Mr Summerhayes has extensive experience across the insurance, financial services and regulatory landscape, including as a former Executive Board Member of the Australian Prudential Regulation Authority (APRA) and as Chief Executive Officer of Suncorp Life, Regional General Manager at National Australia Bank (NAB) and Chief Executive Officer of MLC Superannuation and Investments.

Effective 1 January 2023, Mr Summerhayes will also Chair Zurich’s other related corporate entities. He has previously served as an independent non-executive Director on each of these boards since January 2022.

Mr Summerhayes said, “I am delighted and honoured to take on this new role. Zurich occupies a unique position as a composite – life and general – insurer and my focus as Chair will be to continue to work with our executive team, led by Chief Executive Justin Delaney, as we evolve Zurich’s proposition and operations for the benefit of our customers and employees.”

“I am particularly proud of Zurich’s commitment, both globally and locally, to achieving critical sustainability outcomes and I look forward to supporting the delivery of this agenda,” Mr Summerhayes said.

Noel Condon and Mary Waldron have been appointed independent non-executive Directors of Zurich in addition to its other related corporate entities, effective 1 January 2023. Nicolette Rubinsztein has also been appointed as an independent non-executive Director of Zurich Australian Insurance Limited (ZAIL), in addition to her existing directorships of other Zurich corporate entities.

Mr Condon has more than 40 years’ experience across insurance and reinsurance markets in the Asia-Pacific and Europe. He has previously held senior management roles with American International Group (AIG), including as Australia Chief Executive for nine years and served as a board member of AIG Australia, AIG New Zealand and the Insurance Council of Australia (ICA).

Ms Waldron has more than 30 years’ of experience in audit, risk and consulting as a former Partner at Arthur Andersen and Ernst & Young. She spent 14 years at PricewaterhouseCoopers where she was a member of their Global Leadership team and the Global Chief Risk Officer from 2016 to 2021.

Appointees will join existing independent non-executive Director, John Mulcahy. The announcement follows the resignations of former Chair, Paul Bedbrook, and non-executive Director, Elaine Collins, effective 31 December 2022.

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Geoff Summerhayes

Zurich Australia and New Zealand has announced the appointment of Geoff Summerhayes to Zurich’s suite of Boards commencing immediately.

A former financial services CEO, director and APRA Executive Board Member, Geoff joins five of Zurich’s main APRA-regulated Boards as an Independent Non-Executive Director and Member of Risk, Compliance and Audit Committee. These include:

• Zurich Financial Services Australia Limited (ZFSA)
• Zurich Australia Limited (ZAL)
• Zurich Australian Insurance Limited (ZAIL)
• OnePath Life Limited (OPL), and
• OnePath General Insurance Pty Limited (OPGI).

Geoff’s role on ZFSA’s Board also includes Member of People and Remuneration Committee. He also joins Zurich Investment Management Limited’s (ZIM) Board as an Independent Non-Executive Director.

As an APRA Executive Board Member, Geoff most recently championed significant organisational transformation across APRA’s strategy, leadership capability, diversity and culture during a five-year tenure.

In recent years, Geoff has led significant regulatory change in Australia and globally as a forthright leader, raising awareness of climate change financial risk. His chairperson and leadership roles include the Council of Financial Regulators Working Group on Climate Change with members including APRA, ASIC, RBA and Treasury, the International Association of Insurance Supervisors (IAIS) Audit and Risk Committee, and the UN Environment Program’s Sustainable Insurance Forum (SIF), a global body of insurance regulators collaborating on sustainability and climate change.

Commenting on the appointment, Chair of Zurich’s Boards, Paul Bedbrook said, “Geoff’s extensive experience and expertise in commercial and regulatory matters represents a valuable appointment to Zurich’s Boards. Along with his deep knowledge of the industry, Geoff’s experience also complements the diverse capabilities of our Board Members and we welcome and look forward to his contribution.”

Justin Delaney, CEO Zurich Australia and New Zealand, added: “We are very fortunate to have such a high calibre addition to our Boards. Geoff’s appointment reflects the commitment we have at Zurich to strengthen our position in the market by bringing unique leadership to our strategy, governance and culture.”

