25 years, 22 product lines, 450+ team members, 20,000 clients and one billion dollars in annual gross written premium. What a journey we're on in Australia. When I first started up this business in 1999 I really had no idea of the growth potential we had. We started in our early days giving “hard to place” insurance risks a home. Today we craft commercial and specialty insurance solutions for companies of all shapes and sizes, from Australia’s largest companies and government organisations, right through to micro start-ups.
For me, satisfaction always comes from working with our broker partners to really get to know clients, understanding what they need today and are likely to need tomorrow. We know that business never stands still and we take great satisfaction being by our client’s side on their journey – be that through technological innovation, royal commissions or regulatory change. What an honour to lead Liberty’s growth into a billion-dollar Australian insurer and to do that with such a loyal and dependable team of people. A lot has changed over the past 25 years, but there is also plenty at our core that really stays the same. We’ve worked to capture insights into who we are and what makes us tick. I can’t wait to see where the next 25 years take us.
Mike Abdallah
President & Managing Director Asia Pacific
1-5
What we’ve learnt
Liberty is part of Australia’s growth story. We’ve taken the lead in insuring many businesses and initiatives in Australia, playing a role in most major infrastructure projects, covering everything from bridges, roads, mines, waste treatment plants to hospitals and prisons. With Australia now one of the largest global growth regions for renewable energy projects, we’re seeing our Energy portfolio rapidly evolve as we support the transition from conventional power risks to renewable energy projects. Casualty claims have also changed a lot in our 25 years. The days of single party actions are over, and we’re well equipped to manage the increasing complexity of casualty claims and navigate the myriad of parties involved. From small origins back in 1999 to now being the largest professional and financial lines insurer in Australia, in part one of our 25 Perspectives for 25 years series we reflect on what we’ve learnt.
Liberty Specialty Markets has spent 25 years constantly evolving to deliver the confidence and continuity Australian brokers and clients need in the face of risk and uncertainty. Under the perpetual leadership of Managing Director Mike Abdallah, we’ve delivered 24 years of continuous profitability, ensuring the shared success of our people, policyholders and partners.
From 10 people with fax machines in 1999, to today being a team of 450 using transformational technology. We’ve come a long way in 25 years.
1
Where 25 years has taken us
by the Liberty team
02:00
by Brett Gardiner
Taking the lead in building Australia
3
by Mike Abdallah
Two decades of profitability through the fine art of managing market cycles
2
by Sara Sampaio Soares
Energy agility
4
by Richard Jessup
Increasing complexity of casualty claims
5
by Helen Brand
Enduring partnerships
6
An Insurance partner, not just an insurance supplier
7
by Ben Hissey
Meeting the needs of mid-size companies
8
by Joel Proud
Strength of partnerships in the rising cost of property claims
9
02:20
The benefit of insuring with a mutual
10
00:50
In Queensland alone, Liberty has more than 50 clients that have insured with us for over 20 years.
While Liberty forged our reputation in Australia on big and complex risks, today we partner with business and government organisations of all shapes and sizes. We focus on being an insurance partner, not just an insurance supplier, with our team of underwriters, risk engineers and claims professionals getting to know clients and how to support their evolving operations. Whatever their size, our clients have the security of knowing that, as a mutual, we’re committed to their shared success and offer stability and peace of mind, even during turbulent times. We explore the true value of partnerships in part two of our 25 Perspectives from 25 Years series.
Experience has shown that a long-term tripartite relationship between broker, client, and Liberty creates a sound foundation for long-term success. Close partnerships enable Liberty to get to the heart of every client’s business to understand their risks, objectives, and how we can best tailor insurance to their unique needs.
Importance of long-term partnerships
6-10
by Robert Mercer
The art of specialty claims
11
by Jon O’Riordan
Helping recover
12
by Blooms the Chemist
Speed matters
13
02:45
by Samantha Thorndike
Claims+ for construction clients
14
03:00
By Alan Thorn
Think you don’t have any environmental contamination exposure? Think again.
15
Over the past 25 years, we have been there for our clients through the worst of weather events, raging bushfires, cyber-attacks, oversight and inadvertence.
When a Sydney pharmacy was forced to close due to severe smoke damage, Liberty’s loss adjuster was there within two hours—and the pharmacy was back in business six weeks later. Another client – a food manufacturer - found their livelihood at stake due to a third party packaging issue and Liberty’s Claim’s Recovery team helped them recover $750,000 in uninsured losses. We’re one of few insurers to offer this recovery service. Not all claims can be concluded swiftly. Complex commercial claims can disrupt both businesses and lives for many years. Construction claims usually involve complicated contractual obligations, and increasingly frequent environmental pollution claims are catching businesses by surprise. These specialty claims require technical skills, a focus on solutions, and importantly, an empathetic human touch. Part three of our 25 Perspectives from 25 Years series looks at what it means to have Liberty here when you need us.
No matter the size of a client’s business or how significant a claim might be, at Liberty we understand that insurance claims are about more than money – they all involve people dealing with loss. That’s why we put people first and prioritise relationships.
Here when you need
11-15
by Natalie Manton
Giving hard to place small businesses a home
16
West side story: The art of staying the course with Australia’s mining industry
17
by Tim Bugg
First insurer to have a risk engineer for PI construction risks
18
1:45
by Angelo Maniatis
The enduring impact of PFAS 'forever chemicals'
19
by Michael Lincoln
New ways of insuring against extreme weather
20
Liberty is able to provide liability cover for many businesses that get blacklisted as uninsurable industries by general insurers.
Liberty’s portfolio includes liability programmes for mum and dad type speciality businesses, right through to highly tailored covers for 81 of the S&P ASX100. We understand the lifecycle risks unique to the diverse companies in mining and resources and work in partnership with them from exploration through to closure and reclamation. We're are also committed to staying ahead by tracking risks as they emerge. Liberty was the first insurer in Australia to introduce an in-house risk engineer dedicated to Professional Indemnity construction risks, and produce a lot of risk engineering insights to help brokers and clients understand evolving exposures, including PFAS forever chemicals. Liberty is also pioneering innovative parametric insurance covers to help businesses protect their earnings from the impact of extreme and unpredictable weather. Part four of our 25 Perspectives from 25 Years series takes a deep dive into our tailored solutions.
Liberty bucks the trend towards one-size-fits-all industry solutions by tailoring protection to precise needs. This includes businesses in industries that have historically found it hard to get cover as they are risky, difficult, dangerous or specialised.
Finding solutions
16-20
by Marcus Thomas
The art of enduring relationships
21
Insuring Australia’s energy transition
22
by Shelley Devane
Recall: believe it or not
23
by Rian Wickens
Navigating AI risks in insurance
24
by David Gallagher
Enhancing your cyber defence strategy
25
As well as sustainability in underwriting, we’re looking for sustainability in the industries involved. We want to see our clients succeed.
In a softening market, it can be tempting to shop around for the lowest price – but the cheapest solution may not be the best. Many of our clients first joined Liberty when market conditions forced their incumbent insurers out of the market. As a mutual, we offer consistency through fluctuating conditions and are invested in the shared success of our clients and broker partners. Liberty continues to provide protection for complex and emerging risks, including substantial support for Australia’s transition to renewable energy. While the risks associated with artificial intelligence (AI) are still too ill-defined for one definitive AI insurance policy, several of our existing policies can work seamlessly together to provide comprehensive cover. As cyber security continues to evolve we’re keeping our clients and broker partners abreast of the latest developments and best practice for protecting against new and emerging risks. As Australia’s largest product recall insurer, we also help clients prepare for the unexpected and our fun Recall Believe it or Not shines a light on some of the more bizarre recalls that companies now find themselves exposed to. In part five of our 25 Perspectives from 25 Years series we delve into the market outlook and the trends and emerging risks shaping the sector now and in the future.
The all-important tripartite relationship we foster between client, broker and insurer focuses more on making informed purchases than pricing alone. Establishing relationships that are less transactional and more enduring resonates deeply with our clients.
Market outlook
21-25
Mike Abdallah President & Managing Director Asia Pacific
Helen Brand Vice President, Head of Strategy, Risk & Planning, Casualty & PFR and QLD Branch Manager
Robert Mercer Head of Claims for Asia Pacific
Natalie Manton Assistant Vice President, Asia Pacific
Todd Woodard Head of Underwriting Professional & Financial Risks, Asia Pacific
From small origins as a staff of 10 back in 1999, Liberty Specialty Markets has spent 25 years constantly evolving to deliver the confidence and continuity Australian brokers and clients need in the face of risk and uncertainty. Fast-forward a quarter of a century and Liberty is now a billion dollar Australian commercial insurer, and has consolidated its market presence as a leading insurer to companies at the big end of town through to small privately-owned family businesses.
President & Chief Underwriting Officer - Asia Pacific Australia
To celebrate 25 years, we reflect on how far we’ve come and hear from some of those who have been there from the start.
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Our Australian capabilities
by The Liberty Team
Back to 25 Perspectives
20,000 businesses across Austalia.
81 of the S&P ASX100.
Liberty helps protect more than
Liberty today
Making employees proud of the company they work for provides a strong platform, and Liberty has always aimed to differentiate itself.
President & Managing Director Liberty Specialty Markets Asia Pacific
From heavy industry, mining and minerals, agribusiness, and travel through to family-owned micro sectors like equine, tree lopping, gardening and landscaping and everything in between.
A snapshot of what we insure
Here’s a cross-section of dynamic companies Liberty has helped insure over the past 12 months.
Renewables
The construction of Australia’s largest battery energy storage system in Melbourne.
The operations of Australia’s only green hydrogen plant.
A mine that extracts rare earth elements used to create powerful permanent magnets used in wind turbines and electric vehicles.
The construction of Australia’s largest solar farms in the Central West and New England region of NSW.
To help celebrate 25 years in Australia, we asked some of our longest-serving team members to reflect on the journey that led Liberty to become a leading underwriter to companies of all sizes across the country.
Then and now
We had no technology beyond fax machines which went absolutely crazy when HIH folded and the market firmed in 2000. I don’t think the sight of green fax paper spewing all over the floor will ever leave me. We used to collate the bound business from the products at the end of each month, add the reinsurance and allow for the claims and then deduct the expenses which all came from corporate cards via the bank. It was all very manual and the results were sent to our Boston head office at the end of the month – all done of course by fax. Back then there was no two-day close and early core operating system finish, the numbers were submitted at day 10 which in short order became day five; all very different to the machine that we have today.
