Research Released on Distracted Driving

Texting While DrivingDrivers texting and engaging in other activities is something that I have written posts on several times in the past. Since the last one, my wife Helen was involved in her first car accident in 40 years of driving when a driver (who was texting) drove through a red light and slammed into the front of her car. The distracted driver was travelling at 60 kilometres an hour and if anyone had been on the pedestrian crossing in the path of the car, they would have surely been killed or, at the very least, seriously injured.

A fortnight later, at the same intersection, the same thing occurred.

Source: National Pictures  UK.

Source: National Pictures UK.

While in London last week, the front page of The Mirror had the story of a woman caught driving while eating her cereal out of a bowl on the way to work.

Any such behaviour does clearly increase the likelihood of an accident.

In the United States, the National Highway Traffic Safety Administration (NHTSA) produced a study in 2010 listing the top causes of distraction and a measure of the increased risk of each distraction (vs. normal driving.) The results were:

  • Distraction Risk Multiple Reaching for something 8.82
  • Insect in vehicle 6.37
  • Looking at something outside the vehicle 3.70
  • Reading 3.38
  • Applying makeup 3.13
  • Using phone (dialing/texting) 2.79
  • Inserting/retrieving CD (Adjusting radio/temperature) 2.25
  • Eating 1.57
  • Drinking from an open container 1.03
  • Interacting with passenger in adjacent seat 0.50

The research shows that reaching for something is almost nine times riskier than normal driving.

What surprised me was that texting was not higher up the list. I genuinely believe it should be rated higher.

While some of these physical distractions, such as putting on makeup, eating cereal from an open bowl or reading, demonstrate a more obvious lack of wisdom, from what I see as I drive and walk around Australian roads is that far too many drivers still use their phones to text or call while they drive.

Another surprise to me was that the use of hands-free devices, according to the studies, is not significantly different from holding the phone, despite the legality of one vs. the other.

While the effectiveness of voice-based texting apps needs further study, those apps that require manipulation of the phone or menus do not in my mind provide any benefit.

Despite what many of us believe, all the studies I have seen show that humans, (male or female) cannot successfully multi-task; something always suffers. When a person concentrates on a reading or writing a text, or having a conversation instead of the road ahead, his or her driving suffers.

driving statsIf you do not believe me think how many people turn down or turn off their radio when they are about to do a reverse park.

Zurich North America recently released a Fact Sheet which suggests strategies to reduce the risk which in the main are just common sense. I reproduce a section of the Fact Sheet designed for those that own or manage motor fleets as follows:

Mitigating distraction

Plan calls

Establish times during the day when the driver can pull off the road and be available for communications (whether text, email or telephone).

Work out the frequency and times, based on expected needs and the job being done.

Ignore the phone

Calls cannot always be scheduled.

Establish a culture where allowing callers to leave messages to be returned at the earliest convenience (i.e., when it is safe to do so) is acceptable.

Drive defensively

Defensive driving techniques provide more time to respond to changing driving conditions.

• Pre-set temperature and radio controls.

• Clear windows of frost, ice, snow or debris before driving.

• Increase following distance. (Zurich recommends at least four seconds in normal conditions in a sedan and longer in larger vehicles or adverse conditions.)

• Understand what is occurring ahead of the vehicle. (Zurich recommends scanning at least ten seconds ahead.)

• Drive for conditions. In inclement weather, slow down and allow for increased stopping distances and poor visibility.

• Deal with distractions in a safe location, while parked.

I know that we are all time poor and we are bombarded with emails and texts but I do urge all of us to be mindful of the additional risk that driving while distracted creates.

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800 Years of Magna Carta

IMG_3377I am in London this week visiting  some of LMI’s UK clients, sorting out a couple of messy claims and meeting some potential new clients interested in our policy review and drafting services. I was really pleased that the visit coincides with a couple of major milestones.

The first is the 800th anniversary of the sealing (it was not signed) of the Magna Carta (Latin for Great Charter) on the 15th June 1215. I will cover off the second later in the week  in a separate post.

While not directly related to insurance, it is an important document which has created the democratic system that around a 1/3 of the world’s population enjoy.

