Product Recalls Australia – 28 November 2017

This week’s product recalls includes the following:

catchoftheday.com.au Pty Ltd — Benefit Gimme Brow Volumiser Gel

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Toyota Motor Corporation Australia Limited — C-HR NGX10 & NGX50

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Toyota Motor Corporation Australia Limited — Tarago ACR50 & GSR50

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AGL Energy Services Pty Limited — Salzer DC LB232 (a.k.a. IPV40E & IPV40ES) isolator switches

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For more recalls please visit: https://www.productsafety.gov.au/recalls

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Australia’s failing infrastructure

Recently, I wrote about issues with electricity infrastructure not keeping up with development. The same issue is occurring with storm water drains.

Water damage arising from storms is one of the greatest causes of property insurance losses in Australia, so it should be of great concern to see that our councils and water authorities do not seem to be investing in the infrastructure to protect our homes and businesses.

There are three main issues. The first is councils should simply not allow developments in known flood zones.

The second is that they need to invest in upgrading the storm water systems if they are going to reap the reward of extra rates from new developments. In Camberwell, where our Melbourne office is located,  one development alone has two underground storm water pipes that are around 450mm in diameter, but the council drainage system that it will flow into is less than ¼ of that capacity.

Due to all the additional hard surfaces that are a direct result of turning homes on ¼ acre blocks with a yard into multistorey apartments that take up much of the block and what is left is concreted, means water that was previously soaking into the ground is now surface water, and the existing council drainage system simply cannot cope.

Add to this the fact that developers are not required to bund their construction sites to stop excavated soil and building materials such as sand, gravel etc from being washed into the drains. If they are required to do this, our local authority is not policing it. As well as the odd dodgy builder who just washes down concrete slurry in the roads and lanes, and of course, you get localised flooding.

It appears that the council has also reduced the clearing of the drains despite all the new development and this only compounds the problem. Even if it is the same frequency, it is not sufficient to deal with the extra debris the new developments have created.

As a result, several of our neighbours have had water inundation 5 times this year, when this did not occur in the past.

The trouble for business of course is that unlike residents we have no vote or say in local elections despite most of us spending more time in the electorate than at home and paying significantly more rates than an individual home owner.

Clearly the insurance industry needs to help the insuring public and start a discussion with local authorities in an effort to address this serious problem which is clearly only getting worse.

Alley way next to LMI Melbourne, where during a recent storm the water reached approximately 3 inches deep due to not draining properly.

Building site near our office demonstrating no bunding and the ability for the soil, sand and other materials to wash into the drainage system and block it.

 

 

Image demonstrating a large piece of concrete debris washed down from a building site blocking almost the entire drain which resulted in the alley flood.

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Learning from the past to protect against today’s hazards

During the very hot summer of 2008-2009, that included the Black Saturday bush fires, our Melbourne office was left without power due to both the fires and the inadequacy of an electrical sub-station across the road.

As it is imperative for us to provide our claims services during periods of natural catastrophe, so we are able to assist people in need we installed a backup generator in our building. Some within the business questioned the cost of installation and the ongoing maintenance, but I felt that as part of our risk management and business continuity management plan installing the generator was the way to go.

We have had reason to call on it only about 4 times until this year. Due to power outages, often associated with storms, it has meant that recently we have been able to maintain phone, email and web services at a time of high demand.

This week the generator has come into its own. With the apparent uncontrolled or at best inadequately proliferation of high rise developments in the area, now that Melbourne has had its first taste of summer, the infamous sub-station across the road caught fire and will not be replaced for at least a week from the time of failure. Whether the privatised carrier simply puts back the same size unit or upgrades it to cover the increased demand no one can advise us.

The apparent reason for the failure was that at after 5pm there was an electrical demand surge when everyone came home and turned on their air conditioners and the system could not cope.

In any event the ongoing outages of power to the area have not effected LMI due to our addressing the issue when it first arose nearly 9 years ago. The generator kicks in every time there is a black out or equally damaging brown out.

Of course, we are not the only business in Melbourne feeling the effect of the infrastructure not keeping pace with development. I heard on the radio this morning that homes and businesses in Blackburn and/or Box Hill have power outages. South Australia had their own issues recently.