Geoff has recently been appointed Chairperson of Beyond Zero Emissions, an independent, solutions-focused think tank centred on a prosperous zero-emission economy for Australia. He is also a Non-Executive Director at Heartland Group Holdings Ltd NZ.

Prior to his Board role at APRA, Geoff was CEO of Suncorp Life, CEO Superannuation and Investment at MLC, and held a number of senior executive roles at National Australia Bank. He started his career in commercial property development at Lend Lease.

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Elayne Grace

The Australian Actuaries Climate Index, which measures the occurrence of extreme weather conditions and sea levels, showed winter was relatively benign across most of Australia, with the Index falling to levels not seen since winter 2015.

The Index, which was launched in November 2018, tracks these extremes and how they change over time compared with a reference period. The reference period is 1981 to 2010.

Through winter, it shows temperatures were more benign than the reference period average. Extreme high temperatures occurred less often, indicative of fewer extremely hot 24 hour day/night periods. However, the extreme low temperature index continued to be positive, indicative of minimum temperatures being warmer than the reference period average. According to the Bureau of Meteorology, the season was the sixth warmest winter on record^[2].

Only four out of 12 regions experienced extreme rainfall that was above the reference period average.

“The winter of 2020 is a reminder that despite a long-term trend of increasing temperatures and lower rainfall, thankfully not every season will see extreme weather,” said Rade Musulin, lead collator of the Index.

However, Mr Musulin said Australia may be about to see increased rain and tropical cyclones as we move into summer and 2021. This is the result of the El Nino-Southern Oscillation (ENSO) weather system, which entered a La Niña phase in mid-September. Some past La Niña seasons have seen extreme events, including Cyclone Tracy in 1974 and the Queensland floods in 2010-2011^[3].

Despite a season of relative calm, Actuaries Institute President Hoa Bui said it remains critical that the Australian government, businesses and communities continue to focus on risk mitigation as part of climate change preparedness.

“The Royal Commission into National Natural Disaster Arrangements is due to report later this month, and we anticipate the Commission will make recommendations to mitigate the future impacts of climate change given the evidence presented,” Ms Bui said.

APRA Executive Board Member and Head of Insurance, Geoff Summerhayes, said in a recent speech that the task of preparing communities that face increased likelihood of natural disasters is becoming more urgent. Australia’s insurers will pay out about $5.4 billion from around 300,000 claims related to last summer’s bushfires, floods and hailstorms.

The Actuaries Institute launched the Index to help all stakeholders better understand changes in weather and what they mean over the long term, said Institute Chief Executive, Elayne Grace. “The world’s climate is warming at the fastest rate in modern history,” Ms Grace said.

“Climate change has major environmental, economic and social impacts and these impacts are increasing over time.”

“What gets measured gets managed. We need to measure those changes so that businesses, including insurers and financial institutions with long-term commitments, local governments that manage land use and building development, and communities can better deal with those risks.”

Another finding from the Index is that extreme wind conditions were also below the reference period average, for every region across Australia through the winter.

The Australian Actuaries Climate Index is updated every quarter. It shows changes in the frequency, or rate of occurrence, of extreme high and low temperatures, heavy precipitation, dry days, strong winds and changes in sea levels across 12 regions that are climatically similar.

It is calculated by Finity Consulting for the Actuaries Institute at the end of each season, following the release of data from the Bureau of Meteorology.

Each season is compared to the same season in previous years and against a reference period of 1981-2010.

———

[1] http://www.bom.gov.au/climate/outlooks/#/overview/summary/ & http://www.bom.gov.au/climate/cyclones/australia/
[2] http://www.bom.gov.au/climate/current/season/aus/summary.shtml
[3] http://www.bom.gov.au/climate/updates/articles/a020.shtml

Footnote: References to temperatures, dryness etc. are based on the data underlying the AACI, which tracks changes in the frequency of extreme high and low temperatures, heavy precipitation, dry days, strong wind and changes in sea level, mainly concentrating on the 99th percentile of observations.

