Wesfarmers Insurance operates in the general insurance and financial services sector. Our underwriting businesses include Lumley Insurance and WFI in Australia and Lumley General Insurance New Zealand (LGNZ). Our insurance broking businesses include OAMPS Australia, OAMPS United Kingdom (UK) and Crombie Lockwood in New Zealand (NZ). We also have underwriting agencies, premium funding businesses and financial management operations. We are represented in 119 locations in Australia, 36 in New Zealand, five in the United Kingdom and one in New Caledonia. At 30 June 2012 we employed 3,882 people.

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We consider that our Corporate Plan outlines strategic priorities that are socially and environmentally responsible, as well as economically balanced. Some of our key sustainable outcomes during the reporting period included the introduction of a new cost-effective printing system across the underwriting business, as well as investing in a new policy management system in the New Zealand underwriting business.

We also strengthened our community program with a new partnership between our OAMPS broking business and Make-A-Wish Australia.

We continued to focus on insurance affordability with competitive pricing in personal insurance lines, in addition to achieving claims cost improvements through the alignment of our Australian claims teams across WFI, Lumley and Coles Insurance. We also launched the Partnered Repair Network to offer a more professional and cost-effective approach to customer service.

During the year, we expanded our broking network with the acquisition of the ACM Ahlers business.

The ongoing financial effect of the Christchurch earthquakes continues to be significant. Despite this, we have been pleased by our claims teams who have continued to respond effectively to our clients in their time of need. The underlying performance of our underwriting businesses continues to improve and our broking operations are performing well.

This year, our business achieved several milestones including the launch of the Wesfarmers Insurance Charter, our Employee Value Proposition and Leadership Framework. These set out clear expectations for all employees with respect to a common set of values (integrity, teamwork, openness, accountability and boldness) and the skills and capabilities required. These common commitments provide a framework against which we can continue to build a long-term people strategy. Our goal is to be the insurance employer of choice, and we believe we have started to differentiate our culture by attracting and growing the best leaders in their respective fields.

Despite challenging business conditions, we continued to invest strongly in the development of our people, with more than 300 employees graduating from our leadership programs.

In addition, technical, sales and service skills development has been conducted within our businesses to ensure regulatory compliance and improved business performance.

We also continued to support the Jawun Secondment Program, with two employees participating this year as an opportunity for development. Our employee engagement levels are pleasing, with continued strong scores in the areas of culture, values and leadership.

While we had an increase in LTIFR from 0.83 to 2.71, WI continues to perform better than most industry peers when it comes to safety performance and will continue to look for opportunities to reduce our work-related injuries. We are committed to increasing the representation of women in our managerial and executive ranks, and it remains a central focus for the leadership team through mentoring, sponsorship and other key initiatives.

The WFI site at Bassendean, Western Australia, is our flagship site for environmental awareness. For example, during the year, a BokashiWorks bin trial (for compost) was initiated, and plans are in place for the installation of rainwater tanks. The ‘Minus One’ initiative was also introduced, which reduces paper consumption by decreasing print fonts by one point.

Substantial progress was also made towards lowering our carbon footprint with the introduction of a new printing system across all WFI and Lumley sites in Australia to reduce paper use.

Further energy savings are being achieved by using more efficient printer models, as well as reducing the total number of printers in the business. Arrangements are in place with the service provider to dispose of used toners and other consumables in an environmentally responsible manner.

We estimate these initiatives will lead to a reduction of more than 60 per cent in carbon emissions from printing in our businesses.

Our total greenhouse gas emissions were 13,917 tonnes of CO2e, an increase of 8.8 per cent on last year. The greenhouse gas emissions were largely due to electricity consumption in our offices.

Our main energy use during the year related primarily to electricity consumption in our offices (48.1 per cent) and fuel use (51.9 per cent). Total energy consumption was 0.09 petajoules, an increase of five per cent on last year.

WFI again demonstrated its support of the Australian farming community by sponsoring this year’s Australian Farmer of the Year Awards, run by the Kondinin Group. The Australian Farmer of the Year Awards celebrate the professional, innovative and sustainable approach of farmers.

WFI also sponsored a number of rural associations such as the Nursery and Garden Industry in Queensland and regional community sporting clubs. As in past years, WFI also participated in the First National Foundation charity tournament, held in Geraldton, Western Australia, to raise money for many of the area’s local charities including Variety, Relay for Life, the Australian Red Cross and the First National Foundation.

In addition, WFI encourages all employees to organise and participate in fundraising activities for both local and national charitable organisations. During the year, employees raised money for a number of charitable organisations through participation in events such as Australia’s Biggest Morning Tea (supporting the Cancer Council) and Movember (raising awareness of men’s health).

Lumley supported a number of community-based organisations during the year, for example by sponsoring transport-related initiatives and the Heart Foundation Ball. Lumley also supported the ‘Beat the Bosses’ trivia night with all funds raised going to the CREATE Foundation, which raises money to improve the lives of children and young people who are receiving out of home care such as foster, residential or kinship care. With Lumley employees in attendance, CREATE raised $120,000 for the night.

During the year, we made provisions to pay $1,208 million in claims to our customers who suffered insured losses. This included support for customers affected by natural disasters in Australia and New Zealand. We paid $326 million in wages and salaries to our employees.

Anchored by our Charter, our governance framework includes policies and principles that guide our Board and management team, as well as a system of controls that defines how we work.

During the year, we partnered with the Insurance Council of Australia and contributed submissions on a range of matters affecting the future of insurance in Australia, including changes to the General Insurance Code of Practice, flood insurance and several regulatory reviews.

OAMPS Australia implemented targeted Broker Compliance Training in its online training facility, which has been completed by all broking employees.

Our New Zealand underwriting business, Lumley, has made significant progress in preparation for the introduction of new regulations in the insurance sector which are to be phased in over the next year.

WFI is a member of the Australian Indigenous Minority Supplier Council (AIMSC), which encourages businesses to obtain goods and services through Indigenous suppliers.

Our businesses reported no material regulatory breaches for the year.

• Effective response to catastrophe events, including the impacts on customers, suppliers and the re-insurance market
• Continue to provide ongoing training and development for our people leading to increased retention
• Continue to improve our work environment to create a safe and diverse workplace
• Ensuring our businesses have a positive impact on the communities where we operate to create strong and enduring relationships
• Continue to provide input into the development of effective regulatory systems for the insurance industry and contribute to policy development and regulatory programs