Calamity Cladding

It’s the kind of thing that can cause headaches for many homeowners. Imagine paying a perfectly reasonable insurance premium for many years, only for it to suddenly spike out of nowhere. Well, that’s exactly what’s happened to the residents of an apartment in Brunswick, Victoria.

After their building caught fire earlier this year, owners of the Anstey Square building in Brunswick have been ordered to take immediate action to remove dangerous cladding on the building. The apartments are clad in a mix of polystyrene and aluminium composite panelling, the same material that was used on the Grenfell Tower. You can read more about this type of cladding in great detail in my earlier blog post here.

premium

Image: pexels.com

According to The Age, the overall costs to repair the building are estimated to be more than $2 million. But that’s not all that’s leaving the apartment owners out of pocket. The already-stressed Brunswick apartment residents now have another worry. Their insurance premiums have now more than quadrupled, to almost $134,000 this year.

Chairman of an owners’ corporation, Allister Hill, told ABC News that while he was thankful for the insurance, “it’s a bit scary how much they want.”

According to Insurance Business, legal action has already been filed against the builder. But for the moment, the residents are seeking government intervention. It’s not just these residents that could be caught up in the insurance premium spike, however. It’s estimated that thousands of Melburnians could be affected as understanding of how widespread the issue is becomes known. This could mean anyone who owns an apartment clad by builders using combustible materials in the past decade. Stay tuned, folks. These premiums could be going through the roof.

Words by Skye Jamieson

Deal or No Deal?

Deal or no deal? It’s the million-dollar question – or should we say, billion-dollar? Now, I love a good deal as much as the next person, but this one’s particularly spicy. While there’s no Andrew O’Keefe or sequined women in sight, this week in insurance news we saw a huge acquisition in the insurance industry. Zurich has acquired ANZ’s life insurance business for a grand total of $2.85 billion.

Now let’s get down to the nitty gritty. According to Insurance Business, the sale is made up of two transactions, inclusive of $1 billion of upfront reinsurance commission from Zurich, with the remaining balance paid on completion of the deal.

The transaction will see Zurich take on 100 per cent of ANZ’s One Path Life Insurance.

deal

Image: pexels.com

So why is this such a huge deal for Zurich? Well, it now makes Zurich the largest retail life insurance firm in the country. It’ll have more that 1.5 million customers, as the international giant owns a whopping 19 per cent share of the Australian life insurance market.

According to a statement from OnePath Life Insurance, “The deal will see two true insurance specialists come together to create Australia’s number one retail life insurer and reinforces Zurich’s commitment to financial advisers as valued business partners. It will introduce exciting opportunities for Zurich to invest in new ways to make life insurance more relevant, engaging and accessible to Australians.”

The deal gives the Swiss insurer the top spot in a market attractive to global players, due to its robust economy and low penetration, says Reuters. Zurich will also enter into a 20-year distribution agreement with ANZ in Australia to distribute life insurance products via bank channels.

So, all in all, the ‘deal’ decision seems to be a promising one. It might just be that lucky green $200,000 suitcase hiding in plain sight.

Words by Skye Jamieson

Piggy in the Middle

Claims, claims, claims. We just can’t get enough of them. As loss adjusters we thrive on our favourite type – construction and engineering. They often come in the form of contract works, public and products liability or professional indemnity claims. And at FT Adjusting, simplicity is at the heart of our claims philosophy, which is why we’re proud of our ‘niche-pertise’.

Now, before I get teary-eyed, I’ll try and get back on track with this blog (I had a point to make, I promise!). The fact is, the claims space is a volatile and diverse cycle. But it also has the potential to change dramatically. In fact, an industry expert has provided his recommendation for digitalising the claims space. And boy, it’s a doozy.

Claim Central Consolidated CEO Brian Siemsen told Insurance Business that we mustn’t “put lipstick on the pig,” when it comes to digitalising the claims space. You heard that right.

