Meet Our Operations Manager – Underwriting Facilities & Strata, Matthew Henderson

Q&A

 

Matthew Henderson  Operations Manager – Underwriting Facilities & Strata

Office: Melbourne

Joined Honan: February 2020

 

 

A quote capturing your approach to your role

“Statistics can be used to prove anything. 40% of all people know that” – Homer Simpson.

 

Tell us about yourself

I was born and raised in Melbourne but left at the age of 21 to travel around Australia, New Zealand, and Europe, working in various pubs, bars, restaurants, and nightclubs. I eventually settled in the UK and managed a golf club in Essex. At the age of 29 I realised it was time to put some of my education to use. I bought a suit and started looking for a job in London. It was a full career pivot, beginning with a three-month contract at the Lloyd’s of London Syndicate – Beazley, but ended up as an 8.5-year stint at Lloyd’s, involving several roles at Beazley and finally at MSAmlin as a Senior Business Analyst in their Property and Casualty Division. During this time, I also trained as an accountant. I made the decision to move back to my hometown of Melbourne in December 2019 and began the role at Honan just a few months later.

 

What does the Operations Manager – Underwriting Facilities & Strata do?

As the Operations Manager – Underwriting Facilities & Strata, I have quite a lot of scope and freedom in the business, which I really get a kick out of. Almost anything can come across my desk on any given day. There are four key parts to my role:

  1. Head up the Melbourne-based broker teams for Strata and Real Estate who look after Victoria, South Australia and Tasmania.
  2. Manage our Strata and Landlord insurance product– LIGO.
  3. Oversee national operations across all of Strata and Real Estate. This involves looking to implement operational efficiencies, building and running the data and analytics functions, helping to lead strategy and growth, and being a conduit to our Corporate Services team.
  4. Contribute to various special projects across the business.

 

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

  • I am surrounded by smart people, who are consistently willing to share their knowledge and expertise with their clients and colleagues.
  • What we do genuinely helps our clients.
  • Working within a company that has a culture of success.

 

Biggest learning from your time at Honan?

My biggest learning has been how to delegate more effectively. It’s hard to let go of projects but when you’re surrounded by a lot of great colleagues you’ve got to trust them to pick up your work and run with it.

 

Your core focus for the year ahead? 

Continuing to drive change and efficiencies that make life easier for our clients.

 

Noteworthy trends?

Insurance cannot sit by and let the fourth industrial revolution happen around it, and all over the world the industry is taking giant strides. Honan is proactive in seeking out opportunities in this space and as an independent brokerage firm, can quickly act to stay ahead of the curve. I see technological advances as the biggest trend that will shape how Honan do business in the years to come.

 

Recommended further reading/a great online resource/podcast?

Mr Excel forum – I’ve never had an Excel or VBA problem this forum couldn’t help me solve!

 

 

Meet our Head of Professional & Executive Risks – Henry Clark

 

 

Honing In on Our Partners: Engine Property Group

Melbourne’s leading owners’ corporation managers, Engine Property Group, has been partnering with Honan for some 10 years. Engine has a reputation for innovation and excellence in the owners’ corporation management space, managing a broad spectrum of high-rise towers, mixed-use developments, and master plan communities. Engine’s recent additions to Melbourne’s skyline include Sky Garden, Collins House, Melbourne Square, and Paragon Tower.
We checked in with owner, Andy Dawson, to find out more about the business and its story.

 

WHAT IS THE FOUNDATION ON WHICH YOU HAVE BUILT YOUR BUSINESS?

Our business is built on trust, we ask people to trust us. We strive to constantly maintain trust by producing and providing positive outcomes for our customers.

 

YOUR PARTNERSHIP WITH HONAN COMMENCED BACK IN 2011! TELL US A LITTLE ABOUT WHAT ENGINE LOOKED LIKE THEN VS WHERE YOU ARE NOW.

Quite incomparable really, while business lot volume is not the aim, over the last decade, organic growth has certainly seen us become one of Melbourne’s larger firms. Our investment in our people has also followed that path, building up such a positive culture that we are all exceptionally proud of.  

 

HOW HAS YOUR BUSINESS EVOLVED OVER THE LAST 5 YEARS?

  • We crafted two distinct service propositions to compliment two owners’ corporation management styles: Multi Level & Towers, and Large Scale Planned Communities & Estates.
  • With a view to perfecting delivery and a tangible uniqueness, we conducted a full “systematic attack” on the total business mid-2017. Interviews were carried out with staff, consultants, stakeholders and customers.
  • We applied the learning outcomes back into our systems development through aggressive digitisation, solution determination, process improvement, people improvement including positioning and development of tailored training programmes and mutual appraisal documents. The overall result has meant the business has completely detached itself from legacy systems and processes, which has enhanced responsiveness, effectiveness, and professionalism.
  • With a view to maintaining the above intensity, the second step was to run further workshops with key project management companies to get a clear delineation of how a tower and a large scale planned community may look in 2025.
  • The combination of all the above work really highlighted to us that industry service providers provide accounting platforms and synchronised management systems are falling behind and are simply not evolving. Further, there is no prominent application that fosters resident connectivity, community or creates the opportunity of producing income for an owners’ corporation. Engine has internally driven IT innovation to create platforms to streamline and interface all these critical elements.