Senior Vice President
Ben Hissey
Things have changed pretty dramatically since those first 18 months when we had no systems, no claims centre, no SAP and no Microsoft Teams—just excel.
Former Head of Casualty
Noel MacCarthy
Deputy Head of IT
Fiona Climpson
PFR Manager NSW
Chris Maclean
Head of Casualty Australia and NSW Branch Manager
Paul Scales
Senior Risk Engineer
Guy MacGregor
Chief Risk Officer & Head of Digital Strategy
Vanessa Maher
Head of IT
Cindy Tang
Chief Operating Officer
John McCabe
Product spread
Technical expertise
Clients and turnover
Staff and reach
Specialist Insurer of the Year
22 commercial product lines spanning everything from environmental, commercial and cyber crime, construction, energy, accident and health, directors and officers, marine and M&A.
claims managed per year.
13,000
clients collectively contribute to $1 billion in gross written premium in Australia. 500 Australian clients have been with Liberty for more than 20 years.
Over
20,000
A repeat winner in the prestigious National Insurance Business Australia (NIBA) Awards and leading insurer across 29 categories.
6 members of the executive team with the company for 20+ years, including the longest-standing insurance chief executive in Australia.
staff across Australia.
450+
Casualty was our largest product line until 2017, when Professional & Financial Risks rapidly grew. Today Liberty is the largest financial lines insurer in Australia.
Part of the Liberty Mutual Insurance Group (Liberty Mutual), a Fortune 100 company with more than 110 years of specialist expertise.
The boards and officers of around half the mining and energy companies listed on the ASX.
The transportation of $1.6 billion worth of rice.
Mining, energy & agriculture
Product recall protection for around a third of the products for sale in major supermarkets.
Retail
The construction of the $5b Western Harbour Tunnel from Birchgrove to North Sydney in Sydney.
Construction
The transport of medical equipment, tunnel boring machines, trains and even an 80 metre wind turbine blade.
The cast and crew of 20 Australian TV and stage shows for group personal accident and corporate travel.
500,000-plus Australian employees through our excess workers compensation product.
Transportation & injury
Priceless fine art exhibitions.
Art & entertainment
Directors & officers
Medical and travel cover for miners in Papua New Guinea, Nauru, Mali, Burkina Faso, Tanzania and Ivory Coast.
13,000 small businesses through our casualty and PFR programmes.
Medical & travel
More than 2000 Boards of Directors of Australian companies
Despite being retired I’m not missing the opportunity to share three early memories. We once assessed an ASX100 client with a particularly ominous pollution exposure and stood firm on higher pricing. The client replaced us with another insurer offering cheaper terms, and within 36 months, it suffered two major pollution losses totalling over $35m leading ultimately to that insurer closing its divisional offices in Australia. This was one of those moments that taught me to trust our risk engineering evaluations and stick to our guns, as it could have significantly altered our history. Secondly, following the collapse of HIH and The Independent in the London market in 2001, we saw a lot of casualty business come back to the general market. Early on we realised HIH policies no longer had IBNR protection and swiftly introduced HIH Tail Buy-out coverage, and for many months we were the only insurer offering this protection. The fact we could move fast and adapt in this way is classic Liberty. Thirdly, the diverse assignments of our casualty risk engineers – in consecutive weeks we sent one to assess a heroin injecting center then to a theme park! It just goes to show the breadth of what we insure.
I still recall in my first few weeks being asked to transcribe the information on a placing slip for an energy account onto a processing sheet (which I needed to hand write), then the underwriter manually checking and approving my work, before entering it into Genius. No authorisation was allowed until the underwriter logged into the Genius green screens and verified. It was all manual – today we have BOTS, integration, applications and reporting to either handle this work or assist with the validation.
I joined Liberty 23 years ago in an Underwriting Assistant role.
Since the very start I've been exposed to so many countries and markets. Personally, I’ve had opportunities to write financial lines business across the whole Asia Pacific region, set up the financial lines team in Queensland, manage the Project PI Portfolio in Australia and more recently manage one of the largest financial lines teams based here in Sydney.
I think for me the most significant aspect of working at Liberty is the development of staff and the opportunities that development offers.
People do comment on our staff being here for a long time, but in a way, it’s not that surprising when you take into account how we treat people. While we have an executive team, I’ve never felt there has been a hierarchy. I think we’ve been challenged in a good way, and that made us all better.
Having a variety of roles and responsibilities, I feel very fortunate to be able to work in a company that has such great culture.
I remember twice in the early 2000s working on due diligence for Liberty to potentially purchase HIH. Thank goodness we didn't proceed! During the GFC we also learned some valuable lessons that reinforced our ‘manage the cycle’ philosophy. When the world is in turmoil, being consistent and running a sustainable business is important for our staff, our customers and our broker partners. Again, during Covid we were there for our stakeholders because we had prepared to conduct business virtually. This helped us be there and stand out when people needed us.
I have been fortunate to participate in many challenges and successful events during my time at Liberty.
Everyone’s computer password was the same – it was either Liberty1 or Liberty11. How far we have come! International calls were charged by the minute, and one of our earliest hacks was diverting Mike’s voicemail to an international destination where calls cost $6 per minute – if only hacks were as simple these days! Our earliest raters were developed internally by an actuary and underwriter in excel. Today these raters involve hundreds of lines of coding and a full team to maintain them. We loved our blackberry devices, and when they were phased out and we moved to iPhones, it was a thing to put a cover on with a little keyboard.
Perhaps 25 years doesn’t sound that long? Well it’s long in terms of IT development! In my early days at Liberty:
The changes over the years have been too wide and deep to list, but there have been a number of memorable milestones, for example checking our email systems at the stroke of midnight in 2000 to see whether the Y2K bug was a ‘thing’. I remember John McCabe coming back to our New Year’s party in the boardroom, beaming, to reassure us that Liberty would probably not collapse. Then there were the weeks in London, in our earliest days, persuading brokers and reinsurers that we were indeed credible, followed by the engineers wading through reams of printed reports piled too high to see over, looking for worthy projects that might help save the day. I also have fond memories of the whole Claims and Engineering team going to Brisbane to meet a client to kick-off our first ‘lead’ construction project. And who could forget the tense discussions over insuring a diesel power station in Asia, after a cracking machinery loss, while we tried to solidify our robust reputation? Has anything remained the same? Certainly: Integrity. Friendships. Humour. Trust. Why would anyone want to work anywhere else?
While some insurers have all of their claims staff, irrespective of which product they support, sitting together within one centralised claims model location, it doesn't support the sharing of information across a function. There was some initial resistance to sitting in the branches, however now we recognise that our seating arrangements are a key contributor to enabling the integrated business unit and providing more informed support to our customers and learnings to our underwriters. Today we have claims presence in seven of our office locations across Asia Pacific, supporting our “local first” ideology.
The decision we made collaboratively early on to decentralise the claims team, where claims sit alongside underwriters and risk engineers—and outside of Sydney was a defining moment for me.
Discover more of our 25 Perspectives
For greater insights into pre-empting and navigating the changing insurance and business landscape with confidence, continue reading the full complement of articles within Liberty’s 25 Perspectives from 25 Years series, which celebrates a quarter of a century’s experience drawing on technical and specialist expertise to tailor solutions for the Australian market.
Liberty’s 25 Perspectives from 25 Years
Initially dealing with big corporate casualty, construction and energy accounts, today Liberty helps protect more than 20,000 businesses across Asia Pacific. This includes 81 of the S&P ASX100 who choose to work with our integrated team of underwriters, risk engineers and claims professionals. While the past 25 years have been marked by significant change, there have been clear constants underpinning more than two decades of sustained profitability and growth. Despite an ever-changing insurance landscape, the advent of new technologies and the emergence of new and more complex risks, our commitment to long-term partnerships that help our clients navigate the unexpected has remained unchanged. As many of our people who have been with us since the beginning can attest, we put our people and policyholders first. It’s what differentiates us and ensures our shared success.
Working in IT I’ve been involved in a lot of recruitment interviews and candidates often ask me why I’ve stayed at Liberty for so many years. For me the answer is simple – it’s the people and opportunities for professional and personal growth. I’ve held a variety of different roles, been involved in countless tech and digital projects and transitioned from underwriting to technology to a leadership role. The people, the support, the opportunities – this is why I am still with Liberty 23 years on.
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At the same time, I have seen our people take opportunities to work in Asia, the UK, USA, different states, different product lines, develop technically and take portfolio and people management roles. It’s like having different jobs but never having to leave the company.
Think you don’t have any environmental contamination exposure? Think again
An insurance partner, not just an insurance supplier
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From day one, Liberty had the enviable luxury of not being the subsidiary of a stock-driven company, where shareholders demand growth regardless of when and where it comes from. Being part of the Boston-based Liberty Mutual Group means we’ve never been under the monthly pressure to grow our top line at all costs. We’ve certainly grown, but it’s been on our terms, when the market conditions are right and we know we can offer long-term value. The fine art of successfully managing insurance market cycles is less about pricing and more about risk selection and constantly understanding what the market is trying to tell you. Unlike a lot of our listed competitors that tend to be P&L driven – who focus more on what’s happening this year – Liberty tends to be more actuarial-driven, which means we can make bigger-picture decisions based on longer-term trends.
Mike Abdallah founded Liberty Specialty Markets Asia Pacific back in 1999 and continues to lead it today, alongside four other executive team members who have been with the company for more than 20 years. Under Mike’s leadership, Liberty has delivered 24 years of continuous profitability. Here, Mike shares the foundations that have seen Liberty deliver mutual advantage with brokers and clients across the region.
Managing insurance market cycles is less about pricing and more about risk selection and constantly understanding what the market is trying to tell you.
We also set ourselves apart from our more price-driven rivals by the ‘underwriter lens’ through which we view the market. The beauty of taking an underwriter approach to markets means that working with the right brokers and clients takes precedence over pricing. I know at times we’ve been critiqued for being restrictive of who we engage with, and it’s important to recognise that we started as a very small team with limited bandwidth, and so finding the right brokers and clients that matched our philosophy has kept us focused. Now that our team in Australia is 450+, I still know that we can’t be all things to all people, so staying focused on the right business is important to our team. By subscribing to what we call the 80/20 rule, we permanently focus on business that’s going to be sustainable, and where we can bring value to the table. By taking this approach, Liberty is in now celebrating 24 years of consecutive profitability in Australia. Yes, for those wondering about the first year, I can assure you that there was nothing more character building for our fledgling business than encountering a $11 million claim in our first few months of operation. But we survived that, and after significant growth over the past five years, Liberty now writes a billion dollars in annual premium in Australia. And there have been many more multi-million dollar claims over that time – that we’ve been proud to pay.
