Andrew Fluitsma

Honan Insurance Group (Honan) Executive Chairman, Damien Honan, has announced an exciting new reinsurance offering to the broker marketplace with the launch of Honan Re that will commence operations this week.

Based in Singapore and headed by Honan Asia’s Managing Director Eliza White, Honan Re will offer facultative reinsurance solutions to the organisation’s insurance partners.

Commenting further on the announcement, Damien Honan said “We’re very proud of the reinsurance offering as it deepens and broadens the group’s capabilities and further enhances Honan’s reputation as an industry leader.

“The establishment of Honan Re has also been a personal goal of mine, to build a reinsurance team to support the wider Honan group since we commenced operations in Singapore in 2012”.

“In the current marketplace conditions, we believe it is the best time to launch this initiative and continue to expand Honan’s capabilities and the support we offer our insurer partners”.

Honan Chief Executive Officer, Andrew Fluitsma said Honan was the only Australian broking house to offer reinsurance solutions and its launch comes at an opportune time when the market needs additional capacity and innovative thinking.

‘The addition of a reinsurance offering reflects Honan’s attitude of constantly pushing the envelope to develop and deliver leading edge solutions.  It’s also a testament to the efforts of our incredible team and the success we’re building throughout the region”.

Honan Re will be positioned as a dynamic and solutions focused division of Honan Insurance Group and aims to support the organisation’s partners throughout the entire reinsurance cycle.

Singapore was selected as the base for Honan Re for its reputation as the insurance hub of Asia Pacific and strategic geographical position that offers access to international markets in Asia, Australia, Europe and North America.

Honan Re’s Eliza White said, “The launch of Honan Re demonstrates our ability to innovate and offer clients coverage that meets their changing circumstances and challenges.  We will quickly bring together experienced reinsurance minds and utilize latest technology and robust analytics to address the insurance needs of our partners.”

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Commenting further on the announcement, Andrew Fluitsma said the appointment of Sue Klose will add further depth to the Board as Honan broadens and expands its marketplace activities and grows its operations both in Australia and internationally.

Sue Klose is an experienced non-executive director and executive, with a diverse background in digital business growth and operations, corporate development, strategy and marketing.

She is currently a non-executive director of Nearmap, a provider of aerial imagery and location intelligence; Envirosuite, a global leader in environmental data and intelligence; Pureprofile, a provider of data insights, quantitative research and lead generation; and Stride, one of Australia’s largest mental health care providers.

Prior to her move to Australia, Sue held various digital media management and strategy roles in the United States, primarily with Tribune Publishing and as a consultant with Marakon Associates.

Sue also has an MBA in Finance, Strategy and Marketing from the JL Kellogg School of Management at Northwestern University, and a Bachelor of Science in Economics from the Wharton School of the University of Pennsylvania.

“This is an exciting time for Honan and Sue’s experience will be invaluable in the attainment of the group’s strategic objectives and focus on driving growth and innovation”, said Andrew Fluitsma.

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Andrew Fluitsma

Honan Insurance Group (Honan), one of Australia’s fastest growing international brokers, has announced it has acquired Bovill Risk & Insurance Consultants (BRIC), one of the country’s foremost professional indemnity (PI) and construction insurance specialists.

The Acquisition will see BRIC join Honan’s family of brands and continue to operate under its own identity but will be branded and marketed as BRIC – a Honan Company, marking a significant milestone for Honan and BRIC alike.

“A true leader in its field, we’ve long admired BRIC for its revered reputation, deep expertise and highly trusted relationships with clients and industry bodies,” said Honan CEO Andrew Fluitsma.

“Thanks to our existing trading relationship, and BRIC’s operational rigour, we were able to expedite the Acquisition with incredible speed and confidence. Not only will this Acquisition expand our PI and construction insurance capability, but enable us to offer a strengthened national presence in those key markets.”

For BRIC Founder and Managing Director Chris Bovill, the opportunity to join Honan was one with multiple returns.

“Since inception in 1996, we’ve continuously expanded our business through the growth and development of our people. Our culture of being willing to do hard things has been key – we love chasing the interesting, challenging things so many others shy from. In Honan, I recognised this ethos too – a bold and fresh challenger brand doing great things,” said Bovill.

