Thanks InsuranceNEWs and all those that wrote

Just a quick post to thank Terry McMullan and the team from InsuranceNEWS for picking up on my blog post on Monday about the effect that the Australian Government’s decision to remove Insurance Loss Adjusting from the Skilled Migration Program will have on our industry.

A number of people saw either the InsuranceNEWS article or my blog post and have written in expressing their concern. The deadline for this is today so if you have not already, please complete the public submission on why this proposal will be damaging to both the insurance industry and the Australian people generally at

To be clear, we are looking to ensure the Insurance Loss Adjuster profession (599612) remains on the STSOL (short term) and preferably moved to the MLTSSL (medium long term) lists.

This, I think, all comes down to few people really understanding the value of general insurance, and the claims function in particular. We see this with the number of claims to the Financial Ombudsmen Service and the need for government enquiries.

This demonstrates the importance of the Mansfield Awards for Claims Excellence, set down for July 5 in Sydney.

Besides brokers and insurers helping the cause, we have also had help from those who know people in government and working with senior personnel within the major loss adjusting firms operating in Australia, we will be seeking to meet with government advisers and politicians to explain our cause.

Thanks again to all those that are helping in trying to have the decision to remove loss adjusters from the skilled migration occupation list overturned..

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Loss Adjusters removed from Skilled Migration Program – Please help change the Government’s mind

Following political pressure about the number of home invasions and other crimes being committed by immigrants and the routing of the visa system by far too many,  the Australian Government have done away with the 457 Visas, and as part of this have removed insurance loss adjusting as an occupation/profession that is able to come into Australia.

From what I gather, this is not for any other reason other than a statistical analysis looking at the the number of visas that have been issued and due to the low number it is not required.

Nothing could be further from the truth. Looking at the AICLA diary it shows that there are around 350 qualified loss adjusters in Australia. At the time of writing I understand that there are 47 loss adjusters in Australia operating under a 457 visa.

Another statistic that I have heard is that the Australian Bureau of Statistics has around 3,500 people who record their occupation as loss adjusters. This, I can only assume, is in house adjusters, builders, forensic accountants or investigators who are doing primarily loss assessing. Also, some loss adjusters have moved into claims management due to the pressure of the job and or better salaries.

There are a couple of issues that need to be considered by the government. First up, there has been a 35% increase in complaints against general insurers in the 12 months of 2016-17. The fastest growing problem according to the Financial Ombudsmen Service (Source: ABC News).

The number of brokers complaining about claims service to me is at present at an all time high. This situation is likely to only to get worse with this change.

Secondly, like many sections of the insurance industry, loss adjusters have been caught up with generational change. The number of adjusters that have retired or sadly passed away has been more than most anticipated.

Thirdly, it takes at least 5 years for the brightest of people to be adequately trained to handle larger claims, particularly ones involving complex issues around business interruption, extra costs of reinstatement and the like.

Fourthly, we need to build our base of experienced adjusters to handle catastrophe situations. This is on top of the requirement to bring quality people in from overseas so that business as usual claims can continue to be handled fairly and promptly.

Fifthly, no one that I know who has come into Australia as a sponsored loss adjuster has committed any crime, been a burden on the government and there has been no exploitation by any employer. Everyone has paid their taxes and those that have come have been great for our economy and the communities they live in.

Finally, with the offshoring of many claims roles, the talent pool where those that want to become loss adjusters is reducing and with the pressure on adjusting fees the investment in training and education has put a strain on those firms committed to the profession.

The answer for as long as I can remember has been for the profession to attract quality adjusters from overseas to compliment the local team. Some of Australia’s most talented and respected adjusters working in the industry today fall within this category. What I would say is that many who have immigrated to Australia have participated most in the education process of younger adjusters.

If the government continue down the path of just looking at the numbers and not the important service that highly trained loss adjusters provide to both the insuring public and the insurance industry, then I see a perfect storm approaching for our industry.

If you would like to have your say, please go to

The deadline is this Wednesday, 20 June. The occupation is insurance loss adjusting.

I appreciate you are all busy but I do urge you to please take a few minutes and help get the message across that loss adjusting needs to remain on the skilled migration program. It is only if enough people in our great and important industry complain can we over turn this.


