Deborah McBrearty

Great insights from the hot-off-the press Aon D&O insurance market 2024 update! Key take-aways: i) great time to test the programme structure (composition, retentions and limits) against the company's risk appetite / risk profile; ii) great time to validate that the programme is still competitive e.g. pricing & coverage contestability; and iii) carefully select insurer partners based upon the company's priorities and each insurers' total value proposition.

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"The extreme losses being experienced by the insurance industry have some industry stakeholders considering the unthinkable: will the industry collapse? Regulators and insurance leaders in Australia were asked this question at a government inquiry’s public hearing.The inquiry is looking at insurance unaffordability and unavailability due to climate-driven disasters, like the 2022 floods that cost the industry AU$6.3 billion – a country record." I am worried about this. I forsee much more risk transfer to the client regarding the insurance industry in upcoming years. No market can withstand these losses and insurance has a great "out" by reducing the transfer of risk to a third party, thus increasing the margin of self insurance for the client. We are already seeing 10%+ wind/hail deductibles in FL and that is not going to stop. Soon it will be a full 50/50 Quota Share with a carrier to complete a program. A lot of changes are coming, and a Captive is a great way to take on the future of insurance! https://lnkd.in/eiA5-ZSX

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Allianz one click - a type of embedded insurance? Not sure exactly how this works but seems like info collected through the vehicle buying process is used to generate an insurance estimate - no further info required from the customer… I suspect some additional info may be required for binding. Nonetheless, an interesting development and one direct to customer insurers should be watching closely!

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𝗤𝗕𝗘 𝘂𝗻𝗶𝘁𝗲𝘀 𝘄𝗼𝗿𝗸𝗲𝗿𝘀’ 𝗰𝗼𝗺𝗽, 𝗔&𝗛 𝘂𝗻𝗶𝘁𝘀 Excerpts from the Insurance News article: QBE Insurance Australia Pacific has merged its ⭐ workers’ compensation and ⭐ accident and health underwriting teams ⭐ to create a people risk function. ⭐ allowing brokers and clients to benefit from a “unified” offering of underwriting and risk management solutions. ⭐ Anthony D'Oca will lead the new team as head of people risk. GM commercial Patricia Priest said: ⭐ “... bringing together these underwriting teams allows us to have better risk discussions and solutions for our brokers and customers. ⭐ “We know brokers and customers are increasingly looking for specialised, comprehensive risk solutions, and we’re proud to be the first insurer to have unified our underwriting approach to people risk management,” #accidentandhealth #insurance #qbe

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I commend the insurance industry's proactive approach to addressing climate change through strategic investments. The growing frequency and intensity of natural disasters highlight the critical need for insurers to adopt sustainable practices and embed climate risk into their core operations. The shift towards low-carbon investments goes beyond compliance with the revised Solvency II framework. It is a strategic imperative driven by escalating catastrophe costs and the need to ensure long-term resilience and financial stability on a global scale. By aligning their investment portfolios with environmental, social, and governance (ESG) criteria, insurers can mitigate risks while capitalizing on opportunities within the green economy, positioning themselves as key players in advancing sustainable finance. However, this transition must be supported by robust risk management frameworks and sophisticated actuarial analysis to accurately assess and price climate-related risks. Close collaboration with policymakers and other stakeholders will be vital in driving systemic change and fostering a more sustainable future for both the industry and society as a whole. Ultimately, the insurance industry’s ability to not only adapt to but also lead in the fight against climate change will determine its role in shaping a resilient, sustainable future for generations to come!

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The Insurance Council of Australia (ICA) has joined the conversation advocating for the abolition of Stamp Duty on general insurance in Queensland. As someone who has been personally championing this cause for over a decade, it's great to see the ICA lending their support. It has been a challenging journey, as both major political parties in Queensland, Labor and Liberal, have shown resistance to giving this direct cost of living measure the consideration it deserves. Stamp Duty on general insurance affects all Queenslanders in an unfair and inequitable manner, by increasing, what are already high insurance premiums by an additional 19%! This issue is not new. For over 30 years, there have been numerous recommendations to both Federal and State Governments to abolish taxes on general insurance. The Henry Tax Review extensively documented this matter. The Australian Capital Territory (ACT) took the lead by abolishing Stamp Duty on insurance over 16 years ago, and more recently, Victoria followed suit, albeit in a slow and arduous manner. So, why should Queensland be left behind? In my own discussions with business owners, many are unaware of the burden this inefficient/double taxation places on their overall insurance expenditure. Similarly, most home and contents or motor insurance policy holders don't even realise they're being doubly taxed when paying their premiums. I urge everyone to prioritize this issue and make it one of your top three concerns when engaging with politicians this coming October election. The next state politician who knocks on your door asking for your vote, ask them, "Will you abolish Stamp Duty on general insurance?" #StampDutyAbolition #FairInsurancePolicies #Stampoutthestamp #Genuinecostoflivingmeasures

