Katherine Beards – Head of Client & Operations | Honan Life Insurance Group
Joined Honan:July 2016
A quote capturing your approach to your role
“Success isn’t always about greatness. It’s about consistency. Consistent hard work leads to success. Greatness will come.” Dwayne Johnson
Tell us about yourself
Before joining the Honan family, I worked in Superannuation for 5 or so years. There is a lot of cross-over between these areas, so the switch to life insurance was fairly seamless. A personal experience made it abundantly clear to me the importance of having an adequate personal insurance safety net in place. This first-hand experience is where my passion stems from.
Outside of work, I have a wonderful husband and two young boys who love basketball. You can usually find us having a game of 2v2 at the local courts on the weekend. I’ve also recently completed a Bachelor of Business (Financial Planning) which I’ve been working on part-time for the past 5 years, and I am thrilled to have achieved that!
What does the Head of Client & Operations do?
Together with the broader team, I work with Honan Life’s financial advisers to ensure our processes are efficient and our compliance requirements are met. This involves overseeing the underwriting and implementation process and making sure all advice documentation reaches our clients in a compliant manner. I am responsible for the relationships we have with the insurers, which allows us to continue to deliver quality advice and outcomes to our clients.
What are the 3 things you find most motivating about your role?
Having clients walk away in a better position than when they first came to us. This could mean saving on premiums or having a well-rounded, more comprehensive insurance portfolio to support them.
Genuinely making a difference for our clients during times of vulnerability. We see this firsthand when a claim is paid out. The sense of pride that follows when the financial pressure is alleviated for a client (allowing them to focus on their recovery), is a true privilege.
We have such a close-knit team with a wealth of experience, as well as a vibrant and positive culture, so every day is different!
At Honan, our values form the foundations of our unique culture. What is your biggest learning from your time at Honan Life?
It’s refreshing to work for a company where our clients are at the forefront of everything we do. The drive to do better for our clients makes me incredibly proud to work at Honan.
Your core focus for the year ahead at Honan Life?
Empowering our team with additional tools and knowledge to further enhance our capabilities. I’ll also be focused on fine-tuning our operational efficiency, resulting in better outcomes for our clients.
Recommended further reading / a great online resources/a podcast?
TheSmiling Mind App is an excellent resource to have on hand for quick and easy meditation and mindfulness exercises.
We’ve never shied from conversations on mental health at Honan, but with much of Australia and South East Asia experiencing lockdowns or restrictions due to COVID, our company-wide Mental Fitness Workshop with leading psychologist and Head of Mental Health & Wellbeing at St Kilda Football Club (SKFC), Dr. Ben Robbins was timely to say the least!
Including powerful insights about mindset, stress, and anxiety, Dr. Ben shared practical tips and techniques for navigating everyday life, which you can apply, regardless of your occupation. Here are the top takeaways from Dr. Ben:
1. We are currently spending a lot of time in fight/flight mode
While useful in survival situations, our fight/flight response is often experienced as anxiety in the modern day. For example, running late, receiving an unpleasant email, public speaking, the unique stresses of working from home can all activate this response. With all our attention going to that perceived threat, it can be difficult to think clearly, make decisions, and behave in line with our values.
Dr. Ben explained that our default fight/flight response activates what he calls the ‘red brain’ (the amygdala). He used the example of a player responding to a poor decision by an umpire with frustration and anger. Reacting to a perceived threat with our red brain like this can lead to decisions and actions that we would not make in a calm and more balanced state. Being caught in this cycle takes us out of the present moment and it can trigger negative self-talk, rumination, and even depression. Living in this headspace does not allow us to perform to our potential.
2. Tap into your ‘blue brain’
In contrast to the ‘red brain’ is what Ben calls the ‘blue brain’ (predominantly the frontal cortex). This part of our brain helps us make rational and balanced decisions and actions. When we activate our blue brain, we are calm and present. This practice of mindfulness can help us manage our environment and stress.
3. Make everyday activities mindful
Mindfulness is about paying attention to the present moment with an attitude of openness and curiosity, not judgement. Each day, we have opportunities to practice informal mindfulness, such as stopping to taste a cup of coffee, paying attention to the feeling of water on your skin whilst having a shower, or going for a walk and noticing your surroundings.
