Chevy to the Levy

A few months (months!) ago, we explored in a blog the news that almost all Australian states and territories had agreed to abandon levies on insurance policies to finance emergency services in favour of a property-based charge. Now, this is a pretty hot topic. The Fire and Emergency Services Levy Act was supposed to come into effect on July 1st for New South Wales, as the last mainland state to use an insurance-linked levy.

However, according to a report from Insurance News, the New South Wales Parliament has passed legislation to reinstate the insurance-linked emergency services levy. This came after the Government suddenly backtracked from the move to a property-based charge last month. The legislation gives no indication of how long the insurance-based levy will stay. It no doubt came as a pretty big shock to the insurance industry.

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So why the sudden back flip? Well, like most things, it has quite a lot to do with revenue. According to budget papers, the insurance-linked levy is expected to generate over $794 million in revenue. On the other hand, the deferral of the levy was estimated to reduce revenue by $894 million.

Now, I’m no mathematician by any means, but I can certainly crunch those numbers. Apparently so can New South Wales Premier Gladys Berejiklian. But the decision also came after backlash from residential and commercial ratepayers who were worried about unfair hikes in bill payments. It’s a divisive issue, that’s for sure. And it seems like no matter the decision, someone is going to be in the firing line. Stay tuned for the finale of this one, friends.

Words by Skye Jamieson

Banana Split

Although the ‘slipping on a banana peel’ gag became a staple in slapstick comedy films of the early twentieth century, it just doesn’t seem to happen that often in real life. But it’s no lie that banana peels can be quite threatening. Just tell that to my ten-year-old self. There’s no worse feeling than sitting in second place playing Mario Kart and watching a banana peel appear out of nowhere like a deadly missile. Suddenly, you’re dead last in the race. If there’s one thing that Mario Kart taught me, it’s that the repercussions of tailgating can be fatal. The most shameful defeat was when you slipped on your own banana peel on the next lap.

banana peel

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As bananas have become synonymous with danger, it only makes sense that PricewaterhouseCoopers (PwC) and the Study of Financial Innovation (CSFI) have joined forces to list Australia’s insurance ‘banana skins’ of 2017. The results are in, and they may or may not shock you. According to Insurance News, this year’s Insurance Banana Skins global survey shows Australia’s top-ranked insurance risks are cyber related. Cyber risk is once again dominating the headlines in the insurance world. The report says that cyber risk requires ongoing attention, and that there’s more work to be done for Aussies to feel confident around cyber risk.

Apart from cyber risk, the other top-ranking insurance risks in Australia were found to be political interference and reputational damage.

The Insurance Banana Skins survey also mentions that Australian insurers fear cyber risk more than their global counterparts do. Our advice? If you do see a banana peel, your best bet is to side-step it – unless you want to become a punchline.

Words by Skye Jamieson

Drone Away

Good news everyone! As a cryogenics scientist in the near-perfect cartoon series Futurama once proclaimed, ‘Welcome…to the world of tomorrow!’ Or at least, we can prepare to be welcomed sometime in the near future. There’s a new technology just around the corner that could be changing the way insurance companies process claims, and how loss adjusters appraise them. According to an article from the Robotics Law Journal, drones are set to replace insurance loss adjusters. Let’s hope that article title is just clickbait.

According to the article, the insurance sector is able to make good use of unmanned aerial vehicles, or UAVs, as they can provide live video streaming services to insurance companies. This will mean a more efficient assessment process for loss adjusters and insurance companies. As technologies such as UAVs continue to become more common, the insurance industry will need to ‘get with the times’ in order to attract more millennials.

Drones

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Drones won’t only make the process more efficient though. The continued use of drones will eventually lead to an improvement in claims management and a decrease in fraud. For example, drones surveying a property will be able to create an accurate three dimensional model of its condition after an incident. The article also states that drones will be particularly useful for those hard to reach tasks. “Roof inspections are another important use for UAVs, given that it is an expensive part of the process for insurance companies to pay their adjusters to inspect roofs.”

In the long run, the use of drones in the insurance industry is hoped to result in greater customer satisfaction for consumers. The future is now – all we loss adjusters can do at the moment is pray that our jobs won’t be deemed irrelevant. If that’s the case, drones can bite our shiny metal asses.

Words by Skye Jamieson

Winner and Losers

In the insurance industry, the one thing you can always count on is ruthless competition. We know it can be a dog eat dog world out there. With thousands of insurance companies in Australia alone trying to best each other, it can often come down to survival of the fittest. When you step back and take a look at the insurance industry on a global level, the competition can appear to be even more fierce.

Which is why we’d love to take our hats off to a certain company. According to Insurance Business, there’s a new ‘most valuable’ insurance brand in the world. Survey says: Ping An Insurance. The title of world’s most valuable insurance brand is not an easy one to achieve. Now worth US$16 billion, Ping An has recently dethroned the former king, Allianz.