 

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

Having been in the industry for 24 years, I still find it frustrating that as an industry we continue to undersell ourselves on price. Whilst we value our service proposition and look to “hold a line” on pricing, the pricing I come across from firms with little or no points of differentiation is frightening and frankly unsustainable for most strata business models.

I’m obviously looking forward to the year end implementation of our industry’s regulatory reform, work with it and understand its total application more fully, I mean it’s only been 15 years!

Equally, it will be good to see the proposed mid-year “short-term letting” review. There’s a place for everything and the short-term letting /pure residential interface must have balance but the “last cut” of regulatory reforms really didn’t give owners’ corporations any more significant powers that they didn’t already have.              

 

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 YOUR BUSINESS.

The true difference at Engine is easy, it’s our people.

I’ve been fortunate enough to oversee so many wonderful people over a long period of time and no matter what the circumstances, everyone that has moved through Engine has made their own valued contribution to the business and I’ll always be grateful for that. That said, I’m so immensely proud or our current quality group who can only be described as a dynamic bunch of high achievers who embrace personal development, training and CPD.

 

INNOVATIVE CULTURES AND A COMMITMENT TO ONGOING EVOLUTION ARE COMMON HALLMARKS OF SOME OF THE MOST SUCCESSFUL ORGANISATIONS TODAY. WHAT DOES INNOVATION LOOK LIKE / MEAN TO YOUR BUSINESS?

I spoke earlier on our “systematic attack” which in my view was honestly the starting point of Engine’s evolution. Internally we were brutally honest with ourselves and accepted that we could do so much better. This acceptance along with putting “tasks to process” has indeed driven internal innovation and other “shiny” community-creating lifestyle platforms we are proud of.               

 

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?

So many people over the journey gave me a shot, so many people continue to do so, they all know who they are and they remain so highly valued to me both professionally and indeed some personally. They’ve shaped me and in turn, given me a chance to shape a wonderful business called Engine.  

 

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

More like the next 10 years, I’m going nowhere! I “count my lucky stars” as to how fortunate I am to work with this group.

Whilst having plenty of fun along the way, we’re all committed to seeing where we can take Engine and how we can continue to make ourselves available to the wider community so as to be considered a major touch point for anyone’s owners’ corporation needs.           

 

 

Discover more in our Partner Q&A Series: Global Ballooning.

Insurance Update: Financial Institutions

Financial

The Financial Institutions insurance market continues to harden, with reduced capacity to underwrite risk as we progress further into the 2021 calendar year. Insurers are pressing for increased premium and/or retention levels on a portfolio basis (rather than a risk-by-risk basis) to grow the premium pool. 

Global volatility presents a major concern for insurers, given the anticipated resurgence in the markets and has been the key driver for increased premium rate momentum. With the Australian market floating on an unprecedented level of monetary and fiscal support, investors sitting on large cash reserves, and rapid accelerations in equity gains; underwriters are concerned about sudden devaluations to the market and consequent investor legal suits.  In addition, the lingering effects of the Hayne Royal Commission remain an integral rating factor, as well as any potential long tail claims arising from COVID.

Despite the above however, we are starting to see bright spots in terms of risk appetite navigation.  Following multiple years of the hardening phase, and notwithstanding the unpredictable market cycles, insurers have carved out much better clarity, visibility, and consistency with respect to their appetite across the different FI sectors.

 

KEY TAKEAWAYS FROM FY21: Q3

In Q3, Financial Institution clients who were hardest hit typically exhibited some of the characteristics below:

INCREASE IN FUNDS UNDER MANAGEMENT (FUM) AND REDEMPTION RUNS

Insureds with substantial FUM increases experienced higher prices, as FUM typically indicates the overall magnitude of potential losses.  Conversely, large redemption runs were heavily penalised, given the harbinger for potential investor claims.

NATURE OF FUND 

The type of fund was also an influential factor.  Hedge funds with high gearing ratios and an aggressive alpha focus were impacted, compared to those with more benign strategies. Underlying alternative asset classes were also a key premium driver, with funds exposed to private credit, quant strategies and commodities most impacted, especially those to oil futures which briefly entered unprecedented negative territory.  Hedge funds with a history of shareholder activism were also impacted (this can be a major source of claims), in addition to those Hedge funds that were targets themselves – similar to the GameStop short squeeze scenario.

Feeder fund and other similar “fund of fund” struc­­tures were also affected, due to their higher exposure to international markets, particularly when exposed to the more litigious US investor base.  

Passive index funds which delivered solid beta returns with low management expense ratios were least affected, as well as mutual funds with low-risk strategies.  Funds with considerable retail investor bases were impacted, due to the more litigious nature of this class, compared to the sophisticated wholesale/institutional sector.

VENTURE CAPITAL/PRIVATE EQUITY

There were pricing and coverage implications in the venture capital/private equity funds space, depending on the underlying investee company portfolio.  Investee companies with enduring profitability models, recurring and stable revenue streams and strong Series Round interest were looked upon favourably by underwriters.

