New Zealand and Tasmania still out of step when it comes to Fire Service Levy

fsl taxI share the disappointment of the Insurance Council of New Zealand (ICNZ) that the New Zealand government continues to place the burden of funding the fire services in New Zealand on those that are risk adverse and prudent enough to insure. The trouble continues to be that there are a number businesses and individuals that elect not to insure whether it be their car, home or business and they get a free ride receiving exactly the same service as those that insure.

 

In most jurisdictions around the world, governments have realised that funding fire services through the insurance industry is a disincentive to full insurance which has an adverse effect on individuals, employees, communities and the economy.

In a country such as New Zealand that suffer significant natural disasters, it is in the governments and every single individuals interest for the community to be fully insured and removing the unfair tax on insurance is a start towards this important end goal.

Read Me View comments

Joint Statement on What Constitutes a Repair Under the Earthquake Commission Policy – now released

http://www.dreamstime.com/royalty-free-stock-photo-earthquake-epicenter-image10600905I read with the interest the joint statement between the Earthquake Commission and the EQC Action Group with the main item, which has hopefully now been resolved, is what constitutes reinstatement.

The agreement confirms that reinstatement is to a condition ‘as new’ and not the pre-earthquake condition of the property.

This issue, which I thought had been resolved with the introduction of the reinstatement or replacement memorandum over 40 years ago has been tested even here in Australia of late with many Insurers arguing that some depreciation allowance should be made for the age and condition of the damaged property. A common example is offering 50% on a rusted roof that has been damaged by a hail storm.

Australian policies in particular are quite clear in that they cover to a condition as new with no allowance for its prior age or condition.

I call this attempt to adjust a claim in this way ‘underwriting after the event’.
If the policy is sold on a new for old or reinstatement or replacement basis in insurance then the claim ought to be settled in the court within the terms of the policy which in turn has been priced on this basis and the client having paid the premium.

I’m pleased to see this agreement has been reached without the need to go to court, and I applaud both parties for resolving the matter as they did.

 

Read Me 1

Carter v Boehm – Utmost Good Faith 250th Anniversary Conference


Fort Marlborough Akadika Photography Bengkulu
Carter v Boehm 250th Anniversary’ Conference

Bengkulu, Sumatra on the weekend of 1 and 2 October 2016

This year is the 250th anniversary of Lord Mansfield’s seminal judgment in Carter v Boehm,[1] delivered in London at Easter time in 1766.  As Cory J remarked in the Canadian case Coronation Insurance Co v Taku Air Transport Ltd,[2] Carter v Boehm was decided when:

… the world was a little different. It was a simpler if not, in some respects, a gentler place.  The business of insurance was very different.  Then policies of insurance were issued most frequently to cover a vessel, or its cargo.  The contract was issued for the benefit of the insured.  It was the owner as insured who would have the detailed knowledge of the vessel or its cargo.  No one would know better than the owner of the incipient dry rot or the tendency of the ship to take on water in a fresh breeze.  This was knowledge that the insurance company could not readily attain and it was appropriate to relieve the insurer of all responsibility for obtaining it.  That principle held true in 1766.  It can hold true today where the policy is for the exclusive benefit of the insured.

The insurance issues in Carter v Boehm arose out of a French attack on Fort Marlborough, a British trading post in Bengkulu (then known as ‘Benkulen’ or ‘Bencoolen’), Sumatra in 1760.

The case of Carter v Boehm is particularly important to the Insurance industry as it was the landmark case driving the principle of Utmost Good Faith from Judge Mansfield, which today, is now a part of all insurance contracts. Because this is such a landmark ruling, someone equally as passionate on general insurance as myself, Greg Pynt and I are arranging a special one off conference at Fort Malborough.

As appears from the accompanying photograph, kindly supplied by Akadika Photography, Bengkulu, Fort Marlborough is presently in very good condition, thanks to restoration work completed by the Indonesian government in 1984.

Join us on our visit to Bengkulu City (population almost 400,000 people) on the weekend of 1 and 2 October this year.  The weekend will include presentations by qualified academics and others (including Professor Robin Pearson of the University of Hull) relevant to the legacy of Carter v Boehm each morning.  It will also include a guided tour of the Fort and perhaps visits in the afternoons to an active volcano, the tallest flower in the world, the largest flower in the world and other nearby attractions.

We expect to have a Registration brochure for the Conference later this month.  Logistics limit the Conference to 35 delegates.

This is a one-off visit to Conference in Bengkulu to acknowledge the origins of the arguably the most important case in the law of insurance.  Those behind the Conference will not financially profit by it. Anything over and above incurred costs will be donated to a worthy cause in Bengkulu, yet to be selected.

If you would like to register your interest in joining us in Bengkulu, please contact me on allan.manning@LMIGroup.com

You can also have a look at the event at : https://www.facebook.com/events/607291402759513/

 

[1] (1766) 3 Burr 1905; 97 ER 1162.

[2] [1991] 3 SCR 622.

