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Tough times result in swing towards brokers: Vero SME Index

Tough times result in swing towards brokers: Vero SME Index

Broker satisfaction levels remain high and there may be a shift toward seeking the advice of intermediaries amid difficult economic conditions, the latest Vero SME Insurance Index shows.

Some 78% of clients are satisfied with their broker, with the percentage holding well above pre-pandemic levels of 66% in 2019, while easing from a covid-attributed spike to 84% in the previous survey.

The annual survey shows 61% of respondents use a mix of channels to purchase insurance, up from 54% a year earlier, with the increase driven by a reduction in those who bought entirely through direct channels. The percentage of “heavy broker users” held steady.

Some 62% of direct buyers said they would consider using a broker in the future, up from 50% last year and 41% in 2019.

The findings shows that 68% of broker clients are satisfied with their claims experiences, a 20 percentage point higher result compared to those who buy their insurance direct.

“We know mixed usage is here to stay, but there appears to be some signs there that non-users are increasingly considering broker usage,” Vero Head of Distribution Anthony Pagano says.

“In an uncertain and challenging environment, it’s understandable that clients might be looking for additional support with these important business decisions.”

Mr Pagano says the survey highlights the pressures that broker clients are under, with 61% of respondents nominating economic concerns as a worry. Two thirds of businesses reported that they are experiencing major or moderate impacts from inflation and over half are being impacted by supply cost increases.

The survey finds that 61% of businesses are planning changes in the next year, but 41% admit insurance is the last thing they consider when making changes.

Trust in brokers held stable amid a period that has included record flooding and repeated natural catastrophes, as well as economic volatility. The survey finding 31% of SMEs agree with the statement that “at the end of the day, you can’t trust insurance brokers”, consistent with the previous year.

The level of respondents who agreed that you can’t trust insurance companies increased to 37% from 33%, while 48% agreed that recent events have made them more wary of the industry, up from 41% previously.

The Vero SME Insurance Index report is based on research involving owners and insurance decision makers at 1500 SMEs and 250 large businesses, covering a range of enterprise types and locations. The survey is conducted by BrandMatters.

Vero will provide further updates from the index over coming months covering Environmental, Social and Governance (ESG) issues, natural disasters and employee concerns.

 

Resource:

Insurance News – 13/03/2023

 

PERILS unveils final insurance loss estimate for 2022 Eastern Australia floods

PERILS unveils final insurance loss estimate for 2022 Eastern Australia floods

PERILS, which provides industry-wide catastrophe insurance data, has released its final insurance industry loss report for the February-March 2022 Eastern Australia floods.

The report revealed that the final insurance market loss estimate is A$6,527 million, up from the A$6,292 million estimated by PERILS on September 13, 2022. The latest figure covers the motor and property lines of business, accounting for 9.5% and 90.5%, respectively, of the total industry loss.

The final report provides a comprehensive breakdown of motor and property losses by postcode. The data is further divided by residential and commercial lines and provides loss amounts split into buildings, contents, and business interruption losses where available. It is complemented by postcode-level rain accumulation data from the Australian Bureau of Meteorology.

Australia’s costliest flood

From February 20 to March 11, 2022, Eastern Australia experienced an extended period of heavy rainfall in major river-and-surface-water flooding. The event mainly affected Southeast Queensland (QLD), the north-eastern tip of New South Wales (NSW) and the NSW Central Coast, including the surrounding areas of metropolitan Sydney.

The event has been deemed Australia’s costliest flood and one of the world’s worst losses outside the US in 2022.

Darryl Pidcock, head of PERILS Asia-Pacific, said PERILS’ detailed loss and industry exposure data aims to contribute to industry efforts to manage flood risk and boost the resilience of the Australian economy and society to natural catastrophes.

“The East Coast of Australia has experienced several major storm and flood events during the last three summers driven by persistent La Nina conditions. While current forecasts indicate this will weaken to more normal levels, La Nina has caused the largest industry event loss in Australian history,” Pidcock said. “Despite the challenges faced by our insurance partners in dealing with these Cat events, they continue to support our efforts, for which we are extremely grateful and remain committed to providing value in return.”

PERILS CEO Luzi Hitz commented: “Reliable, systematic data is the foundation of effective risk assessment. Without it, the re/insurance industry is significantly exposed to unexpected losses and dislocation. Making such data available to enable a better understanding of natural catastrophe risk was one of the key drivers behind the launch of PERILS some 14 years ago. Every Cat event further elevates our value proposition, and as the effects of climate change become more visible, this will continue for the foreseeable future.”

