HDInsights Feb 2024 Ed.11 HDI Asia Pacific Newsletter mas
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February 2024 | Edition 11 4 6 7 8 12 14 18 22 24 25 Foreword - Stefan Feldmann Hello from Hong Kong - Daniel Lau Hello from Singapore - Graham Silton HDI’s Powerful Potential HDI Global announces new Managing Director of Singapore branch office as incumbent retires Responsive International Programmes Trends in Renewable Energy Claims General Liability’s ‘bowl of spaghetti’ risk environment HDInsight LIVE Geopolitical Risk & Travel in 2024 Battery Electric Vehicles (BEV) Charging Stations Contents
Welcome to 2024 We’re delighted to begin this year off the back of a strong finish to 2023. You may have read in Insurance News in the December/January issue, that our HDI Global SE Australia branch wrote over half a billion in premium in 2023. This was a target we set ourselves for 2025, so I am thrilled we have exceeded even our own expectations. I thank you our broker partners and community for your continued support. This result is also testament to our excellent team here in Australia who continue to bring their passion, find solutions and nurture relationships with technical excellence. HDI Global Singapore and Australia liability leadership news You may have also heard of some exciting changes in our team across the Asia Pacific region. It is with both gratitude and sadness that we soon farewell Graham Silton, Managing Director Singapore who is to retire in June this year. Graham started with HDI in Australia leading our Property team before moving to Singapore to his current leadership role. In that time he has developed a high performing team who will miss him tremendously and also built a strong reputation for HDI in the region. We wish him all the best with his next chapter and the future travel and adventures that await him. It is with excitement we announce that Alex Tarantino will step into the role of Managing Director, Singapore and Asia Pacific Liability Head at the beginning of July 2024. In addition to leading the team across all lines, Alex will bring his expertise in Liability and support the expansion of International Programmes in the region. Stepping then into the position of Underwriting Manager Liability Australasia is Andrew ‘Andy’ Cochrane. Andy has driven our liability portfolio in NSW and QLD with tremendous success. Along with his technical expertise, he has built strong relationships with our broker partners and is a valued member of our team. Andy is already in this new role and working closely with Alex in the transition. We are delighted to fill these leadership positions from our own talented team of experts. You can read more about this transition on page 12. Partner in Transformation As a global organisation, last year HDI have formed a new vision as your ‘Partner in Transformation’. Already in Australia, HDI is at the forefront of underwriting in the Renewable Energy space as a green growth opportunity. While our Risk Consulting team globally are working on Physical Climate Risk Assessments to support clients with increasingly long-term regulatory disclosures (which was the focus of our well attended webinar this month). We are also working with brokers to support clients across a range of industries as they move through their transformation and transition into the next era of industry. Stefan Feldmann, Head of HDI Global Asia-Pacific, Managing Director HDI Global SE, Australia Foreword HDI Insights edition 11 | page 4
HDInsight LIVE In this issue we are pleased to share highlights from our HDInsight LIVE webinars. On page 14 learn what makes a ‘Responsive International Programme’ with a focus on Property, Liability and Accident & Health cover. Then on page 18 we share a review of ‘Renewable Energy Claims Trends’. In case you missed it, we’ve also shared a fun and insightful article first published by the team in Insurance Business last year on Liability International Programmes. HDI International Programme and MidMarket growth As we look at the year ahead, as a team we are now looking at how we continue to support our broker partners across all our product lines, including growing our Specialty products in the corporate and midmarket industries. We’re continuing to grow our International Programmes, supporting multinational clients with compliant cross-border solutions. Alongside our growth in International Programmes, we’ve had great success in the corporate and industrial space and developing a strong book in mid-market. Our team are working closely with brokers to define appetite and we’re pleased at how we’re able to further support clients across a range of industries in the mid-market space. As always, our team are here to help so please reach out and let us know what you’re working on and how we can participate. I hope this newsletter issue will give you some new insights and deliver information as well as inspiration. Please do reach out to myself and my colleagues with any questions or suggestions you might have. It is an exciting year ahead that we look forward to sharing with you all. Sup porting our broker partners The future transition was a topic of focus for the Marsh Energy conference which we were pleased to support end of last year. With leaders from across the Energy industry the event was packed with insights and pathways forward. Our thanks to the team for our inclusion and the opportunity to attend and learn. It was also our pleasure to support the annual Aon Insights Series Pacific conference. Again, a strong agenda for learning and I was delighted to take to the stage to share some of our insights with the audience. Finally, the HDI team set off to Tasmania to join the strong turn out for the Insurance Advisernet Australia national conference. Inspiring again across the board, and a wonderful opportunity to meet new brokers and introduce our offering in the mid-market space. HDI Community Looking back on the end of last year, I’m pleased our team came together for a number of wellbeing initiatives run by our People & Culture team for the month of October. This included a ‘Wandertag’ as it is known in Germany. In Australia, a walk in nature for colleagues in Sydney, Melbourne, Brisbane and Perth. Plus, some of our more adventurous and athletic team also participated in the Tough Mudder. Thank you to our supporters who helped the team raise almost $10,000 for Mo’vember. Things got a little hairy, but a great cause and initiative from the team. HDI Events Our end of year celebrations were as always, events not to be missed. In Sydney we enjoyed with our broker guests the annual ‘Cruise with Europeans’ in partnership with the German Australian Chamber of Industry and Commerce, while in Melbourne it was an evening on the river. In Brisbane, the team set off for the hills and a beautiful lakeside location. In Perth, they had their biggest turn out yet followed by the quieter, though still much anticipated wreath-making class. Stefan Feldmann Head of HDI Global Asia-Pacific Managing Director HDI Global SE, Australia HDInsight Edition 10 - page 3 Foreword HDI Insights edition 11 | page 5
