Market Update: Q1 – Q2 FY21

Discover our forecast of insurance trends and business implications in the quarter ahead across the following sectors:

 

FINANCIAL LINES        CORPORATE         WORKERS COMPENSATION            STRATA & REAL ESTATE

 

 

FINANCIAL LINES SNAPSHOT

By Ben Robinson- Placement Manager, Professional & Executive Risks

 

KEY TAKEAWAYS FROM FY21: Q1?

Pressure remains in the Professional and Executive markets, with COVID-19 causing continued uncertainty for insurers.

Fallout from the Royal Commission into Misconduct in the Banking Superannuation and Financial Services Industry continues to impact insurers’ bottom lines through the payment of inquiry defence costs and securities class action activity. This is expected to materialise further as the economy begins to stabilise, with many litigation promotors seeking new ‘real estate’ and the regulator supporting the ‘why not litigate’ approach.

 

The Australian Competition and Consumer Commission’s (ACCC) Targeting Scams 2019 report has identified Australians lost more than $634 million to scams in 2019. While the true cost of cybercrime to the Australian economy is difficult to quantify, the industry has estimated cyber security incidents to be in the vicinity of $29 billion annually. Managing cyber risk exposure effectively is more important than ever. The process for enhancing and governing cyber security will be very similar to the process businesses implement for other exposures (e.g. OH&S) and how well these are ‘live drilled’ or rehearsed.

 

KEY CONSIDERATIONS FOR FY21: Q2?

It’s not all doom and gloom. If the following variables are controlled correctly, they can have meaningful impacts on renewal outcomes.

Corporate Governance – It is important that best practice framework is implemented: entities that are well managed, identifying clear procedures to business operations and communication channels will see a more positive outcome when it comes to achieving reduced premiums. This has been a topical issue, with revelations of a handful of large listed companies being subject to poor corporate governance, driving investor concerns and share price uncertainty.

Financial Steadiness – will continue to be a focus for insurers, as the ongoing concern for a business will remain a material risk factor. In the COVID-19 climate, there will continue to be greater attention on liquidity, cash flow and debt maturity. For franchisees, the ‘JobKeeper’ program may be providing critical revenues for these entities that are potentially masking insolvency problems. 

 

WHAT INDUSTRY TRENDS SHOULD CLIENTS MONITOR OVER THE COMING QUARTER?

Financial Modelling will play a crucial part in all financial lines insurance classes, and proposal forms and financials will no longer satisfy many underwriters. Insurers will want to understand what the future holds for many organisations. Underwriters will likely request to see a robust Business Continuity Plan and a recovery ‘roadmap’, identifying any loan facilities and those suspended covenants and how they propose to weather the next 6-12 months.

 

CORPORATE SNAPSHOT

By Travis Wendt – National Head of Corporate Insurance & Risk Solutions

 

KEY TAKEAWAYS FROM FY21: Q1?

While the March quarter saw Australian insurers post a quarterly loss of $997m after tax, APRA statistics released for the June quarter reveal a market turnaround, with a net profit of $1.0bn after tax. Improved loss ratios and slight gains from investment returns were the main drivers of this result.  Despite this, Property & Casualty underwriters continue to focus on overall portfolio management, which includes:

– pricing adequacy

– risks in catastrophe zones (bushfire, cyclone, flood)

– ‘sideway’ exposures such as prevention of access

– higher Worker to Worker deductibles

– tightening of cover (infectious disease exclusions).

 

In addition to upward premium pricing for primary and excess layer(s), casualty underwriters have been undertaking remediation actions across their portfolios.  As with property, casualty underwriters’ portfolios continue to see deterioration in loss ratio(s) brought on by claims frequency, long term inadequacy of pricing, broadened cover and the rising cost of claims (e.g. higher prevalence of litigation).  Rate increases of between 10-20% are being witnessed on primary layers with excess layers seeing reasonably calmer pricing increases of 5-10% at this stage.

 

KEY CONSIDERATIONS FOR FY21: Q2?

As we move into the summer months, the regular seasonal risks are present: bushfires in the southern states with cyclones, windstorms and flooding in the north.  This season is widely tipped to see La Niña conditions return to eastern Australia, meaning increased rainfall and a risk of more tropical cyclones forming across parts of Queensland.  Insurers may apply policy adjustments by broadening flood and named cyclone sub limits or may mitigate their own risk through the purchase of reinsurance.  This last strategy will invariably come at a cost, which will be passed on to clients either in part or in full.  High performing or clean risks remain desirable and continue to see more favourable pricing outcomes.

From a casualty perspective, we expect the current trends to continue over Q2.  Insurers will be taking a much firmer stance on their capital deployment and could lead to a reduction in capacity on certain risks.  Coverage provisions are also being reviewed, especially those considered non-traditional that have crept in over the past few years, including Cyber and Professional Indemnity.       

 

WHAT INDUSTRY TRENDS SHOULD CLIENTS MONITOR OVER THE COMING QUARTER?

