Bouquets where they are due

rose boquetFrom time to time I do vent my frustration at some of the claims handling that goes on and the unfair treatment that people can receive. This includes the concern I feel for insurer’s and loss adjusters that adopt the delay, deny, defend approach to a major claim.

It’s not all bad news and many claims across the country are handled fairly and promptly.

Two examples are that my son, Steven, had a tree fall on his home during a violent storm in Melbourne and he submitted the claim form and quotation at 5.30pm and the money was received into his bank account the following day. There is nothing to suggest that his insurer, Chubb, gave him any different treatment than they would any other customer and that Chubb go out of their way to handle legitimate claims fairly. The beauty for Steven was that he was able to ring the repairer and say that he had received the money and that in turn pushed him to the top of the pile with the repairer. Knowing that he would be paid immediately meant that Steve was able to have it fixed faster than he may otherwise have done so.

The second claim involves a friend of mine who lost their home in the Wye River Fires. As soon as I heard that he had lost his home I asked him to send me a copy of his Policy and I summarised his entitlements under the Policy and sent it to him. I did offer to assist him in discussions with the insurers but he felt that I was already too busy and could handle it himself. He lodged his claim, and without prompting every item of his entitlement including removal of debris, loss of rentable value, the building escalation clause etc were offered by the in house loss adjuster and as it was in agreement of underinsurance and it was not my friends desire to rebuild the home at this time for personal reasons, a cash settlement was offered for the full amount and accepted. In this case it was GIO Insurance.

With so much bad press going on about our industry at the moment particular over the CommInsure debacle which I have commented on it is certainly refreshing to see a relatively minor and large claim go through as they should.

 

Well done to all those involved!

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How to deal with an Insurance Claim after a house fire – Guest Blog Article Albert Krav

A gentleman named Albert contacted me with an article he wrote on how to manage yourself and your claim when you have a loss. I share it here for you all.

 

How to Deal with Insurance Adjusters After a House Fire

Suffering through a house fire can be a traumatic and trying experience. It may result in the loss of prized family possessions, furniture, or even a home. What makes it even more difficult is having to deal with insurance adjusters after enduring through a horrific event. As we all know, dealing with insurance adjusters isn’t always a pleasant experience. Here, we’ll go through a few tips you should consider if you find yourself in the unenviable position of dealing with an insurance adjuster after a house fire.

 

File an Immediate Claim800px-ShadowRidgeRoadFire

It should come as no surprise, but your first course of action (after the fire has been extinguished, your property secured, and you and your family escorted to safety) is to file an insurance claim. This is not only a policy requirement, but it’s also a great idea. You want to get the ball rolling as soon as possible to have your home repaired quickly and restore order back into your life. Your claim will include the date of the incident, the type of damage, the location of the damage, any injuries of the parties involved, a police report, and a description of lost goods.

 

 

person-apple-laptop-notebook-largeMake a Detailed List


A major component of your claim will be a completed proof of loss claim. This is where you’ll list and value the items damaged in the fire. Many adjusters ask that this list include the date of purchase, the brand name and serial number, the price of the item and its description, and so forth.


This is information that very few homeowners have. Therefore, it’s a good idea to keep a home inventory of all your property. If you haven’t done this ahead of time, there are steps you can take to ensure you get the full value for your lost merchandise. We suggest checking bank records and photographs for proof of lost property.

 

 

Stay Organized

3985839229_dcc466eef9_zYou’ll be speaking with, emailing, and exchanging letters and documents with local officials, insurance adjusters, lawyers, contractors, and others during this process. Make sure to document all of your conversations, get copies to all the records, and ask for the names, phone numbers, and email addresses of everyone you have been in contact with.

You should get a binder or a folder to specifically file the claims process and keep all pertinent information in. There won’t be any need to argue with adjusters over the logistics because you’ll have all the information in one place. It will also help you stay on top of contract estimates, invoices, bills, receipts, and more.

