Welcome to the May-June edition of Insurance Insight.
After six rounds of intense scrutiny, the Hayne Royal Commission handed down its final report in February. There were 72 recommendations, with 15 directed towards the insurance sector. Most of these relate to bringing the sector in line with the more heavily regulated areas of financial services.
Key recommendations included changes to commissions on life insurance (to be phased out) and general insurance products, and their codes of conduct to become legally enforceable; funeral insurance to come under the ASIC regime; a ban on cold-calling; changes to the way add-on insurance is sold; claims handing to be seen as a “financial service” within the Corporations Act (placing the emphasis on insurers to be increasingly honest and fair); extending unfair contract terms to insurance; replacing the consumer disclosure duty with a duty to take reasonable care not to make a misrepresentation; extending the Banking Executive Accountability Regime to all APRA-regulated insurers; and requiring individual financial advisers to be registered with a new disciplinary body.
While there are issues around regulation and legislation that will need to be addressed, at EBM we believe this presents opportunities for the insurance industry with professional advice being even more critical for people and businesses.
In this edition, we look at the increasing cyber threat for small-to-medium businesses. Concerningly, it is a threat many are ignoring. According to a recent survey, SMEs are confident in their ability to overcome a cyber incident – 87 per cent said they could overcome an incident, with 56 per cent believing they could contain any incident within 12 hours. However, this would seem to be a case of overconfidence, given 67 per cent admitted to not being aware of the cyber threats they face. And among the SMEs that experienced a cyber incident, 30 per cent did not know which data files were affected.
Parametric insurance has been gaining in popularity among large commercial clients in recent years, and now smaller businesses are looking at the possibilities these solutions may offer. We explain what parametric insurance is and how it can be used for risk mitigation.
In our Financial Planning column we look at ways women can boost their retirement savings to help close the gender super gap.
We welcome your feedback and invite you to contact us to discuss the unique risks your business faces and ways to transfer those risks with the right insurance solutions.
Managing Director - Corporate Broking
Managing Director - Broking
PULLING THE TRIGGER
The corporate landscape is changing and there are emerging risks, paving the way for innovative insurance solutions. Could parametric insurance be the solution for your business?
WHAT CYBER THREAT?
Despite many SMEs falling victim to cyberattack, many are ignoring the threat.
Financial independence and security holds particular relevance for women. In recognition of International Women’s Day, which took place on 8 March, and how good financial planning can help women achieve their life and wealth creation goals, these tips can help boost superannuation savings and close the gender super gap.
EBM NEWS & EVENTS
Strategic hires and internal promotions create a new Executive team, insurance veteran joins our team and we present at a global conference.
SIRA/iCare New South Wales
Return to Work Program deadline
Employers in New South Wales are reminded that they are required to have an up-to-date return to work (RTW) program for their employees who sustain workplace injuries or illnesses. The deadline for the program to be updated is 31 May 2019.
The State Insurance Regulatory Authority (SIRA) has advised:
“Employers have until 31 May 2019 to put their programs in place or update them in line with SIRA's latest return to work guidelines.
Most small businesses can use SIRA’s return to work program template to document their strategy to help workers recover at work.
Employers with a base tariff premium of more than $50,000 (category 1 employers) must have a return to work coordinator who will develop and implement a return to work program in consultation with workers and unions.”
Maximum weekly compensation update
In New South Wales the maximum weekly compensation amount is capped and indexed in April and October.
From 1 April 2019, the maximum amount payable was revised to $2,177.40 gross per week. This rate will remain in effect until 30 September 2019.
For further information, please contact our Injury Management team on (08) 9213 4567.
Return to Work South Australia
New schedule of sums
ReturnToWorkSA has released a new schedule of sums.
As of 21 February 2019, the new maximum Income Support weekly rate of pay became $3,029.40.
WorkSafe Australian Capital Territory
Indexation Benefits Guide February 2019
The Workers Compensation Act 1951 allows for indexation of benefits such as adjustment of wages to weekly compensation, permanent impairment, death, medical treatment, damages and other costs, according to changes in the cost of living or another economic indicator, especially to compensate for inflation.
The ACT Indexation Benefits Guide was undated in February. The maximum weekly compensation rate of pay was revised to $2,469 (post-26 weeks).
EBM’s specialist Workers’ Compensation team
If your business is faced with a Workers’ Compensation claim, EBM’s Injury Management team is here to help you with advice and support throughout the claims process. Please contact us to see how we can help.
NEWS IN BRIEF
Data breaches surge
The December 2018 quarter report from the Office of the Australian Information Commissioner revealed 262 data breaches involving personal information were notified between October and December. The leading cause of notifiable data breaches was malicious or criminal attack (168 notifications), followed by human error (85) and system error (9). Most data breaches resulting from malicious or criminal attack involved compromised credentials (usernames and passwords), such as phishing and brute-force attacks. Talk to your EBM Account Manager about Cyber Liability insurance.