Insurers require greater levels of information to adequately underwrite risks, especially on those accounts where they are not active/current participants.  With insurers reducing their capacity, many clients are now required to market their program to new insurers, many of which are unfamiliar with the specific risks of that business.  A quality submission with updated risk information is key to achieving a positive outcome and a powerful point of differentiation from others, especially in industries deemed high risk. 

From a property perspective, unprotected food & beverage is still considered high risk, even more so for those with bushfire or cyclone exposure.  Liability risks subjected to the highest level of scrutiny are those in the commercial cleaning, asbestos removal, contractor/labour hire sector as well as Global Liability programs with risks domiciled in the US.

 

 

WORKERS COMPENSATION SNAPSHOT

By Jules Paolino – Workplace Risk Consultant

 

KEY TAKEAWAYS FROM FY21: Q1?

The immediate exposure for Australian workers has decreased with the majority of businesses successfully transitioning to remote arrangements (and some now returning to the office). The insurance market is facing a high frequency of claims and large losses, resulting in delays for businesses following the initial lodgement of claims. While workers are still exposed to physical risks, the mental health risks are an increasingly significant challenge for both clients and insurers.

 

Meanwhile, Victorian Insurers have taken a proactive approach in the reporting and management of positive COVID-19 cases in the workplace. Clients are being encouraged to report any ‘outbreaks’ to their Insurer as soon as confirmation is received.

 

KEY CONSIDERATIONS FOR FY21: Q2?

WorkCover WA has announced the abolition of the Common Law Termination Day (previously 12 months post the date of injury). This change has the potential to extend access to Common Law for existing claims where the three-year limitation period has not passed.

icare in NSW have begun remediation of pre-injury average weekly earnings (PIAWE) errors and commenced payment to affected workers. When a work-related injury occurs, and the employee is unable to perform their full pre-injury duties, they may be paid a percentage of their PIAWE for a set period. It has been estimated that under and over payments will impact 5,000 to 10,000 injured workers with the estimated costs to be between $5 million and $10 million in total.

 

WHAT INDUSTRY TRENDS SHOULD CLIENTS MONITOR OVER THE COMING QUARTER?

As businesses transition from home working arrangements back into offices, a degree of apprehension is to be expected from the workforce. Ensuring your business has a robust COVID-Safe Plan that has been communicated to all staff will support a safe and sustainable return to the office.

The Workers Compensation market typically experiences increased claim frequency within the months of November and December. We encourage business to demonstrate commitment to Work Health Safety and Workplace Risk practices, to support a healthy and injury free end to Q2 FY21.

 

 

 

STRATA & REAL ESTATE SNAPSHOT

By Kieran Drum- National Head of Strata

 

KEY TAKEAWAYS FROM FY21: Q1?

The past quarter has seen an ongoing trend of strata residential premiums increasing by around 5-10% nationally. The commercial strata property increases have continued to trend higher (above 10%). Non-strata commercial property insurance underwent a 5% rate increase last quarter (on average) and will likely undergo slightly higher increases in the coming quarter.

Scrutiny over natural peril risk exposures relating to catastrophic events continued to drive premium increases. The fifteen-minute summer hailstorm in Canberra was potentially the most damaging “cost per minute” event of the past year for the strata industry. Fallout from the summer bushfires has considerably impacted commercial property rates and property in alpine risk locations.

KEY CONSIDERATIONS FOR FY21: Q2?

As the State election looms in Queensland, discussions have turned to Government taxes that are inflating North QLD premium. The QLD State’s Stamp Duty tax and Federal Government GST on North Queensland dwellings contribute a significant percentage of overall premiums.

In their November 2020 report, the ACCC will likely focus on further analysis and recommendations around exclusive insurer distribution agreements, third line enforcing and insurance commission in North QLD. The ACCC may also comment on the ongoing insurer exodus in North QLD, as the last quarter has seen another large international insurer cease writing risks in North QLD.

In NSW, increases to the compulsory NSW Emergency Services Levy (ESL) used to fund Emergency Services via property insurance premiums are pushing prices higher. Insurers have been required by government to increase their NSW ESL rates over the past quarter, these NSW Government ESL charges are seeing premium increases of approximately 5% across the State.

 

Example of 1 Oct 2020 NSW ESL increases from unspecified large NSW strata insurer:

Insurance Class ESL Increase From To
Commercial Strata 30.5% 39.5%
Residential Strata 15.5% 22.5%

The South Australia and Western Australia strata and commercial insurance prices continue to be among the lowest premium prices nationally. The Adelaide Earthquake and Perth hail and storm natural perils risks mean each insurer is pricing these locations in vastly different ways, some insurers have dramatically raised rates on new business in these locations, while other insurers are renewing with flat to minimal premium increases.

 

WHAT INDUSTRY TRENDS SHOULD CLIENTS MONITOR OVER THE COMING QUARTER?

