Product Recalls Australia – 26 September 2017

This week’s product recalls includes the following:

Knog Pty Ltd — Knog Frog Strobe Bicycle Light

Read more

Mazda Australia Pty Ltd — Mazda BT-50

Read more

Cyclingdeal — Road Mountain Bike Bicycle Cycling Adult Helmet

Read more

Lenoxx Electronics Aust Pty Ltd — Electric Blanket

Read more

Read Me View comments

Warning on Asbestos Imports

Since the beginning of 2004, Australia has had a complete ban on the importation, manufacture and use of asbestos and products containing asbestos.

As with some of the electrical wiring and insulated foam panels that are being imported from China, it has now been found that building materials, auto parts, crayons and other products imported into Australia from China, contain asbestos.

It is my understanding that under Chinese law, a product that contains less than 5% asbestos can be labelled “Asbestos free” when in fact the product is not. The use of this product can become a real risk to property owners, importers and tradesmen that purchase and install the products etc.

I will confine my comments in this blog to asbestos related products. Since the massive claims that arose out of the use of asbestos, it has become a blanket exclusion across home, business pack, liability and construction risk policies.

More recently, at least one insurer has an automatic decline on any building that contains asbestos. This is as I understand it, is being reviewed to become a referral and will be rated with the additional risk, however at this stage it is an exclusion.

As these products that are being imported are identified, a product recall will be called and if the importer does, as I suspect, immediately seek to go into liquidation, it will be left with the retailer or tradesmen that has sold the product to bear the cost in the first instance. This could have a crippling effect on those businesses.

It is always tempting to go for the cheapest option whether it be building materials, autoparts or general insurance. The reality is, you typically get what you pay for and that modest saving which was made, turns out to have created a massive uninsured exposure which could literally have life changing consequences.

I attach a copy of the Department of Immigration Border Protection notice #2016/13 on the subject of asbestos.

Brokers are urged to discuss this important topic with their Insureds.

Read Me 3 Comments

Will regulation stifle the development of driver-less cars following first fatal accident?

The words Autonomous Vehicles on an automobile gauge with the neOver the weekend I heard of the sad death of Joshua Brown who was in a car operating in autopilot mode. As I understand it, a semi trailer turned across the path of the Tesla Model S car and the on-board anti-collision computer system did not pick up the light coloured truck against a light sky. Whether Mr Brown saw the truck coming we will never know.

United States Transportation Department officials have started an investigation into the cause and many people, including those in the insurance industry and government regulators will be watching for the results with interest.

Ironically, Mr Brown had filmed an incident earlier where the car had prevented a serious accident.

My concern in our Nanny State world is that some interests will attempt to use this tragic event to urge regulators to put up barriers to the development or use of the technology.

Can you image if the governments of the world had stopped or even held back the early development of aircraft technology, how much economic and political benefit would have been lost, not to mention the pleasure of tourism that the ongoing development of flight has created. The early developments in flight, of course allowed the development of space flights with huge scientific and economic benefits. Affordable space tourism is just around the corner.

I have been watching the development of autonomous vehicles with great interest for many years now.  I see huge benefits in so many ways. The transport industry is the most dangerous industry to work in. More dangerous than mining and construction put together. To read the latest on this subject visit https://www.finder.com.au/most-dangerous-jobs-australia

There will be lessons learned from this accident and I am certain that the technology will continue to improve and over time the appalling death toll and the number of serious injuries will be reduced by this technology. Hopefully the regulators will appreciate this and not throw the baby out with the bath water.

Read Me View comments

Beware two new exclusions in some motor vehicle insurance policies

Under some new policies this driver is rendering her motor insurance policy void

Under some new policies this driver is rendering her motor insurance policy void

On reviewing the latest versions of some direct private motor policies the LMI PolicyComparison team brought to my attention that a couple of new exclusions have been introduced.

