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Swiss Re outlines further market hardening

By Insurance, News

It’s fair to say that the coronavirus pandemic has had a massive impact on the reinsurance industry – but just how bad will things get? According to reinsurance giant Swiss Re, it appears that prices are only going to increase.

The firm has pointed to further market hardening, but outlined a positive outlook for renewals. It expects price increases across all segments to continue, pushed on by low interest rates, growing risks and large claims.

In a statement issued today, it outlined “rate improvements in many markets, and particularly in loss-affected segments” indicating further rate hardening across all lines of business. At the same time, a reliance on underwriting profits will increase in the low interest environment with Swiss Re suggesting there will be more opportunities for reinsurers thanks to increased insurance demand and growing exposures.

“Swiss Re expects prices to continue to increase driven by the combination of lower interest rates and the need for prices to cover increasing loss trends as demonstrated by recent experience across the world,” it stated.

In particular, it focused on hurricanes leading to severe losses, noting that the current Atlantic hurricane season is the first on record with nine tropical storms forming before August, with 13 before September. This is being further aggravated by a higher frequency of bushfires and floods, prompting rising claims.

“Even before the COVID-19 crisis, most major markets were operating at below-average profitability,” said Swiss Re CEO of reinsurance, Moses Ojeisekhoba. “To be able to address the growing need for insurance protection in a sustainable way, further price increases across all lines of business are clearly needed.”

Overall, Swiss Re suggests the non-life insurance market will continue its growth, driven largely by an expansion in exposure. It forecasts a global growth rate of 3.3% in real terms over 2021.

READ THE ARTICLE AT INSURANCE BUSINESS AUSTRALIA

Market readies for P&I loss as oil tanker in Sri Lanka catches fire

By Insurance, News

The marine market is readying for another potential loss as the oil tanker MT New Diamond is still engulfed in flames off the coast of southern Sri Lanka — days after a fire broke out on board.

After a boiler explosion in the engine room, a fire broke out on board on September 3. The Sri Lanka Navy, Sri Lanka Air Force, Sri Lanka Ports Authority, the Indian Navy and the Indian Coast Guard have been working to extinguish the fire.

One crew member from the Philippines has died, while 22 remaining on board were rescued. The 270,000 metric tons of crude oil remain on the ship.

An official statement from the Sri Lankan Navy said however, that there is no risk of an oil spill. “Necessary steps are being taken to prevent the fire from spreading to those crude oil storage facilities.”

“Efforts are on to prevent the fire from spreading to the cargo oil. No information has been received of an oil spill yet. Firefighting continues,” the statement added.

Despite these assurances, the market is preparing for another

InsuranceAsia News (IAN) has reached out to market players for comment on the claims and loss adjusting side. Tanker fires are usually covered under traditional marine policies.

The fire is occurring only six weeks after the disastrous MV Wakashio oil spill off the coast of Mauritius. Shipowner Nagashiki Shipping holds cover from Japan P&I Club, who said they are making “internal estimates” on the claims cost and don’t have public figures to disclose yet.

For more on navigating marine risks and profitability, see here. 

MT New Diamond is a large, crude oil tanker built in 2000; it flies the Panama flag.

 

READ THE ARTICLE AT INSURANCE ASIA NEWS

COVID-19 | Helpful tips for pleasure craft owner

By Insurance, News

Dear Business Partner,  

We hope you and your loved ones are staying safe and healthy through these challenging times. We are facing an unprecedented situation and our goal is to support you and your clients in any way we can.

Whilst we may be working from different locations than you are used to, we will continue to support you, as we have in marine pleasure craft lines for over 15 years. In these challenging times we would like to remind you of some features that can assist customers who may be facing financial pressures.  

As you are aware, for privately owned, insured and registered trailer craft and PWC’s, our lay-up feature is available and can help reduce premiums payable. Applying layup will reduce the premium for each month selected and cover will be restricted only to the agreed location where the boat is parked during the elected months. Transit of the boat to a recognised marine dealer for servicing and maintenance is covered even during the lay-up months.  

Lay-up can be applied to your clients’ policies by emailing customerservice@nautilusinsurance.com.au and stating the policy number, specific layup months required and exact storage location for approval. Our team can then process this request and send you a confirmation.  

Other ways to reduce premiums include reviewing the ‘sum insured’ using your free broker agreed value link and removing add-ons such as water skiers liability from trailer boat policies, if not required.  

Please remember, marine environments are unique and clients should continue to be proactive on maintenance and support around their craft, especially when permanently kept in the water. You can access other helpful tips via our staff, through information regularly provided in Nautilus Marine, The Magazine, or from a clients’ local boating industry or support partner.

