2020 Autumn Forum€¦ · Accidentally lost or stolen $5,000 - no proviso. Consequent upon forcible...

2020 Autumn Forum Practical Solutions to Managing & Mitigating Strata Risk

The Strength of Experience

Agenda

• Introduction Speakers Housekeeping

• Damien Leary, Head of Underwriting & Claims• Michael Turnbull, National Claims Manager• Questions• Wrap Up & Feedback


Presenters

• Damien Leary, Head of Underwriting & Claims, Strata Community Insurance

• Michael Turnbull, National Claims Manager, Strata Community Insurance


Importance of Strata Insurance

• Insured Property Losses

• How does the policy respond?

• Liability to others

• De-Risking

• Where does the premium go?


South Coast Bushfires

• 2008 Build

• 3 Storey

• Total Sum Insured - $16.6m

• 13 lots, 9 Destroyed

• $9 million claim


South Coast Fire Video Clip ABC News


South Coast Bushfires


Protecting Your Most Important Asset

• Bushfires and Property Damage/Loss.

• SCI’s focus:– Make safe.– Engaging engineers– Repair & rebuilding– DA– Working with our panel of builders


How does SCI respond? Emergency Accommodation

Emergency AccommodationEmergency Accommodation benefits are available with most Strata policies, however, Strata Community Insurance offers an exclusive benefit – emergency accommodation for tenants, where two or more units are unfit to be occupied, up to $1,500 per lot as a result of an admitted claim.

Example:

1) Malua Bay: Advanced $3000 immediately to 2 owners. 2) A tenant fell asleep with a candle burning, causing a fire which spread to another

unit. The building was evacuated and the tenants and owners were given a benefit of up to $1,500 per lot for alternative accommodation.


How does SCI respond? Temporary Accommodation

• Primary residence– From the date of fire to completion of

reconstruction.– Max 12 months where not rebuilt.

• Part time occupation– Offered accommodation based on similar

properties.


How does SCI respond? Loss of Rent

Common Area and/or lot – leased.

Loss of rent Up until re-letMax 12 months - where not re-built

Short term rental – reasonable costs Based on any bookings taken at the time of the fire. No bookings – past 2 years average.


How does SCI respond?

• Lot owner contributions and fees– We pay up to $2K in contributions & levies.

• Lot owner removal and storage costs– We pay up to $5k for the reasonable costs

• Lot owners travel costs– We pay up to $250 a lot for reasonable travel costs

when consulting with adjusters & repairers. travel


Market comparison

Clauses SCI Company X

Asbestos Exclusion Section 2 - liability to others only General ExclusionOr Liability OBL Exclusion

Office Bearers Liability –Reinstatement of the Sum

Insured

We provide 1 reinstatement subject to an extra premium

charge

No

Keys/Locks - Lost /Stolen Accidentally lost or stolen $5,000 - no proviso

Consequent upon forcible entry $5,000 - proviso tenant/family

Fallen Trees - not Damaged -excluding stumps/roots

Reasonable costs subject to damage - no limit

$5,000 subject to damage


What is your Liability?

• Injury or damage during the period of insurance.

• Occurrence trigger: What happens today could bring an action down the track.

• Statute of limitations.

• Most common issues – slip & fall.

• Extreme examples of injury and costs.

• Risk Management


De-Risking

• Risk management / maintenance plans

• More efficient use of sinking funds instead of insurance

• More efficient use of excesses


De-Risking

• Risk Sharing

• We want better quality risks, better results for us

• More accurate / consistent pricing for the market


Where does the premium go?

Premium $100Less -

Reinsurance $+Commission $+Expenses = $62UW Profit $8

Left over to pay claims $30


Claims: What we’ll discuss

• Claims Statistics

• Claims issues by major loss types.

• Reducing claims costs, admin and angst?

• Water Damage & Burst Pipe Claims

• Unpacking Storm Claims

• Risk Mitigation


SCI 2019 Claims Statistics

• How does SCI categorise its claims?

Attritional Losses - $0-$250,000

Large Losses - > $250,000

Cat Losses – Those where the ICA has issued a Cat Code


2019 Attritional Claims

$27m paid out (5,087 claims) in Attritional Claims.

Attritional Ave Claims Costs Up almost $1,000 from $4,365 (2018) to $5,255 (2019).

Attritional Claims Count

Attritional Claims Cost

Water Damage

56% Water Damage

64% ($17m)

Impact 14% Impact 9% ($2.5m)

Theft & Malicious Damage

11% Fire 12% ($3m)

Why are claims costs on the rise?


