I am pleased to announce that during October, we opened our 10th office and 1st in Malaysia. With a very capable team we are looking forward to expanding our reach in the region. We are excited about this move and the developments it could bring in the future. If you have any subsidiaries or cover requirements in Malaysia, be sure to ask NCI for support in the region!

During the quarter I also visited our key insurance partners in Europe. We discussed performance of the previous 12-months and talked about where we are heading for the remainder of FY20 and beyond. By understanding what is happening on a global scale, NCI can tap into new products and cover opportunities for our clients in the Asia Pacific.

The Christmas period is fast approaching, I wish you and your families a safe break.

Regards
Kirk

The unexpected loss of a key person could seriously impact both short-term profits and long-term business survival. That’s why Keyperson insurance is essential protection for the value you’ve worked so hard to build.

We’ve all heard it said that a business’s most valuable assets walk out the door every night. But, while every employee makes a valuable contribution to your business, the reality is that most businesses rely on just a few high performers and key decision-makers to win new business and deliver the high-quality service your customers expect.

What are the risks?

The costs can be substantial. A 2014 report from Oxford University Business College found that it costs more than £30,000 (around $61,500) to replace an average employee, including recruiting costs, lost output while the replacement gets up to speed, and time spent recruiting and training a new worker.[1]

And that’s just an average employee. The impact of losing a key person can be many times greater. One recent academic study found that a high performer delivers 400% more value than the average performer.[2] Which means that unless you protect yourself, the loss of a key person could potentially cost hundreds of thousands of dollars, severely affecting the performance of your business as a whole, and perhaps even putting your long-term survival in jeopardy.

That’s where Keyperson insurance comes in. Keyperson insurance protects your business from the financial impact of the death or permanent disability of an employee vital to your organisation, combining Life, Total and Permanent Disability (TPD) and Trauma cover in a single policy. The aim is to safeguard the value of vital business assets — the people who keep your business running from day to day.

How it works

The essential difference between Keyperson insurance and standard Life cover is that on the death or disablement of the specified employee, it pays a benefit to the business, rather than the insured person or their family. That gives you the valuable funds to offset the impact of lost business and the costs of recruiting and training a suitable replacement.

In summary, Keyperson insurance helps to underpin profitability and business continuity when the unexpected happens.

For additional information, follow this link or speak to your General Broker.

[1] Oxford Economics, The Cost of Brain Drain, February 2014.

[2] O’Boyle and Aguinis, “The best and the rest: revisiting the norm of normality of individual performance”, Personnel Psychology, Vol 65, Issue 1, pp 79–119.

As we approach the traditional gift giving season, where those of us that are starved of both time and imagination will often resort to buying gift cards for friends and family, it may be worth noting the impact of new legislation concerning gift cards.

From 1 November:

• Gift cards must have a minimum three-year expiry period;
• Information about the expiry date must be displayed prominently on the card itself;
• Terms and Conditions cannot allow certain post-supply fees to be charged; and
• Certain fees cannot be charged after the gift card is issued.

Any terminology that may otherwise have the effect of reducing the expiry period or allowing for further fees, will be deemed void. Contravention of any of the above requirements attracts a maximum penalty of $30,000 per offence.

So, if you are purchasing a gift card this year, at least you have the knowledge that the gift card you buy should represent better value than last year’s card!

Who would have thought a year ago Australia would win The Ashes and our political scene would be seemingly stable! Unfortunately, this is not the case for our friends over in the UK. NCI asked Andy Moylan, Managing Director of specialist credit insurance broker EFCIS and The Export Hub, for his thoughts on the current state Brexit and what this potentially means for the UK economy.

As Brexit negotiations reach a climax, how is Britain’s economy doing? Both Remainers and Leavers acknowledge that since the nation voted to leave the EU two years ago, the UK economy has been disappointing but not disastrous.  However, in the event of “no deal”, the UK is forced to trade on WTO terms and as a consequence economists are forecasting a significant increase in company insolvency in addition to a reduction in GDP, which, in turn could negatively impact upon employment, productivity and consumer confidence.

There are significant concerns from many UK companies that the supply chain would be interrupted and currently a number of these companies are stockpiling products which in-turn is having a negative impact on working capital.  It is estimated that UK warehousing is at 100% capacity and UK companies are incurring additional costs for storage.

“In the event of a no deal I believe that the UK will go into a recession, in part due to interruption of supplies and not relating to consumer demand like previous recessions” says Andy Moylan from “The Export Hub”.

So, what is next:

Boris Jonson needs to go to Brussels on the 17^th of October and negotiate a deal which would acceptable to Parliament or ask for an extension to say the 31^st of January 2020.  However, there is no guarantee that the EU will either renegotiate the terms of Brexit or agree to an extension.  If this is the case the UK could leave the EU on the 31^st of October without a deal and revert to WTO tariffs.

