The Year In Review

1. The Year In Review NIBA 2007 Year in Review

2. Market - Background • 133 licensed insurers - 112 were general insurers and 21 reinsurers. • Market consolidation continues. • Insurers buying insurers – brokers buying brokers and even insurers taking strategic stakes in brokerages

3. The most notable movements: • The $7.9 billion ($US6.11 billion) acquisition by No 2 insurer Suncorp for No 3 insurer Promina. • The acquisition of OAMPS by Perth-based industrial conglomerate Wesfarmers, which already owned middle-range insurer Lumley. • Wesfarmers has continued to buy brokerages, including NZ’s largest locally owned brokerage, Crombie Lockwood. • Austbrokers and IBNA have entered an open-ended alliance to work together distributing insurance products (“AIM”) • Steadfast announced no changes to its current structure at this stage. • RIBA expanding - taking on brokers outside Victoria

4. Distribution • Brokers continue to dominate distribution in the commercial insurance market. • Up about 12% in the past five years (to 75%) • Brokers are regaining market share in personal lines. Up 6% (to 39%)

5. Insurers • LIMBO market --- how low can it go? • Record result for insurers despite intense competition, lower investment returns and impact of June floods (insured losses approx $1.5B ) • Insurers reported gross premium revenue of $30.5B, while underwriting profit up 30% to $2.84B. • Domestic motor vehicle and household insurance made up the largest portion of gross premium revenue at 21.7% and 14.9%. • NSW/ACT insurers accounted for 42.8% of Australia’s total gross premium revenue. The region dominated all classes of insurance except employers liability, for which WA accounts for 54.9%. • In total premium revenue from PI insurance fell 5.6% on the previous financial year to $1.3 billion. Public and product liability gross premium revenue also fell to $1.9 billion. • Overall, industry has gross value of $15B = 2% of economy + employs 96,000.

6. NIBA’s Mission Statement “To constantly identify, meet and represent member needs and expectations with excellence and enthusiasm.”

7. NIBA Organisational Chartas at August 2007 NIBA BOARD Divisional and Specialist Committees CEO YP’s • Consultants • Regulatory/ Legislation • Technical Services • Publications/ PR Marketing • Convention • PI Facility • HR • Education/Courses Professional Development Executive Manager Finance & Operations Registrar/ Member Services Co-Ordinator NIBA College National Education Co-Ordinator Qualifications Traineeships Student liaison Divisional Secretaries (Part Time) CPD/Seminars Admin Assistant (Part Time) Admin Assistant (Accounts) Admin Assistants Receptionist

8. NIBA Board - role • To be visionary & guide the future for NIBA and its members • To assess, plan and govern the affairs and policies of NIBA • To maintain ongoing dialogue and collaboration with key stakeholders through the sharing of knowledge and information

9. NIBA Board – role (cont.) • To ensure effective & viable operation • Enhance the “profession” • Best position NIBA and its members for future

10. Divisional Committees Regular meetings and local input on issues Organise at least 2 social, networking functions which reflect a good image for NIBA and members Produce annual activity plan Business/UWA expos in most states

11. Young Professional Sub Committees • Mission Statement: “Advance aims and objectives of NIBA by providing and promoting an active business, educational and social network for YP insurance brokers”

12. YP committees - role • To report thru respective State Divisional committees • Provide input on issues relating to YP’s • Develop relevant training and education in liaison with NIBA College • Implement activities to promote broking as a career of choice

13. NIBA Key Result Areas Government affairs/lobbying Broker training and education (NIBA College) Technical services, website, advice (FinServ) Member Services (advice, PI Facility, HR) Marketing promotion and publications (McMullan Conway) Convention Administration/Finance/Membership

14. Government Affairs - objectives • Promote brokers interests to key stakeholders including ASIC, Treasury and government at all levels • Enhance NIBA’s profile as peak body representing risk intermediaries • To best position members

15. Government Affairs –2007 hot spots • Code of Practice – launched March 07 (no problems so far) • EDR schemes looking to merge • FSRA – ongoing refinements/fine tuning • Simple regulatory system - NIBA support • ASIC occupied by property finance industry (Westpoint, Fincorp, Bridgepoint and mortgage industry - but brokers gaoled!) • DOFI’s/DMF’s – support in principle but working thru concerns • PI – transitional arrangements, concerns • Taxation – greater traction on argument • FSL/deductible (Vic) (on business with over $50m insured valued)– strong NIBA lobbying - Govt. backs down. • Also effective admin. arrangements for handling net rating • Workers Comp – active committee NSW, other discussions in ACT and Tasmania

16. NIBA Finance • Finance Committee reports to Board • Aim to operate viably under sound financial criteria and procedures • Maintain a reserve = 6 months operating costs (around $3m currently) • To target a min. 15% margin on activities and functions • $2.6M back to members in past 5 years

18. NIBA College - objectives Provide … relevant, reliable, innovative educational products and services to the broking sector … and quality educational advice to licensees and their staff Represent … the broking sector in government and industry educational forums Ensure that members have access to a compliant RTO to meet their qualifications requirements Promote … the benefits of broking careers by providing and supporting traineeship programs Promote … College as a quality educational provider in competitive market

19. Communication Ongoing media relations (AFR, BRW etc) NIBA hotline - over 40,000 seek referrals to NIBA brokers (Needabroker) IC liaison – taxation, flood, under-insurance, liability, workers’ comp etc. Around 100 speeches, presentations, briefings (CEO, President, staff) Sundowners around Australia

20. Communications (cont) “Insurance & Risk Professional” Gazette - popular Marketing kit completed – 12 chapters Website development ongoing New Warren Tickle Memorial Award Newshots, surveys, questionnaires

21. Membership Despite rationalisations & mergers – principal members remain steady QPIB or equivalent = 2491 (June 01 1837 ) Principals = 440 (462 in 01) Branches = 720

22. New Associate membership • Allows entrants that meet the ASIC min Tier 1 requirement and have less than 4 years exp. to join NIBA. • Then encouraged to do additional modules to complete Dip Fin Services (Insurance Broking) and upgrade to QPIB • Then ultimately to FNIBA with Adv. Dip.

23. Member PI Facility Manager - Gallagher Broking Services Aim – “ensure relevant, economical and reliable facility for all members” Competitive market Premium pool over $2m, 89 members Low claims, no deterioration on earlier years

24. Life Brokers & Advisers Sub Committee Assisted ongoing lobbying Representation on industry groups representing life/investment sector Working with divisional committees Gwen Fletcher - awarded Member of the Order of Australia (AM) in Queen’s Birthday Honours list

25. NIBA - industry liaison ongoing IC, FPA, UAC, clusters, government, consumer and related groups Strong links with international broking community as CIIBA secretariat CIIBA a member of WFFI CEO on World Council Executive

26. 2007 Highlights - year of consolidation • Launching Code & Promotional campaign • Generational change - new Warren Tickle Award and State YP winners • Modernisation of QPIB • Victoria dumps FSL (on business with over $50m insured valued) • DOFI Exemptions – they listened! • Industry advertising – nailing AAMI!

27. Finally … • “Achieving consensus may not always be possible … but a function of any representative body is to shape, guide and empathise with its membership as to sharing its aims and objectives.”