Year: 2021

Protecting your personal assets in an increasingly online world

While the threat of cybercrime for everyday Australians may not seem as relevant as it does for larger corporations, the more commonplace new technologies become in our lives and homes, the greater the threat we face on an individual level. Integrating safe practices and building awareness of personal cyber risk is the first line of defence in protecting ourselves online.

Insurance also plays an increasingly important role in responding to the real consequences of cybercrime, just as it does with physical loss events like fires and floods. Here are some practical considerations to help protect you and your family from cybercrime.

 

INSURANCE & PERSONAL CYBER PROTECTION

According to the Australian Cyber Security Centre (ACSC), a cybercrime is reported (on average) every ten minutes here. Australia’s relative wealth and strong economic position makes it an attractive target for cyber criminals, particularly high net worth individuals.  In response to these growing threats, leading householder insurers such as Chubb and AIG have enhanced their policy wordings to include personal cyber benefits and risk mitigation services such as:

  • Cyber bullying
  • Financial assistance
  • Cyber extortion, financial loss and breach of personal information
  • Access to qualified specialists such as cyber data and identity defence firms
  • Crisis and reputation management.

On average, the financial loss resulting from cybercrime is $6,000 for individuals and small enterprises. The automatic limits built into personal insurance policies with cyber extensions may be considered adequate for some individuals.

Alternatively, there is the option to purchase more comprehensive standalone cover through specialist providers. Standalone cyber policies offer higher limits ranging between $50,000 and $2 million. The coverage under these policies is often broader and more suitable for individuals with a higher risk profile. Obtaining this additional insurance may be advisable for high-net-worth individuals who transact more frequently online, work with a range of personal financial service providers (accountants, personal finance managers, lawyers) and are more appealing to attackers due to their wealth.

 

PASSWORDS & MULTI-FACTOR AUTHENTICATION (MFA)

While using the same password for each of your accounts is convenient, it’s also one of the largest vulnerabilities you can create for yourself online. If one of those websites or applications is breached, cyber criminals have the potential to access other personal accounts with the same login details.

Logins for personal bank accounts, health and Government-related services are highly susceptible to attack and expose you to threats such as identity theft. These types of accounts hold the greatest value to cyber criminals due to the sensitive information they contain, so consider using multi-factor authentication (MFA) applications such as Authenticator to enhance your security.  Discover more about protecting your personal information online in this guide by Honan’s Head of Technology, Stuart Madden.

 

SMART HOME DEVICES

Most smart home devices have default permissions and factory settings, which can leave your privacy and personal home security vulnerable to attacks. Be sure to update these settings on each device to ensure you are not sharing access with unknown devices.

It’s also important to maintain and regularly update firmware. The manufacturers of many smart home devices integrate new security fixes if vulnerabilities in the software are identified. These updates may not install automatically, so manually check for security or software patches on a regular basis.

Consider what you really need in your home, where you place devices, and be sure to monitor devices that are always switched on. You may also choose to disable certain features (such as voice command and Bluetooth) if these are not in regular use. Many people with fully integrated homes are now opting to have technology-free spaces in rooms they want to keep secure, such as children’s bedrooms and bathrooms.

 

WITH YOU ALL THE WAY

To find out more about these policies and how they can be tailored to your specific needs, please feel free to reach out at any time. You can read more about cyber insurance here.

 

Christie Mitsas

Account Manager – Private Client Group 

christie.mitsas@honan.com.au

 

 

Discover tips from our technology partners, blueAPACHE

Honing In on our partners: BrewHub

Partnering with Honan since 2019, BrewHub is a specialist provider of workplace coffee experiences. BrewHub works with clients to create spaces within the workplaces for people to meet, connect and engage over a quality cup of coffee or tea.
Servicing the corporate sector, the National brand works with a select group of Australia’s top tenants to deliver highly tailored products and services to each client. BrewHub’s simple, high-tech, contactless solutions are supported by a team of dedicated people, centralised management systems and market-leading innovations like touchless and voice-activated machines.
We caught up with BrewHub Managing Director David Scott to learn just how far this Aussie start-up has come since its 2004 inception.

 

THE CRUX OF YOUR BUSINESS?

At BrewHub, our mission is to connect people in the workplace through beautiful coffee experiences. On a broader level, our purpose is to help people reach their potential – something we’re particularly passionate about. We believe that carrying out responsibilities with purpose and passion is more fun, and helps our company and all those within it build success. We always keep the bigger picture in mind when making decisions.

