Product Recalls Australia – 23 May 2018

This week’s product recalls includes the following:

Mercedes-Benz Australia/Pacific Pty Ltd — MY 2017 Mercedes-Benz AMG “GTR”, “GTC” and “GTS” Passenger Cars

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Coles Supermarkets Australia Pty Ltd — Coles Mini Classics Vanilla Ice Cream

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Suzuki Australia — Suzuki SX4

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Suzuki Australia — Suzuki Kizashi

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Suzuki Auto Co — Suzuki Kizashi

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Suzuki Auto Co — Suzuki SX4

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Volvo Group Australia — UD Trucks – Quon

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Audi Australia Pty Ltd — Audi Q5 (FY)

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SA Health — Al Mina Mediterranean Patisserie – Assorted Products

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Fraser Coast Free Range Pty Ltd — Sunny Queen Farms Organic Free Range Eggs 550g and 590g

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Scandinavian Tobacco Group Australia Pty Ltd — Djarum Bali Hai Cigarettes

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Clark Rubber Franchising Pty Ltd — Be Safe Portable Pool Fence

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Volvo Group Australia — UD Trucks – Quon

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IVECO Trucks Australia — Metro and Delta Buses

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Mercedes-Benz Australia/Pacific Pty Ltd — MY06 – MY12 Mercedes-Benz GL-Class, ML-Class and SLK-Class Passenger Cars

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Specialized Australia Pty Ltd — Specialized MY18 Fuse Comp Bicycle Stout Cranks

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Guest Post: Steven Manning – Another New General Insurance Product Class introduced on LMI RiskCoach

Only a week after the launch of Corporate travel the team are back at it again, be it in the background for months, on the launch of yet another class of insurance, Product Recall and Product Contamination insurance. With the addition of these new classes onto the system, users can now research 14 classes of General Insurance through their LMI RiskCoach Subscriptions.

The reasoning behind the addition of this all-important class is to erase the misconception held by many small to medium businesses that believe that Product recall and contamination covers are included as part of their Product Liability insurance which is, of course, not the case with product liability insurance not covering the recall costs but rather just the liabilities arising out of the incident.

The new content touches on a vast number of areas including policy features, coverage and malicious tampering. It also goes into detail around the regulations under the Competition and Consumer Act of 2010 (CCA) that deem any importer of items into Australia to be the manufacturer, this relates to a huge product recall exposure that many of these businesses do not know they are accepting and could easily mean the end of their business.

The system not only points out the risks associated with Recalls and Contamination but provides Risk Management steps which can be easily implemented into any business faced with these exposures. These steps will significantly reduce the chances of an event occurring and assist in managing the process more efficiently and effectively should a recall occur.

With recall costs on the rise it has never been a better time to have this class added to the RiskCoach system and more importantly to have that discussion with the insured.

One last final note, a big thank you to all of those involved who have made this happen. We have a lot of people working away in the background that make these services and improvements possible! Thank you again!

 

By Steven Manning of LMI Group

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Insurers forget “utmost good faith” at our peril

I get so frustrated when I see dishonesty in any part of the insurance claims process. I fully support all efforts to stamp out genuine claims leakage and dishonesty on the part of the Insured and or repairers who milk the system. But equally if an Insurer is acting with scant disregard to the principle of utmost good faith I am equally appalled.

Before I outline a situation that prompts me to write this post, I want to explain what claims leakage actually is.

One definition is:

Claims leakage is defined as the difference between the actual claim payment made and the amount that should have been paid if all industry leading practices were applied. • Leakage is caused by deviations from established industry or company standards and leading practices. [Source Ernst and Young].

I do not like this one as it speaks of ‘established industry or company standards’ which in themselves may be stacked against the Insured. I have never liked the way that jewelry is insured as it is stacked against the Insured paying premiums on sums insured jewelers and insurers know the Insured will never get all of. You would be staggered at how many people think they have been ripped off by their insurer following a jewelry claim but many in the Industry justify it as it has always been done that way.

