California wild fires

In what is the end of the Northern Hemisphere’s summer it is terrible to see the impact in areas of California, including the Napa Valley, as well as East of Los Angeles Metropolitan area, being affected by bush fires.

The full details of the catastrophe are still coming in, but the early reports indicate that over 1000 structures have burned with 1000’s more under threat. Reports so far put the death toll at 13.

The cause of this fires is that it has been the especially dry conditions, similar to what we have experienced for much of our winter here in Australia, a long with strong winds. Australia is heading for another hot summer, and it is a reminder to any of us who live in bush fire areas to carry out a risk management audit of their property and review their evacuation procedures.

PHOTO: Wildfires whipped by powerful winds have swept through northern California. (AP: Jeff Gritchen/The Orange County Register)

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I cannot understanding headlines like this..

For the past month I have been working over in the United States as LMI launches products such as our Business Income (BI) calculator into this market.

While there, hurricanes hit in Texas and Florida and it was heartbreaking to me to read that people were not fully insured for such events which are not a case of: ‘if it happens’, but rather: ‘when it happens’.

While an enormous amount of money has been collected for Texas it will come no where near the total cost of the damage.

Flood is a major problem following any major storm, let alone hurricanes, typhoons or cyclones.

With the number of major storm events that the US has suffered over the years, and the soft insurance market, I simply cannot understand why people thought they could take the risk.

I did hear some say they could not afford insurance, but the obvious question is now your home or business is destroyed, how can you afford not to have it!

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Whinge or fix it: that is the question!

I wrote at the time how disappointed I was that the Federal Government only earmarked a token $26.1 million towards disaster mitigation for the Federal Budget in 2017-2018.  (To get the benefit the states have to match this dollar for dollar).

At the same time Federal and State politicians are complaining about the high cost of insurance.

Rather than genuinely address the problem, the insurance industry is again being demonised with the Federal Government announcing in the same budget that $7.9 million will be spent over 4 years to enable the Australian Competition and Consumer Commission (ACCC) to monitor and report on prices, costs and profits in the northern Australia insurance market. This is despite the fact the Auditor General’s reported stating that insurance in Northern Australia has been historically under priced. I would argue that this $7.9 million would be better spent in disaster mitigation albeit a drop in the bucket of what is really needed to protect our communities and economy, not to mention individual households and businesses. 

Parking one of the major issues, that being the high level of government taxation on insurance for a moment. But before I do, I did hear that President Trump is planning a trip to New South Wales. His logic is that it is the only state in the world where the leader is more incompetent than he is proving to be. At least he could get the Emergency Service Levy right! – This of course could all be “fake” news.

Anyway, moving on, let us compare Australia’s spend with say what Canada invests in their Disaster Mitigation and Adaptation Fund.

While we plan on spending $26.1 million they plan on spending $2,000 million. That is Canada is spending 76.63 times as much! As a graph, it looks like this!

Yes they are marginally bigger in land mass:

and yes they have about 1/2 as many people again

 

Joseph de Maistre wrote: Every nation gets the government it deserves.  I disagree. Australia deserves better!

Perhaps we could reinstate 457 visas specifically for Canadian politicians to come and show us how to run a government.

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Does the colour of the Metropolitan Fire Brigade Helmets signal more take overs?

I noticed that the spokesperson for the Melbourne Metropolitan Fire Brigade (“MFB”) was wearing a blue helmet and the thought crossed my mind that the organisation has more on their mind than just taking over sections of the Country Fire Brigade (“CFA”).

Perhaps, the long term aim is for it to become the Metropolitan Fire Brigade and Police Force!

I am just joking of course, although the thought did really cross my mind, which is more a reflection on how my mind works and the fall out that the Andrew’s Government has created in the fire services space of late, rather than the sterling work of our fire fighters.

For the record, the blue helmet on an MFB or CFA officer signifies he or she is a Station Officer as per the chart below.

Source MFBkidzone.com.au

 

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Profiting at other people’s expense

The Courier Mail reported on builders massively overcharging victims of Cyclone Debbie and the floods that followed further south. Click here for the article.

This sadly occurs after every natural disaster to some extent and while some as the Insurance Council of Australia state is due to demand surge, some clearly is a giant rip off.

Every trained loss adjuster and claims preparer will be carefully reviewing the scope of works and the costings to ensure they remain fair and reasonable to ensure that insurance remains sustainable in areas likely to be effected by natural disasters. This does take a bit of time but it is necessary for the good of the entire community.

Typically we find that the local builders who wish to remain in the area after the event treat their communities better than the fly by nighters who move in for a quick buck and leave with full wallets and often dodgy work.

The approach LMI is taking wherever we can is to use local builders known to the insured or the brokers. We are finding we are getting better service, better quality and better pricing.

All of us in the insurance industry have a roll to pay in this issue and weed out and black ball the crooks who are preying on people while in a vulnerable state. At the end of the day we will all be paying for it with higher premiums while those in high risk areas may find it difficult to get insurance at all. View full post…

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Finally something a government has done that actually makes sense!

It was really great to read that the Victorian Government has removed stamp duty from insurance on farm policies. Well done!