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In today’s challenging environment, we urge Australian insurance leaders to explore four key questions: • Is productivity a top five strategic priority for the organization? • Is the business being bold enough—for example, aspiring to shift the cost base by 30 to 40 percent or more? • How are you using technology and AI to derisk and accelerate your progress? • How rigorously are you tracking the performance of your productivity program? By setting ambitious goals and leveraging cutting-edge tools, your organization can unlock new levels of productivity and secure a strong future. Let’s lead this transformation together. Learn more here: https://lnkd.in/ggMu2dbw #Productivity #Insurance #Strategy #Technology #Australia

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I had the the great privilege of Chairing the Claims Leaders Summit in Sydney last week. Great presentations and super audience participation. Some key takeaways…  > Claims cost inflation: isn’t going away anytime soon. Understanding the drivers of inflation and responding quickly are crucial.  > Regulatory challenges: Balance is required here, perhaps some have over-reacted and grid locking their business.  > Rise of sustainability: The insurance industry needs to move to incorporate sustainable practices through the supply chain.  > Delivering to customer needs: Customer preferences and needs at claims time remain largely unchanged - explain the process in simple terms, advance and resolve the claim quickly, keep people informed and avoid surprises. Even so, limited progress has been made! > Getting the tech to deliver: Modernising the core remains a priority for many but getting the full promised benefits remains hard.   > Leveraging AI: Stuff is happening here but it needs to shift from experiments to scale applications. > Silica is coming - And it will impact claims...there is time to get ready. > More and bigger events: A multi headed hydra and no easy answers. Perhaps an opportunity for more cross business collaboration. Also, geospatial and computer vision show great promise. > Don’t forget your people: Claims is a thankless job and hard. Show your people the love they deserve.  > Claims at the top table: Claims are the moment of truth. Much of the premium dollar goes there. Claims must be at the Exec table. Not necessarily anything new but a good reminder nonetheless. A special thanks to all the contributors - Darren Trott Angat Sandhu Maya Lazarus Paige Vincent Anthony McLean Kerrie Challenor Abhimanyu Bhola Luke Gallagher Margot Wilson Stephen Neale Brianna Cattanach Joanna Aldridge Lynn Raymond Roehrig Nick Vernon Liam Walter Key Media Bernadette Hateley Raffaella Di Cesare Derek Roberts Garry Baddock Carolina Dreifuss

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Our research indicates insurers around the world face similar risks. New Zealand insurance companies share eight of the top 10 risks with global insurance companies: cyber crime, regulation, climate change, technology, human talent, macro-economy, artificial intelligence and change management. This consistency with the global results demonstrates the long-term changes needed for the industry to address the macroeconomic fall-out from COVID-19, environmental, social and governance (ESG) issues, and workforce-related challenges. Explore our Insurance Banana Skins survey here: https://lnkd.in/gNkGGXbt

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A great piece here from Lara Desay and Michael Abramson summarising the PRA’s Dear CEO letter. This covers what funded re is, why the PRA believes there is more to be done to improve risk management approaches, and areas of specific focus. It may take some time for the “so what” to be clear, but points to watch out for might be: 1. Will this impact any current processes not yet signed that have been priced assuming some funded re? 2. Will this dampen the use of funded re, at least in the short term? 3. If we see a little less funded re, how will those impacted respond? Might this be lower new business targets, raising/allocating more capital and/or pricing discipline? 4. Will any impact be isolated to those who use funded re or lead to industry wide trends? This is against a backdrop of what is already a very interesting time for the risk transfer market. 2024 is forecast to be very busy (with total volumes sensitive to jumbo deals), established insurers targeting strong growth and new insurers looking to gain a footing. All whilst we wait for the outcome and implications of the wider “Mansion House” and Government pension review. https://lnkd.in/eqwv8tBM

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In this Risk & Insurance article, Swiss Re Corporate Solution's Katie McGrath addresses ongoing and emerging trends in the insurance industry, the potential of AI and the challenges of modeling the costs of cyberattacks. https://ow.ly/FfNW30sCLVY

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*** IAG locks in reinsurance deals to steady earnings *** Excerpts from the Insurance Business Magazine: "Insurance Australia Group (IAG) has announced ⭐ new reinsurance agreements ⭐to reduce earnings volatility over the next five years. The company has secured ⭐protection for natural perils and adverse development ⭐for its $2.5 billion long-tail reserves. IAG’s reinsurance agreement ⭐Starting in July 2024, ⭐IAG’s five-year reinsurance agreement with National Indemnity Company (a Berkshire Hathaway subsidiary) and Canada Life Reinsurance ⭐will provide up to $680 million annually in natural perils protection, ⭐totalling $2.8 billion over the period. This reinsurance, along with IAG’s quota share and traditional protections, ⭐ will cap FY25 natural perils costs at $1,283 million, ⭐which is 67.5% of gross claims costs. The coverage aims to protect against earnings volatility from extreme weather events. IAG purchases adverse development cover Additionally, IAG  ⭐secured $650 million in adverse development cover (ADC) ⭐from Cavello Bay Reinsurance Limited, an Enstar Group (Enstar) subsidiary, ⭐for long-tail reserves as of January 1, 2024. The cover applies to multiple portfolios, including ⭐product & public liability, ⭐compulsory third-party motor, ⭐professional risks, and ⭐workers’ compensation. IAG’s capital impact and financial targets Due to the new reinsurance protections, ⭐IAG anticipates a $350 million reduction in its Prescribed Capital Amount, ⭐ pending approval from the Australian Prudential Regulation Authority (APRA). Insurance Business Canada Magazine #insurance #insurancenews #reinsurance https://lnkd.in/gQ-DJ-sK