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Reduce funding of ASIC when the Royal Commission showed up so many problems and risk from natural disasters continuing to be ignored

When I started this blog I did not have any intention of discussing political issues but wanted to focus on general insurance. I am into politics and do not belong to any political party nor do I vote for the same party at each election. I try and make an informed decision based on the promises of each side.

With this background, decisions by governments do impact on general insurance which in turn is there to protect the Australian economy, our communities right down to individual business and home owners.

Last week I was questioning the huge hidden tax that the Terrorism Levy has become.

This week I join the group of Australians who cannot understand why the Federal Government has reduced funding to the Australian Securities Investment Commission at the same time the Royal Commission has uncovered so many problems. I will let you draw your own conclusion.

The other great disappointment in the budget is that the investment in addressing the increasing risk brought about by climate change, i.e flash flooding, cyclone damage etc has been ignored. As a country we will pay for this big time in the long run. If you compare Australia’s investment in this space to Canada’s you can see the leadership required to address this very real issue in our country is way out of step.

Yes there are some good things in the budget but these two issues are of great concern and really do need to be rethought.

We all deserve better than short term politics. We need some statesmanship with a genuine investment, not only our future, but that of our children and grandchildren.

Enough said, hopefully back to some technical insurance stuff tomorrow!

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Which small businesses have mandatory data breach reporting obligations? + 1st Quarter statistics

Another topic I have written a lot on is the Federal Government’s mandatory reporting regime.

I have been asked many times to explain the obligations on small business and so I outline them below. After that I provide some stats at a high level on the first quarter reporting.

From 22 February 2018, the Notifiable Data Breaches scheme (“NDB scheme”) requires a wide range of organisations to report data breaches that are ‘likely to result in serious harm’ to the individuals whose personal information is affected by the breach. They will also be required to notify the Office of the Australian Information Commissioner (“OAIC”).

The NDB scheme applies to organisations that already have obligations to secure personal information under the Privacy Act 1988 (Privacy Act). Generally, this does not include small businesses that have a turnover of $3 million a year or less.

However, there are a few exceptions. Organisations that fall under the following categories will have mandatory data breach reporting requirements, regardless of their size:

  • Health service providers (including, for example, private hospitals, day surgeries, medical practitioners, pharmacists, allied health professionals, gyms and weight loss clinics, childcare centres, and private schools);
  • Organisations that trade in personal information;
  • Credit reporting bodies;
  • Employee associations registered under the Fair Work (Registered Organisations) Act 2009;
  • Organisations that opt-in to being covered by the Australian Privacy Principles under section 6EA of the Privacy Act.

The NDB scheme will also apply to small businesses in these categories that are based overseas if they have an ‘Australian link’.

[ Note An Australian Link generally extends to the overseas activities of an Australian Government agency (s 5B(1)). It also applies to organisations (including small businesses covered by the Act, outlined above) that have an ‘Australian link’ (s 5B(2)). An organisation has an Australian link either because it is, in summary, incorporated or formed in Australia (see s 5B(1A) for more detail), or where:

  • it carries on business in Australia or an external Territory, and
  • it collected or held personal information in Australia or an external Australian Territory, either before or at the time of the act or practice (s 5B(3)).

Further information about entities that are taken to have an Australian link is available in Chapter B of the APP Guidelines.]

Tax File Number (“TFN”) recipients (which is any person in possession or control of a record with TFN information) will also need to comply with the NDB scheme in relation to their handling of TFN information. This means that if TFN information is involved in a data breach, a TFN recipient will be obligated to meet the requirements of the NDB scheme.

Organisations that are not covered by the NDB scheme are encouraged to use the information on notifying individuals under the scheme to create or review their data breach response plans.

Being transparent when a data breach occurs is central to meeting community and consumer expectations. 94% of Australians believe they should be told when a business loses their personal information. Informing individuals about a data breach is one step that organisations can take to demonstrate that they take their responsibility to protect personal information seriously.

And as a practical measure, notifying individuals at risk of harm can provide them with the opportunity to reduce their chances of experiencing harm. For example, individuals can resecure compromised online accounts. This can reduce the potential impact of a data breach overall.

As always, I recommend every business and or organisation to review or develop a business continuity management plan and obtain, and or review their, Cyber Insurance and to discuss the many and varied options available with their insurance broker.