What are the two most likely scenarios in the event of a no deal?

Scenario 1:

Boris Johnson negotiates a deal which includes a workable solution for the Irish Backstop which would be acceptable to parliament. When you consider the Brexit, deal put forward by Theresa May earlier in 2019 the major area of controversy was the Irish Backstop.

What is the Irish Backstop?

The Backstop is an insurance policy contained in the withdrawal agreement negotiated between Mrs May and the EU to avoid a hard border.

The original plan was for the withdrawal agreement to be passed by parliament and for Britain to enter into a transition period.

This is essentially a standstill period, in which Britain would continue to follow EU rules and regulations, with the intention being that this time would be used by government and businesses to get ready for Brexit to take full effect.

In this period both sides would negotiate the terms of the future relationship between Britain and the EU.

Mr Johnson is now trying to find a way through the deadlock – and tweaking the backstop rather than getting rid of it altogether has been suggested as a potential compromise.

In a development that will leave seasoned Brexit observers feeling like they’re in Groundhog Day, this idea has cropped up once more.

DUP’s Foster: ‘It is very important that the Backstop goes’

So why is the arrangement so controversial?

This was because of concerns it would effectively create a border in the Irish Sea due to the need to check goods passing between Northern Ireland and Great Britain.

She pushed for a UK-wide version instead, in order to avoid this issue.

But either way, the Democratic Unionist Party and many Conservative MPs are opposed to the backstop.

If Boris Johnston is successful in negotiating a new Brexit deal acceptable to parliament, he may then call a snap election.

Scenario 2

If Boris Johnson is not successful in negotiating a deal and he refuses to ask for an extension, then we either leave the EU on the 31^st October without a deal, he resigns, or we have a snap election or even a second referendum.  This is assuming that an agreement to an extension on the strict understanding that the UK will either have an election or second referendum.

We are in unchartered waters and no one can say with certainty what will happen, however what is certain is the UK whatever happens is sailing in unchartered waters.

In addition to the challenges of Brexit it highly likely that the election would result in a hung parliament which in turn will result in further challenges in securing voting approval for both domestic and overseas policies.

Watch this space as the fun and games are certainly not over.

Brexit Timeframe:

2016

20^th February:  PM David Cameron announces plans for a decisive in-out referendum on Europe

23rd May: Referendum

24^th May: UK votes 52% to leave the EU and David Cameron Resigns

13^th July Theresa May wins Leadership contest

11^th September: Foreign secretary Boris Johnson launches new pressure group called “Change Britain”, with an aim to force the government to choose the “hard option for Brexit. Taking the UK out of the EU and the single market as quickly as possible.

Mid-September: Sterling begins to fall

3^rd of October: Sterling falls sharply

2017

17^th January: Theresa May outlines her plans for Brexit which rules out remaining

24^th January: Supreme Court rules that the government must obtain approval of parliament before starting the Brexit process following many months of appeal.

29^th March: UK give notice of its intention to leave the EU under article 50 of the EU Lisbon Treaty following many months of parliamentary debate

18 April Theresa May calls a snap General Election

13^th June Election result a hung parliament with Conservatives losing its majority

16^th June Theresa May secures a deal with the DUP

19^th June Brexit discussions commence

2018

6^th July:  Theresa May present her Brexit plan to cabinet members which she hopes would unite her party

9^th July: UK’s Chief Brexit negotiator, David Davis resigns along with Boris Johnson

14^th November: Theresa May announces that a deal has been struck on the terms of Brexit with the EU.

15^th November: 4 more Conservative Ministers resign

11^th December: The house of commons postponed the vote to accept or reject Theresa May’s Brexit Deal.

2019

15^th January Parliament Vote for Theresa May Brexit deal and rejects deal

24^th May: Theresa May Resigns as Prime Minister given that she could not find a solution to Brexit

24^th July: Boris Johnson becomes Prime Minister

28^th of August Boris Johnson suspends parliament which is being appealed by the high court as to its legality

Early September: House of Commons voted against a no snap election and no deal and for an extension if needed against Conservatives and Boris Johnson.

11^th September: Supreme Court

 

Andy Moylan
EFCIS
11/09/2019

We advised in February of the Government’s intention to increase the ATO tax debt reporting threshold from $10,000 to $100,000 if the debt owed to the ATO was overdue by 90 days or more and there were no on-going discussions regarding its payment.

Since then, a Bill has been introduced in Parliament to this effect, with the policy expected to net at least $30 million over the forward estimates through clawing back unpaid tax debts.

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