Insurer backs driverless-vehicle trial
QBE has teamed up with the Armidale Regional Council to provide compulsory third-party (CTP) cover for the first open-traffic driverless-vehicle trial in Australia. The Armidale Regional Driverless Initiative (ARDi) will operate a level-four (driverless on specific routes) fully-automated EasyMile EZ10 shuttle inside the University of New England’s Armidale campus. The trial will run for 12 months. QBE is providing the CTP insurance required to enable the ARDi trial to operate on public roads.
ASIC to investigate travel insurance
The Australian Securities and Investments Commission (ASIC) is set to review travel insurance after the Australian Financial Complaints Authority (AFCA) reported that the use of exclusions for medical conditions was a persistent cause of travel insurance disputes.
Flood-prone northern Australia uninsurable
According to modelling by Climate Valuation, homeowners and businesses in north Queensland may soon find it difficult to insure their properties as flood risk is expected to surge by 130 per cent by the end of the century due to climate change, potentially making flood-prone regions “uninsurable”.
New legislation protects small businesses in litigation
Federal Parliament has passed the Treasury Laws Amendment (2018 Measures No. 5) Bill, which allows a small business to seek a “no-adverse-costs order” when suing a big company for anti-competitive behaviour. The new legislation means small business owners can make a request to court – early in a court challenge – to avoid paying the legal costs of their much larger debtors if they lose court action against them. A judge will be able to agree to the order if the case is about more than settling a private dispute, that is, is “in the public interest”.
Harsher penalties for corporations
ASIC will be able to pursue harsher civil penalties and criminal sanctions against those who have breached corporate and financial services laws. The Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Bill 2018 implements recommendations of the ASIC Enforcement Review Taskforce by amending the Corporations Act 2001, ASIC Act 2001 as well as the National Consumer Credit Protection Act 2009 and Insurance Contracts Act 1994.
Natural catastrophes drive claims surge
According to OECD Global Insurance Market Trends, natural disasters were a major contributing factor to the surge in insurance claim payments in 2017, with gross payments rising in 33 countries (and declining in 12). Peru recorded an 85.7 per cent increase in claim payments after the country suffered its worst flooding in decades. Honduras (36.2 per cent) came in second, followed by New Zealand (34.8), Lithuania (29.8) and Nicaragua (24.3). Australia ranked 18th, with claim payments rising 5.9 per cent. Bolivia recorded the greatest decline in payments (-27.2 per cent), followed by Singapore (-13.6), Colombia (-9.4), Japan (-8.4) and Brazil (-8.3).
Dry, hot autumn predicted
The Bureau of Meteorology is predicting a drier-than-average autumn, worsening a drought that is already devastating farmers and country areas. The season outlook flags a high chance of above-average temperatures nationwide, while the only exceptions to a below-average rainfall forecast are parts of inland WA. It follows the warmest summer on record, with all areas apart from North Queensland falling short of their seasonal rainfall average. Farmers should speak with an EBM Account Manager about FarmCover.
Natural disaster mitigation funding called for
With only 40 per cent of Australia’s annual natural peril costs of $11-12 billion being insured, the Actuaries Institute is calling on the government to increase spending on mitigation and introduce policies to improve resilience. In its pre-federal budget submission, the association called for the government and states to co-contribute $200 million a year to mitigation, and for local governments to be required to budget for natural disaster costs. The Australian Local Government Association’s submission also reiterates the case for $200 million in mitigation spending.
Queensland flood support
Category C recovery grants for primary producers affected by the flooding in North Queensland have been made available through Disaster Recovery Funding Arrangements (DRFA). Primary producers in seven local government areas can access grants up to $25,000 by calling 1800 623 946 or visiting www.qrida.qld.gov.au. In addition, a range of DRFA assistance is now available in 35 local government areas in northern and western Queensland. Eligible small business owners in Burke, Carpentaria, Charters Towers, Croydon, Etheridge and Winton can access disaster assistance loans of up to $250,000 to repair or replace damaged buildings, equipment or stock and concessional loans of up to $100,000 to continue business operations. Communities in Carpentaria and the township of Winton are also able to access emergency hardship assistance payments of up to $180 for individuals and up to $900 for a family of five or more for food, clothing, emergency accommodation or medical supplies. Information on disaster assistance can be found at www.disasterassist.gov.au.
Sydney hailstorm catastrophe update
As at 5 March 2019, the ICA-declared hailstorm catastrophe that battered Sydney and other communities in New South Wales in late December 2018 had resulted in 118,886 (93 per cent domestic, 7 per cent commercial) claims being lodged with an insured value of the event estimated at $1,038,704,566 (82 per cent domestic, 18 per cent commercial).
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