 

REFLECTING ON THE YEAR TO DATE, HIT US WITH BREWHUB’S TOP 3 HEADLINES

 

WHAT ARE THE TOP 3 TRENDS IMPACTING YOUR BUSINESS RIGHT NOW?

  • Touchless coffee ordering.
  • Digitisation of the coffee industry.
  • Environmental and social initiatives from businesses that are tangible, and heartfelt. At BrewHub, we’re far more than just coffee. We’re deeply invested in the multitude of experiences and environments involved in its consumption and production too. Sustainability is particularly important to us. Our commitment to creating a fair and sustainable system means our hubs won’t cost the earth. We’re always developing and implementing new ways to reduce, recycle and reuse. This includes a national program to recycle all bags and coffee grounds, developing smaller packaging for our beans and reducing single use packaging and consumables where possible. Our head office and warehouse are solar-powered and we’re on the way to moving our fleet to electric vehicles charged on site to further reduce our carbon footprint.

 

AT HONAN, WE’RE ALWAYS INSPIRED BY BUSINESSES WHO ARE BRAVE ENOUGH TO DO THINGS A LITTLE DIFFERENTLY. TELL US SOMETHING UNEXPECTED OR TRULY DIFFERENT ABOUT BREWHUB. 

Traditional office coffee service providers are interested in selling beans or machines. At BrewHub, we’re interested in a broader customer experience – one that extends well beyond the customer’s interaction with our ‘solutions’.  We also take a broad approach to managing not just the coffee needs of our clients, but their entire break out facility.

 

 

THEY SAY STRONG BUSINESSES ARE BUILT FROM THE INSIDE OUT. WHAT CAN YOU TELL US ABOUT THE PEOPLE AND TEAMS BEHIND BREWHUB?

Our key objective is to create an environment where each person understands, embraces and helps to improve our culture and service delivery.  We’re a values-driven organisation and work with customers who are willing to ‘partner’ with us in a manner that reflects our culture too.

 

AT HONAN, MAINTAINING QUALITY CONNECTIONS WITH OUR PEOPLE, PARTNERS AND THE COMMUNITY SITS AT THE HEART OF WHAT WE DO. WHAT RELATIONSHIPS & CONNECTIONS HAVE BEEN CRITICAL TO YOUR BUSINESS SUCCESS IN RECENT YEARS?

The most important connections we have at BrewHub are those with our staff, or as we like to call each other, ‘BrewHubbers’. As a service-based organisation, the connection our staff have to the business is paramount to our overall customer experience. Our BrewHubbers are in our clients’ workplaces every day; preparing coffee equipment, rotating milk, topping up consumables and so on, so our culture and our BrewHub brand experience is ‘live’ every single day.

Our connection with BrewHub customers is also critical. Our business model was not conceived and presented to the market overnight. Since day 1 operations in 2004, our model has been customer-led. We listen to customer suggestions on how we can improve, and regularly feed them into our service proposition.

Furthermore, we have a deep commitment to supporting Indigenous Australia, and our relationship with Zipella has been instrumental in our success with this in recent years.

 

WHAT ARE YOU MOST EXCITED ABOUT FOR THE BUSINESS OVER THE NEXT 6-12 MONTHS?

We are rolling out game-changing software that promises to digitise the entire office coffee experience.  It allows us to scale our back office efficiency and invest more in the customer experience. Watch this space!

 

 

HOW HAS HONAN SUPPORTED THE GROWTH, DEVELOPMENT OR EVOLUTION OF YOUR BUSINESS OVER THE TIME WE’VE BEEN WORKING TOGETHER?

Three years ago, BrewHub became a national business. Not a big one necessarily, but national nonetheless. We appointed Honan in 2019 and since that time, they’ve been there to support our work across multiple States and consolidate all our insurances to ensure we were both adequately protected, but enjoying greatest possible efficiencies too.

Our initial engagement with Honan came via the Workplace Risk team who supported us with a Workers’ Compensation program, but we now have our entire insurance portfolio managed by them.

 

WHAT DO YOU ENJOY MOST ABOUT WORKING WITH HONAN?

We have a relationship with Honan that is very personal. Despite being a global broker, they make us feel important – we know they’ll have the capability to support our every need as we grow from here. Reflecting on this partnership, our shift to Honan has been one of the most successful transitions our business has made in recent years. Insurance and injury management gets almost no airtime anymore – the way it should be!