 

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Insurance Business Australia – 14/03/2023

 

E-scooter workers’ comp claims have tripled – RACQ

E-scooter workers’ comp claims have tripled – RACQ

RACQ has urged electric scooter (e-scooter) riders to take their time when going to work as new data has revealed that more crashes occur on the morning commute than on the way home. It also found that workers’ compensation claims from e-scooter incidents have tripled over the past three years.

The data is part of an e-scooter injury research project funded by RACQ and the RBWH Foundation through the Jamieson Trauma Institute (JTI).

It showed that 36% of e-scooter crashes occur on the way to work, while 29% occur on the way home. Moreover, Tuesdays are the most common day for an e-scooter crash.

“More and more people are using e-scooters as part of their daily commute, and while they’re a great mode of transport, people need to remember how dangerous they can be,” said principal technical researcher Andrew Kirk. “We all know how easy it is to run out of time in the morning, and we’re often scrambling to get into the office or wherever we may need to be.”

“Make sure you’re allowing extra time for your commute or accept that it’s better to be a couple of minutes late than seriously injure yourself and end up in the hospital.”

Workers’ compensation claims for e-scooter crashes

The data showed workers’ compensation claims for e-scooter crashes had tripled over the past three years.

“There were 421 e-scooter-related workers’ compensation claims made between December 2018 and October 2022,” said JTI researcher professor Kirsten Vallmuur. “An average of almost 16 claims were made every month in 2022, up from less than five per month in 2019.”

The “majority” of claims were made by males, while the most common age group of claimants was 25-to-34 years olds (35%), according to the data. This was followed by 35 to 44-year-olds (26%).

The RBWH Foundation CEO Simone Garske said trauma research funding is crucial to fully inform the community and policymakers about emerging risks, including those posed by e-scooters.

“Thanks to RBWH Foundation donors and our partnership with RACQ, much-needed funding has been provided to researchers so they can review data and compile statistics which provide life-saving insights,” Garske said.

 

Resource:

Insurance Business Australia – 09/03/2023

 

Will ChatGPT transform insurance? Insurtechs speak out

Will ChatGPT transform insurance? Insurtechs speak out

Whatever your feelings are about generative artificial intelligence (AI), ChatGPT believes it can positively impact the insurance industry.

The chatbot, which became a global sensation after its launch in November, made a case for itself at a demonstration at the Insurtech Insights Europe conference last week.

Prompted about the benefits it could give to insurance companies, ChatGPT its “knowledge” (based on 175 billion data parameters) and communication skills could assist customers with their insurance queries and help insurers stay on top of emerging trends and customer needs.

A highly intelligent AI language processing tool, ChatGPT sparked feverish debate about its implications for the digital world, even as it gained popularity in various industries such as healthcare and education.

But leaders of insurtech companies, many of which use AI to transform claims, underwriting, distribution, fraud detection and more, are optimistic about the doors that ChatGPT could open.

The combination of AI and a conversational interface could have transformative power for insurance, according to one CEO.

“If you can ask a computer, in natural language, to solve a problem for you, and it can do what you ask it for with a high probability, that’s a game changer,” said Amrit Santhirasenan, co-founder and CEO of hyperexponential.

“Additionally, if you have AI models that have the sophistication and freeform ability to interpret with intelligence, that is also going to have huge leverage. We’ll see practitioners who adopt these technologies really level up.”

What are the pros and cons of ChatGPT for insurance?

It’s unlikely, at its current stage, for generative AI to completely replace underwriters, claims handlers, or customer service representatives, experts said.

ChatGPT itself has a significant list of pitfalls: it can’t grasp context or nuance in human communication, such as sarcasm; it’s limited in its ability to handle multiple tasks; and it doesn’t have enough expertise to draft complex or technical documents, such as policy wordings.

It can also hold biases or prejudices, based on the data that it’s trained on, which opens a Pandora’s box of ethical issues for insurance companies.

The value in generative AI lies in its potential to automate non-core but essential tasks.

“If someone could write the right prompts to an AI, rather than manually format a spreadsheet, they could work in 100th or even a millionth of the time,” Santhirasenan said.

According to Roi Amir, CEO of Sprout.ai, insurance companies could use the underlying technology in to jumpstart their own innovations.

Sprout.ai trained its own AI to handle insurance claims data, boasting its claims automation platform can process most claims within minutes. Amir said other companies will be looking to harness generalized AI for similarly specific applications.

