Market Update: Q1 FY22


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






By Poppy Foxton – National Head of Corporate Insurance & Risk Solutions

The last quarter has seen further stabilisation within the property and liability insurance markets, as rate increases continue to moderate with insurers clawing back profit following a difficult natural catastrophe season (CAT) season in 2020-2021.  Whilst the cost of transferring risk still favours the seller, the pricing pendulum has started to swing towards buyers. Longtail liability lines however are still seeing rate increases of 15-20%.  Certain segments are seeing much higher increases. For example, purchasing molestation cover remains highly challenging, with markets withdrawing capacity and decreasing appetite for these types of exposures. Honan is continuing to guide clients through more sophisticated risk transfer and retention program structure options as a strategy to manage these risks, either by electing aggregate deductible structures to offset premium increases, or through non-traditional forms of insurance such as discretionary mutuals or captives. 

In addition, the second COVID-19 Business Interruption (BI) test case was heard in the Federal Court recently, with the outcome handed down on October 8, 2021. An overview of the second test case, along with the key findings is available here.  An appeal date has been scheduled for November 2021 – we’ll provide an update when that judgment is delivered. 




As NSW and VIC commence their paths out of lockdown, clients in the hospitality, tourism and retail industries are expecting improved business results for the quarter ahead. Honan is working closely with clients as they navigate the complexity of returning to the office and liability exposures around the relevant State/Territory orders concerning vaccinated vs unvaccinated customers.

Australia’s east coast experienced severe weather over the first weekend in October, a possible harbinger of events to come in the natural catastrophe (CAT) season. Meteorologists are again predicting equal chances of La Niña events, bringing with it a risk of associated storms and flooding.  Marking the official onset of Australia’s CAT season, October is the time for clients to work with their broker to ensure they’re adequately prepared. A CAT plan and undertaking preventative maintenance on your assets in advance are advisable at the beginning of Q2. 



Insurers will continue to take a conservative approach to underwriting through pricing and capital deployment. For clients, this will mean insurance supply will continue to remain ample, leading to increased competition and further stabilisation of pricing. Following the Haynes Royal Commission, a raft of new financial services industry regulations come into effect in FY22 including the Claims Handling AFSL license requirements, revised Dispute and Complaints Processes, and the implementation of Target Market Determinations. The industry is preparing to implement new policies and processes designed to give greater protection to consumers, particularly retail clients.  





By Henry Clark – Head of Professional & Executive Risks

In September, the Australian Cyber Security Centre (ACSC) published its annual cyber threat report for the 2020-2021 FY, revealing total self-reported losses from cybercrime in Australia in excess of $33 billion.  The escalating prevalence and severity of cyber attacks, along with changes in governance expectations, director liabilities, and regulatory reform is seeing business leaders place significantly more emphasis on their organisations’ cybersecurity and risk management strategies. Head here for our in-depth analysis of the cyber insurance market and updates across a range of different industries, including financial institutions, professional services, and technology. 

Following consecutive years of rate increases, there is clear evidence pricing is beginning to plateau for the public company D&O insurance market. Whilst insurers still applied rate increases during the Q1 renewal period, these were much lower than the prior quarter. This suggests the corrective portfolio measures required in the D&O space have largely been achieved and pricing is reaching a sustainable level for insurers. Challenges remain for companies with poor financials and industries heavily impacted by COVID-19. The ability of brokers to differentiate these clients by communicating in-depth knowledge of their risk exposures and being able to provide quality information about their risk management and risk mitigation activities is crucial to securing positive renewal outcomes for clients.  

The professional indemnity (PI) market remains challenging for certain professions, particularly design and construct professionals, digital banks, mortgage brokers, financial planners, and non-bank lenders. These professions still face supply and demand issues due to several insurers withdrawing from the market. Premium rates increased on average 15-20% in the last quarter, with insurers being highly selective in risks they choose to insure.  



For management liability (ML) and insurable exposures for private enterprises, the full effects of COVID-19 remain unknown. As a result, underwriters are cautiously monitoring their portfolios and the solvency of Insureds. Crime and employment practices liability coverages continue to be the main triggers for ML claims, accounting for over 70% of combined losses for ML insurers.   


