Baby Wipes: not so flushable!

Here are some wipes that clogged pipework and caused an overflow situation. You can see there is no sign of them breaking down. From my article of 25 July 2017.

Back on 25 July last year I posted an article about sewers being blocked as a result of baby wipes being flushed down the toilet.

I would like to think someone of authority reads my blogs and actions results, in any event I read with interest that the maker of White King “flushable” wet wipes, Pental Limited (“Pental”), has been fined $700,000 for making false and misleading claims about the flushable properties of their wipes.

In the report it stated that in addition to marketing the wipes between 2011 and 2016 as “flushable”, Pental’s packaging and promotional materials included statements such as, “Simply wipe over the hard surface of the toilet and just flush away”, and “White King toilet wipes are made from a specially designed material, which will disintegrate in the sewage system when flushed, just like toilet paper”.

In the hearing, the company admitted this was not the case. “The court’s decision shows that businesses face serious consequences if they make false or misleading statements about the nature of their products,” ACCC Commissioner Sarah Court said in a statement on the subject.

Despite public awareness campaigns by water authorities to only flush the “three Ps — pee, poo and paper”, people weren’t getting the message, largely due to the misleading packaging. The result here and subsequent publicity will hopefully help get the 3 P message across.

This is yet another in a run of articles where I have been stressing the need for product recall insurance and also for companies to act honestly or they will face reputation damage and increasingly often statutory fines and penalties.

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Meth Labs pose an additional risk for Property Owners and Real Estate Agents

A staggering number of rented properties in Australia and New Zealand are being used for the illegal manufacture of the drug Methamphetamine turning the home into a clandestine Meth Lab.

The question then arises what steps are reasonable for a property owner and or their real estate agents to ensure the property is free from any contaminate left by such an operation. Some matters It is not always possible to see physical evidence during a routine property inspection.

Is it still reasonable to carry out a physical inspection alone or is it now prudent to carry out a test every time a tenant exits a property before a new tenant is allowed in. Is a home test available from some pharmacies enough? or should an expert in testing for the residue of a Meth Lab be engaged?

Then, of course, there is the question of insurance. Just looking at the Real Estate Agent for a minute, a large number of Professional Indemnity Policies exclude losses arising from contamination. You need to check for any endorsements added to the schedule that may take away the cover that appears to be covered in the policy itself.

I therefore urge insurance brokers to check the policies and schedules they have with their real estate clients and offer such clients to determine if this is an exclusion or not. Do not forget that you can always use the ‘Search by Product Feature” option in LMI PolicyComparison.com for either the Australian or New Zealand policies.

To learn more about the risk caused by Meth Labs please check out Steve Manning’s special report on his Insurance Bites YouTube channel. I enclose a link here for your convenience.

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Self driving cars ARE the future.

As has been reported in the news today, Uber has suspended its self driving car testing after a pedestrian was hit and killed in the state of Arizona, United States.

I said in a 2016 blog and I still maintain that, there is no doubt there will be accidents and deaths as the technology is developed, but there is already clear evidence that self driving cars are becoming more and more safe and if you consider the number of miles that have already been driven by self driving vehicles and the fact that, to my knowledge, only two people have died during this entire period, I do hope that lessons will be learned from this tragic death, but the development will continue for the greater good of us all. 

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Phones and driving do not mix

Over the past month, 3 relatives and friends have been involved in motor vehicle accidents where at least one of the drivers has admitted to texting or doing emails while driving.

As well, there was the tragic accident involving two police officers who were severely injured whilst setting up a random breath testing station in Sydney. Another case in the last month where the driver admitted to being distracted by their phone.

This is a serious problem that is confronting society and the insurance industry and I support the decision by more and more underwriters to include an exclusion in their policy, giving them the ability to deny liability in the event that the insured driver was texting whilst driving and the accident occurred.

Clearly the police alone cannot address this situation, which to my mind, is only becoming worse.

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When is it time to stop pretending to care about customers and actually start?