4. Meditation: the tool to accessing mindfulness
Meditation is not about clearing your mind, instead, it’s about creating space, clarity, and awareness around your thoughts. It’s natural for our minds to wander, however, through practice we become better at noticing this and re-orienting our attention to the present. In fact, through repeated meditation practice our brains physically change. To illustrate, Dr. Ben used the example of learning to drive. When we first learn to drive, it takes all our concentration and effort, but in time and through repetition, we build and strengthen these neural pathways and it becomes easier. It’s the same with meditation!
To help, Dr. Ben recommends trying a mindfulness meditation application such asCalmorSmiling Mind.
Honan is the proud naming rights partner of SKFC’s Business networking group, STK Business. Our staff were greatly appreciative to have had access to Dr. Ben for this insightful workshop.
Many industries and sectors are feeling the force of the hardening insurance market as premiums continue to rise, with both privately owned and strata registered commercial and industrial properties among the most impacted. This article explains what is fuelling the premium increases, how different risks are assessed/priced, and steps to make your risk profile more appealing to insurers.
CURRENT MARKET CONDITIONS
First, it is important to understand the market forces at play. The lower premiums collected in the prior soft market (where insurance was relatively cheap and plentiful) means insurers have suffered underwriting losses where claims paid are similar to or higher than the premium collected.
Making matters worse, property losses have continued to grow, as evidenced by recent flood, bushfire, hail/storm, and cyclone losses. With such large catastrophic losses across the globe, the cost of purchasing reinsurance (insurance for insurers) rises. In turn, insurers raise their premium rates and become more selective in their underwriting guidelines to regain profitability.
Right now, commercial property premium increases are trending between 15-20% for commercial strata, between 5-10% for non-strata commercial buildings, and increases can be upwards of 20% for industrial buildings. Changes in risk information, hazard or high-risk occupants, and poor claims history can push these rates even higher.
WHY ARE PREMIUMS INCREASING FOR COMMERCIAL & INDUSTRIAL PROPERTIES?
The hardening market is driving insurance rate increases and restricting appetite to underwrite commercial/industrial risks. Many insurers who could previously write high-risk commercial and industrial buildings have experienced a significant influx of claims. As a result, they have adopted a more conservative approach and are re-evaluating their risk appetite/rates to reduce their overall exposure. Consequently, underwriters are either not offering renewal or applying large rate increases and additional excesses/deductibles.
Tenants and Occupiers are a major factor in insurers’ risk assessments, in combination with the construction material and fire safety measures in place at the property (see Figure 1). COVID-19 has contributed to a surge in the volume of premises left vacant and unoccupied for an extended period. As shown in figure 1, underwriters view unoccupied lots as more likely to incur malicious damage and theft.
There are now fewer Insurers in the high hazard commercial property market and those remaining have narrower risk appetites. Over the last five years, three strata insurers and at least three specialist property insurers have exited or significantly reduced their exposure to commercial property risks. Reduced competition limits the “capacity” or amount of risk each insurer is willing to hold in any one risk or location. This is particularly evident for hard-to-place risks, such as properties in alpine regions, where there are far fewer insurers prepared to offer terms. Further, if the sum insured is above approximately $5 million, those same insurers may not be able to write 100% of that risk. In turn, the request for a quote may be declined, or sometimes, multiple underwriting agencies will need to insure a percentage of the risk.
HOW IS RISK ASSESSED?
The chart below shows how risks are typically viewed by insurers, with the greater risks most likely to attract higher premiums.
HOW TO LIMIT PREMIUM INCREASES
Insurers appreciate owners that are proactive in their approach to risk mitigation. It instills confidence that the property owner or manager is overseeing and limiting risk effectively. Here are our tips on how to make your property more attractive to insurers:
Property maintenance: Make sure a maintenance plan is in place and always adhered to. It is prudent to have an annual preventative maintenance budget for the property. This allows urgent repairs and proactive maintenance to be carried out. A professional property manager can assist by overseeing the maintenance fund and engaging with industry experts to maintain the property.