“Of course, our people and clients will now have the benefits of Honan’s global network, buying power, broader expertise and go-to-market sophistication, but it was the promise of joining a dynamic business working hard to achieve great things that was too good to refuse. I’m thrilled for our people, our clients and our partners – the chapter ahead is a bright one.”

With a commitment to providing tailored recommendations and high-quality customer service, Honan has grown revenue at a compound annual rate of approximately 17% over the last 19 years. Privately held in partnership with accelerated growth experts TA Associates, Honan’s main verticals are in the corporate, strata, real estate and employee benefits markets, primarily in Australia, New Zealand and Southeast Asia.

BRIC is a boutique insurance broker specialising in professional indemnity and construction insurances. BRIC’s construction insurance capability has strong penetration in the Victorian and NSW markets, particularly its distributorship of Builder’s Warranty on behalf of the Victorian government agencies. BRIC’s PI offering extends to occupations including but not limited to Engineers, Project Managers, Building Surveyors, Accredited Certifiers and IT Consultants throughout Australia. With Honan’s current PI offering predominantly servicing NSW, the Acquisition will strengthen the brand’s national footprint in this key business vertical.

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Edward Sippel

TA Associates, a leading global growth private equity firm, has announced that it has signed a definitive agreement to make a strategic growth investment in Honan Insurance Group (“Honan”), a leading commercial insurance broker.

Honan’s Group CEO and Executive Director, Damien Honan, Chief Executive Officer, Andrew Fluitsma, and Chief Operating Officer, Laurence Basell, will continue to lead the business and be shareholders alongside TA. Financial terms of the transaction were not disclosed.

Honan designs, prices and negotiates insurance policies on behalf of corporate clients. The Company’s main verticals are in the corporate, strata, real estate and employee benefits markets, primarily in Australia, New Zealand and Southeast Asia. Honan has more than 200 employees in seven offices and is part of the World Broker Network (“WBN”), a global network of independent insurance brokers and risk advisors. The Company was founded in 1964 and is headquartered in Melbourne, Australia. Honan has grown revenue at a CAGR of approximately 17% over the last 19 years.

“We are very pleased to welcome TA Associates as an investor in Honan,” said Damien Honan, Group CEO and Executive Director of Honan Insurance Group. “In choosing to partner with TA, the Honan team was particularly attracted by the firm’s global presence, long history of investing in the insurance brokerage sector and experience in partnering with growing companies. We believe that TA will be a valuable partner as we seek to further grow Honan both in the domestic Australian market and overseas.”

“With a commitment to providing tailored recommendations and high-quality customer service, Honan has grown significantly over the past few years,” said Andrew Tay, a Senior Vice President at TA Associates. “We are excited to be investing in Honan alongside a talented management team, and we look forward to building on their track record of growth.”

“We have been impressed by Honan’s strong reputation within the commercial insurance brokerage industry and its vibrant corporate culture,” added Edward Sippel, a Managing Director and Co-head of Asia operations of TA Associates Asia Pacific Ltd. “We are delighted and honored to be partnering with the Honan management team as they embark on the Company’s next phase of growth.”

“This is an important milestone for Honan as we continue to focus on providing the highest quality advice to our dedicated and loyal customer base, especially in the current challenging environment,” said Andrew Fluitsma, Chief Executive Officer of Honan Insurance Group. “The opportunity to bring aboard a long-term, well-respected growth-oriented global investor such as TA, that is fully-aligned and supportive of our business model, is very exciting. We are confident that Honan will benefit from TA’s complementary array of resources and skills.”

The transaction is expected to close in the second half of 2020, pending customary regulatory approvals and closing conditions.

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Commenting further, Travis Wendt said top line premium growth will continue to take a back seat as the market maintains a focus on improved bottom line underwriting profitability.  “Underwriters continue to be very risk selective on both renewal and new business and are still prepared to walk away if things don’t stack up”.

“We have witnessed a number of instances where the incumbent insurer has elected not to renew cover due to changes to underwriting guidelines – even in long standing client/insurer relationships”!

As a result of this stance, there has been a greater reliance to obtain terms through overseas markets such as London and Singapore.  Unfortunately, these traditional markets are in the midst of their own remedial action, with the aim of restoring profitability after several years of significant losses, especially at Lloyds.