The previous versions of the wording did not have an exclusion for reckless acts at all, but this has changed. What is most significant is the new version of the policy specifically states that the insurer will not cover driving into water or illegally using a mobile phone. Interestingly the policy in question is marketed to the older generation, who as a generalisation, and at the risk of being called politically incorrect, would be regarded as being less likely to engage in risky behaviour.

Another observation I would make is that I agree that using a mobile phone, particularly texting or doing emails on them while driving, does in my personal experience, increase the risk of an accident. I have written many articles on the subject of driving while texting in particular and even suggested it should be an exclusion. See this article.

Whether using a mobile to speak on while driving is in the category of a drink driver (exclusion) or a speeding driver or someone who runs a red light (insured) I am not sure. Thinking about it, there is a difference. You can accidentally go over the speed limit by just missing a change of speed sign (even when not on your mobile phone) but picking up and using a mobile phone is a deliberate act. The driver is making a conscience decision to increase the risk of an accident, albeit like most they will think that this applies to others using phones but not them!

With the driving into water, this could be a deliberate act or on a dark night it could be a complete accident because you cannot see it in some circumstances. This one is certainly more messy than the first.

At this stage, this endorsement has not found its way into any broker branded wordings but the introduction into this direct offering could be to test the water and it may become common place.

One point to keep in mind with the exclusion, particularly the one regarding using a mobile phone. Not only does this mean you have no coverage for your own car, you have no third party property damage cover for any other car, or property you may hit. Using your mobile phone could be life changing in more ways than one.

Interesting times but the messages here are a common one from me. You /your clients should not purchase insurance on price alone. The coverage, the financial strength rating and the claims rating of the underwriter are to me much more important when you wish to rely on the protection. If you are in doubt, you should seek the advise of a qualified insurance broker.

Equally important, driving while using a mobile phone, particularly texting does expose the driver, passengers and those around you to increased danger. If it is that important to make the call or check your Facebook (or read this post), pull over and do it safely!

Finally, I would like to thank the great team at LMI PolicyComparison.com for bringing these new exclusions to my attention so quickly so that I in turn can advise you.

 

Read Me 5 Comments

Remember the risk of Asbestos when Renovating Old Buildings

photo 4

An old verandah lined with asbestos cement sheeting to create more living space.

It was great news when close friends bought an old home literally just around the corner from my wife and I. It is a beautiful old Californian bungalow, which has had an old verandah built in to create a sleep out and a sun room.

As so often happens, the home owners at the time lined the two new rooms with asbestos cement sheeting.

Looking around the garden, some off cuts had been used for garden edging and the like.

If you think that you have found asbestos in your home, the best advise is do not touch it. Asbestos is a risk in the home when it is disturbed in a way that produces dust that contains asbestos fibres. In many cases, the presence of asbestos-containing materials in the home is no cause for alarm if the material has not been damaged.

If the material are not damaged and shows no signs of wear and tear it can often be left in place. For example, internal asbestos cement sheet walls or ceilings that are in good condition and coated with paint do not pose a risk to health, while they are not showing signs of degradation or damage.

However, this type of material can be damaged during a hail or other severe storm. It is also susceptible to cracking and spalling during a fire. If it is damaged as a result of an insured peril, then the cost of removing it safely is typically insured as part of the removal of debris cover[1].

In this case, my friends want to demolish the old verandah and add a modern extension. Similarly they want to clean up the yard.

Before starting this type of work, it is important that this material is first identified before any renovations commence and that it is safely removed and disposed of responsibly and legally.

As I understand it, in most states and territories,  householders may legally remove asbestos from their property, however, as asbestos poses a health risk during removal, packaging, transport and disposal; it is important that it is handled safely during these operations.

An old off cut of asbestos sheeting used as some form of garden edging

An old off cut of asbestos sheeting used as some form of garden edging. It is so tempting just to rip it out and break it up and put it in the rubbish bin. Please don’t.

If you are considering doing this work yourself, I  would  refer you to the OHS Reps web-site for further information regarding the safe handling and removal of asbestos in a domestic situation, although, for the sake of the health of your family and yourself, it may be more prudent to get in the experts.  A case of “an ounce of prevention is worth a pound of cure”, but in the case of asbestos, it is should read: “ton of cure”.