Read Me View comments

Definition of Damage

bigstock--125509934

I received a question from a broker as follows:

“Hi Allan

Just a quickie – I have noticed that my existing cluster group policy for Unspecified Damage begins with the meaning as “…Damage caused by any Peril…”.

I think by adding the word Loss as well as Damage the client would receive an advantage?  Eg Loss and or Damage caused by any Peril.

Can you confirm your thoughts please? Kind Regards Jason” [Surname and email provided]

 

My reply to Jason:

Unspecified Damage is the modern and in my opinion, correct term for this sub-limit. It was previously known as accidental damage and in some cases specified damage. The use of these words contravenes the then Trade Practices Act.

Regarding the policy it is important to read it as a whole and not just in isolation. If we go back to the base wording, the heading of the Section 1 in the Mark IV is ‘Material Loss or Damage’ as is the case in the Mark V as well.

The Definition of Damage in ‘the indemnity’ section reads ‘In the event of any physical loss, destruction or damage (hereinafter Section 1 referred to as ‘damage’ with ‘damaged’ having a corresponding meaning) not otherwise excluded’.

This being the case I do not believe that adding the word ‘Loss’, a further time would add anything to the policy as the ‘indemnity provided is from loss arising from Damage with the cover provided by the Insurer then set out under the Basis of Settlement’.

What I would add is that it has never been an issue in any of the claims that I have been involved in, or any of the team at LMI for that matter.

I hope this explains it.

Regards

Allan

 

Read Me View comments

Have you ever had a claim paid on Spontaneous Combustion exclusion under the ISR?

I was asked a question by a broker as follows:

“Hi Alan, Having listened to you so many times  I was wondering and  would appreciate if you could advise if you have ever got a claim paid under the Spontaneous Combustion exclusion under the ISR and is it ok to assume that the first load spontaneously combusted and then the heat caused the others to follow, and only the first load would be not covered in the claim?

Thanks

Kind Regards” AJ [First and Last name and email provided]

 

I found this interesting and informative and thought I would share with you all.

 

“Good morning,

I can assure you that over the 45 odd years of doing claims I have certainly been involved in a number of claims that have originated with spontaneous combustion from oily rags to a raft of different grains, kernels and copra.

If all the stock was in one big pile then the entire pile of whatever caught fire spontaneously would be excluded. However, any silo or other property insured under the policy would be insured.

If on the other hand the stock was in several piles and only one spontaneously combusted and it spread from one stockpile to another or from one truck load to another, or one silo to another, then only the first one, that is the one that combusted, would be excluded.

I hope this explains the situation.

Regards

Allan”

 

Read Me View comments

“I wonder if it’s possible to have a love affair that lasts forever.” – Andy Warhol

New York City MOMA - New York City MOMA - Andy Warhol, Marilyn MI’m living proof that it is possible.

Forty five years ago I walked in and became a claims officer at General Accident Insurance in Brisbane, as my first full time  job. On that day I also met my now wife of 41 1/2 years.

All these years later I have an even greater love for this wonderful industry that continues to protect our insureds, communities and our economy but also for the great woman, Helen, that has supported me in my career, and still works with me in it, in what has proved to be the most interesting and challenging career I could have chosen.

One of the reasons I love insurance so much is that you never stop learning and every claim I am involved in I learn something new despite years or research and study. I encourage anyone that is thinking about joining the industry to get in and make the most of it. You will not be disappointed.

Read Me 1

What does the definition of Indemnity mean when it comes to buildings?

Structural Building DamageI read with interest the latest Insurance update from DLA Piper New Zealand. Crossley Gates and his team provide a very useful service to the industry with these updates. The interest to me on this matter was that the update suggests that in New Zealand it has been common practice for an Indemnity Value on a building to be set on the reduction of the market value before and after the date of the damage. 

This is not the common practice in Australia in my experience and the case of Brescia Furniture Pty Ltd v. QBE (Australia) Ltd [2007] NSWSC confirmed the position that where the property is not for sale, the true measure of indemnity is the value to the insured which is the replacement value of the building less an allowance for its age and condition. The position alters when the building was for sale at the time of the damage. In such a case the true measure of indemnity, which as we know is to put the insured back in the same position as nearest money will allow to the position they would have enjoyed but for the loss is the difference between the pre and post loss sale value. This can be complicated where there is a devaluation or increase in value of the land. For example the land value in a beautiful forested area may drop considerably after say a bush fire, while properties with a beautiful river view may again drop immediately following a serious flooding event. 

The third measure, which I’ve only had to use on rare occasions is the rentable value of the property. This is the measure of indemnity when, say a building is marked for demolition and the true measure of the value of the building is the net rentable income after allowances for agents fees, repairs and maintenance and the like, between the date of the damage and when the building was expected to be demolished.

I explore this in my book ‘Manning’s Six Principles of General Insurance – A Comprehensive Guide to Utmost Good Faith, Indemnity, Subrogation, Contribution, Insurable Interest & Proximate Cause’. To learn more about Manning’s Six Principles of General Insurance click here.

Yellow

Read Me View comments