Such options for your customers are not limited to pleasure craft and we have similar considerations on our caravan and motorcycle domestic lines. In our commercial industry and Proteus Marine lines, our experienced underwriters and business development staff can help you shape appropriate solutions as well.

If you have any questions please don’t hesitate to contact your local Business Development Manager using the contact details below.

We are open and here to support you and your business in any way we can.

Regards,  

The NM Insurance Team

IAG Announces COVID-19 Customer Support Package

By Insurance, News

IAG has unveiled a series of measures to support travel and small business customers hit by the coronavirus outbreak – and other insurers are expected to follow suit.

The general insurance industry has been under political pressure to develop a COVID-19 response similar to that announced by the banks, but insuranceNEWS.com.au understands it has not been possible to co-ordinate an industry-wide position.

Last night IAG confirmed its approach, which applies to direct and brokered insurance offered through its NRMA Insurance, CGU, WFI, SGIO and SGIC brands.

Suncorp is expected to announce similar measures either today or Monday, along with some other major insurers operating in Australia.

IAG’s key measures are:

• Travel insurance refunds for any unused proportion of premiums, including full refunds where

customers have not yet travelled and have not claimed

• Deferred premium payments for up to six months for small businesses experiencing financial hardship

• Refunds on the unused portion of premiums for small businesses who cancel their insurance, with no administration or cancellation fees

• Small businesses which need to close premises due to the impact of COVID-19 can maintain full insurance cover on the premises with no changes to premium

• Reduced timeframes in making payments to suppliers from 30 to no more than 15 business days.

IAG MD and CEO Peter Harmer says the virus is the latest disaster to hit communities “in what has been a catastrophic start to 2020”.

Mr Harmer says IAG is employing extra people to “bolster the company’s ability to respond to customer needs quickly and efficiently”.

“More than 90% of our people are now working from home, including our customer-facing staff who have been set up to work remotely since 2018,” he said.

“We are also employing up to an additional 400 people in the customer-facing parts of our business to help meet the needs of our customers at this time.”

IAG expects the measures to be in place by Monday.

Insurance Council of Australia (ICA) spokesman Campbell Fuller told insuranceNEWS.com.au that ICA “supports measures from its members that assist customers during the COVID-19 crisis”.

Coronavirus (COVID-19) Update – CGU introduces support measures for customers impacted by coronavirus

By Insurance, News

Update From CGU

Dear Valued Partner,

CGU introduces support measures for customers impacted by coronavirus

CGU is pleased to announce a series of measures to support current customers as the coronavirus (COVID-19) continues to spread, and impact families, communities and businesses.

The key measures which apply are:

  • Deferred premium payments for up to six months for small businesses experiencing financial hardships; and
  • Small businesses which need to close premises due to the impact of COVID-19 can maintain full insurance cover on the premises with no changes to premium

We have also employed additional people to bolster our ability to respond to your & your customer’s needs quickly and efficiently.

Deferral of premium payments for up to six months

  • We are offering all small business customers the option to defer payment of their annual or monthly premium for up to six months.
  • This means they will continue to be covered by their existing insurance policy without needing to pay their annual or monthly premiums now.
  • If they do need to make a claim during this time, the cost of their premium will be taken as part of their claims cost.
  • This offer applies to all eligible small business customers – excluding workers’ compensation policies.
  • This is available until 30 September 2020. We will reassess this as needed.
  • For small business customers to take up this offer it will require you to do the following:

–  For annual payments – extend your credit terms to small businesses experiencing hardship for up to six months from policy inception. Remit payment to us as soon as reasonably practicable thereafter. We will adapt our credit control policy and procedures to accommodate these payments outside of your standard credit term arrangements with us.

– For monthly payments – contact our Premium Administration team on 1300 766 724 to make arrangements for deferral of monthly premium payments.

  • This is available to small businesses with an annual turnover of less than $50 million and / or a sum-insured asset value definition of up to $10 million.

Small businesses which need to close premises due to the impact of COVID-19 can maintain cover on the premises with no changes to premium 

  • Most insurance cover for business premises relies upon occupancy. Vacant premises are higher risk and typically attract higher premiums.
  • We understand that some small business sites won’t be occupied at this time due to COVID-19, so we will provide existing customers full cover on the premises with no changes to premium or excess.
  • This is available until 30 June 2020.
  • This is available to businesses with an annual turnover of less than $50 million and / or a sum-insured asset value of up to $10 million.

If you have any questions, or would like to discuss further, please reach out to me or your Account Partner.

