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Fined for using a mobile phone while in charge of a motorised lawn mower

As regular readers will know I am a very strong advocate against the use of mobile phones, particularly texting while driving. I support the introduction of exclusions in motor vehicle policies as a deterrent against this extremely dangerous practice.

I therefore read with interest that police in the UK pulled over a council employee who was, I gather, driving the motorised industrial ride on lawn mower, between jobs while using his mobile phone.

Not only is he expected to be fined but also disciplined by his employer.

If you are an employer, do you have a procedure in your staff manual about the use of mobile phones while in charge of any motorised vehicle. If not, it may be time for a review. Keep your staff, the public and your brand reputation safe.

Children on the farm. older brother driving a lawn mower, younger brother running after him

While looking for a suitable photo to compliment the article I found this one (see left) that immediately got me thinking about another obvious risk. Children in and around motorised equipment, especially on farms and parks. The dangers here are just too serious to picture but only a fool would ignore them!

 

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This is one piece of legislation that I would love to see come to Australia

I wish I had this warning on my phone

The UK Government is calling for a change in the legislation to make directors personally liable with fines of up to £500,000 for nuisance calls.

The UK already have legislation that allows fines to be imposed, but directors are avoiding the fines by winding up the companies, declaring them bankrupt only to open up again the next day. This legislation would close this loop hole.

I do not know anyone who is not sick of receiving time wasting calls that seem to come in on your mobile phone at the wrong time or on your home phone just when you finally get to sit down for dinner. This is despite the fact, I am yet to speak to anyone who has changed their telecommunications or electricity supplier after receiving such a call.

As fast as I block the number, the same company rings back on a different number a few days later. The Do Not Call Register is simply not working.

Obviously some people are taking up the offers or they would not be this daily impost on our time. I question just who is. I wonder if they need more protection from these calls than I do.

I would take the legislation one step further and not only make the directors of the telemarketing company that gets the fine(s) but also the directors of the product(s) or services that they are ringing to sell.

Come on government, protect our right to some quiet thinking and leisure time in this 24 hour world. Better still offer some protection to the trusting and vulnerable in our society.

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Warning: Suspicious Emails

These types of malicious emails are becoming more and more common, as well as trickier to pick up when they are real or not.

I set out below an example of one which one of our employees received which was in fact a scam/hack email. Luckily, they knew to not click.

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Lessons from the Tyre Industry for the General Insurance Industry

I recall quite plainly when the then NZI Insurance started advertising insurance on buses, my then state manager, Mr Russel Hay of the General Accident Insurance could not believe that any insurer would discredit the industry by advertising on the side of a bus. As a young man I did not see anything wrong with this but Mr Hay thought that this degraded the great profession of insurance and damaged the image of insurance generally as being a cut above commodities.

Oh how the times have changed!

Now, we see so many advertisements for Insurance in so many different media channels it isn’t funny. But, what message are we portraying to our customers?

I would suggest that first, insurance is easy, second, it doesn’t matter which policy you have, it is all about the price or the free theatre tickets or discount vouchers for an electrical store and lastly that loyalty does not pay and that you get a discount for moving insurers. The reality is that insurers do not make money on the average client in the first year that they have them, it usually takes 3 years with a good claims history before there are real profits to be made from the Insured. To encourage customers to chop and change year after year is not good for insurers, nor do I believe it is good for the Insured.

My advice to any insured is to pick an insurer and develop a long term sustainable relationship with them.

As a young claims officer, we always checked how long the Insured was with us before making a decision on whether or not to deny a claim. With many insurers, the length of time you have been with them makes no difference to whether or not a claim will be denied, and certainly they are being penalised premium wise for staying with them.

To me, the industry has reached a new low with the recent release of the BizCover ad with someone cutting the most disgusting toenails. To me, it is so repulsive that I immediately changed the channel.

Compare that ad with the way that Bridgestone Tyres are advertising. It is creative and sends a powerful and important message. They are NOT advertising that they have the cheapest tyres, they are explaining the benefit of quality tyres when it matters.

Ironically, one of the first claims that I handled on setting up LMI Group was for a tyre retreading company who had a major fire. His belief was that he faced the same dilemma as the insurance industry, everyone buys his product not realising how important that product is until such time as they really need it. In the case of tyres, it is when you have to slam on the brakes and you expect them to safeguard your family, car and whatever it is you are trying to avoid hitting from injury or damage. In effect it is selling their tyres from a risk management perspective.

Insurance is exactly the same, it is all well and good looking for the cheapest and simplest policy until you really need it.

Just like tyres, insurance is about protection. Good insurance is about managing risk.

In now 47 years of my handling claims. In that time, only a handful of customers have ever discussed the premium with me after a claim, and in the few cases that have, in every case, it has been a negative experience not a positive. That is, they say, “I moved from this insurer to that insurer and saved X dollars, tell me again Allan, how much has that just cost me?” The answer is always at tens of thousands of dollars more.