Another is:

Dollars lost through claims management inefficiencies that ultimately result from failures in existing processes (manual and automated). In other words, it’s the difference between what you did spend and what you should have spent on a claim. The cause can be procedural, such as from inefficient claim processing or improper/errant payments, or from human error, such as poor decision-making, customer service, or even fraud. Claims Leakage is often discovered through an audit of closed claim files. [Emphasis mine – Source: International Risk Management Institute, Inc]

My own definition is:

Claims leakage is the difference between the amount paid on a claim compared to the Insured’s genuine entitlement under the contract of insurance.

I am the first to appreciate that Insurers pay directly or indirectly, vasts amounts of money to builders, panel beaters and a raft of other suppliers and trades. As such they are in a good position to negotiate favourable terms on the basis of the quantity of work directed to them and also the fact in some industries that payment is guaranteed.

At the same time this cannot be an abuse of power and drive businesses into the red or creating a situation where the only way the supplier or trade can make a reasonable profit is by cheating the Insured. I.e quoting for 2 coats of paint and only applying one is a common example. Another is not replacing all the damaged building parts that are not normally visible, that is say wall or ceiling framing.

It appears that at least one insurer has done a deal with a flooring contractor to supply and lay carpet. This is fine.

An Insured suffered damage, lodged a claim and the supplier produced a quotation that was sent direct to the Insurer. The Insured was then offered a cash settlement and found that no other carpet company could do the work for the amount quoted. In desperation the Insured went back to the original company that provided the quote only to be told that they could not do the work for the amount quoted.

Finding that they could not get their damaged carpet replaced The Insured pushed and finally received a copy of the quotation. As it is the Insured’s home, they should be provided this to ensure it is the same quality as before, that what was quoted they receive etc but it was only when the Insured really pushed and would not take no for an answer did they finally get the quotation.  This is what was written at the top of the quotation:

 

Note: this is an image of the exact words and not my retyping the words but I have removed the name of the firm pending possible legal action.

You can image how the Insured feels about their insurer, the repairer and the insurance industry in general. It just adds to the stereotype image of our industry.

When we were appointed we contacted the repairer and they were very upset the client had their original quote. We asked for a quote from this repairer that they would honour and despite their promises, we have never received a quote.

Stepping away from this claim for a minute. If an Insured submitted a quotation like this in reverse, that is that it clearly did not fairly represent the true loss suffered by the Insured, i.e. in the case of an Insured knowingly submitting a quote higher than the true value, it would be regarded as a serious breach of the principle of utmost good faith.

Why is it any different for the Insurer? If it can be proved that, what you could be forgiven for thinking, that is the Insurer has entered into an arrangement that appears to be allowing them to low ball genuine losses, then to me it is a serious breach of the utmost good faith principle. How many other Insured’s have been short changed by this arrangement?

And we continue to wonder why insurance rates so poorly on the trust scale.  I keep coming back to the words of Lord Mansfield more than 250 years ago:

“Good faith forbids either party, by concealing what he privately knows, to draw the other into a bargain from his ignorance of that fact, and his believing the contrary.”

If any reader finds that they or one of their clients is in the same boat as here, please insist on a copy of the quotation and certainly do not accept any offer until it is received and or you are satisfied that you can have the work done properly for the amount offered. All of us in the industry have a duty to protect the insuring public and brand insurance.

For my part, I will meet with the Insurer and see if I can get this one sorted fairly.

 

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Product Recalls Australia – 16 May 2018

This week’s product recalls includes the following:

Volvo Group Australia — UD Trucks – Quon

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Red Kellys No 1 Pty Ltd — Red Kellys Tasmania Creamy Caesar Dressing

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American Special Vehicles — RAM 2500 (DJ) and 3500 (D2) Trucks

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FCA Australia Pty Ltd — 2004-2007 (KJ) Jeep Cherokee

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FCA Australia Pty Ltd — 2018 (KL) Jeep Cherokee equipped with 2.4L (ED6, ED8) engine

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Aldi Stores — oh so natural Almond, Cashew and Cranberry Bites

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Plum Products Australia Pty Ltd — Plum Premium Metal Nest Swing with Mist

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Guest Post – What does home insurance cover?

