A view from Australian Insurance leaders

1. INSURANCEBUSINESSONLINE.COM.AU
ISSUE 2.6
THE YEAR
AHEAD
The outlook for 2014
BROKER NETWORKS
SQUARE OFF
WHO IS THE TRUE
BROKER CHAMPION
DUAL PERSONALITY
DAMIEN COATES ON THE
FRAUD THAT ROCKED
INSURANCE
CATASTROPHE
PLANNING
TACKLING NATURAL
DISASTERS THE SMART WAY

2. COVER FEATURE / 2014 AND BEYOND
16 | JANUARY 2014

3. INSURANCEBUSINESSONLINE.COM.AU
THE YEAR
AHEAD
2013 was a year of ups and downs for the insurance
Insurance Business
asked industry leaders to consult their crystal balls
and tell us what they found.
JANUARY 2014 | 17

4. COVER FEATURE / 2014 AND BEYOND
NOEL CONDON
CEO, AIG AUSTRALIA AND HEAD OF COUNTRY
OPERATIONS, AIG AUSTRALASIA
What has been the highlight of 2013?
The highlight for AIG has been ensuring a new level of
service for our brokers and clients through the
introduction of our market-leading large limit capacity of
up to $1.5 billion for high value commercial property.
This innovative offering has really cemented our leading
status in the property sector and ensured a consistent
approach to our service offering globally.
Name one thing you’d like to see happen in the
market next year?
Brokers and insurers would benefit tremendously from
more government infrastructure investment, following
the peak of mining and resource-based project investment
this year. AIG launched an infrastructure practice team
this year including property, energy, marine and
environmental impairment insurance (to name a few) to
specifically cater to the needs of this sector. I would love
to see the demand continuing at the same pace in 2014.
Are there any sectors you expect to see thrive
or decline?
I expect to see increased business potential for brokers in
the property, energy and financial lines sectors next year.
JOHN NAGLE
CHIEF EXECUTIVE, LUMLEY INSURANCE
What has been the highlight of 2013?
How our operating model and systems have delivered
consistent service improvement outcomes for us.
What do you think will be the three biggest
issues for insurance in the coming year?
Talent: there’s been a recognition of the talent shortage
for some time: I don’t think it’s getting any better in the
short term, and could even get worse in the longer term
with all the outsourcing that’s going on. At the moment,
there are lots of bodies but not much talent.
Commoditisation: more products are being bundled
and/or going on software platforms. That’s not a problem
in itself, but the true complexity of some clients’ risks are
getting lost in the desire for speed of transaction. Getting
the right balance between understanding the client’s true
exposure with their desire to get quick terms and
turnaround will be critical.
18 | JANUARY 2014
If the recent uptake of AIG’s large limit capacity product
is anything to go by then the high value commercial
property market and infrastructure projects will continue
to increase in 2014.
Brokers will also undoubtedly receive more enquiries
from clients regarding cyber insurance solutions as
awareness about coverage gaps in standard policies
increases among organisations.
What’s your number one piece of advice for
brokers for the next 12 months?
I would like to see brokers get more involved with us in
the claims process. A broker that takes on a more
collaborative approach to the claims paying process will
have a more comprehensive understanding about the
client’s needs and behaviours, positioning them as a more
engaged and proactive business partner in not only the
client’s mind, but the insurer’s too. After taking out three
awards for our claims service in Australia this year, this is
one area we are really passionate about.
Who’s your company or individual to watch
in 2014?
Jared King, our head of broker and client management.
Since joining AIG in July last year, Jared has been
instrumental in executing profitable growth strategies
while further refining our best practices in broker and
client management.
Excess global capacity: there’s more and more capacity
coming into the reinsurance market. The question is how
the industry adjusts. There’s plenty of room for that
capacity – if you just look at Australia, where the average
household is 25% underinsured, everyone will be
scrambling around for more capacity anyway if there’s a
sudden rush of sanity.
Name one thing you’d like to see happen in the
market next year?
Commission disclosure – my personal crusade. It’s going
to come. Consumerism and statutory oversight will lead
to product disclosure, whether it’s tomorrow or five
years away.
I don’t see anyone in the industry taking a leadership
role. I would have thought, given everything else that
comes our way, it’s much better to lead on this than have it
forced upon us.
Who’s your company or individual to watch
in 2014?
Daniel Fogarty – today Australia, tomorrow the world?