Maybe I am just unlucky, but I have not met a single person who has had a good claims experience with the insurer that offers discounted theatre and other such benefits.

My recommendation to any insurer reading this is look to engage the same agency that put together the Bridgestone ad to advertise your products and brand insurance. The advice to any insured out there is, if you want to buy theatre tickets, buy theatre tickets, if you want to buy protection, speak to a quality insurance broker and or insurer and look at the coverage and claims service, not just the price. Remember, LMI ClaimsComparison.com is a free service unique to Australia to help you gauge the claims service you can expect from an insurer.

As for Mr Hay, I am sure he would turn in his grave at the way we now advertise / market insurance protection.

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Product Recalls Australia – 5th June 2018

This week’s product recalls includes the following:

Danish by Design Pty Ltd — Troll Lukas Cot

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Panasonic Australia Pty Ltd — Panasonic Toughbook Laptop

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FCA Australia Pty Ltd — MY 2016 – 2018 Alfa Romeo Giulietta

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Instinct Property Maintenance Pty Ltd — IBF400 Ethanol Burner

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Toyota Motor Corporation Australia Limited — Lexus NX200t, NX300h, RX200t, RX350 & RX450h (expanded recall)

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Toyota Motor Corporation Australia Limited — specific Prius, Corolla Sedan, Fortuner & Hilux vehicles (expanded recall)

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IKEA Pty Limited — SLADDA bicycle

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LASER Corporation Holdings Pty Ltd — Portable DVD Player 240V Mains Power Adapter

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R.M.S Titanic – Launched 106 years ago today

Today is the 106th Anniversary of the launching of the Royal Mail Ship Titanic in Belfast, Ireland.

As we all know, the 40,000 tonne ‘unsinkable’ ship struck an iceberg on the 14th April 1912 sinking early the next morning, the 15th April 1912 with a loss of around 1,514 lives.

Lloyd’s of London paid out £1,000,000 (modern day equivalent over £107,500,000) within 30 days of the sinking. To put this into perspective, total payouts on all marine claims by Lloyd’s that year was approximately £6,500,000.

Early in my career, I was told that there is no such thing as a prestigious account. The Titanic was marketed as a prestigious account and as a result, a very favourable premium of only £7,500 was charged for the £1,000,000 sum insured (and we think rates are cheap today!).

Being the avid collector that I am, I recently acquired a plate and cutlery which were manufactured for the Titanic but never made it on board. The items were put aside in a warehouse to replace theft and breakages, but with the sinking of the vessel, the items never got to be used. They now have pride of place in the reception of LMI Group’s head office in Melbourne.

Earlier this year, I received a piece of coal that had been recovered from the wreck of the Titanic and I think this is where my collection will finish.

I never thought I would be lucky enough to own a piece of this history, let alone 4. 

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Are Interest Costs claimable as an Increased or Additional Increased Cost of Working?

This is a question often put to me as some loss adjusters and insurers push back when it is claimed.

If I start with the actual wording from the Australian Industrial Special Risks policy which is found in many other policies, it reads:

“The Insurance under this Item is limited to Loss of Gross Profit due to: (a) Reduction in Turnover; and (b) Increase in Cost of Working, and the amount payable as indemnity there under shall be:…

…The additional expenditure necessarily and reasonably incurred for the sole purpose of avoiding or diminishing the reduction in Turnover which, but for that expenditure, would have taken place during the Indemnity Period in consequence of the Damage, but not exceeding the sum produced by applying the Rate of Gross Profit to the amount of the reduction thereby avoided.”

If the Insured needs to pay a deposit on replacement stock or machinery or even make a fortnightly pay-roll and need to borrow funds to keep the business afloat, while the business has been disrupted due to an Insured Event, or because the Insurer has not made sufficient progress payments to allow them to fund this expenditure from insurance monies, then to me, in any interpretation of the Increased Cost of Working definition, the Insured is entitled to claim the additional interest that they have incurred in consequence of the damage.

I stress, the interest expenditure cannot be existing interest, for that should be included as an Insured standing charge in any event and be fully covered under the Item No. 1 (a). The two tests, being sole purpose test and economic limit test, obviously would both apply.

In view of the relatively low interest rates that are currently being charged around the world, I do not expect that the interest charges, unless the claim was protracted for an extended period of time and the amount borrowed was significant, would not pass the economic limit test. If it did not, or the Insured only had additional increased cost of working cover only, then the Insured would be able to make the claim under “Item No. 4 (Additional) Increased of Cost of Working”.

This reads:

The insurance under this item is limited to increase in cost of working (not otherwise recoverable hereunder) necessarily and reasonably incurred during the Indemnity Period in consequence of the Damage for the purpose of avoiding or diminishing reduction in Turnover and/or resuming and/or maintaining normal business operations and/or services.

Here, the coverage goes further and states that the expenditure only has to be made to maintain normal business operations. Therefore, it goes without saying that if the insured had to borrow additional funds to maintain normal business operations and/or services then the interest paid to do so would be an additional increased cost of working.