Whilst allowing brokers to obtain capacity to place risks, there have been significant hikes in premium spends. “We expect this to continue into 2020 and beyond”, affirmed Travis Wendt.  “For local insurers, 2019 saw the third full 12-month cycle of underwriting remediation, with no real signs of this altering in 2020”.

“Hard market cycles tend to exist for up to 5 cycles before material and consistent shifts are witnessed and with history as an indicator, we anticipate the peak to occur towards the end of 2021”.

Faced with further flatlining investment returns, underwriting profitability remains a key metric of overall business performance.

In 2020, insurers will continue to apply stringent underwriting principles set by management guidelines and will include pricing adequacy, restrictions on certain aspects of coverage and increased excesses.

High hazard property, Professional Indemnity, natural catastrophe risks and residential strata risks with aluminium composite panel (ACP) construction will remain a challenge as the availability of insurer capacity continues to diminish.

Travis Wendt said, “While risks will be viewed on a case-by-case basis, the need for businesses to differentiate their exposure from their peers will ensure they are seen in the very best light by the market, resulting in the most favourable terms available”.

“Prior to the arrival of summer and the current devastating bushfire disaster across multiple states, insurers had placed embargoes on new business within regional areas of New South Wales.  There’s no doubt that as a result of the bushfires there will be a further drag on premiums and cover”.

“Coupled with the ongoing impact of cyclones and tropical storms in Northern Queensland this results in the market taking corrective action required to limit exposure from losses/claims”.

Honan’s Quarterly Market Update concluded with an insight into the trends and considerations in the global insurance market.

As member of the Worldwide Broker Network WBN) Honan has a unique perspective and an in-depth insight into insurance trends across the globe.

“What we are witnessing is increased premiums for Directors & Officers, Liability of Public Companies, Limited markets for unsprinklered EPS locations and the tough PI Lloyds market”, said Steve Pappas, Honan’s Head of Global & Networks.

“In working with new clients with global business activities, we have discovered instances where we have found that clients with multinational risks may not be covered correctly in certain regions”.

Citing a recent example of a client with exposure in the Middle East.  An initial analysis of the insurance program found particular exposures were not covered under the global policy placed in Australia.  Honan was able to engage partner brokers in the Middle East to bind local policies in that region to ensure the correct insurance program was in place.

“It is important to ensure you have the right support when considering business across different jurisdictions.

“At Honan, we advise our clients to talk to their broker as early as possible as transparent and holistic conversations provide for personalised solutions that can assist businesses to evolve and grow across the globe”, concluded Steve Pappas.

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Henry Clark

Honan Insurance Group’s (Honan) Head of Financial & Professional Risks Henry Clark has announced the specialist department has been rebranded to Professional and Executive Risks to better reflect the group’s strength, expertise and pro-active approach in supporting clients with market related issues and challenges such as Directors and Officers (D&O) insurance.

Commenting further on the announcement Henry Clark said the days of just rolling over the D&O insurance renewal is no longer an option as the sector continues to navigate a very challenging and dynamic market.

Insurers applied heavy price increases across-theboard in 2018. This continued into 2019 as the number of claims and reported circumstances exceeded the total insurance premium pool by a significant margin. “D&O is an exceptionally complicated insurance market with carriers responding assertively to claims pressure and continuing growth in securities class actions, litigation and the prospects of further action arising in 2019 and beyond”, said Henry Clark.

Once regarded as mainly being applicable to large listed entities, litigation costs arising from D&O exposures are now so great that D&O insurance has become a necessity for many businesses – regardless of size.

“The primary driver for the current hardening D&O market is the growth in securities class actions led by opportunistic law firms backed by litigation funders and predictions that further claims pressure will arise from the Hayne Royal Commission, privacy regulation, workplace health and safety and now the Royal Commission into Aged Care Quality and Safety”, continued Henry Clark.

“As a result, upward pressure on D&O premiums will continue into 2019 and beyond as insurers leave the market resulting in the current pool becoming inadequate to cover increasing and expensive claims”.

This is going to be reality for the foreseeable future affirmed Henry Clark.

Although a challenging environment, there is still flexibility in the market, but only if the right messages are communicated – and strategies are needed to demonstrate to insurers that the D&O risk is being properly considered and mitigated.

