AILA President's message
- Cameron Roberts
Commission report hotly debated
Welcome to the March issue of Resolve.
The current hot topic for the insurance industry is the likely ramifications from the financial services royal commission's final report.
Our cover story in this issue outlines some key messages from several Brisbane seminars on the topic attended by Resolve editor Kate Tilley. The fallout from the Hayne royal commission will run deep in the insurance industry and be felt across many years.
My predecessor AILA president, Angus Kench, from Liberty, has rightly said the industry must focus on culture to alleviate a lack of consumer trust.
"In some sectors, buyers of insurance have lost trust," he told an insurance publication late last year. "They have been misled or have not understood what they have bought. It is up to all of us in the insurance industry to help rebuild that trust."
I acted for one of the major participants in the royal commission, so I saw first-hand the evidence giving rise to Angus's comments. I endorse his views, particularly in the wake of the commission's report, and see an important role for AILA to play in enhancing the industry's reputation.
Congratulations to former AILA president Steve Knight, who was recognised in the Australia Day honours list with a Medal of the Order of Australia (OAM). The award was for services to the community, in particular his work with the Australian Wooden Boat Festival (AWBF), but also his services to AILA and the law.
Steve has been on the AWBF board for 20 years and chair since 2005; both roles are voluntary. The festival, which was in Hobart on 8-11 February, is now the largest in the southern hemisphere, and one of the world's largest. AWBF has more than 500 wooden boats on display and attracts more than 200,000 visitors every second year.
And belated congratulations to Australia's AIDA presidential council representative Chris Rodd who received an OAM in the Queen's Birthday honours last year for his contribution to the insurance industry and insurance law.
Well done Steve and Chris.
ALRC class actions report
On 24 January, the Australian Law Reform Commission (ALRC) report, Integrity, fairness and efficiency – An inquiry into class action proceedings and third-party litigation funders, was tabled in Federal Parliament.
The two overarching issues of the class action regime – the integrity of third-party funded class actions and the efficacy of the class action system – were the key terms of reference ALRC was asked to consider.
ALRC conducted more than 60 consultations with stakeholders and received more than 75 submissions. Its recommendations aim to promote fairness and efficiency in class action proceedings; protect litigants from disproportionate costs; and assure the integrity of the civil justice system. To read the full report, click here.
ICA tackles climate change
The Insurance Council of Australia (ICA) has established a climate change action committee (CCAC) to help insurers tackle global warming's financial and social costs.
In a post on his LinkedIn page, ICA risk general manager Karl Sullivan said CCAC would help coordinate and facilitate insurers' climate change responses and procedures.
"Many global insurers have already implemented significant climate change response programs and Australian insurers have not been idle, with many investing heavily in taking action," he said. "[Some] of these initiatives may best be achieved through a collective effort."
ICA has commissioned sustainable development expert Tom Davies to write a blueprint to "achieve an orderly transition to a low-carbon economy".
Treasury discussion paper on disclosure
The Federal Government has released a discussion paper on improving disclosure in the general insurance sector.
The paper follows recommendations made in the Senate Economics References Committee report into the general insurance (GI) industry, and seeks views on the issues and objectives behind component pricing, disclosure of year-on-year premiums, standard cover and definitions in insurance contracts, and key facts sheets.
The government said it recognised efforts being made by the GI industry to improve disclosure practices and encouraged continuation of that work.
It said the discussion paper would assist in defining proposals to enable the government to use regulatory tools to achieve recommendations from the Senate report and identify actions the industry can take.
ARPC study on cyber terrorism
Australian Reinsurance Pool Corporation (ARPC) has started a research study on the threat of cyber terrorism in Australia, including the nature and cost of physical damage to commercial property (including business interruption), which may be caused by acts of cyber terrorism.
The 12-month research study, Insurance risk assessment of cyber terrorism in Australia, will identify and explore current and prospective threats, plausible scenarios and the practicalities of extending insurance coverage to include cyber terrorism in Australia.
CEO Dr Christopher Wallace said: "Business insurance policies and the ARPC scheme currently exclude coverage for acts of cyber terrorism which affect commercial and high-value residential property in Australia.
"ARPC expects the cyber research study findings to inform development of government policy in this important area, including the three-year review of the terrorism insurance scheme by the Treasury."
ARPC has commissioned Cambridge Centre for Risk Studies, based at the University of Cambridge in the UK, and the Organisation for Economic Co-operation and Development, based in France, to conduct the research with ARPC.