Fire safety upgrades: Ensuring you are meeting your mandatory council fire safety obligations is a must, however, going beyond the minimum requirements is encouraged by insurers. If the property is leased, ensure the tenants have adopted best fire and safety practices for their industry.
Engage a risk engineer/surveyor: A professional risk engineer can identify hazards and provide recommendations to improve the property’s risk profile. They provide feedback on fire protection, storage suggestions, maintenance, and overall best practice to minimise risk and liabilities.
Keep your broker updated: Inform your broker about any enhancements or steps taken to reduce risk at the property. This can be done at any stage but will be most beneficial leading into renewal. This information will assist the broker in their negotiations of terms with both the holding underwriter and alternate markets.
With COVID-19 outbreaks continuing to disrupt life around the country, maximising the vaccination rate has become a national priority. Reaching the vaccination rate of 80% in Australia is now in our sights, raising questions about the best way to navigate a safe and sustainable return to the workplace.
The issue of whether employers should mandate vaccinations is receiving considerable attention around the world. Multinational companies such as Google and Facebook have introduced a compulsory vaccination policy for staff. This move has been closely followed by Australian companies such as Qantas and SPC, with others indicating they will follow suit.
As businesses seek to understand their risk exposures, we explain how COVID-19 claims and liabilities are currently being viewed and summarise key considerations for employers as they navigate this next phase.
LATEST GUIDELINES ON MANDATING VACCINATIONS
In Australia, four tiers have been set out by The Fair Work Ombudsman (FWO) to help businesses assess where it might be “lawful and reasonable” to mandate COVID-19 vaccinations in their workplaces. The tiers range from Tier 1, where workers are exposed to the most risk and therefore it may be reasonable to enforce vaccinations, through to Tier 4, where the risk of transmission or infection is likely to be lower.
Tier 1 work — employees are required to interact with high-risk people (e.g., border control, hotel quarantine)
Tier 2 work — employees are required to interact with vulnerable people (e.g., health care or aged care workers)
Tier 3 work — employees are required to interact with the public in the course of their employment duties (e.g., retail workers at essential stores)
Tier 4 work — employees have minimal face-to-face interaction with others.
A workplace may have employees performing work in different tiers, which might change over time. With no test cases currently available to show the tier system in action, these guidelines raise the question of what steps are considered “reasonably practicable” for employers to help keep staff safe. At the time of publication, this decision sits with employers.
NO FAULT COVID-19 INDEMNITY SCHEME
Having consulted with the medical, healthcare, business, and insurance sectors, the Federal Government has released the details of the national no fault COVID-19 Vaccine Claim Scheme (the Scheme). The Scheme will provide Australians with efficient access to compensation for COVID-19 claims related to the administration of a Therapeutic Goods Administration (TGA) approved COVID-19 vaccine delivered through a Commonwealth Government approved program, irrespective of where that vaccination occurs.
From 6 September 2021, Australians who suffer injury and loss of income due to receiving the COVID-19 vaccine can register their intent to claim from the COVID-19 vaccine claims scheme webpage. The Scheme will be backdated to February 2021.
The Scheme will cover the costs of injuries exceeding $5,000 caused by a proven adverse reaction* to a COVID-19 vaccination. Independent experts will assess the claims, and compensation paid based on the recommendations. Compensation payments under the Scheme will be fully funded by the Commonwealth.
Australians who receive a COVID-19 vaccination and experience an adverse reaction are encouraged to report it to their doctor who can provide the information to the TGA.
COVID-19 VACCINES & WORKERS’ COMPENSATION
Separate to the COVID-19 Vaccine Claim Scheme, in some circumstances, an adverse reaction to the COVID-19 vaccine may be covered under workers’ compensation. To be covered, the insurer will need to be satisfied that:
the vaccine injury arose out of, or in the course of the worker’s employment; and
the worker’s employment was a substantial contributing factor to the vaccine injury or was the main contributing factor for a disease, injury; or
in the case of heart attack or stroke injury, the nature of the employment was a relevant factor in increasing the risk of the injury (see below).
While each claim needs to be assessed on the relevant facts and evidence, several issues may increase the likelihood that a vaccine injury is covered under workers’ compensation, including whether an employer:
took steps to arrange for its employees to receive a COVID-19 vaccine
encouraged or induced its employees to receive the vaccination to obtain benefits for its business
permitted or directed employees to have a COVID-19 vaccination during ordinary working hours; or
provided instructions to employees relating to the administration of the vaccine.