Competition

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And how come they’re suddenly so popular, I hear you ask. You might even be on the same page as me, and never have even heard of the company before today. Well, Ping An has harnessed some ground-breaking customer service techniques, and they’re reaping the rewards. Their online platform offers a number of free products and services to potential customers, which has created a larger platform for cross-selling. They’re also the first Chinese financial group to use a Net Promoter Score to track customer feedback and brand loyalty. All these little innovative ideas have ultimately pushed the brand value of the company through the roof.

So while Ping An is probably sitting on cloud nine at the moment, Allianz might be feeling the repercussions after having slipped to second place. But with low interest rates and market volatility occurring on a global scale, Allianz wasn’t the only insurance company to drop ranks. According to the report, the biggest loser was NN Group, with a brand value drop of forty eight per cent. That one’s gotta hurt. It’s a tough gig, but just like ABBA said, ‘The winner takes it all, the loser has to fall.’

Words by Skye Jamieson

Cyber Shot

It’s happened, and no, this is not a drill. Since Friday, many businesses all over the world have fallen victim to a pretty serious ransomware cyber attack. And it’s not your run-of-the-mill Nigerian prince scam. This is a nasty virus that infiltrates the system, holds files hostage and demands that a ransom be paid in order to restore access.

Attack

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Needless to say, this cyber attack has shocked the world, with more than 99 countries affected. And these increasing cyber attacks could be reshaping the insurance industry. ABC News has reported that although a few Australian businesses have been affected so far, most Australians aren’t among the victims of the attack. But it should definitely be considered a wake up call for many. According to ABC News, this is what the experts recommend in the event of a cyber attack:

What should I do if I’m a victim of a cyber attack?

  • Disconnect your PC from any networks, then power off
  • If you’re at work, get in touch with your internal IT department
  • Report the attack to the Australian Cybercrime Online Reporting Network
  • Don’t pay the ransom, as it encourages the cyber crime industry to grow

What can I do to protect myself in the future?

  • Update your operating system regularly
  • Back up your files (we’re all guilty of avoiding this at some point)
  • Install and update anti-virus and anti-malware software

The risks of cyber attacks are now higher than ever, and as Insurance Business reports, international insurer Beazley has found that phishing scams aims at accessing direct deposit funds have emerged as a growing threat. Ransomware continues to be a big threat for businesses and a big player in the insurance industry, with attack numbers up 35% from last year. But overall, when it comes to protection from cyber attacks, prevention is always better and easier than a cure.

Words by Skye Jamieson

Still Learning

The month of May has arrived and it’s getting harder and harder to believe that time is moving so fast! Autumn is now well and truly upon us – the nights are getting colder and it’s there’s hardly any sign of the sun when we finally crawl out of the office. And things have been busy in the FT Adjusting office with a steady increase in the number of construction related insurance claims. Contract works, liability claims – you name it, we’ve got it.

We know better that most that the construction insurance industry can be quite niche. It’s safe to say that we know our business. But it’s no secret that we’re always learning more about the construction insurance industry every day. Or rather, I am. I can happily say that I’ve nearly mastered the basics of loss adjusting and am starting to delve deeper into the tangled web of the industry. Today, it’s with an article explaining the biggest trends to watch for in the construction insurance market.

learning

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Insurance Business has reported that the broker Willis Towers Watson surveyed 350 executives in the construction industry and compiled a list of the major concerns and risks facing the industry. Without further ado, here they are.

Five trends to watch in the construction insurance market:

  1. Geopolitical instability
  2. Business model and strategy challenges
  3. Digitalisation
  4. Workforce management issues
  5. Complex operating models

There are a few things to be taken away from this list. While the construction insurance industry is always changing, it’s important to always be looking for ways to amend and develop products for clients. And while some of these risks can seem uninsurable, it’s possible that the industry can do more to meet these rising risks. The construction industry is constantly in a process of development, discovery and improvement. The most reassuring thing to know is that the industry, much like me, is still learning.

Words by Skye Jamieson

Hot Stuff

Here at FT Adjusting, we like to pay particular attention to building regulations. We are, after all, a company that specialises in claims arising from construction and engineering. That’s why, as I was flicking through the latest issue of Insurance News Magazine, I was interested to see an article about bushfire building regulations and an in-depth exploration of hot tips for bushfire preparation and safety.

According to the article, bushfire regulations don’t always cover everything. Justin Leonard is the research leader for CSIRO’s Bushfire Urban Design. His latest investigation was into the damaged houses in the 2015 Christmas Day bushfires along the Great Ocean Road in Victoria. Both regulation-adhering houses and non-regulation adhering houses were damaged in the blaze. This included homes that were built to withstand any bushfire in accordance with standards introduced in 2010. His burning question was; why did these properties still burn down?

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Well, Leonard argues that small but important details can be overlooked in bushfire preparation, and these details aren’t included in building regulations. Here’s some of the most important things homeowners should pay attention to in fire preparation, according to Leonard.