In this hardening insurance market where demand outstrips supply, Honan is working to ensure all clients understand the outlook for their renewal programs to ensure the right level of cover for their organisation. Our insurer partners expect strong underwriting submissions, based on the best available information, in order to optimise the price, terms, and conditions for your risks.  



At the forefront of renewal negotiations are cyber placements. These remain challenging for certain risks and risk management around ransomware attacks in particular. Insurance carriers and cyber underwriting practices continue to evolve from a traditionally narrow focus on factors such as revenue, number of employees, record count and industry class, to a wider underwriting lens encompassing loss modelling tools and continual system scanning, both in-house and via outsourced IT security. Insurers are delicately balancing the growth of their portfolios, whilst remaining disciplined in the face of surging claims and declining profitability.   

As always, engagement with your broker well in advance of renewal dates is essential. 



By Kieran Drum- National Head of Strata
Matthew Henderson – Operations Manager: Underwriting Facilities & Strata


The Real Estate sector has been hit hard by an increase in frequency and severity of cybercrime incidents. Having moved much of their interactions and processing online over the last 18 months, real estate agents and property managers are especially vulnerable to social engineering attacks. Social engineering is a general term referring to an attack where the fraudster successfully impersonates a trusted employee, vendor, supplier, customer, or even a CEO or CFO; manipulating the victim into disclosing security details and sensitive information. These attacks often come in the form of phishing emails. Sadly, Honan clients are by no means immune to such threats. In the last quarter alone, we have seen multiple successful cyber attacks on our clients. Fortunately, in each instance, an appropriate level of cover was in place via a bespoke cyber policy.  

While many organisations believe they can rely on extensions to Professional Indemnity and Management Liability policies to provide adequate cover in the event of a cyber incident claim, this is not the case. To ensure their level of insurance is truly fit for purpose, real estate agents and property managers are strongly encouraged to review their internal cyber security strategies with their broker. 



On September 22, 2021a 5.9 magnitude earthquake struck Victoria, with tremors felt across the state and as far away as Newcastle in NSW. While there were no immediate reports of serious injury or death, damage included collapsed walls, shattered windows, and cracked roadsEarly estimates place the total cost of damage at $150 million, with almost 10,000 claims. At the time of publication (October 14, 2021), the earthquake has not been declared a catastrophe by the Insurance Council of Australia (ICA)Head here to find out more about how a catastrophe is defined and what this means. If you believe you have a claim, please contact your broker directly. 




With heavy rainfall, hail, and tornadoes marking a busy start to the Australian storm season, the Bureau of Meteorology has predicted a 50% chance that La Niña conditions will return this spring (double the normal likelihood). As a result, there is a higher probability of damaging events taking place such as flooding. Clients are encouraged to prepare early (now) bensuring their level of cover is sufficient for the season ahead. If in doubt, please reach out to your broker to discuss.  



Global supply chain interruptions due (in part) to COVID-19, along with Australia’s Black Summer bushfires in early 2020 have contributed to building material shortages; a trend which is expected to continue over the next 12 months. Materials most affected include steel, timber, roofing products, PVC, and electrical products. In addition, the prices of both containers and dry bulk shipping are increasing, with serious shortages in haulage between Australia and other countries.  

These shortages, together with pricing increases, have driven the cost of insurance repairs and replacements upwards. Unknowingly, many property owners may no longer have adequate insurance in place to reflect such increases in costs to repairs/rebuilds. Two simple insurance solutions can assist clients with this: 1) updated property valuations, and 2) those in strata buildings can review the Catastrophe Insurance percentage of the building sum insured 




By Chris Bovill – Chief Executive, BRIC
Travis Gauci – Head of Professionals, BRIC
Chloe Pham – Senior Consultant, BRIC



Building surveyors have continued to experience increases in Professional Indemnity (PI) premiums, excesses, and reductions in limits over the last quarter. However, we are now seeing the emergence of more stable PI premiums. Volatility in engineers’ PI has increased, with multiple insurers leaving the market during Q1, and new entrants simultaneously entering.

Builders operating in the SME construction market have faced several challenges, including shortages in the availability of contractors and sub-contractors, ongoing supply chain problems, and (for some states) restrictions to the number of workers on sites – all leading to increased project costs and delays. This requires constant monitoring to ensure insurance coverage reflects the sums insured, maximum construction periods, and vacant sites.




