Honan Sydney’s new home

 

We’re excited to move into our new Sydney office at 1 Margaret Street!

We celebrated our move with an evening of cocktails and canapes and gave guests a sneak peek at the new office space.

 

Honan announces investment in real estate disruptor The Agency Group

PRESS RELEASE
Melbourne, Australia.

Honan has invested in $500,000 for a 3% stake in B2B real estate disruptor, The Agency Group Australia.

“We’re excited to announce our strategic partnership with The Agency Group. It brings together Honan’s unique approach in building market leading solutions and our significance experience working with the real estate industry,” says Andrew Fluitsma, CEO.

Announced on Wednesday 24 July, ASX-listed The Agency will issue 7.7 million shares at $0.065 each to Honan, as well as one attaching option for every 2 shares, subject to shareholder approval on August 28.

With 272 staff operating across eight offices in Australia, The Agency disrupts the real estate services industry by returning value, previously given to franchisees and offices, to agents and shareholders. The Agency Group’s offerings also include property sale and management services, as well as mortgage financing, financial planning and conveyancing settlement.

Andrew states Honan is well positioned to continue assisting organisations through the partnership with innovative, client-focused and cost-effective insurance solutions.

 

Health care industry hit by more cyber breaches than any other sector in Australia

Medical & Health

Unbelievably only 33% of the health care industry protect themselves from a cyber breach and the outcomes of this can be devastating.

 

Health Service Providers experience more Cyber breaches than any other sector in Australia. These breaches can cost up to $400 a patient, and yet, only 33 percent of the industry has taken the preventative measure of protecting themselves properly by taking out Cyber Insurance. 

With billions of people across the world entrusting healthcare organizations to protect their identities, and these same organisations relying on their critical infrastructure to secure it all, it becomes crucial to not just have the right cybersecurity solution in place to stop an attack before it has a catastrophic impact, but to ensure they are able to prevent future attacks from ever happening.

Melbourne-based cardiology group The Melbourne Heart Group fell victim to a ransomware attack early this year. 15,000 electronic medical records were hacked and scrambled and held to ransom meaning that no one was able to access any of the patient’s data including The Melbourne Heart Group itself. 

Reports indicated that it was likely a result of someone browsing a malicious website or clicking on a malicious link. It took weeks to repair the breach and the company experienced media scrutiny over the extend of the breach and the IT security it had in place to protect its patient’s details. 

This case is a timely reminder that health care companies cannot afford to rely solely on their IT security software in this era of cybercrime. For complete protection, companies need to look towards their insurance broker for guidance on how to manage their cyber risk  

https://www.oaic.gov.au/resources/privacy-law/privacy-act/notifiable-data-breaches-scheme/quarterly-statistics/notifiable-data-breaches-quarterly-statistics-report-1-january-31-march-2019.pdf

The strength of Australia’s health and medical industry

Medical & Health

The last 10 years has seen the Australian medical and health industry grow exponentially. What can we expect in the next 10 years for this dynamic industry?

 

Over the past decade, Australia’s health and medical industry has grown dramatically in size and reputation for its world leading technology, innovation, high professional skills, advanced research, development and robust health system.

It is characterised by a small number of global multinational companies (approximately 20 per cent of the industry) and a large number of small and medium-sized enterprises (80 per cent of the industry).

The health and medical industry is represented by manufacturers, specialised in niche applications in the fields of cardiovascular, diagnostic, hearing, orthopaedic, respiratory devices, as well as health IT, health infrastructure, services and clinical trials. The industry is also expected to advance rapidly into new fields of science, engineering, and nanotechnology to facilitate new innovations in the biomedical sphere and an increasing convergence of physical and biological technology platforms.

The key growth areas are:

  • Medical and surgical equipment and devices
  • Health IT
  • Health infrastructure and services
  • Clinical trials

Medical and surgical equipment and devices

  • Imaging/monitoring equipment
  • Biomedical devices and implants
  • Surgical equipment, general hospital supplies
  • Diagnostic devices
  • Laboratory equipment
  • Dental equipment
  • Health-related software
  • Drug delivery

Cyber breach costs CEO his job

Technology

Your IT security may not protect you from every cyber breach

Cyber breaches are unfortunately becoming more common in Australia, with organisations needing to become more vigilant when it comes to protecting their balance sheet and the reputational damage that can be caused by a cyber breach.

