1

Ward Dedman, Adv Dip Fin Serv (Broking) QPIB FNIBA

Managing Director (Operations)

Steve Sparkes,Dip Fin Serv (Broking) QPIB CIP FNIBA

Managing Director (Broking)

Welcome

Welcome to the October-November issue of Insurance Insight, which marks an exciting milestone for EBM as we commence our 40th year celebrations.

On 1 October 2015, we launched our official 40th commemorations with a staff celebration to mark this important milestone.

EBM has come a long way since we began operating in 1975 – growing from humble beginnings in suburban Perth into a truly national company with nine offices around Australia and more than 200 dedicated personnel.

We’ve weathered recessions, industry downturns, major reforms and catastrophic international crises – a rare achievement in the insurance sector and a tribute to the people who work for us and the businesses who support us. We sincerely thank you all for your trust and support.

Today, 40 years on, our working environment and workplace looks very different to when we started. Who would have tipped cybersecurity as a major insurance issue back in 1975? Who would have thought we’d be able to work effectively and efficiently from our cars?

Advances in technology have transformed our operating environment, in this edition of Insurance Insight, we explore workplace change and the emerging field of reputational risk insurance and what it could mean for you.

On the lighter side, we also delve into what makes us really happy – and we have some answers that might not be what you expect!

We hope you enjoy the articles in this edition of Insurance Insight, which marks the start of 40th

anniversary celebrations and which aims to keep you up-to-date with EBM and industry news.

2

Four decades ago two businessmen – Alan Bishop and Neville Elkington – shook hands on their dream to set up one of the first insurance brokers in Western Australia – a vision that has created one of Australia’s leading insurance and risk management businesses, EBM.

Now truly a national insurance business with 130,000 clients supported by a team of more than 200 personnel, EBM has surpassed its founders’ vision and become a professional, innovative company with a strong reputation for ethical practice.

EBM’s Managing Director (Operations) Ward Dedman attributes EBM’s success to a genuine passion and commitment to risk management by the company’s founders and its current team of staff.

“EBM has had a strong vision and values from day one,” Ward said. “We are committed to delivering client-focused risk solutions, as well as providing a rewarding place to work for our people – we’re a well-rounded organisation with a practical business approach.”

While quick to add there’s no single formula to business success, Ward says there have been some fundamental principles that have helped drive EBM’s growth:

• Look forward: be visionary, identify emerging trends and adapt to changes before they arise. EBM’s specialist products grew from identified, unfilled client needs, such as RentCover landlord insurance which now covers 120,000 rental properties.

• Support those who support you: when looking to the future, don’t forget the people who have supported you along the way. Many of EBM’s clients have been with the company since the beginning and their loyalty is considered the ultimate marker of EBM’s success.

• Business is a team game – invest in your team: encourage social and professional development activities for your personnel. EBM’s senior professionals are some of the most experienced in the business and we’re proud they have linked their professional reputations to the success of EBM.

• Create connections: be involved in industry both locally and internationally, where possible. EBM has taken a wide market view by operating with an open panel of insurers both here and overseas, which gives our clients access to all the world’s best insurance products.

• Give back: support events and organisations in the areas where you operate and causes that align with your business and your people.

EBM’s 40th anniversary marks the end of an important chapter and the start of an exciting new era as the company prepare to move into bigger and better premises in Perth and Melbourne.

“We’re now truly a national operation with global capability, but our feet are still firmly planted in the local communities and industries we service – and remaining focused on our core business and clients is key to our success,” Ward added.

40 years and counting: EBM’s formula for success

3

Industry insight: Reputational risk insurance

Guard your good name; it’s worth more than you might think.

What’s a company’s most valuable asset? Its people? Its intellectual property? A manufacturing plant or maybe its client base?

What about its good name?

In an age when incidents and issues can spread like wildfire via social media – transforming what might be a minor incident into an overnight scandal – reputational risk is very real and, potentially, very damaging.

Just as cyber liability has rapidly emerged as a significant issue for insurers, reputational risk management is looming as the next new frontier in the insurance industry.

“Reputation risk management is already becoming big in the United States,” says EBM’s Corporate Account Director and Victorian State Manager Gino Renzella. “And exposure in this area is growing because of our increasingly litigious society.”

Gino said some underwriters were already providing cover for reputational risk, including revenue loss, crisis expenses and crisis management costs. He said policy triggers could range from product recalls and service interruptions to confidentiality breaches and even negative associations with third parties.

“It’s all about perception,” Gino said. “It could be a health and safety issue where someone dies on a worksite and the company has to explain, or a regulatory investigation that casts doubt on an organisation or its products.

“Whatever the issue, the media and popular opinion are increasingly unforgiving of corporate mistakes or misfortunes and the impact can be disastrous for a business.”

