1918 Spanish Flu, in Which 500 Million People Were Infected and an Estimated 50 Million-Plus People Died

02 VOLUME 43

VOLUME 43 AUSTRALIAN & NEW ZEALAND INSTITUTE OF INSURANCE & FINANCE ISSUE NO. 2 / 2020 2020 02 THE WISDOM OF HINDSIGHT Can lessons from past crises help guide us through this one?

Mandarin feature Interested in reading this article champion in Mandarin? PTake me there Crawford & Company’s James Merchant explains why the role of PAUSE chief customer officer should always have a seat at the C-suite table. ON

06 14 20 Regulators offer insurers Generation why? The wisdom of hindsight some breathing space Insurers must find new ways to engage The pandemic’s impact on global economic Regulators across the region are taking an increasingly large cohort of young activity is unlike anything we’ve seen. steps to ease the burden of COVID-19 and customers. But reaching out to millennials But can lessons from past crises guide us ensure customers remain protected. and gen Zs isn’t always straightforward. through this one? 28 32 36 A purposeful life Commission-based sales Challenging the status quo A passion for finding new ways to help New research reveals customer disclosures ANZIIF’s 2019 Bright Light Award winner people has elevated Thao Tran’s insurance are lower when purchasing life insurance Tracey Hind thinks it’s time for a more career to new heights. through an adviser. Is it time for a rethink? socially minded claims handling model.

04 68 70 73 74 A message from Academic awards Member listing Supporters The list the ANZIIF CEO We congratulate the ANZIIF ANZIIF welcomes its ANZIIF’s 2020 How to stay sane when winners for 2019. newest members. corporate supporters. customers are distressed.

JOURNAL // ISSUE 02 2020 // ANZIIF.COM CONTENTS 3 Volume 43 / Issue no.2 / 2020

The Journal is published quarterly 58 by Hardie Grant Media for the LIFE Australian and New Zealand Institute of Insurance and Finance (ANZIIF). The new Vol. 43 No.2 ISSN 144-8505 GENERAL ENQUIRIES super rules Tel (61 3) 9613 7200 Fax (61 3) 9642 4166 Email [email protected] PYS and PMIF legislation Web anziif.com has served as a wake-up ANZIIF OFFICE call for both insurers Level 7, 628 Bourke Street, and consumers. Melbourne, VIC 3000 Australia Technical• Tel (61 3) 9613 7200 Email [email protected]

JOURNAL ENQUIRIES 40 44 Account director REINSURANCE CLAIMS Scott Elmslie Riding the shock waves Claims tech finds fast lane Account manager Reinsurers continue to assess the ongoing Insurtechs are showing their potential Hannah Louey impact and exposures of the pandemic, to transform the claims process long Managing editor but say the situation is manageable. after lockdown is over. Jo Davy Editor Zilla Efrat Subeditor 48 Helen Eva GENERAL Art direction & design What is driving car Dallas Budde & Natalie Lachina insurance complaints? ADVERTISING ENQUIRIES Motor vehicle cover is one of the most Nicole Prioste complained about insurance categories, Tel (61 0) 410 618 331 but finding a resolution could be as Email [email protected] simple as picking up the phone.

52 64 Hardie Grant Media RISK BROKING Private Bag 1600, South Yarra, Victoria, Australia 3141 The future of event cover Bridging the digital divide Tel (61 3) 8520 6444 Wimbledon’s pandemic payout put event COVID-19 has forced brokers to rethink Web hardiegrantmedia.com traditional distribution models and cancellation cover in the spotlight. Now Publication conditions the market may be set to harden. embrace digitisation. No responsibility is accepted by ANZIIF or Hardie Grant Media for the accuracy of any statement or advice contained in the text or advertisements. The opinions expressed in the Journal are those of the authors, not ANZIIF, unless otherwise stated. ANZIIF accepts no responsibility for the accuracy Key contributors of information in articles and advertisements in the Journal. Article submissions to the Journal by ANZIIF members and others are welcome. Articles are accepted for publication only on the condition that the authors give ANZIIF an irrevocable non-exclusive licence to publish the article and authorise ANZIIF to give permission for production of the article in whole or in part by other persons and organisations for educational and training purposes, as well as on ANZIIF websites. ©Hardie Grant Media, 2020. All rights reserved. JESSICA MUDDITT ZILLA EFRAT ANNA GAME-LOPATA Freelance writer The Journal editor ANZIIF content writer Generation why? — ‘Millennials and Claims tech finds the fast lane — The new super rules — ‘While PYS gen Zs take a fundamentally different ‘They say necessity is the mother of and PMIF may bring attention to approach to insurance. They see no invention. That’s certainly true for inactive accounts, its unintended reason why it can’t be modelled on a insurers’ claims processes, thanks to outcome may leave vulnerable subscription service like Netflix.’ self-isolation and lockdowns.’ members without insurance.’ Connect with ANZIIF via social media and anziif.com

ANZIIF.COM // ISSUE 02 2020 // JOURNAL 4 FROM THE CEO

Upcoming webinars

Rate Trends and Cycles: The Outlook for Insurers and Reinsurers

SPEAKER: Kevin Gomes A message Taylor Fry

ANZIIF from our CEO WEBINARS

Visit anziif.com/webinars to register

Taking the Guesswork very year, ANZIIF conducts a Our research identified three key areas out of Property Insurance range of industry research and that members want ANZIIF to be involved in: produces reports that help us create SPEAKER: Ebenchmarks to measure industry change. Gary Thornley The purpose of our most recent survey was CoreLogic to help us better understand the impact of • Advocating for industry the COVID-19 pandemic on the insurance • Providing the CIP program industry, and to find out what our members need from ANZIIF to ensure the continuity of • Activities and services their learning and professional development. ANZIIF We are really pleased that so many of our WEBINARS members took the time to provide us with ANZIIF is always striving to be relevant to its their views and insights into how their needs members, and the results of this survey have have changed during this time. validated what we are doing and encouraged The insurance industry is feeling the us to work even harder to support them. Our impacts of the pandemic in a variety of full suite of online learning opportunities Visit anziif.com/webinars to register ways — general economic activity has a means that everyone can complete their full significant effect on premium pools, and, professional development requirements at no importantly, the economic environment affects additional cost above their membership. the affordability of insurance for individuals We had already begun developing our and small to medium-sized enterprises. webinar program, but the pandemic has Investment returns, which are a significant helped us shape what content our members factor in total returns for industry, have been want right now — for example, analysis of severely affected and this will be a challenge how COVID-19 will impact specific parts of in volatile markets. the industry, such as capital allocation, travel The role of the broker in assessing risk insurance and claims management. Our and client needs has never been greater, Journal is also focusing on the broader issues Adapting to the and the need for quality underwriting and arising from the pandemic. virtual landscape sensitive claims management is also critical. Professional development in our industry has Ensuring good risk transfer will be essential never been more important — our customers to economic rebound, and insurance is an need to know that we are skilled, ethical and important part of this. current in our knowledge. ANZIIF is proud to While individual businesses will be affected support members in their learning. differently, this is an opportunity for the industry as a whole to focus even more on VIRTUAL customer needs — whether that be through STUDY COURSE the usage of products or varying cover to suit Prue Willsford changing circumstances. CEO, ANZIIF

JOURNAL // ISSUE 02 2020 // ANZIIF.COM INSIGHT 5

HOW OUR MEMBERS FEEL ABOUT COVID-19

47%

47believe COVID-19 +53+C Insight: poses a high–very high threat to the Coping with insurance industry. 58%

COVID-19 58are concerned +42+C about reduced alling customer demand due to business While the overwhelming majority of those customer demand. closures, mounting workloads and reduced surveyed said their business had made a smooth productivity while working from home transition, some flagged productivity levels and were among the key challenges faced by the ability to service clients from home in the F insurance professionals across Asia Pacific long term as key areas for concern. (APAC) at the height of the COVID-19 pandemic. ‘The biggest impact has been keeping in touch A survey of almost 900 ANZIIF members and keeping focused a workforce operating from % conducted in April and May revealed an home,’ one respondent said. ‘[Working from 41 overwhelming majority were feeling the immediate home] is a new experience for the majority of effects of nationwide lockdowns, reporting people and it has been a challenge to create a widespread cancellations of cover and a spike in sense of team and normalcy during this period.’ the number of claims and clients seeking advice More than half of the members surveyed 41believe COVID-19 +59+C on financial hardship. were worried about the long-term impact of will have no impact Government-mandated economic shutdowns remote working, falling customer demand and on their income. across the APAC region led to an abrupt decline interruptions to business cash flow. in the number of businesses seeking insurance, Two in five expect COVID-19 to impact their with one respondent citing their biggest challenge personal income or employment. was ‘maintaining income — policies are being The full report is available to all ANZIIF cancelled against advice and new business is scarce’. corporate supporters. Others reported a significant increase in the number of coronavirus-related claims and 61% customers looking for support in the face of severe financial and emotional distress. As one member put it: ‘Clients’ anxiety levels have increased and so has the workload.’ ‘Clients’ anxiety levels have 61of members who +39+C Like most office-based industries, insurers and increased and so has the need government brokers were forced to make a speedy switch support do not to remote working and online service delivery. workload.’ qualify.

ANZIIF.COM // ISSUE 02 2020 // JOURNAL 6 REGULATION by Zilla Efrat Illustrations by Cami

Regulators relax the rules — at least temporarily Governments and regulators worldwide have taken steps to ease the potential impacts of COVID-19 and ensure that customers are protected. We take a look at the measures affecting the insurance industry in some parts of our region.

egulators in Asia Pacific have been Australia easing up on their programs to With COVID-19 placing unprecedented pressure allow insurers to better focus on the on the financial sector, Australia’s government and challenges of COVID-19. But while the regulators have put their regulatory agendas on hold majority of site inspections have been for six months to give insurers breathing space to cancelled, they are still keeping a close manage the pandemic’s fallout. eye on insurers across the board. Measures on hold include implementing the Hayne royal commission’s 76 recommendations as well R as a series of reviews and reforms planned by the Australian Securities and Investments Commission IN SHORT and Australian Prudential Regulation Authority (APRA). In early April, APRA suspended most of the policy and supervision initiatives on its table — and › Regulators delayed key › While they moved away › All eyes are now on how the issuance of insurance licences — for at least initiatives and legislation from site inspections, they insurers will emerge at six months. It has also deferred reviews into life to allow insurers to better are still carefully watching the other end of COVID-19 focus on the challenges how insurers look after and whether there will be insurance advice reforms and travel insurance, of COVID-19. their customers. further reforms. instead concentrating its efforts on monitoring the capital and liquidity of insurers and other financial institutions. In addition, the prudential regulator has sharpened its focus on general and life insurers to ensure they are taking a fair and efficient approach to claims handling during COVID-19 and are clearly communicating changes in cover to policyholders. Meanwhile, the Australian Competition and

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PAUSE

Consumer Commission announced in April that insurance companies and brokers would be able Those suffering hardships to work together to implement relief measures for some small business customers. Those suffering hardships can defer premium can defer premium payments payments for up to six months and will be refunded unused premiums for any insurance policy they for up to six months and need to cancel because of COVID-19. ‘While COVID-19 has pushed out the timeline will be refunded unused for a number of regulatory changes that were meant to take place this year and early next year, the Australian Financial Complaints Authority’s premiums for any insurance mandate has not changed,’ warns Ray Giblett, a partner at Norton Rose Fulbright Australia. policy they need to cancel … ‘Insurers need to ensure they are acting efficiently, honestly and fairly in their dealings with customers.’ And, while it is still too early to predict the post-COVID-19 regulatory landscape, Avryl Lattin, a partner at Clyde & Co in Sydney, notes that the ‘There are also plans to work together with the states Australian Government has flagged deregulation and territories to consider potential deregulation could be an important pillar of recovery. initiatives. Whether this will result in any of the ‘This may involve a combination of tax, industrial royal commission recommendations being put aside relations and health industry reforms,’ she says. permanently will remain to be seen.’

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PAUSE

8 REGULATION

New Zealand The Hayne royal commission in Australia led to The New Zealand Government has also pushed New Zealand’s two main financial regulators, the back the start date for the new financial advice Financial Markets Authority (FMA) and the Reserve regime until early 2021. The transitional licensing Bank of New Zealand (RBNZ), launching their own application window remains open until then. banking inquiry. In the meantime, the current Financial Advisers A review of 16 life insurers followed between June Act 2008 continues to apply. and November 2018, in which the regulators found As part of this regime, the Financial Services extensive weaknesses in systems and controls and Legislation Amendment Act was passed into law in identified several instances of poor conduct and April 2019. Among its many conditions, it requires potential misconduct. that financial advisers meet certain standards This led to the introduction in early 2019 of of competency and skill, prioritise customers’ the Financial Markets (Conduct of Institutions) interests and ensure clients understand the Amendment Bill (COFI). This draft legislation advice given to them. proposes a new regime for financial institutions and It removes the current complicated classifications requires licensed entities and intermediaries to have for advisers and advice firms, such as QFE, AFA policies, processes, systems and controls in place to and RFA, obliging all advisers to meet the same ensure they’re considering consumers’ interests and standards. It is also accompanied by a principles- treating them fairly in all aspects of their businesses. based Code of Professional Conduct for financial ‘COFI is still going through various readings in advice services. ANZIIF has developed several Parliament, but along with everything else that was pathways for brokers to comply with this Code, on the legislative and regulatory timetable, it got which was originally expected to apply from the deferred due to COVID-19,’ says Richard Klipin, CEO second quarter of 2020. of the Financial Services Council of New Zealand. In a similar move, the FMA announced a It is one of many regulatory initiatives that the RBNZ two-month delay in listed company reporting has delayed or slowed down for at least six months, deadlines and its planned thematic review on including several bills, consultations and new regimes. liquidity for managed investment schemes.

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MAS has deferred several regulatory initiatives, including the implementation of Guidelines on Individual Accountability and Conduct ...

Hong Kong Singapore The Hong Kong Insurance Authority (IA), established In the first week of April, the Monetary Authority of in December 2015, has gradually grown into its role Singapore (MAS) announced it would adjust selected as the primary regulator of Hong Kong’s insurance regulatory requirements and supervisory programs market and has been quick to implement several to enable financial institutions to focus on dealing measures in response to the COVID-19 outbreak. with issues related to COVID-19. In February, it introduced its first set of temporary Stephanie Magnus, co-chair of the Asia-Pacific facilitative measures (TFMs), allowing insurers Financial Institutions group at Baker McKenzie, and intermediaries to sell certain types of long- says MAS has deferred several regulatory term insurance by non-face-to-face methods initiatives in response to the pandemic, including during COVID-19, a departure from the face-to-face the implementation of Guidelines on Individual distribution usually required. Accountability and Conduct and the publishing of In March, the IA announced a second phase of an information paper on Culture and Conduct TFMs, widening the types of life insurance products Practices of Financial Institutions. that could be distributed through non-face-to-face MAS has also postponed non-urgent industry methods until 30 June 2020. projects, such as the launch of a new electronic Measures were also put into place to protect system for banks and insurers to submit applications policyholders, including mandatory up-front for approval of key appointment executives. And disclosures at the point of sale and an extended it has provided financial institutions with more cooling-off period of no less than 30 days. latitude on submission timelines for regulatory Also in March, two new bills were gazetted reports and has given them longer response times which will have an impact on Hong Kong’s to provide feedback to ongoing public consultations insurance market. of new policies. The first provides for a bespoke, streamlined Looking ahead, Magnus says: ‘We expect that regulatory framework for the issuance of insurance- MAS will review certain areas such as operation and linked securities (ILS) through the formation of enterprise risk management to ensure that insurers special purpose insurers. are adequately prepared for future pandemics and ‘The central government has announced support have sufficient plans to deal with future occurrences. for mainland insurers to issue catastrophe bonds in ‘We can also expect insurers to have an added Hong Kong,’ said IA chairman Dr Moses Cheng at impetus to continue in their investment into the time. ‘The proposed legislative amendments will automation and digitalisation of their end-to-end pave the way for Hong Kong to become the preferred processes, with lessons learnt from current domicile for ILS, in particular catastrophe bonds.’ COVID-19 challenges.’ The second bill gives the IA direct regulatory powers over the holding companies of multinational insurance groups. At present, it regulates such insurance groups indirectly, through subsidiaries licensed by the IA. ZILLA EFRAT The Journal Editor ‘Using a principle-based, outcome-focused approach, the new framework will put Hong Kong ‘Before COVID-19, regulators took a heavy-handed approach to financial institutions, on a par with international standards and practices, especially after the disappointing findings of some inquiries. The regulatory pendulum has briefly (and sensibly) swung the other way. The big question is where it will land thus strengthening its competitiveness in the global post-COVID-19?’ insurance market and reinforcing its position as a regional insurance hub,’ added Cheng.

ANZIIF.COM // ISSUE 02 2020 // JOURNAL 10 PROFILE James Merchant Story Domini Stuart Photography Dean Golja

The people’s champion The role of chief customer officer is a recent addition to the C-suite, but Crawford & Company’s James Merchant is proving that it is also one of the most important in navigating the challenges of COVID-19.

ver the past decade or so, insurance companies have joined businesses ranging from telecommunication firms and utility providers to retailers and banks in a collective move towards more customer-centric thinking. O‘Today’s customers are better informed and have more power in the consumer relationship than ever before,’ says James Merchant, chief client officer (CCO) for Crawford & Company’s Australian operations. ‘In a marketplace like the insurance industry where there are no barriers to movement, customer service is an important factor in the choices they make.’ This shift in focus has led to the rise of the customer’s champion in the shape of the CCO. A design thinker Based in Atlanta, Georgia, Crawford & Company is the world’s largest publicly listed independent provider of claims management and outsourcing solutions to carriers, brokers and corporates.