Regards,
Brad Robson
Executive Manager Broker & Agency

Australian market facing “unrest and uncertainty”

By Insurance, News

Australian market facing “unrest and uncertainty”

by Nicola Middlemiss 04 Jan 2020 | Insurance Business Australia 

The head of HDI Global’s Australian operations has commented on the instability of our local market, saying sweeping consolidation has had a notable impact on the landscape – and it’s unlikely to change any time soon.

“We have been experiencing a lot of unrest and uncertainty in the Australian insurance market with competitors leaving certain segments or the market altogether,” said Stefan Feldmann, regional head for ASEAN & Australasia for HDI Global.

Feldmann – who’s been with HDI since 2010 – also predicted that the consolidation process is likely to continue throughout 2020.

“Customers and brokers are understandably frustrated and longing for stable partners with a reliable longterm perspective and commitment,” he told Insurance Business.

“As an industrial mutual we are becoming more deeply established in the value chain as an integrated partner to our customers, much deeper than had previously been the case.”

Feldmann also predicted that the trend of pricing increases and tightening of terms and conditions will likely continue throughout 2020 and well into 2021, given the performance of most global and local insurance companies in recent years.

“The insurance industry as a whole has allowed fundamental technical underwriting principles to slip for quite some time which brought the industry to current market predicaments,” he said.

“We expect that insurance pricing and contract terms, based on technical fundamentals and risk quality, will be the key drivers for the insurance market in the corporate segment for the foreseeable future.” Feldmann also predicted that 2020 would be an interesting but demanding year for the insurance industry, partly due to the political instability which is fast becoming commonplace.

“2020 will not only be a fascinating year, but also a challenging one – with Brexit, US elections, trade wars and geopolitical unrest,” he told Insurance Business.

“While the Australian economy remains resilient, given the potential volatility in the global economy we will certainly feel the impact in the industrial insurance market in Australia.”

As an example, Feldmann pointed to the withdrawal and reduction in underwriting capacity from Lloyd’s of London, which has traditionally been a strong market participant in Australia.

“Our industrial clients also feel the impact of the trade wars between the US and Australia’s major trading partner, China,” he said.

ICA DECLARES BUSHFIRES A CATASTROPHE IN NSW AND SE QUEENSLAND

By News

ICA CEO Rob Whelan said more than 70 bushfires were still burning across southern QLD and NSW and the declaration gives priority to claims from affected policyholders.

The fires fanned by high winds have resulted in multiple property losses since September 5, with the focus today on the area around Stanthorpe close to the NSW /QLD border as well as locations in the Gold Coast hinterland. The extent of property loss is still to be determined, as is an estimate of the financial loss.

“Insurance companies are standing by to help their customers. I encourage anyone who has suffered property damage to contact their insurer as soon as possible to seek guidance on the claims process and the assistance they are entitled to under their policy,” Whelan said.

The Australian Financial Complaints Authority (AFCA) has activated its significant event response plan following the NSW and QLD bushfires being declared a catastrophe by the ICA.

The significant event response plan is activated for events that can potentially result in significant numbers of related complaints coming to AFCA. It provides for early communication with relevant stakeholders and a more streamlined, expedited process for the resolution of related complaints.

AFCA has encourage those who have been affected by the NSW and QLD bushfires to contact their insurance companies.

Under the declaration the ICA has:

  • Activated its disaster hotline – 1800 734 621 – to assist policyholders if they are uncertain of their insurance details, or have general inquiries about the claims process

·         Community members can also enquire via www.disasters.org.au

The ICA is making arrangements to represent the insurance industry at community meetings in affected areas. The meetings will provide property owners with important information about the insurance claim process.

 

CREDIT: INSURANCE & RISK 

Climate change-driven flood risk could make Townsville homes “uninsurable

By Insurance, News

Homeowners and businesses in north Queensland may soon find it difficult to insure their properties as flood risk rises due to climate change, new modelling has suggested.

According to Climate Valuation, flood cover will become difficult to obtain and too expensive for Townsville and other north Queensland communities, as the risk to homes from flooding is expected to more than double under climate change.

Modelling revealed that flooding in Townsville is already about 20% more to likely to occur than previously thought, and that total flood risk in the region is likely to shoot up by 130% by the end of the century, putting the waterlogged region “on track to become uninsurable,” Guardian Australia reported.

“Unfortunately, there are a lot of properties out there that planners in years past considered acceptable, but which homeowners may find are not insurable today or won’t be very soon,” Karl Mallon, director of science and systems at Climate Valuation, told the publication. “Generally, insurance companies often draw a line in the sand at the frequency of a one-in-100-year flood event. This means that as the risks of flooding increase, many Townsville houses will be uninsurable, or the owners will find cover unaffordable.”

A number of homes and businesses that have been impacted by the recent catastrophic flooding in Townsville said they did not have specific flood cover. The properties rated by city planning codes to be outside the “one in 100 years” flood zone, meanwhile, were reported to be effectively flood-free.