 

 

Discover more in our Partner Q&A Series: Catapult Sports.

Meet our Head of Professional & Executive Risks – Henry Clark

Q&A

Henry Clark – Head of Professional & Executive Risks

Office: Sydney

Joined Honan: January 2013

 

 

A quote capturing your approach to your role

“When you’re on top of your game, change your game” – The All Blacks.

This is a lesson in always improving, in never becoming complacent. We are always looking to raise the bar at Honan.

 

Tell us about yourself

I grew up on the Lower North Shore of Sydney with my parents and 7 siblings (5 brothers, 2 sisters). Most of my childhood was spent outdoors playing rugby, cricket, golf, basketball and enjoying the great beaches and Harbour Sydney has on offer.

I began my insurance career 15 years ago, managing general insurance claims. I then took an opportunity to live and travel around Europe by playing rugby in the Netherlands, which was a great experience. When I returned, I joined Marsh FINPRO, supporting a senior broker servicing large ASX risk managed accounts. I was recruited to Honan in 2013 by our now CEO Andrew Fluitsma to lead Honan’s NSW Financial Lines Portfolio. This role has since expanded across the Group and I contribute to the strategic direction of the company as a member of our Extended Leadership Team.

Outside of work, I spend as much time as I can with my daughter Madeleine and my amazing wife Katie where we live on the Northern Beaches. As an ex-player, I stay involved with the Mosman Rugby Club (Whales) as their Old Boys representative. The Whales are a successful rugby club, which Honan proudly supports.

 

What does the Head of Professional & Executive Risks do?

I have responsibility for the growth and retention our of Professional and Executive Risks Portfolio and managing a team of specialist brokers. My role includes negotiating our insurer agreements, placing our large and complex corporate risks, presenting results and market intelligence to boards, executives, and our wider Honan network, and mentoring our younger staff.

 

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

THE VARIETY – We are fortunate to provide advice to a range of different industries, including financial institutions, technology and telecommunications, real estate, life sciences, healthcare, retail, construction, and professional services firms.

THE COMPLEXITY – As insurance and risk partners, we are given deep insights into our clients’ strategic direction and operational frameworks. 

THE PEOPLE – I have been fortunate to meet and learn from many smart, passionate, and driven individuals who are experts in their chosen professions. What I might learn tomorrow from an existing or prospective client continues to motivate me each day.

 

Biggest learning from your time at Honan?

How to adapt to change.

We have been fortunate to have exponential growth at Honan. Over the years, this has included multiple office moves, setting up new locations (interstate and overseas) and staff changes, all of which brings a new set of challenges. Throughout this evolution, we have always stayed true to the fundamental characteristics that propelled us to this position.

 

Your core focus for the year ahead? 

Visiting our clients and partners face to face as much as possible now 2020 is behind us!

 

Noteworthy trends?

The way organisations have adapted to flexible working policies has been refreshing to witness and I will be intrigued to see how it continues to develop. The trust employers have in staff to deliver – no matter where or what time of the day is excellent.

Despite this change in mindset, I still value collaborating and bouncing ideas around in the office environment and I am fortunate my team agree and still enjoy coming into the office regularly!

 

Recommended further reading/a great online resource/podcast?

The Hello Sports podcast:  a couple of average blokes giving their views on weekly sporting events. It’s a great way to lighten up your day when travelling to and from work.

 

Meet our Head of Strategy – Lea Mac

 

 

5 Essentials for Optimising Renewals in a Hard Market

For corporate and commercial clients, purchasing insurance in the current ‘hard market’ presents significant challenges.  As we enter the fourth calendar year of hard market conditions, the withdrawal of capacity means there is reduced competition between insurers, resulting in fewer options for clients.  At the same time, clients are facing higher premiums, reduced limits/sub-limits, and longer lead times. Not all is lost, and there are actions you can take to achieve better insurance outcomes. Here are our top 5 tips.

 

1. COMMENCE RENEWALS EARLY

Renewals have become a lot more complex and require more time to complete.  Depending on the individual risks and the number of stakeholders involved, we recommend commencing the process with your broker 3 months from renewal.  Beginning the process early allows you and your broker to establish realistic expectations, meaning you can budget appropriately for an increase in premium, additional risks to the balance sheet (higher deductibles), uninsured exposures (exclusions such as Pandemic/Infectious Diseases), or all of the above.