I reported on two claims recently which were completely and utterly off the rails. The first being a home where this would be the 4th Christmas the Insured would be out of their home despite having their insurers top of the range product. It was a bush fire situation and there was no suspicion of arson, it was just a case of the panel beater builders completely letting the Insured down. After 15 months of trying, we finally got a common-sense solution, but it has now been 6 weeks that the release has been stuck in legal. How to draft a release was one of the first things I learnt as a claims officer when I was 17 years old and I cannot understand how a claim that has been so terrible handled is dragged on so that it cannot be resolved before Christmas number 4.

I was equally dismayed this morning to see a comment in The Age (21st December 2017) where an Insured has said

“The insurance companies are hopeless I won’t use them, I’ll just try and sell these”

This is a response to the recent hail storm we had in Melbourne.

It is comments like these and the negative feedback from the Insured in the claims that I wrote about recently, which they are saying to their friends and relatives, which caused the great doubt of trust in our industry. An industry which has as its core principles, Utmost Good Faith.

If we don’t address this situation we will suffer as an industry in the long term.

Source: The Age Newspaper, Melbourne, 21 December 2017

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Are we just giving lip service to the customer experience?

I attended an insurance breakfast last week and heard a number of people talk about the customer experience. I thought I would share just two claims that have crossed my desk.

Yesterday, one of the LMI team attempted to report a landlord claim on behalf of a family who have lost a loved one. He thought he was speaking with the insurer but it appears that it was a joint number of the international insurance broker and the insurer. On the one hand, the person taking the call asked the full name of our team member, the name of our company and then sought to get the date of birth of LMI team member. This is after refusing to provide his full name to us for our records. All we know is that it is Tom.

Clearly, the person would not allow us to report the claim but insisted that one of the executors do it. The executor thought this was a complete waste of time when he had provided authority to us to act on their behalf and he was also put through the same experience. The executor, concerned of identity theft, refused to provide his date of birth, he knew neither his sister’s broker nor the insurer would have his date of birth to check against anywhere. He too could not believe that despite asking all this information Wayne from the insurance company would not provide his surname so that he had a record of who he was talking to. He hung up in disgust.

Attempt three, the executor emailed the notification of the claim through to the insurer, only to have someone from the Philippines ring our office asking for “Wayne”. Our office was not permitted to report the claim, Wayne was not the executor but the second claims officer spoken. To my knowledge the claim has still not been set  up, none of us know a claim number nor if an adjuster is to be appointed. All I know is that any insurance, both personal and business, the executor has with that insurer will be reviewed on renewal, and to be fair so it ought to be.

Not for the first time since it was announced has an insured said to me, a full enquiry into the general insurance industry cannot come soon enough.

I try to defend our industry but how do I justify this stupidity.

In another example, a long standing client has been financing a personal loan of $500,000 to have their home fixed. The Insured has invoices for all trades totalling over $400,000 and we had a test quote from a builder who we know well and has done a thorough scope of works which has come in higher. The issue is the cash settlement offer is around $250,000, naturally the Insured will not accept it.

While this goes through the disputes process it means the client has had to find the extra funds to meet the repayments which means no treats, no holidays, no nothing. There is no doubt in my mind that what has happened is that a builder who knows they will never have to do the repairs and is on the insurers panel has provided an unrealistically cheap price to win favour with the insurer and the insurer are trying to force the client into accepting a low ball offer. This insured will not do so and will tough it out and again is anxious to make a submission to the enquiry.

Here I think it is down the actions of one person within the insurance company who appears from our side not to be treating clients close to fairly.

Whether the inquiry goes to this level is unlikely but we ought not be surprised if we continue to fail Insured’s when they need us that we will be faced with enquirers and greater regulation.

Addendum

Within minutes of posting this I received the following email which I have since received the okay to publish without any names.

Confidential

Hi Allan,

That is just disgusting.

I also happen to be [X]’s Claims Manager as well as running my own book as an Account Manager.

Confidentially I can tell you that no less than 6 times in the last 2 months I have had the identical ridiculous situation with [Y] of all Insurers.