It has special interest to me as I question if the principles set down in this document were ignored by Governor Latrobe when he sent in the troops at the Eureka Stockade. This event became of interest to me when I was researching, to me, unfair taxes on insurance.

The principles of the Magna Carta were certainly taken into consideration by the British Parliament when they set up the second level of parliament in Australia, fearing a repeat of the American War of Independence.

Three of the 60 clauses are still in effect today, 800 years later. Others have been repealed or modified.

Clause 1, which deals with the independence of the church (I think King Henry VIII had a problem with that one) and clauses 39 and 40 which translate to:

39) No free man shall be seized or imprisoned, or stripped of his rights or possessions, or outlawed or exiled, or deprived of his standing in any other way, nor will we proceed with force against him, or send others to do so, except by the lawful judgement of his equals or by the law of the land.

40) To no one will we sell, to no one deny or delay right or justice.

In a nutshell the document is important for three main points.

1) No-one is above the law, even the king or queen or in our case prime minister or governor general,

2) Right to a fair trial. (what David Hick’s lawyers were arguing); and

3) People who are taxed should have some kind of representation. (Back to the Eureka Stockade.)

To finish off, the Magna Carta established a number of important principles, which have been copied around the world. It inspired the US Constitution and the Universal Declaration of Human Rights” and has had some influence in Australia’s and New Zealand’s history.

According to Lord Denning, the most famous of English 20th Century legal authorites and along with Lord Atkin my favourite, “this is a document that guarantees the freedom of the individual against the arbitrary authority of the despot”.

Steve Manning, (head of LMI eServices) and I visited the British Library where we saw 2 of the 4 known copies of the 1215 document, and a display covering its entire history.

We then went to Runnymede where it was signed and visited the monument erected by the American Bar Association to honour the importance of the sealing.

Plaque unvielled by the Queen to mark the 800th anniversary of the sealing of the Magna Carta

Plaque unvieled by the Queen to mark the 800th anniversary of the sealing of the Magna Carta

The area was set up like a rock concert with a stage, huge amount of seating with the Queen, Prime Minister Cameron and thousands of people attending.

I am not sure many people went to the trouble of visiting the actual document and then went to the site of the signing today be we both but Steve and I thoroughly enjoyed the day and the learning.

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LMI Newsbeat now out

Newsbeat 3LMI’s latest newsletter covering a range of topics is now available and you can get your copy here.  Articles include Drones,  Slip and Fall claims, Business Continuity Management Planning and LMI Mining.

If you enjoy the articles you can subscribe to obtain future editions direct.

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Latest LMI PolicyComparisons now available

PCI homeAs an ongoing service to our valued subscribers to LMI PolicyComparison Australia, I list below the policy comparisons that have been added to Australia’s premier policy features and benefits comparison website in the last month. You can now view these comparisons at www.PolicyComparison.com.