I often get requests from people and organisations seeking to make a guest post on my site. Unless it is meaningful and is not a straight product flog I will certainly share and embrace their articles. (You would be staggered how many requests I get from gambling sites).

This guest post is from Alex at Lendi.com.au.

What does home insurance cover?

 

The Wye River bushfires that took place in 2015 on Christmas Day destroyed over a hundred homes, with The Insurance Council of Australia at the time estimating total losses to be worth $38 million.

Property losses were significant, and while government grants were given out to those who were unable to return to their home, $1,300 would not have made much of a difference to the many homeowners that turned out to be underinsured.

According to data from RACV Home Insurance, 65% of the members who had their homes destroyed by the fires were underinsured, some by over $100,000. This is an alarming reminder of the importance of understanding your home insurance policy and what it does and doesn’t cover.

 

Home insurance and contents insurance

 

So, what does home insurance cover ? Well, there’s a reason it’s also referred to as building insurance. Most policies do not protect your personal belongings, but rather cover the cost of repairing or rebuilding the actual building structure itself, including any outer buildings, garages, and permanent features within the home, such as light or a built-in wardrobe.

It provides you with financial protection against external events that are out of your control, such as natural disasters including fire damage, hail, and wind, or man-made damages including vandalism, arson, and theft.

However, you should be aware that most policies do not cover particular events such as earthquakes and floods. If you live in an area where these events are more likely to occur, then you may need to take a closer look at your policy options.

If you want your personal belongings covered in case they are damaged, lost, or stolen, then you would need contents insurance. This covers personal possessions in your home such as electrical equipment, clothes, furniture, tools, and jewellery. Many homeowners bundle their home insurance policy with contents insurance into a combined policy so that way everything is covered.

As for home insurance policies, there are two different types to choose from:

Total replacement cover

Total replacement cover is a type of home insurance that, as the name suggests, covers the cost of rebuilding your property to the state it was in prior to being damaged. This is the best option if you want to reduce the risk of being underinsured.

However, only a few insurers currently offer total replacement policies, and you may find that it takes some time to receive the funds if you are to suffer a total loss, as a full assessment will need to be carried out by the insurer to calculate the cost of rebuilding the property.

Sum-insured cover

A sum-insured cover is the more common home insurance option and will only cover you up to a set amount to rebuild or repair your property. The set amount is selected by you and often referred to as ‘the sum insured.’

Since you can only receive up to a set amount, there is a higher risk that you will be underinsured, as most people do not have the expertise required to accurately work out how much it would cost to rebuild their home.

It should also be noted that limits, caps, exclusions, and other conditions vary between insurers, so when you are choosing a policy be sure to ask questions and carefully read the product disclosure statement. Take your time to shop around, so you find the best cover for your needs.

Homeowners that do not fully understand their insurance policies could end up finding themselves to be underinsured at the time disaster strikes. Be sure to do your research and read over the fine print. You don’t want to end up losing your home because of a natural disaster, only to find that you won’t be able to afford the repairs.

As well as taking the time to understand your insurance cover, you should also make a point of regularly reviewing your policy, as over time life circumstances can change, along with your possessions and your home.

Think back over the last year before you blindly renew your policy. You would be surprised at how many homeowners forget to mention an expensive home renovation to their insurance providers. Failure to do so could leave you at risk of not being adequately covered, so it’s worth taking the time to review your policy on a regular basis.

 

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Thank you for sharing Alex.

I would support the position that with some no sum insured policies the time taken to finalise the claim in the event of a total loss can be much longer to agree than with a sum insured policy. I ended up working with around 12 such people following the Wye River fires being engaged around 12 months after the fires. Most disagreements were over the amount of reinstatement.  It is therefore important to use both LMI PolicyComparison.com and LMI ClaimsComparison.com to compare the features and benefits and also the claims service as part of your decision making process.

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Different landlord – similar issue

This is another issue that I have posted warnings on several times over the past few months.

It was reported recently that a Perth landlord was hit with a huge power bill after tenants ran a cannabis grow-house from his property.

The power bill was a whopping $85,000.