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It introduced the role of CCO into its global structure in 2016. The following year, the company ‘Today’s customers are appointed a CCO specific to the Australian market and Merchant took over in September 2019. ‘I think of a good CCO as a “design thinker” — better informed and someone who can apply his or her skill set and mindset in many ways within an organisation,’ have more power in the he says. ‘Wherever you have people, you will find consumer relationship products, services and processes they find frustrating, or goals they are trying to achieve, and these are all opportunities for CCOs to create than ever before.’ human-centred solutions. ‘By facilitating closer interaction with the customer and fostering much more effective collaboration, CCOs are helping to support the development of more innovative, relevant products much more closely aligned to the specific and changing needs of the customer. This, in turn, helps secure the relationship and reduce the risk of the client turning to another supplier. This is where a CCO can have the biggest impact.’ Innovation in response to COVID-19 Merchant is well equipped to develop new approaches to customer service. Before joining Crawford, he founded and ran an innovation consulting business, coached design thinking at an innovation college and worked as an innovation TWO- EDUCATION manager for CGU. But few would have predicted A fellow of ANZIIF, Merchant that his creative thinking would be called on to MINUTE gained a bachelor’s degree in Arts, Economics and Geography from help navigate the challenges of a pandemic on the BIO the University of Tasmania and a scale of COVID-19. Graduate Diploma in Insurance ‘COVID-19 has certainly been a time of great James Merchant from Deakin University. He also learning and innovation,’ he says. ‘Adaptability has completed a Diploma in Marketing, COMPANY // Certificate IV Training and been key as we moved to maintaining relationships Crawford & Company Assessment and a short course in via virtual communication tools such as Skype Design Thinking, Innovation and TITLE // Communication. and Microsoft Teams. We’re also using a remote Chief client officer claims management solution with video streaming BEYOND THE DAY JOB and a self-service app, which has proven critical to CAREER Merchant’s varied interests include delivering an adjuster-led solution for existing and Most recently, Merchant was founder collecting and authoring books new claims. and creative business leader at a on the history of cricket, garden consultancy firm that used design landscaping, running, spectating ‘I have no doubt that COVID-19 will have an thinking to help businesses develop world athletics and bushwalking. impact on the future, with policyholders, insurers new organisational capabilities He also coaches students in and clients being more open to technology through improved business entrepreneurship. solutions and desktop and remote adjusting.’ innovation, targeted training and enhanced information synthesis. TOP TIP Crawford has also created solutions in response Prior to this, he held several senior Replace the traditional sales to new demands. In Australia, Canada, the United management positions with CGU and pitches that centre on forcing the Kingdom and the United States, for example, it Suncorp, including national claims customer down a particular route has introduced a decontamination service. This is manager at CGU and executive with discovery workshops where manager operational services solutions are effectively co-created helping organisations that have been exposed to at Suncorp. with customers. the coronavirus get back to business by cleaning and restoring affected sites.

ANZIIF.COM // ISSUE 02 2020 // JOURNAL 12 PROFILE

‘The CCO is a key person in gaining insights about the new needs of clients during the COVID-19 crisis,’ says Merchant. ‘We’re the voice of the business to our clients, and, in turn, we pass client requirements back to the business. ‘My priority has been to use the time to share our innovations with clients, maintain a growth mindset and look for the opportunities that adversity inevitably creates.’ A work in progress While clients were driving the move to customer- centricity by wielding their new-found power, forces were at work within the industry itself. ‘The collapse of HIH Insurance in 2001 triggered a raft of regulatory changes that had far-reaching repercussions,’ says Merchant. ‘These included the introduction of an ombudsman, the implementation of the voluntary Code of Practice and improved processes for the handling of complaints.’ These changes were already in progress when the Australian Government established the Hayne royal commission (HRC) in 2017, though the findings and resulting actions certainly increased their momentum. ‘The HRC recommendations span a number of customer-critical components designed to recognise vulnerable customers and introduce PICTURED A need for collaboration measures to help ensure that they are protected,’ Merchant is a great believer in the phrase James Merchant says sales says Merchant. ‘I would, however, raise a note of and marketing functions must attributed to the Greek philosopher Epictetus — caution. Some findings may result in increased ‘evolve into customer-centric, that we have two ears and one mouth so that we operational costs, and we must ensure these are problem-solving functions’. can listen twice as much as we speak. not passed on to the customer.’ ‘This certainly applies in this context,’ he says. He is also optimistic about the impact of the ‘Within the organisation, the CCO must work new General Insurance Code of Practice. alongside the executive committee, playing ‘This is very much focused on enhancing levels a central role in the development of new of trust between insurers and customers, and programs and systems that will help improve the implementing measures designed to boost the customer experience. overall customer experience. It aims to place the ‘It is imperative that their role as the customer’s customer front and centre and includes new champion is recognised by everyone and that sections on vulnerable customers and financial they ensure executives are not making decisions hardship provisions, as well as providing greater based on outdated assumptions about the powers to the governance committee to tackle customer’s needs.’ breaches of the Code. He sees the roots of the CCO role in the human- ‘It could also serve to elevate the role of the centred design concepts from the design thinking CCO and promote greater collaboration between movement popularised by Stanford University. insurance companies and their service providers, ‘Fundamental to that is the ability to adopt a heightening the focus on delivering a better creative approach to challenges and opportunities service to customers.’ based on discovering new knowledge rather than exploiting existing knowledge,’ he says. ‘To achieve this, the sales and marketing functions must evolve into customer-centric, problem-solving ‘I think of a good CCO functions which naturally involve a high level of collaboration with customers. ‘Essentially, it is about facilitation, questioning, as a “design thinker”.’ listening, creating and experimenting — and COVID-19 is putting that thinking to the ultimate test.’

JOURNAL // ISSUE 02 2020 // ANZIIF.COM Brokers Ad 05-20_PATHS.qxp_Layout 1 20/05/2020 10:31 Page 1 14 THE CUSTOMER by Jessica Mudditt Illustrations by Cami

Generation why? Engaging young customers Insurers who neglect to engage an increasingly large cohort of younger consumers do so at their peril. However, finding the right approach isn’t always straightforward.

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wo-thirds of the world’s population are either millennials or generation Z, according to Bloomberg’s analysis of United Nations data. For the insurance industry, this represents both an opportunity and a challenge. On the plus side, these two demographic groups Trepresent the greatest potential for growth in the general insurance sector, according to Roy Morgan research from 2018. However, millennials are the least engaged insurance customers compared with preceding generations, a 2015 Gallup survey found. It is clear that more needs to be done to respond to the insurance needs of this group and to harness the business opportunities it represents. Unique needs and preferences While definitions vary, it is generally agreed that millennials are those born between 1980 and 1994, while gen Zs were born between 1995 and 2015. These two IN SHORT groups are distinctly different from older generations in their consumer behaviour and have notable differences from one another. › Millennials and gen Zs First and foremost, they are digital natives, with comprise two-thirds of the global population, increased global connectivity amidst a rise in online retail, but they are among the says Claire Madden, a Sydney-based social researcher least engaged general and commentator on generational change. Gen Zs are insurance consumers. especially tech savvy, she says, and would consider certain › Their purchasing forms of corporate communications, such as phone preferences are different calls, as outmoded. Paper forms would be considered from older generations and an anathema. they are likely to be less able to afford homes. They are ‘As customers, they are global consumers who buy from digital natives and expect global brands,’ says Madden. ‘They also see themselves as a seamless, frictionless global citizens. They are tech and price savvy. They know customer journey. They are price savvy and know how they’ve got options.’ to shop around for flexible David Chan, the general director and head of insurance products. On- distribution at Liberty Insurance in Vietnam, says demand insurance is likely millennials are more likely to scour online reviews than to emerge as a major trend. older consumers, but still value the input of a trusted › Use informal, jargon-free adviser for more complex purchases. They are more likely language on the right digital to purchase their insurance online and seek best-value, platforms to communicate with these groups. A hard comprehensive cover. sell will fail to gain traction. Millennials and gen Zs will also seek out insurers that align with their values, according to a Vero spokesperson in Auckland. ‘Corporate social responsibility and

ANZIIF.COM // ISSUE 02 2020 // JOURNAL 16 THE CUSTOMER

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belonging matter to this generational cohort, likely to want insurance cover only for the period whereas older generations ... look for options they are renting an Airbnb home or using a that reduce effort.’ shared vehicle. And if they don’t use their own car for a few weeks, they may question why United by global trends they must pay insurance on it. The popularity of Digital connectivity has created a global youth monthly subscription services, such as Spotify culture, meaning that gen Zs in particular and Netflix, means that traditional insurance are likely to be using the same social media policies that come up for renewal every 12 apps, watching the same YouTube videos and months are unlikely to appeal. following the same celebrities. Scarborough predicts that insurance is likely to ‘While research shows that there are some become more usage-based. This will be aided by cultural differences among millennials and gen connected devices and wearable technology, with Zs in different parts of the world, at the same data provided to insurers. time, these generations have more in common ‘The millennial and gen Z customer bases are than any previous generation,’ says Madden. more comfortable providing their personal Robin Scarborough, a partner in Deloitte data [than older people] — provided it leads to a Digital’s customer strategy and experience more personalised, convenient or value-added design practice in Australia, agrees. He advises experience,’ he says. insurers to pay attention to certain global trends outside of insurance. Flexibility is key ‘On-demand services such as Netflix and Mathew Skinner, 30, a senior claims consultant at Spotify are globally successful companies who CHU Underwriting Agencies in South Australia, have responded well to the needs of these believes that flexible insurance products will customer groups,’ he says. ‘Millennials and eventually replace broad form policies. gen Zs will expect similar experiences from ‘Younger people don’t see the need to insure their insurers.’ items like clothing and common household These needs and purchasing preferences items, especially in share-house situations.’ But are prompting a fundamental rethink among what are important, he quips, are their mobile many insurers, adds Scarborough. ‘The needs phones: ‘Take away a gen Z’s bed and they’ll sleep of millennials and gen Zs are different from on the floor. Take away a gen Z’s phone and their previous generations. One of the biggest world is over!’ differences is that they value access over This shift in priorities also reflects changing ownership. The insurance industry is using an patterns of wealth. old model based on ownership and these groups ‘Millennials may be the first generation in living have less of a want for that.’ history who will be materially less well off than For example, millennials and gen Zs are more their parents. They validate themselves through quality of life, rather than quantity of stuff that will impact their insurance,’ says Rick Shaw, a partner of consulting and senior member of ‘They are tech and price savvy. Deloitte Australia’s actuaries practice. Skinner points out that as owning a home slips They know they’ve got options.’ further out of reach for many, share housing may become the norm, and full contents cover will Claire Madden / not be necessary. Author and social researcher ‘This is where the flexible pieces of insurance become even more important,’ he says. Madden points to research that shows both

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insurance is often considered a bit member or partner on the cover KEEPING of a luxury purchase. We know that (this is part of government reforms, younger consumers are looking for but it is not mandatory for insurers THINGS value without the frills.’ to offer it). Research by ahm showed that It also provides member perks, SIMPLE IN younger consumers wanted one such as two-for-one ‘date night’ less thing to worry about in an often movie tickets and discounts on A COMPLEX overwhelming world, which is why selected gym memberships. ahm highlights the simplicity of its Romeo says this, along with its CATEGORY products and services. loyalty rewards program, is an ‘Just like our audience, we are important part of providing value Part of the Medibank group, digital first,’ says Romeo. ‘The that goes beyond health insurance. specialist provider ahm health majority of claims can be done When it comes to marketing and insurance offers a no-frills, online using self-service. That communications, ahm strives to affordable private health insurance makes us easy to deal with.’ appeal to the millennial mindset. It option with wide appeal among Affordability is another key selling also communicates on streaming younger consumers. point, which ahm conveys through platforms such as YouTube. ‘At this stage of life, health its logo — a pair of scissors cutting a ‘Our personality is quite strong in insurance is probably not the most coupon. However, Romeo is keen to terms of our humour, playfulness important priority in young people’s point out that it’s not just about being and no-nonsense approach,’ lives, or even on their radar,’ says the cheapest, but offering great says Romeo. ‘We also use simple Amanda Romeo, ahm’s head of value. It offers a discount on hospital black and white cartoons to marketing. ‘Combined with the insurance to members who are aged demonstrate our simplicity in a affordability pressures of today, between 18 and 29 and the principal complex category.’

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generations still have a strong desire for home millennials to piece together different options that ownership, but their journey getting there is different match their specific goals and objectives,’ she says. from previous generations. ‘And as their needs change over time, they don’t ‘A new national survey by Lendlease of Australians have to replace their insurance — instead, they can aged 18 to 40 found that over a third have a specific add or remove the different optional extras to best savings account, and 24 per cent have some kind of suit their changing circumstances.’ side hustle to be able to save for their home,’ she says. Furthermore, MetLife only requires clients to Scarborough predicts that the economic crisis work a minimum of 15 hours per week for income resulting from the COVID-19 pandemic could further cover, while most insurers require a minimum 20 to reduce demand for insurance from millennials and 30 hours per week. gen Zs. ‘They may be forced to live at home with parents for longer and reduce ownership of assets All in the delivery like homes and cars,’ he explains. When it comes to engagement, arguably nothing Another flow-on effect is that these two groups is more important than communicating the right may become even more price sensitive and that messaging via appropriate channels. the likes of on-demand insurance will gain traction ‘Our research tells us that younger audiences are more quickly. more open to digital communications compared Scarborough says that while on-demand insurance with older generations. This group is used to being has taken off overseas, it is yet to build a strong able to run their lives at the touch of a button,’ presence in Australia. says Stafford. One standout example is Suncorp’s partnership Skinner believes that traditional advertising with Good Shepherd Microfinance, which saw channels, such as free-to-air television, Australia’s first accessible insurance cover for people newspapers and radio, are unlikely to penetrate on low incomes. younger audiences. ‘Instead, engaging with Essentials by AAI, as it is known, was launched in customers through online platforms such as 2015 and provides car and home contents insurance Instagram, Twitter and Facebook, as well as to anyone with a healthcare card, receiving podcasts and YouTube, is the best way to reach Centrelink payments or with a household income of younger generations.’ under A$48,000. It allows for fortnightly or monthly Amy Yerro, 31, an insurance broker at Abbott in payments and policyholders can select exactly what Auckland, believes that insurers need to ‘up their they wish to have covered. game’ when it comes to their social media presence. MetLife Australia is also responding to the demand ‘When millennials consider buying insurance, they for more flexible products, says Chesne Stafford, its like to see a big online presence,’ she says. chief customer and marketing officer. However, venturing into the world of social ‘Our MetLife Protect product is a modular product media is risky unless the strategy is well-informed, sold through financial advisers and allows people to cautions Madden. only pay for the cover they need. We’re also seeing ‘There’s a host of unwritten rules about the this trend play out in the group insurance market,’ subtleties of using social media platforms like she says. Snapchat and Instagram,’ she says. ‘When a Stafford adds that the main appeal for millennials company just tries to sell something on these lies in the product’s design, which allows advisers platforms, it really jars with this generation. to work with their millennial clients to build on the A brand must come across as authentic and four standard cover types — life, trauma, total and trustworthy, otherwise it’s awkward and doesn’t permanent disability and income — with a range of gain any traction.’ optional extras cover. Chan agrees, noting that communications ‘Put simply, it’s like building blocks that allows from insurance companies should not be solely

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transaction-focused. ‘Communicate more often than just at purchase or renewal time,’ MAKING HEALTH he suggests. That said, he adds that millennials value the opportunity for online self-service AND WELLBEING wherever possible, including for claims notifications, renewals or updating particulars. A VALUE-ADD This is considered time efficient. Using insurance jargon is a big mistake, says Georgie Drury is the Sydney-based founder and Yerro. It’s important to remember that for CEO of wellbeing provider Springday, whose white- many in these age groups, it will be their first labelled, cloud-based platform is deployed by 26 purchase. ‘Simple is best, and preferably via Australian blue chip clients, including Accenture, their smartphone and a well-designed claims Australia Post and PwC. management app,’ she says. Madden adds: ‘Don’t be afraid to have a Springday launched in 2009 and is currently in more relaxed communication style, even talks with insurers that are interested in the value when it comes to talking about something creation of moving into the health and wellbeing like insurance.’ space, something that millennials in particular value, Stafford emphasises that the application according to Sanford Health research. journey must be quick and easy to navigate. ‘It’s an effective way of attracting millennials and ‘We’ve digitised our applications process and gen Zs, because it’s a value-add as well as a retention streamlined questions, so that we only ask tool,’ says Drury. ‘You’re effectively joining a loyalty questions that are relevant for the individual program, and you don’t want to lose it. The problem customer. This can’t be done with paper- with insurance is that once you have your policy, based applications.’ there’s often no communication until someone Against the backdrop of innovative ways of phones up and says they want to leave. Springday doing business is the need to overcome a general would enable insurers to have a relationship with the scepticism among younger people towards large end user. Some of our app users check in every day, organisations, including insurers. which is a strong value proposition.’ Scarborough believes that the COVID- The platform features engagement strategies, 19 pandemic may offer an opportunity for monthly campaigns and gamified activity challenges insurers to demonstrate a higher purpose and that are integrated with wearable tech. All are aimed social impact that re-engages these younger at improving wellbeing. It can be used as a diagnostic customer groups. When done properly, it will tool and provides suggestions for services to improve build trust and loyalty, and this will go a long wellbeing, which were validated with the University way in developing an engaged consumer group of New South Wales. throughout the years ahead. ‘Springday can also provide insurers with significant amounts of data, which would help them understand who is engaged and disengaged and how to tailor marketing accordingly,’ says Drury. JESSICA MUDDITT While Springday has similarities with AIA’s Vitality Freelance business journalist program, Drury emphasises they have taken a more ‘Millennials and gen Zs see no reason why insurance can’t localised approach. be modelled on an on-demand service like Netflix, because technology can now provide real-time data that personalises ‘We’re not trying to take something that’s worked their usage. The most innovative insurers will be rewarded overseas and thereby put a square peg into a with the loyalty of these groups as they age.’ round hole. It’s been created based on Australians’ preferences and norms.’