AAMI Landlord Insurance – A01460_0214B
Achmea Australia All in One Farm Pack – AIOFP_VA2.0_1114
Allianz Farm Pack – POL065BAFI_1014
Allianz Marine & Transit Underwriting Agency Cargo Insurance within Australia (Accidental Damage) – POL615BAAM&T_0315
Allianz Marine & Transit Underwriting Agency Carriers Insurance Package – POL260BAAM&T_0315
APIA Boat Insurance – AP02679_0713E
APIA Car Advantage Insurance – AP02571_0814E
APIA Caravan Insurance – AP02576_0713F
APIA Home and Contents Extra Insurance – AP02655_0615
APIA Home and Contents Insurance – AP02580_0615
APIA Landlord Insurance – AP02611_0615
Axis Underwriting Services Residential Strata Insurance – AXISRESPOL_0115
Berkley Insurance Australia Real Estate Agents Professional Indemnity Insurance – BIA-RealEstatePI_1014
Brooklyn Underwriting Strata Insurance – Strata_1014
Calliden Insurance Business Travel Insurance – 14PDSCALBTA01_1214
Calliden Insurance First Option Business Insurance – CASL-GLA-FOP_0415
Cemac Pty Ltd Contractors Plant and Machinery and Liability Policy – CEM-CPML_1212
CFC Underwriting Esurance CPM Policy – CFC-CPM-AUS_V1.8_0714
CGU Insurance Ltd Padlock Insurance Policy – CV476_REV2_1014-CID0192_REV4_1214
CommInsure Home Insurance – Defined Events – CIL1516_0515
CommInsure Home Insurance – Landlords – CIL1516_0515
CommInsure Home Insurance – Optional Accidental Damage – CIL1516_0515
Dual Australia Pty Ltd Corporate Travel Policy – DUALCTPDS_0315
Dual Australia Pty Ltd Professional Indemnity Design and Engineering Policy – DUAL-PI-DesEng_0814
eSentry Underwriting Annual (Run Off Basis) Construction Legal Liability & Professional Indemnity Policy – TMNF-CWA(RO)-POL2014-V1_1114
eSentry Underwriting Annual (Transfer Basis) Construction Legal Liability & Professional Indemnity Policy – TMNF-CWA(T)-POL2014-V1_1114
eSentry Underwriting Single Project – Construction Legal Liability & Professional Indemnity Policy – TMNF-CWPS-POL2014-V1_1114
Liberty International Underwriters Cyber Suite Insurance Policy – LIU-AUS-Cyber_1012
Longitude Insurance Commercial Strata Insurance – LONGCSI-03_0415
Longitude Insurance Residential Strata Insurance – LONGRSI-03_0415
Mansions of Australia Home and Contents Insurance – 13PDSMANHC01_1114
Nova Underwriting Professional Indemnity Insurance (Miscellaneous Risks BOPD) – BOPD_1214
NRMA Insurance Landlord Insurance (NSW, ACT & TAS) – G013134_0515
Pen Underwriting Annual Contract Works and Construction Liability Policy – AnnualCW_0315
Pen Underwriting Business Travel Insurance – BusinessTravel_0415
Pen Underwriting Single Project Contract Works and Construction Liability Policy – SingleProjectCW_0315
RAA Comprehensive Car Insurance – MVPDS_0315
Suncorp Metway Insurance Limited Boat Insurance – 13738_0514B
Suncorp Metway Insurance Limited Home and Contents Insurance – 12314_0514C
Suncorp Metway Insurance Limited Strata Insurance – 27877_0415A
TIO Territory Construction Insurance – Construction_0115
Vero (Australia) Household Removals Insurance – All Risks – V5431_0314A

We take this opportunity to remind you that the LMI PolicyComparison website offers more than policy comparisons. Visit the site to view our extensive policy library, Standard & Poors’ financial strength ratings, a list of alternative markets, and more. We also draft wordings and endorsements, carry out peer reviews and policy health checks.

Besides Australia, we also provide LMI PolicyComparison in New Zealand, PNG, Fiji, United Kingdom, Ireland and South Africa as a web based subscription service. Should you have any queries, please feel free to contact me.

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Latest ClaimsComparison survey results now available

claimscomparison 2Just in time for the busy 30 June renewal cycle in Australia the analysts at LMI have published the latest claim survey results.

I would like thank all the participants who completed this important industry survey on claims service, which the team have now collated and used to review the current ratings on Claims.Comparison.com by product and brand. We report across 28 Product Classes which totals 653 entries.

There was a total of 55 changes from the last survey with 16 entries being removed due to recent mergers and acquisitions, which reduced the total number of entries to 637.

There were several new entrants to the survey, however, due to the low statistical count we have not included these brands in this survey, but we look forward to including them in the future as we capture more data.

In this survey round 598 entries maintained their existing rating, while 16 entries improved their overall claims rating. Well done on those involved. To see this improvement is line with one of the primary aims of the service, that is to drive improvement.

However, 23 entries showed a reduction in their overall rating. I suspect I, or the team, will receive some “please explains”, but all I can say is please do not shoot the messenger. We are only reporting what the brokers and insurers are saying.

This survey does not include the performance of the industry during the current round of catastrophe claims management but this will feature in the next.

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A stitch in time can save nine – regular maintenance checks a must

screw looseI am over for much of this week in New Zealand delivering a round of master classes on property insurance. Yesterday, I was in Wellington staying at one of my favourite hotels, but as I was delivering the lecture, I kept being distracted by a partition wall out on the balcony which was moving far more than it ought in the famous Wellington wind.

