Radar 2015 Insights for insurance leaders

Transcription

1 Radar 2015 Insights for insurance leaders

2 Welcome to the first edition of Radar: Insights for insurance leaders. We re delighted to offer our insurance partners our unique perspective on the issues we ve detected for the coming year. Managing an insurance enterprise becomes more complex each year. It can be difficult to detect the broader economic picture, the long term trends and the strategic imperatives while managing day to day challenges. With more competition in the market and increasing pressure to perform, insurers need high quality business insight now more than ever. Our observations in Radar 2015 are derived from our ongoing market research and from our distinctive point of view as an independent consultancy. It s designed to help senior managers and directors of general insurance companies to know what s coming. What s inside? Readers looking for a quick summary of facts and insights will find this in Section 1: What s on the Radar for 2015 and beyond? Following this, we review the trends emerging in FY 2014 and go on to consider the key strategic issues for insurers in We provide examples of the questions we believe leading insurers need to consider. Lastly, we add depth to our analysis by reviewing individual classes of business. Have a question? Our insurance team would welcome the opportunity to discuss any aspect of Radar 2015 with you.

3 Win-Li Toh General Insurance Practice Leader Kevin Gomes General Insurance Practice Leader Martin Fry Melbourne Practice Leader Daniel Smith Melbourne Practice Leader Sharanjit Paddam Actuary Scott Duncan Actuary

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5 Radar 2015 Insights for insurance leaders What s on the radar for 2015 and beyond? in review 06 Key issues for 2015 and beyond 12 Review of classes of business About Taylor Fry 24 Taylor Fry

6 Growth rates / p12 Growth rates are the lowest they have been in 20 years with no signs of picking up. In FY 2014, growth was at the lowest level for 20 years, primarily due to slowing economic growth and the lack of premium increases in home insurance, which has driven growth in the past. Traditional risks faced by consumers are reducing in frequency due to improved risk management, for example safer cars and better building standards. Over the long term this will shrink the market for traditional insurance products. A key challenge facing business leaders will be identifying non-traditional insurance lines that can be developed as new products. 04 Investment yields / p13 Investment yields are at historic lows with no signs of improving. The economic environment is toughening for insurers. Economic growth is patchy and investment returns are at historic lows. Unemployment is expected to rise and consumers are still carrying substantial personal debt. Lower exchange rates may lead to higher car repair costs; however, the free trade agreements with China and Japan may alleviate some of this upward cost pressure. What s on the radar for 2015 and beyond? Catastrophes / p14 Catastrophe losses are below trend, leading to a build-up of capital. New investors are entering the market, stimulating systemic changes. For the third year in a row, catastrophe claims have been benign, leading to a build-up of retained profits for reinsurers. Reinsurance rates have fallen and are expected to continue to fall, for both property and liability classes. Alternative reinsurance capital is taking a larger share of the global reinsurance capacity, putting further downward pressure on rates. This new capacity is likely to be a permanent addition and may lead to a slowing of the cycle. While regulatory restrictions have stopped the market taking off in Australia, we are not immune from secondary effects.

7 Capital / p15 High historical returns are attracting capacity, increasing competition and reducing future profits. High profits over recent years have attracted substantial increases in capacity to the general insurance market, leading to a slowdown in premium rate growth for personal lines and reducing premium rates for commercial lines. The personal lines market has hit the top of the cycle and the commercial market continues to soften. Profitability in these business classes is going to be increasingly difficult in FY Technology / p17 Technology continues to present both challenges and opportunities for insurers. Technology is introducing new products for consumers, and also transforming the risks faced by business. Insurers are responding with new products, such as cyber insurance, but these have not yet hit critical mass. Recent entrants to the market are driving innovation and using data analytics to cherry pick profitable consumers from incumbent players. Insurance leaders will need to take more initiative in helping drive innovation, especially with regards to technology, by implementing technological solutions that are appealing to customers and by responding to technological risk with innovative products. 05 Retention / p17 Empowered and informed consumers may leave insurers in the lurch. Consumers are shopping around more, assisted by technology, and showing less brand loyalty. We expect to see lower customer retention across all financial services and especially in general insurance, which has the highest lapse rates. A business model based on loss-leading sales followed by profits on renewal is likely to fail if retention rates fall.