ANZIIF.COM // ISSUE 02 2020 // JOURNAL 20 INSURANCE IN A RECESSION by Zilla Efrat

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ike so many other sectors of the economy, insurance has not been spared from the ravages of COVID-19. They say history repeats itself, but the jury is still out as to whether the learnings from previous crises will help us through this one. Fiona Gillespie, macro strategist and assistant vice president at Swiss Re, says the world hasn’t Lfaced a pandemic of the scale of COVID-19 since the 1918 Spanish flu, in which 500 million people were infected and an estimated 50 million-plus people died. But Gillespie says the environment today is too different to draw strong analogous conclusions from other crises to determine the potential economic outcome from COVID-19, although historical precedents can offer some guidance on how to handle the situation. ‘In particular, containment measures and fiscal spending [addressing the short-term impacts but also longer- term growth] are vital ingredients to manage the sharp Lessons downturn and subsequent recovery,’ she says. Using past crises as lessons for the insurance industry has its challenges. Professor Monica Keneley, director of teaching at Deakin University Business School, says: ‘First, insurance is not from past a generic industry. It is composed of a series of different markets, so it would be difficult to generalise about the impact. The effect on short-term insurers will also be different to that of long-term insurers.’ Keneley says the current situation comprises both recessions demand shocks and supply shocks. Demand for insurance will be affected by people’s ability to pay, which is dependent on their incomes, she explains. And The impact of COVID-19 on global supply will involve the ability of insurers to supply a product at a price that is attractive to consumers — economic activity is unlike anything something that will depend, in part, on their returns on we’ve experienced in our lifetime. investment portfolios. ‘This is not something that you would expect to see Can the benefit of hindsight help and is different from other events,’ says Keneley. ‘We have not witnessed the sudden cessation of economic guide us through the storm? activity before. Even during the Great Depression of the 1930s, it was a slow decline. This means we are basically in uncharted waters as far as impact and time to recovery go. ‘We are also starting from a weaker base. The bushfires [in Australia] will have had a huge impact on insurers and their liabilities.’

IN SHORT

› COVID-19 is › It has similarities › While there are some like no other crisis and differences to lessons to be learned experienced by the past crises, such as from the past, we insurance industry the GFC, SARS and are still very much in in recent memory. the Spanish flu. uncharted waters.

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By contrast, says Roach, COVID-19 is a public-health 2008 GFC: crisis and the financial repercussions for the real economy are a secondary shock. A MIRROR IMAGE Swiss Re group chief economist Jerome Haegeli believes COVID-19 has already thrust the world economy into recession. ‘This recession operates at an elevated speed, Stephen S. Roach, a faculty member at Yale University being twice as fast as the economic downturn brought on and former chairman of Morgan Stanley Asia, warns by the 2008 financial crisis,’ he says, adding that Swiss Re against looking at the 2008 global financial crisis (GFC) to research shows that the global economy is considerably find remedies for the current COVID-19 situation. less resilient compared with pre-2008. ‘What worked 11 years ago won’t work today,’ he says. Still, some of what may happen with COVID-19 has been ‘The COVID-19 pandemic is the mirror image of the seen before. For example, a 2003 Swiss Re sigma report that global financial crisis. The policy response needs to be examined economic crises in emerging markets like Mexico, crafted accordingly.’ Argentina and Asia observes: ‘Generally, a financial crisis The GFC was, first and foremost, a financial shock that brings about a dramatic drop in demand for insurance. For took a severe toll on the real economy. It was sparked example, Thai motor premiums declined by more than 20 by the depreciation in the United States’ subprime per cent due to the financial crisis of 1997, while in Argentina mortgage market and developed into an international life insurance premiums plummeted by 25 per cent in 2002. banking crisis with the collapse of investment bank ‘However, insurers are more affected by falling asset Lehman Brothers in September 2008. values and high claims costs.’

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‘Generally, a financial 2002 / 03 SARS OUTBREAK: crisis brings about A NEW RISK MODEL a dramatic drop in Back in 2003, Edi Schmid was chief underwriting officer of Swiss Re’s Asian business and was based in Hong Kong when severe acute respiratory syndrome (SARS) hit. demand for insurance ‘For Swiss Re, SARS really sharpened our focus on pandemic risk management,’ says Schmid, who is now chairman of the Swiss Re Institute and Swiss Re’s group ... however, insurers chief underwriting officer. ‘In 2006, Swiss Re started developing our own pandemic model. The model allows are more affected by us to undertake stress tests on our portfolio in a similar way to large natural catastrophe risks. In turn, this information informs key business decisions, falling asset values and such as setting our risk appetite or managing our capital. ‘Since 2006, the model has evolved. It has been constantly improved and updated high claims costs.’ as new knowledge has emerged.’ Currently, the model statistically analyses 50,000 different pandemic scenarios Swiss Re to see what the impact of a certain strength of pandemic might be on a modelled portfolio. So, can it predict COVID-19’s financial impact? ‘The answer is no,’ says Schmid. ‘The final impact of the COVID-19 pandemic remains uncertain and will be unique in terms of insurance impact, lives lost and its impact on the global economy. ‘We need to be extremely careful about making assumptions, drawing conclusions or extrapolating from the model to the current specific situation. For example, the underlying populations used in the modelled scenarios are different from the general population. ‘In our model, the results are based on an insured population and not comparable to the statistics we read in the media, which might be based on a percentage of the total population or a percentage of people known to have the disease.’

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They say history repeats itself, but the jury is still out as to whether the learnings from previous crises will help us through this one.

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They say history repeats itself, but the jury is still out as to whether the learnings from previous crises will help us through this one.

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The Spanish flu swept around the globe in three 1918 SPANISH FLU: phases. The first was in the northern hemisphere spring of 1918 and although it infected widely, it had A DEADLY REMINDER a relatively low mortality rate. The second phase occurred in the following autumn, during which the infection spread more Like COVID-19, the deadly Spanish flu outbreak of rapidly and proved far more deadly. The third phase 1918 spread around the world with alarming speed. was in the first half of 1919 and while less severe But unlike the current pandemic where the risk than the second phase, it still resulted in hundreds of death increases with age, the Spanish flu struck of thousands of deaths. down many young people, particularly those aged ‘If COVID-19 follows a similar track to that of the from 15 to 34. The impact on the insurance industry Spanish flu, the current outbreak would turn out to was also different. have been a mild phase,’ warns Weisbart. ‘The 1918 Spanish flu pandemic caused some strain, If this scenario is correct, he says the first phase but mostly because reinsurance in the US was still will soon taper off and we should prepare for a more then quite primitive and, of course, it was a much virulent phase that might manifest in the second larger shock and took more younger people,’ says half of 2020. ‘Failure to do so would mean we’ve Robert E. Wright, Nef Family Chair of Political learned nothing from the worst global pandemic in Economy at Augustana University in the US. the last 100 years.’ Steven N. Weisbart, senior vice president and chief economist at the New York-based Insurance Information Institute, explains: ‘In 1918, in addition to the very old, the virus ZILLA EFRAT struck unusually strongly at people in the The Journal editor prime working years, triggering benefits from ‘During the Spanish flu, the now defunct British newspaperNews of the World advised its readers to both individual and group life insurance.’ “wash inside nose with soap and water each night and morning; force yourself to sneeze night and morning, then breathe deeply. Do not wear a muffler; take sharp walks regularly and walk home from While noting the contrasts, Weisbart is work; eat plenty of porridge”. My, how science has advanced!’ concerned COVID-19 may still behave like the Spanish flu.

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28 PROFILE 29 Thao Tran by Anna Game-Lopata

A purposeful life A passion for finding new ways to help people has steered Thao Tran’s insurance career to new heights.

hao Tran, Prudential Vietnam After completing her MBA, she returned to Hanoi in Assurance senior vice president, chief 2007 to be with her father, who had fallen seriously ill. strategy and business development ‘I started to seek my life’s purpose,’ Tran recalls. ‘I officer, puts her success down to two wanted to do something to help people have good factors: determination and a high- health and happiness.’ quality education. Born and raised in Hanoi, Tran says Right place at the right time she feels lucky her parents put a strong emphasis on By chance, 2007 was a key milestone for insurance Ttheir children’s learning and development. giant Bao Viet Holdings, with the successful Although her father was a professor of Russian at completion of an initial public offering with Hanoi University and her mother worked at its medical a foreign strategic partner, HSBC Insurance. centre, the family struggled financially in the 1980s and ‘As a local finance and insurance conglomerate, Bao 1990s. Tran recalls her mother had to take on several Viet really needed people with an MBA qualification jobs to earn enough money to raise her three children. to manage its transformation program,’ says Tran. ‘Understanding the expectations of my parents, Despite lucrative job offers in logistics and supply I made strong efforts in studying well as a child chain management from the likes of BP and IKEA, and passed all my exams, even the toughest ones,’ Tran was more attracted to the insurance industry. says Tran. ‘In my thinking, the insurance industry was about Her efforts were rewarded with a place at the working with people and for people. It gives a life raft prestigious Hanoi-Amsterdam High School for the to people when they need help,’ she says. Gifted, which led to her obtaining a Bachelor of ‘A career in the insurance industry would help me International Business at the Foreign Trade University. fulfil my mission of helping people, and I took it.’ In her last year of study there, Tran was selected as one of eight top Hanoi-based students for Unilever’s Transforming Bao Viet fast-moving consumer goods (FMCG) and logistics At Bao Viet, Tran says her greatest achievements were management trainee program. to successfully co-ordinate people and develop new ways ‘At Unilever, I underwent comprehensive training in for them to move forward to achieve strategic targets. both professional and soft skills,’ says Tran. ‘I was in ‘I joined Bao Viet at a time of transformation and the talent pool of the company and given the chance to restructuring from a local sleeping beauty to a work in both Japan and Vietnam.’ company with an international standing through In 2005, she won a Japanese Government scholarship comprehensive support from HSBC Insurance. to undertake an MBA at Waseda University in Tokyo. ‘In 2012, HSBC divested its insurance business globally and ceased to be a Bao Viet strategic partner. However, Taking the path of caring we still leveraged and maintained international best In addition to working in the supply chain, the Unilever practice frameworks.’ management trainee program offered opportunities Tran led a strategic team in 2014 to develop a bold to gain experience in a variety of functions at the vision of retaining Bao Viet’s number one market company, from sales and marketing to accounting, position in both life and non-life insurance by 2020. demand and supply planning, production, research and OPPOSITE As head of corporate strategy, Tran led transformation development, quality assurance and human resources. Thao Tran believes a focus programs and restructuring projects, as well as Tran says her three years at Unilever provided a solid on ‘the health and wealth research into new lines for business expansion, merger of customers’ is essential foundation and equipped her with skills that were to growing Vietnam’s life and acquisition projects and strategic partnerships. fundamental in her later insurance career. insurance market. They achieved their targets three years early.

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‘[Women] take themselves out of the running.’

Moving in a digital world At Prudential Vietnam Assurance, Tran says her role is to build and co-ordinate a clear corporate strategy to achieve sustainable, profitable growth. ‘My vision is to unlock business value in this fast- paced digital world, to transform our company’s customer, distribution and partnership strategies.’ Tran is also responsible for developing partnerships to expand networks, leading market intelligence and helping build the organisation’s data analytics skills to create insights into the marketplace. A wider focus is the development of Vietnam’s TWO-MINUTE BIO life insurance market and the health and wealth of customers. ‘When customers are happy,’ she says, ‘you Thao Tran are also happy and find the purpose of life for yourself.’ COMPANY // Prudential Vietnam Assurance Women at the top TITLE // Senior vice president, chief strategy and business development officer The Vietnamese market has 30 non-life insurers, 18 life insurers and 13 brokers, only a few of which are large- scale companies with more than 1,000 employees. BACKGROUND joined the Vietnamese Business Born and raised in Vietnam, Tran was Council for Sustainable Development. Women account for 48 per cent of the country’s selected as one of eight top Hanoi- Established by the Vietnamese labour force and 36 per cent of senior management, based students for Unilever’s FMCG and Chamber of Commerce and Industry, placing the country second in Asia for the most women logistics management trainee program, this organisation aims to promote the in top enterprise leadership positions, according to where she worked in the supply chain business community’s active role in, and and a variety of other functions. After strong advocacy for, the implementation Grant Thornton research in 2019. completing her MBA at Japan’s Waseda of strategic and sustainable ‘It is always challenging for a person to be successful University on a scholarship, she development in Vietnam. in the insurance industry in Vietnam, as the market is joined Bao Viet Holdings, just as it was still small with few opportunities, especially leadership completing its IPO with HSBC Insurance. PHILOSOPHY As head of corporate strategy, Tran led Tran believes challenges can be positions for women,’ says Tran. a team in 2014 to develop a bold vision overcome with a good education and A mother of two daughters, Tran says the industry of retaining Bao Viet’s number one by continuing to learn new things requirement for ongoing high levels of international market position in both life and non-life and working hard to bring value to professional training and qualifications can prove insurance by 2020. customers. ‘As insurance is about caring for people, your first priority should difficult for women with family responsibilities. EDUCATION be to care for your dearest family,’ she While some life insurance companies in Vietnam do MBA at Japan’s Waseda University says, adding that her greatest aim in life have women in top jobs, Tran says the gender pay gap (highest honour list) and Bachelor of is to offer the best education possible to and a cultural preference for men in the workplace International Business at Vietnam’s her two daughters and inspire them to be purpose-led people. make C-suite positions largely inaccessible to women. Foreign Trade University. ‘They elect not to aspire to the highest ranks of an INDUSTRY CONTRIBUTION OUTSIDE THE DAY JOB organisation and take themselves out of the running.’ Between 2016 and 2019, Tran was When she’s not working, Tran However, she has a message of hope for those who an active member of the Vietnam particularly enjoys travelling and hope to tread a similar path to her own. Bond Market Association, helping reading. She also loves to keep fit. Her favourite activities include yoga, ‘I believe Vietnamese women can be successful in to develop the country’s financial market. In February 2020, Tran jogging and swimming. insurance leadership positions if they have passion, strong determination and a can-do spirit.’

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www.arpc.gov.au 32 CUSTOMER DISCLOSURES by Dr Doron Samuell and Dr Demetris Christodoulou

Do advisers skew disclosures? New Australian research reveals that customer disclosures are reduced if they are purchasing life insurance through an adviser and not a call centre. Is this the time to rethink commission-based sales?

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‘Our research suggests that risk misclassification may be exacerbated when advisers act as intermediaries at the point of underwriting.’

Dr Doron Samuell and Dr Demetris Christodoulou

he Australian Prudential insurance products in relation to Regulation Authority risk classification. recently warned life Our reasoning was twofold. First, insurers that they could disability claims are much higher than be penalised if they fail to expected, suggesting that the risk ‘take the necessary actions’ classification is not effective. Second, to improve the pricing advisers assist in collecting personal and sustainability of individual disability disclosures and there is theoretical Tincome insurance (DII) products. motivation for under-disclosure to increase The basis of this concern is that the likelihood of a completed contract and Australian life insurers have lost A$3.4 therefore a sales commission. billion in the past five years with these products. Underwriting risk factors Former CEO of Munich Re’s life and In a research paper that was published in IN SHORT health operations in Australia and New the journal Applied Economics, we examine Zealand Andrew Linfoot stated that aggregated personal disclosures made by insurers were adding losses to their customers through their advisers versus › Australian life insurers have books with each new retail sale of living disclosures made directly to the insurer’s lost around A$3.4 billion over benefits insurance. telephone operators. the past five years through DII Part of the problem is the risk Our research design imputes the products, in part due to due to misclassification due to inaccurate inaccurate disclosures. counterfactual disclosure pattern; that is, disclosures, and our research suggests that what a customer who is screened through › Disclosures are significantly lower when customers are risk misclassification may be exacerbated an adviser would have disclosed if that screened by advisers rather when advisers act as intermediaries at the customer had used a telephone operator, than directly by the insurer. point of underwriting. and the opposite. › The more that is disclosed, The figures presented in Figure 1 the less likely a customer Hayne blowtorch summarise our high-level results, where will be offered a satisfactory contract, which has an adverse The Hayne royal commission applied percentages indicate the rate of disclosures effect on advisers relying on a blowtorch to financial advisers, made by customers through either commission-based sales. with a spotlight on integrity and channel. These disclosures include several › Incentives can compromise conflicted motivations. risk factors in underwriting. advisers’ motives, but a new Given the central role that advisers play We also present the final decision stage code of conduct and training will in the retail disability market, we asked breakdown, in terms of standard terms improve outcomes. whether advisers may be playing a role offered, modified terms offered and the in the poor performance of disability percentage of declined contracts.