PRIVATE DEBT & DISTRESSED ASSETS

As banks’ lending criteria have been subject to tighter controls, we have seen an influx of managers allocating alternative capital to private debt and distressed assets.  While not impossible to place these risks with insurers, insureds exposed to one undiversified single underlying asset (especially property development), found it difficult to source a solution.

LISTED INVESTMENT COMPANIES (LICS)

LICS with high discounts to Net Tangible Assets had underwriters concerned, especially where the risk of further drops was high. Valuation risk and Directors’ and Officers’ SIDE C continuous disclosure are key concerns in this space.

DISCLOSURE DOCUMENTATION

Insureds making aggressive return forecasts or assurances of minimal investment risk in PDS documents have been highly scrutinised. This had been fuelled by the Federal Court finding that promoter Mayfair 101 engaged in false advertising by targeting investors who used Google search engine terms such as “best term deposit”.

INITIAL PUBLIC OFFERING INSURANCE

Driven by their ability to quickly scale and hence attract higher valuation multiples, we have seen a wave of IT and Cloud focused SaaS companies listing.  Higher multiples can leave companies vulnerable to large devaluations, which can be concerning to insurers.   As such, underwriters have been extremely diligent when deploying capital in the IPO insurance area.

 

KEY CONSIDERATIONS FOR FY 21: Q4

Underwriter appetite in the FI insurance space is highly dependent on the general economic climate.

As long-term bond yields have increased, institutions have moved capital from equities to lower risk fixed interest instruments, with negative consequences for share valuations.  While this is a sign of market recovery, the remaining instability is concerning to insurers. Going forward, insurers will be highly focused on the underlying asset class and risk strategy of each insured, individual fund manager performance, and exposure to retail (compared to wholesale) investors.

Ultimately, the financial markets will need to stabilise before premium increases level off. 

 

WHAT INDUSTRY TRENDS SHOULD CLIENTS MONITOR OVER THE COMING QUARTER? 

FINTECHS

The financial institutions market has been awash with new asset management-focused FinTechs, introducing considerable capital into this space. Many of these FinTechs are challenging the standard rules of investing, trading, clearing, settlement and custody, funds as a service; and insurers have been slow to onboard these risks.

DIGITAL BANKS

The insurance market is also seeing a higher volume of digital banks and more insurer scrutiny following the recent collapse of one of the first mover neo banks.  This has raised questions among insurers, with many adopting a “wait and see” attitude before deploying capacity.  There are positive signs for the sector however, with APRA now insisting neo banks have an income-generating product e.g., lending product before taking on deposits.

CRYPTOCURRENCIES

We are seeing more institutions recognise decentralised finance (DEFI) and cryptocurrency as a legitimate asset class.  Many allocators are now acknowledging Bitcoin as a solid store of value, and a “digital gold”. Alternate currencies such as Ethereum are gathering momentum, given their potential for smart contracts in DEFI infrastructure. Major asset managers such as Ark Invest and Van Eck have been pioneers in this space, with others now following suit.   Furthermore, as a discrete asset class, crypto is not regulated, however on the basis cryptocurrency is classified as a “financial product” under the Corporations Law, it is subject to ASIC regulation. This means insurers may become more open to the class.  A number of carriers are now receptive to providing coverage, depending on the weighting of crypto assets to total FUM.

ENVIRONMENTAL, SOCIAL, GOVERNANCE (ESG)

Funds are increasingly embracing the ESG (Environmental, Social, Governance) theme, promoting investments in the electric and renewables space.  Younger investors have been known to focus on this area and arguably, underwriters perceived this as lower risk as it is driven more by ethical investing concepts rather than pure investor return.

 

With You All The Way

Feel free to reach out to discuss your risk exposures.

 

Henry Clark

Head of Professional & Executive Risks

henry.clark@honan.com.au

 

Dennis Moens

Client Manager – Professional & Executive Risks

dennis.moens@honan.com.au

 

 

Learn about changes ahead for the Buy Now Pay Later sector and implications for Australian FinTechs.

 

Essential Considerations for Business Interruption Insurance

One of the most important aspects of an organisation’s insurance program is Business Interruption (“BI”) cover, which is typically covered within an Industrial Special Risks policy or a Business Pack policy.  

Broadly speaking, Business Interruption cover (also called Consequential Loss cover) – compensates a policyholder for interruptions to their business, including increases in costs due to Insured Events such as a storm, fire, burglary, vandalism, or earthquake. As with any General Insurance policy, the purpose of BI cover is to return the policyholder to the position they would be in if the Insured Event had not occurred. This article outlines the different types of BI cover available and key things to consider when selecting a policy for your business. *

 

1. LOSS OF GROSS PROFIT

One option is to insure your business against loss of gross profit. This is calculated by applying the turnover plus closing stock at the end of the last policy year, less the stock on hand at the beginning of the last policy year and Uninsured Working Expenses. Uninsured Working Expenses are the costs/expenses that vary depending on the level of trading and can include the purchase of raw materials, components, freight, packaging, commissions, discounts allowed and payroll.

 

For loss of gross profit, there are additional aspects to consider, including:

INDEMNITY PERIOD – this is the maximum length of time the insurer will cover the policyholder for the interruption to their business. Once the indemnity period ends, the insurer will no longer indemnify the policyholder for their loss of business, even if they have not returned to pre-loss trading levels.

