Individual insurance brokers often specialise in a range of industry sectors. Ben Gair (pictured above), director of Bellrock Broking, counts dry hire equipment and also childcare services among his areas of expertise.
Insurance Business asked Melbourne-based Gair how he ended up providing risk advice in two sectors with such different risk profiles?
“Where we see that there is an industry that has risk and the risk needs to be managed and insured, then we see opportunity,” he said.
Nearly 15 years ago, Gair was working with OAMPs Insurance Brokers, a firm that is now part of Gallagher.
“I worked in a team which mainly focused around transport and construction - more so contractors than erections,” he said. “That involved a lot of the hire industry, which is where my understanding and expertise there comes from.”
Gair said much of his current work, including in the childcare sector, is a result of referrals.
“We were fortunate that a lawyer that we do some work with was involved with a mixed bag of childcare and early childhood learning service providers,” he said. “We got introduced to them because they had a few issues with their current insurers.”
Gair spotted an opportunity and educated himself by engaging external experts to find out what sort of risks childcare services face.
“Then we went and spoke to the underwriters about what their concerns were and once we started to get our head around the legal and statutory framework we found a bit of a niche in early childhood learning services with those clients,” he said.
Gair said that’s led to more work from referrals.
“So while these are different industries [dry hire and childcare], it’s an evolution of the same process being adapted to understand something and provide the same framework and fundamentals to get the right outcomes,” he said.
IB asked what are the risks in the childcare services space?
“It’s heavily regulated in the sense that a lot of incidents need to be reported to a governing body,” said Gair. “They also quite often have a large number of staff so the HR [human resources] and employment practices liability exposures are quite significant.”
He said wages and a unionised workforce can also present business risks.
One area that’s particularly challenging, he said, is the regulation and risk management around child abuse prevention.
“There is a distinctly different risk around abuse and molestation in these businesses, which is a challenge to insure correctly,” he said.
Managing the personal information of children, he said, also brings particular cyber risks.
“We’ve also seen quite a bit of property and business interruption exposure because these businesses are dependent on one site,” said Gair. “You can’t just pick a childcare centre up and move it next door.”
He said the regulatory approvals and certifications for a childcare facility are tied to the site they operate from.
“If they have a storm claim, they can’t go and relocate everyone the next day,” said Gair.
IB asked him what risk produces the most claims?
“Have you got kids?” asked Gair. “Then you’d understand that kids are forever falling over and hurting themselves.”
He said the licensing framework requires a centre to notify the regulator about these incidents.
“We see a lot of activity just in a pure notification sense because they’re required by law to do this,” he said. “Little Johnny bumped his head, little Johnny fell off a chair, little Johnny was involved in a serious incident - that needs to be reported.”
Another area, said Gair, also produces a reasonably steady flow of claims.
“We do see some frequency in what we will call meritless claims where parents seem to think that the legal system is an opportunity for them to make a buck out of what we see as an inconsequential or irrelevant issue,” he said.
Gair said one way childcare service providers can manage this issue is through a personal accident program which can offer a payment to the parents.
“If little Johnny is injured and our client’s not negligent, we can offer the parent a first party payment to cover a certain cost associated with a hospital visit or a broken bone to avoid litigation and reputational harm,” he said.
IB asked if the frequency of these sorts of claims is increasing?
“No, it’s very much just a steady flow,” Gair said. “The more sites you have, the more activity you have - but I wouldn’t say there’s any trend or increase in parents trying to take advantage.”
One “big piece of work”, he said, is around childcare affordability. The Australian Institute of Family Studies recently released a report looking at the costs and affordability of childcare.
Gair said some childcare centres are undergoing audits to understand their costs better. However, he said the insurance implications of this issue are not known yet.
“There’s quite a bit of M&A [mergers and acquisitions] activity in the childcare space,” he said. “It’s a recession proof business and typically if the business is well run families will stay there.”
Gair said his firm’s clients usually operate between 10 and 50 centres.
“Once it’s been de-risked and set up then it’s an attractive target for a bigger business to come and acquire,” he said.
Gair, whose firm recently joined Bellrock, said his team now has the ability to help with M&A transactional risks.
“We’ve got in-house legal capability at Bellrock and some really capable people,” he said.
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