 

Write It Down

When you speak with your adjuster—whether over the phone or in person—have a dedicated notebook to document all your conversations. Write down the date and time of each conversation, what you may have discussed, and notate any promises, guarantees, or statements of delivery. You’ll be glad to have an updated record of all your discussions.

 

Document Living Expenses

Part of your insurance policy is a loss of use clause. This entitles you to reimbursement for living expenses while you are without a home. However, this doesn’t mean that your insurance agency will foot the bill for lavish expenses. Document any food, travel, and housing expenses you may incur when displaced. Additionally, consider discussing any expenses with your insurance adjuster before you start spending.’

 

800px-FEMA_-_43625_-_A_home_inspectors_with_the_media_in_Rhode_IslandGet the Best Estimate
Depending on your homeowner’s policy, you may have a few options when it comes to repair or replacement. If you have replacement cost coverage, you’re entitled to the full amount necessary to replace your home and its contents (you may have a limit set by your policy).


If you have an actual cash value policy, you’re entitled to the amount it would require to return your home and contents to its market value. However, this type of policy tends to return a lower amount due to the discrepancy between the market and replacement value.

Regardless of the policy, your insurance adjustor will supply an estimate of the value of your home and its contents. You aren’t required to accept this valuation. If you feel the insurance company’s numbers are unsatisfactory, you can hire an independent estimator to value your home and its contents.

 

Stay One Step Ahead

No matter how friendly or grumpy your adjuster may be, keep in mind that it’s their job to make sure you are taken care of. If you need a question answered, contact your adjuster. If you feel that the process is being stalled, call them and politely let them know it’s taking too long. Be gentle, yet firm, and keep in mind that they work for you.

 

End The Process

Your insurance company will most likely attempt to close the adjustment process quickly. At first, this might seem like a blessing. However, that’s not always the case. Living through a house fire is a very traumatic experience, and it can be difficult to think clearly in the following weeks and months. If you find damage or loss after the claim has been closed, your insurance agency isn’t responsible for it. In other words, don’t close your claim until you are absolutely ready for it to be closed.

 

hugging-571076_960_720Stay Strong and Lean on Friends and Family


Living through a house fire is a horrific event. You may lose more than just a few possessions. Lean on your friends and family to help you get through this trying time. Remember to ask your adjuster questions until you feel they’ve been answered, stand up for your rights, and most importantly, stay strong.

 

 

Author Bio: Albert Krav is a contributing writer for Contractors License Resource Group, a contractor’s licensing school. In his spare time he enjoys teaching chess to his two daughters, Lily and Ava.

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Why Are Homeowners Less Satisfied with Claims Service?

Minutes after I posted today’s blog, I read this article which mirrors my own belief that the current state of the soft market is generating the harder attitude to claims.

 

Residential fenced house complex against blue sky.

Why Are Homeowners Less Satisfied with Claims Service?

For the first time since the study launched in 2011, customer satisfaction has declined among homeowners who filed a property claim, according to the J.D. Power 2016 U.S. Property Claims Satisfaction Study.

The report, which analyzes customer ratings on a 1000-point scale, shows that satisfaction decreased five points since 2015, from 851 to 846. “From a data standpoint, this is a significant drop,” explains Mark Garrett, director of insurance industry analytics at J.D. Power.

Until this year, satisfaction scores showed a consistent upward trend.

The ratings are based on five categories: settlement, first notice of loss, estimation process, service interaction and repair process. Service interaction registered the most significant drop in satisfaction—a decrease of eight points. Specifically, claimants were less satisfied with local agents (-8) and claims professionals (-28).

The agent’s responsiveness, Garrett points out, is partially accountable for the decline. “There’s some phone tag in the claims process if the agent isn’t immediately available,” he explains. “That’s a big element in terms of responsiveness, and people rate that.”