Wishing you all a warm Lunar New Year and may the year of the Dragon bring you prosperity and joy. In Hong Kong our HDI team are looking forward to 2024 with the success of 2023 in their sails. In the final quarter of last year our team enjoyed visiting our broker partners in the market and strengthening relationships across all our lines. We are delighted to see strong growth potential in the China market with the goal set to be a global centre for insurance and positive initiatives in the renewable energy transition. Our team celebrated the end of year with a festive dinner, followed by some friendly competition and entertainment. It was great to bring the team together and an opportunity to thank everyone for their outstanding efforts and continuous contribution to our success. Kind regards, HDInsight Edition 10 - page 3 Hello from Hong Kong Daniel Lau, Managing Director HDI Global SE, Hong Kong Hello from Hong Kong Daniel Lau Managing Director HDI Global Hong Kong HDI Insights edition 11 | page 6 HDInsight Edit on 10 - page 5
HDInsight Edition 10 - page 3 Hello from Singapore Graham Silton, Managing Director HDI Global SE, Singapore Hello from Singapore As we begin 2024 with new energy and goals for the year ahead, it’s a great time to reflect on our success last year. In the final quarter of 2023 our team participated in a number of industry and broker conferences. One such highlight was the SIRC 2023 conference. This annual re-insurance event brings together all players across the industry from near and far to network and learn and it was great to participate. As part of our international collaboration, we were pleased to support our Sydney colleagues for the Marsh Energy Conference Australia and New Zealand with our Singapore based Head of Energy, Mark Mackay, participating in a panel discussion at this event. It was terrific to see such strong interest from clients and an excellent speaker line-up delivering insights on the changing risk landscape of the Energy Transition. Closer to home, we were thrilled to announce the appointment of Lisa Leow who will lead the launch of our Accident & Health line for Singapore and the region. Lisa is working closely with our international colleagues and local market in preparing the new product for launch this year. Finally, it was my great pleasure to join our Singapore team on a company trip to Da Nang and Hội An, Vietnam last month from the 20-22nd October. This team building event has been an important part of strengthening relationships within our team, so we can bring the best of us all to the market. Kind Regards, HDI Insights edition 11 | page 7 HDInsight Edit on 10 - page 5 Graham Silton Managing Director HDI Global Singapore
International Programme Capabilities Born as a mutual insurer of the German iron and steel industries and the liability association, HDI Global SE has continued to morph into one of the most respected and leading international insurers offering a broad and responsive range of insurance solutions. With its strong financial roots and combined global capabilities, Feldmann believes HDI is well positioned to become a leading provider of corporate risk management and risk transfer solutions in Australia and the Asia Pacific region. HDI has written approximately 5,000 international programmes globally with around 27,500 local policies in different countries around the world. Our experience is world leading in this space and our network of international programme and underwriting experts have a great reputation for being solution-focused. “There’s been significant growth in the number of international programmes produced from our local Australia office, as we have invested heavily in market leading professionals in this segment,” says Feldmann. HDI’s powerful potential HDI’s powerful potential HDI Global is the industrial insurance subsidiary of German (re)insurance and investment group Talanx –which is also the parent company of reinsurance giant, Hannover Re. “What a lot of people may not know is HDI Global SE Australia provides insurance for almost half of the Top 200 companies listed on the ASX”. First publish in Insurance News, December 2023 Graham Silton Managing Director HDI Global SE, Singapore “Along with our underwriting for other major corporations and our steadily expanding mid-market insurance book, our Australian team are on track to write over half a billion in insurance premium by the end of this calendar year,” says Stefan Feldmann, Head of HDI Global Asia Pacific and Managing Director HDI Global SE, Australia. “The local market is increasingly recognising we are a meaningful player, and within HDI Global our contribution from Australia and access to the Asia Pacific region is becoming core to the group.” A global player On a worldwide scale, HDI Global grew its premium income by 17.9% in financial year 2022 to EUR 8.9 billion. Since 2018 it has almost doubled gross written premiums. “As an industrial mutual, HDI was created by industry for industry,” says Feldmann. With its 120-year history as an industrial mutual, HDI is a household name in Germany and throughout Europe and a leading insurer for most of the DAX, a stock market index of 40 major German blue chip companies. Parent company Talanx recently raised its profit forecast for financial year 2024 to more than EUR 1.7 billion. The group draws its financial strength from being an industrial mutual. HDI V.a.G is the majority shareholder owning 76.7% percent of parent company Talanx, which means they control their own destiny. Recently, Talanx increased its free float from 21.1 percent to 23.3 percent on the DAX (German stock exchange). While strengthening Talanx membership in equity indices, the company will receive gross proceeds of approx. EUR 300 million from the capital increase which will further enhance the already solid capitalisation of the Group for further organic and inorganic growth around the world. HDI Insights edition 11 | page 8 “Corporates expect a lot from their insurance partners and want to know they have a reliable and trustworthy partner. With a network across more than 175 countries, we can provide unparalleled solutions to businesses who operate nationally, and also valuable insights for multinational clients on foreign markets and compliance. Stefan Feldmann Head of HDI Global Asia-Pacific Managing Director
