5 Minutes with ……. Andrew McPherson

Career summary:

  • Started in the industry 1985
  • In various underwriting roles since 1987, with several insurers and reinsurers
  • Based predominately in Melbourne, but have spent several years interstate in Perth, Adelaide and Sydney
  • Worked for a few years as a consultant providing various risk management solutions, including building and delivering a standalone trainee underwriting program
  • Has held several committee roles with Senior Underwriter’s Forum (Victoria) over many years – currently President.

Bucket list:

  • Continue to improve my risk management knowledge with a global role, with Asia a key focus.
  • Life outside the industry:
  • Loving the coastal lifestyle, not far from the Great Ocean Road in Victoria
  • 5 kids (21 to 7), with most weekends taken up with junior hockey, cricket & tennis
    Passionate collector of Star Wars Lego – Ultimate collector series (the big boys stuff – don’t judge me!)

1. What was your first job?

Outside of a newspaper route at age 12 (I think we all had one at one stage), my first real paying gig was as a waiter at a theatre restaurant in Carlton (Melbourne). I got the opportunity through my best mate as his older brother owned the restaurant, and I was paid in cash and in whatever alcohol was left over from the functions that were held. I remember a radio station held their staff Christmas party there one year, and they over-estimated the alcohol they needed, by a considerable margin. My mate and I enjoyed a very good Christmas bonus. I was only 18, but the cash I earned was enough to convince me to defer my studies at University for 12 months and look for a better paying gig – never went back!

2. How long have you been involved in the life insurance industry and in what roles?

2I started at age 18 (4 weeks after I left Uni) at Guardian Royal Exchange in Melbourne as a New Business clerk. That was in late 1985 and after 2 years moved into a junior underwriting role (my training consisted of 10 insurance applications and the reinsurance manual!). Throughout the journey I have been in various underwriting roles in Melbourne, Perth, Adelaide and Sydney with various insurers and reinsurers. I also had my own consultancy business for 3 years and ran my own underwriting trainee program for a major insurer. Prior to re-joining Munich Re I was Chief Underwriter at AIA Australia.

1Something few people will know is that I worked as a claims supervisor for 18 months (at GRE). I decided to go back to underwriting when a lady thought her claim would be assessed more quickly by hitting me with her handbag in the front office.  I am still going through therapy……..

3. What is your current role and primary responsibilities at Munich Re?

I re-joined Munich Re in September 2015, and my official role is Senior Underwriting Consultant. This covers a diverse range of responsibilities, however the key ones are assisting our clients with placing challenging underwriting risks, helping them profile risk appropriately, providing audit solutions, etc. I am also heavily involved in our own internal workflow solution platform.

4. In your eyes, what have been the highlights and lowlights in the Australasian life industry during your career?

I think the highlight has been the growth of professionalism in our industry – we have moved from very little (if any) self-regulation when I started, to a vastly different world now. Insurance brokers, underwriters, claims assessors – we are all much more educated, regulated and ultimately more professional.

The lowlight is how we continually make this a cyclical industry – we seem to often make the same mistakes. This is not the first time our industry has been suffering from sustainability issues, and they are invariably caused by the same brew of ingredients.

5. Currently what do you see as the main challenge/s for life insurers and reinsurers?

Providing relevant and sustainable insurance solutions is the biggest challenge, and one in which we are making some headway. We are still largely marketing a product range that was designed decades ago, for a market that has insurance needs that have moved beyond what we can currently provide them. We need to look outside the ‘one size fits all’ mentality, both in product and in underwriting our product.

I see the work that is currently going into incorporating wearable technology into insurance offerings as one of the best opportunities we have to remain relevant to a new generation with more dynamic insurance needs.

6. The industry has come to the realisation that Income Protection in its current form is unsustainable – without ongoing and significant premium hikes. In April 2015, Munich Re published a paper: Income Protection – A time for review. Have you seen any positive movement since this paper in the industry?

I certainly have. I am aware that many insurers are revisiting their disability product range to incorporate a more realistic offering – in terms of pricing, definitions and benefits. However, ensuring the end client is still the key focus in any product design must still be paramount. The introduction of modern disability tables (ADI 2007-2011) has also been a very positive move.

7. Whether implemented this year or next, the Life Insurance Framework (LIF) will change the way life insurance is sold in Australia. To what extent do you envisage this reform to have on our industry and in particular in the claims and underwriting space?

I don’t see much impact on underwriting and claims, per se. The real impact will be in the distribution of our products, and the retention rates (which are improving outside of LIF).

8. What are your thoughts on the much publicised Underinsurance Gap in Australia and how should we tackle this issue?

The value of group insurance has the potential to change this significantly. Most of the working population has a degree of insurance coverage, however default coverage rarely meets the real insurance needs for most. I think a solution possibly lies in
both revisiting minimum insurance levels within group insurance and in educating the public on their insurance needs and solutions in the retail market – something we simply do not do well. The real solution however simply lies in making insurance easy (again something we don’t do well).

9. In 5 years time, where do you see the Australian life insurance industry? And in your opinion are there any game-changing innovations on the horizon?

The lines between Life insurance and health insurance are becoming blurred, and I believe 5 (to 10) years time will see our industry very focussed on not just providing traditional insurance solutions, but new solutions in improving the health of the insured population. Imagine the day when your insurance premiums and definitions / benefits are fluid (not fixed) and based on you regularly providing real-time health metrics. The revolution is coming!

10. How is ALUCA performing in your view? Where is ALUCA doing well and where can improvements be made?

I have seen some good advances with ALUCA in the past few years, particularly in the area of professional recognition and ongoing education. I would like to see ALUCA increasing it’s exposure to similar industry bodies globally (particularly in ASIA and the US). I see the ability for members to easily share knowledge across geographical borders as a key area ALUCA can look to focus on, particularly as we look to increase the education standards of the membership. Ultimately however, ALUCA is there for the broader membership and the members need to interact with ALUCA regularly to gain the real benefits that a strong industry body like ALUCA can provide. I am not sure that is really happening at the moment.

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