ASX-listed property valuation firm Landmark White experienced were made aware of a cyber breach in February of this year, forcing the company into a trading halt.

The company expects to lose up to $7m in revenue as a result of the breach, costing the CEO Chris Coonan his job as he was forced to resign. The company resumed trading in May, where the share price has tumbled from $0.43 down to $0.26.

This case is a timely reminder that companies cannot afford to rely solely on their IT security software in this era of cybercrime. For complete protection, companies need to look towards their insurance broker for guidance on how to manage their cyber risk.

Source: IT News, https://www.itnews.com.au/news/massive-data-breach-costs-valuer-landmark-white-7m-524716

 

The impact of Product Recall and Contaminated Products

Food & Beverage

Damage to Brand and Reputation and Product Recall remain two of the greatest risks facing a competitive Food & Beverage sector in Australia.

 

Supply chains are becoming more complex with growers, processors, packaging, distribution and retail all having exposure from a product tampering/extortion and contamination exposure.  Crisis management and business continuity planning remain essential for all parties. 

 

Comprehensive product recall policies, once triggered, can cover First Party and Third Party recall expenses, business interruption, replacement costs and rehabilitation expenses.

 

Significant losses were incurred in late 2018 when the $500m dollar Australian strawberry market suffered a series of tampering events (needles in strawberries) as a result of disgruntled employees and further copycat actions. As a result, the sector lost 14% of its value in 2018 and several producers went out of business (despite a multi-million dollar Government Assistance package).

 

The increasing complexity of supply chains and the rationalisation of components /raw ingredients supply to maximise efficiencies in product manufacturing has also led to a multiplying impact on product recall exposures. This can result in a ripple effect whereby an issue with one component can impact across a significant number of brands and products causing reputation damage and financial loss to many different parties.

 

The Peanut Corporation of America (PCA) recall in 2008 remains one of the largest ever Food & Beverage recall incidents globally. A salmonella outbreak in peanut product had widespread consequences and although PCA were only responsible for approximately 2% of the supply of peanuts into the US market, over 4,000 products from 200 different companies were affected, resulting in estimated losses of over  $2bn to the industry and a reduction of 24% in peanut sales across the entire market. PCA filed for bankruptcy as a result of this incident, with numerous civil suits served against the company and owner.

 

In the current environment, manufacturers and wholesalers need to remain cognisant of the exposure arising the products they are producing and distributing. Large retailers impose Terms of trade that are heavily weighted in their favour with little room for negotiation. Australian Consumer law dictates that importers of overseas products are legally liable for loss or damage arising from said products, so care must be taken to ensure that overseas manufactures and suppliers have quality assurance procedures in place along with internationally recognised Food Safety accreditation. 

Recall Expenses extensions available under Public Liability policy will only trigger in the event of Third Party Injury or Property Damage and the coverage is limit so case must be taken if Manufacturers are relaying on this cover to adequately protect them. The sector is seeing increasing incidence of Product Withdrawals by retailers due to quality issues (such as incorrect specification/package/colour etc.) in many cases, these do not trigger even comprehensive Contaminated Products Policy (although there are additional coverage options available in the market).

 

REASONS RECALLS ARE RISING:

 

  • Product safety regulation and investigation expanding
  • Technological advances in testing and identification of new pathogens
  • Increasing complexity and consolidation of supply chains
  • Economic rationalisation and sourcing new/cheaper components
  • Rise in consumer awareness/use of social media
  • Retailers passing on exposures to suppliers under terms of trade.

 

 

Bill shocks ahead for construction sector

Construction

A senior insurance figure has warned of impending difficulties for businesses operating in the construction sector, saying cover will likely become harder and more costly to obtain.

Adam Richardson, construction industry lead at Honan Insurance, says the industry has enjoyed a relatively soft market for the past decade, with insurance companies competing for market share.