It’s often necessary for an agent to communicate with other parties once a homeowner files a claim. Meanwhile, the client is left waiting in the dark. “The agent doesn’t have that information right at their fingertips,” Garrett says. “But it’s helpful to let the customer know that you got their message and are going to get back shortly. Acknowledge that you plan to follow up.”

Greg Hoeg, vice president of U.S. insurance operations at J.D. Power, suggests that the ongoing soft market also plays a significant role in customer satisfaction: “Prices are starting to decrease on a national basis in both commercial and personal lines,” he points out. “When pricing starts to decline, many [insurers] will start focusing on cost control.”

In turn, customer service falls by the wayside, which has a direct effect on revenue; 40% of displeased claimants said they planned to switch insurers within the next 12 months. By contrast, 81% of highly satisfied claimants said they “definitely will” renew their policy.

Weather-related events also influenced whether or not homeowners were pleased with the claims process. Specifically, winter storms in the Northeast in early 2015 caused claims to “skyrocket,” making it harder for agents to tend to everyone at once, Garrett explains.

Meanwhile, Western states, most notably Colorado, also experienced severe weather in late 2014. “The population is more spread out in that region, which has something to do with lower response times,” Hoeg points out. “It’s harder to get to the location, examine the damage and handle the claim”—and that makes customers feel like a lower priority.

While some of these factors are unavoidable, agents can try to help deliver a seamless claims process to clients by walking them through the steps. “As soon as a claim comes up, the agent can reinforce what expectations are, and identify where they’ll be most active in the process,” Hoeg advises. “It’s the unknown that bothers [clients].”

Even when the claimant approaches the insurer first, independent agents can step in and make the process easier for clients. Be proactive: “Agents can contact the customer without the customer calling them first,” Garret says. “It’s very valuable for you to reach out to your customer to check in on them.”

In fact, more agents are doing so. According to the study, 51% of the time, the agent initiated a follow-up call to the customer. Just make sure you and the insurer are on the same page, Hoeg warns, to avoid inconsistencies in the information you’re both providing to the insured.

Satisfied homeowners will keep your business running, but it’s important to keep their best interests at the forefront of the claims process. “This is something that personally affects them very deeply. You’re talking about their entire sense of security,” Hoeg says. “Home is where the heart is.”

 

Source: IA Magazine.com, 9th March 2016

http://www.iamagazine.com/news/read/2016/03/09/why-are-homeowners-less-satisfied-with-claims-service

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Further Commentary on the CommInsure debacle.

Since posting my article yesterday (here) I’ve received many emails, texts and phone calls on the subject. An example of one of these is set out below.

“Hi Allan 

I’m not sure if you’ve seen this article today, but it makes we very angry how the writer simply blankets every insurer as a mug that takes premiums and doesn’t pay claims when they’re valid.  I think that is terrible that CommInsure could allegedly carry out those practices with their Insureds in disregard up utmost good faith in the claimants’ times of need, but to paint every insurer as doing that is plain unfair!  I believe the vast majority of insurers try to do the right thing by their Insureds, whether it’s general or life insurance.   

I’d be interested to hear your thoughts at some stage.  

http://www.brisbanetimes.com.au/comment/that-thinking-feeling/times-up-on-culture-of-illtreatment-by-insurance-companies-20160308-gne76y.html 

Regards
Adam [surname and email provided]”

The journalist who wrote the article to which Adam refers sets out an experience that the journalist had with what he thought was a simple water damage claim and the fact that he was made to feel like a criminal in putting the claim forward.

While not every insurer puts their clients through this, the reality is that many do and this is why our industry currently has such a poor reputation and has had for some time.

It is a reality that whenever there is a soft market there is more emphasis placed on claims and claims leakage, which can be an euphemism for paying as little as possible regardless of the insureds entitlement.