Policyholders often underestimate the time it will take to return to pre-loss trading levels, so it’s critically important to consider delays when nominating the indemnity period, including:

  • Investigations (e.g. by WorkCover, Coroner’s office, fire department, etc.)
  • Development approval from Council
  • Delivery time of plant and equipment.

 

ADDITIONAL INCREASED COSTS OF WORKING (AICOW) – this covers the costs to avoid or limit reduction in revenue and resuming or maintaining normal business operations. This can include leasing of temporary premises, leasing of plant and equipment, overtime payments and temporary employment of additional staff.

AICOW is generally treated by insurers as a ‘rateable value’ on an ISR policy (that is, the agreed premium rate is applied against the AICOW value on items such as the property value and loss of gross profit / gross revenue values), and therefore it has a direct impact on the policy premium.

 

COVERAGE FOR WAGES – Uninsured Working Expenses (UWE) are important to consider here. These are the costs/expenses that vary in line with the level of trade. The decision to include payroll** within the UWE calculations does not need to be considered in absolute terms – i.e., including it entirely within the UWE (not insuring payroll entirely) or excluding it from the UWE (insuring 100% payroll). This option provides the policyholder a high level of cover and flexibility in terms of employee retention in the event of a loss. Given that payroll is generally treated as a ‘rateable value’ it can have a significant direct impact on premium.

For businesses that have ceased or reduced their trading, there is an option to insure payroll on a Dual Payroll or Dual Wage basis.  Using this method, payroll can be insured at varying levels across different time periods. For example, a business with a 12-month indemnity period may choose to insure payroll 100% for the first 12 weeks after the Insured Event and insure a percentage of payroll (e.g. 70%) for the remaining 40 weeks. This method can be effective in reducing the rateable values on a policy, but only where the policyholder understands their staffing requirements following a business interruption. If this method is used, it is important to consider pairing it with Severance Pay cover to account for wages paid in lieu of notice to employees whose services are terminated.

** payroll costs should include all personnel costs (i.e., salaries and wages (including overtime), holiday pay, commission and/or bonuses, payroll tax, superannuation, and Workers’ Compensation insurance premiums).

NOTE: Gross profit is different to insurable gross profit. A key difference is that insurable gross profit does not always consider all the costs of manufacture – fixed costs such as building lease costs which generally do not decrease in direct proportion to the turnover in the event of a business interruption are not factored into insurable gross profit calculations. This cover is typically suitable for businesses with multiple variable costs (e.g., retail, wholesale, import and distribution, hospitality, and manufacturing industries).

 

2. LOSS OF GROSS REVENUE

For businesses in service-based industries with few variable expenses (e.g., solicitors, investment consultants, and medical and health consultants), it may be appropriate to insure for loss of gross revenue. The insured value is generally calculated by taking the turnover from the last year and applying the expected growth for the upcoming period.

Businesses insure loss of gross revenue for a relatively short indemnity period of 3 or 6 months if they anticipate a rapid return to pre-loss trading (e.g., an office-based business with a catastrophic loss to their premises may secure replacement office space, IT equipment etc. and resume full scale trading relatively quickly). In this situation, it is also important to consider a sufficient AICOW coverage limit to cover increased costs associated with the lease of temporary premises, office equipment and employment of additional staff and/or contractors.

 

3. ADDITIONAL INCREASED COSTS OF WORKING ONLY

For businesses with minimal exposure to loss of revenue in the event of a catastrophic loss to their premises, a viable option is to insure for increased costs of working only.

 

4. LOSS OF GROSS RENTALS

This type of cover is designed to respond to loss of rental income to a landlord or property owner. It is important to note that the insured value should include the net rent receivable AND the outgoings paid by the tenant which would be payable by the policyholder if the lease were suspended or terminated.

As with the other coverage options, Loss of Gross Rentals should be considered in conjunction with Additional Increased Costs of Working cover (for items such as advertising costs, contractors’ overtime costs, or rent-free periods for tenants etc.).

 

CLOSING COMMENTS

When nominating the loss of gross profit or loss of gross revenue values, we encourage you to keep the following factors in mind:

  • The Underinsurance / Average / Co-Insurance clause applies to business interruption values as well. In the challenging property market, there may be a temptation to underestimate the business interruption exposure, though this could impact the coverage entitlements if a loss occurs.
  • The standard Industrial Special Risks Mark IV wording contains a Premium Adjustment provision which states the premium will be adjusted in the event of a discrepancy between the actual values as calculated at the end of the policy period relative to the declared values provided at the start of the period. The premium adjustment for business interruption values is calculated at 100% of the premium rate for the period in question.

 

With You All The Way

To find out more about how these policies can be tailored to meet your specific needs, please feel free to reach out at any time.

 

Alfie Chatib

Client Manager – Corporate Insurance & Risk Solutions 

alfie.chatib@honan.com.au

 

*This article does not examine the policyholder’s loss or damage to their property, which would be indemnifiable under the respective Property Damage section of the policy.