The report suggested crime gangs are most likely to target private landlords and will often provide a large upfront cash payment to cover several months of rent. While this is obviously good for cash flow reasons, there are heightened risks if regular full inspections are not made.

The way they organise themselves such a payment allows time for tenants to set up the growing operation.

On a different point, why a landlord would retain the electricity account in their name is beyond me.

Any landlord caught this way could face significant losses.

Apart from the damage and clean-up costs, affected landlords are exposed to loss of rental income while the home is being repaired, as such it can have a devastating financial impact.

Landlord’s need to protect their valuable investment and income stream with a quality policy designed specifically for landlords. The cost of insurance is a legitimate tax deduction and my strong advice is to seek the advice of a quality insurance broker.

Having said this, picking the wrong tenant who racks up a huge electricity or water bill is typically considered a business risk that is not insurable.

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A Changing of the Guard – Financial Ombudsmen Service (FOS) soon out and Australian Financial Complaints Authority (AFCA) coming soon (1 November 2018)

The Changing of the Guard

The Australian Financial Complaints Limited (AFCL) has received authorisation from the Minister for Revenue and Financial Services, the Hon. Kelly O’Dwyer, to establish and operate the Australian Financial Complaints Authority (AFCA).

Both the Minister (media release) and AFCL have issued a media release, and announced the new members of the AFCA Board. In case you have not seen either, I would advise the following key points.

Under the Minister’s Authorisation, AFCA will commence accepting new complaints on 1 November 2018. All financial firms will be required to be a member of AFCA by no later than 21 September 2018. Ninety-eight percent of current members of the Financial Ombudsman Service (FOS) have already completed the annual assessment and member declaration to ensure a smooth transition to AFCA.

AFCA will, over the next few months, be putting in place the necessary infrastructure, staff and procedures to be ready to receive complaints from 1 November 2018.

In the interim, AFCA will operate the FOS scheme and will deal with any existing FOS disputes under the current FOS Terms of Reference. The operations of FOS, including staff and members will be transferred to AFCA.

The AFCA Board will also continue working with the Credit and Investments Ombudsman (CIO) Board on the necessary arrangements for a transfer of its members and operations to AFCA. There will also be ongoing collaboration with the Superannuation and Complaints Tribunal (SCT) during the transition process.

Next steps

One of the early actions of the new AFCA Board is said to be to consult stakeholders, including current FOS members, CIO members and superannuation trustees, relevant industry bodies and consumer organisations, on the proposed AFCA terms of reference (to be known as the Rules) and on an interim funding model for the new scheme.  I will write over the next month with further information on these consultations which are currently planned to commence in June 2018.

An interim AFCA website – www.afc.org.au –  is already up and going to enable the Authority to provide regular information and updates on the commencement of AFCA, including information about consultation on the AFCA Rules.  Information is also available on the FOS website.

It is reported that a full service AFCA website will be ready by the commencement date of 1 November 2018.

If anyone has any questions regarding membership of Australian Financial Complaints Authority or any other questions regarding AFCA commencement, it is recommended you call them on 1800 931 678 or email membership@afc.org.au.

For my part, I will watch the new organisation with interest. General Insurance is so complex and many of us fear that well established legal precedents including the application of the Insurance Contracts Act will not be followed as we have seen far too often of late in the current organisation when those making the decisions are not sufficiently trained or experienced in the industry. With a mega body handling so many different types of financial products this issue may get worse not better.

The second issue is, will the new Authority publish the data on complaints that FOS currently provide annually? This is an important service that I for one would hate to see disappear or get mixed in with a bigger unintelligible report in the new mega Authority.

But to be fair, we need to all give the new Authority every chance and we wish them every success in their very important role.

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NSW introduces new laws to curb the serious issue of distracted drivers

I have posted several articles over the past few years on the very serious issue of people texting and generally being distracted by their mobile devices while driving. One post covered the terrible case where in February this year, a 22-year-old man, who allegedly took his eyes off the road for up to 20 seconds to use his phone, seriously injured two policemen setting up a random breath test. That 20 seconds of mobile phone use in a car travelling at 60km/h was equivalent to driving blind for 330 meters, Parliament was told. As a result, one of the police officers had part of his leg amputated. See http://www.allanmanning.com/phones-and-driving-do-not-mix/

Even on Saturday as I drove out of my own street onto a round about, I was nearly involved in a collision with a driver who was clearly not watching the road. Thankfully my wife and I could see the driver was not watching the road and we avoided the certain collision.