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Lower disclosures through advisers Our main finding is that the collection of FIGURE 1 customer data through an adviser, compared with directly by an insurer, almost always results CLIENT DISCLOSURES in lower customer disclosures and in many cases by more than half. ADVISERS VS. TELEPHONE OPERATORS For example, disclosures for back and spine conditions, which are central to long-term QUOTATION-LEVEL disability claims, are significantly lower when customers are screened by advisers rather than Smoking 8.5% 8.5% by telephone operators. SCREENING-LEVEL This means that the risk classification exercise appears to be less effective when an adviser Alcohol 80.3% 88.1% collects the data. The effect is so large that both Slight condition insurers and regulators cannot, and should not, 9.0% 45.2% ignore it, nor should it be feared as a driver of Cancer 31.6% 41.5% genuine reform towards sustainability. Back/spine 16.5% 31.7% At odds with the population Hypertension 18.5% 27.7% When these findings were presented at a conference at the University of Sydney, we were Respiratory 15.0% 24.0% asked whether the lower disclosures could, Cardiovascular in fact, be more accurate and the telephone 15.8% 21.0% operator disclosures might be over-disclosed. Mental health 12.4% 20.7% We find this to be unlikely. After examining epidemiological evidence for population Diabetes 16.5% 20.0% disease, substance use and lifestyle activities, High cholesterol both adviser and insurer-screened customer 11.9% 19.1% disclosures are implausibly lower than the Hazardous pastimes 10.3% 18.2% general population. Asthma Clearly, those who seek disability products are 11.9% 17.7% not necessarily representative of the general Female health 9.1% 16.4% population, but adverse selection explains that, if anything, those seeking disability insurance Skin disorder 7.2% 15.8% should be even riskier. Digestive 6.5% 12.3% Unpacking adviser motives Indigestion GORD 3.6% 9.8% Assuming adviser disclosures are compromised, Illicit drugs we can speculate about the motives. 1.0% 7.3% There was only one disclosure that was Hernia 2.8% 5.9% identical in both groups: smoking. A seasoned adviser would know that smoking disclosures Thyroid 3.4% 4.9% might inflate premiums by 25–50 per cent, Haematological 2.7% 4.7% depending on the product. This means that commission-based advisers Neurological 1.3% 4.3% could receive a substantial lift in revenue when Hearing condition clients admit to smoking, and they may be 2.1% 3.7% comforted that disclosure of smoking at the DECISION-STAGE OFFERS quotation level carries no risk of the contract being declined or standard terms rejected, given Standard terms 73.0% 46.2% the competitiveness of quotes. So why would other disclosures at the Modified terms 19.4% 40.5% underwriting stage be so low? Declined application 7.6% 13.3% With other medical and lifestyle disclosures,

the more that is disclosed, the lower the Source: D. Christodoulou and D. Samuell, 2020 ‘The adviser effect on probability that a customer will be offered a retail insurance disclosures’, Applied Economics, vol.52, no.5 contract or that a contract will be desirable.

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Information asymmetry but regulators would be wise to As shown in Figure 1, a customer going through be cautious about an adviser has a 73 per cent chance of being such an approach, offered standard terms, but this falls to 46.2 per as the unintended cent when going through a telephone operator, consequences of such with an almost equal chance of 40.5 per cent of actions may compromise a vital getting modified, more expensive terms — and a industry and deny many people assistance 13.3 per cent chance of being declined insurance. who cannot afford fees for financial advice. If advisers rely on commission-based sales, they are naturally adversely affected when customers Baby out with the bathwater are not offered a contract or a desirable contract. If our intuition is correct, there may be large Research evidence from the United Kingdom and numbers of customers who have insecure parts of the European Union, where sales-based contracts based on incorrect disclosures. commissions are banned altogether, show an The research that forms the basis of these increasing number of customers relying more on findings comprises one component of a larger standardised online tools, which goes against the puzzle addressing information asymmetries in premise of seeking personalised advice. life insurance underwriting. This is due partly to the loss of confidence in The life insurance industry, regulators and working with advisers following several damning academia need to examine the reasons for these inquiries, and also because fee-based advice is findings and consider appropriate remedies. simply unaffordable for many customers. These are both tricky problems and we Are we strong enough to resist the temptations acknowledge that our research is observational of financial incentives to act dishonestly? It turns and our interpretation for the systematic out that studies on dishonesty find that people imbalance of disclosures speculative. are generally honest most of the time. We like to be honest and true to values and, Compromised by incentives? unless we are psychopathic, we pay a high internal price when we cross the line. We do not claim that advisers are behaving The price we pay for our dishonesty is usually dishonestly, but we are not excluding the an experience of both physical and psychological possibility that incentives can both consciously discomfort. In some instances, we need a substantial and unconsciously compromise conduct. We pay-off to compensate our internal betrayal. suggest that our findings are likely to be general evidence that incentives may compromise any FASEA suggests a path fiduciary relationship. The thorny issue of commission-based advice The Financial Adviser Standards and Ethics will not be excluded from ongoing debates. Authority (FASEA) appears to have found a Advisers have not given up the fight for reasonable way forward. investment commissions and there are still strong It has done an excellent job of creating a arguments for retaining them in some form. legislated code of conduct and establishing an We believe that a reflexive response, banning educational initiative to improve the education commissions and moving to a purely fee-for- and training of advisers. service model also has shortcomings. That is the right approach in our view, as the A ban would certainly eliminate a range of more salient we make our internal conflicts, the problems arising out of misaligned incentives, harder it becomes to betray our values.

DR DORON SAMUELL AND ‘It turns out that studies on DR DEMETRIS CHRISTODOULOU Dr Doron Samuell is a psychiatrist and behavioural economist, dishonesty find that people owner of medical risk management company Professional Opinions and managing director of behavioural economics consultancy Behaviour. He is undertaking doctoral research at are generally honest most of the University of Sydney into information asymmetries in life insurance contracts. Dr Demetris Christodoulou is a senior the time.’ lecturer at the University of Sydney Business School. He is also director of a cross-disciplinary research group whose main goal is Dr Doron Samuell and Dr Demetris Christodoulou to develop viable commercialised solutions to business problems that require the analysis of complex data.

ANZIIF.COM // ISSUE 02 2020 // JOURNAL 36 BRIGHT LIGHT AWARD by Anna Game-Lopata

Challenging the status quo 2019 Bright Light Award winner Tracey Hind thinks it’s about time we created a more socially minded claims handling model for the future.

A ‘proper’ job Hind was recently appointed claims manager for New South Wales and Queensland at Insurance House, but her journey into insurance started in her late teens when she decided to get a ‘proper’ job ntil recently, Tracey Hind was after returning home from travelling. hesitant to enter the Bright Light She landed an entry-level role lodging claims Award because she thought her and handling enquiries at State Insurance in essay-writing skills weren’t going to Christchurch before moving to Brisbane, where she be up to scratch. settled into liability claims at Lumley Insurance However, the evolution of the and gained broad experience across indemnity and application process from written liability disputes. entries to using any multi-media platform gave ‘Following a restructure, I wanted to try UHind the ideal opportunity to craft a visual something different while capitalising on my presentation on a topic she is passionate about. experience so I made the move to working at a Her 2019 winning submission, presented in a live brokerage in the claims area,’ she says. video collage format, was designed to capture the The role at Insurance House allows Hind to call imagination and express ideas about ethics and on her claims background from a fresh angle. procurement in a more playful way. ‘It’s giving me an opportunity to see things from It proposed incorporating the principles of a a different perspective, share knowledge and circular economy into claims handing processes advocate for our clients when needed,’ she says. that promote ethical consumerism and add value ‘At the end of the day, claims is what insurance is to the insurer and the insured. all about. Being able to deliver on that promise and ‘I looked at three areas that could be look after clients when they are going through a overhauled — increasing the rate of repair, ethical difficult experience or time is really rewarding.’ procurement and retention of salvage — as a While she is new to the claims manager role, starting point for exploring how an ethical and Hind hopes to create a happy and collaborative sustainable approach could also be economical,’ environment that fosters a high-performing team. she explains. ‘Transparency, empowerment and development Hind says she was driven by her desire to change are things I have always responded to in my past the traditional claims handling and procurement roles and which I focus on in my team. I am really models to enable insurers to apply their values enjoying the challenges and opportunities.’ around social and environmental issues. ‘There is an opportunity to change the basic Investing in training principles of procurement from being purely OPPOSITE Hind believes the COVID-19 pandemic will driven by economics to a system that recognises Bright Light Award winner bring about fundamental changes to the claims the value of operating in a more socially minded Tracey Hind proposes a more function. She predicts companies will reduce their sustainable approach to the way,’ she says, pointing to the rise in ethical claims handling process, driven reliance on offshore teams and further embrace consumerism that can underpin such a shift. by a rise in ethical consumerism. virtual working environments.

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‘I don’t think many TWO- MINUTE people doubt BIO that the current Tracey Hind rate of resource COMPANY // Insurance House TITLE // Claims manager

consumption is CAREER Hind’s career began with an entry-level role at State unsustainable.’ Insurance in Christchurch. She then moved to Brisbane, where she spent more than a decade working her way up through claims specialist to senior liability claims specialist positions at Lumley Insurance and IAG. In November 2019, she was appointed regional claims manager for Queensland and New South ‘Remote assessments, remote claims teams and New strategies for changing times Wales at Insurance House. more flexible approaches are likely here to stay,’ Hind hopes her Bright Light Award submission will OUTSIDE THE DAY JOB she says. spark new ideas and will challenge the insurance Hind is proud of her As for trends in the claims space overall, Hind industry to consider and implement different participation in Jawun, a is observing insurers making moves towards strategies in claims management that will have a not-for-profit organisation separating duties, centralising and ultimately de- positive impact on the community. that connects Indigenous organisations around skilling their claims departments. ‘I don’t think many people doubt that the current Australia with secondees She is concerned that the claims function of the rate of resource consumption is unsustainable,’ from the corporate or public future may end up being treated less as a career she argues. sector. She recently spent and more as a short-term job prospect. ‘There is a change in public sentiment, increased six weeks working with the Ngaanyatjarra, Pitjantjatjara ‘If it follows that the standard of claims service awareness of environmental and social issues, and Yankunytjatjara Women’s drops, then this would pose a challenge to the and we are starting to see the introduction of Council on a project for its industry,’ she says. regulations that are addressing these issues. finance department. ‘Ensuring claims handlers have opportunities Harnessing this shift is a huge opportunity for TOP TIP for development and incidental learning is hugely insurers to inform, implement processes that Hind’s advice for anyone important. There needs to be an emphasis on reflect their values and add value.’ starting out in claims is to get training and investment in education to keep She adds that there are many benefits to your qualifications early and building capacity in claims handlers. developing an ethical approach to claims, from move into different roles to gain a wide range of experience. ‘If the opportunities arising from the Hayne stimulating local economies to dissuading ‘Never say no to an opportunity royal commission are fully embraced in the claims fraudulent claims, creating social currency and and look for opportunities to get space, we should see the need to have claims realising value in salvaged assets. involved with projects within handled efficiently, honestly and fairly embedded ‘It is a solid thing to do for the planet and would the business.’ and prioritised across the industry.’ increase employee and customer engagement.’

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We’d love to hear from you — suggest a topic or make a submission to the Journal at anziif.com/about/the-journal or email us at: [email protected]

Technical• Keep up to date with the latest research, market trends and big issues facing the industry. 52

40 44 48 58 64 RISK // REINSURANCE // CLAIMS // GENERAL // LIFE // BROKING // The future of event Riding Claims tech Driving a Untangling Bridging the cancellation cover the shock finds the solution for the new digital divide Wimbledon’s pandemic payout waves fast lane complaints super rules COVID-19 has put event cancellation cover in Reinsurers continue Insurtechs are showing Car insurance fields PYS and PMIF forced brokers to the spotlight. Now the market to assess the their potential to plenty of customer legislation has rethink traditional ongoing impact transform the claims gripes, but does served as a wake-up distribution models may be set to harden. and exposures of process long after it all boil down to call for both insurers and embrace the pandemic. lockdown is over. communication? and consumers. digitisation.

ANZIIF.COM // ISSUE 02 2020 // JOURNAL 40 Pandemic impact by Anna Game-Lopata REINSURANCE

Riding the shock waves Reinsurers continue to assess COVID-19’s impacts and exposures, but they remain outwardly confident that the situation is manageable.

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or reinsurers, COVID-19 is shaping Mandarin feature up to be one of the largest events to Interested in impact the sector in living memory. reading this article The global effects of the pandemic, in Mandarin? its potential for long-tail claims and Fits hit to both sides of the balance sheet all PTake me there point to unprecedented losses. Investment bank UBS predicts re/insurance losses in the range of US$60 billion, while analysts at equity research and brokerage firm Dowling & Partners estimate property and casualty claims related to the virus could amount to US$80 billion. Meanwhile, the G20 has committed US$5 trillion in domestic stimulus and US$8 trillion overall in fiscal stimulus packages to support communities and businesses. Central banks have also cut interest rates ‘For life, accident and health insurance, to promote liquidity in financial markets. COVID-19 mortality disproportionately And there’s likely more to come. affects older people, and governments are ‘The full nature and size of COVID- largely funding health care,’ says Woo. 19-related industry losses may not be ‘Claims are expected for workers completely known for years to come and compensation and employer liability, while presently changes day to day, if not hour directors and officers insurance claims by hour,’ says Joy Langford, a partner at are likely where potential negligence Norton Rose Fulbright in the United States. causes infection. Personal accident and ‘Nevertheless, now is the time for cedents travel insurance availability has already and reinsurers to assess how reinsurance been affected, with travel insurers largely may or may not respond to the multi-line withdrawing from the market.’ exposure presented by COVID-19.’ According to Willis Re, there will be a focus on credit risk, specifically whole turnover A manageable situation (or structured) trade credit, surety and According to Willis Re, ‘the consensus mortgage insurance. appears to be that claims themselves are Its impact report also highlights coverage likely to be manageable from the standpoint available in primary policies for business of the sector’s financial strength’. interruption (BI) and how that might flow ‘Event cancellation claims could produce into the re/insurance market. insured losses of US$4 billion to US$6 ‘The reserving challenges for re/insurers billion,’ the reinsurer notes in its recent — practical, operational, legal and technical COVID-19 Impact Report. ‘Assuming most — are formidable,’ the report says. ‘The of these fall on the reinsurance sector, threat from BI is exacerbated by growing this would be equivalent to a midsize vocalism from various US state legislators hurricane and about 1 per cent of the global seeking to revise actual coverage granted IN SHORT reinsurance sector’s capital base (US$559 into something that they wish had been billion, from Willis Re’s half-year 2019 granted retroactively. This action represents reinsurance market report).’ an existential threat to the entire industry, › The global COVID-19 pandemic Dr Gordon Woo, a catastrophist at RMS, never mind the consequences is presenting unprecedented risks of unilaterally changing contract law.’ for reinsurers on both sides of the says life and health insurers will suffer direct balance sheet. losses from COVID-19, but he concedes Woo says the final industry exposure that to date, ‘it has been challenging to will be dictated by individual policy terms, › Re/insurance losses could associate specific claims to COVID-19 for conditions and exclusions. ‘Government reach at least US$80 billion, but action, such as the declaration of notifiable the industry has come to the life reinsurers’. event well capitalised, so it is ‘ICD-10 [medical classification] codes for events, could also trigger policy coverage deemed manageable. COVID-19 have been established, but no or exclusions.’ special guidance for the selection of the › Uncertainties over costs and Asset side risk access to capital require reinsurers underlying cause of death where COVID-19 to evaluate and adjust their has been reported have been established,’ With equity markets crashing and underwriting strategies. he says. interest rates falling because of the pandemic, volatility and losses on the › Modelling is yet to reflect lessons Impact across multiple lines asset side of the balance sheet could from COVID-19, and there is still a lot to learn. The insurance industry unanimously predicts create a much bigger problem for high claims volumes for contingency event re/insurers than insurance claims. › Reinsurers in the US and UK are cancellation insurance as large events — ‘If we see a spike in policyholders willing working on pandemic insurance pools such as the Tokyo Olympics — are to surrender their policies because they similar to those for terrorism. postponed, though some policies may need the money happening at the same have infectious disease exclusions. time as a crash in equity markets, that

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could create liquidity issues for insurers Strategy reassessment and could force them to sell some of their assets,’ says Pierre Vende, head of There’s no doubt that reinsurers must accident, health and life, Asia Pacific, at revise their plans in preparation for a Aon Reinsurance Solutions. range of economic scenarios that will Willis Re points to ‘lower investment affect customer bases, investment returns yields, potential for deteriorating and balance sheets. REINSURANCE underwriting results, possible reduction ‘The uncertainty over cost and access to in premium growth … or inability of re/ capital in all forms will compound the need insurers to manage similar levels of risk for judicious evaluation of and adjustment because of depleted shareholder equity to underwriting strategy at the core of every and the possibility of adverse reserve re/insurance business,’ states the Willis Re development’ as factors that will drive impact report. pressure on re/insurers’ capital base. ‘Many insurers may be holding more risk relative to their balance sheets than they had anticipated, which suggests three options: ride it out, de-risk or hedge,’ the report adds. ‘Whatever decision leaders adopt, there is work to be undertaken to determine the landscape first and then quantify all of the internalities and externalities that will support a decision in one direction or another.’ April renewals speak volumes This year’s April renewals were a good indication of the pulse of the market, with reinsurance rates rising by as much as 50 per cent and the largest risk-adjusted rate increases occurring on loss-hit catastrophe reinsurance programs. Closed Vende says there was a defensive, self- protective reaction from the industry during the April renewals, with several reinsurers seeking COVID-19 exclusions later in the cycle. ‘I think it’s still very early days in terms of these discussions,’ he says, ‘and there’s a lot of work to be done to make sure that COVID-19 coverages, definitions and exclusions are clearly defined.’ Pandemic insurance ‘… it’s still very early days in terms pool on the cards The risk of a serious pandemic has always of these discussions and there’s been on the agenda for life and health insurers and reinsurers, with various a lot of work to be done to make measures in place to prepare for such an event. But Vende says less time has been spent sure that COVID-19 coverages, exploring the possible impact of a pandemic on the asset side of the balance sheet or definitions and exclusions are potential operational risks. ‘The way COVID-19 has placed restrictions clearly defined.’ on the operation of entire businesses is a key aspect to include in future modelling,’ Pierre Vende / Aon Reinsurance Solutions he says. Vende points to future pandemic coverage as a matter of public-private partnerships.