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The joint project is the culmination of more than two years of work aimed at collecting and publishing higher-quality, more consistent and transparent data about the life insurance industry. It enables the community to review an individual life insurer’s claims and disputes outcomes, and compare them with other providers. The data release signifies a new level of transparency and accountability which the regulators see as essential to improving trust in financial services.

The publications reflect the agencies’ different roles, with APRA focused on protecting policyholders by ensuring the soundness and stability of institutions, and ASIC responsible for regulating conduct, disclosure and consumer outcomes.

• APRA has released its inaugural Life Insurance Claims and Disputes Statistics publication, with more than 22,000 data points from 20 insurers including claims and disputes information across all cover types and distribution channels. The data was collected under APRA’s new reporting standard LRS 750 Claims and Disputes, which came into effect in October 2018.
• ASIC’s MoneySmart life insurance claims comparison tool helps consumers to make more informed decisions by showing each insurer’s claims-acceptance rates, average claim time, the number of claims-related disputes and policy cancellation rates.

The data shows that 92 per cent of overall claims are paid in the first instance, and breaks down consumer outcomes according to cover type and distribution channels.

APRA Executive Board Member Geoff Summerhayes said the release of such broad and granular data on life insurance claims and disputes was world-leading practice among global insurance regulators.

‘This project represents a joint commitment to enhancing industry transparency and holding life insurers to account for how they treat policyholders,’ Mr Summerhayes said.

‘APRA’s publications are designed for industry analysts, including our own supervisors who will use them to gain deeper insights into the performance of the life insurers they oversee.’

ASIC Commissioner Sean Hughes said: ‘APRA’s data publication is complemented by ASIC’s MoneySmart life insurance claims comparison tool, which helps consumers make informed decisions when buying these complex life insurance products.’

‘The online tool compares insurers on four metrics – the percentage of claims accepted, the length of time taken to pay claims, the number of disputes and the policy cancellation rates. MoneySmart also provides a life insurance calculator which helps consumers work out if they need life cover, and the right level of cover.

‘Together, our agencies will use this data to support stronger supervision of insurers.’

This data will be collected on an ongoing basis, and the resources will be updated twice yearly.

Background

Last year ASIC released REP 587 The sale of direct life insurance which targeted concerns identified in ASIC’s 2016 report REP 498 Life insurance claims: an industry review. ASIC is currently conducting wide-ranging reviews of both consumer credit insurance, and total and permanent disability insurance and will report on its findings later in 2019.

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Jacki Johnson

The leaders and senior executives of Australia’s major banks, superannuation funds, insurance companies, financial sector peak bodies, civil society and academia are coming together to set out a roadmap for realigning the finance sector to support greater social, environmental and economic outcomes for the country.

The Australian Sustainable Finance Initiative has today been unveiled – an unprecedented collaboration to help shape an Australian economy that prioritises human wellbeing, social equity and environmental protection, while underpinning financial system stability, in what it says is a ‘critical decade’ ahead.

Modelled on international best practice already seen in groups including the European Union’s High-Level Expert Group on Sustainable Finance and the UK’s Green Finance Taskforce, the Australian Sustainable Finance Initiative will be guided by a Steering Committee charged with developing a set of recommendations to enable the finance sector to contribute more systematically to the transition to a more resilient and sustainable economy.

IAG Group Executive Jacki Johnson, co-Chair of the Initiative, said: “The roadmap we create will include pathways, policy signals and frameworks that will better enable the financial services sector to contribute to delivering on international commitments, such as the Paris Agreement on Climate Change and the UN Sustainable Development Goals, while underpinning economic stability and prosperity for Australia.”

An Australian Sustainable Finance Roadmap will be delivered by the Steering Committee in 2020 with recommendations that will assist the financial services sector to:

1. Mobilise capital to deliver on national and global sustainable development and climate goals;
2. Enhance the sustainability, resilience and stability of the financial system by embedding sustainability, climate and human rights considerations into financial markets and products;
3. Ensure better informed financial decision making by enhancing disclosures and transparency on environmental, social and governance risks and opportunities; and
4. Deliver a financial system that meets community expectations around sustainability.

An Expression of Interest process in late 2018 called on experts active in sustainable finance to nominate to be part of the Steering Committee.

