Fire safety Issue for apartment towers will have insurance issues

Apartment BuildingsRecently an article appeared in the Melbourne Age about the fire risk that some of the imported insulated panels being installed on high rise residential strata.  I would not be surprised if the material was on some commercial premises as well.

The article stated:

Removing and replacing combustible cladding in an average highrise building would be a logistical nightmare, and could cost millions of dollars, according to industry experts.

Victoria’s building regulator has announced every high-rise built in Melbourne’s CBD and inner suburbs in the past decade will be inspected for cheap, imported noncompliant cladding found to be flammable .

The Victorian Building Association’s audit of 170 buildings follows recent findings that noncompliant aluminium cladding imported from China fuelled the rapid spread of a major fire in a Lacrosse tower in Docklands last year.

But removing and replacing the cladding could be an expensive and lengthy process that would pose challenges for engineers.

There is also confusion over whether construction companies, developers or apartment owners are responsible for ensuring buildings with non-compliant cladding do not pose a significant fire risk.

Engineering experts say the cost of replacing cladding would vary, depending on the number of panels and their location.

Melbourne-based facade engineer Richard Drzewucki said cladding on a building’s facade would be difficult to access.

” When the building was built you had a nice tower crane helping you and all of a sudden you’ve got nothing,” Mr Drzewucki said .

One option would be to install scaffolding around the building’s exterior, which is not only timeconsuming but labour-intensive .

Further complicating matters, issues surrounding tenancy, traffic and equipment would need to be worked through.

David Fung from the engineering consultancy group AECOM said the potential problem was not restricted to Victoria, as aluminium composite cladding had been widely used around the country for decades.

‘ It is an issue that is going to have impacts across the rest of the country,’  he said.

The Fire Protection Association of Australia has warned the number of properties constructed with the non-compliant cladding could run into the tens of thousands.

The possibility of a class action in the case of the Lacrosse building has also raised questions about who will bear the cost of replacing the combustible cladding, with law firm Slater and Gordon representing about 150 owners and residents .

The firm’s Ben Hardwick said there was potential for claims worth millions of dollars to be lodged against Victorian builders for the cost of replacing noncompliant cladding.”

This of course is not the only problem with recent construction. I have seen some tests on some of the cables also imported from China by a Australian company and supplied and installed into commercial and residential buildings. Again the product looks okay and is 2/3rds the price but terrifyingly the insulation fails to meet Australian standards. I genuinely fear that it someone will perish in a fire caused by this cabling.

Besides the fire risk, there is a huge exposure for the electricians and builders who have installed the product. If you think the external panels is going to be difficult can you image what removing and installing large cables through out the building is going to cost. I know how this story is going to end. The importer will go into liquidation and the installers and or building owners, perhaps unit holders in a strata title will be left with the problem and the cost.

I hope the installers have not chosen cheap insurance as like all general insurance it is all about protection not the cost.

Sadly for those concerned faulty products is an exclusion in most property, construction and liability policies. Better quality policies have a write back for the resultant damage.  Few if any contractor is going to have a product guarantee policy while their product liability or combined general liability policy is not going to cover the replacement of the faulty cladding or wiring.

What a mess for the building owners, the tenants, the developers, and principle builder and all the  subcontractors involved.

 

 

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Yet more scam emails to be wary of

Danger Scam AlertIt appears I am getting at least one scam email a day these days including some coming through LinkedIn. I did not know I had so many wealthy relatives that had died. They are certainly generous leaving me millions when we have never met.
The latest scam purports to be from Westpac. Here it is:

westpac

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

This one is amateurish in that they do not show the Westpac logo like many do, the email address is clearly not from Westpac but it still catches people. Please keep your eyes open and warn your clients that cyber risk is real, the frequency of events is on the increase and insurance protection is becoming more and more affordable.

I also go this one from what they claimed to be Barclays Bank. Here the tell tail signs are that it is not addressed to me personally, and the email address is from worldbestmarketing@gmail.com. Perhaps they need to change to worldworstscammers@gmail.com

barklays

 

 

 

 

 

 

cyber with pages #2

 

 

 

 

Finally do not forget the free eBook available on cyber risk and insurance available from LMI Group.

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Video Interview on Conference Insurance

CaptureI was interviewed on the popular television show Dollars with Sense. The interview took place in the Melbourne Convention Centre during a trade exhibition and I was asked about the insurance to consider for venue, organisers and the exhibitors. I trust you find the interview between the presenter Dallas Brooks and I of value:

https://www.youtube.com/watch?v=VpndoW0t94M 

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A Book Written for Brokers by a Broker

broker bookGemma Gould of MGA Brokers in Sydney has written and published a book for brokers titled BreakThru Brokin, which I thought was a great read and I congratulate Gemma on her work.

The Book is written in such a way that the target audience (young inexperienced insurance staff) are amused and engaged: it is an good blend of insurance and sales advice and tips.