For clients in the construction professions with upcoming renewals, insurers are paying particular attention to measures taken to limit risk exposures. We encourage clients to carefully consider the following in their applications to help improve the attractiveness of their risks to insurers:

  1. What type of buildings are you are providing services on – high rise, complex builds?
  2. The steps you take to minimise risk – written contracts, client selection, record keeping, etc.
  3. How COVID-19 has impacted your business and your ability to provide your services.
  4. If you or any of your employees have been involved in any disciplinary hearing or investigation, please provide detail around the circumstances, the outcome, and what you have done to remediate your processes to prevent a re-occurrence.
  5. For any claims or circumstances, you have reported, please provide a status update, details of what happened, any aspects that can be attributed to your client, the outcome, and how you intend to prevent a re-occurrence.
  6. Have you or your employees improved their qualifications or become members of a professional institute or association?
  7. As always, clients are encouraged to return their paperwork early.

For builders facing the renewal of their policies, further increases to construction insurance premiums are expected, particularly for material damage and liability (the latter attracting increases of up to 50 percent). Significant losses on long-tail liability claims are also contributing to higher excesses, especially for worker-to-worker claims.



The Limitation of Liability through the Building Surveyors’ Professional Standard Scheme (PSS) will have a positive impact on the risk profile of Building Surveyors. However, this will take several years to be fully realised, and we do not expect any immediate reduction in premiums. More information about the PSS is available here. Together with the Australian Institute of Building Surveyors (AIBS), BRIC has successfully negotiated a premium discount with one insurer as an incentive to enhance your professional qualifications. Please reach out to discuss this with us.

Builders’ construction insurance premiums are not expected to stabilise in the short term, as insurers remain concerned about the profitability of these risks.

Engineers in NSW are now subject to the Design & Building Practitioners Act 2020 (NSW), and insurers are beginning to express concern on claims movement on the Statutory Duty of Care. As new insurance markets are becoming available for consideration, an active and early engagement with your broker ahead of renewal is critical.




By Sharon Rutherford – Head of Risk Consulting

Employers are reminded of the Victorian changes around primary psychological injuries that came into force on July 1, 2021.  These changes help eligible workers and volunteers receive treatment for work-related mental injuries. Employers are required to report these injuries within three business days. More information about the provisional payments is available via WorkSafe Victoria

Employer actual wage remunerations are now due and should already be closed for the FY21 policy period. Penalties can apply where wages are not declared. 


WorkCover WA has announced significant changes to the Workers Compensation and Injury Management Act 1981. The Bill proposes recommendations by Workcover WA in its 2014 Review of the Workers’ Compensation and Injury Management Act 1981: Final Report. The proposed changes have the potential to alter the way workers’ compensation claims are managed and resolved, in addition to increased costs and burdens on employers in WA.  

A copy of the draft Bill, along with an explanation of key materials and details about making a submission, is available via WorkCover WA. Honan’s Workplace Risk team is committed to keeping you updated on the impacts to businesses and employees as this situation evolves – please reach out at any time with further queries.  




The National Return to Work Strategy 2020 – 2030 (the Strategy) drives national action to improve return to work outcomes for Australian employees with a work-related injury or illness. Under the Strategy, Safe Work Australia and Griffith University have produced two reports examining the psychological response to injury among support workers, and the stigma injured or ill employees experience in the workplace. Crucially, both reports provide recommendations around supporting employees and facilitating a successful return to work.  

While the onus of responsibility remains on employers to manage their risk exposures, organisations’ Leadership Teams and WHS Systems alongside wider cultural forces are enhancing awareness about safe work environments and reducing stigma associated with workplace injuries.




Read more from this issue of HoneIn:


Interview with Insurance News



Honing In on Our Partners: Keep it Cleaner



5 Essentials in Cyber Security


The Australian Cyber Security Centre’s annual Cyber Threat Report for FY21 makes for sobering reading, revealing 67,500 cybercrime reports were made in that year (a 13% YoY increase), and estimated to have cost Australians $33 billion. Following the report’s release, Honan hosted a cyber seminar with partners Clyde & Co., sharing the latest updates on the cyber risk landscape, practical strategies for managing the growing risks, as well as regulatory changes to data privacy, and upcoming legal reforms set to affect businesses. As emphasised in the seminar, no industry is immune from the impacts of cybercrime. Here are our key considerations for business leaders to keep in mind as they navigate the evolving situation:


1. Cyber insurance is critical

A robust cyber insurance policy works to complement existing IT security systems to protect your organisation against damages that can result from cyber attacks, data security breaches, and costs associated with response and recovery. While cyber insurance is an essential part of a business cyber security toolkit, it is not a standalone solution. Learn more about how cyber insurance can compliment your cyber security strategy here


2. Embed a tailored Cyber Incident Response Plan (CIRP)

An effective CIRP is a framework designed to protect your business’ reputation, minimise losses, limit business disruption, and help businesses avoid common mistakes in the event of a cyber incident. This plan should be reviewed on an annual basis and clearly define the roles and responsibilities of relevant key staff. Critically, in the event of a security breach, if a board can demonstrate that 1) they were aware of a cybersecurity risk, and 2) that they activated a framework to mitigate that risk, it is less likely to risk breaching its fiduciary duties under both the Privacy and Corporations Acts. To find out more about developing a CIRP to meet your business’ needs, speak with your broker.


3. Understand your governance requirements

Changes in governance expectations, director liabilities, and regulatory reform is seeing business leaders place significantly more emphasis on their organisations’ cybersecurity and risk management strategies. Directors can be held responsible for not acting to progress a company’s cybersecurity framework and may be punished if they are found to have failed to ensure a company has an adequate cybersecurity risk management plan in force, not responded in a reasonable time frame to a known data breach or failed to respond altogether. You can read more about this in our simple summary.


4. Multi-Factor Authentication (MFA) is a must

MFA is a method of electronic authentication that requires a user to provide at least two forms of identity verification before access is granted to a program, network, or system.  Ensure MFA is installed across all remote working systems for your business’ employees, contractors, and vendors. Learn more about MFA and password best practice in this guide.


5. Use a separate Virtual Private Network (VPN) for remote working

With hackers taking advantage of widespread remote working arrangements, it is more important than ever to ensure your staff use a separate VPN whenever they are working outside the office. This is vital for various reasons in preventing security breaches. It is equally important to notify your broker that these procedures have been implemented because this helps them to gain access to insurance capacity as a risk transfer solution for your business.




Click here to watch the Cyber Seminar Recording and enter the Passcode: HbK+7U7P

You can find out more about managing your business’ cyber security in our Cyber Capability Statement.


Ben Robinson

Placement Manager – Professional & Executive Risks

Run-Off Insurance 101: What Companies & Directors Need to Know


Run-Off insurance, also known as the ‘Discovery Period’ or ‘Extended Reporting Period’ is an insurance policy provision that provides tail coverage for various financial lines products written on a ‘claims made and/or notified basis’. Run-Off insurance provides protection from claims of negligence or loss resulting from a breach of professional services or wrongful acts by Management prior to the date of transaction (being an acquisition, merger, or cessation of operations).

Policies typically written on a ‘claims-made and/or notified basis’ include:

  • Directors and Officers Liability
  • Management Liability
  • Professional Indemnity
  • IT Liability
  • Cyber Liability
  • Statutory Fines and Penalties
  • Employment Practices Liability

For a claim to be triggered under these products, an active policy must be in force at the time a claim and/or notification is made. If a policy has lapsed and is not active at the time a claim is brought against a director and/or the company, cover will not respond, regardless of when the wrongful act occurred.

An acquiring company will commonly require the company being acquired to purchase Run-Off insurance to protect itself from past liabilities. Run-Off insurance can be purchased on an annual basis or multiple periods for an upfront payment.



If a company has been acquired, merged, or ceased operations, it is vital that Run-Off insurance is purchased for policies issued on a ‘claims made and/or notified basis’ to ensure protection is in place in the event a claim arises. We recommend our clients purchase Run-Off insurance for a period of 7 years to coincide with the statute of limitations. Under the statute of limitations, companies and directors can be held liable for decisions made for up to 7 years.



Insolvency is among the top concerns for Directors & Officers Liability and Management Liability insurers, as insolvency administrators typically look to regain losses from directors. Over the past 12 months, insurers have taken longer to review submissions and are being more rigorous and prudent in requesting detailed information about the effects of COVID-19, along with audited financials.    

