Christopher Connolly: Reflections on 32 years in business interruption insurance

The story of falling into the insurance industry is a common one. What’s less common is remaining at the same company, in the same niche product class, for more than 32 years. But that’s exactly what the head of Interruption Underwriting Agency (IUA), Christopher Connolly has done.

During that time, he’s seen owners come and go, and business interruption (BI) insurance undergo changes ranging from evolution to revolution.

Christopher shares his thoughts on more than three decades of BI.

How did you find your way into the insurance industry?

I started my working career in advertising and direct marketing. In the 1980s the advertising industry was pretty excessive and when the industry imploded a lot of staff were retrenched, me included.

Harry Dickinson Snr, who was previously a partner in loss adjusting firm Jacobs Guthrie Dickinson, specialised in BI claims. Recognising that BI insurance wasn’t serving insureds well, he started IUA with his wife, Margaret, and son, Harry Jnr, at their home in the Sydney suburb of Woollahra in 1987. I was in between jobs, and they needed someone to join them.  I started processing policies on the 5 November 1990, working from their dining room table. Like many people, I fell into insurance.

What was different about IUA?

The IUA Business Interruption Insurance Policy changed the landscape of BI insurance in Australia. Previously BI policies didn’t make it clear when they would pay and how much they would pay for losses incurred by businesses. Harry established the IUA product with a weekly sum insured, without an average clause, so there was clarity upfront as to when and how much the policy would pay to the insureds.

Now, nearly every BI insurance policy in Australia has added a weekly sum insured (as an option). Unfortunately, many BI policies still don’t say upfront when and how much they will pay.

How did the IUA business evolve to become a part of Steadfast Underwriting Agencies?

The Dickinson family made us all feel part of the IUA family and over time, IUA expanded from the Dickinson family home to commercial offices, and grew, taking on more staff and opening a Brisbane office. In 2001, I moved from Sydney to Melbourne to open IUA’s Melbourne office. Having an on-the-ground presence interstate changed everything; we had $400,000 worth of business in Melbourne when I arrived and three years later, we had $4 million. An Adelaide office followed shortly after.

In 2007 the Dickinson family sold 50% of the business to Calliden, followed by the remaining 50% in 2009. Steadfast acquired IUA as part of its acquisition of Calliden in 2014, and IUA became a key agency in the Steadfast Underwriting Agencies business.  

These days, it’s common for BI to be sold as part of a business pack policy. What’s the advantage in having a standalone BI policy?

One of the main reasons it makes sense to have standalone BI separate to the physical damage component of a packaged policy is that the BI claim can be assessed more quickly. With a standalone BI policy, you have your own loss adjuster who can make an early assessment, make the claims decision, and get the claim moving without having to wait for the material damage to be determined first.

For example, in the event of a fire, it could take up to eight weeks before the property insurer assesses the claim and accepts liability, and once that’s done, they move onto the BI claim assessment. So, it could be up to three months before the insured receives any money from the BI section of their business pack policy. In contrast, we assess quickly and agree to pay claims on a weekly basis.

In addition, instead of a standard indemnity period, we are more flexible, as recovery can take a long time, so in some cases we can extend the indemnity period to up to 36 months.

The brokers we deal with, understand the difference between what the IUA Business Interruption Insurance Policy offers and the cover provided in a business pack, and they want to sell the best policy to their clients, rather than what’s easiest.

Many brokers find BI insurance confusing. How do you counter this?

When brokers learn about BI, they’re told that if they don’t get the sum insured right their own professional indemnity insurance will be exposed, so they’re fearful of the product. We believe that this fear means that around 60% of Australian businesses with BI cover can be over insured.

Due to misunderstanding about the cover provided by BI insurance, IUA undertook some research that found the main reason brokers don’t sell BI policies is due to the jargon contained in policy wordings which is difficult for the average customer to understand and for these reasons, BI is undersold in the Australian market.

When insurers talk BI, they talk in insurance language rather than the language of the businesses that are their customers. We try to make it simple – all we need is the most recent profit and loss statement or business turnover to start the underwriting process.

What have your career highlights been to date?

One of the most significant innovations in BI that IUA has been responsible for was the development of an agreed rate of gross profit for different occupation categories in Australia, which we published and distributed to brokers. These were based on Australian business benchmarks and cross-referenced against financial statements from businesses in each industry. I’m proud to say they became industry standards.

What does the future hold for you and for IUA?

I think there’ll always be a place for IUA as we are here to support and help brokers – they can pick up the phone, talk to someone and tap into our expertise.

I’ve been with IUA for such a long time that I’ve become synonymous with the company, so my focus now is to shine the spotlight on our other underwriters. Our two senior underwriters are wonderful, Katrina Campbell has been at IUA for over 13 years and Dorette Oatway, while newer to the company, has fitted in beautifully. We also recently welcomed two new junior underwriters, Antony Mellino and Marcin Malicki, who have taken to our business incredibly well.

We have excellent people and brokers know they can pick up the phone and talk to people with extensive knowledge. That is what keeps IUA relevant to businesses.

We’re also embracing technology that can free up more time to have these conversations. For example, we’re moving towards automating the preparation of our renewals and using artificial intelligence bots, which give our underwriters even more time to talk to brokers.

I’m grateful to have worked with many talented people over the years… (they know who they are), who have all passed through IUA and are now in senior roles with insurers and underwriters.

And what about the future of BI insurance?

Obviously there’s some uncertainty around some BI policies (at the moment), due to ongoing legal cases testing whether policies that referred to the outdated Quarantine Act 1908 (Cth) will be required to pay for loss sustained by businesses due to COVID-19 shutdowns. The outcome of those cases is likely to lead to changes in the industry, but it won’t affect IUA, as all of our wordings had been updated prior to COVID-19 to reference the Biosecurity Act 2015 (Cth) and clearly excluded pandemics.

IUA is always looking towards new frontiers of risk and even though it’s early days, contingent BI is an interesting area that may develop policy coverage and product innovation. For example, I could see a policy extension for something similar to assailant cover, that could respond in the event that a business was interrupted by a contained criminal act such as the 2017 terrorist incident on London Bridge.

Here to help

Whatever the future may hold for BI, Australian brokers can rest assured that the expertise of Christopher Connolly, and the entire IUA team, is available at the end of the phone for the foreseeable future. Please feel free to get in touch on 02 9307 6655.