I therefore welcome the new measures taken by the New South Wales government to curb this very real problem. That is, people simply do not realise their addiction to social media, text messaging and emailing is putting people’s lives, including their own, at risk. This is despite more than 40,000 people being fined by NSW Police for illegal mobile phone use in the 2016-17 financial year.

In trials by One Task, a Sydney technology company, of speed cameras to spot illegal use the cameras detected more than 400 Sydney-siders using phones illegally in a 12-hour period.

NSW will be the first place in the world to introduce speed-camera-style technology to detect and crack down on illegal mobile phone use by motorists and while it will no doubt have a revenue benefit to the government, I do believe the primary reason for the new laws is to reduce the numbers of people killed or seriously injured on the road.

The new rules have been passed by NSW Parliament and they also extend to mobile drug testing which will now include cocaine and tougher penalties for drivers under the influence of drugs.

While motor vehicle policies have an exclusion for drivers being under the influence of alcohol or drugs, only a few have introduced exclusions for texting while driving. While I strongly support such an exclusion, I think it should be in line with the under the influence exclusion and still protect the owner of the vehicle but make the driver ultimately responsible for their dangerous actions.

 

 

 

 

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A statistic that will surprise some but not all

General insurance covers such a broad range of products it is extremely difficult, if not impossible, to be across them all.

One product that has taken off and is often seen being advertised on television is Pet Insurance.

A recent government report highlighted the concentration by 1 insurer in this space. Clearly they do it well and many brands are with partners they have selected as being credible.

With this background you can understand why I was nearly going to title this post – “Pet Insurance – more brands than a dog has fleas!” 🙂

The purpose of this note is to make sure people are aware that while they be shopping around and thinking they are looking at different insurers and or product offerings, they may well not be.

LMI PolicyComparison.com does have a comprehensive comparison of the features of benefits in this class for subscribers to the service as they do 20 plus classes of general insurance. Meanwhile LMI ClaimsComparison.com compares the claims service which along with the features and benefits of the policy should be considered with any insurance purchase, rather than just making the buying decision on price alone.

The table below shows who owns what brands and the source of the information.  Being buried so far into the report, is one of the reasons I thought it worth sharing the information.

I would also add that I know from PolicyComparison.com that RAC have a product as well that is underwritten by RACQ while Pet Cover is a second brand underwritten by MS Amlin Syndicate 2001 at Lloyd’s.

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Product Recalls Australia – 18 April 2018

This week’s product recalls includes the following:

Gardenia Home Garden Décor Pty Ltd – Bio Ethanol Fireplaces – various models

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Porsche Lizenz- und Handelsgesellschaft mbH & Co KG — Porsche Wooden Car Blue/Black

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GM Holden Ltd — SAAB 9-3 and SAAB 9-5 MY 2006-2011

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Toyota Motor Corporation Australia Limited — Toyota Kluger

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Daimler Truck & Bus Australia Pacific Pty Ltd — Freightliner Trucks

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Lovesac — Kidsac

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Polaris Sales Australia Pty Ltd — ACE 500 / 570 / 900 single seat vehicles (MY2017-2018)

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Polaris Sales Australia Pty Ltd — Polaris RZR 570 side by side vehicle (MY2017-2018)

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Polaris Sales Australia Pty Ltd — RZR XP Turbo and RZR XP4 Turbo side by side vehicle (MY2016-2018)

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Polaris Sales Australia Pty Ltd — RZR XP 1000 and RZR XP4 side by side vehicle (MY2014-2018)

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Polaris Sales Australia Pty Ltd — RZR XP 1000 and RZR XP4 side by side vehicle (MY2014-2018)

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

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For more product recalls please visit the website: https://www.productsafety.gov.au/recalls/browse-all-recalls

 

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