Run-Off insurance is made available at an insurer’s discretion. It is therefore imperative that you review the ‘Discovery Period’ clause in your policy wording to ensure you are aware of the insurer’s terms and conditions. If insurers are uncomfortable with a company’s financials, insolvency exclusions will likely apply, often going hand in hand with a Discovery Period Deletion clause, deleting the Discovery Period entirely. At Honan, we recommend contacting your insurance advisor to confirm your ‘Discovery Period’ clause.



Premiums provided are at each insurer’s discretion, however, typical coverage costs are as follows:

1 Year = 100% of expiring premium

3 Years = 150% – 200%

5 years = 200% – 350%

7 years = 350%+




If you have any questions or concerns about Run-Off insurance, please reach out to your Honan adviser.  


Monique Reibelt

Senior Client Executive – Professional & Executive Risks




Learn how the global insurance market impacts local pricing.



Insurance Update: Financial Institutions


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.



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


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.


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.


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.


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.


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.


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”.


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.



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. 




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.


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.


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.


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


Dennis Moens

Client Manager – Professional & Executive Risks



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


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


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



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

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



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

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



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

Examples of such risks include:

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

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


We’re with you all the way

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


Dominic Brettell

Head of Client Service – Corporate Insurance & Risk Solutions



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

COVID-19: Business Interruption, Contingency and Workplace Risk


On 30 January 2020, the World Health Organisation declared the Coronavirus outbreak a Public Health Emergency of International Concern. We sympathise with everyone who has been impacted by the virus and Honan Insurance Group have implemented additional resources and contingency planning to ensure that we remain able to provide advice, insurance and support to our clients as the situation develops.


As the impact of COVID-19 on local and international economies continues to evolve, we highlight to all clients the need for management to consider financial, strategic and business risks to operations. In this article, we examine the key areas we have received the most queries about: Property and Business Interruption, Business Contingency and Workplace Risk.


Industrial Special Risks* (Property and Business Interruption) Insurance & COVID-19 

(Potential Policy Response under ISR Mark IV Policy)

It is expected that many businesses will suffer disruption as a result of the spread of the Coronavirus (COVID-19).   With the situation changing rapidly and restrictions on the movement and gathering of people (both at local level and internationally), there is no doubt many companies will suffer from loss of revenue and/or additional expense.


Property Damage

Generally, property policies (including office risks) cover physical loss, destruction or damage to insured property resulting from a covered peril (all risks).  In the case of the Coronavirus, the ISR (Mark IV) policy exclusion 4(a) excludes physical loss destruction or damage occasioned by or happening through disease.  Office-related risks also have very similar exclusions. The ISR policy can include a myriad of endorsements with some coverage writebacks for costs to clean-up a site (where required by order of a public authority), however, this would need to be reviewed on a case by case basis.


Business Interruption

An ISR insurance policy extends to include under Section 2 coverage for business interruption.  This cover traditionally applies only to interruption caused by an insured material damage event such as fire, storm, impact or accidental damage.

In addition, cover is extended to include closure of the business by public authority for several risks including human infectious or contagious diseases.   This coverage was designed to cover events such as an outbreak of Legionnaires disease or measles which could affect one or two buildings and a small number of businesses.  Some ISR policies can extend to provide coverage for outbreaks in a 20-50km radius from the insured location.

Specifically, in relation to the COVID-19 outbreak, the ISR policy contains a specific exclusion for loss resulting from interruption of or interference directly or indirectly arising from or in connection with Highly Pathogenic Avian Influenza in Humans or any other diseases declared to be quarantinable diseases under the Quarantine Act 1908 and subsequent amendments.

Following the H5N1 virus (avian influenza) outbreak in 2006 and the H1N1 virus (swine influenza) outbreak in 2009, insurers adopted this exclusion as a market standard position in Australia.

The Australian Quarantine Act 1908 was replaced by the Biosecurity (Consequential Amendments and Transitional Provisions) Act in 2015.  COVID-19 was added to the Act as a listed (quarantinable) human disease on 21 January 2020, under Biosecurity (Listed Human Diseases) Amendment Determination 2020 (Cth) F2020L00037.


Listed Human Diseases under the Act are thus now:

  • Human influenza with pandemic potential
  • Plague
  • Severe acute respiratory syndrome (SARS)
  • Middle East respiratory syndrome
  • Smallpox
  • Viral haemorrhagic fevers
  • Yellow Fever
  • Human Coronavirus with pandemic potential

As a result of the above, the business interruption section of your insurance will not provide cover for COVID-19 disruptions. As with any other threat it is important to consider what risk management measures you can introduce to mitigate the risk to your staff, customers and business.