Pig

Image: Pixabay.com

“What we tend to try and do, particularly in the Australian and New Zealand industry, is put a different colour lipstick on the same pig,” Siemsen told Insurance Business. “The real challenge is whether we can think disruptively enough in the claims space. Can we map that customer journey and use digitisation to recreate potential operating models?”

While it’s a unique picture to imagine, Siemsen does make some excellent points here. He believes that the advent and acceptance of digital technologies provides the industry with an opportunity to rethink a customer’s journey. This could be all the way throughout the claims process, from researching and taking out a policy to making insurance claims.

In rethinking the operating model, it’s not all about bringing home the bacon. It’s about making successful processes between customer, broker, insurer and supplier. And that’s something you can take straight to the piggy bank.

Words by Skye Jamieson

A Royal Affair

December is finally here, and so is the royal commission into alleged misconduct by banks, insurers and other financial service entities. It’s going to be a long, hot summer.

Now, you might find yourself asking, what is a royal commission again? Don’t worry – we’ve all been there. Unfortunately, a royal commission has nothing to do with Prince Harry and Meghan Markle (although we think royal wedding plans would spice it up a little). According to ABC News, a royal commission is a public inquiry governed by an act of parliament. They can be called on any matter “connected with the peace, order and good government of the Commonwealth or any public purpose or any power of the Commonwealth”.

This particular royal commission will be investigating misconduct in the financial services sector. That includes all types of dodgy deals from banks like dishonest financial advice, questionable spending of people’s retirement savings and other behaviour that generally “falls below community standards and expectations” (i.e., major wrongdoing).

So who’s paying for it all? That’d be us, the taxpayers – including the little old ladies who’ve already been conned by the banks. It’s a hefty pricetag at $75 million – and that’s just the starting price.

Royal

Image: pexels.com

According to Insurance News, insurers are saying they’re ready to contribute to the commission. Insurance Council of Australia CEO, Rob Whelan, says the Insurance Council is reviewing the draft terms of reference and will provide input to the Government.

“Though the calls for a formal inquiry have focused on the banks, the Insurance Council of Australia hopes the royal commission will end political uncertainty and improve public confidence in the insurance sector,” said Mr Whelan.

The financial services industry plays an important role in the lives of Australians, so there’s a big focus from banks and insurance groups on rebuilding trust and confidence in the sector. The review will be given a year to deliver its financial report, so watch this space for more updates to come.

Words by Skye Jamieson

Holiday Interrupted

It’s the age-old tale of fine print, loopholes and hidden restrictions that’s told all too often in the insurance world. Insurance policies and documents can be filled to the brim with insurance-y jargon, unnecessarily complex sentences and downright confusing clauses. And that’s just the beginning.

A recent report by the Sydney Morning Herald found that a whopping 26 per cent of people who bought travel insurance in the past twelve months didn’t even look at the document. Blimey. What’s more, the report found that people under the age of thirty were most at risk of not viewing or fully understanding their policy. And to be honest, we can’t say we blame them. Insurance policies are often built to be difficult to understand and even harder to finish.

Which is why we’re not surprised by the news that thousands of Aussies have been stranded in Bali and left potentially out of pocket. The eruption of Mount Agung has halted all flights in and out of the tourist hotspot. And guess who’s included in that list of victims? A large number of young Aussie schoolies who have been caught on the island since Sunday.

 

fine print

Image: Trent Strohm, Flickr

The devil’s in the detail, and the details are in the fine print. Many insurance companies are telling their customers just that. Some companies have issued statements telling customers they would only be covered if they bought policies up to nine weeks ago – before the Indonesian government issued an alert on the volcano. According to Insurance Business, the alert was first raised to level four – suggesting an eruption was imminent – on September 22nd.

So, if you’re a traveller, your best bet is to dig out your handy magnifying glass and double check that pesky fine print. Impacted travellers are being urged to consult their policies and insurance company websites to check if they are covered.

Words by Skye Jamieson

Asbestos Awareness

In keeping with the theme of last week’s blog, today’s topic is all about the dangers of asbestos. It’s November, and that means it’s Asbestos Awareness Month! This is a particularly pertinent issue for Australians because we have one of the highest rates of asbestos-related diseases in the world, according to Asbestos Awareness.