 

 

Discover how to optimise renewals in a hard market

Income Protection: Your Top Five Questions Answered

Life Insurance

“I don’t own a house, so do I need life insurance?” is a question I receive a lot in my role. My response is always: “what is your most important asset?”

While the common replies to this question are “my car” or “my phone”, the real answer is actually something less tangible.  For a large percentage of the working population, the ability to earn an income is your most important asset, and in many cases, your family’s most critical asset.

If you are unable to work for an extended period due to injury or illness, and your sick leave and annual leave allocations have been exhausted, it can be challenging to support yourself financially – particularly if you are self-employed.  Here are some simple answers to other common questions and misconceptions about Income Protection.

 

WHAT IS INCOME PROTECTION AND HOW DOES IT WORK?

Income protection insurance is a monthly payment aligned to a maximum of 75% of your income at the time of application. If you need to make a claim, the benefit will start once the waiting period has been exhausted and will continue to pay a monthly benefit until you return to work or the benefit period expires, whichever comes first.  

 

WHAT DOESN’T INCOME PROTECTION COVER?

Income protection will not cover you in the event of employment termination or if you are made redundant. It is designed to assist a policyholder in the event they cannot perform their job, due to illness or injury.  As part of the application process, each policy is assessed individually, taking pre-existing medical conditions into consideration. At time of implementation, the policy terms will outline what is covered and any exclusions that apply.

 

WON’T MY SUPERANNUATION FUND COVER ME?

It is a common misconception that income protection insurance provided within superannuation is adequate in the event you are unable to work. While Income Protection, or Salary Continuance is included as a default in some superannuation funds, unless you have updated the sum insured to reflect your income, there will be a discrepancy between the amount you earn and the benefit you receive.

As an example, a common default sum insured is a $3,000 monthly benefit, which aligns with an annual salary of $48,000. The cover is usually limited to a 90-day waiting period with a 2-year benefit period. For someone who has not updated their sum insured to accurately reflect their income, relying on a superannuation fund for income protection can be extremely risky. It also highlights the importance of reviewing your policy to ensure you have the right cover in place.

 

ARE PREMIUMS TAX DEDUCTIBLE?

Income Protection premiums are tax deductible when you pay them yourself via credit card or direct debit. Alternatively, to free up cashflow, the premium can be funded via your superannuation fund.   

 

With You All The Way

To find out more about income protection insurance and how it can be used to protect your financial wellbeing, feel free to reach out at any time.

 

Tyler Scarce

Risk Adviser 

tyler.scarce@honanlife.com.au

 

 

Learn about the Golden Rules for Purposeful Life Insurance Policies. 

Honing In on our partners: Global Ballooning Australia

Q&A
For almost 30 years, Victorians have been waking up to expansive skies, dotted with brightly coloured hot air balloons.  Honan has been working with commercial balloonists, including prominent operator ‘Global Ballooning Australia’ specifically, for 20 years. In that time, Global Ballooning has brought balloons to the North Pole and Dubai, developed Australia’s first commercial disabled passenger balloon, and received three Victorian Tourism Awards. We checked in with Company Founder and commercial balloon pilot, Kiff Saunders to learn about the iconic business and their resilient response to the events of 2020.  

 

THE CRUX OF YOUR BUSINESS?

Global Ballooning is a business born out of passion for the extraordinary. Initially my ballooning was pure escapism – a personal pursuit of adventure and freedom. Global Ballooning was a natural progression to keep that dream alive. It is now our mission to the give others the chance to experience the incredible world of ‘Lighter Than Air’.

 

YOUR PARTNERSHIP WITH HONAN COMMENCED BACK IN 2001! TELL US A LITTLE ABOUT WHAT GLOBAL BALLOONING LOOKED LIKE THEN VS WHERE YOU ARE NOW.

The new millennium saw Global Ballooning begin to expand along with our business reputation. Our company could support dedicated staff to perform specific roles, allowing me to focus on the aspects of the business that could facilitate growth. My meeting with Honan’s Alan Taylor in 2001 was part of our launchpad to our future. I wanted to provide ballooning services that encompassed the vision behind our name ‘GLOBAL’ – we needed an insurance partner who would work with us to achieve the extraordinary. The Honan partnership has allowed us to say YES to many incredible opportunities, including taking a balloon to the North Pole! In the past 20 years we have certainly managed to evolve into a world class aviation business with an international reputation for professionalism.

 

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 YOUR BUSINESS. 

 

 

I have always been a person who sees the sum of the whole as greater than the individual. This has always been a cornerstone of our business ethos. Our business is a part of the wider community and it is our responsibility to add value through our business practices. My proudest achievement is the designing and building of a balloon that allows access to those living with a disability. Our ethical business practices also include sustainable business practices and giving back to our local community through assistance with education and community courses.

 

INNOVATIVE CULTURES AND A COMMITMENT TO ONGOING EVOLUTION ARE COMMON HALLMARKS OF SOME OF THE MOST SUCCESSFUL ORGANISATIONS TODAY. WHAT DOES INNOVATION LOOK LIKE / MEAN TO YOUR BUSINESS?