Henry Clark said, “Honan’s Professional & Executive Risks team works proactively with clients by actively engaging in relevant education and alerting them to the changing insurance environment well in advance of cover renewal. The team then guide them to establish the most appropriate strategy to reduce the impact on premium and coverage.”

This includes:

• Providing Directors, the knowledge and tools to personally engage with senior management to set and manage D&O forecasts and expectations.
• Working with insureds to be proactive and commence the renewal process early, allowing time to address any surprises or consider strategies which may mitigate premium increases.
• Examining insurer selection, transparency, relationship management and adequately conveying the client’s individual risk profile in underwriter presentations to help mitigate the prevailing market issues and assist the company to stand apart during this market correction.

“There’s no doubt that the changes and D&O premium increases has surprised many organisations. Honan will continue to work closely with D&O clients to assist them to navigate through the changes and placement of their cover”, concluded Henry Clark.

The Honan Professional and Executive risks team specialises in insurance for financial institutions, professional service firms and corporate organisations. The team of experts has decades of experience offering specific industry insight and placement experience for traditional and emerging risks.

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Commenting further on the appointment, Andrew Fluitsma said the appointment reflects Honan’s commitment and plans to deepen client engagement and position the group as a leading risk partner of choice in the broader Asia Pacific region.

Eliza has deep market knowledge and insight and comes to Honan with a strong broker background and experience in sales, corporate risk, complex risk solutions and management expertise.

Prior to joining Honan, Eliza worked for Starr International and has an extensive background in risk insurance, underwriting (specializing in the energy and risk sectors), management, analytics and global insurance.

These attributes are complemented with a practical insight and appreciation of the Asian risk insurance and brokerage market.

“The demand for risk insurance services is increasing rapidly throughout Asia and Honan is well positioned to capitalise on these growth opportunities”, said Eliza.

“I’m delighted to be joining a dynamic organisation and look forward to working with Honan’s senior team in Singapore to realize the organisation’s strategic objectives”.

This announcement marks another important step in Honan’s strategic aspirations in Asia Pacific and the appointment will help drive our continued growth and momentum concluded Andrew Fluitsma.

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Commenting further, Blair McNamara said the report makes various recommendations including regulation of third party litigation funding in Australia and proposing the prohibition on lawyers charging contingency fees to be lifted.

He added, this will impact current conditions. At present, legislation which regulates the legal profession in Australia prohibits lawyers charging legal fees being a percentage of a recovery.

“I do not see contingency fees being for lawyers as a drastic or alarming development so long as the change is supported by appropriate safeguards”, said Blair McNamara. 

“Whilst, corporate Australia may not universally see such a change as positive, it is important to note that;

• the ALRC recommendation is limited to class action litigation only that are filed in Australian courts.
• a lawyer’s percentage-based fee should absorb all legal costs and disbursements (including an after the event insurance premium and security for costs). 
• percentage-based fee agreements be permitted only with leave of the Court, which provides a further safeguard. 

“Further, third-party litigation funders are not bound by the same legal duties as lawyers to charge contingency fees could be less costly overall and in the interests of class members.” 

It’s important to appreciate that this is a Law Reform proposal at Federal level and any change to removing prohibitions on contingency fees will need to transpire at state and territory level where lawyers are regulated. 

 Hence Blair McNamara’s belief that even with broad support such a change will be some way off. 

“I think the more interesting question will be, if allowed, what impact will contingency fees have on the third-party litigation funding business model”, concluded Blair McNamara?

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Commenting further, Andrew Fluitsma said “We are already witnessing global underwriting markets in Lloyds ceasing to write certain classes of business such as Professional Indemnity and Marine – and we expect this to continue”.

“Honan also expects a continuation of upward pricing pressures throughout 2019, bringing with it another challenging buying year for businesses.  Insurer risk selection and appetite will continue to drive underwriting behaviour leading a growing rating / pricing gulf between low hazard and less desirable occupancies”.

“Underwriting profitability remains the key performance metric in the medium term as insurers continue to focus on good performing and risk managed businesses”.

Claims pressure from settlements in securities class actions is likely to be a factor for the foreseeable future with Side C/ D&O insurance.

Certainty of recommendations and changes will be further clouded should there be a change in government at a federal level.

