Adaptation and change in the Australian life insurance industry : an historical perspective

In the wake of the deregulation of the financial sector in Australia in the 1980s and 1990s the life insurance industry has undergone a period of rapid change and reorganisation. Part of this adjustment has been the move towards the integration of financial service provision and the rise of bancassurance. This paper investigates the strategies adopted by Australian life insurers as they moved into the increasingly competitive environment triggered by the lifting of government restrictions on banking practices. It compares the approach of life insurers with that adopted in an earlier period of expansion and change. During the 1950s and 1960s an influx of foreign owned insurance companies into the Australian market precipitated the diversification of domestic life insurers into other insurance markets. The catalyst for change in both cases was the change in information costs brought about by the change in the competitive environment. The experience of the Australian life insurance market would suggest that there is a link between changing information costs and changing organisational structures. However this link is circumscribed by the institutional environment.

Use and cost effectiveness of computer based training in the insurance industry

Training is essential to the growth and economic well-being of a nation. This need for training pervades all levels of industry, from a national level where a country’s well being is enhanced by training, to each company where productivity is improved, down to the individual whose skills are enhanced and as a result improve their position in the employment marketplace. The Australian Bureau of Statistics report ‘Training and Education Experience –Australia’ (ABS 1993) indicates that training in Australia is undertaken at a significant level with some 86% of employers undertaking some form of training. This is slightly higher in the Finance industry at a little over 89%. On the job training is undertaken by 82% of employers and off the job training is used by 47% of employers. In 80% of the off the job cases these courses were conducted in a conventional manner using an instructor. The remaining 20% of cases were either self paced (14%) or instructor based (6%). These latter cases could involve Computer Based Training (CBT). The report, referred to in the last paragraph, also indicates that a significant aspect of business in Australia is that 95% of businesses have less than 20 staff. This poses significant problems in that the ability to deliver effective training is limited. With businesses as small as these their size does not permit them to carry specialist training personnel so this role falls to the senior staff. These people already have a full workload and their ability to be able to take on training duties is limited. In addition these people were employed for their technical skills, not training. It may be that their ability to fill the role of a trainer is not good and as a result the training may not be very effective. In addition, small business has difficulty in releasing staff for training, The difficulties faced by small business were recognised by the Australian National Training Authority in their 1995 report which indicated that there was a need to develop a ‘training culture’ among small business employers. The authority made a commitment to provide flexible delivery strategies. This includes Computer Based Training (CBT). CBT has existed since the 1970’s. It came on to the scene with a flourish and tended to provide ‘page turning’ programs or ‘drill and practice programs’. In limited areas this form of training became popular but its popularity waned in the 80’s. With the advent of better graphical displays, larger and faster memory, and improved programs in the 1990’s the quality of CBT today is superior to those offered in the 70’s and has greater appeal. Today, still photographs and video clips can be displayed and made interactive. Because of this CBT is making a comeback and starting to have a greater impact. The insurance industry covers a wide range of companies in Australia, these companies vary in size from companies with employees in the thousands to companies with less than five staff. While the needs of the employees of each are similar the ability of these companies to deliver the training varies significantly. Any training can be divided into two parts. Internal or on the job training and external. External training deals with those aspects that concern the industry as a whole whereas internal training affects the individual company. Internal training would deal with matters like company procedures, company products and the like. External training deals with matters such as legislation, products generally, and the like. In the insurance industry the major problem arises with the small companies. Insurance companies would tend to be large in size and able to cover their training costs but the insurance brokers who would make up, numerically, the major number of companies would have a significant number of companies that fall into the 20 staffer less category. In fact many would have a staff of less than 5. While CBT can benefit all companies it is these small companies that could benefit from it the most. This thesis examines: • The place of CBT in training, its cost and effectiveness. • The incidence of CBT in the insurance industry and how the industry determines its effectiveness. • If a program that meets an industry need is able to be produced at a realistic price?