Alpine and above the snowline areas in NSW and Victoria have become the new challenge areas for FY21. Honan has created a limited bulk property placement solution into international insurance markets to secure coverage options. Locally, the alpine locations have seen insurers (strata and non-strata) coming off risks completely or scaling back the limits they will provide for bushfire exposure. Consequently, Honan is placing bushfire locations with either a defined perils program or a combined limit basis into international insurance markets, using higher bushfire deductibles and excess solutions to secure coverage for snow lodges and strata buildings.

In Victoria, the pandemic will likely further impact the challenge of insuring unoccupied locations. Overall, the commercial property insurance rates have been steady at 5% rate increases over the past couple of years. Some movement above this 5% increase is now likely for a third of renewals.

 

 

Read more from this issue of HoneIn:

     Meet Head of Corporate Insurance & Risk Solutions – Travis Wendt

Meet Our Head of Corporate Insurance & Risk Solutions – Travis Wendt

Travis Wendt – Head of Corporate Insurance & Risk Solutions

Office: Melbourne

Time with Honan: 2 years

 

A quote capturing your approach to your role

“Play by the rules, but be ferocious” – Phil Knight (Co-Founder & Chairman Emeritus of Nike).

Naturally I gravitate to this as it comes from a sporting bent. We often use the ‘freedom within boundaries’ analogy at Honan, which speaks to the spirit of rolling your sleeves up, having a go, showing some ‘flair and dare’ – learning from both the success and failures.  It gets us out of our comfort zones, and as my business coach constantly reminds me – this is where all the learning happens!

Tell us about yourself

Prior to joining Honan in 2018, I spent 11 years at Aon and 5 years at Marsh. My earlier roles involved working with clients to develop risk protection strategies, creating the program and negotiating terms and conditions with insurers in order to meet clients’ identified needs. I was drawn to Honan by the opportunity to not only be part of a rapidly growing business, but to have an active hand in shaping the future of the business.  I’m proud to lead a team of professionals who are genuinely passionate about our brand and what it represents. For us, Honan isn’t about selling insurance, it’s about supporting our customers with quality advice and solutions – typically over many years. Building strong relationships – both personally and professionally – is one of the true perks of the job.

Friends and family are very important to me, so I enjoy spending as much time with them as I can. For those who know me, also have a deep love for the great game of golf, and the mighty Richmond Tigers. My wife and I also love to travel, and our go-to destinations generally address two criteria: good food, and good wine (perhaps three if you include a good golf course)!

What does the Head of Corporate Insurance & Risk Solutions do?

My role has three distinct components:

  1. To work with key business owners to implement our strategic pillars
  2. To provide an environment for our team to operate at their best
  3. To build and maintain valuable relationships with our insurer partners in Australia, and overseas – relationships which enable us to deliver truly market-leading solutions for our clients.

Within my role, I solve a myriad of problems, but the majority centre around sourcing optimal placement solutions for our clients. These solutions vary from client to client; from obtaining the most cost-effective cover through to uncovering new markets capable of covering identified risks.  Our vision is for Honan to be the number one independent risk advisory firm in South East Asia – a target we’re gunning down at pace.

What are 3 things you find most motivating about your role?

  • Leading and developing my team
  • Imparting knowledge and experience to our colleagues and clients
  • Working with our team to unearth new insurance markets and capacity.

Biggest learning from your time at Honan?

Learning how to be a leader and what it takes to be a leader, whilst at the same time developing  knowledge and an understanding about the Honan business and its brand DNA. Adapting my management style to my team to enable them to perform at their best.

Your core focus for the year ahead?

  • Ensuring my team remains mentally healthy – the impact of COVID-19 has reinforced the importance of having a connected team that checks in and supports one another
  • Continue to deliver value to our clients through informative and thought-provoking insights and advice
  • Harness and present more comprehensive data, analytics and evidence-based insights to our clients.

Recommended further reading / a great online resource?

TED Talk – Simon Sinek – How Great Leaders Inspire Action.

 

WITH YOU ALL THE WAY: 

Phone: +61 434 651 918

Email: travis.wendt@honan.com.au

Australian Education at Risk: How Cybercrime Insurance can Help

Technology

Around the world, Australia is recognised for its excellence in education and training. Contributing over $32 billion to our economy, this critical industry represents Australia’s third largest export. Unfortunately however, this sector is one of the most vulnerable to cyber threats, due to a high dependency on digital infrastructures and web-based learning. In 2017, the education sector alone accounted for 26% of cyber-attacks in Australia, and 57% of cybercrime across the Asia-Pacific region.

 

The Impacts: How it Hurts

At present, the Government estimates that cyber incidents involving Australian businesses cost up to $29 billion a year. The financial implications of cybercrime are overwhelming, but they extend beyond the balance sheet. Significant damage to an organisation’s reputation is also common, as demonstrated in the recent attacks on The Australian Catholic University, Australian National University and Toll Group.

