INDEX
Little Optimism on Australian economy
AUSTRALIANS' OPINIONS varied considerably to some politicians' views on the economy according to one of the most thorough population measures undertaken.
This is the Allianz-Newspoll two-monthly Future Optimism Index.
In the latest survey report released this week, Allianz Australia managing director Terry Towell said: "For most Australians, regardless of gender, age, or state of residence, optimism about the future of the economy fell substantially over the course of 2011.
"And, as a whole, Australians have entered 2012 much in the same vein, with some groups even less optimistic than the low points reached last year."
A previous report showed Australians' optimism about the future of the economy hit a 2011 low in May, with the Optimism Index falling from 14 to 9, reaching a level less than half the Index level of 20 achieved when the survey began in November 2010.
This might have reflected the aftermath of the summer of natural disasters, exacerbated by global economic uncertainties, Mr Towell said.
"After bumping around at relatively low levels over the second half of 2011, Australians' optimism about the economy has started 2012 on a low, with the Optimism Index falling back to only 8.
"When looking into the results in more detail, there have been some significant changes in sentiment among different groups in the community and those living in particular states.
"For instance, since mid-2011, optimism about the economy has fallen significantly among Labor voters, men, and those living in NSW, Victoria and South Australia.
The fall in optimism about the economy is most apparent in Victoria, where the Index has collapsed from 18 in June 2011, to only 3 in January 2012 . However, optimism has returned to near-survey high in WA."
Mr Towell felt that the ongoing uncertainty about the global economy being caused by the European sovereign debt crisis and the drawn-out recovery in the US economy was contributing to a continuing lack of optimism among Australians about the future of the local economy.
Source:
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10 February 2012
ICA
Insurers Facing Their Own Water Hazards
THE GENERAL insurance sector operating in Queensland and northern NSW is also facing the water hazards of the flooded regions because loss assessors and other personnel have not been able to get in to accurately assess the losses in many places.
Insurance brokers are doing their best in the closed regions to attend to suffering clients.
However, most efforts from all services concerned so far has been on finding accommodation and sustenance for displaced victims.
Teams of assessors and insurer representatives are reported to be assembled and are already fielding claims and enquiries from flood victims.
However, in many places they have not been able to access regions until waters started subsiding, for instance, in the Roma region of south western Queensland.
The St George township of 3800 people, 500 km west of Brisbane, is still covered by the flooded spread of the Balonne River.
To help prepare for accurate assessment and information, Queensland's largest insurer Suncorp has put the locations of its flood assistance teams on its website.
This is so they can be found by flood affect insureds, but the insurer says it's still too early to estimate claims.
"It is too early to advise on the number of claims as in some areas people are unable to get to their homes or are yet assess the damage," Suncorp spokesman Rob White told InsuranceNewsAustralia.com.
"Suncorp customer response teams are in the area and their location can be found on our website.
"Alternately, personal insurance customers, Including home and contents and comprehensive car and boat insurance, can contact our hotline and commercial insurance customers their brokers."
Suncorp Home and Contents policies automatically include cover for flood and storm damage to buildings and contents. Suncorp's Comprehensive Car & Boat policies also cover flood and storm damage.
Campbell Fuller of the Insurance Council of Australia told INAcom: "We will not have a strong idea of claim types and numbers and losses for many weeks due to the nature of these floods and the time it takes for property owners to return to their properties and review the damage.
"However, insurers expect thousands of claims and insurance losses of tens of millions of dollars.
"Assessors are entering communities when it is safe to do so and are already hard at work in some towns. Each claim is being handled on its merits in accordance with the policy terms and conditions."
The ICA formed a taskforce when it declared a catastrophe for south west Queensland.
By late yesterday, it had not done so for northern NSW, signifyng that the flood menace had not reached expected widespread disaster levels yet.
Mr Fuller said the ICA was in regular contact with Emergency Management Queensland and local governments and authorities.
A representative was in Moree, NSW, on Wednedsay and will be in Roma this weekend.
"Further, the ICA has been providing advice to people in flood-affected areas on insurance through local radio interviews," he added.
The ICA was in regular contact with local governments and with emergency authorities including Emergency Management Queensland and the SES.
Some insurers have sent customer response teams to affected areas. The ICA also will be touring main disaster recovery centres over the next fortnight to help manage issues and provide guidance
Source:
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3 February 2012
JP MORGAN & DELOITTE
Insurers Withdrawals worry brokers
INSURERS PULLING out of various markets is one of the top issues facing insurance brokers in Australia.
