Staying Safe

The LMI Melbourne office was originally built as a small factory and then utilised as a warehouse and later partially converted to offices before it was acquired by LMI as its Melbourne base.

Over the years, the building has been slowly refurbished, including the removal of all asbestos and being in the risk and insurance business, we have been careful to always comply with the best safety standards as well as ensuring the building is as energy efficient as possible.

This has involved so many aspects such as solar, and of course, insulation of the building. When upgrading the insulation in the last part of the building, fortunately we have steered well clear of any foam or foam paneling in any of the construction. I find in my research that I’ve done along with several of our customers in the UK particularly, I would certainly be removing any type of foam paneling whether this be EPS or polyethylene cladding.

I was concerned when we did a face lift on the front of the building, where the architect had requested aluminium paneling for an awning and encased existing concrete columns that this may include foam but i’m not only relying on the specifications of the material but in physically inspecting the back and side of the columns I was relieved to see that there was no foam in behind the aluminium.

The purpose of my reporting all of this is just to remind any home or business owners that may be considering remodeling to seriously consider the insulation that you are using and for those with any foam panel insulation to identify the type used and consider its removal and/or the fire detection and prevention in place.

This is not only for the safety of families and employees, but I strongly suspect that the insurance industry will take an even tougher attitude to paneling of all types moving forward.

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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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Yet another recall: this one should not be ignored!

It is estimated that around 80,700 pool fence latches sold through Bunnings Warehouse stores across Australia have had to be recalled. This is following an investigation which found that they do not comply with the required Australian Safety Standard.

With young lives at risk, this is clearly a very serious safety issue, and so I join the request that any and all owners and residents of properties with pools that have been fitted with the product need to take urgent action and have the locks replaced.

Every home, unit, flat or apartment owner and or occupier ought to ensure their pool has a compliant latch. Failure to do so may well result in them being be held liable if a drowning incident occurs.

It is also a timely reminder that home contents insurance has the added benefit of, in a typical good quality policy, $20,000,000 of public liability cover which would protect them as an occupier. Having this coverage of course does not mean that reasonable steps to prevent injury or damage is not taken out, so please check your pool gate latch and take it back and have it replaced if it is the one being recalled.

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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 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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Protection for unoccupied buildings

One of the problems we see regularly at LMI is the theft of metals from unoccupied buildings. There is also the issue of squatters, adventurous children and youths, malicious damage and graffiti.

When the premises are unoccupied the electricity is often cut off which means that there is no lighting, alarm system or video surveillance happening while static guards and even regular patrols may be cost prohibitive. The latter being of limited value in my experience anyway.

The lighting can be easily and cheaply overcome with solar powered sensor lights and I saw with interest that over in Perth, trials have started with solar powered surveillance wireless cameras.

The technology is said to have a range of 300 meters, with thermal images able to be taken in total darkness.

The company providing the equipment is Spectur and it claims its designs are aimed at protecting large perimeter fences such as farms and construction sites, all without needing the usual infrastructure to support them.

To learn more you can go to the article at


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Has failed?

August 2013 saw the launch of LMI which provides a star rating of insurers claims service across over 20 classes of general insurance. This led on to the Mansfield Awards for Claims Excellence which were launched last year. The Mansfield Awards being a joint venture not for profit initiative of LMI Group and InsuranceNEWS.

There were three reasons for the development of the free to use website:

  1. To move the emphasis away from the price of insurance which seemed to me to be the primary determinate for which policy to buy. No one remembers the price of insurance when a claim occurs. What matters is the coverage afforded by the policy, the financial strength of the underwriter, and the quality and fairness of the claims service;
  2. By measuring the claims service it was hoped that it would drive positive change in the market and at the same time reestablish faith in an industry built on the underlying principle of Utmost Good Faith; and
  3. Recognise and champion those Claims Departments that are doing the right thing.