5. INSURANCEBUSINESSONLINE.COM.AU
MICHAEL GOTTLIEB
KATE FAIRLEY
MANAGING DIRECTOR,
MEGA CAPITAL
FOUNDER, GET INFORMED
What has been the highlight
of 2013?
What has been the highlight
of 2013?
We have had several highlights, but
the one that was most significant is
welcoming Steadfast as a cornerstone investor in our
business. Not far behind is being named the 2013
Insurance Business Brokerage of the Year.
Name one thing you’d like to see happen in the
market next year?
Acceleration of clients willing to buy online.
What are your targets and objectives for 2014?
Mega Capital to consolidate and grow its position as a
specialist professional risks broker
BizCover to continue to revolutionise the distribution
of commercial insurance products
Are there any sectors you expect to see thrive?
It’s likely the insurance market will follow the economy.
Therefore, sectors that thrive economically will provide
opportunities to the insurance market.
What do you think will be the breakout
product next year?
With The Privacy Amendment – Enhancing Privacy
Protection Act 2012 coming into effect on 12 March 2014,
cyber insurance will have a free kick. But it will require
brokers to educate their clients on the risks so will likely
be a slower take up than it should be.
Launching Get Informed and the
warm reception I’ve received from
the early adopters.
What do you think will be the three biggest
issues for insurance in the coming year?
We’re about to get hit hard by another media rampage.
The bushfire season has already started where, again,
people won’t have adequate insurance, or they will
be caught out by fine print in direct insurer policy
wordings.
Every declined claim damages our reputation so we
need to get ahead of this.
Name one thing you’d like to see happen in the
market next year?
A shift with brokers stepping up a notch in terms of
consumer awareness. Just because people are already
occupying a certain space doesn’t mean we can’t put our
hat in the ring.
What are your targets and objectives for 2014?
To get our cause featured on mainstream TV.
There are so many Australians holding worthless
pieces of paper in their filing cabinets, we need to
publicise this.
Are there any sectors you expect to see thrive
or decline?
I believe the aged care and the health sector will continue
to grow in line with our shifting conscience towards
healthier lifestyles.
0-2%
2-4%
20%
60%
20%
4-6%
What do you think will be the breakout
product next year?
I’m actually keen to see how Zurich’s travel add-on will
go. Most people would say cyber liability, which is
definitely true, but with its progressive thinking, I
wouldn’t be surprised if Zurich holds its position next
year as insurer of choice.
What’s your number one piece of advice for
brokers for the next 12 months?
Don’t be afraid to sell your service. Be professional, be
proud. You offer products that offer true value to your
clients, never be ashamed of that and don’t be afraid to
offer them when people are in need.
JANUARY 2014 | 19

