Looking for experienced policy drafters

Every part of LMI is growing and we are always on the look out for good people with technical skills in claims, underwriting and risk management.

One part of the organisation that continues to grow is our policy drafting area.  We have approached on a great many projects already this year.

The experts we are after include those with the skill and experience to draft wordings and or who are experts who can sign off on legal and compliance.

If you have the expertise and are looking for either project, part time or full time employment please send your CV through to me. Please advise the classes you are comfortable in and the time you are happy to commit to.

From our side, the existing team work in a collaborate supportive team environment added by the PolicyComparison, LMI Legal and LMI Claims teams.

My email is allan.manning@lmigroup.com. All applications will be treated with complete confidentiality.

 

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US Patents and Trademark Office grant LMI a Trade Mark

LMI Granted Trade Mark in the US

This year is rushing along and we at LMI are certainly not standing still. On top of launching LMI BASIC in the UK last month we are working to launch a new app later this week, an updated version of three of our major products in Australia, New Zealand and the UK AND launch US versions of  LMI BIcalculator.com and LMI RiskCoach next month.

As the US do things slightly different to the rest of the English speaking world when it comes to insurance, the development of the US versions has meant a great deal of work for the IT and LMI Forensic teams.

Before launching it was important for us to protect our logo and intellectual property and after working on it for nearly a year, I was pleased to receive the Trade Mark certificate today from the US Patents and Trademark Office.

LMI ran with the project after initial advice from lawyers specialising in Intellectual Property (“IP”) protection in the US and Australia. The process did get slowed down when one of the major US insurers, or their lawyers to be technically correct, put up an objection on the very last day of the objection period. We nevertheless worked through their concerns explaining a) we were not competing with them in any shape or form and in fact were assisting them in educating customers and getting the sums insured right which would only be to their advantage and b) our logo looked absolutely nothing like theirs!

At the end of the day, reason won out and the all important trade mark has been granted. After all that we went through, we certainly will be having a little celebration tonight!

We already have the logo and several of our products trademarked in Australia, New Zealand and the United States.

Protecting your intellectual property is something that all businesses need to consider and obtaining the trademark was seen as a key step for us in doing so.

While LMI Legal did a great job for us, their expertise is in insurance and I would recommend Millens in Melbourne who have an expert in IP in their team and who helped us with the unexpected objection and gave us advice that we followed and that worked in getting our certificate.

We continue now with innovation patents where appropriate.

 

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A year of milestone anniversaries for key events influencing the insurance industry

250 anniversary ethnic numbers.This September marks the 350th anniversary of the Great Fire of London which led to both modern property insurance and fire brigades as we know them. I intend on writing an extended piece for this blog and am currently working on a coffee table book with my son, which will come out closer to the September anniversary.

Just as important, in my opinion, is the fact it is the 250th anniversary of the court case that led to the enshrining of the principle of Utmost Good Faith into insurance. The case we owe this to is Carter v. Boehm (1766), 3 Burr. 1905

In the course of his judgement, the famous. Lord Mansfield stated:

“Insurance is a contract upon speculation. The special facts, upon which the contingent chance is to be computed, lie most commonly in the knowledge of the insured only: the underwriters trusts to his representation, and proceeds upon confidence that he does not keep back any circumstance in his knowledge, to mislead the underwriter into a belief that the circumstance does not exist, and to induce him to estimate the risk, as if it did not exist.

“The keeping back such circumstance is a fraud, and therefore the policy is void. Although the suppression should happen through mistake, without any fraudulent intention, yet still the underwriter is deceived, and the policy is void, because the risk run is really different from the risk understood and intended to be run, at the time of the agreement.

“The policy would be equally void, against the underwriter if he concealed; as, if he insured a ship on her voyage, which he privately knew to be arrived; and an action would lie to recover the premium.

“The governing principle is applicable to all contracts and dealings. Good faith forbids either party, by concealing what he privately knows, to draw the other into a bargain, from his ignorance of the fact and his believing and the contrary.

“But either party may be innocently silent, as to grounds open to both, to exercise their judgement upon… There are many matters as to which the insured may be innocently silent. He need not mention what the underwriter knows… An underwriter cannot insist that the policy is void because the insured did not tell him what he actually knew; what way soever he came to the knowledge. The insured need not mention what the underwriter ought to know; what he takes upon himself the knowledge of; or what he waives being informed of. The underwriter needs not to be told what lessens the risk agreed and understood to be run by the express terms of the policy. He needs not to be told general topics of speculation…” 

[Emphasis mine]

In this first case it was found that the insurer had not acted in good faith and the client was entitled to have their claim paid.

While the Insurance Contracts Act, [1984] (Cth of Australia) reaffirmed that this principle is the cornerstone of the insurance industry, I question when I see extremely low ball offers of settlement made to an insured, decisions to delay payments to force an insured into accepting a lower settlement, the events leading up to the portrayal of our industry around some investigators and the handling of life insurance claims, ignoring conflicts of interest, and if we are honest with ourselves what are in effect hidden commissions, if Utmost Good Faith is being given anything but lip service on the one hand but being held as something that the insured must exhibit at every turn on the other.