At Liberty, we believe that insurers exist to pay claims, offering welcome continuity in an unpredictable world.
In fact, claims is where we really excel. In the most recent NIBA Broker Market Survey, Liberty led all seven claims performance drivers across all general insurers, being recognised as the leader for timely claims resolution, quick and efficient assessment, knowledgeable claims staff, proactive communication about claims, single point of contact, professional assessors and range of channels to make a claim. At Liberty, we believe insurers exist to pay claims, offering welcome continuity in an unpredictable world. We know that no one wants to experience a claim, but when they do, they truly experience what makes Liberty special. We now write 20+ commercial product lines for 20,000 Australian businesses. Like all boats, the fortunes of all insurers go up when the pricing tide is rising, however, when the tide turns, insurers that struggle at managing cycles can find themselves high and dry. Rather than entering the insurance market in the good times, or contracting when the going gets tough, we know all too well from experience that the key to managing softer markets is client retention. Unlike opportunistic insurers that tend to treat the market like a transit lounge, here today and gone tomorrow, doing the hard yards during the softer parts of the cycle is all about working with clients that align with our value proposition. We believe profitability and being respectful in the market – not price gouging in the good times – are not mutually exclusive, and it starts with putting clear visions in place.
We believe profitability and being respectful in the market – not price gouging in the good times – are not mutually exclusive, and it starts with putting clear visions in place.
The fine art of being able to do this, firstly comes down to investing a lot of time getting staff selection right, and then empowering them to do their jobs without getting caught up in internal bureaucracy.
By taking this approach, Liberty has been able to deliver year-on-year profitability without ever having to completely reengineer our business or close a business line. Brokers who’ve had clients left high and dry by insurers who suddenly exit market segments can appreciate why this is important. The fine art of managing this comes down to investing a lot of time getting staff selection right, and then empowering them to do their jobs without getting caught up in internal bureaucracy. We employ highly technical underwriters, industry-expert risk engineers, experienced claims specialists and a team of skilled support functions to work together as an integrated team to mitigate risk. We focus on service, and building enduring partnerships with our clients and brokers.
It’s been my life’s privilege to lead this team for the past 25 years, and it would be a privilege to keep doing it for another 25 years.
Liberty named NIBA's 2023 Specialty Insurer of the Year
Currently the lead insurer on more than half of their construction projects, Liberty Specialty Markets plays a key role in supporting business and governments to write the story of Australia’s development. Brett Gardiner, Head of Energy, Property and Construction (for) Asia Pacific shares key insights into changing market dynamics that have led Liberty to expand its expertise.
Head of Energy, Property and Construction, Asia Pacific
It’s fair to say there has been a significant number of claims relating to renewables in recent years. It’s probably not necessarily what insurers want to go on record saying, but it’s definitely the truth. While the management of claims is fundamentally the same, the changing types of claims – for example from dealing with machinery breakdown on a gas turbine to hail claims at a solar farm – has seen the Liberty team upskill our risk engineering function and claims expertise. Having proven claims expertise and the ability to locally expedite and settle claims is really important to our clients, and can make or break relationships. Our response has seen us recognise the increasing importance of deploying assessment teams and experts to sites promptly, and swiftly granting indemnity where possible. We also talk a lot internally about understanding a client’s critical path, their pain points, the costs they’re incurring, and ensuring everyone understands what’s required to get the project back on track.
What these clean energy projects demonstrate is Liberty's excellent collaboration across underwriting, risk engineering and claims in the renewables space.
Claims make or break relationships
While labour shortages, supply chain and logistical challenges, plus high inflation contributed to a construction slowdown during the pandemic, the significant amount of infrastructure spending post-Covid has been a positive for Liberty.
Picking up the post-Covid pieces
What’s underscoring changing market dynamics is the transition away from conventional power risks and oil and gas projects as a significant portion of Liberty’s business, to renewable energy projects and risks associated with the energy transition. The past decade has seen Liberty’s energy industry projects become increasingly dominated by renewables, with wind, solar, hydrogen pilot plants and battery storage systems taking the lead from the conventional coal and gas fired power generation risks of our early years. That’s not to say large conventional projects don’t remain a focus for us - there just aren’t as many being built in current times as we transition and the energy mix evolves.
Power and Energy has been a mainstay for our team, and as that industry evolves, we at Liberty are evolving too.
Transitioning to renewables
While all energy-related construction carries risk exposure, a lot of the renewable technologies carry smaller vertical loss exposures to fire and explosion, than the conventional oil, gas and power projects that were a mainstay of the energy industry in prior years.
What we’ve really learnt in the last 10 years is that renewables are more prone to secondary natural perils, like wind, flood and hail, versus the old days of conventional erection risks of power projects which were fire, explosion, and machinery breakdown, which presented more “vertical” versus “attritional” losses across a portfolio. As I write this the global energy market is currently facing a claim in the hundreds of millions of dollars for one of the world’s largest solar projects in the United Arab Emirates after it was damaged by extreme weather in April. While the risk landscape is changing, we’re doing a fantastic job of evolving our skill set to support these new technologies. A number of these new projects require insurance partners willing to support relatively unproven technologies. For example, a few years ago we insured the construction (and now operation) of Australia’s first green hydrogen plant in South Australia. Doing this requires an insurer willing to partner with you as you try something new.
Battery storage systems comprise around 40% of the renewable construction project submissions we see today. Liberty is currently insuring the construction of twelve large-scale battery storage projects in Australia, including the largest to be deployed in Asia Pacific which is currently being built in Melbourne.
While the risk landscape constantly changes across the construction segment, the overall role insurance plays in successfully delivering these projects can’t be overstated.
Despite greater market opportunities, the after-effects of the pandemic like limited labour force expertise, together with evolving weather perils, and technology/methodology changes in a project all have a huge impact on successful project delivery and completion. Our team focuses on physical damage elements of the construction risk, but these are not the only elements that require focus. Liberty also has exceptionally strong Professional Indemnity, Public Liability, Surety, Project Cargo and Environmental products. Providing seamless cover for a project is a major point of differentiation in Liberty’s value proposition. We need to collaborate with our principals and require transparent risk information, construction methodology, contractor expertise, emergency response procedures, business continuity plans and loss mitigation. These are the most important risk elements we look to put in place and gain a significant understanding of on every project we insure. At the end of the day, insurance is a business partner to the projects we insure, and Liberty has built a fantastic team of underwriters across all lines of business who have exceptional local knowledge and authority to continue supporting Australia's growth.
Discover more of our 25 perspectives
Whilst always containing many constants, the market for construction risk has changed significantly since Liberty established its market presence in Australia 25 years ago. Today construction represents more than 25% of our total income, and we see increased size, scope and complexity in the projects we insure. Liberty plays a role in insuring most of the major infrastructure projects in Australia – be that transport infrastructure, plants and facilities of varying nature and complexity, airports, terminals, mines, hospitals and even prisons. Road and infrastructure projects have always been important to Australia’s rapidly expanding capital cities. Over the past eight years, we've seen an increase in heavy civil construction, including the increased use of tunneling to support much-needed improved road and rail infrastructure. As Australia’s infrastructure projects have become more complex, we’ve had to adapt our approach to ensure we keep pace with the evolving risk landscape that presents challenges to delivering projects on time and on budget.
Protecting the construction industry against delays caused by excess temperature, wind and rainfall
Energy is one of Liberty's largest product portfolios, and as a global insurer we’ve been supporting clients through major shifts in technology.
In Australia the mix of energy supply is rapidly changing and Sara Sampaio Soares, Assistant Vice President of Energy, Property & Construction shares insights into what the technology changes mean for our underwriters, claims professionals and risk engineers. Today Liberty protects a wide variety of clients in their renewable energy ventures – helping advance the transition and supporting “green” growth.
Assistant Vice President Energy, Property & Construction
Underwriting considerations for solar PV projects
The days of single party actions are over. Welcome to the web of sub-contractors, sub-subcontractors and labour hire companies. Complex casualty claims manager Richard Jessup explains how the landscape is evolving in Australia.
In Australia the mix of energy supply is rapidly changing and Sara Sampaio Soares, Australia’s National Manager of Power and Energy, shares insights into what the technology changes mean for our underwriters, claims professionals and risk engineers. Today Liberty protects a wide variety of clients in their renewable energy ventures – helping advance the transition and supporting “green” growth.
Complex Claims Manager, Casualty Australia
Claims+ value-add services at pre-placement, post-placement and post-loss stages
As both a specialist financial lines underwriter, and leader of the Queensland branch, Helen Brand knows all too well the art of managing individual policies while nurturing broker and client relationships. Having also recently taken on planning and strategy for the two largest product lines at Liberty Specialty Markets, Helen explains how having local autonomy, and the support to do what they need to do, drives long-term partnerships.
Vice President, Head of Strategy, Risk & Planning Casualty & Professional & Financial Risks & Queensland Branch Manager
As a testament to the enduring client relationships we’ve created, Liberty has 51 clients in Queensland that have worked with our team for more than 20 years. That’s a lot of history together, and let me assure you that most of these businesses have really changed and evolved over these 20 years. As each cycle of a hard or soft market has occurred, we’ve been able to maintain the exclusive relationship with our client base by consistently being there, proactively reacting to their situation and not overreacting to something that might be affecting them.
in Queensland that we've worked with for over 20 years.
51 clients
clients across Australia that have insured with us for 20+ years.
500
Our success in this is largely attributed to our in-house risk engineers and claims professionals who bring industry expertise. Our ability to bring someone into the room with the experience and the background of working on large projects, running big construction jobs, or knowing particulars about a client’s industry is critical to better client engagement. Our approach means Liberty is great for hard-to-place risks, but as we've grown our team we're also very capable of helping more everyday clients with more straightforward needs. Either way we like to take the time to understand the risk and work with brokers and clients to find a solution. We also have the internal structure and processes that give local teams the authority to make decisions and settle claims, so when you talk to us you are dealing with the decision-maker.
Our approach to client engagement has always been based on allowing clients and their brokers to feel at ease discussing their strategy and business perspectives without worrying that their insurer is taking a proposal form as the finite response.
