Mutual 'should not take business from brokers'

Mutual 'should not take business from brokers' | Insurance Business

A member of the reference panel of the Northern Australia Premium taskforce has calmed the fears of brokers who may believe a mutual could see them cut out of the market.

Gerald Ewing, CEO of Regis Mutual Management and member of the panel, told Insurance Business that generally speaking, “there’s no reason why a mutual can’t work with a broker,” and the North Queensland model should be no different although he understands the markets scepticism.

“I can understand that because mutual’s are not that well understood in Australia,” Ewing said

“Again, if a mutual was to come in, it should really not impact the brokers significantly in any way. It wouldn’t be taking business away.

“If a mutual was to sit in the space, it would sit there alongside the commercial insurers which are already there and the mutual would focus specifically on the catastrophe peril cover, in this case for cyclone.”

Ewing stressed that in order to develop Northern Australia, the Government has had to step in to find the best way to protect consumers.

“The issue here is that the insurance market was not able, or not willing, to respond to the problem that was being voiced in Northern Australia,” Ewing continued.

“I fully accept that in terms of technical underwriting the insurers have probably got it right and I think the Government actually supports that position.

“Nonetheless, if Northern Australia is to be developed the way the Government wants it to be, the challenge has to be taken up and looked at and that means that at some level, there is going to have to be some sort of Government funding or response.

“The question is what’s the best vehicle to do that. We think that a mutual or a mutual combination might be the way to do that and we are talking to the Taskforce about that and they are looking at it very seriously.”

Ewing noted that whichever model is chosen by Government, mitigation must form the backbone of any initiatives designed to aid North Australians in the long-term.

“I think whatever model works up there has got to focus on risk mitigation improving the level of risk for householders, consumers and strata owners and to manage it in that way.

“Ultimately, it is about how you improve the long-term and I suppose with a mutual, or the use of a possible mutual, it’s how Government can engage with the community to ensure that mitigation work is undertaken.”

Ewing was speaking on the twenty fifth anniversary of Unimutual, Australia’s leading provider in the higher education and university sector, as he noted the mutual model should not scare brokers away.

“Unimutual does work with brokers, I think currently around two-thirds of the Unimutual membership has a broker involved in the process and it’s very much a tripartite arrangement.

“We work closely with the brokers and an example I often site to brokers who are concerned about working with Unimutual, because the fear is that once you get into a mutual the broker will be cut out, we can demonstrably show that that’s not the case.

"We have at least one member that’s been a member since the very beginning, and the same broker has been the broker for that university for that whole time so there is absolutely no reason why a broker shouldn’t stay involved, particularly in the current climate where most brokers have moved off the commission model onto a fee basis.”