Workers’ compensation outcomes will always be subject to the individual merits of the claim, however, the key factor determining liability is the relationship between the workplace and how an injury arose out of or in the course of employment. Therefore, the role of the employer is important when considering the exposures presented by COVID-19 vaccinations and how this can be determined to be in the course of employment. The link between a vaccine injury and the worker’s employment is easier to establish where a worker is influenced by their employer’s requirement to receive the vaccine or is subject to a Government Public Health Order. In these circumstances, there is a greater likelihood of the vaccine injury being covered under workers’ compensation. When lodging a claim, employers and workers will need to provide information on the link between their employment and the serious adverse reaction to the vaccine.
If a vaccine injury is a “heart attack injury” or “stroke injury”, the worker is also required to establish that the nature of their employment significantly contributed to the injury. In practice, this may require the worker to satisfy additional requirements. For example, the worker may need to provide evidence they opted for a particular vaccine brand due to their employment.
IMPACTS TO PREMIUM IF A WORKER MAKES A COVID-19-RELATED CLAIM
In NSW, icare has confirmed it will exclude COVID-19 claims and COVID-19 vaccination claims from the individual claims experience, meaning it will absorb the costs of the claim without passing on premium impact to the policyholder. This will protect any individual employer or industry from disproportionate premium increases due to COVID-19. This is a continuation of the Job Keeper exemption during 2020 where regulators supported the exclusion of these payments per the declaration of rateable remuneration. Whether the remaining State regulators follow icare’s lead is yet to be seen, however, Honan is liaising with our regulatory contacts to understand their position.
Businesses are encouraged to report any COVID-19 outbreaks directly to the relevant State or Territory regulator (e.g., WorkSafe Victoria, SIRA, etc.) and consider an employee who has tested positive to COVID-19 as having a reportable injury.
These issues remain a complicated area of discussion in the business community and the situation is evolving each day. We encourage businesses to seek legal advice based on their individual circumstances where appropriate before proceeding.
Heist films are one of my favourite movie genres. It is always exciting to watch how the protagonists in the movies cook up elaborate plans and pull off audacious thefts. Over the years, heist movie plots have become more complicated, evolving from robberies to highly intricate schemes. Similarly, insurance coverage has developed over time in response to increasingly complex risks.
In 2021, we have seen a noticeable increase in the prevalence of cyber losses. As cyber criminals find new ways to infiltrate businesses and their systems, there can be situations where crime or cyber insurance policies respond. But what are the differences between cyber and crime policies? How they have evolved in recent years? And how can they help protect your business? Keep reading to find out.
Back to the movie analogy! Over time, simple armed robberies can no longer appease us heist movie fans, we want far more complicated and ambitious plots. Triggers to crime policies have evolved significantly in recent years as well. Historically, the major types of losses under a crime policy were fraud, theft, and misappropriation. That is, if an employee stole money from your business or forged documents to transfer monies into their own bank account, or if a non-employee broke into your business and stole money or stock, your crime policy would typically cover the loss. Just as movie plots have become more complicated, crime policies have also developed and expanded their coverage over time, to include:
THEFT OF HARDWARE: Replacement of your computers, networks, or servers to their pre-loss operating capacity.
INCREASED INTEREST RECEIVABLE OR PAYABLE resulting from a loss, covered by the policy.
FEES, COSTS, & EXPENSES including legal fees, investigative specialist fees, reconstitution costs, and reputation recovery costs.
Introducing the “Tech Guy”. Since the early 2000s, every heist movie crew now needs a Tech Guy. They’re often called Stuart. This is the guy who hacks into computers and whatnot. Crime policies do not protect against cybercrime. With the growing use of technology comes an increase in the scale and sophistication of cybercrimes. Ultimately, this means businesses need to protect themselves against this evolving risk. Cyber insurance is now just as important as crime insurance.
