My Philosophy

I work in the insurance profession and feel extremely proud and privileged to do so. Insurance being one of the most important industries to any developed or developing economy. In fact you cannot have a fully developed economy unless you have a non-corrupt insurance industry upon which business and home owners can trust to deliver genuine protection when their assets are lost, or damaged, their personal or business income is disrupted or they are being held legally liable for some negligent act or omission.

While many treat insurance as a necessary evil or worse still a cost, I believe that for a business owner it is the most important contract that they ever enter into. Why because it can protect their life’s work, the assets that they have accumulated in the business and the lifestyle they gain from the business. How many business owners sacrifice today’s lifestyle for themselves and their families for their business. It also protects the livelihood of their employees.

Let us take a SME business owner for a minute. Their business is often their sole source of income. Sometimes for their spouse, children and/or parents as well. It is the single biggest asset, the mortgage over their home and their superannuation. It is no understatement to say that a lot is at stake when it comes to ensuring that all this is properly protected. This is the key to understanding insurance. It is not just a cost but protection.

The premium paid for insurance is clearly not the total cost of risk. The total cost of risk does include premium but it also includes fees and commissions, the cost of risk evaluation, risk protection (alarms, bars, fire protection) policy deductibles (excesses) self-insured and uninsured losses and losses not paid due to under insurance. These last few costs sit as a giant contingency liability over most SME companies.

At the same time, insurance is one of the most complex products in the world to understand.

For over 40 years I have been working to help home and business owners recover from major insured losses, weather events, fires, earthquakes and the like. So many times the lack of adequate insurance has led to huge financial ruin for the business owners. It often has a far wider social effect with the owners no longer able to afford to send their children to private schools or university, while the business or home owner find themselves in a cycle of poverty they simply cannot break out of.

I have developed this blog to raise some of the issues that I confront on a day to day basis in that the hope that lessons learnt by me in claims will assist others to avoid the same mistake.

I do not intend to sugar coat my thoughts. If something is good I will say so. As an industry we could certainly do with some positive feedback of late. If something is not so good, I will highlight it in the hope that it will get people of influence to think about the ramifications of our industries approach to an issue and that at the end of the day, while we owe a duty to our shareholders we owe an equal duty to our customers, to our communities and to the overall good of our economy.

The views I offer are mine and mine along and may not be shared by my colleagues at LMI Group.

If you disagree or support some point or issue I raise please use the comments section to have your say.

Please note that what I discuss in this blog covers a wide area of the law and insurance practice and many of the subjects touched on are the subject of volumes of texts in their own right.

The blog should not be considered legal advice and should not be relied upon to make any business or insurance decision.
Specialist advice should always be sought on any insurance issue at which time the specific details of the circumstances of the particular matter can be considered.

Having said this, if you believe it adds value please let your friends and colleagues know about the blog.

If you wish to link to the blog from your website please feel free to do so or ask them to contact me using the contact me section of the site.

3 responses to “My Philosophy”

  1. Andrew Ludlow says:

    Hi Allan,

    I do waffle on, but have one question that I cannot clarify anywhere. But first, some sugar coating..

    Your blog and I are becoming more acquainted as I troll the net trying to rectify our situation. My partner and I just passed 916 days since a smart meter install (we were not anti SM), changed out lives forever. We were in Vietnam holidaying, when we learnt about the fire. We registered with FOS in January 2016.

    However, I do agree with and can understand your sentiment re the insurance industry’ role in modern society. It is vital.

    No one, least of all me, would believe what our FSP has undeniable been caught for during those 916 days. This is not what this is about. My question is:

    – Why do our 12 or so certificates of home insurance policies indicate that they are Sum Insured type policies, yet below that, is Key Policy Features and item one is “replacement cover for your buildings?”

    I’ve read lots of material, trying to get an answer. ASIC says that sum insured or total replacement policies are the main two types in Australia. We have both wording on the same policy, and all its supporting marketing docs.

    I look forwards to understanding this, before it costs $100K+

  2. Allan says:

    Sorry for the delay Andrew. I have been in the wars myself of late with a violent burglary, a cyber attack which nearly caught us and an impact loss so have not had time to scratch myself. I do apologise.

    To add to all of this I am off on leave as from close of business today when I discovered I had not replied to you and your troubles.

    I really do not understand the issues confronting you. Can you ring me on 0413127779 today or when I return Friday week or email me where you are located (State/Town) and your phone number and my PA Ashleigh (reading in copy) will have one of my senior claims experts based in your area to give you a ring and provide an initial review and provide advice to you with my compliments.

    Thanks your enquiry and apologies again for the inordinate delay.

    Allan

  3. Andrew Ludlow says:

    Good afternoon Allan,

    Thanks for the response, your apology is welcomed but unnecessary. Please except mine, and we can call it square. Reading between the lines of your recent challenges, the offenders choice of target was a poor one. Hopefully the listed peril of Limited Sunshine & Deckchair Time was averted, and you enjoyed your break.

    I am about to email you a scanned copy of the big branded certificate of insurance, highlighting the wording that I do not understand. Any explanation, delivered anyway would be greatly appreciated. I will also include background info or facts about our claims experience, as friends we know in the industry apologise every time we see them. We are interested in learning if we are odd ones out or part of a common theme. I’ve sold thousands of B2B service contracts, and I believe it is jaw dropping.Not too mention harmful to us.

    For the benefit of any readers, I’m trying to clarify why our certificate of home building insurance appears to have wording from both types of standard home building policies in Australia, according to ASIC, Insurance Council of Aust and Choice etc. Links are below. Our cert of insurance reads:

    Your Policy Summary

    Sum Insured: Buildings $VALUE
    (see page 2 for breakdown)

    On page 2 it then reads

    “Sum Insured
    Please check value blah blah”

    “Buildings $VALUE
    Key Policy Features”

    * replacement cover for your buildings
    * another unrelated feature blah blah
    * another unrelated etc etc

    https://www.moneysmart.gov.au/insurance/home-and-contents-insurance#home

    http://understandinsurance.com.au/types-of-insurance/household-insurance

    https://www.choice.com.au/money/insurance/home-and-contents/buying-guides/home-and-contents-insurance

    Thank you Allan, you are an asset to your industry and no doubt, the Australian community. We are a lucky country indeed.

    Cheers, Andrew Ludlow

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