To examine these issues and others surrounding them to me is a vitally important underlying principle of insurance, barrister Greg Pynt from Perth and I are underwriting a one off special conference in Bengkulu, Sumatra (Indonesia)  on 1 & 2 October. This location was chosen as it is very near the location of the loss which gave rise to the Carter v Boehm case.  [A visit to the restored structure ( a fort) will be part of the event.]

A range of excellent speakers including Prof Robin Pearson from Hull University is being put together. Greg is up in Bengkulu this week to make sure all the logistics are in place for a smooth running of the event. While Greg and I are behind the conference and underwriting it from a cost perspective, the conference is being organised by Conference Images a company well known to many readers.

The cost of the conference which includes registration,  tour speakers, lunches and dinners is a very reasonable $850 plus GST.  To learn more  please down load the Bengkulu Flyer or go to www.CartervBoehm.com. Finally Greg or I are happy to take your enquiries.

The concept behind this website is that it will remain active in perpetuity with papers from the conference, photos and videos of the presentations available for use into the future and hopefully reviewed at the 300th and other milestone anniversaries of this seminal case. Obviously other papers and items of interest on the topic will be added to the proposed knowledge data base.

The final point I would make is that Greg and I are not doing this for any financial gain. It is purely for educational and research purposes for the benefit of attendees, the wider insurance community and for future generations of insurance professionals. If the conference runs at a loss we will bear the cost equally between the two of us. If it runs at a profit, all profit will be donated to an education facility in or near Bengkulu to benefit the youth of that community.

Please come along. It will be a most interesting and informative event.

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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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LMI is Going Greener

Solar panels being lifted onto the roof for installation on LMI House, Melbourne.

Solar panels being lifted onto the roof for installation on LMI House, Melbourne.

This week saw the installation of solar electricity panels on our Melbourne office. This is expected to more than halve our electricity usage in our biggest office. We would have had more, but our neighbour’s building shades parts of our roof for too much of the day.  Urr!

Once we test the claims and evaluate the result of our investment, our plan is to roll it out across our other offices although, disappointingly, the body corporate that controls the building housing our Sydney office and separate LMI Legal office, refuses to allow solar panels on the roof. How short sited.

LMI has been working on  reducing its carbon footprint since 2004 and this is certainly our biggest commitment in the 11 years since. Having said this, unlike most households who are away from the office during business hours, our organisation’s peak electricity use is during the day. During the day, we need to be available, particularly our claims services division during catastrophe situations and we have found in the past that we tend to lose mains power during Victorian bush fires. The introduction of enough solar panels to support our key areas is also seen as a positive risk management measure to reduce the likelihood of a disruption when we need to be on our “A” game.

Steve Manning undertook all the research and spearheaded this project. We acknowledge the help of Con Manetas of Leed Risk Services in Perth who shared his extensive knowledge in solar. Thanks Con and well done Steve.

What we did find is that a lot of the companies supplying the product have inadequate insurance and ‘risk management’ are foreign words to others. I will discuss some of what we found tomorrow.

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LMI Legal opens Melbourne Office

LMI Legal LogoI am pleased to announce that following the ongoing success of LMI Legal, the practice opens an office in Melbourne as of today.

With offices now in Sydney and Melbourne, the specialist insurance law practice will continue to service all states and territories in Australia.

LiorThe Melbourne practice will be headed by Lior Maisner under Practice Leader Peter O’Brien. Lior has
many years experience in the law and holds both a law and business degree.

 

Contact details for each office are as follows:

Sydney

Telephone: 02 9906 5966

Email: Peter.Obrien@LMILegal.com

Melbourne

Telephone: 03 9835 9977

Email: Lior.Maisner@LMILegal.com

 

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I Didn’t set the fire – Arson and the Onus of Proof

Holding Decorative Scales Of JusticeIntroduction:

A recent court decision in New South Wales looked at the issue of whose duty it is to prove whether the Insured was or was not involved in setting a fire, which was clearly deliberately lit.  My colleague, Mr Peter O’Brien, Director of LMI Legal, looks at this for us below, on a subject that I for one thought was considered as settled law for as long as I can remember.

Background

The plaintiff was the owner of a home in Orange, NSW, which was extensively damaged by fire on 27 December 2006.

The fire had doubtlessly been intentionally lit and occurred under suspicious circumstances, which gave rise to the police investigating the plaintiff, her fiancé and a friend.

Due to the unsavoury circumstances surrounding the fire, the insurer denied liability and argued that the plaintiff bore the onus of proving that the fire was not deliberately lit by her or someone who had entered the home with her consent. The relevant wording in the policy provided that:

 …, we will NOT cover loss or damage as a result of fire started with the intention of causing damage by you or someone

 – who lives in your home, or

 – who has entered your home or site with your consent, or the consent of a person who lives in your home.”

First Decision

The court of first instance, in observing that the clause was an “exception clause”, went on to find that the plaintiff not only had to prove that a “fire” had occurred but, somewhat unusually, bore the additional onus of then proving that “a fire was not started by someone who entered the property with her consent with the intention of causing damage”. Presumably, this approach was favoured by the court because of the suspicious events leading up to the fire.