Establishing insurance markets in settler economies. a comparison of Australian and South Africa insurance markets, 1820-1910

How did insurance markets in the settler economies of Australia and South Africa develop? This paper investigates the establishment of the local insurance industries in two settler economies in the wake of the absence of comparative studies in the emergence of insurance markets in the periphery. The paper compares conditions in these settler economies and notes the innovative role of local entrepreneurs. British insurance companies extended operations into the British colonies, but local interests emerged to challenge their dominance. Innovations in organisational form, product offerings and distribution channels afforded local entrepreneurs a competitive advantage in the life market. Collusion in the fire market restricted innovative practices and retained foreign control. This article explains the agency of local entrepreneurs in the emergence of insurance markets in two settler societies at the end of the nineteenth century. This historical development path has notable implications for the current development of insurance markets in Africa.

Determinants of non-life insurance expenditure in developed and developing countries: an empirical investigation

The determinants of non-life insurance expenditure in a panel data set covering 36 developed countries and 31 developing countries for the period 2000–2011 are analysed. Results of our instrumental variable analysis indicate that economic freedom, income, bank development, urbanization, culture and law systems are the key drivers of the non-life insurance expenditure across countries. However, their impacts differ significantly between the groups of developed and developing countries, suggesting that the heterogeneity among countries in terms of the level of development plays an important role. The global financial crisis is also found to influence the direction of those effects, especially in developed countries. The article yields useful policy and economic implications for governments and multinational non-life insurance companies with regard to the development of the non-life insurance sector, an important engine for economic growth and prosperity.

Cyber crime influencing businesses in South Africa

This study shows that cyber crime is a recent addition to the list of crimes that can adversely affec tbusinesses directly or indirectly. This phenomenon was not directly prosecutable in South Africa until the enactment of the ECT Act in July 2002. However this Act also prevents businesses to fully prosecute a hacker due to incompleteness. Any kind of commercially related crime can be duplicated as cyber crime. Therefore very little research appears or has been documented about cyber crime in South African companies before 2003. The motivation to do this study was
that businesses often loose millions in cyber attacks, not necessarily through direct theft but by the loss of service and damage to the image of the company. Most of the companies that were approached for interviews on cyber crime were reluctant to share the fact that they were hacked
or that cyber crime occurred at their company as it violates their security policies and may expose their fragile security platforms.
The purpose of this study was to attempt to get an overall view on how South African businesses are affected by cyber crime in the banking and short term insurance sector of the South African industry and also to determine what legislation exist in this country to protect them.
The case study approach was used to determine the affect of cyber crime on businesses like banks and insurance companies and higher education institutions. Each case was interviewed, monitored and was observed over a period of a year. This study discloses the evaluation of the results of how cyber crime affected the cases, which were part of this study. The banks and higher education institutions felt that they were at an increased risk both externally and internally, which is likely to increase as the migration towards electronic commerce occurs. The insurance industry felt that they are not yet affected by external cyber crime attacks in this country.

Client identification and money laundering control : perspectives on the Financial Intelligence Centre Act 38 of 2001

The Financial Intelligence Centre Act 38 of 2001 (FICA) compels certain persons and institutions (defined as "accountable institutions'') to identify and verify the identity of a new client before any transaction may be concluded or any business relationship is established.1 Accountable institutions are listed in schedule ¹ to FICA and include banks, brokers, financial advisers, insurance companies, attorneys and estate agents. This duty to identify new clients came into effect on 30 June 2003. However, FICA also requires a similar procedure to be followed in respect of all current clients. Current clients are those with whom an accountable institution had business relationships on 30 June 2003.² After 30 June 2004 an institution may not conclude a transaction in the course of its business relationship with an unidentified current client, until it has established and verified that client's identity as prescribed. An institution that concludes any transaction in contravention of this prohibition, commits an offence and is liable to a fine not exceeding R10 million or to imprisonment of up to 15 years.³

The majority of accountable institutions and their clients failed to meet the June 2004 current client identification deadline.4 This failure posed serious economic and legal risks. With a few days to spare, the minister of finance granted a partial and temporary exemption in respect of these requirements. This article explores the statutory scheme for identification and re-identification of clients and some of the practical problems that were encountered. The June 2004 exemptions from these requirements are also considered and proposals for law reform are made.

The discussion of the FICA identification scheme necessitates the following brief overview of the international and South African money laundering control framework.

1 s 21(1) of FICA.
2 s 21(2) of FICA. See also s 82(2)(b).
3 s 46(2) of FICA read with s 68(1) of FICA.