 

2. HAVE A CLEAR STRATEGY WITH SOME FLEX

Working with your broker to develop a clear engagement strategy will assist you in negotiations with underwriters. Underwriting guidelines change regularly, so having some flexibility in your strategy means you can pivot to a plan “B”, “C” or “D”.  Such alterations may require an increase in certain deductibles, removing non-essential cover or a revision in the level (limit) of insurance needed.

A change in strategy could also mean presenting the risk to diversified markets overseas, altering the mix or panel of insurers involved in the program.

 

3. INFORMATION IS KEY

Underwriters now require more information to properly assess the risk and appropriate pricing.  Additionally, the need for the underwriter to ‘sell’ the risk internally requires greater checks and balances.  To maximise the chance for a positive management referral (and minimise time delays), we recommend our clients invest time, energy and resources in providing a detailed submission.

A detailed submission includes:

  • Quotation slip clearly outlining the desired cover
  • Updated values (turnover, insured values, wages etc.)
  • Detailed claims history for the past 5 years
  • Response to all risk management recommendations
  • Any other actions you are taking to minimise risk

If a formal valuation has not been completed in the past 3 years, then we recommend one being completed to reduce the risk of a) underinsurance and or b) co-insurance* conditions being applied.

 

4. DIFFERENTIATE YOUR RISK

Obtaining favourable terms and conditions is easier when your risk positively stands out from the crowd.  With the aim of improving underlying profitability, Insurers are more risk selective, have less capacity to offer, and they are focused on reducing the overall accumulation of insurance in their books. We recommend that clients formally present to insurers at least once a year to promote the positive aspects of their risk management program and any initiatives being implemented to reduce risks.

 

5. REGULAR COMMUNICATION

The market is moving at a faster pace than we have seen in the past key decades. Therefore, it’s important to keep in regular contact with your broker.  Regular communication also makes it easier to revise your strategy quickly, if needed.  Involving other key stakeholders within your business (e.g., the CEO, CFO, Risk Manager etc.) in these communications can enable wider buy in.

 

 

We’re with you all the way

While the current market conditions are challenging, these strategies can enhance the “attractiveness” of your business’ risks to the insurance market. To find out how we can assist in developing an insurance strategy that’s right for you, please reach out at any time.

 

Travis Wendt

National Head of Corporate Insurance & Risk Solutions

travis.wendt@honan.com.au 

 

 

Discover the latest Corporate Insurance insights for FY21 Q2-Q3

 

 

 

*Co-Insurance is an instance where, as a result of inaccurate (lower) asset valuations, you may be required to contribute to a percentage of the claim.

 

Combating Cybercrime: 3 Ways to Protect Your Systems in 2021

The events of 2020 forced many organisations to transition to remote working arrangements, almost overnight. This was heaven for hackers, who took advantage of employees’ vulnerable home networks to infiltrate company systems. Staff are a key line of defence against hackers, so it’s critically important to equip them with training and tools to defend against attacks.  Here are key actions we regularly share in training sessions to help staff identify and report technology security risks.

 

1. UPDATE VIRUS AND MALWARE PROTECTION

Hackers have bots searching the internet to find gaps in your home security. Unsecure Wi-Fi networks, old routers, and security cameras can be used to gain access. Therefore:

  • make sure you have secure usernames and passwords on routers and firewalls at home. Some older routers have a standard password that MUST be changed
  • ensure you have up-to-date malware and virus protection. You are only protected from new attacks if you have the most recent patches on your devices
  • check the logs and make sure you can identify all devices connected to your internet. Most systems allow you to rename devices so you can detect unknown ones
  • consider a home firewall, in addition to the router. This adds an extra layer of protection and most come with parental controls to help manage kids’ internet usage

 

2. BEWARE OF SOPHISTICATED PHISHING ATTACKS

Phishing emails are a common way for cyber criminals to access your passwords and usernames, or to confirm you are a real and active user. Phishing attacks have become increasingly sophisticated and can look almost identical to emails you might expect to receive from banks and couriers etc.. It’s common for these types of emails to ask you to “Please log into to accept this meeting”, “Click here to allow drop off of your parcel” or “Change the drop off for your parcel here”. You can view more examples here.