“If you look at many [AI] models today, you know, they are built to be very specific to a problem,” he told Insurance Business. “ChatGPT is a great generalized model. What I think we will see is many companies using it as their baseline model and add layers of intelligence and specificity for their individual domains.

“It will jumpstart a lot of things because it enables you to start from a much better level of abstraction. Smart companies will be leveraging that to solve very, very specific problems.”

Santhirasenan agreed: “If we take these sophisticated AI models and specialize them, we can create ‘supercharged’ versions of AI applications in different sectors [of insurance].”

It could take time, however, for some specialty and commercial lines to find value out of AI models because of lack of data, the CEO acknowledged. But personal lines like home and auto insurance, where there are hundreds of millions of data points already available for AI to leverage, could see astonishing results.

“We’re only at the beginning of this, but we could see some incredible things out of the personal lines spectrum [of business] very quickly,” Santhirasenan added.

Lawrence Buckler, VP of sales at Sprout.ai, pointed out that AI had existed as an invisible lever in insurance for many years, before ChatGPT came to mainstream consciousness.

“ChatGPT made something tangible that had never been tangible to a lot of people before. At Sprout, we’ve been using AI for several years to solve problems that most people don’t see,” he said.

“Now we have customers that are using AI to fully resolve complex data problems very quickly, effectively, and consistently.”

While the evolution of the technology is still unclear, the overnight sensation around generative AI is a boon for insurance companies, noted Bill Brower, VP of industry relations and claims solutions at Solera.

“The biggest thing [ChatGPT] is doing for the insurance industry is that it gets people more and more comfortable with AI capability,” Brower said.

“The more we see consumers adopting AI in other areas of life, the more it’s going to help insurers with [using AI] in their applications.”

 

Resource:

Insurance Business Australia – 08/03/2023

 

‘Climate trauma’: Australians battle extreme weather and unaffordable premiums

‘Climate trauma’: Australians battle extreme weather and unaffordable premiums

A new study from the Climate Council details “widespread distress” amongst Australians facing severe weather events and pressure from rising insurance premiums.

The report says soaring prices are “increasing the burden” on policyholders to protect their properties against worsening natural disasters.

Of more than 2000 survey respondents who held insurance plans, 64% reported a rise in their premiums in the last two years, with a majority attributing “climate disasters” as a reason. 6% of respondents said they cancelled their insurance due to the increasing cost.

The report found that about 21% of overall respondents reported having no insurance.

Climate Council Research Director Simon Bradshaw says more Australians are feeling “climate trauma,” with over 80% of respondents saying they experienced a natural disaster within the past five years.

“Decades of scientific research have taught us a lot about the physical risks of climate change, but far less attention has been paid to the impact of climate change on our mental health,” Dr Bradshaw said.

“The results highlight the devastating toll that climate change is having on the mental health of our communities, and uncover many practical steps we should be taking.”

Lismore City Councilor and Resilient Lismore MD Elly Bird says locals are experiencing “a collective trauma” from last year’s floods, with many unable to afford insurance or having claims denied.

“People simply cannot navigate day-to-day. We’re exhausted,” Ms Bird said.

“While we continue to rebuild and may well achieve some type of ‘normal’, it is abundantly clear that the mental health repercussions will be with us for a very long time.

“As a society we need to have serious conversations about the sting in the tail of climate disasters: about the mental health fall out – not just here in Lismore – but all around the country.”

The Climate Council says mental health systems require significant reforms to improve preparation and aid for disaster victims, particularly those in regional communities.

It also calls for the establishment of an independent insurance price monitor and a “comprehensive review of the impact of climate change on the provision of insurance”.

Click here for the report.

 

Resource:

Insurance News – 01/03/2023

 

PSC Network provides comprehensive package for reps

PSC Network provides comprehensive package for reps

This article was produced in partnership with PSC Network

PSC Network Insurance Partners is on a drive to expand its ranks of authorised representatives (ARs) around Australia.

It is heartening to know that in the more challenging business environment likely to continue in 2023 a business partner with credentials such as PSC Network is able to underpin the aspirations of insurance brokers who want to make their mark.

“Being an AR is the most efficient and effective way to be an insurance broker in your own right, while getting back-office support and access to other valuable services from a larger network,” says PSC Network chief executive Tony Walker.

Walker has seen talented brokers struggling under the demands of unappreciative employers and sees becoming an AR as a golden ticket to financial success and a much happier lifestyle.

“You own your business 100%, so you can utilise the skills and experience you have generated over many years to suit your needs and those of your customers.”