This on top of the removal of Fire Services Levy is a great initiative and makes the vital protection provided by insurance affordable by a segment of our economy who can least afford not to have it.

Now if only other governments would show as much leadership and good sense. Three come immediately to mind that should follow suit.

Home and business owners in North Queensland are struggling due to the high cost of insurance yet, after Cyclone Yasi and the Brisbane Foods in 2011 the Queensland State Government increased stamp duty on insurance from 9% to 10% (a full 1% increase at a time when a government with even 1 eye open should have seen the importance of business and home owners to be fully insured.

Thorough research by Federal Government Departments has shown that the pricing of insurance in North Queensland is fairly priced on the risk being transferred to insurers. Thank goodness those advocating for a Mutual did not succeed as Tropical Cyclone Debbie would have probably wiped out the fund, everyone’s investment and left many people uninsured.

Let’s save all the money on enquiries and address the elephant in the room. If the Queensland Government followed the lead of Victoria and removed Stamp Duty followed by the Federal Government reducing the Terrorism Levy for those in North Queensland the cost of insurance would fall by more than 10%!

The decision by the New Zealand Government to drastically increase the cost of insurance due to changes to the Fire Service Levy defy understanding for they, like the Queensland Government, should understand the value to their economy of everyone being well insured.

The third Government in the trio is the Tasmanian government, who currently holds the record of taxing their business owners the most through insurance. This of course is a disincentive to development.

Like people around the world, I have become greatly disillusioned with the lack of statesmanship in our politicians where it is power at all cost with more than just a little bit of ego gone mad to boot. It is in this frame of mind that I see some hope and refuse to believe my inner doubt that the decision was made to buy votes and not protect the State’s economy. The reality is what ever the reason, I am extremely pleased. Well done Victoria.

I witness far too often the heartbreak and financial stress that home and business owners face when they are not fully insured and so I urge Victorian’s benefiting from this change to take this valuable opportunity to review your insurance and make sure you are fully protected to make the most of your Government’s wise change of policy.

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LMI Mining attending claims due to Cyclone Debbie

There has been a good deal of news regarding the effect of Cyclone Debbie on the supply of coal to the world. We at LMI have been keeping a close eye on this and assisting many mining clients to calculate their business interruption losses as a result of the damage.

What many readers do not know, is that LMI have a specialist mining division that specialises in mining claims, risk assessment, policy and endorsement drafting and review.

Headed by Murray Rowley, with 50 years experience in mining losses, and backed by a team of on staff qualified mining engineers and accountants, the team are handling several losses arising from the closure of the rail lines in Queensland due to damage that occurred during Cyclone Debbie.

I myself, am proud to be part of this team, having handled mining losses since the mid 1980’s including some of the world’s largest claims. My MBA Thesis was on the Closure of the Bougainville Mine. My experience, however, is far outweighed by Murray’s.

Mining, perhaps more than any 0ther industry, requires a great deal of knowledge and experience. There is often a great deal of money at stake and it is certainly not an area for the generalist or amateur. While Murray and his team are based in Queensland, he and his team have and continue to handle losses all around the world due to their extensive expertise in this industry.

LMI Mining is just one of the specialist divisions we have at LMI that provide expertise for specific industries such as tourism, packaging, manufacturing, energy risks, motor trade, crop, retail, and property management.

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Beware the sharks looking to make a quick buck following Debbie

Source: Queensland Fire and Emergency Services / Twitter

One issue we face after every catastrophe event is the number of get rich quick merchants that jump in and often exasperate the hardship being experienced by insureds.

In the past this has been mainly builders but as we saw in New Zealand after their earthquake, this is changing to public adjusters.

Over the next few days Queensland and Northern New South Wales will see the arrival of at least one team of ambulance chasing public adjusters seeking to sign up people who have suffered damage from Cyclone Debbie and the subsequent flooding to handle their claim. They typically work on a percentage of the amount recovered.

Insurers and Loss Adjusters have tried bringing in US based Loss Adjusters following Cyclones Larry and Yasi and it was a complete failure. Virtually every claim had to be reassessed.

In the main these adjusters were great people but the issue is US policies are significantly different to those in Australia. US based claims people, even if experienced and well trained in interpreting policies  are not trained on the Australian Insurance Contracts Act nor the Insurance Council’s Code of Practice.

Many home and business owners do need real help after a loss but it must be meaningful help from someone who knows our Australian policies, our law -and practice and who is a good builder, restoration company etc and who is not.

These guys talk a good talk but speak with a local broker or loss adjuster from North Queensland who had to pick up the pieces after Yasi to confirm what I am saying.

Remember the last lot were Loss Adjusters under the guidance of Australian insurers and Adjusting houses.

Who is going to watch and guide public adjusters coming in on a tourist visa to make a quick buck. Hopefully our Border Patrol officers will sort them out now President Trump has torn up the Free Trade Agreement.

Having said all of this, just because someone has a North American accent or any other accent does not mean the devil. Loss Adjusters and Claims Preparers, brokers originally from Canada, the United States or anywhere else who are employed by Australian firms, have lived here for a while and have been trained in the areas I discussed such as our Insurance a Contracts Act are fine. Some are great.