“Insurance may protect against such things as loss of revenue resulting from unfavourable media reporting or the cost of promotional effort necessary to restore brand value or customer faith in the brand.”

The boom in social media activity means a trickle of negative comments can become a torrent and that applies just as much to smaller businesses as large corporations.

“It takes years, even decades, to build brand reputation,” Mr Renzella said. “That’s why when a business is sold, there is often an amount incorporated in the selling price for ‘goodwill’.”

“That’s the reputational value the firm has built for itself over time. It’s measurable and therefore should be protected by insurance cover.”

4

Workplace evolution: Challenges in the new way we work

Imagine if you could set your own hours and take time out of your working day to chill in the company health spa or cinema!

It’s not a dream but the workplace of the future, according to a recent survey of 46 global companies by workplace design company Knoll and UnWired.

Many of the worlds’ leading businesses are rethinking the way they acquire, plan and use physical space to create more flexible working environments with fewer desks, more meeting spaces and collaborative hubs to stimulate innovation.

Global giant Microsoft has completely done-away with fixed desks and offices at its Netherlands headquarters, with all employees working on portable devices.

eBay is another company that uses interactive meeting places and collaborative spaces to encourage people from different departments to work together.

Many of these changes are the direct result of advances in technology such as cloud computing, which frees up more office space as companies get rid of outdated infrastructure. Lifestyle choices and increasing demands outside work are other factors forcing companies to be more adaptive and utilise activity-based working principles.

While these holistic and flexible working conditions can deliver positive results, like improved staff retention and performance, employers should be aware that some workplace trends can have implications in relation to their insurance cover.

According to EBM Managing Director (Broking) Steve Sparkes, working from home was one such trend that could potentially leave you and your employees without insurance cover.

“While there are many benefits to be gained by letting employees work from home, we recommend all employers check their insurance cover first,” Steve said.

“Tradies carrying out work in their sheds or garages could also be at risk – imagine if a spark from a welder started a house fire.”

“There are also issues with public liability insurance if a business client was to visit an employee working from home and became injured,” he added.

“It’s a matter of looking at your circumstances and considering the cover you need. There are products available that can be tailored to suit wherever you or your employees work.”

5

Financial planning corner: DIY Super – Where to start

Self-managed super funds (SMSFs) have become a super-charged industry.

As the largest and fastest growing superannuation sector, close to $600 billion dollars in assets are spread across close to 560,000 SMSFs in Australia.*

For some, SMSFs are the ideal option to keep control of their finances and future. For others, the thought of setting up a SMSF is overwhelming and complex.

EBM’s Managing Director Financial Planning Jay Manley says SMSFs can be a good option for those with the interest and time to manage their own affairs, especially those with experience in financial matters and a large or growing superannuation asset.

So, how do they work?

• SMSFs have one to four members or “trustees”.

• Trustees must take their role seriously – they are legally responsible for ensuring the fund complies with super and tax laws.

• Trustees are in control – they set their own investment strategy which may extend from shares, term deposits and property to antiques and artworks.

• SMSFs must be independently audited and an annual return lodged with the ATO each year. The fund’s assets also need to be audited.

• When the SMSF has pension liabilities, actuarial certificates must be produced.

• All records relating to the management of the fund must be retained in accordance with ATO requirements.

There are a range of costs involved in setting up and running a SMSF. Costs for operating, auditing, reporting – and even insurances for members – must be covered by the trustees, and the fund can only be run to provide retirement benefits, not to gain early access to super or to fund future holidays or home upgrades.

If this sounds like an option for you, the ATO and ASIC have detailed information about SMSFs, including an education program online.

Both organisations also recommend seeking expert advice before setting up a SMSF through a registered organisation like EBM Financial Planning who can assist with your superannuation and broader retirement planning.

EBM Financial Planning Pty Ltd is an Authorised Representative of Financial Wisdom Limited ABN 70 006 646 108, AFSL 231138. The advice provided is general in nature. It does not take into account your financial circumstances and objectives. You should consider talking to a financial adviser before making a financial decision.

*Source: APRA Annual Statistics, June quarter 2015

6

Looking at the lighter side of life

Ever wondered what really makes you happy? Always wanted to know to secret formula for a long and healthy life? The answers might just surprise you.

According to recently released research from the Melbourne Institute of Applied Economic and Social Research’s Household, Income and Labour Dynamics in Australia (HILDA) Survey living the lotto dream won’t necessarily deliver lifelong happiness and satisfaction.

These were the key findings from a long-term study undertaken between 2001 and 2012 – providing interesting insights in the lives of around 20,000 people living across the country.

The survey dispelled many long held believes about work-life balance, uncovering some interesting facts, including:

• It’s okay to work hard; very hard… we can work more than 51 hours in paid work and 81 hours of total work per week (that’s more than 11 hours a day) without any detrimental effect on our wellbeing.