The power of tripartite relationships
I know Liberty is well known for asking lots of questions. It’s part of what helps us accurately price the risk, and while I know that might seem a bit painful, it’s what helps us do our jobs properly.
Helen Brand
Spending time getting to know and understand their strategy, we’ve been able to tailor policies each year that work for both us and them. Five years on, and in very different market conditions, we still have this client on our books and have expanded our lines of coverage with them. We’ve been flexible and tailored our terms, and I think this is an example of a client that has survived a very uncertain operating environment and is now pivoting into a new stage of its operations with a strong insurance partnership in place.
As the Covid pandemic was just starting, I was approached by a new client in the travel sector. In our early conversations they were talking down the press coverage surrounding Covid, and once we spent time with them we realised it was because they were worried that if they shared their true concerns that we would jump off their account at first renewal and leave them without an insurer.
Taking on a client in a difficult operating environment
Every year we hold a Liberty Brisbane Market Day where we gather brokers and cover key issues impacting the market. When the hard market was really kicking in, we used these opportunities to have frank and open discussions about our mutual expectations from each other during these tough times. Overall, I think it’s our ability to bring a diverse team to the table to help understand what’s going on that brokers value most, especially now, when they’re often dealing with challenges well beyond the usual day-to-day business.
Coordinating a team of 35 Queensland underwriters, risk engineers and claims professionals, we love the opportunity to be local.
Being local
In my 8 years of underwriting at Liberty I can’t recall a single underwriting decision I’ve had to seek offshore approval to write. Our internal underwriting guidelines are clear, and this puts our local teams in a good position to make decisions.
Let me say from the outset that it’s very rare for Liberty to withdraw cover. Some insurers dip in and out of markets, but that’s not who we are. The flipside is that being there consistently for our broker and client partners means our team sometimes has to have difficult conversations around coverage, exposures and pricing. That’s not always easy, but I think this is what makes us a trusted partner and able to deliver mutual advantage over the long-term. At Liberty we’re not singularly focused on evaluating a risk, writing the policy and moving on. We focus on supporting the underlying relationships that we’ve built and reassessing situations as businesses and their industries change. That’s why we tend to spend a lot of time with brokers in front of our mutual clients.
By working in close partnership with brokers and clients, Liberty Specialty Markets can meet specific and changing needs with tailored solutions and a long-term view.
Experience has shown that a long-term tripartite relationship between broker, client and Liberty creates a sound foundation for long-term success. Close partnerships enable Liberty to get to the heart of every clients' business in order to understand the risks they face, their objectives and how we can best tailor insurance to their unique and specific needs. Funds management Chief Operating Officer, Richard Matthews and his broker Ben Glover, Head of Financial Institutions for Willis Towers Watson, have worked with Liberty professional and financial risks underwriting leader, Michael Mahlo for 15 years. The relationship has solidified as Matthews has taken on different roles across three different organisations whose goals and stages in their lifecycle created very different insurance needs.
We took the program to a wide market and, once again, it was Liberty that demonstrated itself as a leader in understanding risk and offering fair pricing without compromising on the wording.
Head of Financial Institutions for Willis Towers Watson
Ben Glover
Mahlo’s depth of knowledge enables him to actively manage risks as they evolve. Liberty’s disciplined underwriting approach in the face of volatility provides clients with consistent pricing through market cycles, and geopolitical and economic disruptions. “Liberty actively manages market cycles and expectations, avoiding the “knee-jerk” reaction to market pressure,” says Glover. “They have proven themselves to be a sustainable and reliable long-term partner.”
“From the outset, the Liberty team made it clear that they wanted to gain a deep understanding of our investment strategy and commercial objectives, and the risks associated with our business,” says Matthews. “This indicated to me that we could build a relationship with Liberty that would bring long-term stability to our insurance program.”
In each case, Liberty engaged directly with the organisation, including face-to-face meetings with senior staff to clarify their needs and then craft a tailored solution. It’s an approach that supports honest and transparent exchanges built on mutual trust.
Matthews was working with a retail trustee start-up when he first partnered with Liberty. His next role was with a well-established issuer/manager of retail equity and credit funds. His third was with a private family office with an interest in entering the wholesale funds market.
A tailored response to business lifecycles
This is a significant benefit of working with a local insurer with local authority.
Long-term tripartite relationship
Ben Glover Head of Financial Institutions for Willis Towers Watson
Strong relationships continue to add value from tailoring specialist cover to managing claims. Liberty’s integrated claims service team act decisively to pay out valid claims fairly and dependably, ensuring clients feel confident, involved and protected.
Liberty’s business partners benefit from more than 110 years of experience evaluating, managing and pricing risks. Liberty also remains committed to competitive premiums and wordings – and Matthews has always found this to be the case. It came to the fore when he was working with the issuer/manager of retail equity and credit funds. Here, the maturity of the business and the nature of its investments meant it was very focused on value for money.
Fair and competitive pricing
“Richard’s business is built on trust and integrity, and the long-term relationship he has built with Michael gives him confidence in Liberty’s own integrity,” he says. “He knows he can trust them to deliver on their promises.”
For Matthews, Liberty’s partnership approach has provided greater comfort that cover will be available on fair commercial terms year after year – and Glover believes this level of insurer continuity is vital.
Benefits of a partnership approach
Liberty's Commercial Crime cover protects companies from financial loss due to theft or faud by employees or third parties
While best known for its work alongside top-tier businesses, with 81 of the ASX100 among its clients, Liberty Specialty Markets has also earnt its stripes as an insurer to a growing number of Australian small to mid-sized businesses. Ben Hissey, Senior Vice President at Liberty explains why the insurer is equally relevant to companies at the smaller end of town, and why Liberty welcomes their differences and diversity.
While big and complex is often what Liberty is best recognised for in Australia, today there are thousands of small to medium-sized businesses in partnership with Liberty, relying on our protection to confidently carry out their business. Insurance can be a real challenge for smaller businesses, particularly if they're just starting up or engaging in an activity that has a defined claims history or potential natural risks associated with it. Over the past few years insurance policy costs have risen across the board, and brokers often have to work with clients to prioritise covers, with the full wish list not matching the available budget.
Senior Vice President, Asia Pacific
While we excel at complex and technical underwriting, we're also very good at partnering with everyday businesses. You don’t have to face a challenging risk landscape to be a Liberty client—we have plenty of regular clients who value our service and claims ethos.
Many of these clients have now been with Liberty for significant periods of time, some right from the get-go. Our ability to keep them on our books is all about ensuring the policies are responsive to client and broker needs, and our claims service is similarly outstanding.
Today Liberty underwrites a raft of tailored affinity schemes, programs and facilities for specialty industries including law practices, horticulturalists, asbestos removal businesses, security firms, equine businesses and stockfeed manufacturers – industries that all face different risks and exposures.
Industry-specific solutions
Ever since entering the Australian insurance market 25 years ago, Liberty recognised that a one-size-fits-all approach to small businesses wasn’t going to work. What’s become increasingly evident is the need to take an industry segmentation approach – be that for fund managers, sports clubs, horse riding schools, horticulturalists or demolition experts. This means tailoring solutions to reflect the diverse industries these businesses operate in and the unique risk environment different industries face. As a result, Liberty has had a dedicated offering in this space for most of its 25 years in the region. In the past few years we’ve really reimagined the way we engage with smaller businesses, to refresh and refocus our offering.
While insurers have long offered generic off-the-shelf package products to many small and medium-sized businesses, Liberty is really strong in collaborating with brokers to craft bespoke insurance solutions for businesses that need tailored and innovative solutions.
Segmentation by industry
Over our existence, Liberty has also introduced a variety of specialty products, created to meet specific client needs that don’t readily exist elsewhere. This includes our accident and health, crisis management, product recall, tamper and retailers withdrawal insurance. These products often involve a host of specific crisis response services alongside the insurance cover, including things like assistance with media management and legal support, all with a view to assisting clients when they need the support the most. Most recently Liberty has been developing highly innovative parametric solutions to counter the impact of extreme weather in Australia. This includes protecting building sites from excess heat or wind, protecting wine grape growers from taint caused by bushfire smoke, and solar farms that rely on sunshine from the impact of cloudy weather conditions. Liberty’s Portfolio Solutions team also remains focused on digital processing capabilities to help brokers and agencies that rely on our capacity quickly and efficiently place cover and transfer policy data.
For example, we have an electrical engineering service company that became a client in 2003, after the directors had been retrenched from their jobs and formed a new start-up business. Without insurance they couldn’t start trading, and on paper things looked tough, but we had a good relationship with the insurance broker they were working with, and Liberty was able to take them on. Now, 21 years later, they’re still a client. We have a very solid understanding of their business and have been by their side as they have significantly expanded and grown. While more insurers may have appetite for their business these days, continuity is one of our points of focus. We try to meet changing client needs by taking an artful approach and providing different pricing options and greater certainty around what clients can expect.
It’s not uncommon for long-term small to medium businesses to have found their way to Liberty during challenging times when few insurers believed in their business.
Simple solutions for a more crowded space
Law practices
Horticulturalist
Security firms
Asbestos removal
Stockfeed manufacturers
Equine businesses
Product contamination insurance for food, beverage, cosmetics and pharmaceutical companies
Without insurance they couldn’t start trading, and on paper things looked tough, but we had a good relationship with the insurance broker they were working with, and Liberty was able to take them on.
Today Liberty writes more than
25,000 policies across Australia.
Inflation is front of mind for most people at the moment, yet it’s been a very real consideration for several years for Liberty's Commercial Property team.
National Property Manager, Joel Proud shares insights into the active claims environment and rising cost of claims that everyone in the Australian commercial property sector is facing. It’s a sector where long-term relationships with an insurer can really make a difference for clients.
National Property Manager Australia
Fast track property claims, with many eligible claims paid within 48 hours
As a mutual we take a long-term view and are wholly devoted to our policyholders and broker partners. We prosper together by unlocking opportunities with the aim of delivering shared success.
As part of the Liberty Mutual group, we are uniquely positioned to support our clients in an unpredictable world. Our mutual structure provides three key advantages: Structural stability offering continuity and a long-term view Sustainable relationships to deliver reliable outcomes We make time for what matters most Liberty Mutual is the largest mutual organisation operating in our markets, with the broadest reach. Profits are reinvested to build a secure future for our brokers and clients, the wider Liberty Mutual Group, our people, and the communities within which we live and work. So what’s good for our clients, is good for us. We call it ‘for mutual advantage’.