If you are thinking about working with or removing a material that contains asbestos, please consider the following:

  • Do Not use power tools such as drills, saws, jack hammers and the like. (A very dangerous thing to do is use a vacuum cleaner and then try and empty the bag to retain it banging the bag to clean it).
  • Do Not use abrasive cutting or sanding discs
  • Do Not use compressed air
  • Do Not walk on corrugated asbestos cement roofs as it may well be brittle and you run the risk of falling through the roof
  • Do Not leave asbestos products around the garden where they may be broken or crushed
  • Do get the material tested by an accredited laboratory if you are unsure if it contains asbestos
  • Always work with asbestos in well-ventilated areas
  • Always use a good quality dusk mask, eye protection and other safety gear designed for use with asbestos fibres
  • Ensure the material is thoroughly wet down and kept wet during work to minimise the release of fibres and dust

I strongly recommend that loosely-bound asbestos only be removed by a licensed professional, as health risks associated with handling this type of material are far greater than for firmly-bound asbestos.

With the vast majority of insurance policies in the market, liability for injury caused by asbestos is specifically excluded.

—————————————–

[1] I am not for one second suggesting you set fire to a building to have an insurer remove the asbestos. It is illegal and the fire is potentially more dangerous than the asbestos.

Read Me View comments

No it is not an April Fool’s Joke

topAs most of you would know, I deliver a large number of training sessions at Professional Development Days, Industry Conferences and Seminars (average 120 per year).  While at a break during a full day session in Canberra, I took these photos of a temporary repair of a water damaged ceiling.

The staff at the venue explained that they had had some water enter the building due to a blocked gutter. Despite it being weeks ago, the ceiling, which had collapsed, had only ‘temporary’ repairs completed.

A temporary brace had been cobbled together by the builder who was appointed by the loss adjuster, acting for the insurer.

This brace was not fixed at the top in any way and the upright beam, not being long enough for the purpose, was propped up by a sizeable stack of off-cut plaster board pieces. Anyone that knows anything about plaster board knows that it has little, if any, strength when used this way.

Picture1I was horrified that it has been left this way for so long and the client was still trying to use the venue, which created a dangerous situation should anyone knock it. Further, I was embarrassed as a member of the insurance profession that a client had had their premises left in this way.

Come on guys, our industry can do much better than this! Not only are we not looking after the customer as we should, we have created a dangerous situation that could result in a public liability and/or WorkCover claim, not to mention any statutory penalty for not having a safe workplace.

Read Me View comments

Lessons Learned from Lost Malaysian Flight

Travel background with mechanical departures board and airline.After handling claims for just on forty-three years, I know there are always lessons to be learned or basic risk management measures that need to be revisited after every matter, just in case “it” happens. There will no doubt be a number of lessons learned (or should that be “earned”?) that will come out of the tragic disappearance of Malaysian Airlines Flight MH370.

One of the first follows the news that one company in the technology sector, Freescale Semiconductor, is reported to have  lost twenty of their senior staff in this event. No matter how large the organisation is, to lose that much talent at the one time is surely going to have a negative effect and the company itself is reportedly saying as much.

In our own company, we have a limit of four staff per flight and, being a family company, we are anxious not to have all the family on the one flight, or bus for that matter at the one time. We do this not so much for the family’s sake for, if we were all to perish then our worries are over. We do it as we owe it to our staff and customers to have someone who can immediately step in and make decisions to ensure the company remains focused and viable.

Most Corporate Travel policies, but not all, have a warranty, condition or the like that limits the number of staff on the one flight. Often this is five people. This not only protects the company from a catastrophic loss of staff in the one event, it goes some way to ensure the maximum death benefit payable under the policy is a reasonable amount per person.