Bearing in mind, this is only the start of summer, this issue is clearly not going to be an isolated case and all businesses are encouraged to revisit the business continuity plan and if they do not have one, consider creating one.

The issue of inadequate infrastructure is not just limited to electricity. Storm water and telecommunications are also proving inadequate and I will share examples of this issue in upcoming posts.

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Product Recalls Australia – 21 November 2017

This week’s product recalls includes the following:

For more information or to view all recalls, please visit: https://www.productsafety.gov.au/recalls

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Need a good MC?

A good MC can make or break a conference or event.

Over the past three years I have been very impressed with Nathan Strempel who has been a big help in taking the Territory Insurance Conference to the next level.

At this 3 day event he not only MC’s the conference itself but also the opening ceremony, the YIP’s function and the gala dinner. All of which has been handled most professionally.

So if any one is organising an event where they are after a great MC please consider Nathan.

More details can be found at http://www.closertalent.com.au/nathan-strempel

 

Nathan is a consummate professional who researches each and every job meticulously. His precision, attention to detail and quick thinking ensures the audience across all levels is engaged from start to finish and always keeps things moving smoothly to plan. As the organiser I was able to sit back, relax and enjoy the conference.
In 2015 Nathan delighted the NT Insurance Industry with an amazing Game of Thrones introduction. He returned by popular demand this year and had the crowd in stitches with his version of The Bachelor -‘The Insurer’. We’re already looking forward to what 2017 will bring…

There is no question who our MC will be next year – do yourself a favour and book Nathan Strempel as MC of your function, you will not be sorry!”

Northern Territory Insurance – 2016

 

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Cheapest is not always best – Lessons for procurement officers

I spend much of my time speaking at conferences for various industries, where I encourage the business owners not to purchase their business insurance on price, but to carefully consider how important their insurance program is and the protection that it offers.

Increasingly, over the last few years. I have been questioning the true value of a procurement officer, for regardless of what the tenders say, it seems to come solely down to price, without considering the true value that a good service provider to the insurer provides, nor the cost of what getting it wrong does to the average claims cost and potentially to the brand of the insurer and insurance in general.

I will give two examples to demonstrate what seems to be happening more and more.

The first involves a couple in their 70’s who have had their home destroyed during a bushfire over 4 years ago. Clearly, the builder that won the rebuild never expected to win the job and thought the matter would be cash settled. They were then horrified to find that they in fact had won the tender to rebuild. After 2 years, work had not started on the property and the Insured, naturally, complained. The builders found themselves busy at that time and engaged another building firm to do the work and it went along swimmingly until the first progress payment went in from the second builder to the first and they realised that they were going to lose more money in having someone else do the work than they themselves completing it. The first builder, original tender winner, dismissed the second builder and took the project on. Sadly, they did not start doing any work since the dismissal of the first builder, by which time I was then asked to get involved rather than the client go to the media.

I carried out an inspection of the property and then attempted to meet with the claims officer concerned to express some very valid concerns of the Insured and items that I had seen during my site visit. My first email was ignored, so I sent a follow up one setting out just some of the issues, three of which were:

  1. Between the second and first builder, the floor had been propped up in the centre of the home with nothing more than a piece of 19mm x 35mm pine framing. This may have been acceptable while the home was being built to floor level, but once the upper level was on it, the floor had bowed by at least 10mm and I was concerned that when the home was jacked up to be made level again, any works inside including plaster finishes, tiling etc may crack.
  2. The builder had held discussions with the Insured and it was agreed that the home would be rendered at the Insured’s expense. No credit however had been given for the fact that the builder would therefore be able to use seconds bricks rather than first quality as originally quoted/agreed.
  3. Because the home had been left without a roof covering for so long, there was mould clearly visible on the floor, framework and particularly between the floor plate and the floor.

I got a very disappointing reply back suggesting that to the untrained eye the timber prop may appear dangerous, but it wasn’t, and secondly that the bricks were not seconds but mixed, and thirdly they completely ignored the mould.

