Tell us about your career so far and how long you’ve been in the insurance market?
I’ve been in the insurance business – wholly in New Zealand - for around 15 years. I actually got into the game by accident: I was keen for a career in the financial area as a fund manager or something similar but couldn’t get a start and ended up working as an underwriting assistant. When I first applied for the job, I didn’t really know what underwriting was, but I loved the whole concept of it once I got into it and it’s been a great journey since. I find the industry really vibrant, challenging and rewarding, and the people involved – colleagues, partners, and clients – make it a pleasure to come to work each day. It’s a huge honour too, to now be at the helm of Delta’s NZ operations.
What are the main challenges in the NZ insurance sector in 2021?
Unquestionably, COVID-19 has recoloured the global insurance industry and society in general and NZ is no different. The regulatory changes in March this year have also challenged the industry to work harder to get the best outcomes for our customers and refine the system to be more transparent, reliable, and strong – which is a great thing. COVID-19 did see some international insurers pulling out of some sectors of the NZ market and rates hardening as capacity shrank, particularly in some financial lines products such as D&O and professional indemnity, but it also challenged the industry to respond to the risks raised, including the alarming jump in cyber-risks and claims. We definitely haven’t seen the end of surprises from COVID-19. There are potentially other risks, apparently, longer term around political instability and conflict emerging from the mayhem it has caused, consequential commercial disruption, disruption to supply chains, and increased risk of reputational damage. I think there will also be an expectation that the insurance sector will provide solutions for other emerging risks such as severe droughts, which will be a challenge, but we can expect to see parametric solutions to these risks becoming more common. What we’re seeing from our capacity partners and Lloyd’s is a major focus on accumulation and a greater understanding of the impact of a major catastrophic event such as a massive cyber-breach leading to some sort of global outage.
What are you seeing in the D&O market right now?
There are definitely still challenges around capacity for D&O cover and rates have hardened, with an air of uncertainty around how the next few months will pan out as COVID-19 third wave seems to be rearing its head again in Europe and to a devastating degree in India, with significant impacts on the travel and tourism sector. I see D&O challenges for publicly listed companies, especially if they are dual-listed and on the ASX. We can expect to see more scrutiny on D&O being offered for companies involved or investing in unsustainable practices, non-renewables and other areas that affect the environment and climate change in general. Concerns around cyber-security risk and Environmental Social Governance (ESG) will also feature, with a lot of scrutiny on company boards “doing the right thing” - something that resonates with me and is core to our values at Delta. In essence compliance and governance can’t just be a tick-box exercise any more.
How is Covid impacting your various business lines?
As noted, COVID-19 definitely had an impact on our D&O portfolio and the impact will be ongoing. It’s also affected the employment practices and employment disputes space with a lot of restructuring resulting from economic downturn in 2020. In that environment, it’s important again that companies going through restructuring and redundancies create the right process and manage the issues up-front rather than simply fall back on insurance – ensuring the right risk management is in place. COVID-19 definitely led to an increase in cyber-insurance claims – our Singapore office saw a five-fold jump in cyber-claims in the last 12 months - and we believe the COVID crisis will also lead to new opportunities and product innovation.
How have commercial clients adapted to the pandemic and have you noticed any new trends?
With the arrival of COVID-19, business continuity planning (BCP) proved to be more vital than ever, and we saw an increase in development of business continuity and contingency plans, but not as widely as we’d like. Generally, NZ businesses have been nimble and resilient and have changed the way they operate, quickly adopting new ways to keep operating - especially with the help of technology. This has opened a massive opportunity for the tech sector, and we have seen a spur of activities including mergers and acquisitions and increased investment in that space which is one of the core sectors we operate in. Working from home is the most notable trend, and while this proved a vital BCP methodology it does create a whole new risk for businesses with questions around work-life balance, related stress issues and more importantly keep the business’s culture intact. I believe this is going to be the biggest challenge for businesses in adapting to a working-from-home culture.
Are you withdrawing from, or expanding, certain lines this year?
We certainly won’t be withdrawing any products – our portfolio still stacks up for our clients’ needs and the times - and we’ve always had a long-term focus. And we definitely have plans to explore some new product lines arising from the business environment now and as we see it developing in the next 12-18 months and beyond, as the risks facing businesses become more intangible. We are also in the process of launching a insurance response to pandemics and diseases, but with the exception of COVID.
What drove the 25% growth in NZ last year?
A combination of more demand and higher premium rates as the capacity shrank and rates hardened. I think we also benefited from being highly involved in sectors that went well despite the pandemic, such as manufacturing and technology, but more notably cyber issues also contributed: our cyber book grew 40% overall last year.
You’re expanding your suite of cyber-insurance products. How big a threat is this to NZ companies and individuals?
Cyber-insurance was a bit of a “nice-to” a couple of years ago, but COVID-19 changed things dramatically. There was so much more business and personal vulnerability with the rigours of lockdown and working from home and cyber-criminals ramped up their attacks massively. We might be geographically distant and spared the worst of COVID-19 in health terms but that makes no difference to cyber-attacks. Our cyber-insurance products have been very popular –challenge is the risks are evolving so quickly so we’re having to constantly review and reword our policies and keep up to speed.
How important is the broker channel to your business and the wider NZ insurance market?
Our broker community is vital to having a strong supportive insurance industry in NZ, even more so with the new regulations that are coming in. We see our broker network as a critical part of the insurance chain, providing crucial advice and the important human touch and point of trust with clients. We have one of the more diverse risk environments in the world – with earthquakes, floods, and increasing cyber-risks – and our brokers understand the needs of Kiwis well. They are a highly professional arm of the insurance business and we see them taking a greater role in risk management, adding value though holistic risk management solutions.
What are the main opportunities for the broker market this year?
The regulatory changes are seen by some as a bit of a road-block but we see them as a huge opportunity to add value and make the customer even more central to the risk conversation. Brokers and risk advisers who believe in this will see this as a great opportunity.
What is Delta excited for in the year ahead?
We are definitely excited by the scope out there for innovation, Embrace Change is Delta’s mantra – indeed our version vision is to embrace change to make the world a safer place. That’s about new products and we have a few in development, but it’s also about risk management approaches. We’re also excited about developments we have underway to focus more on our Environmental, Social and Governance (ESG) responsibilities to society. The core of that for us is “doing the right thing”, which is a rigorous taskmaster but absolutely our given. We’re excited too about the opportunities to work with our brokers to bring customers more to the centre of our focus and enhance the risk management we’re jointly doing. And we’re very excited about the opportunities out there for Delta to grow internationally, stemming from the success we’ve had in Asia and beyond.
