A non-vanilla risk that’s hard to place
By Daniel Wood
The heightened focus by regulators and investors on ESG factors is having an increasing impact on insurers’ coverage across a range of industries. In Australia, one of the industries impacted is mining, a massive part of the economy and a complex risk assignment for any broker.
Will Laundy (pictured), director of Pillar Brokerage, was recently engaged by a client who services the mining sector.
“The client had received a non-renewal notice from their long-standing insurer as a result of a change in their insurer’s internal underwriting guidelines,” said Adelaide-based Laundy. He added that the client had not submitted a claim or changed their business activities.
“This left the client in an awkward position because the policy was required under a number of their contractual agreements and needed to be held continuously,” he said.
Laundy said there was another challenge.
“Their previous brokers had already been engaged with the broader market and had received ‘no’ responses from everyone they had contacted,” he said.
Just to add to the complications, said Laundy, the policy was past renewal date and had lapsed.
“Not a great position for a client to be in!” he said. “We knew this would be tough.”
The broker said the first thing his firm did was engage the client in “a candid discussion” about potential outcomes and what input his firm would need from them to assist the process.
“We then reviewed the previous market submission alongside the responses being received from underwriters,” said Laundy. “It was clear to us that there would be
“There is just a lack of support,” said the broker
By Daniel Wood
Finding coverages for non-vanilla, hard to place risks is always more difficult but many industry stakeholders say the challenges are growing. Brokers say insurers are showing an increasing lack of risk appetite across a number of insurance sectors.
“There is just a lack of support for non-vanilla risks,” said Anthony Di Fiore (pictured above). Di Fiore is specialty risks manager for Adroit Insurance and Risk, a Geelong-headquartered firm.
“We’ve seen premium increases across most classes and insurers hit their budgets by simply writing vanilla risks,” he said. “That’s great for insurers but the downside is that there’s a reluctance or reduced appetite for risks that sit outside the box and require a little bit of underwriting inspiration.”
Reduced insurer appetite and property risks
Di Fiore said this reduced appetite is making it difficult for him to support his clients. He pointed to property coverages as an example. Di Fiore said any property in a bushfire zone with dense bush has become very challenging to insure since the 2019 bushfires, including ski resorts, camping areas and caravan parks.
“We’ve even seen some regional clients, like the owners of old pubs in small country towns that are built mainly from timber – that’s now a huge fire risk – some of them have become uninsurable,” said Di Fiore.
Half of his state is rural, said Farrell, which means there isn’t a fully staffed fire brigade nearby – impacting the fire component of policies.
“If you phoned me today and said, ‘I’ve just bought the Evandale Hotel. It’s a lovely old building, it’s heritage, it’s the local watering hotel and upstairs, which hasn’t been used