The following members and observers were appointed

Members

• Anna Skarbek, CEO – ClimateWorks
• Christina Tonkin, Managing Director Loans and Specialised Finance – Institutional – ANZ
• Damien Walsh, Managing Director – Bank Australia
• David Atkin, CEO – Cbus
• Didier Van Not, General Manager Corporate and Institutional Banking – Westpac Banking Corporation
• Emma Herd, CEO – Investor Group on Climate Change
• Eric Williamson, Executive General Manager, Corporate Finance – National Australia Bank
• Jacki Johnson (Co-Chair), Group Executive People, Performance and Reputation – IAG
• John Hewson, Chairman – Business Council for Sustainable Development Australia
• Mark Joiner, Chairperson – QBE Australia Pacific
• Mark Senkevics, Managing Director Head Australia and New Zealand – Swiss Re
• Matthew McAdam, Director Asia Pacific – Principles for Responsible Investment
• Michael Thorpe, Managing Director Institutional Banking and Markets – Commonwealth Bank of Australia
• Phil Vernon, Managing Director – Australian Ethical Investment
• Richard Brandweiner, CEO – Pendal Group
• Robynne Quiggin, Professor – University of Technology Sydney, Business School
• Sarah Barker, Special Counsel – Minter Ellison
• Simon O’Connor (Co-Chair), CEO – Responsible Investment Association Australasia

Observers

• Geoff Summerhayes, Executive Board Member of APRA, Executive Committee Member of the International Association of Insurance Supervisors and Chair of the Sustainable Insurance Forum.
• Eric Usher, Head of the UN Environment Program Finance Initiative, Economy Division, UN Environment

Simon O’Connor, Initiative Co-Chair and CEO of the Responsible Investment Association Australasia (RIAA), says “Issues such as climate change and human rights have become material to business and the financial services community. Climate change was recently described by the Deputy Governor of the Reserve Bank of Australia as a ‘systemic risk’ to the stability of our economy, and APRA emphasised last week that climate risks are ‘material, foreseeable and actionable now’ ”.

“The financial services sector is both exposed to those risks, as well as having an essential role in funding and underwriting a future Australia, providing the capital necessary to deliver on sustainable development and climate-related commitments. Through a greater alignment between the financial services sector and these sustainability goals, the sector can both deliver for Australians while building a better, more stable and sustainable financial system.”

“This unique and high-level collaboration will set out a roadmap for achieving this goal and shows the willingness of the financial services sector to step up and play an active role in building a more sustainable and resilient economy for all Australians,” said Mr O’Connor.

Jacki Johnson says “a sustainable and resilient economy is a necessity, not an option, and is the foundation for ensuring Australia’s prosperity throughout the 21st century.”

“As we approach 2020, we are rapidly entering a critical decade for managing climate change and other risks,” said Ms Johnson.

“Australia has made a number of commitments to international targets. Achieving these goals extends beyond social or environmental objectives – it’s an economic and financial necessity. Our economy simply cannot prosper in an environment of ever-increasing severe weather events and the subsequent broader impacts these will have.”

“Delivering on these goals requires not just government policy and commitment, but business and finance leadership. Achieving these goals presents a sizeable economic and social opportunity.”

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Tim Andrews

The Actuaries Institute has launched a climate index, an objective measure of extreme weather conditions and changes to sea levels, to help policymakers and Australia’s businesses assess how the frequency of weather extremes is changing over time.

The Australian Actuaries Climate Index, which includes a number of sub-indices, tracks changes in the frequency of extreme high and low temperatures, heavy precipitation, dry days, strong wind and changes in sea level, mainly concentrating on the 99th percentile of observations. The components of the index were chosen due to their link to risk, an area of expertise for actuaries, and because extremes have the greatest potential impact on people and, often, the largest cost to the economy.

The index is the culmination of an extensive research and implementation process. It is the result of consultation with Australia’s Bureau of Meteorology, Commonwealth Scientific and Industrial Research Organisation (CSIRO), leading insurance and natural hazard scientists and regulators.