Risk Management Tips: How to avoid infection

Here is a short list of ways to minimise the spread of Coronavirus

  • Practice good personal hygiene.
  • Avoid contact with anyone with or suspected of having Coronavirus.
  • Boost your immune system by eating well, exercising, having enough sleep, and keeping your stress levels under control.
  • Cancel or delay any travel until the crisis is over.


Recommended Actions for your organisation:

  • Implement a home quarantine regime for anyone that has travelled to an infected country or is likely to have been in contact with someone infected with Coronavirus.
  • Review and update if necessary human resource (‘HR’) policies on fitness for work including possible quarantining of employees and formalising the requirement for employees to remain off work if affected.
  • Consider or extending flexible working arrangements to reduce the likelihood of the spread of the virus in the workplace or the community.
  • Update travel rules and arrangements limiting non-essential business travel.
  • If not already in place, provide sanitized hand washing stations for use by staff and visitors.
  • Review arrangements for workplace hygiene and cleaning protocols including “cough and sneeze” etiquette.
  • Protect the mental wellbeing of employees concerned about the Coronavirus.
  • Ensure clear and honest communication to employees on their welfare.


Keep Informed

Everyone should remain alert for updates and advice from the relevant authorities on additional steps to manage the spread of the disease. The health department in each state is providing excellent resources and advice and regular updates. Before travelling, check for and take the advice of any travel warnings on


Business Continuity Management Planning

A pandemic is just one risk facing modern organisations.   Having a fully documented and exercised business continuity management plan is important for every business.  Honan has resources to assist you in developing a business continuity plan and please speak to your Client Manager for further information.

*Property/Office/Business Interruption


Business Contingency

The Coronavirus may impact revenue for businesses through:

  • Production slowdown & disruption to workforce (sick or quarantined employees)
  • Disruption to Supply chains and supplier services
  • Decrease (or increase) in demand for stock
  • Large scale closures of consumer markets and public spaces due to quarantine
  • Delays in customers paying outstanding invoices within normal trading terms
  • Economic slowdown on global and local scale


Whilst there is coverage available under Corporate and Business Travel insurance policies in certain circumstances, there is limited cover available under most standard General Insurance policies for loss of trade and interruption to business operations.

As a general rule, it is not viable for most insurance markets and products to cover “global pandemics” as an insurable event. This is because the financial impacts of a pandemic are not quantifiable, meaning risk cannot be priced accurately or sustainably by insurers. If you do suffer a loss, please contact our team to discuss the specific circumstances and how your policy may respond.

Whilst insurance cover availability may be limited, businesses can prepare.  We would strongly recommend formation of a working committee to evaluate the impact to business as conditions continue to evolve, with accountability to the board or executive team.


Considerations for a COVID-19 working group should include:

  • Review of policies, procedures and protocols in place to protect the safety and wellbeing of employees and prevent further risk of spread of COVID-19 within the workforce and community.
  • Assess venerability of IT Infrastructure (including stress-testing) for an organisation’s ‘Work from Home’ capabilities in the event of premises closure/staff quarantine
  • Consider the impact on supplier and customer contracts to meet delivery/service obligations from both parties (how Contractual Penalties & Force Majeure clauses may be applied)
  • Evaluation of possible supply chain disruptions and how these can be mitigated or bypassed through appropriate work arounds and contingency planning
  • Evaluation and stress testing of stock levels and planning for inventory shortage as supply from China recommences operations
  • Review ability to support alternative revenue streams that are not as severely impacted by COVID-19
  • Review communications with key customers and other stakeholders to maintain relationships and manage challenges in a sensible, commercial & collaborative manner
  • Review credit and debt facilities to ensure that cash is available in the short term to manage financial impacts and support increased business restart
  • Communicate with creditors if a reduction in revenue has the potential to impact on cash flow and financial obligations.



Workplace Risk: Workers’ Compensation and Coronavirus (COVID-19)

There has been much discussion around the exposure and potential liability under Workers’ Compensation should an employee or contractor contract Coronavirus.

