Damian Kerin

Australia’s contingency insurance market is maturing, with the increased awareness of contingency risks and insurance policy options driving a marked increase in the take-up of contingency insurance in recent years, according to local specialist insurer Beazley.

Beazley has seen steady year on year growth in the number of contingency policies among its clients – with a 23.8% growth in 2014 on top of strong growth in the previous year.

Beazley Head of Contingency Australia Damian Kerin attributes the growth to two factors: Public interest in extreme weather events, and growing understanding of contingency insurance by event organisers.

“Extreme weather events like floods and bushfires have been very expensive, and have prompted many businesses to consider how these types of risks affect their businesses. Even without extreme weather events, rain can significantly impact turn-out and revenue for events such as fun-runs or outdoor festivals,” Mr Kerin said.

“The events and advertising industry is also becoming more aware of the many contingency insurance covers available and how they can be used. A few years ago, the majority of our book was event cancellation, while today we see growing interest in other policies designed to attract customers, such as prize indemnity,” Mr Kerin commented.

Growing interest in liability and prize indemnity insurance

The majority of Beazley’s contingency policies were to cover event cancellation risks, which made up approximately three quarters (76%) of all claims in 2014.

Event cancellation is popular among event managers, who need to neutralise risks that can lead to severe financial loss and negative impact to reputation, including natural hazards and weather risks (flood, bushfires), terrorism, requisition of venue by a public authority, public health (e.g. communicable diseases such as ebola), fire and so on.

The remaining quarter of contingency risks insured include: non-appearance (14%), prize indemnity (8%) and liability (2%).

In particular, Mr Kerin believes prize indemnity will grow in the Australian market as advertisers and sponsors look to offer large prizes. Prize indemnity insurance is designed to help organisers offer promotions and prizes, as well as protect them from over-redemption when promotions have greater than expected take-up rates.

Beazley says growth of event cancellation and prize indemnity would signal a mature contingency insurance market.

“Prize indemnity insurance is usually popular in developed insurance markets, however it is poorly understood in Australia. We think it will become more prevalent as companies look more closely at their marketing or promotions budgets and consider how they can offer larger prizes without the cost,” Mr Kerin said.

“Greater use of prize indemnity is a sign insurance buyers are using contingency insurance to its full potential as a viable business tool to drive increased sales and revenue, rather than treating it as a compulsory grudge purchase”

Importance of tailored approach

Mr Kerin also emphasises the importance of a tailored approach in contingency insurance, due to the unique and one-off nature of many events.

“Our customers value Beazley’s experience in this area, and our ability to provide a bespoke policy for their event, as opposed to a one-size-fits-all approach. Our policies provided in an easy read format can be tailored against very specific outcomes, such as the ticket revenue, exact temperature or level of rainfall,” Mr Kerin said.

Beazley’s specialist approach to contingency insurance is further underpinned by investing in a comprehensive global database of weather statistics to support the pricing of weather products and event cancellation covers.

Backed by the global capital strength and scale of Lloyd’s of London, Beazley is able to offer a wide range of policies from its local underwriting team in Australia.

Beazley’s local team in Australia has been underwriting contingency risks since 2010.

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Damian Kerin joins Beazley from the insurer Sportscover and has over twenty years’ experience in the Australian insurance market.

The appointment is Beazley’s latest investment in the underwriting skills that have made it a market leader in event insurance, the largest category of contingency cover. From the world’s largest sports, entertainment and trade events to charity occasions and village shows, over the last two decades the company’s contingency team has earned a reputation at the forefront of this specialist form of cover.

Commentating on the appointment, Chris Rackliffe, Beazley’s global head of contingency said: “I am delighted that Beazley has attracted an underwriter of Damian’s experience and reputation to lead our Australian contingency business. We have had a local team in Australia underwriting contingency risks since 2010 and Damian is perfectly placed to lead our next stage of development”.

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Ms White joined Beazley in July 2012 with extensive insurance industry experience including senior accident and health underwriting roles at ACE and Lumley Insurance. She succeeds Noel Nosworthy, who oversaw Beazley’s expansion in the Australian accident and health market with the acquisition in 2011 of Australian Income Protection, a specialist insurer of income protection cover for superannuation funds.

In her new capacity, Ms White will be responsible for overseeing and executing the strategy for Beazley’s Australian accident and health business, and for working with Beazley’s underwriters and operations team to deliver high quality, responsive service to brokers and coverholders. Currently based in Brisbane, she will be moving to Beazley’s Sydney office by the end of 2015.

Christian Tolle, head of Beazley global life, accident & health division, said: “Suzie joined Beazley with a strong track record as an underwriter and excellent broker relationships. In the nearly two years she has been with Beazley she has demonstrated impressive leadership abilities and a strategic understanding of the business. I am delighted she has agreed to take responsibility for the next stage in the development of our Australian business.”

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Duncan Richardson

Beazley announced yesterday the appointment of Duncan Richardson to the role of life, accident & health development manager, as the specialist insurer continues to grow its Australian footprint and boost its capabilities in the life, accident & health market.

Mr Richardson has over 20 years’ experience in broking, general and life insurance. Prior to joining Beazley, he worked at TAL (formerly Tower Australia Life) as business development manager, group life. He has also held senior roles at Richard Oliver Underwriting, QBE and Catholic Church Insurance.

The new appointment grows Beazley’s Australian presence to 40 staff since entering the Australian market in 2008. He will play a key role in building and maintaining client relationships and providing tailor-made client service for Beazley’s life, accident & health clients.

Managing Director of Beazley Underwriting, Noel Nosworthy said Mr Richardson would add to Beazley’s capability to provide tailored services to large super funds. “We are pleased to have Duncan on board, and believe he will make a significant contribution to the life, accident & health team through his wealth of technical expertise and experience in group life markets in Australia,” Mr Nosworthy said. “We are already seeing healthy levels of demand for our life, accident & health products, particularly from mid to top-tier super funds that recognise the benefits of partnering with specialist, niche insurers,” he said.

Mr Nosworthy said that Beazley’s position as a specialist insurer provided clients with greater control over features such as income benefit levels, waiting periods and super contributions.

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