Now to the Ist Quarter reporting stats:

Key statistics from the first quarterly report include:

  • Top five sectors that notified the OAIC of eligible data breaches included health service providers (24 per cent of notifications), legal, accounting and management services (16 per cent), finance (13 per cent), private education (10 per cent), and charities (6 per cent).
  • 78 per cent of eligible data breaches were reported to involve individual’s contact information. 33 per cent were reported to involve health information and 30 per cent to involve financial details.
  • 51 per cent of the eligible data breach notifications received indicated that the cause of the breach was human error. 44 per cent of breaches were reported to be the result of malicious or criminal attack, and 3 per cent the result of system faults.
  • 59 per cent of data breach notifications reported that the personal information of between one and nine individuals was affected. 90 per cent of data breach notifications related to breaches involving the personal information of less than 1,000 individuals.

The key point for me here is that just over half were through human error. No matter what systems we have in place, it is people risk that is our greatest risk in so many areas of our organisations and cyber security is no different!


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A Changing of the Guard – Financial Ombudsmen Service (FOS) soon out and Australian Financial Complaints Authority (AFCA) coming soon (1 November 2018)

The Changing of the Guard

The Australian Financial Complaints Limited (AFCL) has received authorisation from the Minister for Revenue and Financial Services, the Hon. Kelly O’Dwyer, to establish and operate the Australian Financial Complaints Authority (AFCA).

Both the Minister (media release) and AFCL have issued a media release, and announced the new members of the AFCA Board. In case you have not seen either, I would advise the following key points.

Under the Minister’s Authorisation, AFCA will commence accepting new complaints on 1 November 2018. All financial firms will be required to be a member of AFCA by no later than 21 September 2018. Ninety-eight percent of current members of the Financial Ombudsman Service (FOS) have already completed the annual assessment and member declaration to ensure a smooth transition to AFCA.

AFCA will, over the next few months, be putting in place the necessary infrastructure, staff and procedures to be ready to receive complaints from 1 November 2018.

In the interim, AFCA will operate the FOS scheme and will deal with any existing FOS disputes under the current FOS Terms of Reference. The operations of FOS, including staff and members will be transferred to AFCA.

The AFCA Board will also continue working with the Credit and Investments Ombudsman (CIO) Board on the necessary arrangements for a transfer of its members and operations to AFCA. There will also be ongoing collaboration with the Superannuation and Complaints Tribunal (SCT) during the transition process.

Next steps

One of the early actions of the new AFCA Board is said to be to consult stakeholders, including current FOS members, CIO members and superannuation trustees, relevant industry bodies and consumer organisations, on the proposed AFCA terms of reference (to be known as the Rules) and on an interim funding model for the new scheme.  I will write over the next month with further information on these consultations which are currently planned to commence in June 2018.

An interim AFCA website – –  is already up and going to enable the Authority to provide regular information and updates on the commencement of AFCA, including information about consultation on the AFCA Rules.  Information is also available on the FOS website.

It is reported that a full service AFCA website will be ready by the commencement date of 1 November 2018.

If anyone has any questions regarding membership of Australian Financial Complaints Authority or any other questions regarding AFCA commencement, it is recommended you call them on 1800 931 678 or email

For my part, I will watch the new organisation with interest. General Insurance is so complex and many of us fear that well established legal precedents including the application of the Insurance Contracts Act will not be followed as we have seen far too often of late in the current organisation when those making the decisions are not sufficiently trained or experienced in the industry. With a mega body handling so many different types of financial products this issue may get worse not better.

The second issue is, will the new Authority publish the data on complaints that FOS currently provide annually? This is an important service that I for one would hate to see disappear or get mixed in with a bigger unintelligible report in the new mega Authority.

But to be fair, we need to all give the new Authority every chance and we wish them every success in their very important role.

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NSW introduces new laws to curb the serious issue of distracted drivers

I have posted several articles over the past few years on the very serious issue of people texting and generally being distracted by their mobile devices while driving. One post covered the terrible case where in February this year, a 22-year-old man, who allegedly took his eyes off the road for up to 20 seconds to use his phone, seriously injured two policemen setting up a random breath test. That 20 seconds of mobile phone use in a car travelling at 60km/h was equivalent to driving blind for 330 meters, Parliament was told. As a result, one of the police officers had part of his leg amputated. See

Even on Saturday as I drove out of my own street onto a round about, I was nearly involved in a collision with a driver who was clearly not watching the road. Thankfully my wife and I could see the driver was not watching the road and we avoided the certain collision.