6. COVER FEATURE / 2014 AND BEYOND
DANIEL FOGARTY
CEO, ZURICH
What has been the highlight
of 2013?
Zurich being awarded Insurance
Business Insurer of the Year and
NIBA General Insurer of the Year.
What do you think will be the three biggest
issues for insurance in the coming year?
Continuing to manage catastrophe risk. Even before the
2013/14 summer started, we have had bushfires and
hailstorms. Managing the risk of potential future events
will continue to be a big issue for the industry.
Secondly, the impact on the market from the changing
landscape of the broking industry, following the changes
in 2013, such as various senior executive changes in the
broking industry and the Steadfast IPO.
Thirdly, industry image. As an industry, we need to
work to improve the general public’s understanding of
insurance, what we do and the key role we play.
Name one thing you’d like to see happen in the
market next year?
I’d like to see more small businesses recognise the
importance of having business interruption insurance as
we experience more extreme weather events, and protect
themselves properly.
What are your targets and objectives for 2014?
Our target is to continue to bring the best of Zurich locally
and globally to brokers. While we have won awards in
2013, we know we have more to do to keep improving our
market value proposition.
I also plan to continue to focus on attracting and
developing talent to our industry. With the breadth of
roles that insurance offers, there’s a place for many
different skills and people in our industry.
Are there any sectors you expect to see thrive
or decline?
I expect more use of cross-border insurance products as
the world slowly emerges out of the GFC and Australian
companies increase their cross border trading and
investment. Zurich is well placed to assist a range of
companies with their international insurance needs.
What do you think will be the breakout product
next year?
We know cyber risk and security remains an evolving
area of the market, and marine logistics will continue
to make waves.
20 | JANUARY 2014
Who
The favourites:
Melbourne
Storm, South
Sydney
Rabbitohs
The other guys:
Manly Sea Eagles
The favourites:
Essendon
Bombers,
Hawthorn Hawks
The other guys:
Fremantle
Dockers,
Richmond Tigers,
Sydney Swans
Soccer
The favourites:
Brazil
The other guys:
Argentina,
England (always
dreaming), Spain
ROB WHELAN
CEO, INSURANCE COUNCIL OF
AUSTRALIA
Name one thing you’d like
to see happen in the market
next year?
Greater understanding by consumers
and small businesses of the importance of insurance
to their lives, and much less non-insurance and
underinsurance. The ICA’s Understand Insurance
initiative, which was launched in late November, steers
consumers and small business owners through the entire
insurance process and provides easy-to-understand
materials to help them make better decisions.
The Understand Insurance website highlights the
role brokers play and includes a testimonial video that
demonstrates the interaction between the client, the
broker and the insurer, and the positive outcomes that
can be achieved. NIBA CEO Dallas Booth, who features
in a video, and his staff have been very supportive of
this project.
What are your targets and objectives for 2014?
Our primary goal is to build on the achievements of the
past couple of years, in particular the advances made in
highlighting the importance of mitigation in flood-prone
regions and the role of creating resilient communities.
We will work cooperatively with the new federal
government and the responsible minister, Senator Arthur
Sinodinos, on various issues as they arise, including
insurance affordability.
Are there any sectors you expect to see thrive
or decline?
Financial services and health care will thrive.
What’s your number one piece of advice for
brokers for the next 12 months?
Brokers and direct insurers play a critical role in the
economy, and both need to work collaboratively to
educate their clients and customers about insurance.
Who’s your company or individual to watch
in 2014?
I won’t comment on an individual company, but I think
many of the new, smaller, direct insurers are proving to be
savvy marketers, changing how the industry competes
and, as a result, are keeping the better-established
companies on their toes. This heightened competition is
good for the overall industry, though we need to be
careful about selling on price alone rather than on the
value and benefits of the products.