Traditionally, email compromise has been the main form of cyber losses (phishing, ransomware, and cyber scams). Cyber criminals have diversified their tactics, making it easier than ever to fall victim to cybercrime. Some of the emerging losses that we are beginning to see include:
CRIMEWARE-AS-A-SERVICE: Where hackers like ‘Stuart’ gain access to your system, identify how to cause damage, and then sell the ability (for a very affordable price) to compromise your system on the dark web. This could be a disgruntled ex-employee, a personal associate, or a competitor. The most important aspect of this threat is that it no longer takes a person who is IT qualified to take down your systems.
CRYPTO-JACKING: Malicious cryptomining occurs when cybercriminals hack into both business and personal computers, laptops, and mobile devices to install software. This software uses the hacked computer’s power and resources to mine for cryptocurrencies or steal cryptocurrency wallets owned by unsuspecting victims.
E-COMMERCE DATA INCEPTION: These types of attacks pose an emerging and imminent threat to online shoppers, undermining trust in online payment systems.
A PERFECT PAIRING
As the pandemic lingers on into its second year and many businesses around the world continue to support working from home arrangements, cyber criminals are exploiting new avenues to gain access to networks. Being aware of these risks and exposures has never been more important for businesses. Crime and Cyber insurances are complementary products that are essential to businesses in the current digital age. Combining these insurances with the right awareness and investments enables businesses to protect their valuable assets, including their data and reputations.
Like in the movies, there is always insurance to fall back on. Although I am still waiting for a movie’s closing scene to feature a heist victim lodging an insurance claim!
As Australia progresses its mass-vaccination efforts and charts its return to “normality”, employees around the country are emerging from the last 18 months feeling burnt out and underappreciated.
Of the 1,557 Australian employees who participated in Gartner’s 2021 HR Survey Report, just 16% were still willing to go above and beyond their expected responsibilities (slightly less than the global average of 16.5%) and only 9% still considered themselves ‘engaged’ (i.e., willing to work with greater discretionary effort and stay with their current employer).
Employees are looking for opportunities elsewhere for a range of reasons. The top 3 motivations, according to Gartner’s Global Labour Market Survey are 1) work-life balance, 2) manager quality, and 3) respect. For Australian employees, financial compensation ranked down at number 10 when it came to reasons for attrition. By contrast, work-life balance was the primary driver of employee attraction and attrition in Australia, whereas financial compensation was the main motivator when looking at the international data.
Compounding the issue further, many Australians are just not feeling their best. Of the 5,000 employees surveyed in a separate study by Gartner, more than one-quarter (29%) reported feeling depressed due to the COVID-19 pandemic.
WHAT DOES THIS MEAN?
For many Australian employees, the COVID-19 pandemic has brought the importance of mental health to the forefront and with that, a growing expectation for employers to provide adequate mental health offerings to staff. With a 25% boost to employee business confidence in Q4 2020 from the previous quarter, working Australians are more hopeful about obtaining new employment in the current market. It now becomes a question of whether their current employers offer sufficient support and working flexibility.
HOW CAN EMPLOYERS ATTRACT & RETAIN TALENT?
Now, more than ever, to hire and retain top talent, workplaces must be able to offer the right benefits to support their employees. Here are our top tips for levelling up your business’ employee offering.
2. Provide tailored group insurance & private health cover
For many Australians, the motivation to work long hours is to provide financial stability and support for their loved ones. Recognising this, many industry-leading employers offer employer-funded life and disability insurance, as well as corporate private health plans for employees and their families to enhance the employee value proposition. A 2018 Forbes HR Report stated that displaying a strong sense of empathy and community to employee’s families allowed businesses to hire and retain the top talent within their industry. This gesture demonstrates a willingness to invest in the wellbeing of their employees and their families, something that goes a long way, particularly at a time when employees are feeling increasingly burnt out and underappreciated.
3. Flexible work arrangements & mental health leave
COVID-19 restrictions have meant many employers and employees have adopted flexible working or work-from-home arrangements. Employees have regained valuable time with their families and friends, which would otherwise have been spent in the office or transit. Moving forward, employers may consider continuing to offer flexible working arrangements that provide the work-life balance that many employees value.
A FINAL NOTE
Our Global Benefits team has extensive experience working with clients of all sizes across the globe and offers local expertise in the Australian market. Our mission is to work closely with your business to tailor the ideal Employee Benefits and Wellness Plans to help you support your greatest asset – your people.