8 2014 in review Detecting change Every year Taylor Fry jointly publishes the General Insurance Barometer with JP Morgan. This survey of insurers, who make up a majority of the Australian insurance market by premium income, gives a unique insight into the challenges and opportunities facing the industry. In order to provide you with this summary of FY 2014, we ve drawn upon knowledge derived from working with JP Morgan and supplemented this with our own research and market insight. Excellent industry performance with low combined ratios FY 2014 was a strong year for the industry, but the overall outlook is for reduced growth and profits in an increasingly competitive market. Abbreviation / Description Barometer / 2014 JP Morgan Taylor Fry General Insurance Barometer Property Comm / Commercial property insurance including fire and industrial special risks Motor Comm / Commercial motor insurance CTP / Compulsory third party motor insurance D&O / Directors and officers insurance FY / Financial year ending 30 June PI / Professional indemnity insurance 06 PIDO / Professional indemnity and directors and officers insurance PL / Public and products liability insurance RBA / Reserve Bank of Australia WC / Workers compensation insurance in privately underwritten States and Territories Combined operating ratios. Source: APRA, Barometer FY 2014 saw very strong combined ratios for the insurance industry, primarily due to the impact of previous premium rate increases and a lack of catastrophe claims. Reserve releases for NSW and QLD CTP were at reduced levels compared to previous years. Survey respondents reported overall combined ratios of 87% with matching returns on regulatory capital of 18% for FY 2014, similar to returns in FY For personal insurance lines, the combined ratio reduced to 86% in FY 2014 (from 89% in FY 2013). This improvement was supported by very strong results in home insurance, offset by some deterioration (though still good results) in car insurance, and tough trends again in NSW CTP.

9 In commercial insurance lines, the combined ratio was 91%, similar to 90% in FY The combined ratios in FY 2014 were better than the 92% anticipated by the industry in FY 2013, again primarily due to a lack of catastrophe claims in FY Premium rates fell in nearly all commercial lines and slowed in personal lines Premium rate pressures were strong in FY 2014 and there is a weak outlook for growth. Home insurance premium rates slowed from five years of double digit rises between FY 2009 and FY 2013 to just 4% in FY 2014, with more softness expected going forward. 07 Premium rate changes. Source: Barometer Participants in the Barometer said that in personal lines, premium rate increases slowed to 2%, below claims inflation of 3%. Premium rates are expected to slow further in Home insurance in particular slowed from five years of double digit rises between FY 2009 and FY 2013 to just 4% in FY 2014, with more softness expected going forward. This class has been the main driver of growth in premium in the last few years, so its slowdown will leave a hole in premium growth. Commercial lines premium rates reduced by 6% significantly worse than the flat result expected in the 2013 survey. We note that underwriters recorded better premium rate growth than brokers. Commercial property showed very soft trends for both underwriters and brokers, with average premium rates falling by 12%. The industry is expecting commercial premium rate reductions for both FY 2015 and FY 2016.

10 Claims inflation muted and claims frequency continues to fall In FY 2014, claims inflation continued at muted levels and average claim frequency continued to reduce. Frequency trends in most classes were favourable... in line with long-term trends of reducing risk through improved risk management. 08 Claims inflation. Source: Barometer For both personal and commercial lines, average claims inflation of 3% in FY 2014 was at a similar level to the 4% recorded in FY The only class showing high rates of inflation in FY 2014 was workers compensation. The outlook for claims inflation is reasonably similar. Changes in claims frequency. Source: Barometer Frequency trends in most classes were favourable in FY 2014 (0% in domestic lines, -3.2% in commercial lines), although both NSW CTP and D&O showed some increases. This is in line with long-term trends of reducing risk through improved risk management.