“We strongly urge people to check with councils and insurers if their homes are in flood zones, and if they can expect long-term affordable cover,” Mallon told Guardian Australia. “If not, they should know they will have to plan for the risks on their own and think about adapting their homes for climate change.”

 

CREDIT: INSURANCE BUSINESS AUSTRALIA 

Townsville flood damage bill total revealed

By News

The catastrophic floods that have inundated roughly 82,000 homes in Townsville over the past week have so far resulted in 6,525 claims, worth $80 million, according to the Insurance Council of Australia (ICA).

The damage bill is expected to soar over the next few days as policyholders return to their waterlogged homes.

ICA clarified what the flood crisis means for householders in terms of their insurance cover and responded to warnings from Townsville Mayor Jenny Hill that north Queenslanders would not accept unfair premium increases after the floods, AAP reported.

“Right now, we’re focused on fixing properties,” Campbell Fuller, ICA communications manager, told the news agency. “Any talk of premium rises is premature.”

Campbell said all insurers have had a standard definition for flood since 2012, which includes water escaping from a dam, including an intentional release.

“There may be a small percentage of policyholders who have decided to opt-out of flood cover at time of purchase or chose to buy a policy that excludes flood,” Campbell said. “Those policyholders may need to have their claims tested to determine if their claim meets the standard flood definition.”

ICA also expressed concerns that a significant number of Townsville commercial policyholders may not have taken up flood cover.

Hill urged insurance companies to “act as responsible corporate citizens” to help speed up the recovery effort, AAP reported.

CREDIT: Insurance Business Australia

New Unfair Contract Laws Explained

By Insurance, Legal, News

Source: ‘Frankology’ Blog, By The Fold

The unfair contract laws* which start on 12 November 2016 will be a powerful tool for small businesses when negotiating contractual indemnities. Charmian Holmes explores why…

What is an unfair contract term?
An unfair contract term is a term which:
• causes significant unbalance to someone’s rights and obligations;
• would cause them detriment if it was relied on; and
• is not reasonably necessary to protect the legitimate interests of the party relying on it.

Until now, small business had no option but to sign an unfair contract – or miss out on the opportunity for that work.

Who’s protected?
There are 2 key criteria:
• you must be a small business (ie less than 20 employees); and
• (the upfront contract price must be <$300,000 (for contracts of 12 months or less) or <$1,000,000 (for contracts of > 12 months).

From 12 November 2016, small businesses can challenge any unfair contract term. The onus is on the big business (or government authority) to prove those terms are not unfair. If they are, the term is void and can’t be enforced against the small business.

This is a long awaited and hard won protection for small businesses which has the potential to significantly enhance their ability and willingness to provide services to big business. Let’s look at how it will apply to unbalanced indemnity clauses.

One-sided indemnity clauses
There are a number of ways in which indemnity clauses could be challenged as unfair contract terms – these include:
• Indemnities which transfer liability to the small business for losses or liability regardless of fault.
• Indemnities that require the small business to be liable for the other party’s negligence.
• Unlimited indemnities, eg where there is no financial limitation.
• Indemnities for consequential loss, or excessive liquidated damages.

What about contracting out of proportionate liability?
The proportionate liability laws enable contracting parties’ liabilities to be adjusted to the proportion to which they caused, or contributed to an event that caused a loss. Clauses which contract out of this and impede the small business’ ability to join the big business as a concurrent wrongdoer in litigation involving a third party are manifestly unfair!

This means that small businesses can challenge any indemnity clause that differs substantially from the smaller business’ liability in the absence of the contract. Especially if it would trigger a contractual liability exclusion in an insurance policy – as this would mean that the small business would

have no insurance coverage for the exposure.
Small businesses rarely have the financial resources to indemnify big business without recourse to their liability insurance. The irony in this situation is that the contract usually requires the small business to hold

those insurances for this very purpose.
Once the new laws commence, small businesses will have more ability to challenge these types of clauses as it will be illegal to include them in contracts with small businesses. This will reduce the current imbalance in negotiating power between small and large businesses and reduce exposure to uninsured losses.

What about contracts signed before 12 November 2016?
Big business can continue to use contracts with unfair terms until 12 November. If you feel like you’re being pressured to sign something now, this might be why!

If you sign a contract before 12 November 2016, it will be harder to challenge any unfair contract terms – but you should try.

If an existing contract continues after 12 November 2016, ask for changes now to redress the imbalance in the indemnity and other clauses. If that’s not possible, the new laws will only apply to the contract, when it is renewed, varied or extended after 12 November 2016.
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*Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Act 2015

Author: Charmian Holmes