3 claims were landlords. 3 claims were motor vehicle.

Again; the attitude displayed by the person on the other end of the line was nothing short of arrogant…and again no names were forthcoming from them.

I was a little sarcastic a couple of times, & mentioned that my own personal details (DOB etc) were of no assistance or consequence to them.

What is frightening is that, if your issues were NOT with [Y], then are we facing an endemic problem starting to materialise across our whole industry??

It is just so disappointing.

Keep up your good work.

Cheers – [Z]

Sadly I had to write to [Z] that our experience was not with the insurer he named! Clearly this is more wide spread than I appreciated. Why are they collecting all these dates of birth when the risk of cyber attacks is on the rise and at least with the claim we are dealing with inexperienced people cannot even read an email?

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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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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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NSW Government continue to bend the facts to hide their ineptitude.

Like all rate payers in New South Wales, I received this (image) flyer from the New South Wales Government on the emergency services levy.

I cannot accept that deferring the levy is going to help those that are currently bearing the cost of funding the fire and emergency services.

Fact 1: everyone in New South Wales benefits from having an efficient, well funded, well trained and equipped fire and emergency services.

Fact 2: the men and women that do this work deserve our full support for doing some of the most dangerous and stressful work in our society to protect all of us and our property.

Fact 3: it is completely unfair that only a percentage of the community bear the bulk of the cost and not everyone.

Fact 4: by deferring the changes, it means that those that insure go back to bearing the brunt of funding the fire and emergency services.

Fact 5: this, in turn, means that to avoid paying the levy people do not insure or do not insure fully. Putting an even greater burden on the prudent and risk averse who insure fully.

Fact 6: Currently, the Fire and Emergency Services means that many insurance policies are 40% higher in New South Wales than say Victoria. If you add the triple taxation of Goods and Services Tax being imposed on the Fire and Emergency Services and then the State Government Stamp Duty on insurance premiums, Fire and Emergency Services Fees, and the GST component any fool can see the inequity of having the levy on any product or service.

Fact 7: Every single study on Fire and Emergency Services shows that the fairest way for the community to fund the service is to have as broad a tax base as possible. This is property rates where everyone pays, whether you are a tenant or an owner occupier.

Fact 8: In 2012, the New South Wales Government issued a White Paper and called for input from the community on moving the levy away from insurance, rightly pointing out that it was inequitable in the current form. This means the NSW government have had 5 years to get this right as well as the benefit of consulting with all the other mainland states who successfully made the transition from insurance to property rates.

Armed with these facts, I am sure that you will agree with me that this is a monumental and inexcusable balls up by the New South Wales government.

I am pleased to see the issue is getting some time in the Sydney Morning Herald  which sheds more facts on the waste involved here and how the new levy was so wrongly calculated. For a home owner who fully insures it should logically have gone down with the broader tax base.

We cannot put the toothpaste back in the tube but what we need is some honesty on the part of the Government that they and only they got it wrong and secondly an honest time line as to when the reforms will be implemented.

My guess is that it is in the too hard basket for this government, that is, it is beyond their ability and that we may be stuck with it for another generation.

Of course, this is not the only issue this government has failed us on. The water issue from the Murray Darling is a complete story of failure in itself.

We all deserve better!

 

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Blocked sewage pipes – the curse of the baby wipes

Here as some wipes that clogged pipework and caused an overflow situation. You can see there is no sign of them breaking down.

Just one of the many brands of baby wipes on the market that may cause a problem if not disposed of correctly.

LMI Claims have seen a number of water damage claims arise due to blocked pipes. While tree roots used to be the most common cause, the cause now is often baby wipes.

Most are not biodegradable and therefore not suitable for flushing down the toilet.

We have even seen the ones that claim to be flush-able causing problems.

With an overflow from sewage it is not a simple mop up and move on, especially if carpets or other soft furnishings are involved.

Following the old adage that prevention is better than cure, I hope this short post stops this from occurring at your home or place of work.

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