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‘The private insurance industry alone is not sufficient to absorb such a financial impact,’ ‘… when the whole industry is he says. ‘I also think it’s the right time to create some form of pandemic insurance struggling with high uncertainties, pool similar to other risk pools that cover natural catastrophes like earthquakes it is of paramount priority for insurers or terrorism.’ To that end, as reported by insurancenews. to have a precise understanding of their com.au, Convex CEO Stephen Catlin will chair a steering group to examine ways for the United Kingdom’s insurance industry portfolios and corresponding exposures.’ to respond to future pandemics. The Munich Re group, which includes executives from top companies like Aon, Guy Carpenter and Willis Re, aims to work closely with terrorism reinsurer Pool Re. Coming out the other side impact on their respective economies’. In the US, the Risk Management Society ‘Enough buffer capital has been built up (RIMS) has written to the US Congress Despite the continuing fallout, Munich over the recent relatively benign loss period to recommend a pandemic or epidemic Re is one insurer that is confident of for extreme asset-side events such as loss-sharing program along the lines of its emerging ‘comparatively stronger’ from this. The extent to which the industry can existing Terrorism Risk Insurance Act (TRIA), the corona crisis. withstand the volatility in equity markets formed after 9/11. It points to prudent reserving, over a longer period remains to be seen.’ Meanwhile, ratings agencies such as AM cautious investment and excellent risk Best are conducting balance sheet checks management systems as just some of the to examine risk-adjusted capital levels and measures that have helped it counter this ANNA GAME-LOPATA investment portfolios, looking at both the unparalleled situation. ANZIIF content writer claims impact and falling stock values. ‘In times like these, when the whole ‘Pressure for businesses to take out ‘The global reinsurance industry is the industry is struggling with high backstop for the insurance sector, so it pandemic-related coverage could come from uncertainties, it is of paramount priority for will be critical in the coming months to governments reluctant to fund furloughed insurers to have a precise understanding see it step up to the plate. With balance businesses in the future,’ says Woo. of their portfolios and corresponding sheets stretched on both sides, as well as political and public pressure, ‘In terms of reference events for the exposures,’ says a Munich Re spokesperson. prudent adjustments to strategy will be life sector, regulators could include this Willis Re adds that the ‘robustness and required, as well as collaborative thought pandemic as a benchmark, alongside well- future health of the sector will depend on the leadership to incorporate the learnings used scenarios such as the 1918 pandemic, from COVID-19 into an ongoing response severity of the emerging health scenarios for the future.’ with implications for how excess mortality and longevity of the various national is calculated.’ governmental actions and their associated

RESTAURANT SERVES FIRST BI LAWSUIT

A popular New Orleans restaurant, Oceana Grill, was reportedly future civil authority shutdowns of restaurants in the New Orleans the first business in the United States to sue its insurer, Lloyd’s of area due to physical loss from coronavirus contamination’. London, for business interruption (BI) losses incurred as a result ‘One of the key issues in the Oceana Grill lawsuit will be whether of restrictions imposed by the COVID-19 pandemic. the restaurant incurred “direct physical loss or damage” as The restaurant can accommodate up to 500 guests, caters for a result of COVID-19. Typically, “all risk” policies only provide weddings and other private events and — in normal times — coverage for physical property damage,’ the website notes. operates from 8.00 am to 1.00 am every day of the year. It adds that New Jersey businesses ‘seeking coverage under Oceana Grill is arguing that under its ‘all risk’ policy, which similar types of policies may be in luck’ as ‘several recent does not exclude losses that arise as a result of a virus or global decisions have broadly interpreted the term “physical damage” pandemic, the restaurant is entitled to coverage. in favour of coverage’. However, it remains to be seen what the The National Law Review website reports that this includes ‘any courts in Louisiana decide.

ANZIIF.COM // ISSUE 02 2020 // JOURNAL 44 Innovation in claims by Zilla Efrat Claims tech finds CLAIMS the fast lane From 3D virtual site tours to AI tools that perform damage estimates in real time, insurtechs are showing their potential to transform the claims process long after lockdown is over.

OVID-19 has had disastrous More conversations repercussions for humans and the global economy, but it may have also BeThere provides 3D high-resolution virtual transformed many insurers’ claims tours of sites and associated documentation to processes permanently. insurance companies. ‘For us, conversations CGrant Beck, co-founder and CEO of insurtech are starting to occur and insurers are BeThere Group, says that even before the beginning to ask a lot more questions about pandemic, Australian insurers were looking our technology,’ says Beck. ‘We haven’t seen a at new technologies because they didn’t have jump in adoption, but we have definitely seen a enough people to manage claims from natural jump in curiosity.’ disasters such as bushfires and floods. Similarly, London-based tech company ‘Then COVID-19 arrived and that was the real Tractable, which uses artificial intelligence (AI) push off the diving board,’ he says. to assess damage and estimate repair costs in ‘I don’t think there’s an insurer or vendor real time in order to settle claims faster, also to an insurer that hasn’t made some reports more talks with insurers. technological adaptations in the current ‘COVID-19 has created more urgency in the climate. They have all had to change their market for virtual technology,’ says Norval current processes in some way, shape Scott, its head of communications and public or form.’ relations, Europe, the Middle East and Africa. These changes, he believes, are here to stay. ‘For us, the impact of COVID-19 emphasises ‘It all goes back to ensuring the customer a specific trend: AI can reduce unnecessary journey is a good experience. I don’t think we’ll data collection loops and points of contact ever go back to the way we used to do it. The between insurers, repairers and policyholders. way we are doing things now is the new normal While that is specifically of interest to for the future, in a good way. customers now, it’s also what they want going ‘Technology has also given some of the forward. But COVID-19 has meant they’ve IN SHORT smaller players an opportunity to rise up and had to move more quickly and accelerate show what they can do. It’s definitely given our their interest.’ company a spotlight we didn’t have before.’ › Before the pandemic, many Beck says insurers have benefited from doing Virtual winners insurers had been examining very mundane things when it comes to IT for new technologies to improve the past 30 years and were not rushing to One start-up that has thrived during COVID-19 their claims function. COVID-19 adapt to new technologies. But with COVID-19 is Brisbane-based tech company Codafication, has fast-tracked their uptake which has customers in Australia, New of these. shutting down borders, physical contact and physical site inspections, insurers have moved Zealand and Asia. › Virtual inspections have taken quickly to video-type inspection models or Managing director Daniel Sandaver says the off, thanks to self-distancing company’s flagship product, Virtual Assist, has and lockdowns. simply FaceTiming customers, he says. ‘They have been kind of forced over the edge. been implemented by many leading insurers to › Many insurers’ claims There’s a lot of cool stuff around and they keep their teams, customers and contractors processes will have changed safe during the pandemic restrictions. for good post-COVID-19. need to use it to their advantage, because what was normal just a short while ago is ‘Virtual Assist is a virtual collaboration not anymore.’ platform that empowers insurers to process

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‘COVID-19 has created more urgency in the market for virtual technology.’

Norval Scott/ Tractable

ANZIIF.COM // ISSUE 02 2020 // JOURNAL 46 CLAIMS claims remotely,’ he explains. ‘With Virtual Assist, the insurer simply texts or emails the customer a link that transforms the customer’s smartphone into a high-definition video, voice and image capture tool — no apps, downloads or clunky set-up required.’ Sandaver says the insurer can see exactly what the customer sees in real time. It also allows multiple parties to participate in the assessment, including builders, engineers and other specialists. In Australia, he says IAG and Suncorp are using Virtual Assist. ‘We’re also working with a range of mid-tier and challenger insurance carriers, as well as some of Australia’s largest brokerage houses.’ Like other suppliers, he says some of Codafication’s long-term partners were proactively digitalising their insurance claims process before the pandemic began. ‘COVID-19 has fast-tracked what was already on the horizon for the insurance industry: the digital transformation of the claims process,’ he says. ‘Now sales have dramatically increased due to it.’ Sandaver believes his technology will become part of insurers’ normal operations in the future. ‘Once insurers experience the improved business and customer outcomes, there’s no going back,’ he says. Another company that has benefited from COVID-19 is Claim Central Consolidated, which operates in Australia, New Zealand, the United States and South Africa. Head of distribution Greg Johnson says several companies in the insurance sector are using the company’s live streaming solution LiveLogik and virtual inspections for the first time because of the impact of COVID-19. ‘This was not just a local phenomenon. This has happened on a worldwide basis,’ he says. ‘Using the LiveLogik platform internally, our property repair average time from claim decision to receiving excess and signed scope of works was just 5.5 days [a 68 per cent reduction compared with 17.4 days using traditional methods]. Tellingly, 30 per cent of these are received within just three hours and 58 per cent within one day.’

RIGHT 3D virtual tours, virtual assistants and more are finding their way into the insurance sector with gusto.

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Mandarin feature Interested in reading this article in Mandarin? PTake me there

QBE fast-tracks video triaging normal and provides an added measure RESOURCES to keep customers and teams safe. Meanwhile, QBE tells the Journal that it’s Find out more about some of these In New Zealand, Suncorp’s general been investing in new technologies for some insurer Vero managed claims assessments time, through both its venture capital arm emerging technologies here: during the country’s lockdown period using QBE Ventures and its own in-house data and BeThere photographs submitted by customers via analytics team. bethere.net.au their smartphones and scoped the work ‘One of the tools we’ve had on the radar for via the digital pricing platform CoreLogic. some time and fast-tracked due to COVID- Codafication codafication.com ‘The process worked well and Vero 19 is a video triaging tool, which enables plans to roll out digital and video our loss adjusters and builders to manage Tractable assessment more intensively over the the assessment phase virtually,’ says a tractable.ai next 12 months,’ says a Suncorp QBE spokesperson. New Zealand spokesperson. ‘We’ve made it compulsory for all our QBE Ventures qbe.com/ventures ‘During natural hazard events, Vero has suppliers to have implemented this also used drones to review damage in areas technology so that we can ensure claims are that would have been difficult to reach in continuing to be assessed and progressed in other ways, speeding up the assessment a safe environment during this period. and claims settlement process for our ‘The video triage tool is simple and can customers.’ be used by anyone who has a smart device. Drones and remote claims In most cases, the customer will be sent a for Suncorp and Vero link via text message. They click on this link, In addition to using Codafication’s Virtual enable camera and microphone access on Assist, Suncorp has advanced other digital their phone or iPad and then walk around solutions to ensure insurance claims their property following the assessor’s are resolved quickly despite COVID- instructions, capturing footage and images 19 restrictions. ZILLA EFRAT of their property.’ These include increasing web chat The Journal Editor QBE says the biggest benefit of this capabilities, extending online claims ‘They say necessity is the mother of tool is its ability to fast-track claims, functionality and using drones to complete invention. That’s certainly true for insurers’ claims processes, thanks to the self- because it can easily progress them to the roof inspections. isolation and lockdowns during COVID-19.’ next stage and minimise the number of Suncorp’s head of claims Michael Miller site inspections. says this virtual way of working is the new

THE TECH TRENDS TRANSFORMING INSURANCE

Machine learning Internet of Things Social media Telematics Chatbots Drones Machine learning Insurers can use data Mining social media Telematics is like wearable Utilising AI and machine Drones can be used can not only improve from IoT devices such as data is improving risk technology for your car. learning, chatbots can across many stages of claims processing, the various components assessment for P&C Vehicles equipped with interact with customers the insurance lifeycle — it can automate it. of smart homes and insurers, bolstering monitoring devices measure seamlessly, saving collecting data to calculate This review can be wearable technologies fraud detection data on speed, location, everyone within an risk before issuing a policy, used for claims, to better determine capabilities and enabling accidents and more, which is organisation time — aiding in preventative as well as policy rates, mitigate risk and entirely new customer all processed with analytics and ultimately saving maintenance and assessing administration and even prevent losses in experiences. software to determine insurance companies damage following a loss. risk assessment. the first place. premiums. money.

Source: 8 Insurance Technology Trends Transforming the Industry in 2020 Jeff Wargin

ANZIIF.COM // ISSUE 02 2020 // JOURNAL 48 Motor vehicle cover by Christopher Niesche GENERAL What is driving car insurance complaints? There are many reasons motor vehicle cover attracts the highest number of complaints in general insurance, but finding a resolution could be as simple as picking up the phone.

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otor vehicle cover is one of Denial of a claim is the third-highest IN SHORT the most complained about reason for complaints, particularly where insurance categories, largely it relates to mechanical damage which › Motor vehicle cover typically because insurers don’t people believe is accidental damage, but attracts the most complaints in adequately explain what is the insurer says is related to normal wear the general insurance category. Mcovered and what is excluded from their and tear. › The top three causes are policies, according to John Price, lead Policyholders also complain about losing delays in handling claims, ombudsman — insurance at the Australian their excess, when the insurer believes disputes over claim amounts Financial Complaints Authority (AFCA). they are at fault for the accident, but the and denial of claims. In its 18 months or so of operation, AFCA policyholder doesn’t. › Transparent communications, and not just sending an email, has received about 100,000 complaints Add-on insurance sold by car dealerships, could help to reduce the about financial products, with insurance such as tyre and rim insurance and number of complaints. accounting for about a quarter of those and extended warranties, is also a significant motor vehicle policies making up about a cause of complaints, but most of these are quarter of all insurance complaints. resolved quickly with a refund by the insurer. Motor vehicle insurance is typically the most complained about general insurance Confusion over policies category, although the spate of recent Price says the common thread in most natural disasters in Australia has pushed complaints is the lack of understanding housing claims into top spot for 2020. consumers have about their policies. Price says the high number of motor ‘I think people misunderstand what they vehicle insurance complaints relates in part have cover for, often based on the way the to the high number of policies taken out by policy is advertised and promoted as against consumers, but also to the product not being what’s in the actual product itself,’ he says. well understood. ‘The industry doesn’t highlight exclusions in its advertising and it’s not required to, Where the complaints lie but if a person doesn’t read the policy and The top cause of complaints is delays in the doesn’t bother to make those inquiries, that handling of claims, from assessment and can result in a belief that they have cover investigation to approving repairs. when in fact they don’t.’ Next are disputes over the claim amount — For example, Price says consumers aren’t either the amount offered for repair or, if the clear about what accidental damage means. vehicle is assessed as a total loss, its market If people are driving along and their car blows value (if it is a market value policy). a head gasket and breaks down, they see it as accidental damage because it’s unintended and unexpected. They don’t realise that it is mechanical damage and not covered. In one case, the owner of a 2010 Mercedes Benz B180 lodged a complaint with AFCA after they were involved in a crash and ‘I think people misunderstand what they have the insurer refused to cover repairs to the transmission, stating the damage had cover for, often based on the way the policy is arisen as a result of general wear and tear, advertised and promoted as against what’s in which was not covered by the policy. AFCA found in favour of the insurer the actual product itself. ’ because there was insufficient evidence to show the damage to the transmission was John Price / Australian Financial Complaints Authority related to the claimed event, despite the

ANZIIF.COM // ISSUE 02 2020 // JOURNAL 50 GENERAL

owner of the car presenting a mechanic’s report concluding the damage was as a result of the impact to the vehicle. However, AFCA placed little weight on the evidence as expert opinion. ‘This is a handwritten statement and not on any sort of company letterhead or identifying material,’ it said in its determination. ‘The insurer was entitled to exclude the transmission damage from the claim and is not required to take any further action in this regard. However, it is required to arrange an inspection of the complainant’s concerns about the repairs and consider the policy response once that inspection has taken place.’ Solutions to improve outcomes Adam Squire, head of claims at insurance broker Gallagher Australia, identifies another key issue resulting in complaints: assessors and claims handlers are short on time because of workloads and limited authorities. ‘Increased time to assess claims and investment ‘Increased time to assess claims and in resourcing would most likely make a investment in resourcing would most likely make a significant difference,’ he says. significant difference.’ Squire adds that some customers see making a claim as a combative process Adam Squire / Gallagher Australia from the outset, so lodging a complaint is already top of mind when starting a claim. To improve the situation, he believes that insurers should focus more on outcomes than on process. He points to the cost Price gets back to the need for improved of dealing with a disputed loss, which communication — from cover to claims — as generally ‘far outweighs’ the cost of the a solution to reducing and better handling disputed settlement but is a different line complaints. on the profit and loss statement. ‘Taking an ‘There’s no substitute for clear, industry-wide view, we need to stop looking transparent communication in terms of at the claims cost and staff expenses line resolving matters. And that’s not sending an items separately on a P&L,’ he says. email. That’s actually getting on the phone Squire says the industry has changed and talking to people,’ he says. from a model where generally one person ‘I think the industry needs to clearly handled the claim from lodgement through communicate with the consumers. It needs to resolution and took ownership of the to clearly communicate what the cover is. outcome. He says many decisions are And if there’s going to be a delay or if there’s now based on ‘slavishly following a claims going to be an issue, it needs to talk and to handling process’. talk early, not delay it.’

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accredited smash repairers to disinfect CAR INSURERS customer cars before and after repair work has been done. RESPOND TO In New Zealand, AA Insurance introduced three key initiatives for COVID-19 auto insurance customers during Auto insurers in Asia Pacific have COVID-19: a NZ$2 million fund to been doing their part to help look after vulnerable customers policyholders driving less during experiencing genuine hardship; a the pandemic restrictions. freeze on premium increases; and a commitment to reduce premiums Campbell Fuller, head of once it has a clearer picture of how communications and media relations lockdown and other restrictions have at the Insurance Council of Australia, affected its claim costs. says Australian car insurers have been ‘smashed’ by the hailstorms ‘We are mindful people are driving earlier this year and the devastating less, which is reflected in fewer claims bushfire season. Both have stretched being made. We don’t intend to take their resources. Nonetheless, several advantage of this at the expense of our ‘We are mindful people insurers have offered premium customers,’ says Chris Curtin, CEO of are driving less, which is holidays, freezes, reductions or AA Insurance. rebates to customers affected by In Singapore, AXA Insurance reflected in fewer claims COVID-19. announced a S$500,000 care being made. We don’t Sunshine Coast-based insurer Youi, package to help customers affected for example, is providing a 15 per cent by COVID-19. Customers, including intend to take advantage refund to new and existing customers motor insurance customers, who of this at the expense of for three months. At least 50,000 Youi are hospitalised due to COVID-19 customers have opted in for this, says will receive a cash benefit of S$200 our customers.’ Youi CEO Hugo Schreuder. per day of hospitalisation, up to a maximum of 90 days. In the event of Chris Curtin / AA Insurance Similarly, QBE Australia’s ‘laid up’ death due to COVID-19, a S$20,000 cover provides small to medium-sized lump sum will be paid out. Frontline businesses with a premium return for healthcare workers will receive double vehicles that were not driven. these amounts. QBE has also given eligible existing While reductions in road traffic and new motor customers a one-off during COVID-19 may result in fewer A$50 gift card to help them through collisions, Fuller notes that car COVID-19. ‘This equates to around 25 insurance covers a variety of risks per cent of the average policy for the for a full year. April–June period,’ says Vivek Bhatia, CEO of QBE Australia Pacific. ‘Most risks remain unchanged during the pandemic,’ he says. QBE has also extended payment ‘Comprehensive car insurance can timeframes or deferred excess cover you for theft or damage to your payments for up to six months, car while it’s parked on the street, he adds. your driveway or garage, such as theft IAG, meanwhile, allows motor or vandalism, or damage caused by customers to defer premium severe weather. It also covers you payments for up to 90 days, while for damage to the car or damage Allianz Australia’s policyholders can you may cause during essential trips to the doctor, supermarket or park CHRISTOPHER NIESCHE place payments on hold for up to Freelance journalist 60 days. Both also provide help on for some exercise. And, if you have finance on your car, you are usually ‘It is interesting to note that one of the excess payments. key solutions to reducing motor vehicle required to maintain comprehensive complaints is the same as for so many As an extra benefit, IAG and QBE pay car insurance.’ of life’s problems — better and clearer communication.’