Innovation is everything when your aim is to be the market leader. We never want to be caught looking over our shoulder when we live in an age where you can envisage and implement in such short time frames. I really like the phrase – ‘the main recipe for growth is to fail often, fail fast and fail at low cost’ – basically don’t let fear be a barrier to innovation; within failure there are great understandings and of course, success.

 

2020 SAW YOUR FLIGHTS GROUNDED IN ACCORDANCE WITH COVID-19 RESTRICTIONS. HOW DID THE BUSINESS STAY RESILIENT DURING THIS TIME? 

2020 is a business year I would rather forget. It has been confronting to be faced with the reality that (as an entrepreneur who has spent 28 years rolling with the punches to shape my business) that there are situations like this that strip you of being the ‘master of your own destiny’. This is particularly difficult for a free-spirited individual and it has taken some time to adjust. Resilience for us has been to keep the team connected and engaged whilst being completely apart. Over the 7 months we were grounded, we have achieved significant internal efficiencies, attracted a new client and built a community balloon. We started the lockdown knowing we needed to see the opportunities within the disaster. I am happy to report that we never lost sight of that, even though there were a few tears.

 

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?

 

Relationships in business, as in life, are an essential aspect of success. For us, our connection with the wider tourism industry, stakeholders and business partners is ever-present. We highly value working with people whose values and energy align with ours. I will always value loyalty, commitment and service over cost. It always gives me great pleasure to find I have been dealing with the same people for decades.

 

 

YOU HAVE AN IMPRESSIVE TRACK RECORD, BUT NATURALLY, HOT AIR BALLOONING MUST HAVE RISKS. WHAT ARE THE TOP 3 WAYS HONAN HAS SUPPORTED YOUR BUSINESS OVER THE TIME WE’VE BEEN WORKING TOGETHER?

Risk mitigation and management is the single biggest operational focus of our business. As a Charter Airline we are required to comply with the Civil Aviation Act. This is where my relationship with Honan’s Alan Taylor has been crucial. In 2001, I decided we needed a Melbourne-based Insurance Broker who could work with us on an aviation policy that would service our needs and comply with the Civil Aviation Carriers Liability Act. At the time, Honan did not offer this service but they worked with us to establish connections in London who could underwrite our risk (even though the book of business was extremely small). We travelled to London to present to the underwriter a 10-point policy wish list that removed the grey areas in our existing policy.

Specifically, Honan’s solution:

  • connected Ground Risk and Aviation risk (vs two different policies)
  • allowed us to have an insurer appointed Risk Controller to deal with Brand Protection in event of an incident
  • offered a policy reward for a higher operational Risk Management profile.

This was my and Honan’s first introduction to Graham Roberts and the Lloyd’s underwriting syndicate. It was by far one of the most beneficial trips I have made in my business life. This relationship has lasted nearly 20 years and I still deal with the same three people.

What are the benefits? Well, when we want to take a hot air balloon on a nuclear icebreaker to the North Pole so we can take guests up and down on a tether or put a balloon in the middle of San Paolo with $20M cover – we know who will help. Flying over the desert, mountains, cities – filming, adventure, training – this is what we do, and the secret of our success is to be able to say yes and move fast. Global Ballooning has never been knocked back on even our most unusual requests. This is what happens when all parties know there are professionals in the room and trust is absolute.

 

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

I’m most excited about launching our ‘Love Letter to Melbourne’ balloon. This is the final step in a community funded project, a symbol of hope and resilience for our amazing city. The creativity and energy invested in this project has kept our team

 inspired and engaged at a time when there has been so much pain and hardship in our community and the tourism industry. It’s our hope that our Love Letter to Melbourne will brighten the sky and people’s lives!

 

Editor’s Note: Honan is proud to be supporting the Love Letter to Melbourne initiative. The initiative launched on 30 March 2021.

 

 

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

Appointment of Sue Klose as a Non-Executive Director

Honan Insurance Group’s (Honan) Chief Executive Officer Andrew Fluitsma has announced the appointment of Sue Klose as a Non-executive Director of the rapidly growing insurance, risk and financial solutions provider.

 

Commenting further on the announcement, Andrew Fluitsma said the appointment of Sue Klose will add further depth to the Board as Honan broadens and expands its marketplace activities and grows its operations both in Australia and internationally.

Sue Klose is an experienced non-executive director and executive, with a diverse background in digital business growth and operations, corporate development, strategy and marketing. 

She is currently a non-executive director of Nearmap, a provider of aerial imagery and location intelligence; Envirosuite, a global leader in environmental data and intelligence; Pureprofile, a provider of data insights, quantitative research and lead generation; and Stride, one of Australia’s largest mental health care providers.

Prior to her move to Australia, Sue held various digital media management and strategy roles in the United States, primarily with Tribune Publishing and as a consultant with Marakon Associates. 

Sue also has an MBA in Finance, Strategy and Marketing from the JL Kellogg School of Management at Northwestern University, and a Bachelor of Science in Economics from the Wharton School of the University of Pennsylvania.

“This is an exciting time for Honan and Sue’s experience will be invaluable in the attainment of the group’s strategic objectives and focus on driving growth and innovation”, said Andrew Fluitsma.