The book also provides some useful reminders to the more practiced professional.

Purchases are processed via the website – www.breakthrubrokin.com.au – and Gemma has provided me with a coupon code that you can use on PayPal which knocks 20% off the price. The coupon code is – BREAKTHRUNOW

Well done Gemma, I congratulate you on your effort and the end result which you can be justifiably proud of.

 

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US Weather Catastrophe Claims 19 Lives so Far

Graphic courtesy of National Oceanic and Atmospheric Administration

Graphic courtesy of National Oceanic and Atmospheric Administration

With 5 weather related catastrophes the industry is dealing with this year already, it was interesting to see that the US has not escaped bad weather.

Extreme flooding in parts of Texas and Oklahoma were triggered by a series of thunderstorm clusters, which produced excessive rainfall over the Memorial Day Weekend. As an aside, it has always interested me how many cats like this occur on a holiday or time of celebration; Mother’s day floods, Cyclone Tracey at Christmas; Boxing Day floods, Australia Day floods etc.

In Houston, Texas, 280 mm (11 inches) of rainfall was unofficially reported between 9:00 pm Central Daylight Time (“CDT”) Monday, through to 3:00 am CDT Tuesday.

Austin, Texas, also experienced 180 mm (7 inches) of rainfall. These are huge falls in anyone’s language.

Reports just in, indicate severe damage as a result of rushing water and inundation, affecting homes, businesses and infrastructure over large areas that include Houston.

At least 19 fatalities have been reported, with a dozen people still unaccounted for.

Response efforts are ongoing with both state and federal support. It will take some time for authorities and the insurance industry to fully assess the scope and severity of impacts of this event.

Naturally everyone’s first thoughts are with the families of those lost and missing, and others directly affected.

It is of course far too early to predict if this event will be large enough to turn around the soft market in the insurance industry.

What it should remind us is that we ought to be discussing flood cover with our clients at renewal, particularly with many of our larger clients in Australia coming up on June 30. If the premiums are going down, perhaps spend some of it on widening the existing cover! If not flood, increasing the current values, or the indemnity period.

I thank Guy Carpenter for their ongoing advices on the Texas event.

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Blog Question – Uninsured Tenant

bigstock-Questions-And-Answers-8042036Good afternoon Allan,

I trust that you are keeping well. I am pleased to advise you that I have recently subscribed to your Blog and am enjoying receiving & reading your periodical posts. Very informative and useful information.

Here’s one for you a question from one of my clients.

Hi Simon,

Further to our discussion on the 20th April have you any feedback in relation to the insurers view and the possible exposure to [our organisation] should the lessee not have any public liability insurance?

It is an essential term of the lease however if the tenant fails to provide it’s is then up to the owner to determine whether they terminate the tenancy or accept the risk.

We need clarity if the owner is at risk or if their own building insurance will cover any potential loss.

In this case we are referring to [name withheld for privacy reasons].

I await your advice.

Regards,

Amy”

What is the most accurate response that I can offer this asset manager (and the Lessor – our insured) on this matter?

Please can I ask you to keep the names & addresses confidential, for obvious reasons.

Allan, I thank you for your attention to this matter and look forward to soon hearing from you.

Kindest regards,

Simon [surname and email provided]

———————————————————

 

I answered as follows:

It is difficult to answer this with 100% accuracy without reading the lease. I say this as many leases these days have an indemnity clause, which means that should the landlord be held responsible, the tenant and their insurer will step in and meet the full cost incurred by the landlord.

In most cases involving public liability it is deemed to be a occupiers liability. They have day to day control over the premises and have a duty to keep it safe for their employees and/or customers/visitors. While it should not happen, what can and does happen is what is known as “deep pockets” syndrome. If, say, someone was seriously injured and could not work again or a child required serious medical attention for the rest of their lives and the amount required to compensate the injured party was a large amount of money, then the courts may go out of their way to find, where the tenant has no insurance or assets to cover the amount, that the landlord is in someone responsible just so that they contribute or pick up the costs awarded to the injured party.

Another exposure is that if the tenant were to accidentally damage the building, say, cause a fire, the landlords insurance does not have the protection of the tenant’s liability program.

In all these cases the Landlord should still be protected subject to the policy limits of their own coverage on the building, loss or rent and liability.

My own thoughts are that if a tenant is so silly to operate their business without basic public liability cover then any significant claim against the entity will send it into liquidation, creating a contingent liability for the landlord. If they are going to penny pinch and get the most widely purchased and reasonably priced insurance protection for their business what other cost saving measures are they going to take. I doubt they would be maintaining their own equipment etc well, let alone the landlord’s valuable asset.

For me, I would not want a tenant who breaks this important condition of the lease. If they break this condition what other ones are next?

I hope this helps.

PS It sounds like this tenant needs the advice of a good insurance broker. Go and visit them and sort them out!

Regards

Allan

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Please Help a Loss Adjuster with a Great Cause.