“The index is designed to help us understand how extreme weather, and hence risk levels, may be shifting as a result of climate change,” said Tim Andrews, a Principal at Finity Consulting. Mr Andrews, who has 30-years of actuarial experience, collated the index, using data from the Bureau of Meteorology’s extensive network of weather stations and tide gauge facilities. The data was collected nationally and grouped into 12 climatically similar regions.

“This index is a very important piece of work for the Actuaries Institute,” said Institute President Barry Rafe. “Actuaries are skilled at summarising and presenting complex data, and the assessment and management of the financial consequences of risks.”

“This project aims to help big and small corporations better understand the changes in weather extremes across Australia. It is one way to bring science and business together.”

Actuaries Institute Chief Executive Elayne Grace said: “This work will assist businesses to assess and report risks from climate change, and Australians more generally will be able to look at the data and see what’s going on.”

Australian financial institutions can reference the index to help them meet their commitments to adopt international risk reporting measures, Ms Grace said. The Financial Stability Board’s Taskforce on Climate-Related Financial Disclosures in 2017 wrote recommendations for a single international cross-industry standard for disclosing those risks.

The Australian Prudential Regulation Authority (APRA), which last year warned that the risks of climate change were “foreseeable, material and actionable now”, has welcomed the new index.

APRA Executive Board Member Geoff Summerhayes said: “APRA has a longstanding working relationship with the Actuaries Institute, collaborating on financial risk metrics and standards. We believe this initiative is a positive step towards helping regulated entities to understand and manage the potential impact of climate risk on their businesses.”

Chief Executive Officer of the Investor Group on Climate Change, Emma Herd, said: “The effects of climate change are here and now, and getting worse.”

“Australian investors are looking for the tools they need to better assess and mitigate physical risks for their investments. The Australian Actuaries Climate Index is a welcome new tool for managing climate risk.”

The IGCC represents Australian and New Zealand institutional investors with around $2 trillion in funds under management, and others in the investment community concerned about the impact of climate change on investments. The very first Australian Actuaries Climate Index report, to be issued November 12, which covers the period 1981 to 2018, shows the frequency of extreme conditions in Autumn 2018 was higher than the historical extremes for Autumns in the baseline period from 1981-2010.

In fact, the frequency in the baseline period has been exceeded in every season but one since 2010. The results are compared to a 30-year reference period, mostly focusing on the 99th percentile of observations. The index will be updated each quarter.

The Australian index was built following the establishment of a similar tool in the United States and Canada that tracks different components to measure risk and climate change. That index, published quarterly, measures the frequency of extreme weather and the extent of sea level change. The US/Canada index is supported by a number of actuarial groups, including the American Academy of Actuaries and the Society of Actuaries.

The Actuaries Institute plans to develop more explicit measures of risk and the climate index represents the first phase of that work.

“This is a first step,” Ms Grace said. “We hope to build on this index by attaching risk data, such as damage to property and health statistics, in order to understand the relationship between weather extremes and risk, enabling more explicit risk indices to be developed.”

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The new data released today continues to indicate that more than 90 per cent of claims that go to decision are paid in the first instance. The data also shows that different products and distribution channels have different claims and dispute outcomes, with 97 per cent of death claims being paid in the first instance, 84 per cent for total and permanent disability claims and 87 per cent for trauma claims. A summary of the results is provided in Tables 1-3 below.

These results are consistent with previous data released in November 2017 and with the results in ASIC’s Report 498 Life insurance claims: An industry review in 2016.

Today’s release completes round two of the pilot phase and will be followed by a third and final round of data collection.

The two agencies are now moving to establish an ongoing reporting regime (using APRA’s data collection powers) with regular publication of credible, reliable and comparable data at both aggregated industry and insurer-specific levels. The aim is to improve transparency of life insurance claims practices as well as the quality of information underpinning public debate and policy-making. Consequently, this should help to drive accountability in the sector.

In addition to the data being released today, the agencies are responding to submissions on the May 2017 Discussion Paper Towards a transparent public reporting regime for life insurance claims information, and seek input by 5 July 2018 on our proposed approach to industry and insurer-level publications.