What quote captures your approach to your work/leadership/life?
“Forever the student” Sensei – Patrick Pinto.
To me, this means no matter what you know, remember to stay humble, and if you stop learning then you will be left behind.
Tell us about yourself
My first introduction to the insurance industry came from working at the Australian and New Zealand Institute of Insurance and Finance (ANZIIF) during university. This gave me the perfect introduction to a career in insurance and I pursued a Graduate role with insurance firm Willis. I worked in the Financial Lines Corporate team before transferring to Commercial Risks. I found the technical complexity of SME risks to be just as fulfilling as their larger counterparts, especially when addressing entire portfolios or even entire professions. I joined Gallagher, managing schemes and Facilities, primarily specialising in Professional Indemnity, Management Liability, and Cyber products. Most recently, I led a team of underwriters at Chubb and oversaw the digital distribution of their Financial Lines products. While I have been consistently focused on Financial Lines products, I have enjoyed approaching these risks from a broad number of perspectives spanning technical analysis, client service, portfolio management, systems and efficiencies, underwriting, and business development.
The silver lining of Melbourne’s lockdowns is the opportunity to spend a lot more time with my loving family. My two girls with a third on the way keep me very busy. Outside of work I’m a novice martial arts enthusiast, currently focused on kyokushin karate. I’ve also developed an interest in crypto currencies and blockchain technologies, and have enjoyed exploring both the technical innovations, and the disruptive changes these technologies herald.
You have just started in your new role with BRIC, can you share with us a little about what specialist skills and experience (your special sauce) you will bring?
The experience and skills and relationships already in the BRIC business are seriously impressive. My task is to leverage the collective capabilities within BRIC and the resources of Honan to amplify the talent that exists!
You have had an extensive career. Can you give us a highlight that stands out?
I could tell you about some hard-to-place risks that were highlights, but actually, what I am most proud of was leading a multi-state team at Chubb through the challenges presented by COVID and helping them to feel supported, understood, and engaged. Being virtually invited into my team’s homes really amplified the human aspect of work, and the fact that everybody was facing different challenges and a lot of listening was key.
For those that may not be aware, can you explain what the purpose of your role as Head of Professionals at BRIC is?
Working in what is arguably the hardest area to place insurance (coverage for building surveyors and engineers), the purpose of my role is to assist clients and work with our insurance partners to satisfy their requirements at the same time – and delivering all of that in a transparent way. I’ll also be focused on fostering talent and looking for opportunities to help my team develop and excel.
You have worked across Financial Lines insurance for SMEs through to large complex risks for ASX-listed companies and international corporate businesses, what is the biggest change you’ve seen in the Insurance industry in the last 5 years?
There has been a drive for efficiency and digital distribution, but concurrently, there have been significant changes in the risk landscape (e.g. climate change, cladding crisis, regulatory changes, growing cyber risks). This creates a tension for insurers and brokers to simultaneously streamline processes, while needing more information from businesses to address these emerging risks. Let’s call finding that balance an industry wide work in progress.
What was it about this opportunity that drew to join BRIC and the Honan family?
Securing insurance for complex and hard-to-place risks is incredibly energising and the societal good of the building industry has always appealed to me. The ability to work in that area of risk, coupled with the calibre of the BRIC team and the energy and resources within Honan and contributing to the synergy of the two was literally impossible to say no to!
What is your core focus for the year ahead at BRIC?
I’ll be amplifying the technical capabilities within BRIC via the resources and professionalism of Honan. I’ll be adding the sizzle to the existing BRIC offering!
Finally, can you provide us with a recommendation. A book /a series /a podcast?
Section 13 of The Insurance Contracts Act 1984 (The Act) states that a contract of insurance is an agreement requiring each party to it to act towards the other party (in respect to any matter arising under or in relation to it) with the utmost good faith and failure to do so may result in civil penalties.
Together with recent changes to the General Insurance Code of Practice, findings in the recent case of Australian Securities and Investments Commission v TAL Life Limited (No 2)  FCA 193 (TAL case) raised awareness around insureds’ rights and serves as a guide for insurers on the extent of their obligations when assessing and investigating an insured’s claim. This piece outlines the recent findings in the TAL case and its implications for insureds’ rights and insurers’ obligations.