Claims for this item are a relatively new phenomenon, typically brought about by the fact that some insurers are no longer willing to make reasonable progress payments to assist the insured during the initial phases of a loss. In fact, some insurers insist that the Insured incur the costs under Material Damage before they will reimburse them. In such cases, if their insurer has failed them and they have had to rely on the banking or other finance sector and incurred a cost to do so, then surely this is a legitimate Increased Cost of Working. To deny such a claim is a clear case of wanting the cake and eating it too.

To me, this is such an obvious increased cost of working, I cannot understand why it is being refused so often.

Perhaps, if it continues the only alternative will be to have it tested by the courts, but to me, it is a lay down misere.

 

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Product Recalls Australia – 29 May 2018

The Takata saga continues…

 

Mercedes-Benz Australia/Pacific Pty Ltd — Mercedes-Benz MY 2017 “GLC” Passenger Cars

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Kia Motors Australia — Soul PS

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Daimler Truck and Bus Australia Pacific Pty Ltd — Mercedes-Benz Actros Trucks

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Ford Motor Company of Australia Limited — Ford Kuga and Escape

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Miss Maud — Assorted Bakery Products

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Ford Motor Company of Australia Limited — Ford Focus and Kuga

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Ford Motor Company of Australia Limited — Ford Courier, Econovan and Ranger

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Have your say for the Mansfield Awards

The second annual Mansfield Awards for Claims Excellence will take place on Thursday, 5th July evening in Sydney.

If you have not put your name down as yet, please visit the website.

Unlike other awards, where people nominate and the award can be given to the person who provides the best proposal, these awards are based on a survey as well as data obtained from the Financial Ombudsmen Service.

If you would like to have your say and participate in the survey with claims service you have received, either as an Insured, insurance broker, or repairer, you can do so at ClaimsComparison.com.

 

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Blog Question: How do you deal with Increased Cost of Working incurred during a Waiting Period (Time Excess)?

I received this question which comes up from time to time.

Hi Prof. Manning,

As we know, the increased cost of working (ICOW) of Business Interruption (BI) insurance, that certain expenses may be incurred following loss or damage to try and maintain business activity, such as renting alternative premises, hiring additional staff and additional advertising.

What happens if the interruption is shortened under deductible days as a result of ICOW being incurred?

How can I deal with ICOW incurred during a waiting period?  which cost is payable?

How the average daily value deductible shall be deal ?

Looking forward to your reply,

Many Thanks

[name withheld]

 

In this situation, there are a few options. Under the principle of Utmost Good Faith, and typically to comply with a condition within the policy, the insured must take ALL reasonable steps to mitigate their loss. This means, incurring the increased cost of working costs as soon as practical to mitigate the loss, not only during the time of the waiting period, but in the balance of the indemnity period.

The second option is to wait until the time excess has expired, however as I say, this would be in breach of a policy condition and fly in the face of the principle of utmost good faith.

The way I have treated this is to try and be fair to all parties. I look at not when the cost was incurred, but to whose benefit the expenditure has meant. For example, during the Longford Gas Crisis in Victoria, Australia in 1998, the gas supply’s were cut to thousands of businesses in the state of Victoria. The expected period of disruption was not known and everyone was clambering to look for alternative ways of mitigating their loss. This included for some, changing out jets from natural gas to liquid petroleum gas (“LPG”), and installing LPG tanks. This was a significant cost to large manufacturing companies.

 

The loss occurred on a Friday afternoon and this installation work may have occurred over the weekend when the manufacturing site was not operating in any event. Therefore, while the expenditure was incurred during the waiting period, or time excess, the benefit was all to the insurer from Monday morning when the plant was able to return to normal, due to the expenditure incurred during the waiting period. In that case, I recommended and insurers accepted that the expenditure should be paid in full as the benefit from the expenditure was all to their benefit.

In other cases, say for a restaurant, the peak days for the restaurant were Friday night, Saturday lunch, Saturday evening, Sunday lunch and Sunday evening, as it was the grand final weekend for a major football league, many restaurants were closed on the Monday. As it turned out, the period of disruption was a total of 10 days. Again, here I apportioned the benefit received against the expenditure. Let’s assume that the expenditure was incurred on the Saturday morning which allowed the restaurant to operate Saturday lunch & dinner and Sunday lunch & dinner, closing for Monday in lieu of a day off on the weekend and was open for the next 6 days. In this instance, I would apportion the expenditure again based on the benefit to the Insured during the waiting period and the Insurer during the balance of the indemnity period. Here, I did not use days but rather the revenue generated on each of the days and portioned it for the benefit received by the Insured in the first 48 hours and then the Insurer for the balance of the indemnity period.

Every senior loss adjuster and claims preparer, who deals with business interruption claims, believes that time deductibles or waiting periods are more trouble than they are worth. In my book, Business Interruption Insurance and Claims, I have outlined just 4 of the major problems with time deductibles.

What would be fairer and easier, certainly from a quantification point of view, would be a straight monetary excess/deductible.

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