To help reduce the chances of an attack, be sure to:

  • always check the email address. If it doesn’t look right, don’t click or reply. If you do click and you’re asked to log in, don’t
  • check with the individual or company the email appears to be from or log into your account via the web address, not the link in the email. A simple check can save you a lot of stress

 

Phishing attacks can also take the form of browser notifications. This innocent looking pop-up is a recent example of a browser attack designed to trick unsuspecting users.

 

3. LEVEL-UP YOUR PASSWORD GAME

To reduce the chances of hackers accessing your usernames and passwords, you should:

  • ALWAYS use multi-factor authentication (MFA). This dramatically increases the security of the system, especially if you use an authentication application
  • check to see if your passwords are compromised. Mass data breaches of small and large companies over the years means your ‘old’ passwords may be for sale on the dark web. You can safely find out if your work and personal emails have been compromised here
  • use a separate password for each login (a password manager like LastPass can help). Don’t use any personal passwords to access your company IT systems
  • use a phrase as your password e.g. IEatMyDinner@6pmEveryNight will take a cyber criminal months, even years to crack
  • change passwords regularly (every 30-60 days) and NEVER simply add a number to the last password you used. This is the first thing hackers will try if they know your last password
  • include at least one uppercase, lowercase, number, and special character in new passwords and ensure they are 8 – 14 characters long.  Complex and longer passwords take more time for hackers to break

 

A FINAL NOTE

I like to think of cyber security defences as a fence we build to protect our systems. Criminals continue to find ways to get over, under or around these fences. Therefore, it’s essential to keep checking the fence to ensure it remains secure. I encourage you to assess the strength of your company and personal fences today.

 

 

Stuart Madden 

stuart.madden@honan.com.au

 

Stuart is Honan’s Head of Information Technology and a member of the Zoom Customer Advisory Board. You can read more about his involvement with Zoom here.

 

 

Discover tips from our technology partners, blueAPACHE

Preventative Electrical Maintenance in Strata Complexes: What You Need to Know

Strata News

Fire damage claims represent a significant cost to strata insurers and a major inconvenience to owners and tenants. Faulty or poorly maintained electrical systems are often the cause of these incidents, with Fire and Rescue NSW attributing almost 40% of house fires each year to electrical issues. The high volume of ageing strata properties throughout Australia means the issue is set to continue if preventative actions are not taken. Regular preventative electrical maintenance helps reduce the risk of a serious claim and enhances the safety of all residents within your strata complex. Here are four simple actions you can take to reduce your risk and risk to others nearby.

 

1. THERMOGRAPHIC SCANNING

Thermal Imaging or Thermographic Scanning is an effective way to identify load imbalances and hotspots (electrical parts that are damaged or worn will emit a higher level of heat than the surrounding area on a switchboard). More and more Strata Insurers now require old wiring to be inspected for compliance as well as regular Thermographic Scanning of switchboards.

The use of infra-red technology by a qualified electrician can identify abnormal temperatures within switchboard systems and rectify them in the early stages. Identifying issues before they escalate also prevents any downtime while damaged parts are replaced, which can sometimes take months to manufacture.

 

2. REWIRING

Common issues like overloaded electrical circuits, worn-out insulation on old wiring systems, the absence of grounding systems, and incorrectly modified wiring all increase the risk of fire and electrocution.

Often, properties constructed more than 50 years ago will exhibit some of these issues.  In some cases, the replacement of these systems is necessary (and often required depending on the type of wiring system). If the property is more than 50 years old, arrange an inspection by a qualified electrician who can assess these issues.

 

3. INSTALLATION & TESTING OF RESIDUAL CURRENT DEVICES (RCDS)

RCDs or Residual Current Devices are used to regulate the flow of electricity and automatically disconnect the flow when an imbalance is detected in the circuit. These systems are vital to avoid serious injury by electrocution.

In Australia, RCDs have only been mandatory on power circuits since 1991, so be sure to check the property is fitted with an approved device. Regular testing and tagging of RCDs by a qualified electrician can reveal whether the supply is tripping rapidly enough to avoid a potentially serious electrocution. Push button testing of your RCD is also required on a 6-monthly basis under Australian Standards. In Western Australia, the Department of Mines, Industry Regulation & Safety recommends this is done every 3 months.

 

4. TESTING & TAGGING OF COMMUNAL APPLIANCES

Testing and Tagging involves the visual and electrical inspection of an appliance to ensure it is in safe and working order. This can only be carried out by suitably qualified technicians and should be done on a regular basis.