The purpose of this posting is to recommend that you review or create your own risk management strategy for travel and to look at the coverage and limitations of your Corporate Travel Insurance policy. If you do not have the cover, please speak with your insurance broker. The cover is surprisingly affordable and with coverage for hire car deductibles included, the investment is often more than paid for by the savings in buy down excess fees on hire car charges. It certainly is for LMI. For those that have access to LMI PolicyComparison, a reminder that the site includes comparisons on Corporate and Business Travel policies for the following insurers.

PCI travel

With multiple airline carriers to most parts of the world, it is only in the rarest of circumstances, that the “no more than four person per flight” rule is an inconvenience.

While I appreciate that air travel remains an extremely safe method of travel, “it” can happen at any time and as I explain in my lectures on risk management, there are many ways to treat risk, risk should never be ignored. I certainly wished I had a $1 for every time a claimant has said to me: “I never thought ‘it’ would happen to me!” In fact I heard it so often I used the line as the title of my thesis into business survival following a major insured loss.

While we wait to see what other lessons learned come out of this, my heart naturally goes out to all those that lost loved ones and are going through so much stress wondering  just what happened.

 

Read Me View comments

The need for “contract certainty” # 1 Statutory Fines and Penalties Cover

The need for any contract to provide certainty is, on the face of it, important. This allows each party to the contract to know exactly what their rights and responsibilities are.

As a contract of insurance is, to my mind, the most important contract a business owner enters into in their business life, coupled with the fact that insurance is a product that does not follow the principle of ‘buyer beware”, but rather requires utmost good faith on both parties, it goes without saying that it is more important for an insurance contract to provide contract certainty.

The fact that the policy wording on the World Trade Centre towers had not been agreed on, was a stark reminder to the insurance industry for the need for contract certainty. Having insurance in place saying “wording to be agreed” is naturally going to lead to a massive dispute when a large claim arises before the wording is agreed.

Contract certainty is now compulsory for brokers and insurers in the United Kingdom and this has been welcomed by consumers. In summary, the standards in the United Kingdom’s Financial Services Authority’s Code of Good Practice require confirmation of the agreed wording to be used before placement.

But this is just one issue. The other is when the policy purports to provide coverage, but when it comes to the crunch the insurer refuses to grant cover.

One example is the cover afforded for statutory fines and penalties. When this cover first came out I questioned whether it had a place. My concern was that it may be regarded as being against public policy. I have written articles on this subject, such as the proposal by a group of students to offer insurance for fines for fare evasion. Refer http://www.allanmanning.com/traminsurance-its-illegal-on-so-many-levels/

In discussion with underwriters they advised that statutory fines and penalty cover for, say, a breach of employment practice law was different and it was to protect the directors and senior offices that may be innocent, but caught up in a breach. I could see how this had a place to protect such people but the policies did not spell when a claim would be paid or when it would not be.

A number of insurers who have issued such cover are now refusing to pay claims for statutory fines and penalties due in their belief that any such payment would be against public policy.

So what is insurance against public policy. An insurance contract that violates government legislation, is contrary to public policy. Similarly, if it plays a part in some prohibited activity the insurance policy/contract will be held unenforceable in court. An insurance contract that protects against the loss (fire or theft) of illegal drugs, for example, is contrary to public policy and is therefore unenforceable.

The trouble for the Insured and, as such, for the broker that advised them to take out this coverage, is that the Insurer picks and chooses which fines they will pay for and which ones they will not, after the event. The only way this can be overturned is to take the matter before a judge.

russian rouletteWhat needs to happen so that clients do not have an insurance contract, which in effect they are playing Russian roulette with? Either the cover for statutory fines and penalties has to be removed completely from contracts by Insurers who are uncomfortable about providing any coverage, which they believe may, under some circumstances, be against public policy or Insurers need to include in the policy wording a clear set of conditions as to when an insurer will not pay the claim. This allows the client and their broker to know the rules in advance. It also assists in protecting the  brand insurance, which has been tarnished in so many ways of late. The third option is to pay all claims arising from statutory fines and policy limits.