ANZIIF.COM // ISSUE 02 2020 // JOURNAL 52 Event cancellation by Abigail Murison RISK

GAME, SET & for event cancellation cover?

Wimbledon’s pandemic payout put event cancellation insurance in the spotlight. But for the many event organisers who do not have communicable disease cover, it is likely to become harder and more costly to obtain.

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or the first time in 75 years, the grass courts of Wimbledon remained quiet in July 2020. No crowds. No strawberries and cream. No tennis stars sporting the traditional all-white Foutfits associated with the tournament. The 5,000-plus ball kids, umpires, maintenance workers and other volunteers, staff and suppliers to the All England Lawn Tennis Club (AELTC) were relieved of their duties. Like myriad events around the world, The Championships, Wimbledon, which is the oldest tennis tournament in the world, was cancelled — another high-profile victim of COVID-19. For Wimbledon, however, there is a silver lining. The organisers have event cancellation insurance that includes cover for cancellation and postponement owing to communicable disease. Many other events have not been so prescient or so fortunate. Warning shot The AELTC is reported to have taken out MATCH communicable disease cover after the severe acute respiratory syndrome (SARS) outbreak of 2002 / 2003. SARS resulted in around 8,100 cases and 774 deaths globally — three-quarters of them in China, where the outbreak began. According to the World Wimbledon’s pandemic payout put event cancellation insurance in the spotlight. But for the many event Health Organization, Hong Kong recorded 977 probable cases and 300 deaths, while organisers who do not have communicable disease cover, it is likely to become harder and more costly to obtain. Singapore registered 238 probable cases and 33 deaths. By contrast, Australia recorded six probable cases of SARS and New Zealand reported just one, with no loss IN SHORT of life in either country. Simon Calabrese, national manager of the entertainment and leisure specialty › The Championships, › Communicable disease › It will be unavailable until business at Marsh, notes there has been an Wimbledon, is one of few cover was typically offered the market assesses its uptake of event cancellation insurance in events that has insurance as part of event cancellation losses. If cover is offered Australia since 2003. But, he says, SARS or cover for cancellation or cover, for an additional again, event organisers can pandemic cover is not an accurate yardstick postponement as a result premium. However, many expect higher premiums to measure why this has been the case. of communicable disease. event organisers opted not and deductibles and more to take it. restrictions. ‘Prior to COVID-19, communicable disease cover was generally considered a low exposure for event promoters, especially for those events being held within Australia and New Zealand,’ says Calabrese.

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RISK

‘When looking at event cancellation risks, large event promoters, conference owners some of the main exposures are inclement and local government, while smaller weather, natural catastrophe, bushfire, venue promoters tend to self-insure their risks,’ damage, non-appearance of a principal ‘The market won’t says Calabrese. performer, power failure, transport strike offer pandemic or Damian Kerin, head of entertainment or failure, and terrorism, among others. Asia Pacific at Allianz Global Corporate & These risks have been more of a contributing communicable disease Specialty (AGCS) in Singapore, explains factor to the increase in promoters seeking that event contingency insurance coverage, as opposed to SARS.’ cover until it knows ‘reimburses irrecoverable costs and expenses incurred, or loss of profit as a A question of scale what its COVID-19 result of the unforeseeable abandonment, Compare this with COVID-19. As of 6 July, exposure is, and the postponement, interruption or cancellation there were more than 11.3 million cases of an event’. worldwide, according to the Johns Hopkins claims are still coming.’ ‘Such policies generally exclude coverage University tally, and the global death toll for an outbreak of communicable disease had passed 533,000. Australia had 8,583 Stuart Hartley / which leads to an event being disrupted,’ cases and 106 deaths and New Zealand EventCover he says. ‘Where coverage is afforded, it is had 1,534 cases and 22 deaths. predominantly restricted to the necessary New Zealand moved hard and fast to cancellation of an event by order of a stop the spread of the virus, with a level 4 government authority or venue closure.’ lockdown that started on 25 March. With all Globally, the Lloyd’s Market Association gatherings cancelled and all public venues wording has a general exclusion for closed, it was a devastating blow to the communicable disease as standard, unless country’s event industry. the disease manifests at the venue when an Stuart Hartley, underwriting manager event takes place. at EventCover and WeddingCover in New ‘Prior to COVID-19, on a case-by- Zealand, has worked hard over the past case basis, event organisers could pay two years to increase awareness of event an additional premium to buy back cancellation insurance in the event industry. communicable disease cover,’ says Hartley. Even so, when the COVID-19 outbreak ‘It was a small premium. The problem was struck, few event organisers were prepared. that no-one took that option.’ ‘Most events didn’t have any cover — Kerin points to the number of COVID- either because they weren’t aware that related provisional claims, already event cancellation insurance was available in the thousands and the majority of or because event organisers and insurance them submitted by companies in the professionals weighed up the risk of United States. communicable disease insurance as part of their event cancellation insurance and decided it was not a risk they needed to cover,’ says Hartley. In Australia, the combined national, state and territory response to COVID-19 has had a similar effect on events. ‘The whole Major events industry has been suffering immensely as a result of the pandemic, from sporting that fell victim events to music and festivals, the arts and conferences,’ says Calabrese. to COVID-19 Risks and challenges The coronavirus outbreak and Big events, such as Wimbledon and the 2020 Olympics, are more likely to have subsequent ban on comprehensive event cancellation cover public gatherings led that includes the risk of communicable to the cancellation disease. ‘As a global event with or postponement of Formula 1 FIFA 2022 significant public attention, we have some of the world’s Australian World Cup always sought to purchase the optimum most high-profile insurance cover available to us,’ says an events. AELTC spokesperson. Grand Prix Asia qualifiers ‘Event cancellation [contingency] insurance is quite a common purchase for

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‘The number of claims outside the US market is considerably lower [only about 10 per cent of all claims]. In Europe, most claims come from the United Kingdom, Germany and Italy. In Asia, there are only a few notifications at this stage,’ he says. ‘AGCS will certainly honour coronavirus- related claims where they are part of our policies and cover is clear. In fact, we should look at this as an opportunity to demonstrate our claims pledge, especially in sectors such as the entertainment industry, where we see a significant number of loss notifications.’ In New Zealand, Hartley says that in the face of closed public venues and limits on who can travel and where, some event organisers have pivoted and proceeded with events via digital channels. Others have been waiting to see what events can proceed at levels 2 and 1 of the lockdown and in what form. ‘Sadly, some events will go out of business,’ he predicts. Locked out Tennis365 reports that the AELTC will receive a payout of UK£114 million (A$215 million) for the 2020 cancellation of The Championships. Ironically, now that event cancellation insurance — and communicable disease cover — are front-page news and firmly on every event organiser’s radar, there’s never been a worse time to buy cover. ‘The market won’t offer pandemic or communicable disease cover until it knows

The Masters Glastonbury Tour de Tokyo tournament Music Festival France Summer 2020 Olympic Games

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what its COVID-19 exposure is, and the claims are still coming in,’ says Hartley. Calabrese notes that the contingency market was already seeing rate increases in late 2019 ‘due to the past few years of large global losses for contingency underwriters’. ‘The COVID-19 pandemic alone is expected to contribute an additional US$5 billion to US$10 billion in losses for contingency insurers and reinsurers alike,’ he says. ‘As these losses are wholly realised, the contingency market will significantly harden throughout 2020 and beyond. ‘Unfortunately, this means that the events industry will be faced with unprecedented premium increases, higher deductibles and restrictive coverage across the board. We will also see vigorous underwriting processes implemented from all insurers as they look to take on a more selective underwriting appetite going forward.’ Leaner, stronger, different Countries that have managed to flatten the curve of COVID-19 infection are lifting lockdowns and restrictions. However, until a reliable vaccine is available, many may KNOCK-ON EFFECT still look to limit gatherings. With a vaccine likely to be 12 to 18 months away, there’s no Event cancellation cover provides CFC’s media team leader Jade Giltrap immediate certainty for event organisers. some level of protection to the says that while licence agreements ‘To some extent, the future of events is organiser, but the financial impact of often include a mandated insurance in the hands of the public,’ says Hartley. event cancellation or rescheduling requirement, CFC designed the ‘I think that people will be ready and due to COVID-19 is also having a standalone policy as an alternative excited to go back and attend events, but catastrophic effect on promotional for companies that would otherwise there will be less expendable income and partners, licensees and businesses have to purchase fully-fledged media people will be perhaps more selective involved in merchandising. liability policies. about what they attend, with more focus on homegrown events. The licensing industry relates to She says the long-term effects of the ‘The future will look different, but we have third-party use of intellectual property pandemic on licensee relationships a phenomenal event industry and the New such as images, logos, graphics and remain to be seen, pointing to the Zealand attitude of “she’ll be right” will spur trademarks and licensees would be rescheduling of the Tokyo Olympics us on.’ expected to have their own cover. to 2021 as a challenge for licensees And Wimbledon? As AELTC board member who have already produced content Tim Henman told Tennis Channel Live: ‘If we ‘They are impacted in the same way bearing the logo for Tokyo 2020. can take some positives out of this time, it that promoters are and would likely would be around communications and the be covered if they had purchased a ‘Those [licensing agreements], first tennis family looking at what’s in the best contingency policy which included a off, are probably incapable of being interest of the sport to hopefully bounce back communicable disease extension,’ fulfilled, either in full or in part, even stronger.’ says Marsh’s Simon Calabrese. because they’re quite short-period contracts just to cater for the event, London-based specialist insurance so every single one will need to be ABIGAIL MURISON provider CFC recently introduced Freelance journalist amended,’ says Giltrap. a customisable licence agreement ‘The COVID-19 pandemic brings home liability product that provides ‘In addition, people will have the fact that the risk landscape is constantly changing. Event organisers, protection to licensees for an expended money on “2020” and companies and individuals need to unintentional breach of their licence now it’s “2021”, so it will be very assess their cover requirements regularly and carefully, to adequately agreements, including cover for interesting to see how all that is mitigate against new sources of risk.’ intellectual property infringement. going to be managed.’

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58 LIFE

One year on from the implementation of Protecting Your Super legislation, life insurers are grappling with the impact on risk and pricing, as well as the need for better communications about the value of their product. Untangling the super rules

JOURNAL // ISSUE 02 2020 // ANZIIF.COM 59 The new super rules by Anna Game-Lopata

ver the past 12 months, IN SHORT two new pieces of legislation have PYS and PMIF significantly reshaped › The implementation of PYS and the group life insurance PMIF legislation aims to protect legislation inactive super accounts being landscape in Australia. eroded by fees and insurance On 1 July 2019, the by numbers premiums, as well as preventing Federal Government’s certain fund members being Protecting Your Super (PYS) package came charged for insurance they may into effect, followed by the implementation not need. O on 1 April this year of the accompanying › Many fund members may be Putting Members’ Interests First unaware of the changes, potentially (PMIF) legislation. leaving vulnerable people without The result has seen a significant number life insurance cover. of superannuation members losing their › Removing fund members from insurance cover and an opt-in system that 3 million the group insurance pool has now places responsibility for cover squarely resulted in premiums rising. on the shoulders of fund members. accounts likely to lose insurance cover as a › Insurers and super funds need to work harder at engaging and PYS and PMIF: exploring result of PYS changes. communicating with members a fundamental shift to help them make the right decisions about their insurance. PYS aims to reduce the number of inactive, duplicate accounts in the super system and the depletion of low account balances by 1.6 million fees and insurance premiums. accounts initially impacted Members with multiple accounts were by PMIF legislation. found to comprise a third of all accounts (about 10 million), causing the erosion of balances in the order of A$2.6 billion per year in fees and insurance. The PYS legislation requires the cancellation of default insurance cover in a member’s account that has not received 47% any type of contribution for 16 months or more, unless the member elects to keep their insurance. Inactive accounts with less than A$6,000 are rolled over to the Australian Taxation Office (ATO). of Australians47+ unaware there53+z The PMIF legislation cancels life insurance policies for super accounts would be changes to super. of less than A$6,000, as well as for new fund members aged under 25 — unless those affected have nominated to keep their cover. ‘PYS and PMIF have fundamentally shifted the way Australians access life insurance through superannuation,’ says Phil Patterson, head of group insurance solutions at Willis Towers Watson. ‘What was once offered as a default 1 in 5 product for all Australians is now under a of those Australians say they voluntary opt-in basis for significant groups understand what these of members. This places the onus on the customer, requiring them to better engage changes are. with their super and their insurance.’

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Insurance cover drops away a year on an ongoing basis. Despite significant preparation for the In July 2019, the Association of Speaking to the Financial Standard in April introduction of PYS, ASFA’s 2019 survey Superannuation Funds of Australia (ASFA) this year, a spokesperson from life insurer found just 47 per cent of Australians were surveyed its members on the impact of the TAL said the combined effect of PYS and aware there would be changes to super, new legislation. Based on the responses, PMIF was to ‘remove around 30 per cent of with only one in five of those having a good ASFA estimated that three million accounts [superannuation] members from insurance understanding of what the changes were. were likely to lose insurance cover as a policies’ resulting in a ‘fundamental change Further, the data indicated an average result of the PYS changes and that the PMIF to the group of members being insured opt-in rate for insurance cover of just legislation could impact about 1.6 million within each individual superannuation fund over 16 per cent, although this varied accounts initially and up to 100,000 accounts across Australia’. significantly between funds, from 7 to 40 per cent of those affected. Improving communication Jenni Baxter, who leads the insurance and fintech teams at Rice Warner, says super funds have generally put in an enormous effort with member communications around insurance. ‘Engagement levels have certainly increased following this, as evidenced by the spike in call centre activity,’ Baxter points out. ‘Unfortunately, default insurance and, in particular, the new rules for it switching on and off, is complex and therefore inevitably not always well understood.’ Russell Mason, lead national superannuation partner at Deloitte, suspects many fund members don’t yet understand the new rules, especially those members who had left a small balance in an inactive account to maintain cover. ‘I’m aware of a number of industry fund clients who are continuing to receive insurance claims from members whose cover ceased as at 1 July last year, despite extensive communications by the funds to members,’ he says. ‘Whether the communications were not read or not understood is debatable; however, clearly there are still a number of members of super funds who do not yet realise their cover has ceased.’ Patterson says implementing PYS and PMIF was a huge practical challenge ‘... clearly there are a number for insurers, super funds and their administrators, especially because they had to meet short regulatory deadlines. of members of super funds ‘Moving forward, we need to lift the bar on communication and engagement who do not yet realise their with members so that awareness and understanding does improve to enable cover has ceased.’ members to make the right decisions for Russell Mason / themselves,’ he says. Deloitte ‘Members can no longer rely on the default system to keep them covered, and the industry is bracing itself for the inevitable complaints and reputational challenges from members who didn’t understand, or were disengaged, and find their claim denied.’