The vast number of digital libraries storing sensitive personal data also makes the education sector highly attractive to cyber criminals. Personally Identifiable Information (PII), such as student records, make cyber breaches particularly damaging. Furthermore, high-risk technology systems, hardware and infrastructures such as laptops, tablets, interactive whiteboards, mobile phones and video conferencing are commonplace in the education industry. Designed and utilised by multiple parties across the sector, e-learning platforms also house data relating to students, teachers, curriculums and learning outcomes, all of which may be at risk.

 

How Hackers Work

Hackers are becoming increasingly sophisticated in their approach to hacking anti-virus/anti-ransomware software. Readily available through the dark web, hackers now use scanning tools to identify particularly vulnerable organisations, and to further isolate the weak points in their systems and networks.

Once a hacker gains access to a device, systems like malware and ransomware can be used to extract confidential information or shut down computer systems/networks, demanding a ransom in return for access.

 

Cyber Insurance: Protection Through Policy

Cyber Insurance can represent a low-cost way to help protect your business from the risks of cybercrime. Given most organisations are not able to resolve cyber attacks in-house, a robust Cyber Insurance Policy will include an Incident Response Team (IRT). Equipped to respond immediately, the client’s IRT can:

  • minimise further loss to the business (e.g. financial, reputational)
  • regain critical system access ASAP with a view to protecting systems and data
  • limit business downtime, minimising income loss as a result.

 

Cybercrime Case Study: How Honan Helped

Honan recently supported a client (Sydney-based driver training school) through a cybercrime event.

The cybercrime (insurable event)

A ransomware attack causing the booking and payment processing system to be down for five days, resulting in a $25,000 loss in revenue, plus IT vendor fees.

The resolution

Having a Cyber Security Insurance Policy in place with Honan meant the total costs incurred by the client were covered by their insurance premium. Beyond potential financial loss, the IRT provided valuable insights into the type of attack and the resulting damage. The IRT conducted analysis of the client’s systems to limit the risk of further attacks.

 

 

Honan – we’re with you all the way

For more information on how to protect your business from cyber threats and other emerging exposures, please contact us at any time:

 

Chris Prowse

Senior Client Executive ‑ Corporate Insurance & Risk Solutions

chris.prowse@honan.com.au

0491 696 380

 

Construction in Decline: Insurance Implications for Industry

Construction

For the first time since 2017, the global construction industry outlook has shifted into decline in the wake of COVID-19.  National construction activity is following a similar trajectory, after a 3% decline in December 2019, and a drop of 0.7% in the June 2020 quarter. Fortunately, the Federal Government’s Jobkeeper and Jobseeker programs have assisted many employers in retaining workers and sustaining business operations, as has the classification of construction as an essential service.

 

As we enter Q2 of FY21, we’ve summarised how the present conditions are impacting the insurance market for members of the construction industry.

 

Contract Works – Material Damage
  • Many local insurers have been reviewing their rating models, with knock-on effects to premiums and deductibles. In addition, many have reduced capacity to insure – i.e. where we would normally expect an insurer to insure a risk / builder / project to the value of $100,000,000, we’re now seeing many revert back to a multi-insurer approach, whereby several companies share the risk.
  • Insurers are also closely reviewing the Limits of Liability and sub-limits due to meaningful absences of local capacity.

We believe the above has been brought about by last summer’s unprecedented bushfire season, and the North QLD floods of 2019. Both events have resulted in depleted pools of reinsurance, often making insurance unprofitable for carriers. This is commonly referred to as insurers’ realisation of losses.

  • Previously available coverage enhancements such as Design Exclusion write-backs (LEG3 or DE5) are either seeing a minimum of 30-40% rating increases or scaled back to DE4 reduced coverage, or not offered at all. Following this, we are seeing a large adjustment in DE5 deductibles where insurers would previously have offered coverage and deductibles at a minimum of $100,000. This has been lifted to $150,000-$250,000 due to the breadth of coverage it provides and the complex nature of attritional losses.
  • Contractors with poor loss history and exposure to weather events are experiencing imposed revised deductibles for separate major perils and water damage excesses.

The Lloyd’s of London market has continued to experience change following the Lloyd’s Review
(DECILE 10) and the exit of many construction insurers – where previously they were also providing support to Australian underwriting agencies. Those which remain are increasing minimum rates, securing policy limits and offering higher deductibles.

 

Early engagement is key to insurance success

Insurers, brokers and contractors must work together in the short to medium term, with early engagement critical to help protect each contractor’s capital position/s and future plans for growth. Working together in a tripartite partnership capacity is essential to avoiding bill shock.

 

Construction Liability & Completed Operations

The current situation has seen insurers continue to closely scrutinise their underwriting results across all classes of casualty programs. Insurers have set their sights on underwriting profitability (vs gross written premium) and the investment income is being treated as a ‘nice to have’ and relegated as a priority. We have observed similar responses from insurers based in Singapore as well as Lloyd’s of London. Consequently, we are seeing sharp increases in policy excesses and renewal rates on prior years.