With all such things, I look at it as a threat but also an opportunity for insurance brokers and even for the claims preparation area of LMI who can now explain the importance of having someone highly knowledgeable in insurance working for the client to ensure that they are fully protected and that when a claim occurs they do receive a prompt and fair claims service.

One of the areas that I would like any inquiry to address is what I would call Claytons Covers. I’ve two situations on my desk at the moment where a customer has sought to have claims preperation fees approved by the insurer and has been refused. In both cases the insured is very elderly and the loss is in excess of $1,000,000 in one case $2,500,000. If an insurer is not going to grant permission to appoint someone to assist an elderly customer in such as circumstance, they are clearly never going to do so and therefore should remove the false cover from the policy. In the case of the Strata insurer, I have written to senior management after a similar episode a couple of years ago in Adelaide seeking that the section be removed but it still remains in the policy and the Insurer has never granted permission on any claim to my knowledge since and certainly is refusing to do so on this latest matter.

The trouble with all this is that it damages the brand insurance, and makes it harder for the thousands of honest, hard working insurance brokers and advisers, underwriters and claims officers who genuinely want to protect their insureds, communities and economy.

As I said in yesterday’s post I hope that it does make those who are involved in the questionable behaviour to have a good hard look at themselves and ask is the risk of reputation damage to their own organisation and brand insurance really worth it for it will out over time.

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Lessons learnt from CommInsure

Honesty and related 3d words including sincerity, believability,Monday evening was the first night that I had watched Australian news for over 6 weeks, and as I turned on the television the whole sorry saga of the CommInsure debacle unfolded.

I felt sick in my stomach when I heard the circumstances as outlined in the program and most disturbing was the allegation made by the doctor that he had been pressured to change his report from what he genuinely believed to be the truth.

There was then a great deal of talk about what sort of inquiries should be held into the insurance industry. There was no differentiation in the reporting between life insurance and general insurance. I was pleased to see that The Australian newspaper however, did report it was life assurance.

Two things immediately sprang to mind in this report. First is that brand insurance issued against damage which can cause the insuring public to lose faith in an industry which is so vital to protect them, their communities and to protect the wider economy. Secondly, even further compliance regulations may be imposed on the general insurance industry when it is operated in such a different way in so many factors. Rather than be a one off sale, typically general insurance is an annual contract with the advises urged to focus on the level of protection, the financial strength rating and the claims service rating of the insurance provider and not on the premium or commission levels.

When it comes to claims the insurance adviser, if one, is engaged by the insured and acts on their behalf to ensure the claim is properly and fairly handled. For more complex claims there are professional claims preparers who work with the insured and/or the broker to ensure the full entitlement is obtained. The major lesson to be learnt from this is that insurance is a contract of utmost good faith. This is not a new principle, in fact the case which set the principle Carter v Boehm (1766) 3 BURR 1905 but we call it the landmark case, celebrates its 350th anniversary this year. Lord Mansfield, the judge in the case, stated “Good faith forbids either party by concealing what he privately knows, to draw the other into a bargain from his ignorance of that fact, and his believing the contrary.”

This principle of utmost good faith is enshrined in the Australian Insurance Contracts Act (1984) – refer part II – the duty of utmost good faith.

I have sensed during my working life that as insurers have moved from mutuals and small community based organisations to global corporate giants that the shareholder has become more important than the policy holder. It is incumbent on all of us in the insurance industry to act with utmost good faith, to pay valid claims and to treat our customers with the respect that they deserve. To do otherwise will damage not only the brand of the specific insurer but the wider corporate brand and brand insurance itself. The size of brand damage, the cost to management and to the business generally to meet all the requirements of whatever form of inquiry is made and then make good to all the policy holders that have been affected will be significant. At some stage bad behaviour will come out and this must be remembered by all insurers despite the fact that they may find their profit margins are currently being eroded. If people lose faith in the brand they will seek the protection they need elsewhere. I have a number of general insurance claims where I’m sure the insured would welcome a visit by the reporters from Four Corners at ABC.