Faulty communal appliances such as dryers and washing machines can contribute to the risk of electrocution or fire, so it’s vital that regular testing and tagging of these appliances is conducted.

 

A FINAL NOTE

The above solutions are not exhaustive, and all electrical maintenance should be referred to a suitably qualified professional who can assist you in developing and carrying out a regular maintenance schedule.

 

 

We’re with you all the way

To learn more about how Honan can assist you in managing your Property and Strata risks, please reach out at any time.

 

Anthony Chitty

Client Executive

anthony.chitty@honan.com.au

 

 

Discover more about Strata & Flood Insurance: What Does it Cover & Do You Need It?

Changes ahead for the Buy Now Pay Later sector: Key implications for Australian FinTechs

Finance

Cries for regulation in the currently self-regulated Buy Now Pay Later (BNPL) sector are nothing new. Financial services providers and consumer rights groups have long expressed concern that these services enable financial overcommitment from vulnerable Australians. But are we reaching a point where the size and scale of these businesses, the emergence of several new market entrants, and the disruption to traditional credit markets is forcing the Government’s and regulators’ hands?  This article looks at the current situation for BNPL FinTechs in Australia, how insurers currently view their risk exposures, and how this may change if regulations are introduced.

 

THE CURRENT STATE OF PLAY

In 2018, digital laybuy platform Afterpay and the BNPL sector avoided regulation when ASIC reported it was not looking to bring them under the National Credit Act. In late 2020, a Senate Committee on Financial Technology and Regulatory Technology backed the BNPL sector’s code of practice, saying self-regulation helped to protect innovation. This code is currently being finalised by The Australian Finance Industry Association (AFIA) in collaboration with its BNPL members. It aims to have the BNPL industry Code of Practice operating by 1 March 2021.

Recently, however, a report provided to the UK’s financial regulator, the FCA, following a review of the unsecured credit market, has made the strongest case yet for implementing regulation within the BNPL sector, at least in the UK.

 

HOW WILL THIS IMPACT THE AUSTRALIAN MARKET?

The BNPL sector is never far from the sights of ASIC, which released an industry update in November 2020. ASIC currently holds Product Intervention Powers (PIP) over BNPL products which provides a regulatory tool to address any significant harm to consumers. Come October 2021, the Design and Distribution Obligations (DDO) legislation will also apply to most ASIC regulated products, which will include BNPL products.

Whether these regulatory controls, complemented by industry self-regulation, will provide consumers sufficient protection without stifling innovation remains to be seen. What is certain, however, is this topic remaining hot for a while yet. According to IBISWorld, the market is predicted to maintain strong growth, with Australian BNPL revenue forecast to grow from AUD 680M (USD 488M) in FY20 to AUD 1.1BN by FY25, with users set to double to 4M within three years.

 

INSURING BNPL FINTECHS IN AUSTRALIA

FinTechs are a blend of technology and financial businesses, exposing them to risks common in both sectors, where insurers’ appetites are commonly limited.

Examples of such risks include:

  • Technology risk – tech failures leading to 1st and 3rd party financial loss
  • Financial and credit risk
  • Financial crime, fraud, and identity risk
  • Cybersecurity and Data Privacy – 1st and 3rd party losses
  • Directors & Officers Liability
  • Public & Products Liability
  • Regulatory Investigations and Statutory Liability
  • Money Laundering risk

Although some do, BNPL FinTechs are not required to hold an Australian Credit Licence (ACL). Thus, in the eyes of insurers, they do not have the same responsibilities and obligations as ACL holders under the National Consumer and Credit Protection Act. This lack of regulation makes insurers nervous, and securing adequate insurance is therefore challenging. It will be interesting to see whether insurers’ risk appetites change if regulation is introduced into the BNPL sector – as recommended in the UK.

 

We’re with you all the way

With significant experience in the financial, technology and FinTech sectors, Honan welcomes the opportunity to assist all businesses operating in this space. Feel free to reach out at any time to discuss your insurance needs. 

 

Dominic Brettell

Head of Client Service – Corporate Insurance & Risk Solutions

dominic.brettell@honan.com.au

 

 

Discover the 4 Risk Protection Essentials for Tech Start-Ups.

Strata & Flood Insurance: What Does it Cover & Do You Need it?

Strata News

Of the many covers available in the strata insurance marketplace, flood insurance is one I find myself answering queries about almost every day, particularly after a day of heavy rain. With wild weather sweeping across the country in recent times (and the likelihood of future weather events occurring), it’s vitally important that strata managers and Owners’ Corporations understand their risk exposure to flood events, what flood cover involves, and ensuring the appropriate cover is in place.