Before we get down to business, it’s time for a little backstory on asbestos. One of the only places in Australia that produced blue asbestos was a small mining town called Wittenoom in Western Australia. The roads of Wittenoom were paved with asbestos, and the thriving town literally lived and breathed it every day. By 1961, a former Wittenoom miner was diagnosed with mesothelioma (an asbestos-related disease) and died, becoming the first of more than three hundred former mine workers to die of the disease, reported ABC News.

Today, Wittenoom is (almost) a ghost town. The Western Australian Government recommends avoiding the area and no longer recognises Wittenoon as a town. Electricity has been cut off, mail deliveries stopped and police patrols halted, reported The Age. But amazingly, Wittenoom has a grand population of three people, who refuse to evacuate their homes.

Awareness

Image: Wikipedia

Now to business. Asbestos is a serious danger in the construction and engineering industry. It’s not just tradies, builders and engineers that need to be aware of the dangers of asbestos in our homes and buildings, but all Australians. Many people wrongly believe that only fibro homes contain asbestos. In fact, asbestos products can be found in any Australian home built or renovated before 1987. This includes brick, weatherboard, fibro and clad homes.

The fact is that one in three Aussie homes contains asbestos. If you’re renovating this summer, check out this healthy house checklist to help you identify asbestos products and safely mange them. You can also check out the Australian Government’s Asbestos Safety and Eradication Agency FAQ page.

Words by Skye Jamieson

Cladding Up

Earlier this year (nearly four months ago!) I blogged about the dangers of cladding. More specifically, about the audit that Australian authorities have been conducting to ensure any cladding used in high-rise buildings is fire-retardant. In case you missed it, cladding is generally used on buildings to provide thermal insulation and weather resistance to a structure. It’s also sometimes used decoratively to improve the outer appearance of buildings. It can come in many forms, including Polyethylene/aluminium composite cladding (PE Cladding).

Cladding used on Australian buildings became a huge cause for concern after the deadly Grenfell Tower disaster. So it’s not surprising that many insurance companies are responding to the issue and updating their policies on composite cladding. MECON is one such example.

MECON are asking some tough questions. Who, if anyone, is legally liable for the presence of the PE cladding in a product? Would it be the PE cladding supplier, the building owner? Or would it be the specifier of the PE cladding: the architect, engineer or builder? In searching for answers, MECON likens the case of PE cladding to the case of asbestos cladding. In doing so, they’ve highlighted the key similarities and differences between the two cases.

Asbestos

Modern Cladding. Image: Pixabay

Similarities:

  • Both are stable themselves, but are potentially dangerous given the right circumstances.
  • Both were promoted and authorised for use as a building material.
  • Both were identified as dangerous before their use was restricted/banned.
  • Both were specified for use by a number of different entities in the construction (or supply) chain.
  • Both exist today in buildings, but that in itself has not triggered a legal obligation to remove it.

Differences:

  • The PE Cladding is flammable but asbestos is not.
  • Asbestos was manufactured in Australia but the PE Cladding was imported.
  • Asbestos is more of an OH&S issue than the PE Cladding.

Now that the potential dangers of PE cladding are known, says MECON, and the Government is potentially moving to ban and restrict use, these issues of liability will likely come into question. Stay tuned, folks, this one could get tricky.

Words by Skye Jamieson

High Risk, High Reward?

It’s been a little quiet over the last week, but this blogger has returned from her short hiatus. A lot has happened in the insurance world in the past week, and I’m feeling mighty inspired.

Heading into my beloved office this morning, I got thinking about risk. We take risks every day of our lives. In fact, we take so many risks that we might not be aware of just how often it happens. Something as mundane as driving a car, for example, can be an incredibly dangerous task. You might be the best driver in Sydney, but you can’t predict the behaviour of others on the road. It can be a risk using the office microwave to heat up your leftover fish curry. You might earn some enemies in the office by doing so. Or, some of you might have taken a particularly large risk yesterday by placing a bet on the Melbourne Cup (here’s hoping it paid off!).