The insurers are leaving certain markets because of the increasing cost and exposures of natural perils and climate change.
The other big concern of brokers is in the distribution business where direct marketing and internet sales are increasing their share of insurance arrangements.
These worries were each rated by 50% of respondents about the issues most concerning brokers in the 2011 General Insurance Survey by JP Morgan and Deloitte released this week.
Respondents also raised the matters of staff issues bracketing training, retention and experience and flood cover as 33% each in their worries for the future, followed by 25% nominating excess competition - commoditisation and capacity - as issues facing their future.
"In addition to the natural perils and the flow on effects for brokers, which could lead to some consolidation in the market, there was equal concern about distribution, the reality of technology and the rise of the internet," said Stuart Alexander, insurance leader at Deloitte.
Mr Alexander said: "New technological devices such as smartphones and global positioning systems (GPS) are impacting the industry.
"The internet only accounted for 2% of sales back in 2003 when we first started asking about the use of the internet in our survey.
"In 2010, the use of this channel had increased to 11% and was forecast by the industry to increase to almost 20% in 2015.
"The rise of social media channels as a bona fide way to connect with customers also throws the skill levels and staffing shortages that emanate from such changes into relief."
However, unlike last year where the top issue for brokers was increased market competition and capacity (71%), this year only a quarter of respondents rated this as a major concern.
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31 January 2011
SMALL BUSINESS NSW
SME's confounded by Compliance
REGULATION, ESPECIALLY compliance, are among the burdens affecting the progress of the small business market in NSW – and could be found in other states.
The "burdens" such as regulations on small businesses, work health and safety requirements and global economic pressure are some of the challenges facing small business operators in NSW, the state's first Small Business Commissioner Yasmin King announced yesterday.
This followed her meetings with hundreds of small business operators across the state.
Ms King recently made her inaugural NSW regional listening tour which was titled Giving Small Business a Big Say and reported on the challenges small businesses face as well as their priorities for the future.
The tour was sponsored by the NSW Business Chamber and enabled Ms King to better identify the biggest issues affecting small business operators in NSW as well as the role of the NSW Government in assisting and promoting the growth of the small business sector.
Ms King's 28 stop tour travelled from metropolitan Sydney to the Northern Rivers, Mid North Coast, Murray Riverina, Central West, Central Coast, and finished up in the Hunter.
"NSW has some of Australia's most dedicated and dynamic small business operators and it was important that I visit their turf to meet with them and get a better understanding of the variety of issues affecting small businesses in different parts of the state," she said.
Minister for Small Business, Katrina Hodgkinson, has congratulated Ms King on the success of the listening tour.
"As Minister for Small Business, I want to ensure that small business operators have access to support, relevant and practical information and an independent advocate who will not only be a touchstone but someone who will fight for their rights," she said.
Ms King said the listening tour has been a great chance to meet with small business owners across the state and feedback from these meetings would assist her to best represent their needs in the corridors of government.
The small business operators' main problems list began with regulatory burdens (compliance, often with multiple agencies); government tendering and procurement processes - relating to small, local providers, and work, health and safety requirements - premiums, inspections, audits, appeal processes.
Other difficulties seen were Fair Work Australia – "burdensome and with an advisory function which is not sufficiently practical to assist small businesses"; local government - regulation and planning decision making, fees and charges, and unfair market practices - retail sector, landlord and commercial issues.
A copy of the Commissioner's Listening Tour Report is at www.smallbusiness.nsw.gov.au.
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20 September 2011
KPMG SURVEY
Brokers hold commercial key
INSURANCE BROKERS in Australia have remained the key distribution channel for commercial insurance over the past 25 years, KMPG reports in its latest General Insurance Survey for 2011.
During the past 5 years brokers have averaged more than 70% share of the commercial insurance market, said KPMG quoting official statistics.
Most commercial insurance policyholders, particularly at the large corporate end of the market, rely on brokers to provide advice on the best insurance both in terms of value and product.
This was in contrast to lower cost policies, especially personal insurance products, where it was easier for customers to research the market themselves, according to KPMG.
Brokers also had developed individual online platforms for insurance providers to list their products.
From the brokers' perspective, KPMG said that customers benefited due to price transparency and comparability between different providers and products.
In an overall view of the past 25 years, the KPMG says the nation's general insurance industry had evolved into a robust, competitive industry that was focused on achieving appropriate returns for shareholders balanced with security and customer service for policyholders.
KPMG added there was little doubt that formalised risk consciousness and sound underwriting practice were embedded much more firmly than they were 25 years ago.
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