Damien Coates (pictured above), recently provided Insurance Business with insights into where his international underwriting firm sees opportunities and challenges in Australia and New Zealand.
“I think in Australia, we’re seeing the transactional liabilities phase, which includes W&I [warranty and indemnity] and title insurance, as a growth area,” said Coates, DUAL Asia-Pacific’s Sydney-based CEO.
In New Zealand, he said “it’s all about capacity.”
“Our New Zealand business now is without doubt our fastest growing business,” said Coates. “It was an NZ$20 million business five years ago and it’s now over NZ$150 million.”
The offering is for brokers in Australia and New Zealand but also other countries across the Asia-Pacific.
Coates said DUAL has traditionally focused on general liability but is starting to look for opportunities in the transaction liability space.
“There are certain liabilities that are associated with the transaction that are best dealt with and insured in the transaction itself,” he said.
IB asked what challenges Coates’ firm faced simultaneously launching this offering, not just in Australia and New Zealand, but also in several other Asian jurisdictions?
“The expertise associated with transaction liability is a very specific expertise,” he said. “So it’s quite common that many companies will lead their transactional liability across the APAC region from Australia, and that’s the route that we’ve chosen.”
He suggested that the regulatory challenges across these different markets, in this particular insurance area, are quite similar.
Coates also suggested that that this new offering is a stepping stone for expansion in the property insurance space. He said his firm has already acquired a firm in New Zealand.
“In New Zealand, we acquired a business that was our first entry into the property insurance market in New Zealand,” he said. “That is an incredibly complex market because of the issues that we’re seeing with climate-driven cat.”
He said that portfolio has “grown significantly.”
“We’re now looking to see if there are [acquisition] opportunities for us in Australia,” said Coates. “We’re hearing from brokers that there is a lack of expertise in commercial property in Australia.”
He suggested that an acquisition deal may not be far away.
Coates also said that being able to offer brokers both property and liability covers is becoming more important, particularly in markets challenged by natural catastrophes.
“What we’ve found [in New Zealand] is being able to offer brokers both property and liability is really very important for the way they’re looking to manage risk, particularly when we’re talking about aggregates associated with quake-exposed areas,” he said.
The CEO said the New Zealand property insurance market suffers from “a massive lack of supply of capacity.”
“We’ve recently been able to secure an extra NZ$4 billion of extra aggregate that we’re able to use in the market because there are some real issues for brokers in terms of being able to get enough capacity for property in the New Zealand market,” said Coates.
He also said NZ has limited SME market penetration “for some of the liability products like management liability and cyber.”
Much like in Australia, he said in recent years stakeholders in New Zealand’s property market have faced new complexities around floods and other climate risks and the need to develop new risk models.
“Commercial property is such a difficult market to operate in because we’ve got combinations of an increasing number of climate driven nat cat, not just in modelled cats such as earthquakes, but we’re also seeing floods and other weather driven events,” said Coates.
Also, he said, rising costs driven by inflation across the supply chain are causing “a lot of underinsurance.”
“It really is a conundrum,” said Coates. “There’s a lot of demand for more insurance but there’s limited supply.”
This year, DUAL Australia is marking 20 years as a business with fundraisers at its four offices around the country. The aim, said Coates, is to raise $200,000 for several charities including the Black Dog Institute. The recent fundraiser in the Sydney office, he said, raised $86,000.
“What better way to celebrate than by giving back to those less fortunate than ourselves,” said Coates.
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