Australian & New Zealand Operations business review

Increased average claim size and frequency saw our attritional claims ratio deteriorate in the first half of 2016. Decisive action undertaken since, including premium rate increases and claims cost management initiatives, has seen the attritional claims ratio improve in the second half of 2016 with further improvement expected in 2017.

Pat Regan
Chief Executive Officer   •   Australian & New Zealand Operations

Gross written
premium (US$M)


4% from 2015 1
Net earned
premium (US$M)


4% from 2015 1
Gross written chart, net earned premium

  1. Up 5% on a constant currency basis.

2016 in review

Australian & New Zealand Operations reported a combined operating ratio of 92.7%, up from 91.3% in 2015. The increase in our attritional claims ratio during the first half of 2016 required decisive action to address the deterioration in our performance.

During the second half of the year we implemented a comprehensive remediation plan with a strong governance framework that is now embedded in the business as an ongoing discipline.

Key remediation initiatives undertaken included rate increases, improved risk selection, tighter management and control over claims expenses, focused supplier management and greater emphasis on salvage and third party recoveries, as well as improvement in our management information lead indicators.

This new approach enabled a thorough analysis and understanding of the many factors at play during the year, including the importance and value of improving customer experience. Extensive customer‑centred research, together with our relationship management expertise, helped us to redesign and improve many core processes. As a result of success in this area, retention has remained strong at 83.1%, up on 81.7% achieved in 2015.

Additionally, a focus on technical excellence was identified as a key success factor and work was commenced to strengthen this area of expertise. This remains an important element in the broader strategy to recruit and retain the best people in the industry as a driver of future performance. New appointments made in key areas of the business refreshed the talent in decision-making roles and augmented the core strengths already in place.

Our combined commission and expense ratio increased marginally, reflecting a slight change in the mix of business. Our expense ratio remained stable at 14.0%. Continued focus on expense management has offset the loss of income from our Victorian Workers’ Compensation Managed Fund business and an increase in technology investment.

Outlook for 2017

The insurance market will remain competitive; however, the premium rate cycle is hardening as our competitors respond to higher claims costs and continuing low investment returns. We anticipate premium rate increases at least in line with claims inflation and in some products, particularly property and motor vehicle, at levels above inflation.

We will drive further improvement in our attritional claims ratio during 2017 as the remediation initiatives are fully embedded and earned through the underwriting account. Improved risk selection is also expected to benefit our large individual risk claims ratio.

The NSW Government remains committed to regulatory reform in the CTP market. At this stage, the exact nature of the likely changes is difficult to predict. We continue to work closely with the Government in relation to the proposed reforms that aim to deliver a fairer and more sustainable scheme.

With over 200,000 Australian businesses insured with QBE, we understand that every business that partners with us faces its own unique set of risks. We also understand that every business owner that partners with QBE wants to protect their people, property and reputation. With deep, cross-category expertise and products ranging from Business Liability to Commercial Packages and Property, QBE provides SMEs across Australia and New Zealand with tailored solutions, focused on getting them back in business when it matters most, to work on the job at hand, with real confidence.

“With changes in underwriting to both leadership and governance, ANZO is well placed to ensure the ongoing development of market leading products that support our customer and intermediaries.”


GWP received to date (US$M)


Committed to invest (US$M)


Customers in rural and regional Australia have shown a strong desire to support their communities following a successful pilot of Premiums4Good in Elders, which will be rolled out in 2017. Select Financial Institutions customers will also participate from Q1, 2017.

In the community: Helping children with cancer

Our support of The Kids’ Cancer Project has helped fund vital research and trial programs for children diagnosed with cancer. Childhood cancer is the leading cause of death of Australian children by disease and, sadly, claims the lives of three children each week.

In 2016, we funded the production of an anti-cancer drug for a Phase 1 trial. The first patient, Declan, from Western Australia, was given only three months to live. We’re extremely grateful that he is still with us 15 months later and experienced none of the side effects traditionally associated with chemotherapy. The huge success of this trial is a strong indication of the drug’s potential as an effective treatment for children with cancer. QBE will continue its support of The Kids’ Cancer Project into 2017 to fund the manufacture of a new batch of the drug, ensuring the trial continues for courageous kids like Declan.