I therefore welcome the new measures taken by the New South Wales government to curb this very real problem. That is, people simply do not realise their addiction to social media, text messaging and emailing is putting people’s lives, including their own, at risk. This is despite more than 40,000 people being fined by NSW Police for illegal mobile phone use in the 2016-17 financial year.

In trials by One Task, a Sydney technology company, of speed cameras to spot illegal use the cameras detected more than 400 Sydney-siders using phones illegally in a 12-hour period.

NSW will be the first place in the world to introduce speed-camera-style technology to detect and crack down on illegal mobile phone use by motorists and while it will no doubt have a revenue benefit to the government, I do believe the primary reason for the new laws is to reduce the numbers of people killed or seriously injured on the road.

The new rules have been passed by NSW Parliament and they also extend to mobile drug testing which will now include cocaine and tougher penalties for drivers under the influence of drugs.

While motor vehicle policies have an exclusion for drivers being under the influence of alcohol or drugs, only a few have introduced exclusions for texting while driving. While I strongly support such an exclusion, I think it should be in line with the under the influence exclusion and still protect the owner of the vehicle but make the driver ultimately responsible for their dangerous actions.





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Address at the ASIC annual forum by the Hon Kelly O’Dwyer MP

With many of us concerned about the loss of trust in the insurance industry by the public, the increasing number of complaints and some of the practices being adopted I thought I would share the address by the Hon. Kelly O’Dwyer MP in her role as Minister for Revenue and Financial Services at the ASIC Annual Forum on 19 March.

I have marked in red the areas that I particularly found of interest.

Check against delivery

Thank you, it’s a pleasure to welcome you to the Australian Securities and Investments Commission (ASIC) Annual Forum.

This is the first time I have officially shared a public forum with the new chair of ASIC since the announcement of his appointment late last year, and I want to congratulate James Shipton on his new role.

Some of you might know that James and I share a fairly quirky heritage in that James’ father, Roger Shipton, was a former Member for Higgins, and I am the current Member for Higgins.

However, we had never met until he was headhunted for this role from the United States.

I am sure James will bring to this important job his considerable experience in corporate regulation, both as a practitioner and in academia, as well as, as a regulator. His unique international perspectives in Europe, Asia and the United States will be an asset.

ASIC has an incredibly important role in Australian business.

Australia’s reputation as a great place to invest, to set up business and to employ people, rests in no small part to the confidence we place in the work of our regulators, especially ASIC.

So it is fitting that the theme of this year’s ASIC Annual Forum is — ‘maintaining trust’.

This is because trust is fundamental to all our dealings in financial services, doing business and investing.

And maintaining trust requires constant vigilance.

It raises many questions — for financial professionals, for regulators, for the industry as a whole.

And the ‘maintaining trust’ theme also poses implications for the Government — ones that we are working hard to address.

So in my time today, I want to make some announcements relating to ASIC, as well as share some thoughts on recent developments and the Government’s priorities in the year ahead.

ASIC leadership

When it comes to the leadership of ASIC the Government strongly believes it’s crucial that the ASIC Commissioners have the right mix of skills, knowledge and experience.

As I mentioned, we have recognized that James Shipton brings a strong set of skills and international experience to the role of ASIC Chair.

And I would like to announce today that the Government also intends to create a second Deputy Chair position in ASIC to build on and strengthen ASIC’s leadership and give ASIC greater flexibility to administer their new powers and increased responsibilities resulting from recent law changes. 

This move will bring ASIC in line with its regulatory brethren at the Australian Competition and Consumer Commission (ACCC).

This important step will also support ASIC to engage more closely with its stakeholders and assist to better communicate its role, its priorities and how its resources are allocated.

I am currently seeking the required approvals under the Corporations Agreement with the States and Territories, and intend to introduce legislation to make the necessary amendments to the ASIC Act in the coming weeks.

I am also pleased to announce today the reappointment of ASIC’s current Deputy Chair, Mr Peter Kell, and also Commissioner John Price.

I want to thank them for their tremendous work to date, and I look forward to their continued contribution.

The Government will make an announcement regarding the new Deputy Chair on introduction of the legislation.

Statement of Expectations and Competition mandate

In line with the theme of ASIC’s leadership and future direction, it is with great pleasure that I announce the Government has settled on the new Statement of Expectations for ASIC.

