Article by Marc Bayer are courtesy of business news.
KIDNAP and ransom cover is not something most Western Australian businesses ever need to worry about.
However, it provided the inspiration for Anthony Moorhouse when he developed a new kind of insurance tailored for small and medium enterprises.
The policy is designed to help businesses operating in the local market deal with crisis situations.
Mr Moorhouse believes his company, Biz-Assist, is the first to cover this type of risk.
“The insurance market has always had an international product but has never had a domestic product, we are the first ever, not just in Australia but the first ever,” he said.
The product also has a specific focus on SMEs.
“If big companies have a significant incident, they usually have the balance sheet and diverse operations so they can withstand it,” Mr Moorhouse said.
“Small and medium businesses have the same kinds of exposure as big corporates but they don’t have the capability.”
He said 40 per cent of SMEs that had a ‘significant incident’ never traded again.
“From an insurance industry perspective, that is catastrophic,” he said.
“That’s why the insurers are interested in this.”
The Biz Assist product is offered in tandem with the services provided by specialist crisis response company Executive Risk Solutions.
As such, it has brought together two military veterans who used to be business competitors.
Mr Moorhouse was an Australian Special Forces commander while ERS is led by Scott Houston, who was a member of the Australian Special Air Services regiment.
The two men subsequently established separate businesses, with Mr Moorhouse launching emergency response company Dynamiq in 2005.
It grew to have 180 staff with offices in Australia, Asia and the Americas, with Perth being the largest.
Its focus was on travel and expat insurance, with the company handling 12,000 emergency response cases per year.
This included kidnap and ransom cases, medical evacuations and crisis management.
The business was bought by ASX company Insurance Australia Group in 2015, after which Mr Moorhouse spent several years overseas.
On his return to Australia, he looked up Mr Houston.
“Scott and I used to be competitors but we always respected each other’s work,” Mr Moorhouse said.
For Mr Houston, the veterans link is a big part of his business.
“The values we have in the forces are key for this business,” he said.
“And I don’t know who else could have talked me into going into insurance.”
Mr Houston’s investment in Biz Assist marked the latest pivot for his business career.
After leaving the SAS, he spent four years providing security services to Rio Tinto before establishing ERS in 2008.
The company got its big break in 2012, when it was awarded a major contract with Roy Hill Holdings to provide security and emergency response services at its Pilbara iron ore mine.
That led to ERS winning Business News’ Rising Stars award in 2014 and the Telstra Australian business of the year the following year.
A decade on, ERS is still working with Roy Hill.
“We are one of the longestserving contractors at Roy Hill and I’m on the board of the Roy Hill Community Foundation,” Mr Houston said.
“It’s been such an amazing journey with them.”
The company expanded overseas at one stage, with operations in Africa, but has since pulled back to the Australian market.
Mr Houston has also established an indigenous joint venture with executive Kevin Caton.
Their company, Accurate STP, won a $24 million contract with the state government in 2020 to deliver security services to the Perth Cultural Centre.
Ms Houston said ERS had grown to have about 500 staff and consultants working for a wide range of clients across mining, property and health care.
His team includes part-timers engaged by ERS on an as-required basis, providing both consulting and training advice and crisis response services.
Its capability incudes paramedics, nurses, fire crews and security patrols, with a 24/7 operations centre in Applecross keeping tabs on all relevant assets.
Mr Moorhouse said the crisis response service helped businesses deal with anything from a fire or flood to a workplace fatality.
In the case of a fire, for instance, normal insurance covers the damage to buildings but it does not cover the impact on the business.
“It could affect the client’s reputation, their people, their environment, their operations, it could be a legal issue, it could be their livelihoods,” he said.
Biz Assist and ERS focus on providing 14 days of emergency support to enable the company to get back on its feet.
“What we do is very finite, it’s for that critical period immediately after a crisis occurs,” Mr Moorhouse said.
“That triage, first response component, which we work on, that is critical, it sets the tone for what will happen afterwards.”
Biz Assist is broadening the type of risks covered, with the firm currently establishing a partnership with a cyber security firm.
“That is all based off market demand,” Mr Moorhouse said.
“Ninety per cent of the calls I have with insurance brokers, the first thing they ask about is cyber.”
Mr Houston said the first line of response after a cyber incident was often to the lawyers but the response needed to be broader.
“It’s never just one thing,” he said.
“What is most striking is that it’s the reputational damage that is the most significant long term.
“When there is a large breach, surveys show there is a catastrophic collapse in trustworthiness.”
Mr Moorhouse said many business owners and managers did not fully appreciate what needed to happen after a crisis.
“Think about a workplace fatality, you need to deal with next of kin, other staff, trauma counselling, there’s the regulators, lawyers, the media,” he said.
“Potentially, the regulator will shut down the site so you can’t deliver product to customers and that affects cash flow.
“Even if they have some capability, it’s unlikely they will have the capacity to deal with a crisis and keep the normal business operating.”
The Biz Assist insurance policy is underwritten by Samphire Risk, a Lloyds of London syndicate.
“I’ve known those guys for a long time, they are kidnap and ransom, crisis management insurance specialists,” Mr Moorhouse said.
“We customised their existing policy to suit a domestic market.”
Mr Houston said he had seen first-hand the difference between the capacity of big companies and SMEs.
“Big companies invest money to train their crisis management teams,” he said.
“We do a lot of training for those teams, we run scenarios, we run exercises.
“This is for small and medium enterprises.
“A lot of managers think they can handle a crisis but that is not the case, it’s catastrophic and creates a lot of pressure.
“This gives them peace of mind, if something goes wrong, they can pick up the phone and our experience becomes their experience.”
Mr Moorhouse said there was a growing focus among boards of directors on business continuity and crisis management plans.
This trend had been aided by COVID, which forced nearly all businesses to examine their risk exposures.
For listed companies, the ASX guidelines include a specific requirement to have business continuity and crisis management systems.
In many cases, companies respond by preparing a formal crisis management plan, often with assistance from a consultant.
Mr Moorhouse describes these plans as a depreciating asset.
“They might have a plan but when was it prepared? How old is it?” he said.
“And when was the last time it was tested?”
And even if the plan was up to date, he said most small businesses would struggle to effectively implement their plan amid a crisis.
“I’m not being disrespectful, there just isn’t the capacity internally.”