Our approach to claims
Senior Vice President, Head of Claims, Asia Pacific
Specialty insurance claims often involve significant disruption to both businesses and lives. They can be complex, costly and lengthy. As such, specialty claims require a commitment to relationships and a focus on solutions. By combining technical skills, commercial pragmatism, transparency and an authentic human touch, Robert Mercer, Head of Claims at Liberty Specialty Markets highlights how his team supports brokers and clients when it matters most.
Our clients now contract with customers and suppliers from diverse locations on increasingly complex terms, operate under constantly evolving legal and regulatory frameworks, manage economic uncertainty and appropriately support changing environmental, social and governance demands. Cumulatively, we live in a world that constantly demands more from businesses and businesses demand more from insurers, especially when a claim is made. Where the stakes seem perpetually high, companies are careful about the insurers they choose to help manage their risk. As a Fortune 100 company, and the largest mutual organisation operating in P&C markets, Liberty uses our broad global reach, strong balance sheet and highly experienced claims team to forge relationships that help support our clients as they face unpredictability.
The commercial landscape has changed strikingly since the late 1990s when Liberty first started in Australia.
Changing claims environment
With high local claims authorities and the ability to make decisions quickly, our team has the expertise and experience to support our brokers and clients through losses big and small. We strive to consistently deliver best-in-class service to all insureds for all claims, but our relationship-driven, people-first approach to complex claims is what truly sets us apart.
Fortunately, Liberty’s claims professionals are never more than a phone call away.
Being local matters
Our 30-plus Australian claims team is located across four states and in 2023 alone, in various ways, we supported 66 claims for ASX-listed top 100 companies spanning property, construction, cyber, power generation, marine cargo, liability and directors & officers insurance. We also paid thousands of claims for small and medium-sized businesses.
Standing by our brokers and clients through these times means our claims team has witnessed every conceivable human emotion. Clients ring us as they are dealing with anger, anxiety, grief and disbelief. It’s not uncommon for them to feel bewildered, experience regret for inadvertently acting on or giving incorrect advice, or to be stunned by the ferocity of natural forces. But whatever the emotion, and whatever the context, our first job is always to help them through what is often a harrowing experience. We also recognise that sometimes, those involved in a claim face personal exposure. From health and safety obligations to customer demands and regulatory or disclosure requirements, businesspeople justifiably place great significance on their reputation, professionalism and livelihoods. When our clients make a claim with Liberty, they are dealing with someone who strives to understand the various pressures they are under.
Complex claims result from difficult and unexpected events. Insurance policies are often called upon where technology has failed, construction has gone awry, human error has occurred, or systems have not operated as intended.
The human element
Ultimately, no matter the size of our client or how significant a claim might be, we understand that insurance claims involve more than money – they all ultimately involve people dealing with loss. As a result, we put people first and prioritise relationships.
Over the past 25 years we've been there for our clients through the worst of weather events, raging bushfires, cyber-attacks, oversight and inadvertence. We've seen catastrophic property damage, spectacular product failures, hard-won reputations questioned and most tragically of all, lives lost.
We understand that reasonable minds can differ sometimes, especially where a claim is inherently complex. We also understand that the longer a claim goes on, the more challenging it can become. Liberty’s claims team knows how to handle candid conversations and work collaboratively. We strive to demystify the claim process, tailor a strategy to the circumstances of our client and ensure all parties have realistic expectations of what a policy can deliver. We also recognise that brokers and clients need to be informed and contribute to key decisions because their input is essential to maintaining alignment during a long-running claim.
Whether we're paying our client directly or indemnifying them against a third-party allegation, our people-first approach means dependably working together towards a fair claim outcome.
Fair and dependable
We offer our clients access to a local specialist who takes full ownership of their claim, working consistently with broker and insured from the outset to understand what has happened, deliver the best service we can and find effective solutions. Last year, the National Insurance Brokers Association voted Liberty the number one claims team across all seven performance categories, recognising timely claims resolution, staff knowledge, proactivity and professionalism amongst others.
Like our customers, we’re skilled professionals committed to what we do, and we’re drawn from a diverse range of backgrounds.
Best-in-class service
1st
NIBA 2023 Specialty Insurer of the Year.
The vote reflected Liberty’s claims commitment across multiple products, ranging from rapid fast track settlements to multi-year class actions.
There is no “one size fits all” approach to managing specialty claims and the more complex the claim, the more tailored our approach must be. Our team is constantly learning, always responding to new circumstances and continually striving to stay abreast of developments in technology, regulation and trends that impact the businesses and industries we insure. By doing so, we can most effectively support our clients when the unpredictable happens. From the very raw challenge of helping our clients following a workplace injury or fatality, to donning our boots and literally wading through water in the aftermath of a flood, from managing the results of a vessel fire to helping an insured navigate the complexities of a securities class action, we’re in your corner for the long run.
The art of specialty claims management lies in balancing people, policy, pragmatism and fairness. Just as no two clients are the same, each claim is unique.
Bringing it all together
place in all seven claims performance drivers.
At Liberty Specialty Markets, across Asia Pacific we provide a dedicated claims recovery service focused on handling subrogated recovery actions.
Liberty’s Claims Recovery Manager, Jonathan O'Riordan and Crisis Management Underwriter, Donna Niblock recently helped an Australian crisis management client recover a substantial sum of uninsured losses they incurred after faulty packaging led to a voluntary product recall. The client never expected to recover this loss, and we’re pleased we could demonstrate why we’re an insurance partner, not just an insurance issuer.
Claims Recovery Manager, Asia Pacific
We also help recover people - learn how Liberty's Accident & Health team recovered a client from Everest base camp
At Liberty Specialty Markets we aim to pay claims fairly and dependably. See our value proposition in action in this recent Australian property damage claim for Blooms the Chemist.
Fast action from the Liberty team saw the business repaired and reopen in just six weeks. The Loss Adjuster was on site two hours after Liberty was notified of the claim, a part payment was made to ensure wages were paid and the shelves restocked, and a pop up store set up at the front of the pharmacy. Six weeks later the chemist was back and operating.
Recoveries manager
Liberty Specialty Markets insures some of the largest and most complex construction projects in Australia. We stand behind many major infrastructure projects including tunnels, pipelines, motorways, recycling centres and military bases.
Handling claims that arise from these construction projects is never straightforward. Liberty casualty claims lead, Samantha Thorndike lives and breathes these claims every day and shares insights into what goes on behind the scenes. At Liberty, claims provide much more value to construction clients than simply handing claims.
Senior Claims Specialist and Tech Lead for Australia
Tailored construction insurance solutions for complex risks
When thinking environmental risk, people often think of heavy industries like mining and oil and gas. As environmental regulations tighten, at Liberty Specialty Markets we're increasingly seeing financial exposure for a wider range of industries.
In this short video we profile contamination exposures facing five non-traditional polluters. An incredibly broad range of industries can find themselves facing an environmental pollution event. Liberty’s Environmental Impairment Liability team understands the need to mitigate these risks. As a leading specialty insurer, our coverage is designed to consider a wide array of exposures and provide protection for industries which would not often be considered as vulnerable to an incident.
Podcast : What is Environmental Impairment Liability insurance?
Vice President, Head of Environmental Impairment Liability, Asia Pacific
by Alan Thorn
Liberty Specialty Markets has been able to protect many Australian small businesses that operate within sectors that other insurers have typically overlooked by creating a number of one-size-fits-all industry solutions. Portfolio Manager Natalie Manton explains how Liberty protects 13,000 small businesses through its national casualty programmes.
Assistant Vice President and Portfolio Manager
Watch: about Liberty Specialty Markets in Asia Pacific
Through a philosophy of competitive pricing along with tight underlying guidelines, Liberty has been able to provide liability cover for many mum-and-dad-type businesses that have historically found it hard to get cover. These businesses typically operate within inherently risky, difficult, dangerous and specialised industries, and quickly get blacklisted as uninsurable industries by general insurers. Yet they need insurance. This is where Liberty has been able to form enduring partnerships to keep some of these trickier industries insured and operating. Over the years Liberty has provided cover for businesses like demolition and asbestos removal specialists, horse riding operators, and horticulture businesses including tree loppers, stump removalists, gardeners and landscapers. We work closely with our broker partners on these programmes, which sell these products as an agent of Liberty to wholesale brokers or clients directly.
The policy wording around this liability product has been tailor-made specifically for clients within the equine industry. Ideally, we want 80-90% of the policies underwritten for programmes like this to fit within our underwriting parameters. Within this example, those guidelines include turnover limits and specific occupation categories including agistment horse riding, coaching, and some of the equine therapies. However, just because something doesn’t fit within the box doesn’t necessarily mean we can’t underwrite it. Instead, it may just need to be priced and underwritten differently.
Sixteen years ago Liberty took on an equine liability product with Affinity Insurance Brokers (Affinity), which is responsible for over half of all our client programmes here in Australia.
Equine liability
As a case in point, since 2008 we’ve had one very high-profile large loss which finalised last year for $10 million. In light of this exposure, we’ve seen a surge of interest in risk management. This includes training seminars, and also practical steps like supplying a waiver document for our clients’ customers to sign to protect their interests.
While the volume of claims we receive from the equine sector isn’t significant, their vertical exposure – typically a $1 million-plus injury claim once every five years – means this tightknit sector is keen to understand how it can minimise its exposure.
Fewer claims is a win-win
Having partnered with Liberty on the equine liability programme from day one, Affinity’s Client Director Paul Davenport is quick to highlight the efforts we’ve made to understand this industry group.
Liberty has empowered us and the equine industry to improve safety and has taken the time to learn about our clients, recognise our expertise and most importantly—stand by us come claims time, It’s important for clients to understand that fewer claims are a win-win for them and us. While it makes the risk better for us, it also means large payouts won’t have a material impact on our portfolio and consequently result in higher premiums.
Affinity’s Client Director
Paul Davenport
Within this industry that means getting the fundamentals right. For example checking the ground, ensuring barrels are spaced correctly, checking the horse-riding arena is clear, documenting when the soil is tested, and checking saddles are maintained and in good working condition. We’re all constantly working on ways to minimise the claims environment to ensure premium stability. While many small businesses can buy an annual insurance policy and don’t give it a second thought, for industries like equine it’s a much harder proposition. Here there is real value in partnering with a broker and insurer who play an active role, and can help individual businesses and the whole industry succeed.