Does organisational heritage matter in the development of offshore markets? the case of Australian life insurers

The globalization of financial markets over the past decade has focused the spotlight on the responsiveness of financial firms to international pressures. Insurance markets have traditionally relied on global networks not only to expand the insurers' sphere of influence but also to support domestic business. Until relatively recently, Australian insurance companies have not played a significant role in the development of international markets. However, in the last decade of the twentieth century Australian insurers ventured overseas on a scale without precedence. This article presents an historical perspective on the internationalization of the Australian life-insurance market with a view to understanding why these firms have been classified "late starters" in the internationalization stakes. In a broader capacity it provides insights into the impediments to overseas expansion and the forces encouraging or discouraging the development of cross border networks.

Functional range of movement of the hand : declination angles to reachable space

 The measurement of the range of hand joint movement is an essential part of clinical practice and rehabilitation. Current methods use three finger joint declination angles of the metacarpophalangeal, proximal interphalangeal and distal interphalangeal joints. In this paper we propose an alternate form of measurement for the finger movement. Using the notion of reachable space instead of declination angles has significant advantages. Firstly, it provides a visual and quantifiable method that therapists, insurance companies and patients can easily use to understand the functional capabilities of the hand. Secondly, it eliminates the redundant declination angle constraints. Finally, reachable space, defined by a set of reachable fingertip positions, can be measured and constructed by using a modern camera such as Creative Senz3D or built-in hand gesture sensors such as the Leap Motion Controller. Use of cameras or optical-type sensors for this purpose have considerable benefits such as eliminating and minimal involvement of therapist errors, non-contact measurement in addition to valuable time saving for the clinician. A comparison between using declination angles and reachable space were made based on Hume's experiment on functional range of movement to prove the efficiency of this new approach.

Do financial reforms improve the performance of financial holding companies? The case of Taiwan

We examine the performance of financial holding companies (FHCs) in Taiwan after the financial reform that removes the separation of banking, securities, insurance, and other financial services. Using data envelopment analysis, we find that FHCs fail to improve technical efficiencies in the post-reform era. They also do not outperform independent commercial banks after the financial reform. Lower technical efficiency caused by excess operating expenses appears to be the primary source of inefficiency. While scale efficiency may improve as FHCs grow larger, the benefits are marginal and insufficient to offset the potential costs of organizational diseconomies. Our findings suggest that increasing the size and scope of financial activities alone do not necessarily improve the performance of financial firms.

The evolution of the Australian life insurance industry

The life insurance industry in Australia has traditionally been an important source of long term finance for both the public and private sector. However, very little historical analysis has been undertaken into an industry that constitutes a fundamental part of the economy's financial sector. The present climate of deregulation has initiated an irrevocable process of change within the industry. To comprehend the full implications of this change it is necessary to have an understanding of how the industry has evolved. This paper seeks to provide a background account of the growth of the life insurance industry in Australia highlighting the influences that have determined the structure of the industry.

The origins of formal collusion in Australian fire insurance 1870-1920

The market for insurance has become increasingly competitive in recent years. However, it has not always been so. At the end of the nineteenth century, it was characterized by a highly concentrated and tightly controlled oligopolistic market structure. As such, the history of the fire insurance industry provides an interesting case study in the development of collusive behaviour amongst firms. Up to 1897, pricing agreements among firms were generally short-lived, and were followed by periods of intense competition. After this point, an agreement was forged, which proved very resilient to market pressures and formed the basis of premium rate setting until the 1970s. This paper investigates the difference between this agreement and previous efforts to set premium rates, and points to some of the common features of the later compact, which explain its longevity.

"Sexually transmitted debts":the scope of defences to directors' liability for insolvent trading

The recent demise of prominent Australian corporations, such as GIO Australia Holdings Ltd, One.Tel Ltd, HIH Insurance Ltd and Ansett Australia Ltd, have highlighted the relevance of, inter alia, the Australian insolvent trading provisions embodied in the Corporations Act 2001 (Cth) (formerly Corporations Law). What may not be appreciated, however, is that insolvent trading is not only concerned with large public companies. Many of the insolvent trading cases that come before the courts involve small proprietary companies. Moreover, in many cases these are small “family” companies where there may only be one active director. This gives rise to a difficult issue as to the appropriateness of imposing liability for insolvent trading on a spouse who is, factually, merely a dormant director. This article explores the issue of spousal liability for insolvent trading, particularly focusing on the scope of the current defences to insolvent
trading under s 588H.