The new Statement of Expectations acknowledges that ASIC, as the market conduct regulator, has the challenging task of balancing several objectives aimed at facilitating efficient capital markets and promoting trust and confidence in the financial system.

It reflects the notion that for ASIC to be a successful regulator, it will need to continue to have an open and sound working relationship with its regulated population and counterpart regulators.

It further recognizes how critical it is for ASIC to communicate its key decisions and regulatory outcomes to the public and demonstrate clearly how those decisions and outcomes align with ASIC’s legislative and strategic objectives. This is particularly essential now that ASIC is being funded by industry.

Competition mandate

The new Statement of Expectations will also reflect a new competition mandate for ASIC.

It is my belief that ultimately it is competition – not regulation – that is the best means of ensuring consumers get value for money in financial services.

I think that everyone agrees that both consumers and financial services providers — particularly new entrants — benefit from a more competitive financial system.

To this end, the Government will legislate to add consideration of competition to ASIC’s mandate, consistent with the Government’s response to another of the Financial System Inquiry recommendations.

This new mandate will require ASIC to consider the effect that its work and the exercise of its powers will have on competition in the financial system.

Including competition consideration in ASIC’s mandate complements other key initiatives undertaken by this Government to support competition.

This includes tasking the Productivity Commission to review competition in Australia’s financial system and funding the ACCC to undertake in-depth inquiries into specific financial system competition issues.

The Government looks forward to receiving ASIC’s response to the Statement of Expectations from its new Chairman.

As for recent developments in reforms, there’s plenty to discuss, but I’d like to focus on a few key items.

New financial adviser standards

Earlier last year, the Turnbull Government established the Financial Adviser Standards and Ethics Authority (FASEA) – a body comprising industry, consumer ethics and education experts – to raise the education, training and ethical standards of financial advisers.

Since the appointment of its CEO, Dr Deen Sanders, FASEA has been working hard to provide the industry with certainty on the new requirements.

I am pleased to note that shortly FASEA will be releasing new draft guidance on the education pathways for all existing advisers.

Under the proposal, existing financial advisers will need to undertake a relevant degree or one or more bridging courses, including a specific course on the Code of Ethics that will be developed by FASEA.

Advisers who have not previously undertaken a degree, or who have undertaken a degree that is not in a related field will need to reach degree-equivalent status.

And advisers who have previously completed a degree in a relevant discipline will need to complete between one and three bridging courses, to bring them up to date with current ethical and professional standards. Some advisers will need to complete additional study.

However, it is important to remember why these reforms are necessary – repeated instances of inappropriate or just plain bad advice has significantly eroded trust and confidence in the financial advice sector.

Every adviser has a role to play in rebuilding that trust, and these new educational requirements are a critical step towards professionalising the sector.

Ultimately, the professionalization of the advice sector will be in the best interests of all advisers, existing and new, because it will ensure enduring consumer trust and confidence in the financial advice sector.

The consultation on FASEA’s draft guidance will be open until the end of June this year. I encourage you all to participate.

Whistleblower protections

Now turning to protections for whistleblowers.

In the summer just gone, we introduced a Bill into Parliament to implement significant reforms to Australia’s whistle-blowing regime.

The Bill will provide stronger protections for insiders who break ranks and expose corporate misconduct and, for the first time, establish whistleblower protections for people who disclose information about tax misconduct.

The Parliamentary Joint Committee’s report on whistleblower protectionsmade 35 recommendations to strengthen Australia’s regime and I am pleased to say the Bill addresses the vast majority of those recommendations, and the Government is currently considering those that remain.

The new whistleblower Bill delivers on the Turnbull Government’s commitments in the 2016-17 Budget and as part of the Open Government Partnership – National Action Plan, to provide new protections to tax whistleblowers and to strengthen whistleblower protections in the corporate sector.

Under our Bill, a wider range of whistleblowers will be protected from a wider range of egregious conduct, and for those who do suffer reprisals or retaliation for blowing the whistle, the path to compensation will be simpler and easier.

And we are delivering a framework which will improve corporate governance practices and facilitate effective law enforcement.

Our Bill is a major step forward for whistleblowers in Australia, and we look forward to Labor and crossbench support for these critical reforms.

Financial products

This year the Government is also progressing reforms to address the mis-selling of unsuitable financial products to retail investors and consumers.

