Insurance industry close to full recovery after Asia-Pacific disasters.

Nearly two years on from the devastating series of natural disasters that saw floods, bushfires, earthquakes and tsunamis scar the Asia-Pacific region, the insurance and reinsurance industry is close to recovery. With the great majority of short-tail claims now settled, insurer capital is returning to regular levels and consequent capacity across a range of product lines and industries is bringing renewed opportunities for insurers and insured’s alike. Additionally, there is an increasing level of ‘alternate capital’ that is now entering the market and is prepared to operate at a far lower return on capital than traditional insurers and reinsurers.

That was the positive news greeting attendees from some of Australia’s leading business and insurance organisations at the Aon Advanced Risk Finance Conference in Melbourne last week.

According to Steve Nevett, Chairman, Pacific Region, Aon Risk Solutions, positive news for the insurance industry spells positive news for Australasian business, freeing insurers and reinsurers to invest in developing more targeted risk management solutions.

“The APAC region suffered terribly due to a string of natural disasters in 2010 and 2011. With insurer and reinsurer capital and capacity significantly depleted as a result, there was limited opportunity for innovation and development – despite the clear need for new solutions as industry risk profiles change,” explained Mr Nevett. “However the relatively clear run that we’ve had over the past two years in Australasia has helped the market find its feet and apply its growing capacity to underwriting new risks and expanding product offerings.”

In addition to examining broader global and local risk financing trends, the conference offered practical lessons in risk management techniques and strategies from leading corporations including UPS and Coca-Cola Amatil.

“A key lesson from both was that business cannot treat supply chain risk mitigation as a ‘set-and-forget’. Instead, each potential risk should be addressed in line with need and adjusted as circumstances change,” said Mr Nevett.

The UPS case study was a reminder to attendees that managing risk can be difficult for any corporation, regardless of size. From an internal perspective, best practice risk management is dependent on all the parts – people, processes and technology – working together seamlessly.

The Coca-Cola case study addressed supply chain risk management, drawing upon their experiences from the recent spate of natural disasters. It focused on how important it is for corporations to continually monitor the types of risks applicable to their individual situation so as to ensure they have appropriate protection – be it through intelligent and responsive risk management frameworks or risk transfer strategies such as insurance.

Perhaps the standout presentation was one that compared the daily risk management strategies of elite fighter pilots with those of risk management professionals in business.

Delivered by aeronautical daredevils, Afterburners Australia, it addressed the respective role of planning, briefing, execution and debriefing in any successful exercise. The key message from these expert risk-takers? That execution comprises only about 5% of success. It’s the other components that have a far greater influence.

“It’s hard to imagine a more risky occupation than being a fighter pilot, so it was of particular interest to note that planning, briefing and debriefing is their focus, over and above the flight itself. It’s a formula for success that is just as relevant to risk management professionals. And it’s our hope that much of what attendees heard and experienced at our conference will help them achieve that level of success and flawless execution.”

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Each new team member will bring a combination of lengthy experience and specialised expertise to the team.

Former Rio Tinto executive Scott Eccleston is to be appointed Placement Director, Major Projects; former property head from JLT Asia Kevin Hubbard will take on the role of Placement Director, Property, Energy and Mining; and Heath Jose, who brings deep UK experience from London-based firm, Windsor’s, will become the new Placement Manager, Liability.

In his Melbourne-based role, Mr Eccleston will bring the benefit of his 12 years in the risk and insurance department at Rio Tinto to Aon clients. Prior to his recent departure from Rio Tinto he was General Manager Risk Financing.

“Scott is a leading light in mining insurance and has been instrumental in the construction programs for many of Rio’s major developments and mine expansions. As well as his major development and national infrastructure expertise, Scott will provide additional support to the business development initiatives in Global and Corporate, where his industry knowledge and contacts are a genuine differentiator for Aon,” said John Donnelly, Managing Director of Broking and Chief Broking Officer, Pacific, Aon Risk Solutions.

Mr Eccleston commenced his role on 11 February 2013.

Mr Hubbard, who will also be Melbourne-based, is currently the Managing Director of Property for JLT Asia. Prior to this he was specialist property broker in London for more than 30 years.

“Kevin is acknowledged in the London and Singapore markets as one of the preeminent brokers of complex major accounts. His relationships with underwriters in London, Europe and Asia will provide our clients greater international market knowledge and placement expertise than ever before. I have no doubt he will be a fantastic addition to the team,” said Mr Donnelly.

Mr Hubbard will commence his role when he has completed his commitments with his current employer and will be reporting directly to John Donnelly.

Mr Jose, who will be based in Sydney, joins Aon Risk Solutions from Windsor’s in London, where he specialised in London market liability placements for international clients, including those from Australia. The move to Aon signals a return ‘home’ for Mr Hose, who held a position in Aon’s Perth office prior to his UK appointment.

“Heath’s London market experience will provide us with significant insight into that market and our clients will benefit through his extensive market contacts. The fact that we are welcoming back a former team member is an added bonus,” said Mr Donnelly.

Mr Jose will commence his role on 11 March and will be reporting to Bill Pavey, Placement Director Liability.

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