Result of Appeal

In McLennan v Insurance Australia Limited [214] NSWCA 300 the court reversed the decision of the court of first instance and held that the burden of proving that the fire was not deliberately lit did not rest with the plaintiff, but with the insurer.

The court’s reasoning is in accordance with established principles that once an insured has established that the claim falls within the scope of the insurer’s promise, the burden then shifts to the insurer to prove that the claim is not otherwise defeated by an exception that the insurer seeks to rely upon.

In other words, if an insurer seeks to rely on an exception, the general rule is that the insurer must prove the application of the exception

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New eBook Highlights the Risks Involved in Signing Contracts

Contract ReviewsI have just released a new book, my first as an eBook, titled Mannings Guide to Contract Reviews with the tag line: the slim little book that could save your business (and perhaps your home!)

The reason for the book is the increasing number of small and medium business owners that sign contracts not realising the huge contingent liabilities that they are taking on.

More and more, big business, under the guise of risk management is transferring more and more risk onto their suppliers, tenants and customers.

The book explains about the risks associated with indemnity clauses, waiver of subrogation and perhaps most importantly, the fact that liabilities that are created solely by entering into a contract are not covered under the vast majority of insurance contracts.

The book has a Points to Consider Section and a great feature whereby you can download a comprehensive check list in PDF form that takes you through some of the key risks to look out for.

It suggests contracting your insurance broker and a good insurance lawyer such as LMI Legal (www.LMILegal.com)

To download a free copy of the book go to http://www.lmigroup.com/content.aspx?artId=518.

ChildrensMoreover, I hope to launch my very popular children’s book, “What’s Insurance – Mr Owl explains it protects your stuff” shortly.

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InsuranceByte – Meet the Directors of LMI Legal

Capture LMI LegalIn this week’s InsuranceByte, I have the privilege of introducing you to my fellow Directors at LMI Legal, Peter O’Brien and Lauren Wakeling and having them explain the type of work the firm will be concentrating on.

To view the podcast please click on the following link http://www.youtube.com/watch?v=xATZ3BOKm3o&feature=youtu.be

To learn more about LMI Legal please visit www.LMILegal.com.

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Introducing LMI Legal

LMI Legal home pageAs the LMI Group continues to deliver solutions to our clients, it became increasingly apparent that we needed to have our own legal practice to support the work we already do in areas such as contract reviews, policy drafting & interpretation and claims preparation. We also felt we ought to extend this specialist legal service to insurance brokers, general insurers and to others in the insurance and wider communities.

Accordingly, it is with great pleasure that I introduce LMI Legal.

The antecedents of formation of this independent legal practice commenced more than three years ago when Peter O’Brien, a highly qualified and experienced insurance lawyer joined LMI Group as our in house legal expert and Corporate Counsel.  The quality of Peter’s work and the successes he has achieved during this period attracted more and more work to the point where we needed more staff. But in line with LMI values, we would not settle for anyone, the importance of getting the right expert demanded we only engage the best.

We did this when Lauren Wakeling agreed to join Peter and I as one of the foundation Directors of LMI Legal.

LMI Legal, which opens its doors today, is a specialist insurance law firm offering legal services Australia-wide.  We focus solely on Insurance Law because that is what we know and know well.

Our lawyers offer expert advice and litigation services to all  involved in the insurance industry, including insurance brokers, insurance companies, government authorities, commercial entities and individuals.

LMI Legal is committed to delivering the best results for its clients.  We explain complex, technical legal issues clearly and concisely.  Insurance claims by their very nature can develop into a dispute. At LMI Legal, we tailor our approach to resolving such disputes according to our clients’ needs – whether that be pursing litigation or negotiating a timely, commercial settlement.

We will also assist our clients to minimise their exposure to risk created by contract and offer a range of contract review services.

For many individuals and SME clients, we understand that the cost of obtaining legal services can be a barrier to them.  This situation can be abused by the other side. Accordingly, I am pleased to advise that my fellow Directors agree that LMI Legal will offer flexible billing arrangements, such as “no win, no fee” or fixed fee agreements in appropriate circumstances.

In broad terms, the area that the practice will be concentrating on include:

  • Insurance law;
  • Property/Industrial Special Risks (ISR);
  • Business Interruption/Consequential Loss claims;
  • Advanced Loss of Profits/Delay in Completion/Delay in Start Up;
  • Building and Construction;
  • Public liability;
  • Product liability;
  • Personal injury;
  • Tort law (such as, negligence);
  • Professional Indemnity;
  • Directors and Officers liability;
  • Fidelity and Crime;
  • Consumer and Competition law;
  • Commercial litigation;
  • Contract review;
  • Policy interpretation; and
  • Policy Drafting.

Having the resources of LMI Group in areas such as forensic accounting, engineering, risk management and underwriting, places LMI Legal in a league of its own.

To learn more please contact me or visit www.LMILegal.com

 

 

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