However, a spate of losses affecting the sector, combined with a slowdown in approvals and tighter lending conditions, seems to have significantly dampened insurer appetite.

“From our observations, this change in insurer appetite and overall approach shifted around the end of the financial year in 2018 and has continued into 2019,” said Richardson.

According to Richardson, carriers are moving away from the top-line growth strategies they’ve long pursued and are now looking to exclusively support profitable business instead.

“In the case of distressed accounts, where contractors have had multiple professional indemnity losses or notifications, we are finding the local market has become unsupportive,” he said.

Unsurprisingly, this means rate hikes are on the horizon for businesses in the construction sector.

“Bill shock will be a significant issue for many organisations when they receive their professional indemnity renewals this year,” said Richardson, who anticipates increases of between 15% and 25% – and that’s just for those with clean accounts and no unusual exposures.

“That figure will rise upwards of 250% or greater for those accounts that have had claims, or which present significant new or existing exposure to insurers,” said Richardson.

“There have been instances where premiums have doubled or tripled based on the expiring sum insured levels of liability,” he added.

As a result, Richardson is being proactive with clients to discuss imminent price increases – and said other brokers should consider it too.

“We believe that brokers should work with their clients to prepare a minimum of 12 weeks prior to renewal in order to develop a robust marketing strategy,” he told Insurance Business.

“Clients must commit time and resources to ‘sell their risk’ in order to differentiate themselves from others,” he continued. “The earlier the renewal process commences, the easier it is to manage your customers’ expectations and the expectations of other stakeholders.”

Construction Industry Lead, Richardson says, will become increasingly important as insurers demand more detailed information about exposures.

“Underwriters will not positively receive risks which are presented late or close to expiry date and it is vital that proposal forms are submitted well in advance to ensure sufficient time to negotiate the most favourable renewal outcomes,” he said.

Rebranded specialty division reflects Honan’s strength in managing professional and executive risks, especially in a challenging market.

Finance

PRESS RELEASE

Honan Insurance Group’s (Honan) Head of Financial & Professional Risks Henry Clark has announced the specialist department has been rebranded to Professional & Executive Risks to better reflect the group’s strength in expertise, market clout and it’s pro-active approach in supporting clients with market related issues and challenges such as Directors and Officers (D&O) insurance.

Commenting further on the announcement Henry Clark said the days of just rolling over the D&O insurance renewal is no longer an option as the sector continues to navigate a very challenging and dynamic market. Insurers applied heavy price increases across-the-board in 2018. This continued into 2019 as the number of claims and reported circumstances exceeded the total insurance premium pool by a significant margin.

“D&O is an exceptionally complicated insurance market with carriers responding assertively to claims pressure and continuing growth in securities class actions, litigation and the prospects of further action arising in 2019 and beyond”, said Henry Clark.

Once regarded as mainly being applicable to large listed entities, litigation costs arising from D&O exposures are now so great that D&O insurance has become a necessity for many businesses–regardless of size.

“The primary driver for the current hardening D&O market is the growth in securities class actions led by opportunistic law firms backed by litigation funders and predictions that further claims pressure will arise from the Hayne Royal Commission, privacy regulation, workplace health and safety and now the Royal Commission into Aged Care Quality and Safety”, continued Henry Clark.

“As a result, upward pressure on D&O premiums will continue into 2019 and beyond as insurers leave the market resulting in the current pool becoming inadequate to cover increasing and expensive claims”.

This is going to be reality for the foreseeable future affirmed Henry Clark.

Although a challenging environment, there is still flexibility in the market, but only if the right messages are communicated – and strategies are needed to demonstrate to insurers that the D&O risk is being properly considered and mitigated.

“Honan’s Professional & Executive Risks team works proactively with clients by actively engaging in relevant education and alerting them to the changing insurance environment well in advance of cover renewal. The team then guide them to establish the most appropriate strategy to reduce the impact on premium and coverage.”

This includes:

  • Providing Directors, the knowledge and tools to personally engage with senior management to set and manage D&O forecasts and expectations.
  • Working with insureds to be proactive and commence the renewal process early, allowing time to address any surprises or consider strategies which may mitigate premium increases.
  • Examining insurer selection, transparency, relationship management and adequately conveying the client’s individual risk profile in underwriter presentations to help mitigate the prevailing market issues and assist the company to stand apart during this market correction.