Hot Tips:

  • Make sure you do not store combustible materials, for example, heavy fuel, under or adjacent to your home. Many homes are not capable of withstanding heat from these fuels.
  • Use non-combustible water tanks.
  • Place large, fuel-heavy items such as boats and cars at least six meters from your home.
  • Remove flammable materials and vegetation surrounding the house.

These are just a few tips to make your home a whole lot safer in the event of a bushfire. It can even be as simple as understanding where the risks are in your home. After all, we may not be able to control the weather, but we are able to make changes to the way we prepare for environmental events. You can read the full article by Bernice Han in the April/May issue of Insurance News (The Magazine).

Words by Skye Jamieson

Jargon Gone

As someone with experience in signing difficult to read contracts, I can confidently say that there’s no greater fear of mine. Living in Germany, you are constantly handed loaded banking agreements and rental contracts, and understanding even half of what they are saying is no easy feat. Plus, you kind of feel like you’re put on the spot. To read and translate an entire contract would take days. Sometimes I wondered whether I was signing over my first born child to Deutsche Bank. Who knows, really? In between the mountain of technical German and oodles of fine print, I didn’t stand a chance.

So you can understand why I might have been happy reading a report from Insurance Business which has slammed insurance companies for their complex and unfair contracts. It’s customers who sometimes suffer the consequences of complex jargon as some insurance companies hide behind intricate disclosure statements.

Contracts

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The home, strata and car insurance industries were called out by the Consumer Action Law Centre, who said that “insurance policies are riddled with terms which, on their face, could be unlawful if unfair contract terms laws applied to insurance.” An inquiry was made before the Senate urging insurance companies to come up with standardised definitions, so that customers across multiple fields are able to understand what’s going on in the fine print.

You can rest assured that there will soon be some changes in the way insurance industries communicate with customers. After all, reading through complex jargon and technical waffle can almost be like hearing someone talk underwater. It may as well be in German.

 

Words by Skye Jamieson

Heated Debate

Humans are a funny bunch. Sometimes we can all get along. Most of the time, we just agree to disagree. I’d wager that the majority of conflicts in human history can be attributed to disagreements that have gotten out of hand. Whether it was stealing fire, land or a coat of many colours…the list is endless.

So it’s really quite a rare occurrence when politicians, insurers and consumer leaders can unanimously agree on an issue.  Especially when that issue is related to taxes. It was Benjamin Franklin who once said there were only two things certain in life: death and taxes. After reading a report from Insurance News, I’m not so certain they’re a certainty anymore.

The report announces the news that insurers, politicians and consumer leaders have all agreed that taxes on insurance are inefficient and can contribute to underinsurance. Almost all Australian states and territories have agreed to abandon levies on insurance policies to finance their individual fire services.

Fire

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So why the sudden change? After a recommendation from the 2009 Black Saturday bushfires royal commission, Victoria made the switch to a more efficient system way back in 2013. It’s argued that emergency services are vital, and should be shouldered by the entire community.  It’s also said that our fire and emergency services are such an essential part of our infrastructure that shouldn’t be placed solely upon those who take out insurance. According to the report, as the last mainland state to use a levy, New South Wales will switch to a charge on property rates on July 1st. Hopefully the switch will lead to a more efficient system for the financing of our fire and emergency services.

Of course, there’s still one state that is yet to make the switch and abandon taxes on insurance. That’s Tasmania. For the time being, Tassie, we can just agree to disagree.

Words by Skye Jamieson

Trial and Terror

You may have noticed that most of the blogs published here are generally light hearted. In the breakdown of a typical blog post it would usually go something like this: ten per cent puns, ten per cent actually useful information, and eighty per cent mindless jabbering. Well, I’m about to break my lucky streak here as we enter the realms of a pretty serious topic – terrorism.

Here’s where we get technical. Terrorism, as it turns out, is very significantly related to the insurance industry these days. Let’s start at the beginning, a very good place to start. The Australian Reinsurance Pool Corporation (ARPC) is a public financial corporation established by the Terrorism Insurance Act of 2003. According to the Australian Government, one of its jobs is to administer insurance schemes for commercial property and associated business interruption losses airing from a declared terrorist incident.

So here’s the gist of it. Through the ARPC, in the event of a terrorism incident, eligible Australian properties can be covered for loss or damage and associated business interruption.  This includes buildings or other structures on the land. Still with me?

terrorism

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Well it’s been reported by Insurance News this week that the ARPC has been expanded to include mixed-use and high-value residential buildings. The definition of ‘eligible property’ has been widened to include buildings with at least 20% commercial floor space, or that have a building sum insured of at least $50 million. The Terrorism Insurance Act has also been amended to remove doubts over coverage for chemical or biological attacks.

The ARPC Chief Underwriting Officer believes that the recent expansions will ‘modernise scheme coverage, underpin its financial strength, and ensure the ARPC is better equipped to protect Australia from the economic losses caused by terrorism catastrophe.’ Phew. If you’re still reading this, then congratulations, you’ve made it to then end. And on second thoughts, this blog had a whole lot more mindless jabbering than I’d originally intended.

Words by Skye Jamieson