In these CEO Connect messages, Ty Birkett provides an oversight of high-level issues and developments.
I do try to avoid cliches, but two that spring to mind a lot recently are “the only constant is change” and “I can’t believe we are nearly halfway through the year” – both are very apt.
Regarding change, we continue to see a lot of personnel changes within Member organisations. This brings new ideas and thinking – plus fresh enthusiasm – on the one hand, but a loss of “corporate knowledge” on the other. Some with whom I have met are even newer to their roles than I am, so – if I can ask the indulgence of our long-term partners for the next few paragraphs – I’d like to provide some background on what makes Unimutual unique.
Established nearly thirty years ago at a time when affordable commercial insurance was unavailable, Unimutual is still owned and controlled by its Members – not external shareholders. This makes possible an organisation where everything is done to benefit the Membership. The single-sector focus means that the protection provided, the risk management and loss prevention services, and the approach to claims handling, are all tailored specifically to the need of Members.
Member-ownership means a clear alignment of interest. A focus on financial sustainability, rather than profit maximisation, enables an absolute focus on service and on Member needs.
For those new to Unimutual, I encourage you to visit our website or speak to our team about our services and approach. I also encourage you to take advantage of a wide range of opportunities that Unimutual provides for you to collaborate with fellow Members. For those who are familiar, please continue to challenge, participate, provide feedback, and help to build an even stronger mutual that benefits the whole sector.
In terms of being halfway through the year, we are rapidly approaching 1 July insurance renewals – which is far and away the biggest renewal point for commercial insurance in Australia. I will write more about the Unimutual renewal specifically in late July, but we continue to see tumultuous insurance and reinsurance markets. Commercial insurance has run at a loss for some time, and if companies have made a profit it is generally with significant help from their personal line portfolios, prior year reserve releases, and/or periods of benign natural peril experience.
Insurance organisations are pushing to bring commercial portfolios back to profitability. The market is disjointed and insurance programs vary considerably, but at this time the general expectation is double-digit percentage rate increases, and premium rates continuing to revert to 2012 or 2013 levels. I will provide more comment on this in the next CEO Connect, but it is important for Members to know that rates are continuing to harden.
The reinsurance for Unimutual was purchased on a single event limit across the portfolio of $1.5 billion (rather than the previous lower limit in place for each individual Member). The shared limit was set such that it would only be a concern in the most extreme scenarios. Contrast this with conventional insurance, which offers a fixed sum insured with no mention that the reinsurance is typically shared (this is the case even with your home insurance).
Providing the cover as an explicitly stated “shared” limit, rather than a fixed individual limit, is unusual and it has created quite a few concerns for Members – more around how it works between Members than the level of coverage itself. We are currently working on reverting to the previous approach (i.e. individual limits) if possible. We will communicate our progress.
So, whether it is understanding the valuable services and Member-focus of Unimutual, understanding the protections offered, discussing the approach to renewal, or any other matter, please do not hesitate to contact myself or any of the team.
1 July is also a significant date for Unimutual as it marks Harry Rosenthal’s retirement. Harry has worked with Unimutual for 11 years and has been synonymous with driving a Member-focused organisation where risk management is central to everything we do.
I knew Harry prior to taking on this role and, as many of you have, had the privilege of regular coffee catch-ups and got to share his wisdom. I join the rest of the Unimutual team in wishing Harry all the best for the future and thank him for everything he has done for Unimutual and its Members.
Chief Executive Officer, Regis Mutual Management Ltd