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What constitutes professional advice and or professional service?

Holding Decorative Scales Of JusticeLior Maisner of LMI Legal kindly provided me with this synopsis of a recent court case addressing this topic. Lior writes:

Liability policies, other than professional indemnity policies, frequently contain exclusions for liability arising from “professional advice or service”. The reasoning is that liability for professional services is, more usually, expressly insured under a professional indemnity policy.

Over the years, conflicting decisions have been handed down by the courts as to what is meant by a “professional service”.

In the recent decision of Chubb Insurance Company of Australia Limited v Robinson [2016] FCAFC 17 the Federal Court of Appeal revisited the issue.

 

When is a service “professional” in nature?

Mr Robinson signed a statutory declaration supporting a progress payment to a contractor for an amount of $1,426,641.70 pursuant to a building and design contract. The developer refused to pay, alleging that certain subcontractors and materials suppliers had not been paid in full as at the date when the statutory declaration was made and, accordingly, the contractor had been overpaid. The developer argued that the statutory declaration recommending a progress payment had been made negligently and in misleading and deceptive circumstances. The contractor went into liquidation and the developer instituted proceedings against Robinson as the Chief Operating Officer of a building company that was a wholly owned subsidiary of the contractor. Robinson sought indemnity under their Director’s and Officer’s liability policy.

Chubb denied liability and argued that the rendering of the statutory declaration constituted ‘professional services’ which fell within the terms of their professional services exclusion. The policy provides the following clause:

“The company shall not be liable for loss in respect of any claim…

Professional Services (V)

Any actual or alleged act or omission, including but not limited to any error, misstatement, misleading statement, neglect or breach of duty committed, attempted or allegedly committed or attempted in the rendering of, or actual or alleged failure to render any professional services to a third party.”

 

In the court of first instance, it was held that the conduct of making a statutory declaration by a construction project manager was not a ‘professional service’ in itself and such an act was not excluded from Chubb’s D&O policy. The court drew a distinction between the professional preparation of building plans and the routine administrative task of providing information in relation to a progress payment that did not require any professional assessment.

 

 

Court Ruling on Appeal

On appeal, Chubb argued that the primary judge took an “unduly narrow view of the meaning of the professional services exclusion clause”, citing the need to characterise the overall activity in the context of which the breach occurs, rather than concentrating on the specific task giving rise to the liability.

The full Federal Court disagreed with Chubb, stating that “we do not consider that the making of the Statutory Declaration [request for payment] by Mr Robinson and him authorising it to be submitted to St Kilda constituted the rendering of any services to St Kilda either by Reid or by Mr Robinson…those acts amounted to nothing more than the routine compilation of factual material in order to secure a contractual payment”.

The full court also accorded with the view of the primary judge, who ruled that:

“When the policy was issued, Reed [the company that employed Robinson] was, to the knowledge of Chubb, engaged in the business of building and construction. This business was carried on by the Directors, Offices and Employees of Reed. When the insuring clause of the D & O Policy insured “persons acting in their capacity as directors, officers or employees of Reed, the D & O policy was necessarily referring to Directors, Officers or Employees engaged in activities comprising or supporting the delivery of building and construction services by Reid. The D & O Policy was therefore intended to insure against the risks associated with the performance of those activities

 

Conclusion

The full Federal Court observed that the obvious purpose of the professional services exclusion is to exclude activities that are truly professional in nature, such as architectural design, engineering, surveying and quantity surveying. The clause was not intended to apply to the routine activities of a company or its officers or employees, such as the provision of information in support of its payment claims under a design and construct contract.

Of course, as the court remarked, each policy and set of circumstances may give rise to differing opinions, principles of construction and ultimately, conclusions.

This will not be the last judicial pronouncement on this topical issue and Chubb themselves may well elect to once again appeal this decision.Law Judge Gavel And Legality Symbol

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Understanding customer goods cover under a first party policy.

