News update: Coronavirus, Natural Perils and Investment Markets
We have taken precautions to avoid any interruption to Unimutual service from coronavirus, and we will continue to update Members.
Coronavirus is excluded from most Member cover, due to its inclusion by the Government on the infectious diseases list
Recent weather events and financial market falls do not pose any risk to the financial stability of Unimutual (although they may have effects on the insurance and reinsurance markets going forward)
I want to provide Members with a brief update on recent developments – including coronavirus, weather events, and financial market movements – in addition to your regular communications.
Unimutual exists to benefit Members and to offer our expertise around risk, and we encourage you to reach out to us with any questions or concerns. Similarly, if you would like advice or counsel regarding your risk management efforts, please contact us and we will be happy to help. We will continue to monitor the situation and communicate with Members about any key developments that may affect you.
We recognise that current events may have a significant impact for some Members, and we encourage you to keep us up-to-date with your circumstances. Unimutual itself remains in a stable position to continue supporting its Members.
Coronavirus (COVID-19): Unimutual service fully operational, COVID-19 added to the Government infectious diseases list – excluded from cover
Environment: There is a great deal of uncertainty at the moment about the spread and impact of COVID-19 and its impact on general health and the broader economy.
Unimutual service: The Regis Mutual Management team is fully operational and is set up to continue to be so. No restrictions are currently in place, and we have not been impacted by travel bans or quarantine requirements so far, but all team members have the ability and the option to work remotely should the situation develop to ensure uninterrupted Member service.
Member cover: Unimutual provides protection for property, liability, cyber, environmental liability and active assailant (as well as arranging management liability). These protections are not intended to cover pandemic or disease events and the Unimutual wording is consistent with others in the marketplace. While circumstances differ, in most situations an Infectious Disease exclusion applies (based on the latest list provided by the Australian Federal Government under the Biosecurity Act 2015). Human coronavirus with pandemic potential was added to this list in late January 2020, meaning that cover is excluded. We have been getting ongoing legal advice on the implication of the amended Biosecurity Act 2015 and it is very dependent on the specific circumstances.
The impact and actions required in response to COVID-19 are wide ranging for our Members, and there may be losses resulting from actions taken or premises closed. We encourage you to contact us or your broker if you have any concerns about protection.
Natural Perils: Hailstorm will result in Unimutual’s highest ever historic loss but reinsurance means Unimutual remains financially strong
Environment: My recent CEO Connect provided commentary around the very tumultuous summer that saw bushfire, storm and hail events. The community impact has been significant. While generally fortunate, one of our Members did suffer significant damage in the January hailstorm. This will result in the largest loss to Unimutual in its 30 year history. This is the role of Unimutual: it exists to support Members in the event of losses.
Financial implications: Events like these are reinsured, meaning that the net result to Unimutual is capped and well within the risk appetite of the Mutual. Regardless of the ultimate quantum, it does not create any additional financial risk for Unimutual.
The majority of big individual losses are borne by our reinsurance partners. Member cover is set up this way to protect Members and the sustainability of their mutual protection provision. However, these reinsurers have also been impacted by other events nationally, globally and economically, which will have longer term effects for the market. We will continue to provide communications around what this is anticipated to mean for the Unimutual renewal later in the year.
Investment Markets: Invested Member reserves largely unaffected by market fall
Environment: After a strong 2019 and start to 2020, the last two weeks have seen significant falls in stock markets around the world.
Unimutual sustainability: Since 2015, Unimutual has successfully invested an amount of free reserves with an external fund manager, including in equity markets, in order to achieve a slightly higher return on assets for a small amount of risk. At 31 October 2019, only $12.5M of more than $90M total assets was invested outside of conventional cash and term deposits. Of this, only $2.5M is invested in domestic and overseas equities.
This approach is consistent with the purpose of a mutual that exists purely for the benefit of Members, and this deliberate conservative approach was reaffirmed at the most recent Board meeting. As such, the falling stock markets will not have a significant impact on Unimutual. In recent years, the biggest drag on investment has been the low interest rates applying to the cash and term deposit investments, but this low risk approach has proven to be the right one for the mutual.
Get in touch: we are here to help
So, while extremely trying times, Unimutual remains in a very sound position from which to navigate current and future challenges.
We are aware that the higher education sector is impacted to a greater extent than the broader economy, and that everyone at our Members is working hard to adjust to a wide range of challenges and a great deal of uncertainty.
Unimutual exists to benefit Members and we would encourage you to reach out to myself or any of the team if you have any questions.
Chief Executive Officer, Regis Mutual Management Ltd