11 Top concerns for the insurance industry Insurers identified competition and low premium rates due to excess capacity as key concerns. The graph below shows the strong growth in capacity for all commercial classes during FY We might be lucky and once again produce profits due to a lack of catastrophe claims. However, the longer term outlook is one of reduced growth and reduced profits. Change in capacity. Source: Barometer 09 Technology remains a key issue both in terms of opportunities and threats to insurance. Regulation was less of a concern, reflecting the lower regulatory activity from APRA during FY 2014, compared to the introduction of the revised capital regime in Outlook We re clearly at the top of the personal insurance market and well past the peak for commercial insurance. While consumers and business can look forward to premium rate reductions in 2015, insurers will struggle to keep growth and premium rates up. The great unknown is, of course, the claims activity due to catastrophes. We might be lucky and once again produce profits due to a lack of catastrophe claims. However, the longer term outlook is one of reduced growth and reduced profits. In the next section, we examine some key issues that will be significant in FY As part of the scope of Radar 2015, we have also included strategic questions that industry leaders can focus on during the year.

12 10 We re clearly at the top of the personal insurance market and well past the peak for commercial insurance. While consumers and business can look forward to premium rate reductions in 2015, insurers will struggle to keep growth and premium rates up.

13 Radar 2015 Insights for insurance leaders 11 Taylor Fry

14 Key issues for 2015 and beyond Growth APRA statistics show that rates of growth in gross written premium during the last two quarters of FY 2014 were the lowest they have been over the last 20 years. In recent years the main driver of premium growth has been home insurance, which has experienced double digit increases since the catastrophes of FY Home premium growth rates in FY 2014 fell to 4%, and have resulted in the slowing of premium rates across the industry. Key strategic questions for insurance leaders Have you exploited your data in order to accurately identify and retain your most profitable customers, or attract new profitable customers? What are the new risks facing your customers, and how do you develop new products to offer protection from those risks? 12 Can technology, such as telematics, be used to innovate your product offering? Premium growth. Source: Barometer Our analysis in the Barometer shows that over the last 20 years, average premium growth in Australia been 0.3% per annum less than nominal GDP growth. This is not unexpected the impact of improved risk management over time will reduce claims frequency in traditional insurance products. Road and vehicle safety is improving, building regulations are improving the resilience of houses, work health and safety is reducing accidents at work. Insurers will need to develop new products to meet the changing risks faced by consumers. One example of this is cyber insurance, which provides protection to business from computer hacking and privacy breaches. However, that market is still in its infancy, and has only seen small business volumes. The privatisation of CTP in South Australia may offer some limited growth opportunities in the future. Given a lack of new insurance products, few signs of claims inflation, low expectations for GDP growth, and substantial competition, we expect premium growth to be very difficult for insurers this year.

15 Investment yields Key strategic questions for insurance leaders Do your business plans allow for substantially reduced investment income? Given the reduced bond returns, should you consider alternative investment strategies? Risk free interest rates. Source: RBA With the cost of capital at an all-time low, what opportunities are there for acquisitions? Investment yields are at all-time lows, for both Government and commercial bonds. Equity markets are at all-time highs, and Commonwealth Government bonds have seen substantial reductions in yields, especially at longer durations. 13 The lack of investment returns is hurting underwriters of long-tailed business, particularly CTP, WC, PL, PI and D&O. Unemployment is expected to continue to rise, and consensus forecasts are for low GDP growth following the collapse in commodity prices. As a result, interest rates are not expected to rise any time soon. While export growth is expected to pick up with the falling Australian dollar, this is unlikely to provide much relief to Australian domestic insurers, whose prospects are driven by domestic sectors of the economy. Falling exchange rates may also give rise to inflationary pressures on motor vehicle repair costs, although the free trade agreements with China and Japan may provide some relief.

16 Catastrophes Catastrophe costs during 2014 were significantly below the 10-year average. Catastrophe costs by year. Source: Barometer 14 Catastrophe costs during 2014 were significantly below the 10-year average, even allowing for the Brisbane hailstorm in December However, weatherrelated claims remain the most significant driver of claims cost in property classes. Weather patterns on the Eastern coast are driven by the Southern Oscillation Index, which indicates El Niño, La Niña and neutral events. Average cost of weather events. Source: Barometer The graph above shows the average cost of weather events for each phase of the Southern Oscillation Index is expected to be a neutral year, and potentially an El Niño year, giving expectations of lower than average claims costs. At this early stage, the estimated costs of Cyclones Marcia and Lam are not available.

