I learned today that one insurer has changed the way that they will be addressing emergency repairs.
As it has been explained to me, a restoration company is to be appointed and is to attend in a short time frame. (So far so good but this is where it all goes wrong).
If the estimated cost of the works is greater than the paltry amount of $3,000 then they are not to do any remedial work but rather prepare a list of the damaged items and report on whether the item can be saved or restored. If it can be restored it is be quoted. This contractor is to do all of this at no cost to the Insurer.
This report is then to be forwarded to the Insurer who within 24 hours will appoint a second restoration company to do exactly the same and then allowing a second 24 hours the insurer will authorise repairs. The emphasis is clearly on price.
Clearly the person or team that have come up with this procedure:
- has never had their home or business effected by water, fire or smoke. If they had they would realise that this is completely unacceptable behaviour and the Insurer’s claims officers are going to get a lot of irate calls from their customers. I would also expect a lower retention rate at next renewal for any client that has been through this.
- has not been out in the field as a loss adjuster. After 6 weeks into my 42+ year experience in handling claims I learned that the secret of minimising losses is to get in early and stop the damage as soon as possible. If you take a fire or water damage for instance, metal parts will start to rust, electronic componentry will corrode and carpets and other fabrics will rot. Nothing I have seen since week 6 of my career has made me rethink my view. I do not gamble but I would bet that the average claims costs will go up for this insurer using this methodogy.
On the other hand, when I completed my doctoral research program in 2006, the most poorly rated service provider following a claim was the restoration company. The customers felt that they were paid too much, that this often ate into their now precious sum insured, and that they were given preferential treatment by being paid before they, the premium paying, customer..
I do agree that the current system does have to be improved with many of the restoration companies, not all. But the proposed system is in my firm opinion not the way. If anyone had rung me or I am sure any experienced claims person that this would have been explained at no cost.
I will be watching with great interest this experiment and watching what it does to the insurers claims star rating as rated by LMI ClaimsComparison. In the meantime, I am glad that my insurances are not with them.
I recieved the following interesting question:
Dear Prof. Manning,
I am a young professional working in the insurance industry and have a particularly keen interest in insurance contracts and their history.
My question relates to the reasoning behind insurance contracts commencing and expiring at 4.00pm.
I have attempted to research the matter myself to find out why this particular time was selected but I have not had any success. I have also asked my experienced colleagues who haven’t been able to find a definitive answer. I wonder if you can shed any light on this matter.
I look forward to hearing your thoughts.
Luisa [Surname and email provided]
This is one of the first questions I am not 100% sure as I have not found any reference to this in any of the huge amounts of books in any book or training course. I have, like many of you I am sure have questioned this and when I asked at different times in my career I received two different but plausible answers.
Before I address them I reminded Luisa that 4pm is not universal with some Lloyd’s syndicates ending at midnight.
The first and most popular answer is that the 4pm deadline was designed to allow an insured or broker, one hour of business hours to place a risk that has otherwise expired rather than find that they cannot get cover in place till the next morning.
Another possible simple answer is around the time that insurance offices closed their doors. When I was a child, banks used to close at 3:30pm in Australia but the staff stayed back to 5pm to do all the reconciliations.
Back in the day it is possible that in the UK the insurers closed their doors at 4pm and it is for this simple historic reason that the industry uses that time.
So we have two possible answers without knowing which if either is correct. I therefore throw the question open to the readers. If anyone has any other possible answers could you please let me know via the post a comment section along with where you heard or read it. Thanks.
Flowing on from the post above, it was no surprise that the Federal Government believe that only around 1 in 3 businesses are fully and or correctly insured.
While this creates a real threat to the businesses that are not insured or protected by a Business Continuity Plan and to the economy, it also presents opportunities to good insurance brokers who can identify the risks of a business and offer some alternative risk treatments.
There are many ways to manage risk, mitigage it, eliminate it, and transfer it to an insurer are just a few. The thing no one should ever do, is ignore it.
Food for thought
Today, was a big milestone in the life of my family. My son, Steve got married and it was a wonderful day.
The only thing that marred it was that after groom and the three groomsmen were all dressed, the four of them along with an old school friend of Steve’s and I were standing out in the front yard being filmed by by Andi from LMI Media. We heard a distinct crash and saw the neighbour across the street drive off down the road. Clearly she had hit one of the groomsman’s cars. It was not a big dent but it was the one who had the greatest pride in his car. It turns out it was all on film.
The groomsmen himself works for a insurance broker, another was a lawer, while all the others worked for LMI who of course specialise in insurance claims. It was great to see the young men rally around the groomsman say they would act as a witnes etc. I could not help but have a chuckle to mysel that of all the peolpe, on all the days to hit someone this could not be worse for the negligent driver. Not to mention it was right opposite the third party’s home.
As the women drove back into the street, she saw the crowd around the groomsman’s car parked opposite her drive way, all dressed in morning suits and she drove up and immediately apologised for not hearing or feeling what had obviously happenened especially on such an important day. She gave her assurance that she would meet the full cost of the repairs. The lawyer insisted on getting this in writing which she did while Steve provided the name of the best panel beater in Melbourne, a long standing client of LMI, Mr Gloss of Moorabbin.
It was all done politely and with no fuss. I did not get involved at all as the next generation had it all under control.
Luckily, all this was sorted by the time the car came to take the party off to the wedding. With CCTV so prevalent and most mobile phones having a camera built in, it does make it more likely for the people who do not do the right thing to be caught. There is a lot to be said for the old adage, do unto others as you would have them do unto you. Accidents do happen. This is forgiveable, but I do not think any judge will have sympathy for someone that damages someone else’s property and then just drives off.
In this case, if you pardon the pun, it did not put a dent on what otherwise was a wonderful day for the family. I sure you will join Steve and Chantelle a long and happy life together.
It was a pleasure and privilege for me to present today to the senior management team of the Melbourne based Joval Group with a certificate confirming that they had reached the International Standard for Business Continuity.
Joval Group is a diversified company in several sectors including coffee and wine. With wine they are involved in brands such including including Shaw and Smith, Cloudy Bay, and Riedel. In coffee they are the Australian agent for Lavazza coffee and Lavazza expresso machines.
I know from having assisted businesses following major losses for over 40 years that businesses with a Business Continuity Plan recover more quickly from a crisis and most importantly of all have a much better chance of survival.
The major barrier for most SME’s is the cost of developing a plan. With this in mind LMI developed an on-line system LMI ContinuityCoach which allows a business to develop a fully compliant Business Continuity Management plan for less than $1,000 including GST.
Due to the complexity of the business Joval Group elected to engage the head of LMI Continuity Planning Division, John Worthington to develop a bespoke plan for all their divisions and locations.
Close up of the LMI Certificate of Completion
During the acceptance speech the CFO at Joval stressed the professionalism of John and the way that he carefully explained the process to them as he worked his way through the development and testing of the plan.
With the Insurance Council of Australia, government, business groups, financiers, and suppliers and customers focusing on business resilience, the demand for business continuity planning is certainly increasing. If you or any of your clients require more information on this please contact me or visit www.ContinutiyCoach.com .