Ronald McDonald House_0Gregory Harris, a Loss Adjuster at Cunningham Lindsey New Zealand, is running for  great cause and  Limited – Major & Complex Loss, is running a full marathon in Christchurch on 31 May 2015 for a very worthwhile cause, Ronald McDonald House.

The Ronald McDonald charity is a great initiative which has now gone world wide providing genuine assistance to sick children and their families whilst they need hospital treatment.

Gregory, who is obviously a glutton for punishment and clearly much more fit than I, is planning to make this a long term commitment and at age 54, is committed to complete 5 marathons annually.

If you know Gregory and or would like to assist in this great cause, please visit  https://give.everydayhero.com/nz/gregory-david-harris. Thanks guys in anticipation and all the best to you Gregory in your run.

Once again it is great to see individuals and companies in our great profession helping the community outside their day to day profession of giving back people their lives after major losses and disruptions. Well done Gregory!

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FCA report on UK handling of claims for SME upsetting reading

fca coverThe Financial Conduct Authority (“FCA”) in the United Kingdom have released a paper titled “Handling of insurance claims for Small and Medium-sized Enterprises (SMEs) and it makes for some upsetting reading.

The executive summary includes the following findings:

findings

 

 

 

 

 

 

 

 

 

 

The question we have to ask is it any better in our part of the world? If you take the recent study by Queensland Institute of Technology that I referred to a few days back, I would suggest NO. In that paper, our Insured’s felt that the claims process was more stressful than the incident giving rise to the loss or disruption.

In my discussions with many claims managers, loss adjusters and other professionals in this space, I get a feeling of tiredness after years of being over worked, primarily due to the seemingly endless stream of catastrophes, coupled with retirements, resignations and transfer of good quality staff. Unless we invest wisely in claims and not just seek to cut costs the position will only get worse for our customers, the insuring public.

As an adjunct to the report, there is a second paper on the level of coverage etc found in the study. I will complete my reading of this paper over the weekend and post my thoughts next week.

 

For now if you would like a full copy of the report please tr15-06 SME Claims

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Well done to Sportcover on your assistance to small sporting clubs who often otherwise miss out

sportscoverI have been a bit behind of late due to being on the road delivering training and dealing with all the claims arising from the natural catastrophes. I am slowing getting back to normal and just wanted to say a belated well done to Sportcover.

They announced the recipients of the 2014/2015 Sportscover Sponsorship Fund (“SSF”). The winners were:

  • Yarra Pistol Club, Lysterfield, Australia.
  • Wirral Volleyball Club, Woodchurch, UK
  • Stockport Arnies (Weight Lifting), Stockport Cheshire, UK
  • Baulkham Hills Hockey Club, Baulkham Hills, Australia
  • Adelaide Comets Soccer Club, Adelaide, Australia.
  • Kolora Tennis Club, Kolora, Australia.
  • Illawong Little Athletics Centre, Lucas Heights, Australia.
  • Adrenalin Cheer & Dance, Mount Pleasant, Australia
  • Donald Golf and Bowls Club, Donald, Australia.
  • Walmley Table Tennis Club, Sutton Coldfield, UK

 The clubs/associations were awarded a grant of US$750 (or AUD$750, GBP £500, €600 – or local equivalent).

If you would like to learn more or seek a grant for your sporting club in the future please go to: http://www.sportscover.com/supporting-sport.asp?id=2725

I appreciate a lot in the insurance industry do a lot for their communities but it is always good to recognise a good thing.

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Study confirms what my own research revealed about the stress of an Insured handling their own claim

QUT research into claimsThe most recent study results  by published by the Queensland Institute of Technology (“QUT”) titled Flood aftermath linked to post-traumatic stress confirms my own findings about the stress felt by an insured who is attempting to handle their own claim. This latest research was carried out by QUT researcher Kelly Dixon looked at the mental health impacts on victims of the Brisbane 2011 and Mackay 2008 floods.

What the research found is that the rebuild and dealing with an insurer and or loss adjuster is often more traumatic than the event that triggered the loss or disruption in the first place.

For a full copy of the research please click here. This is what I found in my research conducted during the mid 2000’s as part of my doctoral thesis.

It is for this reason that I always try and put myself in the shoes of the Insured and make the process as painless and stress free as I possibly can. This means regular contact, prompt progress payments and making sure that all the trades turn up when they ought and do the proper thing by the insured.

Feingold videoI recently finished a claim and took the opportunity to ask him how he found the process. Please click here view the short 2 minute video.  I am not alone in the way I do claims and all the LMI team take the same approach as do the better loss adjusters and claims officers. Certainly, I had great help from the insurer on this claim.

In a business situation, it is best for the client to get on and focus on and work at getting his/her business back together and letting a specialist assist in mitigating the loss and disruption and presenting a valid claim in accordance with the terms of the relevant insurance policy. That is why I set up LMI Group back in 1999 and our claims service remains the back bone of the organisation.

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