Greater insurer scrutiny and changes to the classification of business that should be written has influenced the costs and restrictions imposed by reinsurance arrangements, meaning:

  • Insurers are seeking to increase rates where claims have been poor or where currently underpriced, or looking to scale back offered policy limits. The increase is between 10-25% on well performing accounts.
  • Insurers are requesting much more information around operations to ensure they fully understand the risks and exposures and price accordingly.  If information cannot be obtained or is ignored by contractors, insurers are likely to restrict coverage or exclude certain parts altogether.

 

Work on bridges, piers, jetties, harbours, defence, civil contractors/earthmoving, and heavy industry are currently considered more susceptible to “long-tail” losses. Insurers are steering away from these risks, which are seen as unprofitable (due to WorkCover recoveries).

Sub-contractor injury or sub-contractor caused property damage deductibles are likely to continue increasing to minimum levels of $50,000 with some seeking up to $250,000 (depending on the industry). Insurers are being selective and treating each risk on their own merits. Options are available for excess buy-down on a standalone product.

An increase to the policy excess can alleviate premium increases. In some events however, the premium reductions are not proportionate to the increase in excess.

 

Worker to Worker claims continue to be the focus of Construction Liability underwriters

Now more than ever, contractor personal injury claims are being brought on by recovery actions from WorkCover and state-based workers compensation insurers (given the long-tail nature and statute of limitations, which can be up to 7 years). As a result, Worker to Worker deductibles offered by insurers and/or cover is being offered at a minimum deductible level of $50,000 and we are seeing insurers requesting claims data for up to 10 years to analyse trends before writing new business.

 

 

We’re With You All The Way

It’s important to be aware of these changes and how they are impacting new and existing insurance policies. As a general rule, it’s best to engage with your broker early to limit bill shock and seek the most appropriate cover for your needs. We encourage you to contact your Honan insurance advisor to discuss your situation and address any questions or concerns.

 

Adam Richardson 

Head of Client Service (QLD) – Corporate Insurance & Risk Solutions

adam.richardson@honan.com.au

 

Update: Professional & Executive Liability in the COVID Climate

The ongoing pandemic and deteriorating economy continue to cause financial stress for businesses across the country. With the Federal Government’s COVID-19 temporary insolvency relief arrangements set to end on December 31, 2020, a wave of bankruptcies is expected to occur. In an effort to enhance the survival rate of struggling businesses, the Federal Government announced a series of insolvency reforms which will come into force on January 1, 2021 (subject to the passing of legislation). In this article, we’ll explain how the current conditions are impacting Professional and Executive Liability policy exclusions and underwriters’ capacity to take on risk, and outline what the proposed insolvency reform package means for small businesses.

 

Current risk appetite & what this means for insurance

Even before the pandemic hit, Professional and Executive Liability underwriters experienced challenges when assessing businesses operating in underperforming industries. This has been further compounded in sectors severely impacted by the pandemic, such as travel. As a result, underwriters are more cautious about taking on risk.

As a consequence, reduced insurer capacity and increased premiums are a common experience for brokers and their clientele. In light of any financial distress, the application of an insolvency exclusion is becoming more common for D&O Policies and often found within a typical Management Liability program (unless underwritten back of out of policies, by way of audited financials being presented). The wording which is more commonly found identifies an exclusion in respect of cover for claims &/or losses arising from the insolvency of an insured organisation. Policy wordings can vary and use different language, which may determine how this exclusion is triggered. As such, clients are encouraged to seek advice from their Honan broker.  

Directors and businesses who find themselves in financial distress, should consider the prospect of insolvency at board level. C-suites need to keep in mind that their duties acting in the capacity as a Director or Officer are to the entity itself and not necessarily to themselves. Gaining any protection from ‘safe harbouring’ provisions must not be the main focus for C-suites. If insolvency is suspected, C-suites should engage in proactive measures towards developing a pathway that the company can adopt, which may lead to a better outcome OR immediately appoint an administrator. If the insolvency reforms slated for January 1, 2021 come into force, companies with liabilities below $1m may look to adopt the ‘debtor in possession model’.

 

What are the proposed reforms?

Australia’s current voluntary administration requirements are designed for larger companies, and this process is complex and costly. In addition, under the current system, the Administrator takes over effective management and control of the company. All of these factors can discourage small and family run businesses (with liabilities below $1m) from entering the restructuring process. 

Broadly speaking, the reform package will introduce:

  • a new debt restructuring process to assist struggling but viable small businesses
  • a simpler, faster and less costly liquidation process for small businesses
  • complementary measures to assist insolvency practitioners manage the increased demand for liquidating and restructuring small businesses (e.g. a new classification of insolvency practitioners limited to performing the simplified process).

 

What do the reforms mean for small businesses?

Eligible businesses can continue trading in the ordinary course under the control of the owners while the restructuring plan is arranged. The owners will work alongside an independent practitioner on a restructuring plan and provide relevant financial information to the practitioner, enabling them to make arrangements with creditors and certify the plan.  

 

 

We’re With You All The Way

While the situation is fluid, we are committed to keeping you updated as more information comes to light.  We encourage you to contact your Honan insurance advisor to discuss your situation and address any questions or concerns.