Given that in client programmes the claims of a few end up being spread across a small sector, there is a natural interest in ways to reduce claims risk.
Ongoing education is critical
These clients vary in size, from mums and dads who might be running a few horse-riding lessons and agistment services, through to big associations that run competitions and major industry events—and so the premiums vary accordingly.
Seminars we run with Affinity typically focus on the importance of clients not only documenting, but also following their processes.
Assistant Vice President, Professional & Financial Risks Manager, Perth
While providing professional and financial risk (PFR) cover to Australia’s mining and energy sector is not for the faint-hearted, Liberty Specialty Markets has carved out a reputation as a lifecycle insurer in this dynamic sector. We share what it means to be in it for the long haul when insuring around half the directors and officers running the 874 ASX-listed stocks operating in this space.
At face value, insuring the board and management teams of mining exploration companies, which typically have little more than a mining lease, limited funding and a whole lot of blue sky—may seem speculative at best. Once these explorers find something they typically progress into a mining developers phase where they gear themselves up with debt and still have no income, which makes for a precarious financial position and D&O risk profile. Once they pass this stage and construction is hopefully completed on time and on budget, then they enter the production phase and blossom into mature mining companies. Today, we insure mining companies at all stages of this lifecycle, with Liberty’s book ranging from absolute start-ups right through to some of the largest producers in Australia. No matter where they are in the maturity cycle, protection for director disputes, regulatory investigations and employment practice claims are all top of mind for the directors we protect.
Liberty is one of few insurers with appetite across the entire mining lifecycle from exploration to design and planning, construction/development, production, closure/reclamation environmental, casualty and disaster. We also support locally domiciled Australian companies with international operations (including Africa) which brings exposure to very different regulatory and operating landscapes.
It’s when commodity prices fall away that the solvency of mining companies comes under threat, the margin is eroded and companies eat into their reserves to survive. At the same time, we’ve seen many companies in a downward cycle rejig their operations efficiently enough in order to survive the leaner years, and this is mainly attributable to the experience of the board and its management team, which typically has a diverse set of qualifications and skillsets at hand.
Given that it can be years before these junior stocks enter production and start making any money, the trick to assessing the underlying risk is to first look at the quality of management, the quality of the asset and the maturity of the jurisdiction they’re in.
Key to picking the right account
We prefer a good management team with an average asset over a good asset with an average management team.
By taking a long-term sustainable approach, Liberty can help junior miners progress from the nursery as an explorer all the way through to a fully fledged producer. Working with us on this journey helps them avoid gaps in cover, and also gives us opportunities to demonstrate real client value through sharing our claims learnings and insights. An example of this value is our recent D&O policy enhancement that offers Defence Select, bringing the option for clients to engage their preferred legal defence team in the event of a claim. While Liberty has a very well-established legal panel, this option has proved popular with our smaller mining clients who like the ability to engage their own specialist legal partners who bring deep understanding of their operations (with agreed costs covered by their policy).
Financial exposure is a big concern for our mining clients, particularly before they start producing, and having peace of mind that we can help keep the lights on if a claim occurs alleviates some of the pressure.
A long-term sustainable approach
That’s why it’s critical for us as underwriters to get out from behind our desks and engage regularly with the sector on where and how we can add value. While renewal and pre-renewal client meetings are important, we also know that mine site visits, social engagements and conference attendance are all integral to staying connected with the market. These are important forums that allow us to foster relationships, understand what clients want and close any gaps in client expectations. By partnering with brokers and their clients, we‘re continually investing time in ensuring we’re talking their language.
Maintaining consistency, especially between boom-and-bust cycles, is where we earn our stripes in this market.
Talking the same language
Considering a surety bond? Liberty is the #1 surety bond and guarantee provider worldwide.
Five years ago Liberty Specialty Markets was the first insurer to bring on an in-house risk engineer dedicated to construction clients.
Tim Bugg helps the team understand the key technical and delivery risks associated with engineering and construction projects. Today Tim is an integral member of the Australian Liberty team, enabling us to understand, prepare and more accurately price Professional Indemnity cover to meet client needs.
Liberty’s Group Accident & Sickness policy offers protection against financial loss due to sickness or accidental death/disablement through injury
Assistant Vice President, Risk Engineering, Professional & Financial Risks
Automotive recall report for passenger vehicles and light trucks
PFAS is an umbrella term for Per- and Polyfluoroalkyl substances. These are a class of over 5,000 human-made chemicals (though the number can vary depending on the definition) that have been used in a wide range of consumer products and industrial applications since the 1940s. The carbon-fluorine bonds in PFAS lead to very stable substances, however, this also makes the ultimate breakdown products of PFAS extremely persistent in the environment and in the human body. This is why they are often referred to as “forever chemicals”. We use our knowledge of the principles of chemical safety and current understanding of PFAS chemicals to support brokers and clients to understand and evaluate the known risks that PFAS currently present.
Vice President Risk Engineering Casualty & PFR, Asia Pacific
After more than 80 years of use across many industries around the world, the impact of forever chemicals present a major concern to the insurance industry. Liberty Specialty Markets' global Casualty Risk Engineers have studied and tracked PFAS since it became a problem, and there is still a long way to go before PFAS exposure evaluations are completed. Our risk engineering guide brings you up to speed on what these chemicals are, where they are used, why they are a concern and the current state of legislation and litigation activity.
Read the report
Today PFAs are found in everything from contact lenses to lipstick, guitar strings, x-ray films, and the infamous firefighting foam that is the subject of landmark litigation.
As insurers, we’re acutely aware of the impact of extreme weather, and the importance of brokers and insurers working with businesses to find solutions to help better prepare for and mitigate those risks. As well as our traditional property and liability covers, Liberty is also pioneering a range of innovative parametric insurance covers that provide new ways for businesses to protect themselves from the impact of extreme and unpredictable weather. In this edition of our weather monitor, we explore: • Weather extremes in Australia • Changing climatic patterns in Australia • How Liberty’s parametric weather insurance is helping protect businesses from interruption caused by weather events
Globally, the summer of 2023 was the warmest in recorded history. In Australia it wasn’t the overall hottest, dryest, or wettest year on record, but it certainly delivered some wild and unusual weather that had a significant impact on communities and the economy. In this report, we explore the increasing volatility and frequency of extreme weather events and how Liberty Specialty Markets is helping to protect businesses from their impact.
On average, 2023 was the eighth-hottest year on record in Australia, and the mildest winter on record.
Any industry that is commercially impacted by the weather has potential application for Liberty's Weather products
Vice President Crisis Management & Weather, Asia Pacific
It’s typically during the softer part of the market cycle – when insurers are more willing to negotiate and be flexible with their terms and premiums – that clients are most likely to be offered a wider array of options and cost savings. Liberty has many clients who initially joined us because a change in underwriting direction meant their incumbent insurer pulled out of their market segment or refused renewal because the pricing and account terms weren’t sustainable. What looks like a good deal today, can be a short-term play if capacity dries up, and this inevitably happens at an inopportune time for the client when other financial pressures are taking hold. There’s also no guarantee that insurers that are purely price-driven can tick all the right boxes when it comes to delivering value. Many of our products are long tail in nature and deficiencies may only be evident after multiple renewals.
Head of Casualty and Professional & Financial Risks, Asia Pacific
While lower premiums, higher limits, and broader coverage may give insurers tickets-to-the-dance during a softening market – which tends to last much longer than a hardening market – they’re not the key to enduring client relationships. Marcus Thomas, Head of Casualty and Professional & Financial Risks at Liberty Specialty Markets explains why Liberty focuses on ensuring there is more to client relationships than pricing alone.
Unbeknown to many clients at the time, better pricing may not equal better value.
The value propositions we’re talking about include underwriting, risk engineering and claims services. Specifically, the ability to understand a client’s business, tailor coverage to their specific needs, offer flexibility, resolve issues that arise, and navigate complex and challenging situations that evolve and develop. These are not necessarily in sync with a renewal cycle. Of course, there is no time like claim time to seek out value in your insurer. This is when clients realise that having a local and highly experienced claims team is not only an asset, but an imperative they want in their insurer. At Liberty we think that being able to make local empowered decisions based upon local legal and regulatory environments, without ceding control and decision-making to overseas “handlers” or deferring to external legal counsel to fill experience gaps, is a pre-requisite in a large commercial insurance operation.
The all-important tripartite relationship we foster between client, broker, and insurer is more centred around making informed purchases than pricing alone. Our local presence adds an extra layer, meaning that, despite the advent of Zoom, Teams and Google Meet, we’re able to form and execute these relationships face-to-face.
Liberty prides itself on technical acumen amongst underwriters, claims professionals, risk engineers and other supporting experts who bring specialist knowledge across our product areas.
Equipped to take the lead
We prefer to position ourselves as a viable primary lead insurer – assessing and setting primary terms and conditions. We believe this is where our value proposition resonates most deeply with our clients, establishing relationships with clients that tend to be less transactional and more enduring.
Underwriters had to adjust their risk pricing and, put simply, those that left that decision too late are not in the class anymore. Similarly for Property, more frequent severe weather and the emergence of “non modelled cat” has meant pricing adjustments have been necessary. Meanwhile, in Casualty the spectre of asbestos still casts a wide shadow over the industry and we have to vigilant about the emergence of similar very long tail new risks hence the concern and focus on PFAS. Being a sustainable insurer means we need to respond to the changing environment. Sometimes, yes, prices do go up, but we also have many insureds who have had remarkably stable premiums over the past 20 years based on their risk landscape and profile. As well as our underwriting ethos, our mutual structure helps us achieve this by removing the pressures to make knee-jerk reactions to maintain short-term profitability.
One example is how the emergence of securities class actions meant D&O went from a highly profitable class to a severely unprofitable class in Australia.
Riding the cycles
Even when relationships are solid, we know that nothing stands still. Industry risk profiles change, new risks emerge, regulation and litigation trends change and evolve over time. This can and does change the view and pricing of risk.
This means being there for clients in the tough times. At Liberty we strive and take pride in doing this. This means in tough times we do not seek to “gouge” clients. At the peak of the hard market, we do not necessarily care that another insurer higher in the programme may get a stronger rate than us as long as we are comfortable with our pricing of the risk. At the end of the day, it’s all about having the conversation. What coverage does the client want and need, and how can we best help them make that happen. For us it really is an integrated team approach, and 25 years since we started, it’s good to see that this approach continues to be working and evolving further with new capabilities.