“Our underwriters are at the forefront when clients and brokers request international programmes, particularly in the Property, Liability, Marine and Accident & Health lines - and now the market is recognising who we are and what we’re capable of. Our experts navigate local regulatory requirements while meeting the cover requirements of our customers.” Through HDI’s IP-Web clients can control and manage their international programmes and have transparency over their multi-national policies. Clients and their brokers can access all their details at a glance including premiums, coverage conditions, asset locations and claims developments. Claims Excellence Recognising the need for flexible solutions and claims excellence is central to the HDI proposition. It’s a philosophy Regional Claims Manager Asia Pacific, David Lloyd, has developed with the team. ‘‘Clients buy insurance to protect themselves. “When the unexpected happens the impact is felt on the balance sheet, but also can influence brand and reputation,” he says. “With the expert knowledge on our team, we work collaboratively with clients to ensure reasonable resolution of any claims. When claims take the form of litigation, we are aware that we are defending the case in their name so work to protect and support their reputation throughout the process.” With litigation increasing, along with claims inflation the HDI team work closely with brokers to ensure cover is appropriate to clients’ needs. There has been a steady increase in class actions in Australia since 1992 when favourable legislation allowed for new litigations he says. “Working on an ‘optout’ model, to commence a class action in Australia, seven or more people are necessary. “Over the last three decades, there’s been $8 billion in settlements,” Lloyd said. “Forty of those class actions demanded $50 million or greater. We’re watching these cases closely particularly in the current claims inflation environment for their potential impact on clients.” Insurance demands from corporate clients are always evolving and recent inflation has had a considerable impact on the insurance industry as replacement values become more difficult to predict, which in turn makes managing risk more complex. The accuracy of declared values and claims inflation is another area where the team looks to work closely with clients, particularly given supply chain delays and extended reinstatement times. Business interruption periods are up from what they were a few years ago and as the cost of replacing an asset goes up, so the declared value should also be increasing. “Valuations establish the correct value of the property asset or business at the time the insurance policy is taken out. “To have valuations right from the start is important for a streamlined and positive claims experience,” says Lloyd. ‘‘Businesses need to know they can count on their claims management providers when time is of the essence. They need to know they will have a reliable partner throughout the whole claims process,’’ says Lloyd. HDI’s Powerful Potential HDI Insights edition 11 | page 9 “At HDI, our claims team have extensive experience and work closely with underwriters, so we have established relationships which is important when claims are made.” David Lloyd Regional Claims Manager Asia Pacific
Contact - HDI HDI’s Powerful Potential HDI Insights edition 11 | page 10 A partner in transformation Today, the market is rapidly evolving and includes new areas where insurers face a completely novel set of claims such as energy storage, solar and wind. Transitioning to renewable energy is one of the most significant tasks of our time. Mitigating climate change and reducing dependence on fossil fuels have become paramount and HDI is committed to working with clients to understand their challenges and their roadmap for the future. “The insurance industry is evolving along with the transition to renewable energy. As a partner in transformation HDI is an important part of the journey,” says Feldmann. “We are working with advanced technologies such as data analytics and climate modelling to assess risks more accurately.” At the start of 2023, there were 106 renewable energy projects under construction in Australia, which involved a capital investment of about $25 billion. HDI is a leading underwriter for many of these projects, particularly in the Engineering, Liability, and Marine lines. At the same time, the industry continues to learn from the loss activity that the sector has experienced in recent years. Haris Michaels, Engineering Underwriting Manager at HDI Global encourages brokers and clients to engage with the insurance industry early to understand the risks. Future of the market Looking to the future, Feldmann sees still strong growth potential for the business as a true relationship insurer. “I believe a lot of our clients and broker partners value the strong culture and ‘can do’ attitude to finding solutions that we have as a team, which is what sets HDI Australia apart. We work hard on keeping our start-up culture alive, even though we have been running as HDI Global for 12 years in Australia. Our team bring a lot of passion to the business and are looking after our brokers and clients with technical expertise and enthusiasm.” With offices in Sydney, Brisbane, Perth and Melbourne and team members in Adelaide, HDI Global is working to bring the best of its local team of experienced