PSC Network is part of the bigger PSC Insurance Group, and the services of the parent are available to PSC Network ARs. PSC Insurance has Offices in Australia, NZ, Asia and the UK meaning that the know-how of a major international firm is on tap for PSC Network reps.

In each state PSC Network has its own regional managers to help with both setting up and expanding your business if needed.

“Their principal role is to provide day to day assistance on the placement of business in the market and to assist in building your business in a compliant manner for the benefit of your clients.”

Other specific support includes such things as access to marketing and new business lead generation organisations to assist in growth of an AR’s portfolio.

“They can target specific industries in your area to generate leads,” says Walker. PSC Network is even willing to provide the funding for this if required, he adds.

“We can also assist the AR in the placement of business to the market through our contacts and leverage arrangements, so you are not left on your own.”

PSC Network also has a National Claims Manager available who can assist in early settlement of claims for your clients.

ARs also get fully funded professional Indemnity cover including cyber.

Setting up systems

Getting your business set up can seem overwhelming at first but PSC Network provides technology support, banking, and premium funding arrangements plus internal processing systems for its ARs.

ARs manage their own processing through the Winbeat processing and compliance system. There are no transaction fees applied separately when processing client invoices.

“The system is extremely easy to use and fully paid for by PSC Network. Sunrise and other insurer platforms are also included which allows you to quote and bind business 24 hours a day anywhere in Australia,” says Walker.

There are also no sign on fees when joining PSC Network, which now has in excess of 200 plus ARs and 400 plus support staff around Australia and New Zealand.

Perhaps one of the most appealing aspects to brokers who have existing networks in their local communities and a good level of experience is the fact that the AR trades under their own business name thereby promoting their business and not the licensee’s business. Customers will continue to attach to the AR’s brand even while it is part of the PSC Network.

The fine print

With the PSC Network model we identify with experienced general insurance brokers who have the long term commitment to build their own business, are customer focused, compliant and motivated.

Training and compliance reviews are undertaken both individually and as a group through both the PSC Network annual conference held in August each year and one day workshops in each state on a regular basis to address local issues and meet with local suppliers,” says Walker. PSC Network clearly stands behind its slogan of local knowledge and global reach.

The PSC business model is designed to add value and help ARs build successful broking businesses. With inhouse specialists for technology and compliance, marketing support, a robust underwriting network, a choice of premium funders, full PI cover and the possibility of another income stream from life insurance via an internal partner and more, it’s a solid package waiting for motivated brokers to take advantage of.

Click here for more information about becoming a PSC Network AR.

PSC Network Insurance Partners is a division of publicly listed PSC Insurance Group Limited. As a Group, PSC aims to be the trusted insurance and risk management partner for its diverse range of Small to Medium Enterprise (SME) clients. PSC Network Insurance Partners Pty Ltd is an Australian Financial Services Licensee, responsible for a large network of Insurance Advisors across Australia.

 

Resource:

Insurance Business Australia – 28/02/2023

 

AFCA receives more than 2,000 complaints in a year since flooding event

AFCA receives more than 2,000 complaints in a year since flooding event

AFCA receives more than 2,000 complaints in a year since flooding event

It has been nearly a year since severe rain caused extreme flooding in the East Coast region, and the Australian Financial Complaints Authority (AFCA) has reported that it has since received a total of over 2,000 complaints related to the incident.

According to AFCA, the most significant issue among the complaints it received was the delays in claim handling.  The disputes authority also stated that the 2022 flooding was its second largest “significant event” since AFCA’s inception in November 2018, just behind the COVID-19 pandemic.

AFCA noted that the number of escalated complaints it received is more than four times the number it received related to the next most significant weather event, the South-East Coast storms of February 2020, which led to 493 complaints.

“We are concerned by the volume of complaints that have been reaching us about delays by insurers,” said AFCA chief ombudsman and chief executive David Locke. “We understand that the scale of this event has put pressure on insurers but these sorts of complaints can often be avoided through good, regular communication with customers.”

Locke added that AFCA wants to see insurers resolving more complaints within their own dispute resolution process, over relying on AFCA, as relying on the independent organisation prolongs the time customers spend in “limbo.”

Flooding beset South-East Queensland (SEQ) and northern NSW after storms hit the areas on February 28, 2022. The flooding affected more than 20,000 homes in SEQ, and another 3,000 homes in NSW. It has since been deemed Australia’s costliest flood, and even topped 2022’s list of most expensive insurance losses outside of the US.