FAILURE BY THE INSURER TO ACT WITH THE UTMOST GOOD FAITH: A RECENT EXAMPLE
The application of the duty of utmost good faith was recently highlighted when the Federal Court found that life insurance provider TAL Life Limitedbreached its duty to act with utmost good faith under section 13 of the Act because it rejected cover under an income protection policy based on the insured’s failure to disclose her prior history of depression. A claim was made after the Insured was diagnosed with cervical cancer. Importantly, there was no real dispute that the prior history of depression was unrelated to the cervical cancer.
The Court found that TAL failed to act with the utmost good faith, first by not notifying the insured about the investigation into her history of depression, and second, in failing to give her a proper opportunity to address TAL and any material it was relying on prior to its decision not to pay compensation. Third, the Court found TAL had failed to act with decency and fairness in reaching its decision without giving the insured a proper opportunity to supply material to TAL.
This decision serves as a useful guide for insurers on the extent of their obligations when investigating and assessing an insured’s claim.
THE INSURANCE INDUSTRY & SELF-REGULATION
In a similar vein, based on a two-year review of feedback and input from member insurers, government, consumer advocates, and regulators, The Insurance Council of Australia implemented changes to the General Insurance Code of Practice (The Code) on 1 January 2021. The Code is designed to set industry standards above those required by law and may require further updates to reflect regulatory changes. Together with Section 13 of The Insurance Contracts Act 1984 (The Act), the Code is intended to maintain fairness and transparency for insureds, moving forward.
IMPLICATIONS FOR INSUREDS
Clause 67 of the Code sets out the standard for assessing insurance claims, specifically: “When we are assessing your claim, we will only ask for and rely on information that is relevant to our decision. If we ask you for information, then we will tell you why we need it.”
While insurers have the right to investigate claims and request related information, it is clear from its obligation under the Act and applicable Code that insurers must:
act with decency and fairness in reaching their decision
give the insured notice of their investigation
allow the insured an opportunity to address the insurer’s concerns.
A FINAL NOTE
The outcome of the TAL case, together with the recent changes to the Code reinforces the obligations and standards insurers are required to uphold when investigating and assessing insureds’ claims. The changes are in line with the industry adapting to better support the rights of the insured.
Growing up in country NSW, I moved to Sydney when I was 15 and I now live in Newcastle, which is the perfect mix of regional, coastal, and urban settings. I’m a family man with a wife and a 2 ½-year-old son with another on the way. I love sport, especially basketball (despite the two torn ACLs I experienced while pursuing this passion!)
Prior to insurance, while completing my Business degree I worked in child welfare, caring for at-risk youth in residential care settings. It was a challenging, eye-opening experience working with marginalised kids and their families and it gave me perspective on life. I left welfare, motivated to gain expertise in the corporate world and to bring these experiences back to the welfare/NFP sectors later in life.
Since joining Honan in 2011, I have worked in Real Estate, Strata, and Corporate insurance. I’ve also overseen our Claims and Workers’ Compensation teams and helped develop our partnerships capabilities. Now, I provide Honan services to the Newcastle/Hunter and Central Coast region, expanding our presence in regional Australia.
What does the Head of Client Service do?
My current role in Newcastle is less than 12 months old so it is like starting a business, albeit with the support of an international brand and a blueprint from previous expansions into capital cities.
Initially, my role focused on developing a business plan and strategy for Honan’s expansion into the region, which has now progressed to the implementation stage. This involves new business and partnership development, building Honan’s brand presence in the region, servicing existing clients, and providing insurance learning and development opportunities to the business community.
What are 3 things you find most motivating about your role?
I have a great passion for meeting people and learning about different businesses. Many business people don’t have time to properly address their risks and/or do not fully understand the advisory role of an insurance broker. I find it very motivating to play my part in the success (and protection) of businesses through the work Honan does.
Growing up in a country town, I witnessed firsthand the importance of community. In my new regional role, I am driven to support the local, school, and business communities which are very much intertwined in regional Australia.