17 Capital The low number of catastrophes since 2011, both within Australia and globally, has given rise to record profits for insurers and a build-up of retained capital for reinsurers. Additional capacity has entered the market from both traditional reinsurance and also alternative reinsurance capital, such as catastrophe bonds and collateralised reinsurance. The graph below shows that alternative capital has grown from 5% to 11% of total reinsurance capacity and continues to grow at a much faster rate than traditional reinsurance. Key strategic questions for insurance leaders Given these global trends, are you obtaining value from our reinsurers? Given your risk appetite, is your reinsurance purchase at optimal economic levels? Will alternative capital be more persistent following catastrophe events, leading to fewer and weaker cycles in reinsurance pricing? What are the implications for direct insurance pricing? 15 Growth in reinsurance capacity. Source: Barometer Capital markets are supplying this alternative capital directly to insurers and reinsurers. Investors, which tend to be large North American pension funds, have long investment horizons and are looking for the diversification in returns that is offered by reinsurance. For such funds, alternative capital is a tiny fraction of their total invested assets, and we expect this to remain a long-term source of insurance capital. This influx of supply has also led to a fall in the cost of alternative capital, contributing to the large growth seen in the market. While regulatory restrictions have limited the take-up of alternative capital by Australian insurers, the market has not been insulated from this global trend. Large increases in reinsurance capacity have reduced the reinsurance premium rates for property, and spilled over into lower liability reinsurance premium rates.

18 Radar 2015 Insights for insurance leaders 16 Technology is introducing new products for consumers, and also transforming the risks faced by business. Insurers are responding with new products, such as cyber insurance, but these have not yet hit critical mass. Taylor Fry

19 Technology Technology continues to affect all aspects of insurance from products and pricing, through distribution, claims and risk management. Competition is driving demand for innovation, and technology is supplying that innovation. The use of data analytics by insurers has led to substantially improved rating factors, particularly for personal lines. In particular, new entrants to the market have successfully poached profitable customers from existing players over the last few years. Technological change has increased the risks associated with computer hacking and privacy breaches for companies, and commercial insurers have been focussed on cyber insurance. While that market is yet to take off, we expect that it will grow strongly as companies start to experience losses from cyber threats, and brokers disseminate better coverage to their clients. New business models and products, such as transport network companies like Uber and home hosting like Airbnb, are causing market disruptions and posing new risks for consumers. These changes, in turn, provide both opportunities and challenges for new insurance products to help consumers manage these risks. Telematics for car insurance has shown limited growth in Australia, as previously noted. However, some British insurers have started to offer discounts on pet insurance for dogs wearing GPS collars, which allows them to monitor whether they have been walked enough and also helps them to find lost pets! Key strategic questions for insurance leaders How is technology transforming consumer risks, and what are the opportunities for new insurance products? Are your distributors effectively marketing your new products to consumers? Are you making best use of your data to price risks and identify profitable segments for growth? 17 Retention Technology is providing consumers with better and easier access to information about risks and opportunities. Loyalty to brands appears to be lessening as consumers embrace new companies that provide new technologies and products. Financial services are not immune from these trends and we expect to see lower customer retention across all financial products. General insurance has the highest lapse rates for financial services at around 20%, even when compared to home loan refinancing also at around 20% and health insurers at about 10%. General insurers are more vulnerable to systemic changes in consumer behaviour. Current insurance business models tend to have loss-leading pricing followed by price increases on renewal, which implicitly relies on brand loyalty or lack of comparison research by consumers. If retention rates fall, then these business models are likely to fail to generate profits and insurers will need to adapt. Key strategic questions for insurance leaders How are you monitoring lapse rates, and are there any signs of changes in behaviour? Do you fully understand the elasticity of demand for your products, and which segments are likely to renew? To what extent are you reliant on profits on renewal, and how can you adapt to changes in retention over the long term?