 

Andrew Fluitsma

Chief Executive Officer

andrew.fluitsma@honan.com.au 

 

Ben Robinson

Placement Manager – Professional and Executive Risks

benjamin.robinson@honan.com.au

 

Honan launches New Extended Mechanical Warranty Policy

Agriculture

Working with Plant & Equipment (P&E) partner, Heavy Machinery Warranty, and underwritten by Lloyds of London, the policy is a new introduction to the Australian market.

Unlike alternative P&E warranty options on the market which typically require machinery dealers to offer indemnity and then seek recovery from the insurance product, the new Extended Mechanical Warranty places policy ownership in the hands of the insured party. Bypassing the need for manufacturer and/or supplier assessments, policy holders (machinery owners) can claim directly against their policy, rather than relying on dealerships to facilitate claims on their behalf.

The cover offered under the policy includes the replacement of parts and/or repair costs to the hydraulics and powertrain following sudden and unforeseen loss. The policy is also available for makes and models of the following types of equipment:

 

Construction Equipment

  • Excavators
  • Bull dozers
  • Wheel loaders
  • Motor graders
  • Articulated trucks
  • Rollers

Agricultural Equipment

  • Tractors

Material Handling Equipment

  • Telehandlers
  • Forklifts

 

We’re with you all the way

For further information on the Heavy Machinery Warranty Policy, please contact Scott Cole at any time.

Scott Cole

scott.cole@honan.com.au

+61 447 566 008

Strata Public Liability Cover: FAQs & Top Tips for Lot Owners & Strata Managers

Strata News
Are we covered? And for what?” These have become the most commonly asked questions from Lot Owners, Committee Members and Strata Managers following an incident in a common area resulting in an injury, or damaged personal belongings.

 

It is relatively well known that Public Liability (PL) cover is a mandatory requirement for a Strata scheme (also known as Owners Corporation or Body Corporate), and that each State’s Strata Laws come with minimum requirements for PL cover, there is less public understanding around what to do in the instance of a PL event, and what the insured party is covered for.

In this article, we address some of the FAQs, debunk a common myth associated with PL claims, and share some helpful actions Lot Owners and Strata Managers can take in the event of a claim.

 

What Losses Are Covered by PL Insurance?

PL cover provides protection to an Owners Corporation (OC) for losses arising out of its legal liability for third party property damage or personal injury, subject to policy terms and conditions.

This includes settlement awards, damages awards and court-ordered costs, up to the insured Limit of Liability shown on the policy schedule.

In addition, PL insurance extends to cover the investigation and legal defence costs if the insurer does not perceive the OC to be liable for losses claimed by the third party claimant.

 

Whose Interests Are Protected?

The OC is the insured entity as named on the Strata Policy Schedule. This means that the Policy only responds to claims made against the OC. It does not respond to claims made against Lot Owners in their private capacity. That said, certain policies may extend cover to other parties who may be enjoined into proceedings against the OC by the claimant. For example, both Strata Unit Underwriters and Strata Community Insurance’s residential and commercial strata policies include an extension of cover for employees of the OC, office bearers and volunteer workers under certain circumstances.

The above policies also extend to Strata Managers if they have been enjoined by the claimant solely by virtue of the relationship between themselves and the OC under certain circumstances.

 

Myth Buster: Can Lot Owners & Committee Members Claim Against OCs?

Questions often arise as to whether a Lot Owner or Committee Member can claim compensation against the OC for personal injury or property damage. The answer is YES, and it will be a claim considered under a PL policy. It is important to note, however, that the Policy is intended to indemnify the OC within Policy terms and conditions, but not to indemnify the Lot Owner, Committee Member or any other third party claimants. This means that when the insurer does not perceive the OC to be liable, the insurer will deny liability on behalf of the OC to the Lot Owner or other claimants and will not be compensating the Lot Owners or other claimants for losses.

 

Dos & Don’ts in the Event of a Claim

There are numerous policy conditions applicable to PL claims. Failure to comply can result in insurers limiting their contributions or refusing to grant indemnity.

It is a requirement to notify insurers of circumstances that could give rise to a public liability claim, even before legal action is threatened or taken. For example, if you are aware of a fall on common area leading to a personal injury, reporting it right away ensures best practice compliance with policy conditions.

Insurers have considerable discretion and control over PL claims once indemnity is granted. So, preserving the incident area, co-operating with claim investigators and avoiding direct communications with the claimant allow insurers to understand the circumstances and manage the claim efficiently and effectively.

Strata policies also provide insurers with control over appointment of solicitors and the decision-making process, including whether to accept liability on behalf of the OC or alternatively defend its position. So, avoid negotiating with the claimant. Allowing your broker and strata insurer to work together and manage such communications can prevent you making statements which can be interpreted as an admission of liability or an offer of settlement.

 

We’re With You All The Way

Our Strata Team has a wealth of experience in PL claims and can guide you in the right direction from the moment you become aware of circumstances that could give rise to such claims, through to advising on critical actions required to help protect your interests.