The AFCA chief executive, in a statement, also raised concerns about general insurance complaints apart from those related to flooding. The organisation has seen a 65% increase in general insurance complaints in the 2022-23 fiscal year, so far. As of February 23, AFCA had registered 17,163 general insurance complaints, compared with 10,417 complaints registered during the same period in 2021-22.

 

Resource:

Insurance Business Australia – 28/02/2023

 

‘Not acceptable’: NSW brokers flag recovery concerns one year after floods

‘Not acceptable’: NSW brokers flag recovery concerns one year after floods

As northern NSW communities mark the one-year anniversary after historic flooding hit the region, local brokers say many residents continue to face a difficult path to rebuild their lives.

Avid Insurance Brokers MD Dave Katschke, based in Alstonville, tells insuranceNEWS.com.au that despite most flood-related claims having been resolved, the process “has not been an easy task,” noting issues with insurers’ handling.

“Overall, the service standard expected from the insurers has not been acceptable to the insureds or brokers,” Mr Katschke said.

“It is not uncommon for our office to contact an insurer on multiple occasions and not receive a response for weeks.”

Mr Katschke says insurers’ actions have placed unnecessary stress on his clientele during a difficult period by complicating claims handling.

“We commonly see multiple claims handlers on a single claim which delays the claim process due to the new claims handler being unfamiliar with previous correspondence/discussions,” Mr Katschke said.

About 10% of Mr Katschke’s clients’ claims remain unresolved due to delays caused by specialists or ongoing Australian Financial Complaints Authority (AFCA) complaints.

He says while insurers have provided some clients with temporary accommodation, issues remain due to the “distinct lack of available accommodation within the region”.

“We’ve had insurers agree to hire caravans in place of homes just so that clients have a place to call ‘home’ while repairs are underway,” he said.

As the 12-months offered for most insurers’ temporary accommodation benefits comes to a close, policyholders are now at risk of losing their provided living arrangements.

“For those who have not already done so, we are seeing insureds move back into their partially repaired properties or back with family/friends,” Mr Katschke said.

“For the most part, properties are ‘liveable’ but not restored back to the condition that they were in 12 months ago.”

Beyond issues with claims, locals are facing an ongoing crisis of insurance affordability, with premiums exponentially rising, leaving many lacking the required amount of protection for future events.

“What we’re finding right across Northern NSW is the region has been blanketed as a high-risk zone, not only due to flooding but storms damage as well,” Mr Katschke said.

“A lot of the insurers who used to provide coverage for Home, Landlord & Farm products are declining outright to offer a quote which has severely limited the coverage options for insureds.”

But Mr Katschke spoke highly of the local community’s resilience during the recovery process, saying it has remained united in the face of the devastation.

“Our community is very close with one another and in the face of tragedy, we’ve seen heroes be born,” he said.

“It has been and continues to be a huge battle to rebuild lives and properties all across the region but we are resilient and there is great comfort in knowing that we have one another to lean on in our time of need.”

Claims Manager at Ballina Insurance Brokers Kerry Humphries says many of those with flood cover were provided with temporary accommodation, but needed to stay at their properties to prevent theft.

“Theft is still rife,” she said. “Those with no flood cover had to fend for themselves. Many had to sleep on the floors in their damaged homes.”

She says flood cover is unaffordable, or unavailable.

“As a result, the community will be forced to take cover excluding flood, which will leave them exposed to uninsurance should this type of event occur again.

“Many people are suffering and some will not recover from this event. Mentally and physically many have been pushed to the limit.

“There are many shops closed still in Lismore. This will take years to recover from. If another event of this magnitude occurs in the next one to three years, you could kiss Lismore goodbye.”

 

insuranceNEWS.com.au – 23/02/2023

https://www.insurancenews.com.au/the-broker-2/not-acceptable-nsw-brokers-flag-recovery-concerns-one-year-after-floods

Starting Out – What Insurance Do I Need?

Starting your business journey is one of the most challenging yet rewarding decisions you’ll ever make. My journey started a little over 3 years ago. Yes there are risks involved by why play it safe forever.

Before you make that final decision to back yourself, it’s important to surround yourself with like minded individuals and professionals to support you along the way, especially at the planning stage.

We provide advice and guidance to a large number of start up SME’s and one of the most frequent questions we are asked is what type of insurance do I need to get started? Answering this question depends greatly on the business products or services you plan on offering to your customers as well as the structure of the business your accountant has recommended such as incorporated company, partnership or sole trader for example.

https://www.steadfast.com.au/well-covered/insurance-for-starting-out-business/how-to-minimise-being-underinsured

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