As outlined by Safe Work Australia (2020), Workers’ Compensation arrangements differ across schemes, however there are common threshold requirements that would apply in the case of COVID-19:

  • that the worker is covered by the scheme, either as an employee or a deemed worker
  • that they have an injury, illness or disease of a kind covered by the scheme, and
  • that their injury, illness or disease arose out of, or in the course of, their employment.

Compared to work-related injuries, it is difficult to prove that a disease was contracted in, or caused by particular employment. In the case of a virus such as COVID-19, establishing the time and place of contraction may become increasingly hard. We have sought clarity from our legal partners and obtained publications from the governing state regulators. Their view is it will be challenging to prove workplace exposure to Coronavirus as questions will arise as to the exact time and place of contraction.

For coverage to exist, a determining authority would need to be satisfied that the employment significantly contributed to the employee contracting the virus. For viruses, it can be difficult to accurately determine the exact time and place of transmission. As a result, it may be difficult to determine that employment significantly contributed to the virus.

However, where an employee’s employment puts them at greater risk of contracting the virus the significant contribution test may be easier to meet. For example, if the employment involves:

  • travel to an area with a known viral outbreak
  • activities that include engagement or interaction with people who have contracted the virus
  • activities that contravene Department of Health recommendations.

Each workplace illness would need to be considered on its individual merits, having regard to the individual circumstances and evidence in relation to the claim. More information is available here: Comcare Australia.

Deeming an illness or disease as work related and unique to the workplace may require court intervention to distinguish medical opinion from legal facts. There is no liability determination available to declare an illness or disease compensable or non-compensable; each case is determined on its own merits and circumstances.

Although you may not be able to eliminate the potential risk of employees contracting Coronavirus while carrying out work, you must do what is reasonably practicable to minimise the risk of employees contracting Coronavirus.


Coverage while travelling overseas for work

Any liability or workplace contribution applies to both employees working overseas and those working within Australia. Each case will be determined on its own merits and circumstances.

Note: For international employees engaged locally, state or country specific legislative conditions will apply. Queries should be directed to Honan. Depending on the state of urgency, travel restrictions and periods of self-isolation may need to be considered and communicated to all employees and contractors.


Employer Support

It is important that employers refer to internal policies and procedures to ensure measures for employee safety are in place. Honan has resources to actively advise on Workplace Risk exposure, as well as Legal and Work Health and Safety partners who can assist with ongoing management of this changing environment.


All companies will need to keep up to date in what is evolving environment.  Please see below some resources to do so:

Australian Government Department of Health

Safe Work Australia


McKinsey & Company have released a briefing paper (9th March 2020) which provides some insight into possible global economic impact as well as some common steps that can/need to be taken in preparation for businesses being affected and the formation of a working group: link here.

For any additional queries or concerns, please contact your Honan client manager.


*Property/Office/Business Interruption

The advice in this paper is general in nature. While the utmost care has been taken in the preparation of this preliminary advice or opinion, you use it at your own risk.

If you have difficulty reading and/or understanding the cover provided in the policy(ies) that you have please contact your Client Manager.

Self-Licensing in the Financial Services sector


In the wake of the Royal Commission there has been a trend towards self-licensing in the financial services space.  Insurers are now looking upon these independent self-licensed Insureds more favourably than those affiliated to a dealer group because of the perceived conflict of interest issues associated with vertically integrated business models. 


A follow-on effect of this independence has been an increase in AFSL applications, and with these applications greater licencing scrutiny post the Royal Commission landscape.  The review has essentially resulted in a raising of the bar for minimum standards, with less than half of these applications now being approved.   


Over the same period a greater proportion of AFSLs and ACLs were cancelled at the initiation of ASIC.   Insurers have welcomed this tougher regulatory approach given the more stringent hurdles these new independent licence holders need to go through.  In addition to this, accounts with a strict fee for service remuneration structure with minimal exposure to grand fathered trail commissions have been a welcome addition to most insurer portfolios.

Tougher penalties for Privacy Act breaches


Are you protected?

It has now been over a year since the amendments to the Privacy Act were introduced, requiring companies to voluntarily notify any breaches to the Office of the Australian Information Commissioner (OAIC).