 

WHAT IS DEFINED AS A ‘FLOOD’?

Prior to 2012, each insurer in the market had their own definition of flood cover, which made it difficult for consumers to accurately compare and understand the different options available to them. In 2012, the Insurance Council of Australia introduced a statutory flood definition applicable to all domestic property insurance contracts (including Residential & Commercial Strata) to reduce consumer confusion about what constitutes a flood event.

 

The current definition of Flood is as follows:

The covering of normally dry land by water that has escaped or been released from the normal confines of: 

  • any lake, or any river, creek or other natural watercourse, whether or not altered or modified; or
  • any reservoir, canal, or dam.

Reference: Section 37B (2) (a) of the Insurance Contract Act 1984 (Cth). Insurance Council of Australia, 2012  

In simple terms, if a deluge of rain causes a river, lake, dam, or the like to overflow and the rising of this escaped water causes damage to the property, this would trigger the flood definition in the strata insurance policy, should the Owners’ Corporation have this cover in place.

 

WHAT DOES FLOOD INSURANCE COVER?

Flood Insurance is usually provided as an extension to a standard strata insurance policy. Provided the Owners’ Corporation has this extension in place, the strata insurance policy will typically respond to loss or damage arising from the following:

  • Damage to the Building, inclusive of common areas and items falling within the definition of building within private lots (e.g., walls, cabinetry, installed fixtures, and fittings)
  • Damage to Common Contents
  • Loss of Rent & Temporary Accommodation.

Costs will be covered up to either the total sum insured for Building, Common Contents & Loss of Rent/Temporary Accommodation, or to the Flood Insurance Sub Limit noted on the policy schedule, whichever is the lower amount.

 

DO I NEED FLOOD INSURANCE? 

If you do not live near a body of water (as described in the flood definition above), then the chances of flood would be considered remote, and Flood Insurance may not be required. However, should the property be near a body of water, then Flood Insurance is likely to be needed. To find out more and understand the flood risk at your property, you can access the following resources:

  • Your local council will have flood mapping available for your area and be able to tell you if you are in a flood zone
  • Alternatively, you can refer to the Australian Flood Risk Information Panel
  • Contact Honan – we can utilise our internal resources or access our insurer partners’ flood mapping to help you understand your risk

 

HOW DO I PURCHASE FLOOD INSURANCE?

Within the strata insurance industry, Flood Insurance is offered on a case-by-case basis. This means it is not automatically included in each policy. When a request for flood cover is received by an Insurer, they will review the flood risk (often down to the specific house number on a street and its proximity to bodies of water) and determine whether they will offer flood cover. If the Insurer offers flood cover, they may also charge an additional premium, impose an additional excess, or even impose a limit on the amount of flood cover they are willing to offer (usually lower than the overall sum insured). Not all insurers in the strata insurance market offer flood cover, so ensure you understand if your strata insurer can offer this extension of cover.

 

WHAT NEXT?

Honan, and our specialist team of brokers are available to answer any queries and assist with sourcing Flood Insurance. To learn how Honan can help, please contact your broker or reach out directly at any time. 

 

Joshua Boyd

Client Manager, Strata Insurance & Risk Solutions

joshua.boyd@honan.com.au      

+61 439 391 289

 

 

Find out about underinsurance in the property market and how to limit your risk.

Corporate Snapshot: FY21 Q2-Q3

Insurance Updates

In this update, we share practical insurance insights from the quarter that’s been, and forecasts for the quarter ahead.

 

KEY TAKEAWAYS FROM FY21: Q2?

Q2 saw a continuation of the hard market which has dominated the past 3 years. Over the December quarter, we saw two distinct approaches to underwriting from overseas/global insurers. The first; a more conservative and selective approach to risk acceptance, especially for new business. The second; a largely ‘business as usual’ play by local insurers who continued to balance growing their books with managing a risk-distributed portfolio. The behaviour of global insurers was largely driven by management reporting, end of year close out, and annual reinsurance treaty negotiations as underwriters looked to limit additional exposure to their portfolios.

In December, insurers again exceeded their top line premium targets as well as deploying their full calendar year capacity. This resulted in greater focus on risk selection, with even tighter terms and conditions applied to policies. Additionally, underwriters were required to obtain referral/management approval prior to the release of terms.  This caused delays, which in many cases resulted in a declinature for terms to be offered.