The Honan Professional and Executive Risks team specialises in insurance for financial institutions, professional service firms and corporate organisations. The team of experts has decades of experience offering specific industry insight and placement experience for traditional and emerging risks.

Issued by Honan Insurance Group    www.honan.com.au

Media Enquiries:                 

Mr. Joe Perri
Joe Perri & Associates Pty Ltd

 

Cyber attacks on the rise for the real estate industry

Industry

As cyber breaches are becoming more common in Australia, real estate organisations need to become more vigilant when it comes to protecting their balance sheet, and the reputational damage that can be caused by a cyber breach.

The industry is seeing an increase in cyber breaches, as hackers realise the potential to access sensitive information that real estate companies hold.

This year alone, Honan have received claims for two separate agencies that have been victims of Social Engineering Fraud. In both cases, hackers were able to access documents and contracts, changing the bank account details to their details, sending payments directly to the hacker’s accounts. Together both claims totalled over $100,000.

Ransomware is another form of a cyber breach affecting the real estate industry. This occurs when malware infects files or devices, locking them and demanding a ransom to regain access. With offices relying on IT systems to run the day-to-day operations, a ransomware attack can shut down a business for days or weeks and can be extremely costly to resolve.

ASX-listed property valuation firm Landmark White was made aware of a cyber breach in February of this year, forcing the company into a trading halt. The company expects to lose up to $7m in revenue as a result of the breach, causing the CEO Chris Coonan to resign. The company resumed trading in May with the share price plummeted by 40%.

With today’s reliance on all things digital to run a business, it is more important than ever that the real estate industry look towards their insurance broker for guidance on how to manage their cyber risk.

For more information on how to protect your business from these and many other emerging cyber exposures, please feel free to contact a Honan representative below;

For more information on our Real Estate Solutions, please contact our team at Realestate@honan.com.au

The Energy of Renewables

Mining & Energy

When a single solar farm can surpass the production of a coal-fired power station, the future for renewables is a strong one.

Energy and mining industries are specialised and highly complex with a high level of stakeholder engagement and government regulation. The mining sector is modern with world-class operations and high standards. Risks management and related insurance in the mining sector has stayed relatively unchanged from underground soft coal through to rare earth elements mines. Exports continued to grow in 2018, with key commodities being Coal ($61 Bil), LNG ($48 Bil), Gold ($20 Bil) & Iron Ore ($20 Bil). While traditional energy exports of coal and LNG are booming, domestic power production is quickly turning to renewables.

A single solar farm can exceed the output of the Hazelwood coal-fired power station in Victoria, one of the country’s largest polluters. Solar power has taken off, with 5,000 MW per year for 2017 & 2018 installed in both industrial scale and rooftop farms. This is equal to three major coal power stations coming online per year. Solar is expected to generate 80% of all electricity in Australia by 2030. While this is creating opportunities, it is also creating challengers and risks for the designers, project managers, builders, operators and owners. Along with the opportunities are risks such as connectivity and stability of the power grid, project construction delays, sourcing or training specialists to design, build and operate the solar and wind farms.

During the past year, we have successfully worked with several principals and head contractors on several renewable energy projects. These included a 175 MW grid ready project generating electricity for 59,000 homes, a 275MW project the largest in NSW and a 220 MW project, the largest in SA. While solar and wind will become mainstream, traditional energy sources such as natural gas will remain a significant source of energy, making up 18% of primary energy use. With the east coast of Australia facing a shortage of natural gas, resulting in increased wholesale and retail prices, exploration and production remains a key area of investment for Australian markets. Massive investment in LNG export projects of approx $200 Billion was undertaken between 2009 – 2015, with Australia now the second largest LNG exporter globally. This investment created new risks and challenges for the industry at that time, similar to those now facing the solar industry with its substantial pipeline.

At Honan, we work with clients to risk manage projects and operations, reducing injuries, loss and damage and assisting to safeguard profitability.

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