At the end of the day, when the group had left the conference room, I went out on to the balcony to find that my concern was justified. The fixings were clearly undersized for the job, many screws were missing and others had worked loose to the point that only a couple were still holding the wall.

I was concerned that the wall could break loose during a storm causing more damage to the building and to passers-by, guests of the hotel or to other property.

While I appreciate that New Zealand has a no fault compensation scheme, this is cold comfort to an injured party. In other jurisdictions, anyone operating a place of business owes a duty of care to their guests, staff and the public in general and this extends to regular maintenance.

What I witnessed had not just occurred that day and must, or perhaps I should have said been seen, by cleaning /housekeeping staff and picked up by a regular maintenance check.

If your business, or your clients do not think risk management is important, safety incidents (not accidents, as these are preventable) will and do occur.

I am pleased that I discovered this hazard while it was still standing and not after a storm.

I have shared my concerns with the front of house staff who took the report seriously and will (I hope) have the necessary repairs completed. At their request I emailed them four photographs of the problem. I also know the insurance broker involved, so I copied him in on the email.

On a different topic, my time in Wellington was well used with a breakfast meeting to finalise the topic I will be speaking on at this year’s Insurance Council of New Zealand conference, to be held on 11th November in Auckland and, at the end of the day, I partook in an extended interview with journalist, Mr Rob Stork, of New Zealand’s Sunday Star Times on the inappropriateness of having Fire Service Levies on insurance. I understand the article will appear in this Sunday’s paper for those readers living in beautiful New Zealand.

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Lloyd’s Have Extended Their Sanctions Limitations and Exclusion Clause to Include Australia

Tag Cloud Illustration Related To Economic SanctionsSanctions exclusion clauses and warranties are nothing new and, in fact, are commonly used across the insurance industry as a tool for insurers to mitigate risk arising from the international sanctions regimes to which they may become exposed (e.g. suppliers and /or customers coverage). Wordings vary according to the country of origin.

Lloyd’s have put out a Market Bulletin, No Ref: Y4861 on the subject which covers the subject well. If you would like to down load a copy please click here y4861.

Recently the standard Lloyd’s Market Association (“LMA”) 3100 clause was amended to Australia. The revised wording reads:

SANCTIONS LIMITATION AND EXCLUSION CLAUSE

 

No (re)insurer shall be deemed to provide cover and no (re)insurer shall be liable to pay any claim or provide any benefit hereunder to the extent that the provision of such cover, payment of such claim or provision of such benefit would expose that (re)insurer to any sanction, prohibition or restriction under United Nations resolutions or the trade or economic sanctions, laws or regulations of the European Union, Australia, United Kingdom or United States of America.”

headerOn looking through LMI PolicyComparison.com (Australian version), this type of clause is already in a few different property and professional lines wordings for the past 12 to 18 months.

For example, the following appears in several property policies:

  1. Sanctions regulation

Notwithstanding any other terms or conditions under this policy, [insurer name]  shall not be deemed to provide coverage and will not make any payments nor provide any service or benefit to you or any other party to the extent that such cover, payment, service, benefit and/or any business or activity of you undertake, which would violate any applicable trade or economic sanctions, law or regulation.”

When it comes to professional lines many insurers are introducing a similar clause. For example, Zurich has had it in for the past 12 months or so and it is generally a General condition like the following which is in their Aged Care Liability Professional Indemnity wording. This wording reads:

Sanctions regulation – Notwithstanding any other terms or conditions under this policy, Zurich shall not be deemed to provide coverage and will not make any payments nor provide any service or benefit to any insured or any other party to the extent that such cover, payment, service, benefit and/or any business or activity of the insured would violate any applicable trade or economic sanctions, law or regulation”

Dual use the following as an exclusion, this example is from their Evolution Management Liability wording:

Sanctions Limitation Exclusion – We will not cover the insured for loss to the extent that trade or economic sanctions or other laws or regulations prohibit us from providing insurance.”

Chubb has had the following in their wordings for quite a while, this is a general term in their Management Liability wording

This policy does not apply to the extent that trade or economic sanctions or other laws or regulations prohibit the Company, its parent company or its ultimate controlling entity from providing the insurance.”