Honan’s Quarterly Market Update affirmed that after almost two decades of favourable buying conditions, 2017 and 2018 saw the beginning of significant change; a change and market dynamic which will continue and accelerate in 2019.

Throughout 2018, insurers found themselves in a challenging position, whereby previous strategies to build market share through top line premium growth were replaced with the need to bolster bottom line profitability.

With this approach came a willingness to walk away from business should the underwriting re-calibration not yield acceptable levels of profitability.

Communication and relationships are pivotal said Travis Wendt, Honan’s Head of Broking & Carrier Management.  “Relationships flexibility still exists in the wider market but only if the right messages are communicated – and communicated early.

“Insurer selection, transparency, relationship management and “selling” your individual risk profile to the market is critical to not only help mitigate prevailing market issues but also to assist your company to stand apart during this market correction”.

“Honan is proactively driving the renewal process earlier for clients to allow adequate time to address any surprises or consider strategies which may mitigate underwriting volatility”.

Highlights of Honan’s December 2018 Quarterly Market Update

• Food & Beverages – We are seeing a significant correction in pricing for non-desirable, high hazard business.  F & B related accounts (packaging, processing and storage related) have seen major withdrawals of market capacity locally brought on by the frequency/severity of fire & stock losses, construction from combustible materials such as EPS (Expanded Polystyrene) and low levels of automatic protection. This is being brought on by frequency of claims, ageing infrastructure, combustible materials used in construction and a lack of fixed protection (automatic sprinklers and smoke detection).
• Queensland & Western Australia to face tighter conditions – Insurers are actively controlling their sideway exposure to Natural Catastrophe perils such as weather, flood and earthquake, where the impact is mainly felt in Queensland and Western Australia. This is being seen in a tightening of underwriting in the form of reduced limits, increased pricing and capacity withdrawals. This underwriting discipline has been brought on by increased reinsurance costs, increased net retentions emanating from the events of 2017.Directors & Offices – Financial Lines underwriters are focussing on (and already been actively remediating) their Directors &
• Offices portfolio, especially ASX listed entities that purchase Side C cover.
• Cyber Insurance market – There has been an increase in the number of data breaches notified to the Office of the Australian Information Commissioner (“OAIC”).

The top 5 industries that reported breaches were health care service providers, legal, accounting and management services, finance (including superannuation), education and professional associations or “charities”.

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Last week Honan announced the appointment of Blair McNamara as Head of Legal and the internal promotion of Sharan Uppal to Chief Client Officer and Carly Blakiston to Head of People & Culture.

These senior executives are exceptional individuals and practitioners in their respective fields, with remarkable career accomplishments to-date, and the skills and experience required to support Honan’s strategic and growth aspirations said Andrew Fluitsma.

The new appointments and roles follow the recent launch of the new brand identity and senior leadership restructure whereby Damien Honan took on the role of Group CEO and Andrew Fluitsma CEO Australia & New Zealand.

Reflecting Honan’s commitment and investment in Asia Pacific, Brad Tymmons was appointed CEO, Asia and has relocated to Singapore to oversee group’s operations in the region.

Commenting further, Andrew Fluitsma said, “Since its inception and throughout the countries in which it operates, Honan has built a strong reputation for the provision of personalised solutions, innovative marketplace offerings and exemplary client service”.

“Furthermore, there has been significant investment in internal infrastructure improving processes and efficiency that have combined to facilitate the development, execution and adoption of strategy – that in turn has seen a significant increase in business growth”.

Hence the importance of these appointments and restructure as they mark another step in the organisation’s commitment to the future and its vision to deliver an exceptional client experience throughout the end to end journey with Honan.

Today, top companies are judged primarily on the basis of the client experience and we see this as an important investment in the Honan brand added Andrew Fluitsma.  By creating a powerful and memorable client experience that meets and exceeds expectations an added benefit will be clients acting as brand ambassadors and advocates for the organisation.

Therefore, it is imperative that Honan always stays ahead of the curve in the delivery of smarter, faster, more seamless solutions for clients – as well as playing an important and leading role in the broker sector, within Australia and the international markets in which it operates affirmed Andrew Fluitsma.

Andrew Fluitsma concluded, “Coming into the New Year and beyond, Honan is in a great position to grow by helping support Australian and Asia Pacific clients across all aspects of business risk with appropriate solutions to address their unique challenges”.

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