The Steadfast Convention in Brisbane has wrapped up. Over three days, about 2,000 insurance professionals attended breakout sessions, keynote speeches and broker only meetings.
They also networked across an expansive marketplace among dozens of colourful insurance firm exhibition stands (pictured below). Australia’s biggest insurance industry focused event ended with a disco themed gala dinner.
Insurance Business sat down with Steadfast CEO Robert Kelly (pictured above) and COO Nigel Fitzgerald. The interview focused on the firm’s future plans, including expansion in the United States and current industry challenges and opportunities.
What did Kelly think of his firm’s convention this year?
“It seems to have gone really well,” he said. “There’s a great camaraderie and everybody’s really friendly.”
Kelly said the convention is very important to the firm with an annual budget of several million dollars. The marketplace for exhibitors and delegates, he said, is a focus.
“It’s not something that we do on a peripheral basis and the insurers really support the marketplace,” he said. “We turn all of our people back into the marketplace for morning tea, for lunches and for drinks so it’s a working marketplace, it’s not just a jolly to hang around.”
Another major theme at the get-together was how to best deal with a range of difficult insurance industry challenges. Those include rising premiums, insurance affordability and availability, cyber issues and increasing numbers of natural catastrophes.
IB asked Kelly what he sees as the biggest issue facing the Steadfast network of brokers and underwriters in Australia?
“I think the escalating cost of domestic insurance in Australia and the lack of the ability to have competition in that area because of the dominance of the two major players,” he said.
The CEO said another linked issue is consumers’ lack of understanding around the cost of insurance and how those costs need to rise because of the number of attritional claims.
“You’ve got politicians being abused by their constituents saying that insurance companies are gouging,” said Kelly. “Insurance companies are not gouging, you’ve got reinsurance trying to get back money it’s lost for the last decade.”
The Steadfast chief said the price of domestic insurance is “escalating beyond anything like they’ve [insurers] seen before.” He said this is nothing to do with CPI or inflation.
“Then you’ve got the ordinary guy on the street saying, ‘How can this be so? Why have we got to pay this?’”
However, Kelly suggested these skyrocketing prices are causing an important change: more consumer awareness.
“I think one thing that highlights to us is that the consumer is now becoming very much aware of insurance,” he said.
“The other thing that I think is just starting to blow up,” said Kelly, “is the interaction between a body corporate’s strata plan, their executive committee and the managing agent who manages the estate, and then the insurance broker and the REM flow between those.”
He referred to the independent strata review by John Trowbridge, a veteran industry consultant. Trowbridge concluded that the “opaque” brokers fee system should be phased out in the interests of transparency.
“We paid for and published an independent review on that over a year ago, the Trowbridge review,” said Kelly. “Now, some people are coming to understand that there are some intricacies in the way that’s done that may not be in the best interests of all the participants.”
He said he expects this issue to start receiving more media attention. IB has published several articles on this unfolding controversy and more will follow in the coming days.
One of the keynote speakers at the Convention was Patrick Tiernan, chief of markets for Lloyd’s of London. Tiernan referred to his firm’s 2023 financial results released this week.
He said even taking into account last year’s strong performance, from 2017 to 2023, capital investments in the industry have only made a return on an average of 3.6% every year.
Tiernan’s point: this isn’t a great result, won’t attract new capital and the insurance market needs to remain disciplined.
Kelly agreed. He said it’s time the insurance industry “wakes up” to this reality and prices itself accordingly rather than enduring “the rollercoaster rides they’ve done on pricing and claims.”
“I think that there’s a renaissance going on in insurance all around the world where people are saying, they’re no longer going to accept that,” said Kelly. “I think it’s a great time to be in insurance.”
He said insurance companies are going through “a pretty good stage with the readjustment of the reinsurance and with people starting to realise that 3.6% return over a 10-year period is not very good.”
IB asked if this situation is creating more underwriting discipline at insurers and improving their operations?
“Yes, I think so,” said Kelly.
Fitzgerald agreed.
“Insurer sophistication has increased tremendously in the last five to 10 years,” he said. “They’re more on top of their portfolio performance than ever before.”
Fitzgerald said there will always be market pressures of supply and demand but he expected insurers to realize when they are “off track” far more quickly than in previous years. He also thought they wouldn’t stay “off track” for the sake of premium.
“They won’t shoot for volume,” said Kelly. “They’ll shoot for profit and hope to get volume, rather than, let’s shoot for volume and worry about profit later - I think those days are over.”
At the time of the conversation, Kelly was anticipating 1,500 guests for the disco themed gala dinner – according to organisers, the biggest gala dinner Steadfast has hosted. The Steadfast CEO didn’t reveal his disco outfit but did say that Nigel Fitzgerald was coming as a disco ball.
Steadfast has told IB that the next Convention will be held in Melbourne. In the coming days, IB will publish more of the Kelly/Fitzgerald interview.
Did you attend the Steadfast Convention? What did you think? Please tell us below