In a swift follow-up from this at the end of March, Attorney-General, The Hon Christian Porter MP, announced the government’s intention to introduce even tougher penalties, as follows:

  • Penalties increased from $2.1m to $10m for serious or repeated breaches.
  • Providing the OAIC with the infringement notice powers, up to $63,000 for body corporates and $12,600 for individuals who fail to cooperate.
  • Introduce requirements for breaches to be addressed by third party audits, to ensure those directly affected are advised.
  • Require social media and online platforms to stop using or disclosing an individual’s personal information upon request.
  • Introductions of specific rules to protect the personal information of children and other vulnerable groups.

The Privacy Act amendments have forced Company Directors to become more digitally literate and cyber aware, however with the ever-changing nature of cyber risks, it is becoming increasingly difficult for Directors to keep up.


With these changes it is now more important than ever that every company manage their cyber risk through a robust insurance program, designed to protect not only your company’s balance sheet from significant first and third-party losses and fines, but also from the reputational damage that can be caused.

To manage your company’s Cyber Risk, contact Dan McCallum at or +61 499 799 131.


Honan Insurance Group Pty Ltd (Honan) holds an Australian Financial Services License 246749. Honan is not an insurance company, rather an insurance broker acting on behalf of our client. Where we act under a binder (as the insurer’s agent) we will notify you. This article contains general information only and is not advice. Before considering an insurance product you must read the Honan Financial Services Guide and relevant Product Disclosure Statement. 


National Insurance Brokers Association (NIBA)


Since 1988 Honan Insurance Group has been a member of the National Insurance Brokers Association (NIBA), an organisation which represents the interests of the insurance broking sector in Australia.

NIBA members range from large international brokerages to small suburban brokerages and through representation, communication, information and education, NIBA ensures the insurance brokers’ interests are protected and their professional standing enhanced.

The insurance and risk business is highly regulated, and intermediaries are subject to a wide range of professional and legislative pressures. To thrive in such a demanding environment they must be able to keep pace with constant changes in the risk factors Australian businesses face.

NIBA supports its members through its lobbying, education, technical and information services and our members are recognised as having a high standard of professionalism and knowledge through ongoing educational support and technical development.

Great for Criminals, Bad for You: Social Media and KRE (Kidnap, Ransom & Extortion)

Biotech & Life Science

We should all be aware by now how fast the Internet and social media is growing. To put this into perspective, there are currently over 3 billion active Internet users, 100 billion emails are delivered per day, and 10,000 tweets are sent every second. It should come as no surprise then that the Internet, due to its sheers size and potential for user anonymity, has become a breeding ground for criminal activity. In particular, social media has become quite the information resource, attracting opportunistic criminals from all walks of life.

Common attacks such as identity theft and credit card fraud remain prevalent, requiring little effort while offering a worthwhile income for perpetrators who indiscriminately target a large number of potential victims, but as a result of the increased level of personal information made available on social media, we are seeing a rise in more sophisticated and targeted attacks against high-value individuals, such as business owners and directors.

With basic social engineering and intermediate computer skills, criminals can collect a dangerous amount of information on an individual’s personal life, family and business practices. This exposes targeted individuals to a number of security risks, including:

Kidnapping for Ransom
An individual(s) is seized against their will and held hostage in order to coerce certain concessions. Kidnapping for ransom usually involves demands for the payment of a financial settlement (cash, goods and /or property) in order to release the hostage(s).

Tiger Kidnapping
A kidnapping is orchestrated in order to conduct another criminal act, typically a robbery. Perpetrators generally abduct an employee of a business and then force them to facilitate a robbery. Dependents of the victim are often held hostage until the robbery is complete.

Virtual Kidnapping
A ransom demand is made under the pretext of an individual having been kidnapped, however, no abduction is actually committed.

The obtaining of property, including goods, money and/or favours or privileges by way of duress, be it actual/threatened force, or under pretence of official right. Perpetrators often threaten the release of confidential or potentially damaging personal information.

Cyber Extortion
The threat or act of denying access to, or the stealing or destroying of, data held on an electronic device unless a ransom is paid. Undesirable/illegal information may also be transferred onto the victim’s computer.

To lower your risk it is recommended that you take steps to improve your online security and exercise caution when it comes to using social media – by understanding how social engineering works and by being aware of what information you have made available online. For more information on what measures you should take, you can call one of Honan’s cyber and network security experts on 1800 981 377 or email

Sources: (‘Overshare: Social media and KRE’ 09/09/2015)

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