20 Review of classes of business Focus on the Australian insurance markets Car: premium rates and profitability expected to decline due to competition Gross premium income. Source: APRA 18 In this section we review the eight major classes of insurance, using statistics from the Barometer. Car and home insurance each make up 22% of the gross premium income in Australia and CTP adds an additional 10%, to give personal lines a combined 53% share of the market. Of the commercial lines, property is the largest at 12% of the market, while PL and commercial motor each have 6%, WC has 5%, and PIDO has 4%. The remaining classes, including reinsurance, account for 14% of the market. Car Insurance. Source: Barometer Car premium rates did not increase in FY 2014, due to: Low claims inflation Increases in excess and deductibles leading to lower claims costs Lack of weather related claims High levels of competition. We expect premium rates to decrease slightly in Higher expense ratios increased the combined ratio to 93% in FY 2014 from 91% in FY 2013, giving lower profits. We expect combined ratios to rise slightly in FY 2015, in line with forecast premium rate decreases. Claims inflation has remained low at 2% in FY 2014, the same as FY Claims inflation may increase slightly in 2015 due to the depreciating Australian dollar increasing the cost of imported spare parts. The Australian motor industry continues to collapse, leaving a greater dependence on imported parts. This might be somewhat offset by recent free trade agreements with China and Japan. Claim frequency has been flat from 2010 to Over longer periods we expect claim frequency to reduce due to improved road and vehicle safety. This is borne out by the graph over, showing the NSW motor fatality rate declining over time.

21 Home: improvements unlikely as premium rates slow down NSW road fatalities. Source: NSW Roads and Maritime Services Growth in the car market has been constrained by the high level of competition. New entrants to the market over the last few years have taken market share from the large incumbent players. They have also successfully cherry-picked profitable business through portfolio segmentation and analysis. Banks have successfully identified opportunities to crosssell general insurance products to their customers by using advanced analytics to scrutinise transactional data. This has resulted in further competition for incumbent insurers. New entrants over the last few years have faced high expenses. This is due to the large advertising spend required to build a brand and acquire customers, and the substantial technology investment required to establish customer services. However, having made these investments, these businesses are very competitive going forward, and pose a strong threat to incumbents. The application of telematics has not reached significant levels the high cost of installing black boxes remains an obstacle. Smartphone apps have provided a cheaper but substantially less reliable means of measuring both how much customers drive their car and their driving skills. Like no-claims discounts, insurers are using smartphone app telematics as marketing tools rather than as risk management or claims reduction tools. Driverless car technology continues to improve, and will likely lead to a substantial disruption to car insurance. This technology is likely to lead to both a potential reduction in the cost of claims and future premiums, and to the liability for motor accidents moving from the driver to the manufacturer or the network operator. Home Insurance. Source: Barometer Home premium rates increased by only 4% in FY 2014, compared to double digit growth in the preceding four years. This is due to low claims inflation, increases in excess and deductibles leading to lower claims costs, a benign claims environment and high levels of competition. We expect premium rates to increase only slightly in Profitability improved substantially, from an 89% combined ratio in FY 2013 to 79% in FY Both expense and loss ratios fell, as did reinsurance rates. We expect combined ratios to rise slightly in 2015, as claims increase to their long run average. Ongoing high profit margins have attracted new entrants to the market over the last few years, and this has had a similar impact to car insurance, as described above. Claims inflation has increased slightly from 3% in FY 2013 to 5% in FY Underlying claim frequency has continued to fall, due to improving building standards and security. 19

