Charting the challenges for the year ahead
The year that was may have been a bit of a non-event, but the insurance industry couldn't be happier. In fact, they're hoping 2013 brings more of the same. We speak to Robert Whelan of Insurance Council of Australia and Scott Condren of Vero for their thoughts on what lies ahead in the year to come.
Video transcript below:
Donna Sawyer, Insurance Business Online
Donna Sawyer: 2012 may have been a dull year compared to others, but the insurance industry isn’t complaining. In fact Scott Condren of Vero says he’s hoping for more of the same next year.
Scott Condren, Vero
Scott Condren: Weather, that remains the big unknown. We have just entered another storm season and fingers crossed it will be benign one, surely we are due for that. And if it is relatively benign then we should see a stabilisation of the reinsurance cost issues that is affecting all of us. So that would be a god send actually.
The other major issue is the global economic outlook. We have seen some small improvement out of the US recently, but they still have a long way to go and Europe has basically remains a basket case. Those global economic conditions are likely to impact Australia as we move into 2013 and that will have a direct effect on the insurance industry.
Rob Whelan, Insurance Council of Australia
Rob Wheelan: Much better than 2011, 10 did. We had a more benign year in terms of claims particularly catastrophe, so that helped the industry. The industry was also able to effect some price increases across the board to recover from the catastrophes of 2011. So I think that put us in good stead for 2012. So it’s worked out quite well for the industry and stabilised I think the industry after those major catastrophes of 2011.
Donna Sawyer: Bob Whelan of Insurance Council of Australia says there are more reforms to implement in the year ahead and lobbying Canberra for changes to the tax regime is also high on the agenda.
Rob Whelan: Well 2013 will see us bedding down a lot of the reforms that came as a consequence of the inquiries and reviews of the insurance industry during 2011 – 12. So that’s a major issue for us too and that includes thing like the common definition of flood and the key facts statement which will be incorporated in the Insurance Contracts Act going forward. So they are major reforms that we need to bed down, but also we have had a major change in the taxation regime. The industry has had a great success with the Victorian fire services levy being repealed by the government there and replaced with a property tax and we are hoping that the same thing will occur in the New South Wales with the emergency services levy which we are hoping the government may repeal in 2013 and replace that with a property tax. So they are major wins for the industry and will reduce our cost base considerably.
Donna Sawyer: For brokers the year ahead will be what you make of it. Scott Condren of Vero says there are plenty of opportunities out there for brokers who have focused on relationship building.
Scott Condren: How we do things today will be a lot different how we do things tomorrow and the way we transact business is evolving rapidly within the industry. That will continue, but no matter how differently we do things and how we transact business changes, the human element, the relationship piece will be a constant. That’s something that a machine can’t replicate, that human element of the insurance industry. So any company that loses its focuses on that or de-emphasizes that does so, it might be at their own peril.
Rob Whelan: Insurance brokers are a fundamental part of the market and play an integral role in the market and we see their role as continuing in the future through 2013 of course. There is a lot of complexity in the marketplace and their ability to provide good advice to customers, their clients in the marketplace to help them determine what risks they are subject to and what are the best products for them to undertake to manage those risks, I think is a fundamental piece of the market.
Donna Sawyer: This is Donna Sawyer reporting for Insurance Business Online.