underwriters, risk engineers, claims experts and international programme specialists to support clients nationally and globally. “Technical maturity is a work in progress, particularly in the wind, battery storage and hydrogen space which is still in development. Likewise, our understanding of natural catastrophe risks continues to evolve, and we are eager to share this knowledge with our broking and client partners to help with mitigation efforts. With our experience, we understand the industry’s pinch points so these can be considered when it comes to the planning, development and operation of assets. This means we can guide brokers and clients based on our experience to obtain a robust and balanced outcome for all stakeholders.” Haris Michaels Engineering Underwriting Manager, Australasia Stefan Feldmann Head of HDI Global Asia-Pacific ManagingDirector P: +61 420 176 170 stefan.feldmann@hdi.global Please contact our HDI Team with questions David Lloyd Regional ClaimsManager Asia Pacific P: +61 411 017 392 david.lloyd@hdi.global HarisMichaels EngineeringUnderwritingManager Australasia P: +61 498 052 656 haris.michaels@hdi.global
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Graham Silton joined HDI Global SE Australia in May 2015 and successfully grew the property portfolio in Australia before being appointed as Managing Director for Singapore in 2017. Since then, Silton has played a pivotal role in transforming the reputation of the Singapore branch office and developing a strong following in the market place, contributing also to the positive overall result of the German based industrial insurer, HDI Global. Following four decades in the insurance industry as a leader and expert property underwriter with international experience, Silton will retire at the end of June 2024. Alex Tarantino, currently Regional Underwriting Manager Liability and Cyber Asia Pacific, will continue in his current role until he moves to Singapore as Managing Director Singapore and Asia Pacific Liability Head from 1 July 2024. With over twenty years of International Underwriting experience across the UK, Canada and Australia, Tarantino joined HDI Global SE in 2019. His assignment to Singapore reflects HDI’s ambitions to continue expanding its reach in the growth regions of Asia Pacific. Andrew Cochrane, currently Liability Underwriting Manager, Northern Region will become Underwriting Manager Liability Australasia in the Sydney office from January 2024. Cochrane’s career began in London in 2002 as an International Liability broker focused on Australia, Canada, Africa and Latin America business before moving to Australia in 2015 to pursue liability underwriting opportunities. In 2019, Cochrane joined HDI Global where he has been instrumental along with Tarantino in growing the liability book and establishing HDI as one of the leading Liability markets HDI Insights edition 11 | page 12 HDI Global announces new Managing Director of Singapore branch office as incumbent retires HDI Global SE will appoint Alex Tarantino as Managing Director HDI Global SE Singapore, as Graham Silton announces his retirement in mid-2024 following over four successful decades in the insurance industry. Andrew Cochrane to lead Liability in Australasia following Alex Tarantino departure. HDI Global announces new Managing Director of Singapore branch office as incumbent retires Image: Graham Silton Image: Alex Tarantino Image: Andrew Cochrane
Contact - HDI “We’re delighted to see this transition of strong leadership from Graham Silton who has built a dedicated team and business for our Singapore office, on to Alex Tarantino who we entrust to continue to grow our brand and become a leading corporate insurer in the region”, says David Hullin, Board member of HDI Global. "With a global perspective, Alex has a keen understanding of the needs and drivers within local markets that will underpin our ambition to be a reliable partner in the transformation of our broker, ceding partners and clients in the Asia Pacific," says Feldmann. On the appointment of Andrew Cochrane as Underwriting Manager Liability Australasia Feldmann says: “Andy has been central to leading our success in New South Wales and supporting the development of the Queensland liability portfolio for HDI in Australia. In addition to his strong technical knowledge, Andy embodies our relationship approach to looking after our brokers with his own unique brand that as a culture we try to encourage and share with our partners and clients.” HDInsight Edition 10 - page 19 HDI Global announces new Managing Director of Singapore branch office as incumbent retires HDI Insights edition 11 | page 13 Graham Silton Managing Director, Singapore M: +65 9815 8392 Graham.Silton@hdi.global Alex Tarantino Regional Underwriting Manager Liability and Cyber, Australasia and APAC P: +61 406 173 524 Alex.Tarantino@hdi.global Andrew Cochrane Liability Underwriting Manager Australasia P: +61 420 449 259 Andrew.Cochrane@hdi.global “Graham is an outstanding leader, who has made a significant contribution to our business first here in Australia and over the last seven years as a leader in Singapore expanding our HDI reach in the growth regions of the ASEAN. Graham’s dedication to our staff, brokers, customers and ensuring financial success for HDI has set a high standard for those who will follow in his footsteps. He will be missed by colleagues who all have the deepest appreciation for the value he added to so many individuals and our larger business.” Stefan Feldmann Head of HDI Global Asia-Pacific Managing Director I am very pleased that we have been able to fill these important leadership roles with our highly capable internal talents. The depth of talent in our team means we will continue to provide specialist underwriting expertise, meaningful capacity and tailored solutions for large complex risk including our International Programme capabilities. I am very confident that we have experienced leaders in place to continue the successful work we have done in building a strong offering to our clients and brokers” David Hullin Board Member of HDI Global