It is the fly by nighters that I am worried about. It is stressful enough going through a Cyclone I do not want the claim process to add to the stress.

Of course we have some home grown sharks as well. Already we are hearing advertisements on the radio about public adjusters. Having worked in claims in Queesland for over 40 years and have never heard their name let alone seen their work I worry.

Again, I am not saying anyone is dishonest or in experienced. Handling claims, particualrly business interruption claims requires training, and experience, and I urge everyone to please check their insurance qualifications, their experience in handling insurance claims, ask for testimonials and ring previous customers. Do not just fall for the retoric of what President Trump would call “Fake Experts”

Reality check: geneuine experts and trades v the sharks

What I will say is that as a business interruption specialist, I have been called in to help set the sum insured and or calculate losses for some of Australia’s leading accounting firms. I am Fellow of the CPA professoinal accounting body but I do not attempt to do my own tax or superannuation. I leave this to the experts and do not want to be training someone at my expense. The same goes for business interrutpion claims. They can be extremely complex and business owners and those inexperienced in the product do not know what they do not know resulting in either claims payments being delayed unnecesarily and or valid items being missed.

The same warning goes for builders, restorers, and other trades. Make sure that they are registered to work in Queensland, have the right insurances. experience and intergrity.

The majority of full time professionals in the insurance industry want Insured’s to get a fair deal and good advice when you or your clients need it most.

For some time I have been pushing to have anyone handling claims in this country needs to be licensed after adequate training. Those that advise at the time insurance is sold are required to have an Australian Financial Services Licence. Why not those giving advice at claims time?

For claims preparation, a good place to start is the International Institute of Claims Preparers website where all members have been trained on general insurance law and practice and the 6 principles, most importantly the principle of utmost good faith, have been tested, approved and commit to continuing professional development and ethical behaviour.

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Recap of week one.

LMI activated its Emergency Response plan on Thursday 30 March starting first in Mackay, Proserpine, Bowen and surrounds and as we were able to gain access, extended this into the Whitsundays. Other teams looked after claims in South East Queensland, Murwillumbah and Lismore.

Within this first 10 days, we have arranged for progress payments for close to $40 millions to be made to assist business recovery. This of course, makes a huge difference to those businesses allowing them to engage trades, replace stock and recover that much quicker. But more it helps the suppliers, tradespeople etc asked to step in and do the rebuild etc. It helps the whole community.

I make this point in an effort to show the public that with the right correct adviser/broker arranging the correct coverage with a quality insurer, followed up when it really matters with good claims service, insurance is an invaluable service protecting you from financial loss.

We do not hear about the huge effort, insurers, their claims teams, loss adjusters, and claims preparers put in after every such event to help our customers and communities.

Of course, we see the horror stories in all the regions we are responding to, where at the time it was considered too high a premium and now having taken the risk of “it will never happen to me”, business owners are now faced with significant uninsured losses both in property damage and business interruption.

The reality is no matter how skilled and willing to help the LMI team are, we cannot put the toothpaste back in the tube. If the cover is not there, or is not adequate then we cannot wave a magic wand and fix it.

Even if your business was not affected by the event, please remember this at your next renewal. Make sure that your assets, business income and liabilities are insured adequately just in case it is your turn next time.

I end on a positive note. One of our clients we visited had felt overwhelmed by the whole event and was upset that no money was offered by the loss adjuster during his first visit. The Insured sent a text to her broker who in turn rang the Insured straight away. She rang me and Rian Jenkinson our State Manager in Queensland acting as a Claims Preparer got straight onto it and with the help of the claims team and the loss adjuster who certainly did not mean to cause any stress arranged a progress payment. The insurer sent out their senior property claims manager who assisted by arranging a second payment at the end of the week.

It does make such a difference to have a good insurer on board.

Insurance is not just about $, it is about people.

Despite his very hectic workload, Rian dropped in and picked up some flowers and a bottle of wine for the Insured and her husband from their broker, he and I to put a smile back on their face and let them know they were not alone at this time.

This small gesture had a really marked effect as we now focus and getting this business back up and running “double quick time”.

Thanks to all the insurers that helped us help your clients, to the brokers who have entrusted your client’s claims with us,  and a special well done to Rian for going the extra mile.

 

 

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Actions of the sea – Cyclone Debbie continues her path of destruction

Photo/Martin Sykes found on: http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11832871

I have posted recently about the issue of actions of the sea, high water, flood and erosions, and with Ex-cyclone Debbie now finishing her path, leaving a trail of destruction in her wake we readdress this issue.

We look at the damage that has occurred and again we face a similar issue to that in Australia, in New Zealand now, where a home has their pool hanging OVER the cliff’s edge due to the land falling away.

See: https://www.tvnz.co.nz/one-news/new-zealand/raw-drone-footage-shows-auckland-homes-infinity-pool-hanging-off-cliff-after-backyards-massive-slip

When any of us purchase, or rent for that matter, a property, we have to make sure that the asset does not suddenly turn into a massive liability. Some risks are insurable, others, if they occur to frequently such as flood in some places or if they are deemed inevitable such as erosion, they may well not be.

 

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