In December 2017, we invited comment on draft legislation for new design and distribution obligations for issuers and distributors, and a new product intervention power for ASIC.

The design and distribution obligations will ensure financial products are targeted and sold to the right consumers.

Now let me make clear from the outset, there is more work to do on these critical reforms. The feedback received from the last round of consultation raised a number of issues and the Government is carefully considering these.

When, and only when, these issues have been given full and deep consideration and after additional consultation  the legislative package be finalized and ready for introduction.

Under the new regime, firms will be required to identify the target market for their product, and will need to design the product for that market.

Further, both issuers and distributors will be required to take reasonable steps to ensure that products are distributed appropriately – that is, distributed to the target market only. These are significant reforms that will change the landscape for the sale and distribution of financial products in this country.

However, despite this, as many of would be aware these new obligations are not unprecedented – the reforms that commenced in the European Union in January this year also apply design and distribution obligations to product issuers.

To complement the new design and distribution obligations, ASIC will be given a new product intervention power.

This will give ASIC the power to intervene in the sale of a product, a product feature or practices related to the distribution of a product, in circumstances where ASIC perceives a risk of significant consumer detriment.

The products intervention power, like the design and distribution obligations, is also not unique globally.

The Financial Conduct Authority in the UK has for some time had the power to intervene in the sale and distribution of a financial product, if it is considered to be harmful to consumers.

And, the European Securities and Markets Authority has recently sought comment on proposed product intervention measures for their market.

The design and distribution obligations and the product intervention power are complementary and interconnected, and I am confident that together they will represent vastly improved consumer outcomes.

These reforms were recommended by David Murray in his 2014 Financial System Inquiry report, and the Government accepted those recommendations in full.


While I’m here, I’d also like to say a few words about the insurance industry as there are a few major developments on the horizon.

Life insurance report

At the end of this month, the Parliamentary Joint Committee is due to hand down a report into the life insurance industry.

Among the findings, I expect that the report will make recommendations on whether or not there is a need for further reform and improved oversight of the life insurance industry.

It will also focus on the sales practices of life insurers and brokers.

This report has long been awaited by the industry, government and indeed, many consumers.

Unfair contract terms

And, in the first half of this year, the Government will be consulting on changes to apply unfair contract term laws to life insurance contracts, as well as general insurance contracts.

This is in response to the Senate Committee report on the general insurance industry and the Australian Consumer Law Review.

While this will be a significant reform for industry, it is in the best interests of consumers and will bring the insurance industry into line with other financial services.

Mental health

Another issue, the insurance industry is currently contemplating with is claims for mental health related disabilities.

In October 2017, we saw the release of the Actuaries Institute Green Paper on mental health and insurance — a welcome development.

The paper highlights the large array of issues the insurance sector, and in particularly the life insurance sector, need to consider to support the large number of Australians who experience mental health conditions.

The list of issues includes things like definitions, data, rehabilitation and claims processing.

Given the incidence of mental health issues across the population, it is in the best interests of the community that the insurance industry, regulators and government work together to deal fairly and effectively with this issue.

I look forward to seeing further progress in this area.

Australian Financial Complaints Authority

Before I finish, I’d like to share some insights on the Australian Financial Complaints Authority (AFCA) — the new one-stop shop for all financial and superannuation disputes.

It will be landmark year for dispute resolution in Australia.

Parliament has passed legislation to establish the AFCA and we are currently putting in place the governance structure that will enable AFCA to start accepting disputes no later than 1 November 2018.

I recently announced that the inaugural Chair of the AFCA Board will be the Hon Helen Coonan.

And once a company is authorised to operate the AFCA scheme, I will make further appointments to the AFCA Board.

When the AFCA is up and running, consumers and small businesses will have access to free, fast and binding service to resolve all financial disputes.

The advantage of the new regime is that there will no longer be uncertainty, consumer confusion and cross-referral of disputes between dispute handling bodies.

Where a complaint covers multiple providers within the financial system, managing these complaints will be smoother under a one-stop shop.

What’s more, the AFCA scheme will also allow more small businesses to access external dispute resolution.

We have relaxed the definition of ‘small business’ so that in the case of a dispute related to a credit facility of less than $5 million, a business with fewer than 100 employees will be able to lodge a dispute with AFCA.

On top of that, AFCA will operate with significantly higher monetary limits than the existing external dispute resolution ombudsman schemes, so that those who have wrongfully suffered a loss will receive fair compensation.