Managing complexity and compliance for multi-national operations is key for creating responsive International Programmes. HDInsight LIVE webinar share tips on setting up effective Property, Liability and Accident & Health International Programmes for clients. To stay competitive in a global economy, growing companies may stretch across borders to nurture and develop new markets. With large capital investments in operations, growing third party loss exposure, caring for local and travelling employees, companies face complex risk management, compliance and insurance issues. “HDI have become really adept at working with our clients to design and implement international programmes that reflect their risk management philosophy and ensuring that their policy responds appropriately in the event of a loss,” says Edwina Reid, Technical Underwriter & Product Development Leader, Property, Australasia. What are International Programmes (IPs)? International Programmes help broker partners and their clients navigate complex local legal systems and regulatory requirements across multiple countries. “Our goal at HDI has always been to help our clients have the peace of mind of knowing they have a compliant insurance program across the whole world over which they have full transparency and full control,” says Rinnah Roque, Service Delivery Manager, Producing Office IP. As a cross-border insurance solution for companies operating in a global business environment, IPs involve a centrally controlled master program and a network of local policies integrated through reinsurance. Apart from a master policy there is at least one local policy issued through the same insurer. IP-Web HDI provides an online service called IP-Web giving you access to information on your international programme anywhere in the world, 24/7. IP-Web is available to all brokers and clients who need up-to-date status of policy issuance, premium payments, and even claims. Local documents such as policy and invoices can be downloaded from this portal so you don’t need to wait to get it from your local office. HDInsight LIVE Webinar HDI Insights edition 11 | page 14 Responsive International Programmes
HDInsight Edition 10 - page 21 Property insurance and foreign currency exchange rates Some of the more complex issues multinational clients are facing in the property space are foreign currency exchange rates that can impact scheduled asset values. “This is particularly topical, given the recent volatility of the global market,” Ms Reid said. “Values can be impacted by fluctuations in these currency exchange rates”. How and when the insured collects information on the insured values can impact the insured's global declared values. Typically, the insured will report asset values in the relevant local currency, then convert them to the producing office currency using a single agreed date for the applicable exchange rate. Insured values are then converted back to local currency at the time of policy inception. The potential volatility from currency fluctuations may be minor when an insured has assets in a couple of countries, but when a multinational program includes dozens of countries, the insured's exposure to exchange rate volatility is increased. “HDI has worked with clients to address this by discussing and agreeing to a uniform date when converting local currency to producing office currency,” Ms Reid said. This is then carried forward to the conversion and allocation of premiums. Maintaining loss control for construction projects Another challenge clients face is maintaining consistent risk management and loss control objectives across multiple territories. As regulation and legal parameters change from country to country, so do standards of protection and construction, and in some developing countries, the fire and natural hazard risks that form the basis of underwriting assessments, may not be well understood. As a solution, HDI risk consulting is able to provide clients with valuable engineering and loss control services – with a team of 180 engineers globally. This global platform means that HDI has centralised expertise, as well as local knowledge of regulatory and business environments. “This also means our engineers can help to interpret and communicate and implement best practices and a consistent loss prevention program within the context of local conditions and the requirements of local jurisdictions,” says Ms Reid. Casualty Insurance “The trigger for HDI is a registered entity in a particular country and revenue generated from that country,” explains Andrew Cochrane, Liability Underwriting Manager Australasia. This is then deemed a country at risk. “As soon as we have that information from brokers, we then look at those countries at risk and we analyze where we deem exposure to be.” There are a few solutions that can make things easier, says Mr Cochrane. In Europe there is a Freedom of Service (FOS) to issue one (1) policy, which can encapsulate all EU countries. The UK is not part of this anymore, but all the others can be captured within this FOS policy. A couple of nuances are that France and Germany have some peculiar coverages. For comprehensive client cover, HDI will often have their own local policies in place as well as the FOS policy. “And from our point of view with the HDI network, being a German entity, we have operations all over Europe, so we can normally go to the country, the largest revenue in Europe, and that will be the base where the FOS policy comes from,” says Mr Cochrane. A region that is slightly more complicated is the United States. Programmes there need to be underwritten by HDI in the US. “So, we need the information really nice and early that we can get it over to our colleagues there who price it up and send it back to us,” Mr Cochrane said. HDInsight LIVE: Responsive International Programmes HDI Insights edition 11 | page 15 The red and green list for liability Green countries are countries which HDI Global SE can cover directly from Australia. Red countries are countries which the Australian branch can't cover directly, meaning that there needs to be a local policy or another solution in place. Another option is Cash before Cover, which are being used in countries such as Japan, India and South Korea. “In such a case we have to have the premium to the local HDI entity or partner before the binding of the risk,” Mr Cochrane said. “So, it is really important, again, to have this submission into us nice and early.”