Anyone can get a price for their insurance while LMI PolicyComparison has provided detailed comparisons of the features and benefits of general insurance policies since 2003.

With no simple way for a customer to gauge the claims service of their provider until it may be too late, ie, at the time of a claim, LMI was developed.

As we approach our 5 year anniversary, it is timely to check what difference we have made. To do this I looked at the recent General Insurance Code of Practice Report.

I include charts below that reflect the following in a 5 year period, 2012-2013 to 2016-2017. I would explain this is retail claims which includes, Domestic Building & Contents, Private Motor, Personal Travel, Residential Strata, Caravan, Pet and Pleasure Craft Insurance.

The first chart (Chart 3) below reflects that there has been a 24.07% increase in the amount of claims lodged, over the period.


However sadly in my opinion, the next chart, (Chart 11) reflects that there has been a whopping 67.37% increase in the Retail declined claims.

There does seem to be a far too large and widening gap/ disparity between the two figures above. I cannot accept that many people are making claims that are not claims under traditional policy coverages. Either, the policies are stripping away cover or valid claims are not being met.

From the claims that come across my desk and that of my colleagues at LMI and LMI Legal, we are seeing an increase in the number of claims that are incorrectly being declined and/or where the Insured is being seriously short changed. If the client does not have an insurance broker and/or know of our services then they sadly often accept it and move on. This may appear good for insurers but it will pay harsh dividends for the industry in the long term.

While these figures greatly disturb me, it makes me more determined with both LMI ClaimsComparison, the Mansfield Awards for Claims Excellence and to double my efforts to inform the insuring public not to buy insurance on price alone.

I am also committed to work to have all loss assessors, loss adjusters, investigators, building consultants etc who are dealing face to face with clients and making decisions on whether a claim is a claim or not to be licenced and have at least basic training on general insurance and in particular the 6 underlying principles, starting with the need to act with good faith and also have a basic understanding of the coverage afforded by the contract of insurance they are making decisions under.

I end with the following quote from the court case from 2000 of Ontario Inc. v. Non-Marine Members of Lloyd’s London.


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When will we learn?

I watched in disbelief the television news of a fire in Russia where 64 people were killed. It is reported that some doors were locked or barred.

Over the past few years, I have been researching fires in New York (The Green Triangle Shirt Factory, 1911), Chicago (the Iroquois Theater, 1903) and Singapore (Robinson Department Store, 1972) where similar circumstances led to legislation making it illegal to have fire doors locked, and not to have sufficient and adequate fire escapes, outward opening doors to all public buildings, and safety regulations around lifts.

Surely in the 21st century these should be world-wide regulations not to mention mandatory laws around sprinkler systems in public buildings such as the one involved here which looks from the photographs reasonably modern.

Even where we have regulations I often see fire escapes chocked open or stock or rubbish piled up in fire stairs or blocking fire doors.

Unlike the US cases where no one was convicted of an offence despite clear evidence they should have been, I hope there is an open and thorough investigation following this loss and if fire regulations have been breached that severe penalties are applied.

Meanwhile, it is a stark reminder that fire safety, and risk management in general, are an important issue for any employer and or organisation that invites the public onto their property.

Working cover of upcoming book on 6 crises that hit Chicago.

The research I carried out on the Iroquois Theater fire in Chicago in particular I found extremely interesting and heart wrenching at the same time. Over 600 people perished in an over crowded theatre which had unfinished fire escapes, locked doors and inward opening doors. It is one of 6 events in Chicago that I have been researching with my daughter Susan. In the upcoming book, Lessons Learned from the Great City of Chicago, we look at the lessons learned from a risk management perspective, the part insurance played and some tough psychological questions that flow from such tragic events. If we can stop one such tragedy reoccurring it will be worth all the effort we put into the research.



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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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Australia’s failing infrastructure

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

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

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

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

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

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

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

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

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

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

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

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



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

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Learning from the past to protect against today’s hazards

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

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

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

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

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

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

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

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

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

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