Need Insurance? Save time and money - apply online
An exclusive insurance program for ATMS membersClick To Apply
GSA Sports and Leisure DivisionClick Here to find out more
Self Storage Insurance with GSA
Click Here to find out more
News & Offers
I have been analyzing and forecasting economies for over 40 years and, fortunately, have been able to predict most of the major global events – the collapse of fixed exchange rates, various recessions, major stock market and financial crises, including the GFC, major policy shifts, and so on.
Yet, I now find it more difficult to predict the global economy than at any time during that period. There are a host of reasons. The orders of magnitude in policy movements, both budgetary and monetary, have been much larger than past experience; volatility in financial markets has been much greater; many economic relationships generally expected in the past seem to have broken down; and the economic profession seems quite divided on appropriate policy responses.
Who would have thought that Japan, the post WWII economic success story through to the late ‘80s, would experience a couple of decades of rolling recessions and deflation, despite near zero (even at times negative) interest rates, and a multiplicity of stimulatory fiscal packages over that period?
Who would have thought Europe would still be teetering on the brink of recession over six years since the GFC, with the economic powerhouses of Germany and France in economic trouble, the economic plight of the peripheral performers – Greece, Spain, Italy, Portugal and Ireland – having seen little improvement, and the European Central Bank now embarking on huge “quantitative easing”, seeking to inject even more liquidity into the system to avoid deflation and hopefully stimulate growth, all still with question marks over the sustainability of the Euro as a currency zone?
One particular European challenge right now is how Europe accommodates the new, Greek, anti-austerity Government, which is seeking to renegotiate its bail out arrangements, possibly with some debt forgiveness. Greek debt is still about 175% of GDP; the Greek economy is just coming out of six years of recession, which has seen its GDP fall by 25%, with unemployment still around 25%, youth unemployment double that, and having experienced significant emigration. The threat is “Grexit”, whereby Greece is forced out of the Euro as it can’t get the deal it wants.
Although the US and UK have seen a reasonable recovery, it hasn’t been as strong as might have been expected given the huge central bank support, sustaining near zero interest rates, that haven’t produced the pick up in business investment that was expected. Now the issue is how well these economies will perform once the central banks start to tighten monetary policy, and to raise interest rates.
The global focus is now on when the US Federal Reserve will move to tighten, now that it has completed its programs of “quantitative easing”, with concerns that this may lead to significant corrections in stock and bond markets, considerable currency volatility, and have significant negative effects on emerging nations.
China is also slowing somewhat more than expected, and is starting to feel the effects of several structural problems stemming from a significant property bubble, rapidly rising inequality, the weakness of its shadow banking system, and the general difficulty of the need to make a transition from an investment-based to a consumer-based economy.
One of the other significant economic factors has been the sustained weakness of commodity prices and, more recently, the particular weakness in the oil price, essentially driven by the Saudi desire to send US shale oil producers to the wall, by holding the world price below their breakeven price. This is a significant, additional, global deflationary force, and will probably cause a significant shake up in the oil market, especially if the Chinese pick up these failing US companies.
There is also significant pressure in currency markets as many countries, including our own, wish to see their exchange rates lower, to use exports to underwrite their economic recovery.
Then, overlay these major economic issues with the extensive geo-political tensions driven by the Russia/Ukraine escalation, at a time when the Russian economy is in deep recession with a collapsing stock market and currency; the war against ISIS and a host of other tensions in the Middle East; and many regional tensions/border disputes, etc.
May we live in interesting times? These are very significant global risks for an export dependent economy such as ours!
The global, and indeed local, insurance markets are driven by many factors. Recently we have seen an influx of insurance capital resulting in a continued “soft market”. The catastrophic losses from Hurricane Sandy in 2012, estimated at $2bn (USD), are all but forgotten. With 2013 / 14 being relatively uneventful in terms of large losses, insurance premiums remain flat. Those clients that maintain sound risk management protocols combined with quality underwriting submissions and well executed broking strategies are seeing rate reductions, driven by the excess of global capital in the Australian insurance market. All good news for our clients!
That said, there are many emerging risks of which businesses need to be cognisant. IT system hacking and data security breaches continue to be reported almost daily in the mainstream press. On average the damage caused by a data security incident adds up to $649,000 (source Kaspersky), with damage caused by targeted attacks rising to $2,540,000.
Directors are finding themselves under more scrutiny than ever before. The changing landscape as a result of the GFC, increase in shareholder class actions and unheralded regulatory pressure has seen the personal liability of directors exposed like never before. As a result, it is essential that directors implement a culture of compliance across the organisations for which they are responsible. Having robust risk management procedures in place including a comprehensive Directors & Officers (D&O) Liability policy is essential to protect the reputation and assets of directors.
For more information on emerging risks, please CLICK HERE to download The Allianz Risk Barometer – Top Business Risk.
It’s not every day you get invited to the Prime Minister’s house for morning tea. But to mark the end of what was a huge 2014 for KidsXpress, our team did exactly that!
Margie Abbott, our KidsXpress Patron, is strongly connected to what we do at KidsXpress. Margie has a long history of working in early-childhood development and she led the morning tea conversation, drawing out of our therapists some remarkable stories that really go to the heart of the KidsXpress philosophy.
This very special event highlighted two things for me. Firstly, that we have a truly remarkable group of highly sought-after expressive therapists and the support team that surround them are extraordinary. An organisation and team that I’m incredibly proud of.
And secondly, that without our supporters like GSA we simply wouldn’t be able to have as much impact as we do – transforming lives every day. A focus for KidsXpress in 2015 will be storytelling and sharing our impact. So as an integral part of the KidsXpress Village you can expect some incredibly powerful storytelling from KidsXpress this year!
Written by Margo Ward the visionary and founder of KidsXpress
Over the past few months GSA has entertained both its clients and suppliers with two big events. We first welcomed GSA clients, along with Rugby Union and Rugby League Royalty, to celebrate the 2014 Grand Final. The day was hosted at The Stables, Royal Randwick Racecourse (owned by GSA client, Keystone). MC for the day was Rabbitohs and Roosters legend and radio personality Jimmy Smith. Other notable guests included Phil (Gus) Gould, Anthony Minichiello, The Waterhouse family, Andrew Mehrtens, NRL Commissioner Mr John Grant and Jockey Hugh Bowman.
Grand Final Lunch Photos
GSA also took the chance to celebrate 2014 with its supplier and insurer community by welcoming 220 guests to a frat-house themed party in Point Piper. It was a very enjoyable day and a great way to blow off some steam with the people that have given us much support to GSA and their clients.