Being part of Honan as it has evolved over the last decade is a source of pride. We have a fantastic team and working remotely with my colleagues motivates me every day.
Prior to 2020, vast numbers of Sydneysiders were relocating to regional and coastal towns for the lifestyle, and COVID-19 expedited this trend. Simultaneously, the sophistication and size of businesses in regional Australia, coupled with population growth has driven demand for products and services that were previously only available in the capital cities. Much of this change has been enabled by technology and I expect this trend will continue. Honan saw the opportunities in Newcastle/Hunter, the largest regional economy in Australia.
The biggest learning from your time at Honan?
The value of persistence and the importance of good people. We spend more time with our colleagues than our families (at least we used to), so having people around you who share the company values and contribute to its culture is essential. The right people make persisting through challenges, achieving high standards (and enjoying yourself along the way) that much easier.
Your core focus for the year ahead?
To connect with as many people in the region as possible, to learn about their businesses, and find opportunities to add value.
Recommended further reading / a great online resource /a podcast?
I always recommend spending more time with your family and friends. That’s what is most important.
Australian Prudential Regulation Authority (APRA) is making changes to income protection policies to ensure the product can continue to be offered in the market. This article outlines the changes coming into force from October 1, 2021, and how these changes may affect you, whether you have an existing policy or not.
WHY ARE THE CHANGES HAPPENING?
The income protection sector has lost more than $3 billion over the last 5 years, after paying out approximately $5 billion in claims during this period (KPMG, 2020). With generous products being offered by insurers to win business, a 53% increase in mental health claims over the last 5 years, and a 36% increase in length of claim time, changes are needed to ensure the industry and income protection product is sustainable (KPMG, 2020).
In a recent insurer webinar hosted by TAL Insurance, it was stated that the original purpose of insurance was not intended to put the claimant in a better position, but to provide a level of cover throughout a time of need. Geoff Summerhayes of APRA said, “life [insurance] companies have been keeping premiums at unsustainably low levels and designing policies with excessively generous features and terms that, in some cases, provide a financial disincentive for policyholders to return to work”. Changes need to be made to ensure the longevity of income protection policies.
WHAT IS CHANGING?
One key change to income protection policies occurred on April 1, 2020, namely removing the agreed value. This change means a claimant’s income is assessed at the time of claim, as opposed to at the time of application. The largest effect is likely to be felt by those with fluctuating year-to-year incomes such as the self-employed.
The biggest changes will be imposed for all new policies from October 1, 2021. These are:
Income replacement ratios to be reduced from 75% to 70%. This means in the event of an income protection claim after October 1, 2021, the claimant would receive up to 70% of their income after 6 months of the claim.
During the first 6 months of a claim, a claimant is entitled to up to 90% of their income, depending on the policy they have entered.
Income will be calculated over the 12 months before the claim, compared to some current policies which use the highest rolling 12-month income over the last 2 or 3 years to smooth out fluctuating income.
Guaranteed renewable policies will no longer exist. Long benefit periods, such as to age 65, will be managed and reviewed to help ensure there is motivation to return to work. Insurers understand that long-term claims are costly to businesses and in effect, cause premium increases for existing clients.
This may include changing from “Own Occupation” to “Any Occupation” definition after 2 years on the claim. “Own occupation” refers to the individual’s job when they make a claim, “any occupation” refers to an occupation the individual can fulfil, despite still being unfit for their own occupation.
WHAT ACTIONS CAN YOU TAKE AHEAD OF THE CHANGES?
If you already have an income protection policy:
No immediate action is required. You will be able to maintain your policy. However, a review to ensure the policy is appropriate is encouraged.
If you do not have an income protection policy:
Until October 2021, you can still take out an income protection policythat has a 75% income replacement ratio, an indemnity definition with the best 12 month income period over 3 years, and many additional benefits such as a critical illness benefit, defined/scheduled injury benefit, a bed confinement benefit, and minimum weekly working hours.
WITH YOU ALL THE WAY
Find out more about Income Protection and how it works in our guideIncome Protection: Your Top Five Questions Answered. With the changes set to take effect from October 1, this is an opportune moment to review your existing policy or understand your options. Feel free to reach out at any time.