We can also support you in identifying your risk exposures and advise you on measures to minimise your exposure to costly and unnecessary PL claims.

Please don’t hesitate to reach out at any time.

 

Annie Wang    

Associate Claims Executive 

annie.wang@honan.com.au

 

From Brownlow to business – the habits and skillsets that have helped AFL legend Chris Judd in the world of investment

In the business world, professional sportspeople – with their dedication, discipline, and skills, are often cited as the epitome of high performance. But what is it really like to transition from the pinnacle of sport to the challenges of business? And what are some of the habits and skillsets that enable that? Honan CEO Andrew Fluitsma recently caught up with champion footballer, media personality and now Company founder, Chris Judd to find out.

 

Watch this latest episode of our ‘With You All The Way’ series, to hear these insights, as well as:
  • How personality testing and early business experience introduced Chris to the world of investing
  • How Chris brought his skillsets from on and off the sporting field to the business media space, crediting ‘blending skillsets’ as a key enabler to a unique market position
  • How ‘habit stacking’ helps Chris achieve outcomes each day
  • The importance of having people around you to develop a plan
  • The power of maintaining a healthy routine and connectivity

 

Meet Our Head of Claims – Poppy Foxton

Poppy Foxton Head of Claims

Office: Sydney

Joined Honan: 2012

 

A quote capturing your approach to your role

“Never let the fear of striking out keep you from playing the game” – Babe Ruth. 

 

Tell us about yourself

Eight years ago, I left Aon to join Honan as a Senior Claims Executive which involved working on a single portfolio in a team of three. Honan is a rapidly growing company, and this was my blue-sky opportunity to create a claims service that was truly market-leading, and a headline value-add for the business. I rolled up my sleeves and got stuck into claims across all lines of business. Four promotions and two rounds of maternity leave later, I now proud to head up Honan’s Claims division, overseeing a team of 20 in delivering exceptional claims solutions and services for our clients across Australia.

Outside of work, I enjoy spending time with my husband, two young boys, and two Groodles (think giant teddy bears). We all spend plenty of time at the local beach or hiking in National Parks. My husband and I are particularly keen hikers, which means we’re never short on adventures. We once got caught in a blizzard at the saddle of a New Zealand mountain during a three-day hike. I honestly thought we would perish up there!

 

What does the Head of Claims do?

My role is to design and execute the overall strategic growth and service delivery for Honan Claims, together with our subsidiary TPA service, Risksmart Claims Management. Collaborating with relevant teams across the business, I’m responsible for building strong relationships with our clients through outstanding claims results. I’m fortunate to lead a team of exceptional claims experts, coaching them to develop a commercial yet pragmatic approach to claims management, whilst building their personal capabilities as business leaders in their own right.

In today’s market, claims are becoming more complex than ever. Together with my team, I love the challenge of troubleshooting problems for our clients, leveraging our solid relationships with leading carriers along the way. A number of clients require sophisticated claims solutions for under deductible claims or captive programs. We develop and deliver solutions which save our clients time, money and internal resources through exceptionally efficient claims management.

Together with my partner in crime Lea Mac, I’m also pleased to lead Honan’s Sydney office; building  great systems and processes to ensure business objectives are met, but fostering a great workplace culture and happy, engaged staff too.

 

What do you find most motivating about your role?

I work with amazing people across the whole business – from Corporate to Strata to Operations. Getting to collaborate (and sometimes spar) with my colleagues is the highlight of every day.

Honan is quite unique in the level of opportunity available. I have never been pigeonholed to claims alone. Every day I’m faced with new learning opportunities which push me to reach my potential as a leader and businesswoman.

 

Biggest learning from your time at Honan?

With the right leadership, people can change dramatically. I’m a very different person now than I was 8 years ago. Being continually pushed outside my comfort zone has made me tougher, smarter and happier. I have learnt that people are a product of their environment, and with the right support and a bit of tough love they can surprise themselves with how far they can go.

 

Your core focus for the year ahead?

Supporting our clients in managing their risk during the Pandemic, particularly around navigating potential liability exposure in a new landscape. The industry is anticipating a number of class actions around mismanagement and employment practices to come from COVID-19. In addition, there is an AFCA test case on whether broad sweeping pandemic policy exclusions will apply to business interruption claims. We will be working closely with our clients to protect their assets and ensure they obtain the full benefits of their insurance program.

 

Noteworthy trends?

“Working from home” seems an obvious one, but one silver lining of this Pandemic has been its capacity to prove just how productive and engaged our team can be whilst working remotely. Globally, I think we will see a shift to wider acceptance of flexible working arrangements; allowing people to improve their ‘work life balance’ and enable work to be done from anywhere they please. Given our relatively young workforce and rising house prices in major cities, this marks a huge shift for professionals across the globe. A regional revolution is my bet!

 

Recommended further reading / a great online resource?

Check out the app Headspace. It is a great way to relax and switch off at night, which we all really need right now!