Relationships are a two-way street and longevity is a key factor in us being able to deliver our side of the bargain.
Having the conversation
About Liberty Specialty Markets in Australia
The value of the global renewable energy market is expected to top US$2183 billion by 2032 – a significant market for insurers. Liberty Specialty Markets is invested in supporting Australia’s energy transition, and our 25 years of experience in the region is helping us act in a considered way. Here, five of our specialist Australian underwriters involved in planning, building and operating renewable energy projects explore our long-term view in supporting these projects as they grow bigger, more complex and more remote.
Renewable energy is exciting, but it has also introduced a new set of challenges for insurers.
“As well as sustainability in underwriting, we’re looking for sustainability in the industries involved,” says Todd Woodard, who leads Liberty’s Professional Indemnity underwriting practice. “We want to see our clients succeed.” “The main difference from other industry sectors is the scale and speed of its development,” says Tom McCardell, who leads Liberty’s underwriting of construction cover for many of Australia’s largest renewable energy projects. “Less than a decade ago we were only seeing a handful of renewable energy projects each year, now we may receive a dozen across our desks in a month. We’re all on a steep and constant learning curve.” For Rocio Gil Perez, who underwrites the construction and operations for renewable clients, the expansion of projects into remote areas is also contributing to a more complicated risk profile. “We now need a more comprehensive understanding of the exposures, as projects are growing in size and complexity” she says. “Along with natural perils, there are mechanical and electrical breakdown exposures inherent to renewable energy projects, which can be complicated in remote regions. Renewable energy also benefits from government-backed schemes designed to stimulate growth and investment. It’s important for us to stay up-to-date with these so we’re ready to help existing and future clients.”
The construction of Australia’s largest battery energy storage system (in Melbourne)
In the past 12 months, Liberty has played a role in insuring
Today Liberty works on a diverse range of renewable energy projects. Current construction submissions are around 40% Battery Energy Storage Systems (BESS) – a significant increase over the past 18 months, 20% solar and 20% wind, plus a few green hydrogen and other specialised technologies.
The operations of Australia’s only green hydrogen plant
The transportation of 80-metre-long wind turbine blades
The construction of Australia’s largest solar farms in the Central West and New England regions of NSW
A solar farm built on a landfill site
“They require risk engineering based on specialist knowledge,” says Robert Cairoli, who leads Liberty’s marine team and helps safely transport the components needed for renewable projects. “Our investigations cover everything from ships and inland vehicles, loading and offloading, route surveys and weather analysis to how the equipment is packed, stowed and handled.” Once again, there’s pressure to keep pace with rapidly evolving technologies and processes. “We need to know whether any plant and machinery is still at the prototype stage and how difficult it would be to source replacements,” Cairoli says. “If equipment needs to be stored during transit, we analyse the laydown locations to assess their exposure to natural catastrophes such as windstorms and flooding.” There’s also regulation to consider. “The International Maritime Organization (IMO) has set goals for the shipping industry to become NetZero compliant by 2050,” says Cairoli. “It’s up to underwriters to ensure their renewable energy accounts comply with these regulations.”
Offshore and remote projects add an extra layer of complexity.
The challenges of location
“Many solar farms are being built on contaminated ground,” says Alan Thorn who leads Liberty’s Environmental Impairment Liability team. “Over the past 12 months we’ve helped insure a solar farm that was built on a closed landfill site in Australia, and while great use of a challenging location, this brings its own set of unique exposures.
Back on land, site contamination and pollution exposure are an issue for renewable energy accounts, particularly in the solar space.
Being aware of what you're building on
Alan Thorn
Contamination issues – either by the materials used in your project or by disturbing something below ground that you are building on top of – are very real risks for renewable operators.
Over the past 10 years, Australian insurers of renewable energy projects have been hit with a number of major claims.
Major claims increase the pressure
“Across all our product lines, the active claims environment is leading to more stringent underwriting criteria and due diligence,” says Cairoli. “Insurers may also revise their policy terms and conditions to include more exclusions or limitations, and increase deductibles to limit claim amounts.” He also anticipates greater collaboration between insurers and stakeholders such as project developers, engineers and technical experts. “Collaboration gives us a better understanding of each project’s specific risks,” Cairoli says. “They’re also likely to analyse claims data to identify trends and common causes of loss, which can inform future underwriting decisions and risk management practices.” Gil Perez’s team has already intensified scrutiny of exposure to natural perils through meticulous natural catastrophe analysis. “We’re using available catastrophe modelling tools, historical data and Liberty’s own engineering expertise to build out our own renewables exposure tool,” she says. Meanwhile, McCardell is responding to the impact of weather events such as bushfire, flood, hail and wind, which don’t always sit within a box.
“We've sharpened our focus on site location and risk mitigation measures for vegetation management,” says McCardell. “We’re also very conscious of accumulations. Renewable Energy Zones combine assets such as solar and wind farms, storage and high-voltage transmission infrastructure. This means regulators and clients are concentrating high-value exposures in relatively small areas. Given natural perils can affect all, we must be mindful of how much cover we can offer, both during the construction stage and when the assets are operational.” Thorn is also focusing on identifying key exposures and then providing a unique solution for individual risk profiles. “As always, our number one objective is to provide value for our clients,” he says. Woodard points out that some contractors are accepting unreasonable risks, or risks outside their control because they want to be in the energy transition space. “We take a longer-term view,” he says. “We’re continuing to write policies and partner with new clients who understand and appreciate our philosophy.
For Liberty, this includes a large solar farm that was severely damaged by an intense hail storm. Solar in particular has presented some real challenges for insurers. From a Professional Indemnity perspective, Woodard points out that particularly in the early days of renewables, companies were rapidly popping up to build their first solar farm with very limited experience. “I’ve had approaches from companies that were private equity firms yesterday, come to me as solar farm developers today, and given the industry has relatively low barriers to entry, they’ve bought or leased land, designed a site and had a go. This “give it a shot” approach has never applied to traditional energy projects like coal fired power stations or gas plants, and one of the first questions we ask all project submissions about is the experience and track record of the management team.”
“Connect your clients with our underwriters,” says Woodard. “Not every risk is for us, but there’s value in cultivating those relationships.” Gil Perez recommends involving insurers early in the process through face-to-face meetings with clients and brokers. “Starting the process early gives us a better understanding of the client's risk appetite and specific needs,” she says. “Add detailed and relevant information about the project and we’ll be well-placed to provide the best possible, tailored insurance solutions.” Brokers can also help underwriters by providing information on what their clients are doing to mitigate risk. “Brokers should also be able to advise on risk mitigation strategies that not only satisfy underwriter enquiries, but could also lead to lower premiums for their clients,” says Cairoli.
According to our experts, brokers need to pay attention to communication.
Expert advice for brokers
“It’s fascinating to see the continual improvement in technology and solutions designed to decarbonise the grid and to be involved with it in some small way,” says McCardell. “There’s so much opportunity here in Australia. We already have a huge investment pipeline in solar, wind and BESS (battery energy storage system) projects, and there’s more on the horizon with pumped hydro, offshore wind, and green hydrogen. It’s an exciting time to be in this space.” Liberty insures owners, developers, contractors, operators and consultants across the whole of the renewable energy sector. Over the past year, we have provided cover for companies producing battery chargers, solar farms and the largest BESS in Australia; transportation of wind turbine blades; and a city being built in Saudi Arabia that will be powered entirely by renewable energy.
Many underwriters choose to work in renewable energy because it is dynamic and they’re keen to support projects that have a positive environmental impact.
In the right space
By the Liberty Marine Team
Our Project Cargo shipping risk engineering guide explores what's needed to ship oversized and heavy shipments
Liberty's Tom McCardell and Sara Sampaio Soares on a site visit
Head of Environmental Impairment at Liberty Specialty Markets Asia Pacific
In conversation with Liberty's underwriters
Rocio Gil Perez
Underwriter, Energy & Construction
Tom McCardell
Assistant Vice President, EAR & Renewable Energy Construction
Todd Woodard
Professional & Financial Risks, Head of Underwriting
Robert Cairoli
Vice President, Marine Asia Pacific
Head of Environmental Impairment
Every day across the world products are recalled. Sometimes they present a safety risk, and other times they are recalled due to reputational concerns or quality issues.
We never cease to be amazed at the different scenarios that unfold, and share some with you to help you appreciate the almost unbelievable situations that some manufacturers, distributors and retailers find themselves facing. Product recall is often specifically excluded from Products Liability cover, leaving a business vulnerable to any product recall loss. Liberty Specialty Markets' Product Recall insurance is suited to a broad range of consumer and commercially durable products, protecting them from retailer recall costs, replacement costs, loss of profit, rehabilitation expenses and more. If these product recall scenarios have you thinking about your clients, please get in touch with one of the Liberty Crisis Management team members to discuss product recall insurance options.
You certainly don’t think ‘no escape’. But back in 2014, the luxury Italian car maker had to recall more than 3000 of its 458 Italia and Spider models because the trunk – located at the front of the car – did not have any mechanism to open from the inside. Usually, a car boot can be fully opened from the inside but on this occasion, while the trunk could be opened an inch or two to prevent the suffocation of anyone trapped inside, it couldn’t open fully. The vehicles were recalled and the latch modified so if you were indeed trapped you could escape pretty efficiently. Well, that recall certainly puts paid to all of those trapped-in-a-car-boot movie scenes.
Think Ferrari and you immediately think ‘red’. You think ‘speed’. You think ‘luxury’.
The perfect vehicle for... a kidnap?
Let’s face it, we all know that sometimes, one flush isn’t enough – modern bathrooms are all about conserving water, after all, and sometimes that can lead to things getting blocked. To the rescue came Sloan Valve Company’s Flushmate Pressure-Assisted Flushing System – a device in the toilet that was capable of increasing the power of the flush, making blocked toilets a thing of the past. Unfortunately – and there was always going to be an unfortunately here – there was a problem. And that problem was caused by the pressure needed to increase the flushing power, occasionally escaping in other ways. Like through the tank link. Cue thousands of cases of randomly exploding toilets, some pretty serious lacerations, and millions of product recalls.
We usually steer far away from toilet humour, and that’s just as well because this exploding toilet was no laughing matter for anyone caught in the crossfire.