Risk

Image: Wikipedia

But risks are also changing for the construction industry. According to Insurance Business, construction clients should be aware of the ‘underappreciated’ insurance risks in the construction industry.

The news comes from Iain Drennan, industry expert and head of construction at Jardine Lloyd Thompson. He believes that many construction clients face a rising cyber threat. Drennan, however, believes their threat differs from that of other sectors.

“Construction companies don’t necessarily house personal information like the banking or retail sectors. However, they still have access to sensitive information, especially if they are dealing with government entities,” Drennan told Insurance Business.

Some construction firms face loss of data, software threats and theft of intellectual property. But Drennan believes that the breadth of cyber cover available to construction clients has increased dramatically in the last couple of years. This means that constructions clients have the opportunity to be better prepared for rising risks. In this case, ‘playing it safe’ is the smart thing to do.

Words by Skye Jamieson

Weather the Storm

Storms are on the horizon this month, it seems. No, we’re not talking about Geostorm, the newly-released film that’s been receiving exceptionally bad reviews. It’s been reported that the ‘disastrous’ disaster film is mostly about people staring at computer monitors. If you’re a particularly overbearing manager who enjoys spending several hours watching people watch computer screens, then you’re going to love Geostorm.

Otherwise, we’re talking about actual storms. Wind, rain, hail – all that jazz. Sydney sure does get its fair share of storms. And it’s about to get even easier to predict exactly where these storms are going to hit. It’s said that the best predictor of future behaviour is past behaviour, but could the same hold true for the weather?

Storm

Image: pexels.com

According to Insurance Business, NRMA Insurance has revealed the Sydney areas worst hit by damaging weather events in 2016-17. It’s not looking good for the northern and northwest Sydney regions, which incidentally is home to the FT Adjusting office. NRMA reports that Kellyville was the Sydney suburb worst affected by the storms, then St Ives, Rouse Hill, Wahroonga and Turramurra.

With October marking the beginning of storm season, the NRMA believes many people don’t take the impact of storms seriously. Storm damage is the leading cause of all home insurance claims in the state. All the while, less than one in ten New South Wales residents believe that storms pose the biggest threat to their property.

So, Sydneysiders, it’s time we got our acts together. Approximately 46 per cent of residents and their homes aren’t disaster ready! So what can we do to weather these imminent storms? Apparently, it’s the little things that can make the biggest difference. You can prepare you property by doing things like trimming branches, cleaning gutters and securing loose items in your garden. For more tips you can read the full article here. And hopefully at the end of this storm season we might see a rainbow.

Words by Skye Jamieson

Wading Game

Leaks are something that we deal with daily here at FT Adjusting. Burst pipes, leaky drains and even exploded sewage systems – you name it, we’ve seen it. Leaks are a fact of life, especially during storm season.

But way across the ocean, there’s a different kind of storm brewing. Some New Zealand councils could soon find themselves in hot water for approving leaky buildings. An Auckland law firm is taking class action against councils that inspected or approved leaky or failed buildings within the last ten years, according to an article from Stuff.

According to Adina Thorn Lawyers, the aim is to help building owners who are living with leaks. And it’s an extensive time frame – it could be ten months, or ten years after the work was approved by the council.

Anyone who has had involvement with a council over the past ten years, or who is part of an existing claim, can register. This includes individuals, body corporates and commercial owners.

Leaks

Image: pixabay.com

In the world of construction and engineering insurance, this is massive news. According to building surveyor John Dalton, it’s common to find building work that’s not up to standard. Oh, if only the walls could talk, John.

‘Clearly the scale of the problem runs to hundreds of millions, if not billions of dollars with many property owners naturally asking what value really attaches to a council consent, which is something that takes good money and often considerable effort to secure,’ Dalton told Stuff.

The action will be fully funded, so participants won’t have to pay a cent. But New Zealand councils could find themselves in the firing line quite soon. Nevertheless, the whole process might take some time. And we have no problem wading to see how the whole thing pans out.

Words by Skye Jamieson