I can see such clauses becoming more and more mainstream, starting with Global policies on an ISR, but as yet, it has not become mainstream on property programs in Australia, but watch this space.

Having said that, I really cannot see anything onerous with the wording for Australian or New Zealand business.  It has certainly been the cause of any declination that I have become aware of. In fact, I see it as being prudent and in keeping with the role of insurance. We should not be insuring anything that is against sound public policy.

If anyone has a concern with the wording, I would love to hear about it and the reason for your concern.

I would thank Adam Matteson, Managing Director,  Talbot Underwriting Australia, Brian Peele, LMI Policy Drafting,  and Kristen Waddington of LMI PolicyComparison for there help in researching the subject.

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Oils Ain’t Oils When it Comes to Policy Wordings – Don’t you get Caught!

Metaphor Compare Apples To Oranges LightA broker approached LMI with a problem in that he had moved a motor vehicle policy with an Agreed Value to what he thought was a similar coverage, but called Nominated Value. Regrettably, it was a case of apples and oranges with the terms meaning different things.

The definition of Nominated Value in the new policy is stated as:

Nominated value

Nominated value means the amount specified as the Nominated Value, exclusive of GST, in the schedule.

This amount includes standard accessories, tools and spare parts that the manufacturer supplies as standard equipment with your vehicle, and any Vehicle Accessories specified in the schedule.

He read this and thought all was good and moved the policy to the new insurer.

A claim occurred and the vehicle was deemed to be a total loss. It was then it was pointed out to him that the Basis of Settlement stated:

Basis of Settlement – Section 1

The following Basis of Settlement will apply:

Total loss

(b) Nominated value

When your vehicle is stolen and not recovered, lost and not recovered, or damaged and we do not consider it economical to repair your vehicle, then if nominated value is stated in the schedule as the Basis of Settlement then the maximum amount we will pay for your vehicle is the lesser of:

  • the nominated value; or
  • the market value plus 15%.

Provided that the maximum amount we will pay in respect of Vehicle Accessories is the value of those Vehicle Accessories shown in the schedule.”

Here the Nominated Value was $15,000 but the market value was deemed to be only $10,000. The broker is now trying to explain to his client why the client has been charged premium on $15,000 and is only getting $11,500 when he [the Insured] thought he had an Agreed Value policy as he did before.

I can understand why an underwriter would wish to cap the amount that they would like to pay above the true market value of a vehicle but it is cold comfort for the Insured or their broker.

headerEven with motor policies, it is always wise to include a product comparison from PolicyComparison.com with the sub-mission and to quickly scan it for any traps like this. Few policies are the same and a few seconds to obtain the comparison can save a whole lot of grief.

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A lot of movement in the IT liability space

headerThe team at LMI PolicyComparison dropped me a note flagging that they had have seen quite a sharp increase in interest in the market for this class. – Insurance for IT/Tech industry.

The product has been around for some time of course. It’s a combined policy usually addressing Professional Indemnity (“PI”) and General Liability for IT firms. PolicyComparison have generally addressed the policies by comparing them under separate PI and Liability comparisons so that brokers and their clients can see how they differ to normal PI/Liability wordings.

The main players are:

  • Axis Specialty
  • CGU
  • Dual
  • Chubb  is quite unique and offers way more covers than the most others. It is quite a complex but comprehensive wording.

In the last 2 months the LMI Team have seen new releases of the following wordings along with many more requests from brokers for one off comparisons.

The Comparison team are also noticing a blurring of lines with cover policies now offering some cyber coverage.

I and the team at LMI PolicyComparison will continue to watch and keep readers posted on developments. Steve Manning head of LMI eServices and Sharron Walker, Operations Manager at LMI PolicyComparison are considering creating a new class but the need is not quite there yet but this may change.  Let me know your thoughts and I will share it with Sharron and Steve.

 

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A short Interview on Terrorism Insurance

terrorism videoOne of the topics that generates the most questions to me has over the past 6 months with many radio and press interviews has been around the terrorism event in Sydney and how policies respond, and the trigger for coverage. Business Strategist, Michael Harrison, interviewed me recently on the topic which he himself was keen to understand. Here is the result: https://www.youtube.com/watch?v=x4PwU8BhbZU

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