 

WITH YOU ALL THE WAY: 

You can reach me at poppy.foxton@honan.com.au or 02 9299 9767.

Scaling up the next generation of South Australian businesses

South Australia (SA) is more than frog cakes and Farmers’ Union iced coffee it’s also known for its fresh produce, regional food producers and world-class wines. Our Client Services Manager for South Australia, and Head of Health & Medical, Trent Woodward, checked in with three family-owned local businesses to learn more about what makes these businesses unique and how Honan has helped the next generation to scale up and thrive in regional South Australia.  

 

Business name: Apex Bakery 

Location: Tanunda (Barossa Valley, 70km north-east of Adelaide) 

What is your unique business proposition?: 

Apex Bakery use traditional Barossa recipes dating back to the 1800s. With house specialities including ferment doughs/breads, together with pies and pasties all baked in the wood fired oven, you will taste the difference at this acclaimed regional favourite.  

Tell us a fun fact about Apex Bakery: 

The Apex Bakery wood oven has been continuously fired since 1924, making it what is believed to be the longest continuously fired commercial wood oven in Australia. All Apex breads are slow fermented for up to 12 hoursproducing an unforgettable tasteWith a little help from Maggie Beer, Apex Bakery’s infamous wood oven supplied the coals to light the Tasting Australia wood oven in Adelaide Town Square. 

How has working with Honan helped you? 

Apex Bakery is a brand well known in the local community, particularly for their artisan approach to baking. The importance of maintaining these techniquesand their priceless history, has been critical to the owners, the brand and the community more broadlyThrough quality ongoing advice and robust insurance policies, Honan has provided the critical assurance the Apex team has needed to focus on what they do best – baking amazing products!     

 

 

 

 

 

Business name: Tomfoolery Wines 

Location: Barossa Valley  

What is your unique business proposition?: 

Tomfoolery wines is a family owned business producing some of Australia’s best handmade wines. They provide a unique cellar door experience, and a premium bed and breakfast on the winery site too 

Tell us a fun fact about Tomfoolery Wines: 

The winemaking at Tomfoolery is traditional, with wild yeasts, open fermenters, hand plunging and basket pressing the order of the day. Ben “Chippy” Chipman prides himself on putting an approachable spin on wine. For instance, all Tomfoolery wines have a name which captures the brand story; from ‘Trouble and Strife rose to ‘The Dust Up and flagship Artful Dodger’ … all labels are highly memorable by name, and unforgettable by the taste! 

One of Tomfoolery’s leading wines, ‘Benito De Soto’ is named after a Galacian pirate Benito De Soto. This notorious captain of the Burla Negra, was the last of the great ships to plunder the Atlantic. Many a sailor’s heart sank in fear at the sight of her dark sails. The inspiration for this wine was fleeced through voyage and vintage in the far vineyards of Benito’s Galacian homeland. The wine takes 5 years to finally reach the cellar door, and is Ben’s nod to Spain where he spent a vintage early in his career.     

How has working with Honan helped you? 

With the opening of a cellar door, to their thriving bed and breakfast accommodation, Tomfoolery has achieved substantial growth over the past few years. Over this time, Over this time, Honan provided a full review of their program highlighting areas which would allow the business further to adapt and scale. The ongoing advice and support of their program allows Tomfoolery to take their wine and passion to more people with confidence.   

 

 

 

 

 

Business name: Mundoo Island Station  

Location: Mundoo Island, Fleurieu Peninsula 

What is your unique business proposition?: 

This unique property is a privately owned cattle and sheep station 1.5 hours drive south of Adelaide in the Coorong on the Fleurieu Peninsula, South Australia. Mundoo Island (MI) Station is also the last farming property on the River Murray – where the river meets the sea. 

The station is run over a series of islands nestled in the mouth of the River Murray, the largest being Mundoo Island – 3,000 acres (approx. 1,200 hectares).  

Fresh water passes through the barrages (under normal river flow) and mixes with the salt water corridor of the Coorong, flowing out to the Southern Ocean via the Murray mouth, taking with it the accumulated salts, pollutants and nutrients from the entire length of the Murray-Darling Basin System. 

Tell us a fun fact about Mundoo Island Station:  

Three of the five River Murray Barrages, in the Coorong at the end of the river, dissect MI Station. Thus, Mundoo islands has the salt water of the Coorong on one side and the fresh water of the River Murray on the other 

Due to its extensive wetlands, MI Station is home to myriad birdlife and native animals including several endangered and vulnerable species. 

How has working with Honan helped you? 

Honan provided Mundoo Island Station’s owners with the security and peace of mind to focus on scaling their agriculture and tourism businesses, and ultimately showcase their unique part of the world to more people. The Station now offers farm stay, birdwatching and station tours, photography workshops and Coorong camping – additional revenue streams for their business.

 

 

We’re With You All The Way

 

Trent Woodward

Head of Health and Medical

Please feel free to contact Trent at any time on trent.woodward@honan.com.au , +61 437 080 655 or connect with him on LinkedIn.

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