 

KEY CONSIDERATIONS FOR FY21: Q3?

2021 marks the fourth consecutive year of hard market conditions, albeit with some anticipated softening on underwriters’ pricing for low hazard, vanilla style risks. At the upper end of the rating spectrum, we will continue to see higher rate increases for more hazardous risks, resulting in broader pricing. Well performing businesses are likely to receive higher single figure increases compared to distressed accounts (claims, occupancy, and exposure to natural catastrophe perils), which continue to attract rate increases in excess of 25%.

Despite underwriters continuing to approach natural catastrophes and highly volatile risks with caution, market capacity is set to remain stable for the quarter ahead.

 

WHAT INDUSTRY TRENDS SHOULD CLIENTS MONITOR OVER THE COMING QUARTER?

As Insurers introduce new underwriting guidelines for the calendar year, we will see:

  • withdrawal of certain product classes (such as Professional Indemnity and Excess Liability)
  • introduction of sub-limits for hail and windstorms (previously not sub-limited)
  • complete exclusion for Infectious Disease
  • reduction of % participation, especially where risks are written on a 100% basis.

Insurers are taking these steps in an effort to maintain underlying profitability, especially in response to poor investment returns courtesy of low interest rates. 2021 results are expected to be mixed, contingent on product class and State/Territory frameworks. This will be reflected in upcoming market and regulatory reporting.

The recent Business Interruption test case in NSW in respect to COVID-19 will remain front of mind for insurers, with several undertaking capital raising to bolster balance sheets should Insurer appeals be unsuccessful.    

 

We’re With You All The Way

Feel free to reach out to discuss your risk exposures.

 

Travis Wendt

National Head of Corporate Insurance & Risk Solutions

travis.wendt@honan.com.au 

 

 

Read the FY21 Q2-Q3 Financial Lines Market Update

 

Don’t let your property dream become a nightmare – 4 tips to minimise buyer risk

Strata News

Buying a residential property can bring with it a whirlwind of nerves, frustration, excitement, and hopefully, ultimate joy. Often a complicated and drawn-out process, purchasing property also comes with a host of insurance-related implications, and ones well worth preparing for in advance. Having recently purchased a property of my own, I’ve collated 4 top tips for reducing risk and getting your insurance organised ahead of settlement.

 

1. ALWAYS START WITH A BUILDING INSPECTION – The real estate version of a test drive

You’ve fallen in love with a property and you’re considering making an offer. What’s next? Rather than making an immediate offer, wherever possible, engage a building and pest inspection service as early in sale negotiations as you can. A building inspector will review the property for evidence of existing structural damage, or evidence of conditions that may lead to structural damage in the future.

All qualified building inspectors must have a Professional Indemnity (PI) policy in place. This means that in the instance of finding structural damage in your new home in the future (that was not originally identified in the inspection report), you may be able to make a claim against your building inspector’s PI cover.

 

2. GET YOUR HOME INSURANCE TIMING RIGHT

Once you’ve progressed to the point of signing a contract with the vendor, it’s time to think about home insurance. Depending on the location of your property, the timing of when you become responsible for any damage to the property will vary – always check this ahead of time. As a general rule however, you should purchase a home insurance policy as soon as you can after the contract is signed. Your lender may even require you to do this before your home loan becomes unconditional.

 

3. IS THE PROPERTY IN A STRATA PLAN?

If the property is located within a Strata Plan, it is usually the responsibility of the Owner’s Corporation to take out a Strata Insurance policy to cover the building or common property that forms part of the Strata Plan. The Strata Insurance policy should be in place before the property is sold. If you’re unsure,  check with the vendor or contact the property’s Strata Manager.

 

4. DO YOU NEED LANDLORD INSURANCE?

If your new property is an investment and you plan to rent it out, you should consider Landlord Insurance. Landlord Insurance covers your property as per a home insurance policy in addition to losses that may arise through the actions of your tenant/s (e.g. theft, loss of rent if the property becomes uninhabitable or malicious activity).

 

We’re with you all the way

To learn more about how Honan can assist you in managing your Property and Strata risks, please reach out at any time.

 

Matthew Henderson

Operations Manager – Underwriting Facilities & Strata

matthew.henderson@honan.com.au

 

 

Find out about underinsurance in the property market and how to limit your risk.

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