HDInsight Edition 10 - page 21 What is D-I-C and D-I-L cover? D-I-C or D-I-L is short for difference in condition or difference in limit. This cover is not provided under the local policy, but under the master policy. It therefore forms part of the master policy and sits above the local policy. This means that it bridges the gap in cover, or the limit provided by the local policy. As an example: A master policy for liability has 20 million and you issued a 1-million-limit for a local policy. If there is a loss for 5 million, the local policy will cover 1 million and the 4 million will be paid under the policy issued here in Australia. DIC and DIL cover provide a consistent level of insurance protection worldwide. “And this is what our sales proposition to our client actually is: that having an IP provides a consistency of coverage across the whole world wherever they operate in,” Ms Roque said. Nuances of terrorism Should a client have assets in Spain, the Consorcio de Compensación de Seguros (CCS) scheme is compulsory for extraordinary risks, which includes terrorism. This risk coverage must be included in all policies issued by insurance companies in property lines to finance the scheme. A compulsory surcharge will be applied on the values insured. France similarly has GAREAT (Gestion de l’Assurance et de la Réassurance des Risques Attentats et Actes de Terrorisme) which is a co-reinsurance pool, mandated by its members, the French or Foreign Insurance companies authorized to operate in the French market, to provide them with co-reinsurance solutions for their large risk book of business, which manages the reinsurance of attacks and acts of terrorism. The UK and the US operate slightly differently: There is legislation in place requiring that the commercial insurance market provide terrorism cover, but there is no obligation that the cover be taken up by an insurance buyer. Accident & Health Insurance Since launching accident and health insurance within Australia three and a half years ago, HDI has also been writing IPs for business or corporate travel. A minimum requirement is that there is a parent company here in Australia with subsidiaries in other countries. HDInsight LIVE: Responsive International Programmes “We define the country of risk in the accident health world as the country where employees employed by an insured entity are located,” says Philip Chandler, Accident & Health Underwriting Manager, Northern Region, HDI Global. “Some of our clients like to align benefits for all their employees globally. If a company takes a siloed approach, a lot of the employees may have differing levels of cover, whereas providing an international program managed by one insurer by way of the D-I-C-D-I-L endorsement, will provide equal cover for everyone around the world, wherever they are.” An example: “If you've got employees in China, for example, and they're employed by the Chinese entity and they're taking trips, those trips would fall into that Chinese entity's exposure for us.” As with other accident and health placements here in Australia, HDI typically write the policy a 100 percent – not on a co-insurance payment like you may see with property or liability. That's obviously subject to local regulations. “Using the example of China, they require a minimum retention of 20 percent.” says Mr Chandler. “Generally, we'll write the whole policy, so you're just dealing with one insurer, which can be simpler in many ways.” “When we're requesting information, we typically need the number of trips originating from different countries, different entities around the world. So that would be domestic and international trips. So just like here in Australia, where we'd be covering the local Australians for when they travel internationally and locally,” Mr Chandler said. Each of the local policies that HDI issues also covers the local employees for their domestic and foreign trips. Then there are some nuances in some countries whether there's local client information, local broker information, or in the USA for example, where business travel or accident health risks require a surplus lines broker. “HDI can usually help with contacts and help ease the process,” Mr Chandler said. Philip Chandler Accident & Health Underwriting Manager, Northern Region
HDInsight Edition 10 - page 21 The financial interest clause (FInC) HDI can only provide cover under the master policy if non-admitted is permitted. One solution is the financial interest clause. This amends an insurance policy to cover only the multinational organisation's financial interest in its worldwide subsidiaries so that the parent company is the only legal entity covered by the master policy. The financial interest cover is provided to the parent company because HDI cannot cover the risk situated in a country where non-admitted insurance is not permitted, therefore the cover is afforded to the parent company. The claims payment can therefore only be made to the parent company and no service can be provided locally. “Any transaction in relation to that claim will be dealt with the parent company,” says Ms Roque. The parent company should be able to assist with the assessment of the losses and they should be communicating to their local subsidiary. The local policy will respond to the claims filed against that local policy and if there's anything that will not be covered by that local policy the FInC clause can be triggered in case the parent company sustains a financial loss, that loss will be paid to the parent company. A reminder for financial interest clause: In Australia HDI covers the parent company and any financial interest clause premium will attract GST and stamp duty. This means this needs to be added on top of the premium that is charged under the master policy. In general, financial interest clause is a last resort. Wherever possible, HDI will issue a local policy. HDInsight LIVE: Responsive International Programmes Cross-border insurance Cross-border insurance refers to when a foreign insurer is permitted to cover risk located overseas. A typical example for Australia would be underwriting a risk in New Zealand. Key questions for cover would include: • Can HDI pay claims into the country? • Can HDI send its own adjusters to do