7. COVER FEATURE / 2014 AND BEYOND
CAMERON SKEWS
GENERAL MANAGER OF SALES AND
MARKETING, ANZIIF
What do you think will be the three biggest
issues for insurance in 2014?
I think the three biggest issues will centre around
distribution, big data and how it is used, and the
increasing level of offshore service centres. I am
interested in how privacy will relate to the management of information
about customers, especially in relation to some of the large direct GI
companies who have access also to a great deal of retail and consumer
purchasing through their other arms (Coles etc).
Name one thing you’d like to see happen in the market
next year?
I would love to see a pushback from the industry against selling products,
particularly personal lines products, on price alone. The industry has done
itself damage in this way, and while I understand it from a marketing and
customer acquisition point of view, in the long term, it is damaging to have
complex and vital products reduced to one figure. I believe this is
responsible for a significant portion of the underinsurance in this country.
What are your targets and objectives for 2014?
The Institute has a number of goals and objectives for 2014. Through
membership services and our soon-to-be launched new website we are
going to provide a more tailored and vital service to members and the
industry. We are witnessing a change within a lot of the large insurance
companies around how they approach training and development and I
think we will be working a lot more closely, assisting them to technically
train their staff to the highest standards and to gain the best results for
their organisations. It is also the Institute’s 130th birthday and we have a
lot to celebrate with the industry about our combined history and the
achievements won in that time.
"I am really looking forward to exploring this country as
much as possible, given I moved in only six months back
and haven’t seen much yet"
DIPAK SAHOO
DIRECTOR AND INSURANCE
PRACTICE LEADER, ANZ,
CAPGEMINI
What has been the highlight
of 2013?
2013 has been a year of regulatory
reforms for Australian insurers. The
superannuation reforms, FoFA and its impact and general
insurance industry reforms, to name a few, have kept the
insurance industry on the edge through most of 2013.
Apart from this, general insurance companies have used a
relatively event-free year to consolidate their core
operations by investing in core technology platforms.
Name one thing you’d like to see happen in the
market next year?
I would like to see more and more insurers moving away
from the legacy platform and investing in core technology
transformation. Legacy systems are the biggest bottleneck
in the growth of the sector. This is preventing insurers in
adopting digital channel(s) seamlessly, changing their
operating model to cater to the market need and
regulatory changes and, above all, preventing them from
being a data-driven business, which is at the core of the
insurance business. I would like to see more insurers
move from a B2B/B2C mindset to a B2Me mindset.
What are your targets and objectives for 2014?
My personal target is to help the industry in the core
technology transformation space by making it easier,
affordable and risk-free as much as possible. We are
making this happen by investing heavily in bringing preconfigured industry leading systems to the insurers,
hosting it and supporting it. I am also keen to bring some
of the global best practices in the areas of digital
transformation and analytics from our experience in
mature markets like US and Europe to Australia.
What do you think will be the breakout
product next year?
"Spending time with family and friends and getting down
to the beach as often as I can"
Telematics will be something to look out for, if not next
year at least in the next one to two years. I personally feel
it will help insurers price their premium correctly and
incentivise their customers for good driving behaviour.
"My daughter successfully completing Year 12 and my son
graduating Uni"
What’s your number one piece of advice for
brokers for the next 12 months?
"The World Cup and Keith Jarrett (pianist) touring a country
relatively near me"
Know your customers and service them well. This can
only be enabled by data and effective use of the data
available. In a B2Me environment, brokers should invest
heavily in the areas of CRM and analytics.
"A trip to the US with the family"
22 | JANUARY 2014

8. INSURANCEBUSINESSONLINE.COM.AU
AL DART
CONTINGENCY
UNDERWRITER,
BEAZLEY AUSTRALIA
What do you think will be
the three biggest issues for
insurance in the coming year?
From a contingency perspective, the
largest issue is the deteriorating and unpredictable
weather conditions, and the flow-on effects these
weather conditions have on clients and brokers. Another
key issue is challenging the perception among event
organisers and small business that contingency insurance
is expensive.
Contingency has come a long way with pricing and
today is much more affordable due to the availability of
enriched weather data and insurers’ ability to structure
tailored cover to suit the event type and client appetite.
Finally, the general trend of offshoring is a major issue
for event organisers when it comes to the greater level of
exposure faced and the increased levels of complexity in
understanding and securing adequate cover to protect
what are invariably large budgets.
What are your targets and objectives for 2014?
My target is to continue to educate brokers and their
clients on how contingency insurance is different to
other types of insurance, and to promote innovation
in terms of products, services and delivery in the
insurance sector.
Are there any sectors you expect to see thrive
or decline?
Over the next few years we are expecting growth in the
prize indemnity insurance sector from small businesses.
I think the idea of being able to offer customers a large
cash award without physically having to have the cash is
appealing to both businesses and their customers,
particularly with smaller businesses who have limited
budgets for marketing and promotions and most are
seeking differentiation in an increasingly tough economy.
What’s your number one piece of advice for
brokers for the next 12 months?
Don’t be afraid to offer new and different products to
your clients. Often they will thank you for it and if
you ever get stuck, it is your market’s job to assist in
finding a solution.
JANUARY 2014 | 23