We believe this will provide real outcomes for consumers and small businesses.

Closing remarks

Over the past 12 months there has been a lot of work done by the Turnbull Government in the regulatory space, and further work, as I have outlined, will continue this year.

Collectively, the initiatives that I have mentioned today will make a big difference.

They go to integrity and they go to transparent processes. And most importantly, they go to consumer trust.

We know that there is much to do.

However, it is at forums such as this where new ideas and experiences can be shared.

Our goal is not regulation for regulations sake.

Our goal is to provide the best regulatory structure for the free enterprise system to work as it should.

This will ensure that our country is seen as the best country in the world to invest in, and that our businesses and most of all our financial consumers can look forward to a prosperous future based on trust in that  regulatory framework. 

So, on that note, it is my pleasure to officially welcome you all to ASIC’s Annual Forum for 2018 and I look forward to your deliberations.

Thank you.

For my part I will continue to argue that builders, investigators and others handling claims are regulated so as they have at least a basic understanding of the fundamental principles of insurance, including the principle of Utmost Good Faith and understand the products that they are making decisions on coverage.

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Are fines imposed on SME’s for data breaches fair?

As from 23rd February 2018 legislation now requires that Australian businesses report data breaches.

I have heard that there have already been an average of 10 notifications a week but this figure was on social media and I have not been able to verify the number.

I appreciate that we all have a duty to protect the personal data of our customers and employees but I question whether fines  imposed on any company that is breached is fair and reasonable.

Today the news is all abuzz about how Facebook was hacked. There have been reports of countless hacks of major international businesses and even sensitive government departments.

The issue is what is reasonable has been mulling around in my head for a while. It started last year, when LMI’s head of cyber security presented a board paper seeking an upgrade of our company’s security and seeking additional funding to cover the introduction of new software solutions. As we take cyber security very seriously all the recommendations were adopted and the capital expenditure approved.

A few weeks later I was meeting with a new client and in passing they advised that they had upgraded their security system and had spent exactly 50 times more than we had. Admittedly the client was an insurer with a much greater turnover, much larger customer data base and one would therefore think greater exposure. Having said this, the amount they had spent was greater than the gross profit of our organisation. As such it simply was not feasible for us to mirror their efforts.

Having said that, the same hacker could be targeting LMI as them and despite what to us was a significant expenditure I have to think we will be more vulnerable than the insurer.

I am also concerned about the number  of SME’s that are using the services of cloud based services such as Zero and MYOB’s new accounting systems. Employee data can be held here and the question is who would be fined if there was a breach of the cloud provider?

The other point that I would make is that after attending a number of conferences and hearing a number of computer security experts who carry out penetration testing, I am of the firm opinion everyone has been hacked but they have so much data already collected they have not used it as yet. The infographic at the end of the post shows the number of reported breaches during the first half of 2016, If you compare this to 2017 first half figures of 1,901,866,611 reported data breaches, you can see the massive increase (343%) in just one year.

The point to keep in mind is that in some countries, including Australia, during this period did not have to report breaches and so the figures are not complete.

With this background, I question is levying a fine on an organisation that has taken reasonable steps within their budgetary constraints fair and reasonable. Or is it just another form of hidden taxation on SME’s?

The reality is that reporting of breaches is now mandatory and the penalties for not notifying a breach are correctly more serious. Therefore businesses that do suffer a breach need to report it immediately.

If fines will ensure then every business needs to rethink their attitude to cyber insurance and if they do not have the cover consider obtaining the protection and of course making sure that it provides cover for any fines or penalties.

While does provide a detailed summary of the features and benefits of the majority of cyber policies available in Australia, it is my recommendation to any organisation looking for cyber insurance to obtain the advice of an insurance broker to obtain the right insurance protection for them.

This is a class of insurance that is changing rapidly and as with the cyber security itself it is not a set and forget issue. Both cyber security and the protection afforded by cyber insurance protection needs to be reviewed constantly, the later at least each renewal.


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Should Australia follow the US with Travel Pre-Approval

I caught my first flight following the upgrade of security after the latest terrorism arrests that took place last week.

I was concerned, as when I was called over for explosive testing the official tested two other people I did not know at the same time. Even though I was the first called, he wiped the swab over me last and tested us all with the one swab.