APRA Member Geoff Summerhayes said: ‘APRA is fully committed to the development of this important new data reporting regime. The community expects the life insurance industry to be transparent and accountable for its conduct – it is said sunshine is the best disinfectant, and we are shining a light on the industry’s claims performance.’

ASIC Deputy Chair Peter Kell said, ‘ASIC found that the comparability and reliability of data in the life insurance industry was poor. Working together, ASIC and APRA have made significant progress with industry to improve the data. Our data reporting regime is already bringing improved transparency to this area, and our continuing work is benefiting consumers, insurers, and regulators.’

Through the Financial Services Council (FSC), the industry has proposed to engage and fund an independent data expert to collect and analyse claims and disputes data. The expert would assist insurers to provide the necessary data to the agencies, and bolster the industry’s data capabilities and ability to understand and communicate its own performance. The agencies support this approach in principle, and are continuing to engage with the FSC on this proposal to ensure the objectives of the new data regime are met.

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Sally Loane, CEO of the FSC said: “As APRA Member for Superannuation Helen Rowell has served with distinction.

“The FSC has appreciated the consultative approach Ms Rowell has taken in her dealings with the industry and for her efforts in implementing significant reforms in superannuation arising from the Cooper Review. We wish her well in her new role as Deputy Chair of the country’s prudential regulator.”

Mr Summerhayes was a director of the Financial Services Council from 2010 until September 2015 and co-chair of the FSC’s Life Board committee from 2011 to 2015.

Ms Loane said: “Geoff made a significant contribution to the life insurance industry through his role as CEO of Suncorp Life and as a director of the Financial Services Council board, and as co-chair of our life board committee.”

“His leadership during the life insurance reform process over the past 12 months was outstanding and his long experience in the private sector in financial services will be valuable as he takes up his APRA position.”

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The working group will address issues such as the quality of advice, product design and remuneration structures which were raised in ASIC’s Review of Retail Life Insurance and Advice report released on 9 October.

As independent chair, Mr Trowbridge will convene the working group and facilitate industry and policy solutions. The group will specifically address retail life insurance product structures, financial advice and distribution practices.

Brad Fox, CEO of the AFA said: “Mr Trowbridge brings extensive knowledge of Australia’s regulatory system to the Working Group. This will be pivotal in assisting the group to develop sustainable and workable solutions for stakeholders.”

Mr Trowbridge’s experience spans the private and public aspects of the financial system and ranges from competition in retail financial services, to capital structure issues, system stability and regulation. From 2006 to 2010 Mr Trowbridge was one of three Members of APRA’s executive where he was responsible for life and general insurance and executive remuneration. He was a pioneer of general insurance actuarial work in Australia and held senior management roles with QBE and Suncorp. In 1981 he started Trowbridge Consultingwhich became a leading actuarial firm in Australasia and which merged with Deloitte in 2000. Also, after merging with a US firm (Tillinghast) in 1984, he gained extensive experience in life insurance and, on deregulation of banking.

Mr Trowbridge said: “The ASIC report points to some important issues for consumers and the broader Australian community. These are complex and difficult issues for the life insurance and advice industries to solve.”

“I applaud the Association of Financial Advisers and the Financial Services Council in taking the initiative to set up a Working Group which will make a concerted effort to find durable solutions in consultation with all stakeholders.”

“I am delighted to contribute to this initiative through leadership of the Working Group,” he said.

The Working Group will include three representatives from the FSC and three from the AFA. The FSC’s representatives will be: John Brogden – FSC CEO; Andrew Hagger – group executive, NAB Wealth and CEO of MLC Limited; and Geoff Summerhayes – CEO of Suncorp Life.  AFA representatives will include: Brad Fox – AFA CEO; John de Zwart – CEO of Centrepoint Alliance and Jeff Thurecht – AFA NSW State Director.

A public report on the group’s initial findings will be released in mid-December and a final report in February 2015. The Working Group will consult with the regulators and Parliament on its recommendations.

John Brogden, CEO of the FSC said: “We take the findings in the ASIC report very seriously.”

“It is important that consumer trust and confidence in financial advice and products is restored to ensure Australians have sufficient life insurance cover.”

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