As for the brokers, if you hear of an insurer rejecting a claim under one of these policies, due to a belief on the part of a claims officer that the circumstances giving rise to a particular claim are against public policy for indemnity to be granted, how then are you going to explain the benefits of the policy to your client? What exposures do you create for your own practice by recommending such cover without contract certainty as to what will and will not be paid? Please give this serious consideration before you find yourself caught trying to explain a denial to one of your clients.

Read Me 3 Comments

A milestone in vehicle safety shared at no cost

3564393839_0aba3c9453A common feature of passenger safety in motor vehicles came about with the introduction of the three point seat belt. The first car model to have the three point seat belt as a standard item was the Volvo 122 way back in 1959.

The familiar three point belt was developed by Nils Bohlin while working at Volvo. In an act of great social responsibility, Volvo made the new seat belt design patent open, in the interest of safety and made it available to other car manufacturers for free. I question how many other car companies would have taken this approach?

In addition to designing the seat belt, Engineer Bohlin demonstrated its effectiveness in a study of 28,000 accidents in Sweden. Unbelted occupants sustained fatal injuries throughout the whole speed scale, whereas none of the belted occupants were fatally injured at accident speeds below 100kph. Furthermore, no belted occupant was fatally injured if the passenger compartment remained intact in any accident, at any speed. I understand that this study was done with the less effective 2 point seat belt.

I wonder how many lives have been saved by Bohlin and Volvo in the nearly 55 years since its launch. A more vexed question is why do some people still not wear seat belts and put themselves at risk? The tragic death of Princess Diana is the first to come to mind.

Read Me View comments

Tales from the Tube # 2

Continuing on from last week, in celebration of the 150th birthday of the London Underground, I am sharing some of the milestones that have arisen due to events and incidents on the Tube.

This week’s event involved a major fire at King’s Cross Tube Station. The  fire broke out at about 7:30pm on 18th November 1987. Sadly the fire killed 31 people with a further 100 + or – injured.

The cause of the fire was said to be a carelessly discarded lit match or cigarette which was caught up in the escalator. This old escalator had timber slats on the floor of each moving tread.

Source: www.thetimes.co.uk

This escalator serviced the Piccadilly Line and approximately 15 minutes after being reported, as the first members of the London Fire Brigade were investigating, the fire flashed over, filling the underground ticket office with heat and smoke. Part of the reason for the flash over was that a train came into the station and the sudden rush of air fanned the flames.

Rushing down the escalator at the time were firemen including the most senior attending officer. This resulted in a period of chaos and one of the outcomes was the senior officer is not permitted to put him or herself in danger and must control the fighting of the fire from a safe place.

Statue of James Braidwood, father of the modern fire service in Parliament Square, Edinburgh

This important lesson took a long time coming as over 100 years ago, on 22nd June 1861, the London Metropolitan Fire Brigade’s first chief, James Braidwood, was killed when a wall collapsed during a fire in Tooley Street at Cotton’s Wharf (near where London Dungeon’s currently is). He was supervising the fighting of the fire and saw that a wall was in danger of falling. He went himself to warn his men and was killed when the wall collapsed. It took two days for his body to be recovered. The two men he went to save were ironically unhurt. The loss of the most senior fire officer in the London Fire Brigade caused disruption to the brigade for some time and certainly effected the result at that particular fire as it did in the King’s Cross fire.

Staying with the King’s Cross fire, the London Underground were also strongly criticised for their attitude toward fires. Complacent because there had never been a fatal fire on the Underground, staff had been given little or no training to deal with fires or evacuation. As so often happens, the publication of the findings of the enquiry led to resignations of senior management in  London Underground and to the introduction of new fire safety regulations.

While events like the King’s Cross fire are tragic positive things do come from them. It is frustrating that it takes such an event to highlight problems that are obvious risks.

It is part of the risk management process which in turn forms the first part of Business Continuity Management to identify and eliminate, reduce or otherwise manage the hazards of an organisation.

Read Me 1