the loss adjustment in the country? • Can HDI send its own risk engineers to assess the assets? Another consideration is out of territory taxes the insurance company, or the insured, is responsible to pay in the country. The UK for example requires the producing office to remit insurance premium tax or IPT to the UK if the risk is covered on a non-admitted basis. HDI has been in the IP business for over 60 years now. It leads over 5,000 IPs and has issued around 27,500 local policies, generating approximately 1 billion euros in premium. With branches in 39 countries, where HDI doesn’t have a local office, there are partner insurers who have been through an extensive accreditation process so can issue across 175 countries. Additionally, HDI has hubs that operate in three strategic areas in the world. Germany hub looks after the, Europe, Middle East, and Africa. Hong Kong hub looks after Asia-Pacific, and a Latin America hub for that region. Learn more from our IP experts Watch here: HDInsight LIVE: Responsive International Programmes What does non-admitted insurance mean? Non-admitted insurance refers to the insurance company's license. “So, if you talk about HDI Global SE Australia, you're talking about our license here in Australia,” Ms Roque said. HDI Australia is licensed to operate in Australia. Whereas in Malaysia for example, HDI Australia is a non-admitted insurer. This means that anything that the company does in Malaysia will be treated as non-admitted. “If you see non-admitted insurance, the first thing that you should remember is whether the insurance company you're dealing with has a license in the country where the risk is located,” Ms Roque said. Contact - HDI Rinnah Roque Service Delivery Manager Producing Office IP P: +61 433 476 522 Rinnah.Roque@hdi.global
Transitioning to renewable energy is one of the most significant and challenging tasks of our time. In a HDInsight LIVE webinar the team and guest experts explored emerging claims trends impacting the sector. Countries all over the world have set ambitious emission reduction targets boosting the renewable energy sector. As the industry grows, so do the associated risks. Loss activity includes extreme weather events damaging renewable energy infrastructure, an increased risk of fire and exposure to emerging and rapidly evolving technologies. As David Gibbs, State Manager Western Region for HDI Global explains, the insurance industry is evolving along with the transition to renewable energy. “Companies are developing new products tailored to the renewable energy sector,” he said. “We are needing to turn to advanced technologies such as data analytics and climate modelling to assess and price risks more accurately.” At the same time, the industry continues to learn from the loss activity the sector has experienced in recent years. Snapshot of renewables in Australia At the start of 2023, there were 106 renewable energy projects under construction in Australia, with a capital investment of about $25 billion. This investment would see a planned 17,820 megawatts of new energy capacity in the country according to Cameron Maclean, Partner and legal expert from the global law firm DLA Piper. Among these projects are a hydrogen and ammonia plant in Western Australia, and a hydrogen facility in South Australia. “There is an enormous amount of money flowing into renewable energy projects in Australia and in the region,” Mr Maclean commented. This also involves the extraction of minerals, particularly battery minerals like lithium and nickel, or ammonia for hydrogen batteries. “So, we're seeing significant investment in mining and extractive industries as well as upstream development,” he said. During 2022, about 36% of the electricity generation in Australia came from renewables. By 2030 this could be as high as 82% based on the Energy Council's current forecasting. Most of the renewable energy generation is happening on the east coast of Australia (QLD, NSW, VIC). There are 2.4 gigawatts installed as of September 2023, and a projected investment spend of about $21.2 billion. However, projects are spreading to the West Coast as well. According to Mr Gibbs this is likely due to a combination of State Government policy and mining companies spending money on renewables projects, particularly solar projects coupled with batteries. Types of Renewable Energy Sector Claims The insurance sector is starting to see claims mostly relating to property and construction and emanate from a variety of causes, according to Andrew Hodkinson, Director at Lloyd Warwick, a multidisciplined loss adjusting company offering a wide range of engineering and technical claims support services to the global insurance industry. HDInsight LIVE Webinar HDI Insights edition 11 | page 18 Trends in Renewable Energy Claims
“We see issues with electrical equipment, be it power surges that cause damage, or onboard damage to electrical items, transformers, synchronous condensers, generators, and the like,” he explained. Mr Hodkinson also listed issues with mechanical breakdown, particularly in the wind sector, with gearboxes and main bearings affected. Less frequent are structural issues according to the expert. “One area of interest is the impact of workmanship design and materials in the claims space,” Mr Hodkinson said. “As there is such a rush in the renewable sector, there is obviously going to be a lot of pressure on the suppliers to do things quickly.” David Lloyd, Regional Claims Manager Asia Pacific for HDI Global, gave an example for a design fault resulting in a complicated repair and claim. “We've had one claim regarding a solar farm where the connection points for the panels were defective, and it involved 70,000 panels that had to be remediated.” In the end it was one issue that caused this fault and resulted in a substantial claim. Depending on where the sites are, there is environmental peril like wind, rainfall, fire, and hail with Queensland being affected the most within Australia. A recurring problem is lightning strikes to wind farms. There also have been occasional fires during construction and there can be transport and handling matters. Operator and maintenance errors are limited in comparison according to the expert. HDInsight Edition 