What would have happened if either had traces on them or their baggage and it was then wiped all over mine? It seemed an extremely unprofessional way of doing things which could at worst have severely delayed my travel and worst damaged my reputation if I was caught up at the same time as a terrorist.

It could be that they are just trying to look like they are doing something, but do it properly or do not do it at all.

The airport check in was, of course, a nightmare and I suggest that the government consider introducing a similar system as the United States government with a pre-approval travel system.

For those who travel frequently for business, within Australia and internationally it continues to get harder. We all appreciate the need for security but if you have say an APEC Travel Card which means you have been checked by not only our government but many within Asia, you have no criminal record and are not on any terrorism watch list then allow them to get on with their business and tax paying ability.

The benefits to government and the security system would be:

  • More revenue for government as there would no doubt be a fee to get the pre-approval. I think the APEC Card costs $700 and at present offers absolutely no value within Australia, going in or out at present. The value is in countries that honour the system.
  • It would reduce the congestion currently seen at the airport making it more pleasant for all travelers.
  • It would allow the security officers to focus on those that have not had the stringent security clearance and therefore likely improve detection.

Naturally, I would still suggest a random check of pre-approved travelers and if they were found to be carrying something not permitted they lose their pre-approval status which in itself would be reason to take care of what they take.

While security is the new norm for all our sakes, if the United States, who you would suspect would be one of the highest if not number 1 on the target list, can develop a workable solution, there have been no successful circumventing of the system that has been such to have it disbanded after many years of successful application.

This was the first of 6 flights I am to take between now and Thursday evening. Meanwhile, I am not looking forward to the rest of the week spent in airports. While I do not wish to be difficult, I certainly will not be allowing the explosive test to be conducted with others again. We will see how that goes down.

Oh, and please check your travel insurance to make sure that it has no exclusions for terrorism that may prevent a claim being made for cancellations or heaven forbid something worse.

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NSW Government continue to bend the facts to hide their ineptitude.

Like all rate payers in New South Wales, I received this (image) flyer from the New South Wales Government on the emergency services levy.

I cannot accept that deferring the levy is going to help those that are currently bearing the cost of funding the fire and emergency services.

Fact 1: everyone in New South Wales benefits from having an efficient, well funded, well trained and equipped fire and emergency services.

Fact 2: the men and women that do this work deserve our full support for doing some of the most dangerous and stressful work in our society to protect all of us and our property.

Fact 3: it is completely unfair that only a percentage of the community bear the bulk of the cost and not everyone.

Fact 4: by deferring the changes, it means that those that insure go back to bearing the brunt of funding the fire and emergency services.

Fact 5: this, in turn, means that to avoid paying the levy people do not insure or do not insure fully. Putting an even greater burden on the prudent and risk averse who insure fully.

Fact 6: Currently, the Fire and Emergency Services means that many insurance policies are 40% higher in New South Wales than say Victoria. If you add the triple taxation of Goods and Services Tax being imposed on the Fire and Emergency Services and then the State Government Stamp Duty on insurance premiums, Fire and Emergency Services Fees, and the GST component any fool can see the inequity of having the levy on any product or service.

Fact 7: Every single study on Fire and Emergency Services shows that the fairest way for the community to fund the service is to have as broad a tax base as possible. This is property rates where everyone pays, whether you are a tenant or an owner occupier.

Fact 8: In 2012, the New South Wales Government issued a White Paper and called for input from the community on moving the levy away from insurance, rightly pointing out that it was inequitable in the current form. This means the NSW government have had 5 years to get this right as well as the benefit of consulting with all the other mainland states who successfully made the transition from insurance to property rates.

Armed with these facts, I am sure that you will agree with me that this is a monumental and inexcusable balls up by the New South Wales government.

I am pleased to see the issue is getting some time in the Sydney Morning Herald  which sheds more facts on the waste involved here and how the new levy was so wrongly calculated. For a home owner who fully insures it should logically have gone down with the broader tax base.

We cannot put the toothpaste back in the tube but what we need is some honesty on the part of the Government that they and only they got it wrong and secondly an honest time line as to when the reforms will be implemented.

My guess is that it is in the too hard basket for this government, that is, it is beyond their ability and that we may be stuck with it for another generation.

Of course, this is not the only issue this government has failed us on. The water issue from the Murray Darling is a complete story of failure in itself.

We all deserve better!


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