Ultimately, an engineer confirmed that not only was the timber ‘support’ dangerous as I predicted, but was so weak that it may have caused the entire home to collapse. The claim officer had also misunderstood the difference between seconds bricks, being that they were not first, and second hand bricks which means they came from another site. The day after they received my letter, the builder was advised and immediately sheared up all the framework, hiding the mould that I had pointed out, without treating it first. Because of the hype around mould at the time, coupled with the age of the Insured’s (I would remind you they are in their 70’s and the wife quite frail), I thought I would have it tested. I then received a note advising I had vandalised the home.

I took the entire issue to the national head of claims for that particular insurer and while someone with more experienced was appointed, it still took a full 15 months to get resolved with the insurer agreeing to cash settle the claim. The cost of the claim had blown out by several hundred thousand dollars, combined with the fact that they will be paying rent until they can get a new home built themselves.

Insurance should be there to help people in their time of need.

This was a completely innocent fire from the Insured’s perspective (it was clear it was from the bushfire) and they will have been without a home for coming up to their 4th Christmas. This is unacceptable in anyone’s language.

The second example, involves an insured who had water damage in their home. Rather than engaging a loss adjuster to oversee the claim, the insurer decided to save money and send out a restoration company. It took 8 days for the company to even attend site, and rather than take a detailed inventory, they simply packed everything up, put it into a shipping container and assured the Insured that it would be unpacked at their warehouse, separated between wet and dry and that the wet items would be cleaned carefully and sterilized.

6 months later, it was found that the items were still in the shipping container and a vast majority of the contents, even those that were not originally damaged by water, had become affected by moisture and mould etc. Some antique furniture which had been beautifully French polished had been stripped back and sprayed with a cheap lacquer. Here, the insurer is trying to distance themselves from their agents, which of course, is unconscionable. Here again, a claim has blown out dramatically due to poor service delivery.

These are just two claims that have come across my desk, and for every one that does, I question how many others are out there. In both of these cases, how many people have these insureds discussed and expressed their disappointment with the insurance industry and the particular brands involved. The first one I had to get LMI Legal involved to resolve, and it appears from the approach on the latest water damage case, I will have to do the same, for at this stage there still appears to be absolutely no empathy for the Insureds position whatsoever.

While I am annoyed with the claim process, I think it all starts at the procurement stage. Buying services is not like buying washing machines. If you have a highly competent professional who has studied, has years of experience, then of course their hourly rate is going to be slightly higher if they are honest and only charge the hours they work. The existing procurement process, appears to favour the shortcut takers, or those who cheat the hours. Either way, the insurer misses out on engaging the right person for the job.

What disappoints me, and I feel should be called out more is that despite this being a huge dispute, the Insured has not been given any advice of the internal complaints procedure, their rights with the Financial Ombudsmen Service (FOS) etc. This confirms one of the many examples I have that some insurers are able to obtain a better rating with FOS.

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Product Recalls Australia – 8th November 2017

This week’s product recalls includes the following:

1 NOV 2017

Marlee Watch Co — Children’s Timepiece Watches

For more product recalls please visit: https://www.productsafety.gov.au/recalls 

 

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Northern Territory Insurance Conference

Last week I had the pleasure of attending the Northern Territory Insurance Conference. The sole aim of this conference is to provide education for the Northern Territory Insurance Community with no charge for attendees. Big thank you and well for a seamless and professional conference organised by Young Insurance Professionals (YIPS), led by Katie Mc Gettigan and John Vanarey.

Special thanks also to the sponsors who make the whole thing possible. With the number of requests companies receive for donations each year this is certainly a great cause in assisting with educating our next generation of insurance professionals in the NT, which is so vital to the protection and success of our communities.

Congratulations to those winners at the event, listed below.

 

Claims Professional of the Year Award

Winner: Tim Graham, TIO

 

 

 

 

 

 

 

Service Provider Professional of the Year Award

Winner: Michael Buckley, M&J Builders

 

 

 

 

 

 

 

 

Senior Sales & Underwriting Professional of the Year Award

Winner: Michelle Johnson, Allianz

 

 

 

 

 

 

 

 

Senior Broker Professional of the Year Award

Winner: Stewart Cox, Gallaghers

 

 

 

 

 

 

 

 

Young Insurance Professional (Broker and Insurer) of the Year Award

Winner: Alana Brown, MGA

 

 

 

 

 

 

 

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