22 CTP: Claim frequency rises in NSW, while QLD remains profitable NSW has had an increase in claims frequency. This is primarily due to an increase in Accident Notification Form claims, which expanded to cover at-fault drivers in 2010, and to cover claims up to a maximum value of $5000 from QLD has seen reductions in claim frequency in line with long-term trends in motor vehicle accidents and injuries. Both schemes have continued to see restrained claims inflation in FY 2014, but we expect to see some superimposed inflation in FY CTP NSW. Source: Barometer Retention rates in NSW are around 65%, which is much lower than retention rates of around 85% in QLD. This is likely due to the MAA s Green Slip Calculator, which provides easy price comparisons between insurers for NSW drivers. For QLD, policy renewal is linked to registration, with the default being renewal with the same insurer. The lack of price differentiation between licensed insurers also drives the high retention rate in QLD. 20 The key concern for CTP as a regulated class of business remains the uncertainty in the future actions of the regulators. CTP Queensland. Source: Barometer CTP premium rates increased by 4% in NSW and fell by 2% in QLD during FY We expect premium rates to increase only slightly in 2015 for both States. Profitability fell in NSW with combined ratios rising from 91% in FY 2013 to 99% in FY Profitability rose in QLD with combined ratios falling from 74% to 71%. However, both of these results relied heavily on abnormal reserve releases of 13% for NSW and 22% for QLD. The level of reserve releases has, however, fallen compared to FY After four years in a row of reserve releases, the question of future abnormal releases remains open. Profitability was also adversely affected by the continued low investment returns. We expect combined ratios to increase for both States in FY 2015.

23 Commercial property: intense competition and decreased rates Commercial motor: driving steadily ahead Commercial property. Source: Barometer Competition in the property insurance market has been intense over recent years, driven by significant capacity increases in the direct and reinsurance markets. Premium rates reduced by a staggering 12% in FY 2014, after a 2% rate reduction in FY Rate reductions were driven by the corporate and middle market segments where excess capacity and price pressure from brokers are typically greatest. The benign catastrophe experience has also reduced premium rates. We expect further softening of premium rates in In spite of these premium rate reductions, profitability improved in FY 2014 with a combined ratio of 87%, down from 95% in FY 2013, primarily due to a 6% fall in the expense ratio. A softening of reinsurance rates, reduced claim frequency and event activity below expectation resulted in a small improvement to the net loss ratio. We expect the softening market to increase combined ratios in Claims inflation has continued at 3% and is projected to remain stable, while claims frequency has reduced by 5% from FY We expect further reductions in frequency due to improving building standards and security. Reinsurance rates decreased 8% in 2014 as a result of greater capacity in the market and benign catastrophe claims. We expect reinsurance rates to continue to fall in Commercial motor. Source: Barometer Commercial Motor has been one of the few commercial lines to see stable premium rates during FY SME premium rates have increased, offsetting reductions in the large corporate segment. We expect premium rates to remain stable in Profitability for the class also remained stable in FY 2014 with a combined ratio of 90%. We also expect combined ratios to remain stable in Claims inflation has been mute at 1%, while claims frequency has reduced by 3% from FY 2013, in line with the long-term trend for reductions in vehicle accidents. Claims inflation may pick up with the fall in exchange rates leading to higher costs of parts. Free trade agreements with China and Japan may provide some benefits that help to offset this. 21

24 Workers compensation: dependent on reserve releases and economic growth Public and products liability: high competition and lower profitability 22 Workers compensation Western Australia. Source: Barometer Workers compensation Tasmania, NT and ACT. Source: Barometer In WA, overall premium rates remained flat; in the remaining privately underwritten States they increased by 1%. We expect rates rises to remain subdued in Profitability fell in WA, due to claims inflation and lower reserve releases, but improved in the remaining privately underwritten States, due to increased reserve releases and lower expenses. In 2015, we expect combined ratios to remain stable for WA, and reduce slightly for the remaining privately underwritten States. However, these results are critically dependent on the level of reserve releases. The major issue for WA is the general state of the economy, wage inflation and the prospects for growth in the labour market. In the remaining privately underwritten States, the main concerns remain the possibility of future regulatory change. Public and products liability. Source: Barometer Public and products liability premium rates declined by 6% in FY 2014, following a 2% decline in FY This was due to increased capacity and strong competition. This trend was seen across the SME, middle market and corporate segments. We expect premium rates to continue to fall in 2015 for the same reasons. Claims inflation has been stable at 6% and claim frequency remained flat again in FY Profitability has reduced in FY 2014 with a combined ratio of 91% in FY 2014 compared to 88% in FY 2013, driven by reductions in reserve releases increasing the loss ratio. We expect combined ratios to remain at current levels in 2015, but such stability is critically dependent on the level of reserve releases. As well as the high level of competition, the class has been affected by low investment returns, the potential for unwinding of tort reforms, and worker-to-worker claims.