10 - page 21 HDInsight LIVE: Renewable Energy Claims Trends HDI Insights edition 11 | page 19 Battery fires is an issue being picked up by the news on a regular basis, Mr Hodkinson points out. “The reason for that tends to be that you've got well known suppliers involved and they're very sensitive around their PR,” he said. However, theoretically there is the possibility of a claim that's potentially $2.5 million or the replacement of one of the battery packs. Mr Lloyd reported that lithium batteries in particular are causing problems for insurers despite the fact that lithium is not classed as a dangerous material. However, fires can result in shipping claims, as well as in claims regarding e-bikes and electric motor vehicles. Currently, Mr Hodkinson’s company Lloyd Warwick has been instructed by almost 100 claims in Australia. “We are now starting to get enough data to work out the trends of where claims are coming from,” he said. The following statistics are evolving but indicative: • Electrical equipment failures: 36% • Natural perils (storm, hail, fire, floods): 25% • Mechanical failures (machinery breakdown): 22% • Others: Maintenance/design failures, structural failures etc. Offshore wind farms pose a unique challenge, stemming not only from their remote location but also from the need for expensive heavy lift vessels for necessary repairs. Repairs in general can present a challenge in Australia, as spare parts might not be as easily accessible as in the US or Europe. Project costings create challenges A variety of foreseeable and unforeseeable claims challenges may arise according to David Lloyd, Regional Claims Manager Asia Pacific for HDI Global. “We are dealing with complicated and untested technology with ambitious targets set by governments on what they want to achieve,” he said. “There's material shortages, there's failures and there's high labour costs. This is putting pressure on the projects themselves and it is causing blowouts. As an insurer, we need to be aware of that.” David Lloyd Regional Claims Manager Asia-Pacific The Age Factor Andrew Hodkinson, Director at Lloyd Warwick, shared the example of an aging wind farm, operating for more than 15 years without any issue when one of the towers collapsed. It parted cleanly at a section above ground. A fatigue crack had formed over time to a point where eventually the tower couldn’t hold its own load and came down. “The problem with these sorts of claims is that, because it is an old facility, the insured is unlikely to reinstate due to obsolescence”, he explained. This means, the claim is more likely to be settled on an indemnity basis.
“You are immediately thrown into a transit situation of getting generators, gearboxes, and similar type items,” Mr Hodkinson reported. “Turbine / generator equipment from Europe can't always be flown in and is not always available.” This means that business interruption becomes a major problem with such claims due to the length of time it takes to get replacement equipment or repairs done. One of the up-and-coming energy sources is hydrogen and as Mr Hodkinson reports, there are a lot of pilot projects as the technology is still not 100% developed. There are risks involved along the hydrogen chain, from production to transportation, storage, and distribution. Hydrogen is highly inflammable, and leakages can trigger fires and explosions. This industry can, however, take learnings from the traditional Oil and Gas sectors which are now getting involved. Detrimental impactors in general Meanwhile legal expert Cameron Maclean from DLA Piper shared his observation of seven classes of issues that have arisen over the past few years. Some of these points overlap with issues Mr Hodkinson mentioned as well. 1. A lack of supply in terms of material or skilled labour. 2. Design and construction errors: Mr. Maclean points out that the emergence of novel technology often brings about challenges due to substantial financial investments and the extensive use of equipment. HDInsight Edition 10 - page 21 Complexity arises from the multitude of components involved in any project, coupled with the difficulty in pinpointing the root cause of a problem caused by the initiating event. 3. Technology failure: These issues can be caused by a singular piece of technology or equipment that's not performing as expected. Another obstacle can be equipment that requires overall design solutions, which were not considered at the procurement or contracting stage of the development. “An example is a project which was set to start production in June 2021. Its construction involved 30 stages, 29 out of these 30 stages were finalised without issue, however, the 30th stage did not work and still has not worked, as Mr Maclean reported. This caused the company to go into voluntary administration. “$200 million worth of shareholders’ funds disappeared because of one stage of the project that did not work,” he said. 4. Legal issues: Climate change mitigation is a big topic, but not everyone wants it in their backyard according to Mr Maclean. Litigation at the planning stage, in terms of development, is becoming more common, he reported, particularly for wind farms. 5. Community as well as investor pressure for companies to do something about decarbonisation and energy transition can translate into poorly formulated market announcements or investor presentations, Mr Maclean pointed out. ASIC, as well as the Australian Competition & Consumer Commission (ACCC), are aggressively investigating misleading claims by companies as to energy transition. HDInsight LIVE:Renewable Energy Claims Trends HDI Insights edition 11 | page 20 Green Hydrogen Andrew Hodkinson, Director at Lloyd Warwick, told the example of an aging wind farm, which had been operating for more than 15 years without any issue when suddenly the tower collapsed. It parted cleanly at a section above ground. A fatigue crack had formed over time to a point where eventually the tower couldn’t hold its own load and came down. “The problem with these sorts of claims is that, because it is an old facility, the insured is unlikely to reinstate”, he explained. This meant, the claim becomes an indemnity settlement position.
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