AAA Conference | 24 May 2019 Beijing, China Members Report: EBM

AAA Members Report – Australia Country: Australia Name of Member: EBM Membership details (update) - Annual Premium Turnover: AUD $200m + - Number of Staff: 233

AAA Members Report – Australia Countries of Operation: Australia Locations: Perth, Sydney, Melbourne, Southport, Kalgoorlie, Bunbury, Geraldton, Karratha and Adelaide (RentCover)

AAA Members Report – Australia % of income by top 5 – 10 industries

AAA Members Report – Australia Professional Indemnity Details (update) - Limit of Indemnity: $100,000,000 - Legislative Requirements: $20,000,000 - Insurers: NIBA Scheme and Lloyd’s participants

AAA Members Report – Australia Who regulates Insurance Brokers in the country: Australian Securities & Investment Commission (ASIC) What Insurance Broker and Agent Education Programs exists: QPIB, Diploma and Certificates How many Insurers operate in the country: 82 APRA approved How many Insurers are active Broker markets: Approximately 20% of which are active broker markets (only 1 is exclusive to brokers, Zurich)

AAA Members Report – Australia Market Conditions - Number of Insurers decreasing, increasing, stable: Stable. Major local insurers focusing on direct market. Internationals and Corporates moving into SME (eg AIG, Chubb, Berkshire, HDI) - Insurance capacity decreasing, increasing, stable: Stable – major insurers have capacity and slightly moving reinsurance arrangements. Hazard Property and D&O (side C exposed) under pressure - Premiums decreasing, increasing, stable: Moderate increase (hardening dramatically in the hard to place Property and side C exposed D&O) - Commissions decreasing, increasing, stable: Stable - Amount of fee income as a percentage of total Broker income: 30% (including Broker fees and fee invoices) - Average Broker income percentage earned as commission: 26%

AAA Members Report – Australia Number of Brokers decreasing, increasing, stable: Decreasing (increase in AR model (insurer owned in some instances), and cluster group and international broker acquisitions) Percentage of business controlled by Brokers: 90% Commercial, 10% Domestic Percentage of business controlled by insurers (direct): 5-10% Commercial, 80-90% Domestic Percentage of business controlled by other intermediaries e.g. banks: Other Agents - 5% Commercial, 10% Domestic

AAA Members Report – Australia Information Technology used by Brokers (including online platforms): CBS/EBIX, Ferret (Document Management), MS Dynamics (Client Relationship Management), iNavigator (Intranet), Qlikview (Data), EBIX Evolution (CoverLink), Finance (Microsoft Dynamics Business Central 365)

AAA Members Report – Australia Political issues at time of report: Forthcoming Federal election (18/5). Closer scrutiny of Financial Services industry including increased regulation, compliance and heightening of ASIC powers. Royal Commission findings are being reviewed closely and suitable strategies being considered. Commissions under 3 year review. Economy at time of report: Stablised. Resources sector showing some positive signs of growth, aided by infrastructure investment. Member’s view of Insurance Broking over the next 3 years: Competition remains very strong. Hardening rates and capacity provide good opportunity as does broker mergers ie Marsh/JLT and CKA/Willis.

AAA Members Report – Australia Member’s principle activities/successes over last year: Solid financial performance in difficult economic conditions. Alan Bishop recognised as a Member of the Order of Australia (AM). Reset Executive leadership including promotion of Ward Dedman to CEO/Executive Director and appointment of Peter McLachlan as Executive General Manager – Strategy & Operations (25 years experience – QBE senior positions). Ward’s reappointment to the NIBA National Board as a Director for a further 3 years. RentCover’s review of purpose, vision, brand, website, client services area (Centre of Expert Care) and management structure resulting in holistic approach to client interactions. RentCover won several major accounts. CoverLink (internal MGA) celebrated its 5 year anniversary and turning over circa $40 million in GWP. Any major issues/challenges over last year: Competition remains strong. Impact of Lloyd’s market turmoil on some binders/facilities. New business growth and strategic focus. Re-establish Melbourne Corporate and grow East coast broking operations. Development of Construction & Marine business. Link the opportunities between RentCover and Broking. Royal Commission findings being closely monitored. Member’s planned activities over the next 3 years: Strong focus on business development and growth across all areas of operation, consolidate EBM further as an important player in Construction, portfolio consolidation (with CoverLink and major insurer partners including Lloyd’s). Revisit EBM’s purpose, narrative, behavioral values and True North. Closely monitor Royal Commission findings and implement suitable strategies. RentCover expansion including EBM Difference project, IT&T projects (such as CRM, technology upgrade program, Evolution) and People & Culture focus more refined on targeted training & development (EBM Academy). Divestment of Financial Planning business. Data management and information strategy under consideration.

AAA Members Report – Australia Any potential business/opportunities for AAA members to work together: International Relationships embedded into new business/existing client renewal process to identify opportunities (CRM).