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Insurers arm wrestle with risk and pricing One year on from implementation, an increase in premiums is the most visible impact of PYS. An ongoing challenge will be to avoid a spiral of ever-higher premiums leading to more and more healthy members opting out. Reporting an increase to premiums of 34 per cent for the members of four funds insured by TAL, the Financial Standard quotes the life insurer as saying that removing members from the shared insurance risk pool requires insurers to ‘reassess the risk associated with those smaller groups of members’. ‘In almost all instances, this has unfortunately resulted in an increase in premiums for those members who continue to be insured,’ the spokesperson reportedly said. Patterson says premiums have increased by an average of around 15 to 20 per cent across the industry, mainly in total and ‘Better engagement with members permanent disability and income protection. He says this is partly attributed to the is the key, through the use of smart, selection risk generated by unhealthy members being more likely to opt in but confirms TAL’s position that the personalised technology linked to more significant reason is due to the large reduction in the proportion of salary or contribution data ...’ inactive members. Phil Patterson/ ‘We are, however, yet to see the full Willis Towers Watson premium increase effect as some funds were able to defer the implementation of the PYS increases,’ he adds. ‘PMIF will generate another round of increases, but current indications are that they may not be key, through the use of smart, personalised as large as those for PYS.’ technology linked to salary or contribution data, enabling funds and insurers to Vulnerable members impacted understand where customers are within Perhaps a more disturbing impact of the their employment journey,’ he says. legislation relates to members under the age of 25. Concerns about the new regime Mason points to one of his clients in a According to Patterson, the fundamental blue-collar industry where super fund principle of PYS is sound, but PMIF is ‘a members are predominantly male, dangerous step further’ in its assumption education levels are often low and the that ‘low-balance contributors don’t need average age of fatherhood is around 22. insurance until their account balance ‘These members need insurance cover,’ reaches $6,000’. he says, ‘and, sadly, in my experience of ‘PMIF creates potential gaps in cover this fund, over a period of around 30 years, when a person changes employment or many of the deaths and disabilities are changes super fund, and it will be the most those under age 25.’ disadvantaged and least engaged members Patterson adds that ‘inactivity’ in who will fall into that gap,’ he says. superannuation funds occurs for multiple ‘A great strength of group insurance has reasons, ranging from caring for a sick been its simplicity and affordability arising parent, going on parental leave or even from its very broad coverage. Unfortunately, becoming self-employed. in our view, PMIF adds complexity and ‘Better engagement with members is the reduces the breadth of coverage so that

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the integrity of the group insurance pool is reduced and premiums increase as a result.’ Mason is not a fan of either PYS or PMIF. He argues that prior to the introduction of COVID-19 IMPACT ON PYS the legislation, some funds did have the balance right between an appropriate level AND PMIF IMPLEMENTATION of premiums and cover and the erosion of benefits. COVID-19 asks further questions increased mental illness ‘Yes, in some cases members were paying of an industry still grappling and an associated higher number too much in premiums or did not have with the pricing, product and of disability claims. appropriate levels of cover, but this wasn’t, implementation issues of Then there is the issue of allowing in my view, a reason to introduce PYS,’ Protecting Your Super and Putting he says. ‘Now that we have it, we need to people to access their super early Members’ Interests First. adapt. Educating members about the value to assist them through the COVID- of life insurance has become even more Willis Tower Watson’s Phil 19 crisis. While this could have important. Hopefully, this will result in good Patterson says the vast majority of the unintended consequence of engagement and members opting in to group insurance policies are fully loss of insurance for accounts that cover where they might otherwise not have received it.’ insuring potential claims that may subsequently fall below A$6,000, arise from COVID-19. Patterson believes this is unlikely The way forward to happen. Some policies contain a pandemic Clearly, PYS and PMIF are a wake-up call to exclusion clause that may have ‘Any reduction in account balance the industry to better engage, self-regulate subsequently been rolled over from a high point that exceeds and refine its product offering. ‘The implementation of PYS and the auto to other insurers. However, it $6,000, due to investment market consolidation of small, inactive accounts to is limited in its scope and won’t falls or partial withdrawals under the ATO should be applauded for addressing affect many members. ‘We further the new early release scheme, will the biggest issue in account balance understand this clause has not not affect insurance cover in the erosion — the proliferation of duplicate been invoked by the insurers short term,’ he says. accounts, many with duplicate insurance,’ for the clients we work with,’ Another emerging question arising says Patterson. says Patterson. ‘Now insurers and trustees need to focus from COVID-19 is the potential on good, affordable insurance design for At this stage, it seems likely effect on ‘income’ and ‘salary’ active members and others who need it. that the number of direct death as defined in income protection ‘To rest on our laurels will only generate claims from COVID-19 might be insurance for members being stood additional government oversight and limited, as the overall number of down or receiving the JobKeeper further lead to the de-grouping of group deaths in Australia is small and allowance. life insurance.’ concentrated in older ages where group insurance typically does not apply. ‘It is too early to tell whether ANNA GAME-LOPATA COVID-19 has a long-term effect ANZIIF content writer for claims under TPD and income ‘The Australian system of default group protection insurance. We hope that life insurance is unique and should be valued for the benefits it offers in it will not,’ says Patterson. every industry. While the PYS and PMIF regime may prevent duplication and While the direct claim effects bring attention to inactive accounts, from COVID-19 may be limited, its unintended outcome may be to leave vulnerable members without there is a possible secondary the insurance they need. Insurers effect: any recessionary and trustees need to be mindful of this outcome and to proactively environment could work towards helping consumers mean higher rates of take more responsibility for their unemployment, leading to insurance, especially in the current pandemic landscape.’

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CLIENTS SERVICE YOUR SERVICE 64 Distribution models by Domini Stuart

BROKING Brokers bridge the digital divide COVID-19 has triggered a sudden and dramatic change in how people are working, forcing brokers to rethink their traditional distribution models and embrace digitisation with unprecedented speed.

ot so long ago, Michael involved in the process. Tools that enable Lovegrove, co-founder screen sharing, such as Zoom, Microsoft and CEO of insurtech Teams and Google Meet, are also vital in company JRNY, would the immediate term, but Lovegrove believes have advised traditional brokers need to commit to digitising brokers to start shifting everything they can now for the long haul. towards a digital model. ‘COVID-19 is not going to be short-lived, Once the COVID-19 so it’s extremely important they invest in pandemic hit, he began urging them to IN SHORT offering their services online in a customer- Nmove as fast as they could. centric way,’ he says. ‘Meeting in person is no longer possible Partnerships could be the pathway to [in some regions] and if customers working › COVID-19 has expedited the expediting this process. from home don’t have a complete office need for brokers to enhance ‘Traditional brokers excel at building their digital capabilities. set-up, they may not be able to print out relationships and serving their customers documents, sign them, scan them and › Brokers who embrace to the best of their abilities, and many have send them back to their broker,’ he says. technology could cut their costs, built huge customer bases,’ says Lovegrove. ‘That process is fundamental to the life improve their customer service ‘Partnering with a digital technology provider of a traditional broker, so, in the current and use data from third parties can create a solution that benefits all three situation, you must be able to do all these to hone their advice. parties — the broker, technology partner things online, even if that means piecing › Some customers will continue and, most importantly, the customer.’ together technology where and when you to prefer personal contact, can in order to survive.’ particularly for large and Accelerating a trend Lovegrove is concerned that if brokers more complex policies. Here, a Whichever path brokers choose, COVID-19 hybrid of digital and traditional lack the resources they need for all their approaches will work well. will likely prove to be a powerful catalyst in employees to work remotely, customers their update of technology. could have a poor insurance experience. ‘Historically, brokers may have been using ‘That’s the last thing we want, but there’s services that enabled them to do something a lot of scrambling going on and I hope like quote in real time, but that’s a long way the temporary solutions being put into from the full digital experience you would place will have the capacity to do what’s have if you were a small to medium-sized required,’ he says. enterprise (SME) looking for a business Lovegrove suggests brokers should pack online,’ says Chris Bayley, co-founder prioritise technology that enables their and chief innovation officer at global customers without printers or scanners to insurance distribution platform company self-serve online while keeping themselves Cover Genius.

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In the past, independent broking group Not surprisingly, this sparked concern Insurance Advisernet provided its brokers for the future within the broker community. with technology designed to make their However, the move to online transactions lives easier but managing director Shaun has tended to stay within certain sectors, ‘Pre-COVID-19, there Standfield says many declined to use it. such as SMEs and businesses at specific ‘Pre-COVID-19, there was definitely a stages of their life cycles. was definitely a cohort who thought they didn’t need to ‘Digital has made it much easier for learn how to use these tools because there smaller businesses to get the coverage cohort who thought was someone else in the office to do it for they need without having to jump through them,’ he says. ‘Now, suddenly, they’re too many hoops,’ says Bayley. ‘At this level, they didn’t need to working in isolation and have no choice the products are pretty standardised, so but to learn how to use them as fast as there’s minimal need for advice. SMEs are learn how to use they can.’ also looking for value, so if you can remove Digitisation has, of course, been mouths to feed in that value chain, both the these tools because reshaping and disrupting the insurance customer and the person selling the policy industry for years, in part driven by can benefit.’ rising customer expectations, according Standfield adds that business there was someone to Saurabh Mehta, Singapore-based owners’ insurance needs are relatively partnerships director of Cover Genius. straightforward when they are first else in the office to ‘Insurers were already being forced to starting out. rethink their traditional broker models and ‘At this point in the cycle, it often makes do it for them.’ find innovative ways to present insurance sense to buy your insurance online,’ he Shaun Standfield / Insurance Advisernet options at customers’ digital touchpoints,’ says. ‘But the risks increase with the he says. growth of the business, and you’re also

ANZIIF.COM // ISSUE 02 2020 // JOURNAL 66 BROKING

likely to become more risk averse as you have more to lose. That’s when you’re likely to seek out a broker.’ EVOLUTION OF THE On the lookout for opportunities BROKING BUSINESS Forward-thinking brokers have already identified opportunities associated with Cover Genius’s Saurabh Mehta believes that traditional new technologies. brokers will need to adapt to emerging trends. ‘A strategic approach to technology Here are five changes he anticipates: can increase a broker’s capability and enhance its business proposition in a number of ways,’ says Mike Emmett, CEO As more customers and managing director of equity-based Questions from 1 choose to purchase insurance broker network AUB Group. 4 digitally savvy and some or all of their ‘Digitisation can improve customer well-informed customers insurance online, experience and reduce time-to-serve. will drive brokers to brokers will need to Developing partnerships with parallel stay in touch with trends consider providing end- industries, markets and ecosystems can in technology. to-end solutions. boost market exposure. And leveraging digital customer engagement models The fast learning Brokers will need can increase a broker’s ability to compete 5 curve resulting 2 to offer more and effectively and efficiently in the end-to- from COVID-19 could different products, such end spectrum of insurance customers. inspire brokers to make as the personalised, This is particularly important in the areas training programs contextual or bite-sized where consumers are most likely to start part of their digital insurance products made looking online for their insurance needs.’ transformation. possible by technology. Data and analytics tools are also providing some brokers with Coaching to valuable insights. help brokers ‘The data we draw from third-party 3 understand, segment sources enables our brokers to have and profile users could richer conversations with their clients enable them to apply the and ultimately give better advice,’ says Standfield. ‘For example, we can correct hybrid of digital spell out major hazards for specific and personal service to occupations and provide detailed each customer. information about natural perils. We also draw on data for risks associated with client locations, such as the sea level and proximity to bushland. Five years ago, that would have taken an hour or so to research, whereas now our advisers can access all that and more with just a few keystrokes.’ He points out that while many brokers are expected to act as specialists, most need a diverse range of clients to protect themselves against shocks in any one industry. ‘Our advisers are community-based and community-focused, providing advice to people in all kinds of occupations,’ he says. ‘For them, having access to this level of data can be game changing.’

JOURNAL // ISSUE 02 2020 // ANZIIF.COM 67

Looking ahead models — a traditional strength of brokers.’ Another change is the growing synergies While it’s impossible to forecast the between jurisdictions in the region, notably long-term impact of COVID-19, it’s likely ‘I believe the future new legislation that is bringing Australia that most brokers will need to develop and New Zealand closer together. an approach that encompasses both will see a number ‘There may be differences in terminology traditional and digital services. between Australia and New Zealand, ‘Customers look to brokers for of insurance but at a macro level, there’s a lot more independent, expert advice. Yet they also alignment,’ says Standfield. ‘The changing appreciate time-saving digital solutions,’ companies working legislation in New Zealand in terms of says Mehta. ‘I believe the future will see a licensing for brokers is very similar in number of insurance companies working intent to that in Australia.’ on a hybrid model to reach customers on a hybrid model both physically and digitally with suitable Customers lead the way products and digitised sales collateral.’ to reach customers Mehta believes customer needs will drive A hybrid approach can also play a vital both physically future changes. role in building trust. ‘Whether or not we’re dealing with ‘As an insurtech, we make it possible and digitally ...’ COVID-19 or any other crisis, people want for customers to understand what kind clear options, clear comparisons and clear of insurance they need and then buy it Saurabh Mehta / descriptions of the cover, along with a online,’ says Lovegrove. ‘But we absolutely Cover Genius claims process that’s seamless and easy understand that some people still want to understand,’ he says. ‘Brokers will personal contact. That’s why we offer either need to transform themselves or to redirect them to an adviser or broker partner with insurtechs if they’re going who can talk them through any further to meet their customers’ expectations questions they may have.’ with a transparent and simplified Before COVID-19 put a stop to face- crisis. In the past, customers didn’t pay insurance experience.’ to-face meetings, baby boomers and much attention to pandemics, but now it’s Lovegrove adds: ‘I really want to millennials were the groups most likely to what everyone wants to know about.’ emphasise that, if the traditional model choose personal contact, perhaps because More broadly, digital disruption has driven was struggling, it’s now broken. Brokers that was the relationship they took for many brokers to consider new business must look to engaging digitally now if granted in the past. As restrictions are models. In a March 2020 article for they want to get through the next six to 18 lifted, it will be interesting to see whether InsuranceThoughtLeadership.com, months. The good news is that larger and their digital experiences have changed their EY’s global insurance leader Isabelle more traditional insurers and brokers that expectations. Lovegrove suspects that just Santenac noted some are repositioning act quickly to preserve their businesses are might be the case. as underwriting and risk advisers in going to cut out a lot of unnecessary costs. ‘You have to remember what customers order to boost revenue and strengthen They’ll also be able to provide better service are really looking for, which is reassurance, customer relationships. than ever before. So, while there might and brokers can provide that without being ‘Risk placement will always be important be some short-term pain, in the end their in the same room,’ he says. to commercial insurance brokers, but it will businesses will be more profitable and ‘Clients want to feel confident they’re no longer be their sole focus,’ she said. sustainable if they embrace the change.’ buying the right insurance or that their Santenac also acknowledged that it would claim is being taken seriously. They’re not take considerable effort and investment to trying to make a new friend.’ execute this transition. ‘Brokers must overcome market New focus in a changed world scepticism about their ability to add COVID-19 has also changed the way value in a primarily digital world,’ DOMINI STUART Freelance business journalist consumers look at insurance. she said. ‘There will always be a need for personal contact ‘People are becoming more aware of the ‘They will also need new skill sets, between traditional brokers and their clients, but details of their insurance policies,’ says higher-quality data and modernised as COVID-19 has shown, we can no longer assume Lovegrove. ‘Some business continuity technology. Those that transform these meetings will be face-to-face. Brokers who aren’t tech savvy are now at a disadvantage. They insurance might not cover damage or loss successfully, and immediately, will be well must do all they can to catch up quickly and set up caused by the COVID-19 outbreak, and I positioned to lead the creation of industry a hybrid model for the future.’ don’t think I’ve ever come across a travel ecosystems that connect industry players insurance policy that covers this kind of following variants of all these business

ANZIIF.COM // ISSUE 02 2020 // JOURNAL 68 AWARDS

ANZIIF 2019 Academic Awards Every year, ANZIIF presents a number of awards to celebrate individual student excellence. We congratulate the winners for 2019.

WINNER // after completing a Bachelor of Science. the number of ANZIIF papers I’ve done. I Amy Black After that, I worked in claims before need new challenges to keep me interested accepting a broker support role with over time. Amy Black from Crombie Lockwood. What is your advice to people thinking Crombie Lockwood This year, you started as a broker with about studying with ANZIIF? is the 2019 ANZIIF your own book of clients. What was It is very manageable if you’re also working Diploma of that like? full-time. You can buckle down and study Insurance Broking The promotion was something I had for a few weeks, then go off and have a Student of the worked towards. I’ll admit that while it’s month off before you jump back in. Year. She also won Regional Student of extremely interesting, at times it’s also a It helped that my workplace was the Year — New Zealand and the Rodney bit intimidating. I’m lucky that I’ve had that really supportive of us doing papers, Benjamin Award. time in a support role with other people to so we had time for our study sessions How long have you been in insurance? learn from. and assessments. I’ve been in the insurance industry for It’s the kind of role where you never Get a study partner or group together. seven years. I started in a personal lines really stop learning, which I love — you It’s really nice to know on exam day, underwriting and customer service role can probably get an indication of that from you’re all in the same boat.