 

 

Read about Honan’s acquisition of PI & construction insurance specialist, BRIC

5 ways to bolster your risk management program in a constantly changing world

Insurance Updates

Most people’s experience with general insurance is limited to Home & Contents, Private Motor and Travel Insurance. If you own a business, you may have come across Public Liability and Business Insurance. With changes to the way we live and work, however, our individual and business risk profiles are constantly evolving. In response, the insurance market offers a range of specialised products designed to protect against the changing nature of risk.

Here are 5 of the lesser-known insurance products and their powerful role in risk management:

 

1. Legal Expenses Insurance

The nature of insurance is for use as a shield to defend against risk rather than a tool, like a sword, to pursue or attack. Legal Expenses Insurance, however, breaks this mould and is a product that can be purchased by businesses to pursue (and defend) potential legal disputes and the costs associated with these actions (a typical limit is $100,000).

2. Group Personal Accident Insurance for Working-from-Home (WFH)

While many businesses have now returned to the office/workplace, it is expected that the prevalence of remote working will remain substantially higher than pre-COVID levels. Insurance is available for businesses to support employees who become injured while working from home. The policies provide benefit payments (depending on the injury) and can extend to assist with ergonomic injury support, childcare reimbursement, staff replacement and recruitment costs.

3. Kidnap, Ransom & Extortion Insurance

Travel Insurance policies will often have some level of cover for kidnap, ransom, and extortion, but a separate and more robust policy can be purchased to protect against evolving global security threats. These policies are provided by insurers as a crisis management solution for organisations and their employees and include a range of risk prevention and consultancy services, including crisis consultants, hostage negotiators, emergency extractions and repatriation consultants, surveillance, security monitoring and awareness training.

4. Prestige Home Insurance including Personal Cyber Insurance

A typical home insurance policy purchased directly from an insurer may not provide sufficient cover prestigious homeowners. A more suitable policy may be a prestige home insurance policy designed for homeowners with higher value assets including artworks, antiques, wine and spirits collections, jewellery, and watches. These products can now also include protection from malicious cyber activity.  You can learn more about personal cyber benefits and risk mitigation services here.

5. Tax Audit Insurance

In the event the Australian Taxation Office or other Government department comes knocking to audit your business’ tax returns, you will need to cover the cost of the accountancy fees which can stack up quickly when audits include multiple years of tax returns. A Tax Audit insurance policy can cover the fees associated with tax audits and other official investigations (i.e. reviews and inquiries) into your liability to pay taxes. Typical limits range from $20,000 – $100,000 but higher limits can be secured.  

 

WITH YOU ALL THE WAY

To find out more about these policies and how they can be customised to meet your specific needs, feel free to reach out at any time.

 

Dominic Brettell

Head of Client Service – Newcastle/Hunter

dominic.brettell@honan.com.au

 

 

Discover more about protecting your personal assets in an increasingly online world

Planning Major Capital Works? Don’t Be Caught Out

Strata News

As Committees plan for large maintenance projects or capital additions, it is critical for members to consider how these works interact with existing Strata Insurance policies covering buildings and other common property. Not consulting your Insurer before approving contracts for capital works (such as repainting the building, resurfacing pool areas or carparks, replacing balustrades or major plant and equipment) can leave the Body Corporate without adequate insurance responses if something goes wrong.

Here are our five checklist items to keep in mind for your next major project:

 

1. Understand strata policy coverage for the proposed cost of works

All major Strata Insurers have policy extensions where alterations, additions and renovations are covered by the strata policy, providing the following criteria are met:

  • The value of the proposed works does not exceed an amount between $100,000 and $500,000. This amount varies depending on your Insurer, so check your policy wording carefully. You can ask the Insurer to increase the permitted value of works on a case-by-case basis. 
  • You notify the Insurer well in advance before works commence and they agree in writing to cover the works. The Insurer will want to ensure the works do not present new or additional risks to those they are already covering.

As a general rule, a strata policy covers insured property damage to the new works (up to the policy limit). The coverage also provides Liability Cover for the Body Corporate but only for events directly caused by the negligence of the Body Corporate.  This coverage does not extend to the activities of contractors or their subcontractors.

 

2. Consult your Lawyer

It is good practice to have all capital works contracts checked by a Lawyer. Once the contract has been approved by the Lawyer, the contract should be provided to the Insurer for their approval.

 

3. Do not sign before you have agreement from your Insurer

Be wary of signing contracts that waive the Body Corporate’s (and therefore the Insurer’s) rights of subrogation*.   If a contractor or their subcontractor makes a mistake that causes property damage or personal injury, then you/your Insurer will want to claim against them/their Insurer. We have seen Bodies Corporate unintentionally put themselves in a position where they cannot make a claim.

 

4. Are the proposed works included on the Principal Contractor’s Contract Insurance policy?

It is essential for the Body Corporate to insist the Principal Contractor/Builder covers the agreed works for property damage and public liability.  They will usually do this via a Contract Works Insurance policy, otherwise known as a Construction or Contractor’s All Risk policy.  The Principal Contractor will have either an annual policy or a project-specific policy.  The Body Corporate should sight the current policy and provide it to their Lawyer for sign off.

The Body Corporate should be named as an Insured on the Principal Contractor’s Contract Insurance policy. If this is not possible, they should be noted as an additional insured at the very least.