Turn Knowledge into PowerI received a phone call asking me to explain why anyone would insure customer’s goods under a fire or ISR policy and not simply rely on the public liability section of a business pack or a standalone liability policy.

When one party, say an insured, is holding for some reason the property of another. This could be goods sold but not delivered, goods on consignment, there is a situation known in legal terms as ‘bailment’.

This may involve a written contract, which sets out who is responsible for insurance, but more often than not there is no contract in place.

In simplest terms, the bailor entrusts the possession of the good or property to another individual known as the bailee.

In such situations there is not strict liability. It does not normally require the bailee to have an armed guard on the property with a machine gun to stop burglars in one hand and a fire extinguisher in the other to protect it against fire.

What the bailee has to do is to take reasonable care of the property in their possession.

This can become quite a complex area because what would be reasonable to protect say a neighbours aluminum ladder would be completely different to a jeweller entrusted with a clients multi-million dollar diamond ring. The big difference between bailment and say the tort of negligence is the onus of proof.

In a normal negligence situation the agreed party has to show that the other party owed them a duty of care, that they breached that duty of care and as a result of that breach, they have suffered loss, injury or damage.

In the case of bailment, the bailor simply asks for their goods back and it is up to the bailee to demonstrate to the satisfaction of the court that they have taken reasonable care. If they fail to do so then they would be held responsible for the property.

Turning now to the insurance implications, having a public liability policy is one thing. There are two issues to consider, firstly, the insured has to have been found to be negligent for the policy to be triggered. The public liability policy would normally provide defense costs to the insured, to defend any action brought against them where the insurer felt that there was no negligence on the part of their client the insured. Another issue is that typically policies have low limits for care, custody and control. These often can be negotiated higher with the underwriter, but the limits can range from $50,000 to $250,000 or even higher as a standard cover. This may not be adequate for all clients.

A matrix illustrating correlation and connection between good cu

In some cases, an insured who wishes to protect their brand elects to insure the customers goods under a first party policy which typically provides cover for this from the insured perils covered by the policy. The cover under most fire policies is limited to the property of customers which are otherwise not insured. The reason for this is that the ISR or property insurer covering the bailor does not want to have the situation of dual insurance which could in some industries involve hundreds or even thousands of customers. This would be a nightmare to administer.

The cover is really designed to protect the brand of the insured and to allow them to reimburse their clients for lost property which may be lost or damaged as a result of an insured peril but where the insured has no legal liability but rather a moral obligation or a commercial relationship with the client such that he does not want to upset them to the point where he could lose them and there by damage the business in the long term of permanently. I regularly recommend that an insured have this form of cover and a reasonable example was for a panel beater. He felt that he not need the cover as he only did insurance work and all the vehicles in his custody/control would have been insured by the customers insurer and he felt, as did his broker that the insurer’s involved  would understand the rules of bailment and would only ‘come after him’ if he was negligent and therefore could rely on their liability policy.

Knowing the panel beating industry as I do, I realise that quite often parts are moved from the vehicle, such as wheels, bonnets, doors etc for repair and whilst they are no longer fitted to the vehicle they are suddenly not insured by the motor vehicle policy. Having $100,000 cover for customers goods not otherwise insured protects the insured and his customers from the messy situation where parts removed from the vehicle would not be insured by the motor policy. His taken out of the cover, provides protection to his brand and to his customers for their property whilst it is temporarily removed from the vehicle.

Another reason why insuring property under a first party policy and not a third party policy is that it can supplement the care, custody and control limit under a public liability policy, but it must be remembered that typically a public liability policy would cover a wider range of circumstances giving rise to loss or damage, and could in some cases cover the consequential loss as a result of the property but this is a subject for a separate post.

If you have any further questions on this subject or comments to add please do so in the comment box below and remember to hit the “ask me a question” button should you have any questions on insurance or risk management.

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