25 Professional indemnity and Directors and officers: competition driving rate reductions despite forecast losses We expect combined ratios to increase significantly in As well as the deficiency in current premium rates, we expect increased claims frequency and severity due to the continued actions of litigation funders, as well as new litigation funders entering the market. The lack of investment returns adds to the gloomy outlook. Many insurers note that much of the additional capacity is entering the market through coverholders from Lloyd s of London, and some have questioned the underwriting expertise of new entrants. Nonetheless, there remain opportunities in PI due to the expanding service economy in NSW, and the potential for additional cover for financial planners following the Future of Financial Advice reforms. Professional indemnity. Source: Barometer 23 Directors and officers. Source: Barometer Continued growth in capacity has increased competition in both PI and D&O markets, resulting in continued reductions in premium rates of 5% in PI and 2% in D&O. These reductions are despite the deteriorations in combined ratios to 100% for PI and to 91% for D&O in FY This decreased profitability was due to reserve strengthening, which increased loss ratios. Despite the acknowledged deficiency in premium rates, we expect them to continue to fall in 2015 as capacity continues to enter the market.

26 About Taylor Fry Who we are 24 Taylor Fry is a leading consultancy firm providing actuarial, financial modelling, statistical and strategic policy advice to business and government. Our main area of work is in providing general insurance actuarial advice and business-oriented statistical and policy advice to both the insurance industry and governments. We develop innovative, world class, and fit-for-purpose solutions for our clients analytical and actuarial needs. We deliver genuine value for money, and build our solutions and relationships to last. Taylor Fry has operated since Our senior actuaries each have more than 20 years experience in the industry, in corporate and consulting roles. We have grown to more than 40 professional staff, with offices in Sydney, Melbourne and New Zealand. We build strong relationships with our clients by seeking to understand their business goals and processes, providing customised solutions, and delivering real value efficiently and effectively. Our people are leaders in their field, recruited for their expertise, integrity, and enthusiasm. Taylor Fry were proud winners of the Service Provider to the Insurance Industry award at the 2014 Australian Insurance Awards, hosted by the Australian and New Zealand Institute of Insurance and Finance and Asia Insurance Review. Further information about our company, our clients, our people and the services that we offer can be found at our website: What we do We provide the full range of general insurance actuarial services to business and government. Our consultants have a wealth of experience acting as Appointed Actuaries and Principal Advisers for: Insurers and reinsurers of all sizes, from small specialist monoline insurers to large multi-brand conglomerates Accident compensation schemes, including State and federal workers compensation and compulsory third party schemes Courts of Law, where we act as Expert Witnesses on all aspects of insurance and accident compensation. Our services include: Reliable, integrated and practical insurance liability valuation processes ranging from the provision of independent advice for small and self-insurers, to working in collaboration with large insurers to design and implement in-house valuation processes Customised capital models that allow our clients to determine optimum capital management strategies fit for today s complex environment Financial condition reports that provide genuine insight into our clients operations, and provide recommendations to reduce significant risks to their ongoing viability Budgeting and monitoring tools that deliver genuine insight, allowing our clients to stay one step ahead as they identify and address underlying performance issues as they arise Data visualisation tools that provide clear insight into your business performance Technical pricing and optimisation for insurers looking to understand customer behaviour and maximise the value of their portfolio A range of courses and workshops aimed to assist in the management and direction of your business.

27 Radar 2015 Insights for insurance leaders Taylor Fry were proud winners of the Service Provider to the Insurance Industry award at the 2014 Australian Insurance Awards, hosted by the Australian and New Zealand Institute of Insurance and Finance and Asia Insurance Review. 25 Taylor Fry

28 Sydney Ph: Fax: Level Clarence Street Sydney NSW 2000 Australia [email protected] Melbourne Ph: Fax: Level 6 52 Collins Street Melbourne VIC 3000 Australia [email protected]