Gallagher: empowering clients to handle risk

18 May 2022

Founded by Arthur J. Gallagher in Chicago in 1927, today the eponymous insurance brokerage, risk management and consulting firm operates in more than 60 countries. In Australia it is the chosen partner for more than 130,000 businesses, from small enterprises to multinational corporations and iconic brands. 

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Welcome to another edition of Fast Five – our fortnightly series where we ask Victoria’s most influential and exceptional business leaders five questions to get a behind-the-scenes glimpse of some of Australia’s most dynamic businesses.

Gallagher’s aim is to take out some of the complexity around insurance and risk management so businesses can focus on what they do best.

In this edition we spoke to Samantha McCormack, State Manager, Victoria, about the role insurance brokers play for business, Gallagher’s local operations and broader industry trends.

#1: Gallagher’s Australian presence has been growing since a merger with OAMPS in 2014, with a further 25 mergers and acquisitions since then. Can you offer an insight on the company’s operations and current outlook in Australia?

We do have a growth mindset and a proud track record of successful acquisition and organic growth. We love growing alongside our clients and also bringing like-minded partners into the Gallagher business. We have more than 1,000 employees and big ambitions for the future.

In Victoria we have eight branches which are part of our network of more than 30 branches across every state and territory in Australia. We serve businesses of all sizes, with tailored solutions for small, medium and large. We also have a range of sectors we specialise in with dedicated teams offering expertise and market leading industry knowledge.

Think of Gallagher as your trusted advisor and business partner who can help you out when something unexpected happens. We understand the communities that you call home because we are part of them too. We also offer the distinct advantage of access to global insurance, risk solutions and partners – a critical benefit in the insurance market where negotiating and accessing the best insurance placement solutions is strongly enabled by this global capability.

#2: What does an insurance broker do and why should businesses, particularly smaller ones, consider engaging one?

Insurance brokers navigate the complexity of insurance policies and coverage challenges, driving better outcomes for clients both in mitigating risk and managing expenses. Importantly, when the unexpected strikes and an insurance claim has to be made, the Gallagher team swings into action advocating on behalf of our clients and making sure they get the required support when they need it most.

No matter what industry you work in or how big your business is, our brokers will get to know your business so they can give you the best advice and risk management solutions available to help protect your business. It is our aim to try and take out some of the confusion that can be felt around insurance and risk management so you can focus on your business or role, with the confidence you are protected by a professional insurance and risk management program.

#3: What trends are emerging or evolving in insurance and risk management, including those driven by COVID-19, and how can businesses best protect themselves today?

Australian businesses have been doing it tough. After year-on-year disasters and the impacts of COVID-19 business owners and boards are facing a further challenge in rising insurance premiums and in some cases unavailability of insurance cover. Here are some of the influences to consider ahead of renewals.

While internal factors such as location and type of operation affect access to insurance there are also external influences contributing to a ‘hard’ insurance market.
These include:

  • Catastrophic natural events and the increasing prevalence of extreme weather events
  • Large individual fire losses
  • Lower investment returns for insurance companies
  • Higher costs from the treaty reinsurance market
  • Increased litigation from class action activity
  • Greater regulatory scrutiny of boards and directors
  • COVID-19 implications
  • Environmental accountability pressures.

The combination of these conditions is forcing insurers to restructure their risk portfolios around long-term sustainability, with a focus on profits. As a result premiums have increased as tolerance for risk has tightened. Overall there’s significantly less capacity than there has been previously and because of this, placement is more difficult.

#4: Cyber security is a growing global threat but often poorly understood or downplayed by business. What risks can this pose and how can businesses minimise these – including through cyber insurance?

Cyber criminals are becoming more sophisticated and they continue to find new ways to access business data, records, servers and networks. Having the right cyber security and risk management practices is the best way to avoid a cyber attack or data breach but, if something does go wrong, cyber insurance can help you pick up the pieces.

Think of cyber insurance like any other insurance cover you have. If there is a fire at your property, your insurance cover will help you rebuild, and cyber insurance is designed to help you get back on your feet in the aftermath of a cyber incident. Cyber insurance gives you access to a panel of experts, from legal and PR advice to IT specialists to help you control, contain and coordinate your response to a cyber incident and can cover you for a range of threats and outcomes.

Take-up rates for cyber insurance cover in Australia remain relatively low compared to more traditional commercial property and liability insurances, according to the Insurance Council of Australia. But as the pace of cyber attacks continues to increase and massive cyber claim payouts persist, insurers are reducing their cyber risk appetite and capacity. Businesses lacking cyber security controls can expect to see 100 per cent to 200 per cent rate hikes, reduced coverage terms and even possible non-renewals.

Due to the heightened cyber threat environment, cyber insurance underwriters have a laser focus on data security controls when evaluating risks. Virtually all cyber insurance insurers will require evidence of at least some preventive controls which may include multi-factor authentication (MFA) remote desktop protocol (RDP), data backup practices, segregation of networks, encryption, patch management, privileged account management (PAM), employee training and a host of others.

#5: Many enterprises are expanding their sustainability efforts to generate environmental, social and economic benefits for the firm, its employees and the community. How is Gallagher working to achieve this?

We believe that sustainability is critical to business success and we think that in order to truly be a sustainable organisation we need to do the right thing by not just our business, but also our people, our communities and our environment.

Preserving the environment is both a moral imperative and a sound business strategy. We take environmental impact into account in both our major purchase decisions and everyday operations. We actively seek to do the right thing by our environment and reduce our environmental footprint.

Our initiatives include:

  • Choosing the most energy-efficient office building for our office refits
  • Using low-wattage, motion-activated overhead office lights in our largest offices
  • Sourcing office fitout materials from an accredited Australian-based sustainable supplier
  • All of our medium and large office locations feature hot/chilled water dispensing units to reduce need for bottled water
  • Recycling and using recycled materials at all sites
  • Employee volunteering including tree planting and environmental clean up initiatives.

 

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