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*** IAG facing class action for allegedly inflating premiums of loyal customers across Australia *** Excerpts from the Australian Broadcasting Corporation (ABC) article: “ ⭐️A law firm is launching a class action against a national insurer ⭐️claiming they used a computer algorithm to inflate premiums for "loyal" customers. ⭐️ The insurance brands involved in the alleged misconduct are the Royal Automobile Club of Victoria (RACV) the State Government Insurance Office (SGIO) in Western Australia, and the State Government Insurance Commission (SGIC) in South Australia ⭐️What's next? Class action law firm Slater and Gordon is also investigating a possible class action involving NRMA customers. The central claim is that ⭐️ a computer algorithm was used to inflate premiums ⭐️for customers considered more likely to stay, ⭐️a practice dubbed "loyalty uplift". Those increases 🧨may have had nothing to do with the person's risk profile or 🧨the cost of providing the insurance. Customers likely to leave were allegedly given smaller premium increases than those who were expected to stay. "The insurance company was ⭐️jacking up the base premium ⭐️before the discount was applied, ⭐️with the effect the discount really had no value at all," Mr Hardwick said “ #insurance #insurancenews #actuaries #datascience #pricing #optimisation Actuaries Institute https://lnkd.in/gQX9UdiH

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Essential reading for directors. The "Climate Scorpion" report from the Institute and Faculty of Actuaries asks: 🔺 Are you taking extreme risks seriously? 🔺 Do you understand how high the stakes might be? Our assessment of impacts – and our management response - tends to overlook the tail risks i.e. risk of unlikely events occurring. The “sting in the tail” 🦂 comes from tipping points and interconnected risks, with potentially ruinous outcomes. We are already seeing tail impacts right now.  Since 2023 shattered climate records around the world, in 2024 we’ve had temperatures reaching close to 50° in parts of WA, Perth breaking its record for the most 40° days and now century-old forests dying in heat and drought. This report calls for the actuarial approach:  ask what would ruin us, and then take action to avoid that. It also introduces the concept of “planetary solvency”. And an excellent reminder that the 1.5° limit is vital.

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Interesting to see the gaps in the role of #insurers in the report from the latest NZ Finance & Expenditure Committee #Inquiry into #Adaptation. Of course insurers can and do actually play a big role in these spaces: - Insurance retreat or premium increase is a more influential signal to many of us than #NaturalHazardRisk; - Insurers can follow the sustainable finance route and encourage #adaptive planning and development through pricing and policy T&Cs, especially during recovery (because it's in their own self interest to have resilient assets and property available to insure); - And insurers can direct their own commercial #investment towards #resilience projects, enabling not just local government, but Iwi, commercial and community groups to access #finance (see self-interest above).

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Ray Dalio's latest Great Power Index paints a challenging outlook for Australia, emphasizing the necessity for a strategic shift towards greater innovation and productivity. It's clear that relying solely on natural resources is not a sustainable path forward; adaptation and evolution are imperative. We need improved engagement between our institutions and corporations with early-stage businesses. These startups bring a unique blend of risk-taking, energy, focus, and a resilient "can do" attitude that larger entities often lack due to risk aversion and cumbersome processes that stifle innovation. To bridge this gap, enhancing collaboration models between large organisations and startups is crucial. Consider Corporate Venture Capital, fostering innovative partnerships and investments, and Corporate Venturing, working directly with startups to co-develop new technologies or business solutions. Key insights from Dalio's report reveal Australia as a modest power, with strengths in natural resources but weaknesses in a small economy and underdeveloped infrastructure. The economic outlook is moderately unfavourable, with high debt and modest growth. However, Australia excels in happiness and health indices, boasting a high life expectancy of 84 years. Fostering innovation through effective partnerships with early-stage businesses is pivotal for Australia's future competitiveness and growth. https://lnkd.in/ddra45Kz

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Unpacking the potential impact of a rupture of the Hikurangi Subduction Zone ... the odds are quite terrifying with scientists estimating a 25% chance of a magnitude 8 quake striking the Hikurangi Subduction Zone (e.g. Wellington) within the next 50 years. Definitely worth learning more and getting prepared. https://lnkd.in/g8y3tT3V

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