• Those on higher hourly wages have a reduced sense of job security. And, if you want to increase your pay packet, you need to consider studying or simply changing jobs.

• When we get time to play, we have more money to spend, as the mean household disposable income increased by more than $1,700 per year.

• Money can buy a bit of wellbeing, as those in higher socio-economic regions and with higher incomes reported better overall health.

• Men have better health when they have a partner (but no kids) and conversely for women it’s better not to have a partner (unless you have kids).

• Whether you have a partner or not, it might just be better for your health to stay at work. It seems that retirement does our wellbeing no great favours – for men especially, as retiring can set them up for health issues.

• While our general health declines with age, our mental health doesn’t; in fact, it often improves slightly. And keeping our minds active also improves our cognitive abilities.

Now there’s something for all of us to think about!

7

Multi-million dollar violins to cowbells – Brooke looks after them all

Brooke McLaren is EBM’s musical instrument specialist – looking after everything from percussion instruments to rare 17th century violins.

It’s Brooke’s role to help her clients protect their instruments, many of which are highly valuable, handmade and imported from Europe.

“EBM works in conjunction with Lark Insurance Brokers in the UK which has been specialising in musical instruments for many years,” Brooke said.

“Some of these instruments date back to the 17th Century and many are from the UK and Europe.”

“It does vary a lot. We cover everything from a $600 children’s violin to a $20,000 or $30,000 orchestral-quality instrument.”

“There are so many different kinds of instruments – clarinets, clavichords, harps, flutes, double bass, drum kits, cornets and even cowbells! We also cover electric guitars, amplifiers, mixing desks and other kit for studio recording.”

“The most valuable one on our books is a multi-million dollar violin.”

Brooke joined EBM in 2008 and has been specialising in musical instruments since 2012, working initially from Melbourne and now from the Victorian town of Sale.

“It’s a bustling little town and our office is located on the main street. Sale is a hub for many smaller communities as well as local industry including cattle, dairy and crop farming,” she explained.

“There’s also the Esso Gas plant and a RAAF base located nearby.”

In addition to musical instruments, Brooke also looks after a facility for Real Estate Agents as well as the insurance needs for clients in the local Gippsland region.

1300 INSURE (1300 467 873) | F: 1300 365 822 | ebm@ebm.com.au | www.ebm.com.auNew South Wales | Victoria | Queensland | Western Australia | South Australia

Coverholder at Lloyd’s | Global Broker Network | Asia Australasia Alliance | National Insurance Brokers AssociationElkington Bishop Molineaux Insurance Brokers Pty Ltd | AFSLN 246986 | ABN 31 009 179 640 | Est 1975

News in brief

Reduce home, contents and strata insurance in northern Australia The Taskforce charged with examining ways to reduce home, contents and strata insurance premiums for people living in northern Australia has just finalised public consultation on its interim report. The Northern Australia Insurance Premiums Taskforce is considering new models, such as having a mutual cyclone insurer or a cyclone reinsurance pool, for cyclone prone areas. It will deliver its final report to Government in November.

Chinese property investorsChinese property investors are turning to non-bank lenders following the tightening of the major bank’s lending practices. New non-bank lender, Chifley Securities has experienced an 86 per cent growth in commercial property finance to Chinese investors – some $65 million since 30 June 2015, compared with $35 million in the first six months of 2015.

State and territory insurance taxes Australian property owners and renters would take out more insurance if state and territory insurance taxes were abolished – protecting their homes and household assets by an extra $36 billion. Research by the Insurance Council of Australia showed that hundreds of thousands of households would be more likely to increase their insurance cover, or start buying insurance, if taxes and levies such as stamp duties were removed.

IT recruitment is on the increaseIT recruitment is on the increase across the country. A survey of 650 hiring managers by specialist recruiter Robert Walters requested hiring forecasts until 31 December 2015. Some 39 per cent of managers said they expected to increase IT staffing levels before the end of the year. The survey also found that 45 per cent of IT businesses would be looking to keep their headcount at similar levels.

Australians still rely on receiving the aged pensionHalf of all Australians still rely on receiving the aged pension, according to landmark research from the Institute of Actuaries of Australia. The pension accounts for 73 per cent of retirement income for those in the bottom quartile income bracket and 44 per cent for the “middle Australia” bracket. Those in the top quartile income bracket still qualify for part-payment (16 per cent of their income over their lifetime).

Worker’s compensation in New South WalesFurther changes have been made to worker’s compensation in New South Wales. Workcover NSW was restructured into three new agencies on 1 September and new provisions relating to injured workers were passed by State Parliament in the Workers Compensation Amendment Act 2015 on 13 August 2015. For more information on how these changes will affect your business, contact EBM’s Account Manager Frances Cook.