The mysterious case of the exploding toilet
From songs to TV shows, merchandise to educational sessions, the message has been shared with generations of kids around the world. Some methods have proven more successful than others. Back in the late 90s, a US-based company – the Bureau For At Risk Youth – launched an initiative that saw pencils bearing the slogan ‘Too Cool To Do Drugs’ distributed to schools in the States. Very soon, however, those pencils needed sharpening. And, as the message had been printed so a person holding it in their right hand could read it, they soon gave some very different advice to that which was intended. Cool to do drugs. Do drugs. Drugs. Once the mistake had been spotted by a 10-year-old, the pencils were quickly recalled and replacements were issued. This time, with the slogan printed in the opposite direction to avoid the awkward phrasing.
The ‘don’t do drugs’ message is one that society’s been keen to hammer home to kids for decades – and, let’s face it, it’s no easy task.
Pencils giving the wrong message!
They issued a voluntary recall for both products in 2017 because they may contain an unintended ingredient - golf balls! The products, they feared, may have been accidentally contaminated with “extraneous golf ball materials” that were harvested alongside the potatoes, posing quite a few risks to consumers, from choking hazards to potential mouth lacerations. No other recall in recent memory, from salmonella in Jalapeño chips to listeria in raw milk cheese, has involved chopped remnants of what you’d find on a putting green.
McCain Foods manufactured Roundy’s Brand Frozen Southern Style Hash Browns & Harris Teeter Brand Frozen Southern Style Hash Browns.
Golf balls for breakfast anyone?
In 2007 the popular children's toy was found to contain a chemical that the human body turns into the party drug "fantasy" when swallowed. Australian doctors were actually the leading force behind the global Bindeez toy recall after they discovered the toy contained the potentially deadly drug compound. Doctors who treated a two year old boy at Westmead hospital, in Sydney's west, after he ingested the toy's beads became suspicious about the quantity of Bindeez beads the boy swallowed and had them analysed. The efforts of these Sydney doctors led to 40 countries recalling the toy previously awarded Australia's Toy of the Year in 2007!
Bindeez are a children's toy, consisting of small coloured plastic beads that can be arranged in designs.
A toy that turned into a party drug
The problem was reportedly discovered in 2009 when a car dealer in the US found one of the spiders in a canister vent line in the engine after a customer brought the car in for repairs due to a fuel leakage. The Mazda 6 model holds a ‘particular attraction’ for the yellow-sac spider, which builds its nest in part of the fuel system. The spider was the likely cause of the leakage, which was caused by an increase in pressure in the fuel tank, causing cracks. The Mazda 6 models destined for the US had a different fuel tank to the ones in Australia, and there were no reports of spiders in the Australian models. It was not known how the spiders entered the engines, but it is likely they entered during manufacture, assembly, or transport. Their venom can cause small lesions in humans. Twenty infestations have been reported in Mazda 6 cars throughout the world.
Over 50,000 Japanese-made Mazda 6 cars were recalled in the United States due to sightings of the yellow-sac spider, which had been building homes in the fuel tank.
A car spider invasion
Liberty's Product Recall Monitor summarises recent product reclls that have taken place in Australia. All kinds of products and industries are impacted.
Assistant Vice President Crisis Management Australia
by the Liberty War & Terrorism Team
Malicious assailants post new threat to Australian businesses
As businesses continue to leverage AI at a rapid pace, Rian Wickens, Head of Cyber & IT Liability at Liberty Specialty Markets speaks to the opportunities and risks brokers need to be aware of as AI's influence evolves.
Head of Cyber and IT Liability for Australia
Intellectual property
In March 2023, the CSIRO reported that 68% had already implemented AI technologies and 23% planned to follow suit within a year. Of course, opportunity inevitably brings risk, and as AI continues to expand, new risks are emerging.
The value of Artificial Intelligence (AI) is old news for most Australian businesses.
The grey area of risk related to intellectual property (IP) is an area of concern. The World Economic Forum has described generative AI as disrupting traditional views of creativity, authorship and ownership, and pushing the boundaries of copyright law. This ambiguity hasn’t prevented some organisations from filing lawsuits, such as the New York Times’ claim that OpenAI, the creator of ChatGPT, used its copyrighted material to create and benefit financially from AI products. Until there’s a definitive answer to the question of who owns content created by generative AI, companies using the technology to create content can’t be certain they’re safe from claims of IP infringement.
AI bias
AI hallucination
Customer service chatbots
Privacy and confidentiality risks
However cyber criminals are now using generative AI to exploit the human vulnerability in cyber security, by creating more natural-sounding and convincing phishing emails, even in languages they don’t speak themselves. Tools such as “WormGPT” and “FraudGPT”, which could be described as ChatGPT for criminals, lower the technical requirements of cyber hackers. Explicitly designed for malicious activities with no ethical boundaries or limitations, they can create sophisticated phishing and business email compromise (BEC) attacks, write malicious code, create undetectable malware and even guide novice users on how to deploy ransomware.
To date, significant investment has been made in using and incorporating AI in cyber security detection and defence products, far outpacing cyber criminals' use of it in their cyber offensive tooling.
Cyber Security
Meanwhile, regulators around the world are struggling to keep pace with AI-related legalities. The European Union is in the process of formally adopting and translating the AI Act, which it claims is the first comprehensive regulation of AI by a major regulator anywhere. In the US, the White House has released a blueprint for an AI bill of rights, but there is currently no comprehensive federal legislation. Some states are taking matters into their own hands by passing their own laws, which will inevitably result in confusion for companies whose interests cross state lines. In the UK, the Ada Lovelace Institute has described the Government’s proposed approach to AI regulation as ‘all eyes, no hands’, with significant capabilities to anticipate and monitor AI risks but no powers or resources to prevent those risks or even react to them effectively after the fact. In Australia, there are no pending regulations specific to AI on the horizon; however, there is discussion taking place with the Australian Senate establishing a Select Committee investigating the adoption of AI to inquire into and report on the opportunities and impacts for Australia arising out of the uptake of AI technologies in Australia.
While most of the litigation we’ve seen so far targets some of the world’s biggest organisations, the next wave is likely to target less prominent companies and products.
Lack of regulation
When underwriting professional indemnity and cyber risks, especially for IT, Fintech and professional services firms (such as solicitors, accountants, engineers, and other financial service providers), assessing an insured’s risk exposure in relation to the use of AI is an important part of our underwriters’ thought process. Our underwriters will take into consideration:
Underwriting AI Risk
The presence of an AI usage policy, which is used to regulate and provide guidance on its acceptable use in the workplace. Public ChatGPT or private instance? If public, has the company undertaken their own risk management process on the use of public generative AI models and implemented boundaries for what information can be utilised without breaching privacy or compromising confidential information. For instance, have they set limits on the types of data that can be input into the AI model, or do they have restrictions on the use of AI-generated content in external communications. The use of AI driven chatbots and what risk mitigations have been undertaken. Mandatory training for employees that utilise AI outlining risk exposures and acceptable use. Ongoing assurance on the AI systems being used. AI technology risks are addressed along with other hazard areas in third-party vendor risk reviews.
For example, at Liberty we draw on areas such as Professional Indemnity, Cyber Liability and Directors & Officers insurance to provide comprehensive cover without specific AI exclusions. Companies providing technology products are already vulnerable to legal actions claiming non-performance, failure to deliver and other liabilities. The risks are bound to increase for those now incorporating AI-into their products or services. Liberty’s Civil Liability Policy for Information Technology Organisations provides cover for financial loss claims, while our Combined General & Products Liability (CGL) Policy for Information Technology Organisations covers claims for personal injury and property damage.
As yet the risks are too ill-defined to be captured in a definitive AI insurance policy, though existing policies can work together to cover the gaps.
The role of insurance
With so many diverse threats to manage, companies are increasingly looking to insurance as a solution. Business leaders know it’s impossible to remove risk entirely, but the right cover could provide the confidence they need to continue investing in the benefits of AI.
AI bias is also increasingly talked about. The training data or even the algorithms designed by its creators can contain bias that reflect and perpetuate human bias within society, including historical and current social inequality. As a case study, Bloomberg used fictitious names and resumes to randomly allocate them to equal resumes using demographically distinct names associated with particular races or ethnicities. When using AI to rank the fictitious candidates, it favoured names from some demographics more often than others to the point it would fail benchmarks used in the assessment of job discrimination.
AI hallucination is when AI models, in their responses, generate false and misleading information and present it as fact. This underscores the importance of thorough fact-checking. Case studies presented to the senate inquiry into the integrity of the Australian consulting industry suggested that KPMG was complicit in the 7-Eleven wage theft scandal and guilty of auditing the Commonwealth Bank during a financial planning scandal. Neither accusation was true. Both examples had been generated by Google Bard AI and submitted to the inquiry without being fact checked by the academic in question or any of their colleagues.
The emergence of readily accessible public models of Chat Generative Pre-Trained Transformers (ChatGPT) brings privacy and confidentiality risks for organisations as any information entered into the platform is fed into the model and potentially available publicly; therefore, if customers personally identifiable information is entered a privacy breach has occurred, and likewise, if the organisations' confidential information such as financial results or intellectual property is entered it essentially has trained the model with that information for the benefit of other users. Many organisations are creating their own dedicated private instances to remove this risk exposure.
Another emerging risk is the use of AI in customer service chatbots. The effectiveness of these chatbots is only as good as the quality of the data they have been trained on. If not configured correctly, they can be vulnerable to being tricked with command prompts (prompt injection attacks) into divulging personal and confidential information.
Liberty Specialty Markets along with cyber security advisers NCC Group, aims to provide an overview of MFA and discuss common pitfalls and challenges that an organisation should be aware of when choosing to implement an MFA strategy. This guide provides insight into the different methods of MFA, highlighting those that have proven resistant to attack and those that have proven less resistant, to guide best practice implementation. Whilst MFA is undoubtedly superior to single-factor authentication (SFA), it is not a “silver bullet” and not all methods of MFA can be considered equal. Organisations should consider MFA an essential control, but always as a single component of their broader defensive strategy.
Multi-factor authentication (MFA) is an essential complement of any business’ approach to cyber security, and it’s essential it’s implemented and managed in a strategic and well-thought-out way. In this guide, we explore why MFA is used, some of the techniques used by adversaries to bypass it, and recommendations that organisations can adopt to enhance their cyber defence strategy.
The Australian Cyber Security Centre (ACSC) identify multi-factor authentication (MFA) as one of the eight essential strategies to mitigate a cyber security incident.
Head of Cyber and IT Liability, Asia Pacific
Liberty's Australian CyberChoice claims service brings clients the freedom to choose their cyber response partners