If the Principal Contractor does not have a Contract Works policy in place, then it is likely all liability for property damage and personal injury will fall back onto the Body Corporate and you should do all you can to avoid this situation.

 

5. Only sign the final contract after it has been checked and agreed to by your Lawyer and Insurer

 

 

A final note

To find out more about reducing your risk exposure, feel free to reach out at any time.

 

Chris Glass

State Manager (QLD)

chris.glass@honan.com.au

 

 

 

Learn more about the importance of knowing your commercial tenant’s site.

 

*the legal right to pursue a third party responsible for an incident/loss.

Insurance Catastrophe Declared Following Disastrous NSW Flood

Insurance Updates

In light of the 1 in 100 year storms and floods which continue to wreak havoc across NSW’s mid-north coast and Western Sydney regions, the Insurance Council of Australia (ICA) has today declared a catastrophe for large parts of the State. For insured residents, businesses and property owners in affected areas, this is good news – their claims will now be fast tracked.

Since the storms first hit last Thursday March 18, some NSW locations have seen close to 1000mm of rain, with others receiving 500mm. NSW Premier Gladys Berejiklian says around 18,000 people have so far been evacuated from their homes, and the NSW Government is appealing to the Australian Defence Force for clean up assistance across the State. At the time of writing, Queensland’s south-east is also being affected by extreme weather.

NSW major flooding is expected along the Hawkesbury River at Windsor and Sackville, the Macleay River at Kempsey and Smithtown, the Wollombi Brook at Bulga and the Colo River at Upper Colo and Putty Road.

Source: Bureau of Meteorology, March 22, 2021.

 

KEY IMPLICATIONS FOR 2021 PROPERTY INSURANCE

NSW 2021 VERSUS TOWNSVILLE  2019

With residential insurance premiums in strata and real estate already increasing by more than 10% at the start of this year, March 2021 will be remembered for the NSW flood events starting on 18 March 2021 (and rain to continue to fall until approximately 25 March).

For context, the Townsville floods of 2019 was forecast to potentially cost insurers and reinsurers ~$1bn in claims. Based on the widespread impact of this month’s NSW flooding thus far, this March 2021 event is likely to see insurance claims exceeding those of Townsville.

 

THE IMPACT OF UNINSURED BUILDINGS

The impact of uninsured buildings due to flooding in NSW is likely to be high. Many businesses are reporting that insurance cover for flood was not in place due to affordability issues. Instances such as these demonstrate how important it is for property owners to source quotes via a reputable insurance broker – brokers who rigorously audit their needs, ensure cover is adequate, and that the price of premiums are not considered in isolation. 

 

GOVERNMENT SAFETY NETS

The current NSW floods will stretch NSW and Federal Government safety nets – their potential to ease the burden of increasing premiums post catastrophes will now be at capacity. The insurance industry is already dealing with increased insurance premiums in North Queensland (and Australia), cyclone areas and rural bushfire locations, specifically in alpine regions.

 

SUPPORT FOR STRATA & REAL ESTATE AGENTS – HONAN READY TO HELP

Honan Insurance Group is on hand to assist with NSW flood related claims and will be drawing on its national team to prioritise the lodgement. We’ll also be working hard to make affected buildings safe, if impacted by flooding and / or storm water damage. It is important that you check your insurance policy to review what you’re covered for. Some insurers have implemented an embargo on writing new insurance policies in NSW locations that are experiencing severe storm and flooding events.

 

KEY STEPS FOR LODGING A CLAIM

At Honan, we’ve prepared an essential list of tips for responding to storms, floods, and optimising claims relating to flood or storm events

If you are insured via Honan Insurance Group, you can lodge a claim directly online, or via your Strata Manager or Real Estate / Property Manager.

  1. Contact insurance broker citing the date, time, cause and location of the loss
  2. Use your insurance policy number reference when making a claim
  3. Take photos of damage
  4. Obtain identification of all civil authorities involved. i.e. SES, Police, health department, building inspector, etc.
  5. Keep relevant damaged items for assessment or photo evidence
  6. Arrange for quotes
  7. Retain all invoices, time sheets etc, to ensure all costs are captured and attributable to the loss and to prevent an overlapping of normal costs with these expenditures
  8. If you are making a business insurance claim, have your ABN and GST information handy (if applicable).

 

UNDERSTANDING FLOOD INSURANCE

Not all properties are exposed to the risk of flooding, however with the insights from the 2019 Townsville flooding and this month’s NSW flooding yet again highlights the need for clients to work closely with their broker to understand their risks, to secure adequate cover and purchase adequate flood insurance to protect their livelihood and assets.

Using a reputable insurance broker will give you access to flood mapping tools that can be used to determine if you are in a flood area with no risk, or in an area with the potential of low, medium or high risk flooding.

You can learn more about strata flood insurance – what it covers, and whether you need it, here.

 

We’re With You All The Way

Feel free to reach out to discuss your situation and address any questions or concerns.

 

Kieran Drum

National Head of Strata

kieran.drum@honan.com.au 

 

 

Discover the latest Corporate Insurance insights for FY21 Q2-Q3

 

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