ANZIIF ACADEMIC AWARD RECIPIENTS 2019

NAME COMPANY QUALIFICATION/MODULE DESCRIPTION LOCATION HIGHEST MODULE WINNER Anthony Brown LA511-00 Construction Loss Adjustment NSW, Australia April Willis RPS502-15 Introduction to General Insurance QLD, Australia Baron Thomsen National Pacific Insurance Ltd GI502-15 Liability Underwriting Management American Samoa Bradley Barker MetLife Insurance Ltd RM504-15 Management of Specific Risk Exposures NSW, Australia James Taylor JLT Australia RM503-15 Operational Management of Risk VIC, Australia Jennifer Chen Victorian Managed Insurance Authority RPS504-15 Management of Specific Risk Exposures VIC, Australia Justin Liang Sedgwick LA504-15 Loss Adjusting Law and Regulation TAS, Australia Justin Liang Sedgwick LA505-15 Managing Operations TAS, Australia Justin Liang Sedgwick LA508-00 Liability Loss Adjustment TAS, Australia Kevin Chia GI403-15 General Insurance Products Brunei Kevin Chia GI404-15 Introduction to General Insurance Underwriting Brunei Kushali Vekaria St Andrew’s Australia LI402-15 Customer Service for Life Insurance WA, Australia Lebnan El Hajj McLarens LA509-00 Building Loss Adjustment NSW, Australia Linh Nguyen Sedgwick LA506-15 Negotiating Effective Settlements NSW, Australia Linh Nguyen Sedgwick RM501-15 Introduction to Risk Management NSW, Australia Nam Ha GI506-15 Commercial Lines Underwriting Management Vietnam

JOURNAL // ISSUE 02 2020 // ANZIIF.COM AWARDS 69

NAME COMPANY QUALIFICATION/MODULE DESCRIPTION LOCATION Nathan Baran McLarens LA502-15 Loss Adjusting Practice VIC, Australia Nathan Baran McLarens LA503-15 Property and Casualty Loss Adjusting VIC, Australia Dhipaya Insurance Public Company Pijit Jantasorn GI402-15 General Insurance Law and Regulation Thailand Ltd Dhipaya Insurance Public Company Pijit Jantasorn GI405-15 General Insurance Claims Handling Thailand Ltd Pongsagorn Global Adjusting Technical Services LA507-00 Business Interruption Loss Adjustment Thailand Lapwattanamongkol Co. Ltd Quoc Dang Suncorp Insurance LA501-15 Introduction to Loss Adjusting VIC, Australia Thanh Luu JLT Pty Ltd GI503-15 Personal Lines Claims Management Vietnam Thanh Luu JLT Pty Ltd GI504-15 Personal Lines Underwriting Management Vietnam Thanh Nguyen VietAdjusters JSC LA510-00 Theft, Money and Fidelity Loss Adjustment Vietnam

REGIONAL STUDENT OF THE YEAR Holly Wardlaw Arthur J. Gallagher Diploma of Insurance Broking NSW, Australia Samael Rice RSM Tasmania Pty Ltd Diploma of Insurance Broking TAS, Australia Bradley Barker MetLife Insurance Ltd Diploma of Integrated Risk Management NSW, Australia Underwriting Agencies of Australia Crystal O’Keefe Certificate IV in General Insurance NSW, Australia Pty Ltd Linh Nguyen Sedgwick Diploma of Loss Adjusting NSW, Australia Amy Black Crombie Lockwood (NZ) Ltd Diploma of Insurance Broking New Zealand Holly Oberg-Humphries IAG New Zealand Certificate IV in General Insurance New Zealand Leslie Wigginton Regional Insurance Brokers Diploma of Life Insurance QLD, Australia Neil Ackerman McLarens Diploma of Loss Adjusting QLD, Australia Susan Lee Suncorp Insurance Certificate IV in General Insurance QLD, Australia Susan Lee Suncorp Insurance Diploma of General Insurance QLD, Australia Samuel Venning Perryman O’Grady Philpott Pty Ltd Diploma of Insurance Broking SA, Australia Naaz Mohamed A-PAC Investigation Solutions Pte Ltd Diploma of Loss Adjusting Singapore Mohamed Yousof Dhipaya Insurance Public Pijit Jantasorn Certificate IV in General Insurance Thailand Company Ltd Ashwini Singh Capital Insurance Group Certificate IV in General Insurance Fiji Justin Liang Sedgwick Diploma of Loss Adjusting TAS, Australia Christopher Easdown Maiden Australia Holdings Pty Ltd Diploma of Insurance Broking VIC, Australia Rohit Vatsa National Transport Insurance Certificate IV in General Insurance VIC, Australia Debbie Du Preez IAG Australia Ltd Diploma of Integrated Risk Management WA, Australia

RODNEY BENJAMIN AWARD Amy Black Crombie Lockwood (NZ) Ltd Diploma of Insurance Broking New Zealand

STUDENT OF THE YEAR Amy Black Crombie Lockwood (NZ) Ltd Diploma of Insurance Broking New Zealand Bradley Barker MetLife Insurance Ltd Diploma of Integrated Risk Management NSW, Australia Justin Liang Sedgwick Diploma of Loss Adjusting TAS, Australia Leslie Wigginton Regional Insurance Brokers Diploma of Life Insurance QLD, Australia Susan Lee Suncorp Insurance Diploma of General Insurance QLD, Australia

ANZIIF.COM // ISSUE 02 2020 // JOURNAL 70 NEW MEMBERS

NEW ANZIIF MEMBERS ANZIIF would like to extend a warm welcome to its newest members.

*For the period 12 February to 24 June 2020.

FELLOW Francis Gabone Australia Maureen Fielding New Zealand Widya Hasan Australia Ashnil Chand Fiji Fung Tang China (Hong Kong) Michael McKeon Australia Wing Yee Woo China (Hong Kong) Christopher Conrad Australia Gail Omenefa Papua New Guinea Michelle Halprin Australia Wu Jiangtao China (Hong Kong) Li Gao Australia Hamish Campbell Australia Michelle Forbes-Masterson Australia Yin Ho Kwok China (Hong Kong) Neil Luddington Australia Haroon Bari Australia Michelle Kaehne Australia Yuen Ki Luk China (Hong Kong) Ravi Shankar Onbathuveli Gopal Canada Hay Yin Pong China (Hong Kong) Minsun Kim Australia Heather Bone Australia Monica King Australia ASSOCIATE SENIOR ASSOCIATE Hei Yi Wong China (Hong Kong) Mudit Sood Australia Adam Murage Kenya Hermes Ouma Switzerland Nathan Mitchell Australia Amelia Stone Australia Adam Ware Australia Hiu Man Lau China (Hong Kong) Nicholas Danson Australia Amie Eckert Australia Ahmad Alyas Australia Ian Markus Australia Nicole Hunter Australia Andrew Condell Australia Amanda Cooke Australia Jackwyn Costello New Zealand Nicole Huber Australia Arieta Nauakarawa Fiji Amit Sharma United Arab Emirates Jacqueline Prior Australia Nicole Tofler Australia Asena Maramanibusa Fiji Andrew Jenkin Australia Jade Van Eeden New Zealand Nur Farahin Talib Malaysia Bianca Parussolo Australia Anish Nagar Australia James Hoskin Australia Pak Chuen Ko China (Hong Kong) Chiew Wei Chieng Brunei Anthony Rawlings Australia James Woods Australia Patrice Taylor Australia Christopher Streames Australia April Willis Australia James Balis Australia Pavel Frolov New Zealand Craig Rogers Australia Baoxia Liang China, People’s Republic James McNulty New Zealand Peter Jeffrey Australia David Toman Australia Benjamin Will Australia Jeanette Tuckey Australia Pheroza Edibam Australia Dylan De Bruyne New Zealand Benjamin Van der Merwe Australia Jiaying Wu China (Hong Kong) Pok Man Frank Lee China (Hong Kong) Ebony Vince Australia Benjamin Williams Australia Jonathan Rawling United Arab Emirates Pui Ling Cheung China (Hong Kong) Eleni Adiyawa Fiji Brian Egan Australia Jordan Hornby Australia Pui Mei Leung China (Hong Kong) Fahad Al-Ghurani Australia Bryce Yeo Australia Joseph Nohra Australia Ravinesh Ram Fiji Fay Appelby Australia Carole Harach Australia Joshua Young Australia Rebecca Hawkins Australia Feliks Eidelman Australia Catalina Boboc New Zealand Joshua Ward Australia Rebekah-Rose Kyle New Zealand Francis Tauleka Fiji Cathleen Greep Australia Joungyeon Kim Australia Rejoice Hoko South Africa James Beattie Australia Chan Sze Mei China (Hong Kong) Julie Smith Australia Rickie Foley Australia Jennifer Kerslake Australia Chi Fai Law China (Hong Kong) Ka Ho Leong China (Hong Kong) Rochelle Taylor New Zealand Jennifer Bennett Australia Chi Fung Law China (Hong Kong) Ka Kui Wong China (Hong Kong) Samantha Fryer Australia Julie Gaitho Kenya Chi Keung Ng China (Hong Kong) Kam Fai Ostwald Lam China (Hong Kong) Sayuri Hewawasam New Zealand Juveline Vivas Australia Chi Ming Cheng China (Hong Kong) Karissa Miskell Australia Gammadagoda Vitaranage Kannika Wittayakhaw Thailand Chin Yan Kwong China (Hong Kong) Khalil Eid Australia Scott Woodward Australia Kerry Murray New Zealand Ching Ho Yiu China (Hong Kong) Khanh Ta Vietnam Seral Yassin Australia Kiah Austen-Vincent Australia Ching Ho Lui China (Hong Kong) Ki Cheong Cheung China (Hong Kong) Shannon Rowse Australia Lafcadio Toke Solomon Islands Ching Man Lam China (Hong Kong) King Cheong Leung China (Hong Kong) Sharon Griffiths Australia Laura Beames Australia Chris Ewens New Zealand Kirsten Baerwald Australia Shawn Feng New Zealand Lewis Tien Brunei Christopher Dharmaratne United Arab Emirates Kwan Ling Tam China (Hong Kong) Simon Grigg New Zealand Liju Varghese Mathew United Arab Emirates Christopher Goodrick New Zealand Kwok Wah Cheng China (Hong Kong) Sing Yong Lee Singapore Luani Guglielmin Australia Cinzia Lucano Australia Kwong Wai Cheung China (Hong Kong) Siti Nur Syahirah Ariff Phadhillah Malaysia Michael Ha Indonesia Claire Fraser New Zealand Lai Pui Ho China (Hong Kong) Siu Yee Leung China (Hong Kong) Michelle Whalley Australia Connie Gane Australia Lam Yim Ling China (Hong Kong) Siva Sanggary Sambath Malaysia Mini Cheng New Zealand Cormac Walsh Australia Lang Tian Chan China (Hong Kong) Stephanie Willson Australia Muhammad Farhan Australia Courtney Tracey Australia Linda Escott New Zealand Stephen Ross Australia Muhammad Fauzi Mohamad Sarbini Malaysia Courtney Landrebe Australia Linh Truong Vietnam Taylor McEvoy Australia Nadira Shaik Australia Dino Safic Australia Lisa Rigo Australia Thomas Lawrie Australia Nicole Guerin Australia Dion Drexler Australia Luke Birmingham Australia Timothy Holloway Australia Rane’e Kaszynski Australia Duncan Ainsby Australia Man Ni Lam China (Hong Kong) Uvindu Pathirana Sri Lanka Rose Brettell New Zealand Dya Nabila Mali Malaysia Mariann Illyes Australia Wan Chong Leung China (Hong Kong) Sean Hanping Shu New Zealand Erica Ram Australia Marie Silas Papua New Guinea Wee Mae Tay Australia Shanjana Devi Fiji Fabio Lucano Australia Matthew Brown Australia Wesley De Beer New Zealand Simon Marshall New Zealand

JOURNAL // ISSUE 02 2020 // ANZIIF.COM NEW MEMBERS 71

Sophie Marsh New Zealand ALLIED Gunadahe Walawwe Papua New Guinea Natalie James Australia Sophie Seymour Australia Sampath Wijayarathna Neelima Yazali Australia Talia Hodgkinson New Zealand Adam Rhodes Australia Hamish Kerr New Zealand Neil Christian New Zealand Tamara Thornton New Zealand Adam Matteson Australia Hannah Haggarty Australia Nicholas Evans Australia Tiffany Wong New Zealand Allan Lee Australia Haoran Fang Australia Paul Laver Australia Ting Ngai Lam China (Hong Kong) Allan O’Brien Australia Helen Geercke Australia Paul Watson Australia Vince Dang Australia Amanda James Australia Jackii Howe Australia Peter McLellan Australia Amanda Woods Australia James Skiba Australia Quanchai Burns Australia Amrishkumar Patel Australia James Locke Australia Raj Kumar Australia AFFILIATE Andrew Stubbings Australia Jiaqi Tang Australia Rebecca Hammond Australia Aleesha Ottey Australia Andrew Royan Australia Jo Davy Australia Resia Waini Australia Amara Simpson Australia Anna Klease Australia Johanna Ng Australia Richard Penneck Australia Anita Galligan Australia Anthony Lillecrapp Australia John Koeppler Australia Rob Evans Australia Annie Lei Australia Anthony McLean Australia John Usher Australia Robin Edgecliffe Johnson Australia Anthony Kapolos Australia Arman Girsang Indonesia John Kemp Australia Ross Jones Australia Caleb Davis Australia Beau Munn Australia John Borg Australia Ryan Mansom Australia Carly Morris Australia Belinda Smith Australia Johnny Spiller Australia Samantha Kent Australia Chi Ngo Australia Benjamin Mccallum Australia Juana Laucirica Australia Sandy Azzopardi Australia Danika Tymukas Australia Benjamin Drake-Brockman Australia Julie Moorehouse Australia Sarah Mutch Australia David Keane Australia Benjamin Legge Australia Juliet Eckford New Zealand Sarah Chorlton Australia Eayl Machlis Australia Bev Fernando Australia Kandice Wintle Australia Sasha Leonida Australia Edward Nott Australia Blake Knutson Australia Karlie Harwood Australia Scott Utley Australia Emily Barr Australia Brad Fitzpatrick Australia Kate Razmovski Australia Shayna Tweed New Zealand Emily Sofkovska Australia Brian Locke New Zealand Kate Godfrey Australia Shayne Briffa Australia Grant Zorad Australia Britney Wheatley Australia Katrina Johnson Australia Simon Martin Australia Hugh McGregor Australia Brook Ballantyne New Zealand Kelly Wilsmore Australia Siobhan Jacobs Australia Jamie Willmott Australia Carol Scott Australia Kelly Gosnell Australia Stephanie Cowin Australia Jemma Wright Australia Caroline Cattermole Australia Kevin Luck Australia Stephanie Fox Australia Jessica Rappard Australia Chintan Parekh Australia Kevin Foot Australia Stephen Wray Australia Jethin Cherian Australia Chloe Roso Australia Konstantinos Savidakis Australia Stephen Lynch Australia Jody Rayner Australia Chloe O’Connor Australia Laura Nichols Australia Sue Crawford New Zealand Joshua Scutts Australia Christopher Graham Australia Leela Mathad Australia Tamika Bishop Australia Joshua Beleza Australia Cindy Christou Australia Louisa Scott Australia Tanya McCaffrey Australia Marguerita Bevan Australia Clara Miao Australia Luca Pelassa Italy Tara Laybutt Australia Michael Traill Australia Clare Morton Australia Mark Esperida Australia Tasha McNamara Australia Natalie Hockley Australia David Lane Australia Mary-Ann Janse Van Rensburg Australia Taylor Ziersch Australia Natasha Drummond-Hay Australia David Pearl Australia Mathew Lippiatt Australia Teagan Musgrave Australia Raymond McPherson Australia David Scordo Australia Matthew Tarabay Australia Terence Francis Australia Reginald Law Australia David James Allan Australia Matthew Redrup Australia Tony Morris Australia Sandra Lilia Australia Dean Thomson Australia Megan Giddings Australia Trevor Sinclair Australia Scott Albion Australia Deborah Cox New Zealand Melanie Hansen Australia Vincent Higgins Australia Scott Channells Australia Diana Stowers Australia Melissa Hesford Australia Virginia Irving Australia Sharnee Harris-Woods Australia Emily Chadwick Australia Michael Behm Australia Vivienne Ireland Australia Sharon Buffone Australia Emma Johns Australia Michael Maksoud Australia Wai Ting Cheung China (Hong Kong) Sharon Fernandes Australia Emma Andrews Australia Michael Pollard Australia William Welch Australia Taylah Hammond Australia Fritz Neberl Australia Michael Ciullo Australia Wong Ching Lok China (Hong Kong) Ting Yu Australia Gareth Barnes Australia Michelle Prete Australia Zoe Isles Australia Tuan Saban Qatar Gracie Straube Australia Michelle Fitzsimmons Australia Wendy Back Australia Graham Kenafacke Australia Mohsen Abu Jubara United Arab Emirates Yehezkiel Ardaniv Indonesia Gregory Mullins Australia Monica Meng Australia

ANZIIF.COM // ISSUE 02 2020 // JOURNAL OUTLINED FOR OUTPUT

2018 & 2019 WINNER Authorised Representative Group of the Year

ee deddd OUTLINED FOR OUTPUT CORPORATE SUPPORTERS 73

ANZIIF’S CORPORATE SUPPORTERS The ANZIIF Corporate Supporter Program brings ANZIIF and the insurance industry together to work on not-for-profit projects that offer long-lasting benefits to the community, the industry and its people. ANZIIF thanks its corporate supporters for their generous support.

Protecting Professionals

ANZIIF.COM // ISSUE 02 2020 // JOURNAL 74 THE LIST by Jo Davy

01 // Know your duty of care CEO of Red Nose Australia Keren Ludski believes that, while it’s important for professionals to be supportive and empathetic to clients in distress, ‘it is not their responsibility to provide advice or support outside of their scope of practice’. ‘Having clear boundaries will assist professionals to compassionately and appropriately respond to grieving clients,’ she says, adding that professionals then need the right tools to be able to refer distressed clients to appropriate support services. Dr Gavriel Schneider, a specialist in human risk management, says employees should be given clear direction around the expectations for dealing with vulnerable clients who may become angry or upset. ‘If the business’s message is “we’re client-facing, just take the abuse”, then there needs to be mental health tools in ways to stay place to support that,’ he says. 02 // Develop the right skill set Basic counselling skills, such as active listening, clarifying, sane when rapport-building and summarising, are ‘vital’ for anybody dealing with emotional or distressed clients, according to Wynne Wee, vice president, Asia Pacific, at Workplace Options, customers are a company that specialises in employee wellbeing programs. ‘More than that, effective emotional management and conflict resolution skills will allow them to bring their service distressed to the next level,’ she adds. 03 // Accept you don’t have all the answers As customers struggle with health Equipping yourself with the right skills is important, but you concerns, job losses and anxiety should also be aware of the limitations of your knowledge. ‘People lean on experts in uncertain times and they also about the future, looking after your tend to think that if you’re an expert in one thing, you will own mental health amidst all this be an expert in everything,’ says Schneider. uncertainty is just as important, as If you are unsure how to respond to a grieving or distressed client, Ludski suggests simply acknowledging that you don’t three experts explain. know what to say and then asking if there is anything you can do to help. ‘Don’t try to be their counsellor,’ she says. ‘Listen and acknowledge their loss, and then refer them to support services.’ 04 // Create a self-care plan Self-care refers to the activities and practices we choose to engage in on a regular basis to maintain and enhance our wellbeing. For some, this might be a massage or a bubble bath; for others, a gruelling workout — it’s entirely personal. ‘Figure out what energises you, and then incorporate that into your weekly routine,’ Wee advises. ‘Something that will allow you to be in the moment with yourself without distractions from social media or pressures related to work.’ 05 // Seek support from colleagues Both Wee and Ludski recommend managers establish regular debriefing sessions to give team members a safe space to discuss challenges they have faced and share strategies with

each other. Illustration: iStockphoto ‘Prioritising the wellbeing of their employees is paramount,’ says Wee. One of the most important ways to do that, she adds, is by creating a safe workplace environment with the knowledge that employees can go to managers to discuss any issues or concerns.

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