Large Loss

&

Catastrophe Volumes

2019 Large Loss Volumes

$24m paid out (14 Claims) in Large Loss Claims (compared to $4m in 2018)

2019 Large Loss Fire run! $18.4m

Relatively low catastrophe level ($3m) relative to past years for SCI


Water Damage Claims

• Water Damage claims as defined by SCI?• Main reasons we see for Water Damage Claims?• Minimising the incidence of Water Damage claims within

Strata?


SCI Definition of Water Damage Claims

• Water Damage claims include resultant water damage from:– Leaks to appliances – Overflowing of apparatus, such as basins, bathtubs & showers.– Failure of waterproofing membranes.– Failure of connections to a hot water tank.


Main Reasons for Water Damage Claims

AGEING CONNECTIONS.

INCORRECT INSTALLATION OF

APPLIANCES / CONNECTIONS.

MAINS PRESSURE OPERATING

ABOVE APPLIANCES SPECIFIED

LIMITS.

DETERIORATION OF

WATERPROOFING MEMBRANES.

USER NEGLIGENCE IN LEAVING PLUGS IN AND WALKING

AWAY, OVERFLOW.


How do we minimise Water Damage Claims?

Introduction of stop flow valves.

Communication on plumbing works within an Owners Corporation.


Burst Pipe Claims

• Burst pipe claims as defined by SCI?

• How can Strata Managers assist?

• Better outcomes for Body Corporates.

• Consequences of mismanagement of burst pipe claims?

• What part can SCI play?


Definition of a Burst Pipe

• Non-Pressurised Pipes : Damage to, cracking or coming apart of wastewater, sewer or storm water lines.

• Pipe – Pressurised within wall – Bursting of any pipe, under mains pressure, that is behind a fixed surface.

• Pipe – Pressurised outside of wall – Bursting of any pipe, under mains pressure, that is accessible without having to break through fixed surface.


Date of loss/damage

Cause of pipe bursting Photos of pipe Photos of the

insured property

Description of insured property

damageBreakdown of plumber costs

Builder quotes & invoices

Information Required


How Can Strata Managers Assist with Burst Pipe Claims?

• Encourage all plumbers and insureds to;– provide photos, – their opinion on most likely cause of the pipe bursting, and – breakdown of costing from day 1 – (Search and Locate, Repair & Reinstatement

• The SM should also ask the Body Corporate to retain the damaged pipe.

• Ultimately the best way in which an SM can assist in effective claims handling is by appointing an SCI Panel Builder.

• You will find the details for our panel builders for each state on our website at https://stratacommunityinsure.com.au/claims/approved-panel-of-builders/

https://stratacommunityinsure.com.au/claims/approved-panel-of-builders/


Best Practice Management: Burst Pipes

Lack of management of burst pipe claims may lead to:

• Increased Loss Ratios.

• Application of increased premiums.

• Application of increased excesses.

• Possibility of poor risk avoidance by Insurers.

• Far greater administration for a Strata Manager.

• Greater time-delay when non-insurer trades are completing repairs.

So what’s the solution…?SCI wants to be a part of a collaborative approach to solutions for Bodies Corporate. Here are some solution options:

Stop Valves

Larger flow stop valves

Installation of meters

SCI Panel of Repairers

Improved outcomes…

Reduced timeframe for claims management

Reduced timeframe for occupants being out of their property

Reduced frustration and angst for all members of a Body Corporate

Reduced Insurance cost to the Body Corporate and therefore lower impact on insurance premiums

Strata Manager’s and Committee resources focused on other aspects of Body Corporate Management

Reduced administration for Strata Managers

Helps in establishing Risk Mitigation opportunities

Make safe costs covered by SCI for urgent & sudden events


Storm Claims• How does SCI define storm claims?• Insights and Australian Standards• Consequences of band-aid fixes to storm water entry claims?• How can we collectively better manage storm water claims for Owners'

Corporations?


SCI Definition of Storm Claims

• Damage caused by violent wind, sometimes combined with thunder, heavy falls of rain or snow.

• It can and often does enter, via roofline, balcony thresholds, window framing and ground level.

• “Storm” damage that is the subject of a Catastrophe as issued by the Insurance Council of Australia (ICA) will be coded by SCI with a specific Cat Event Code, and not Storm.


NCC & Australian Standards

• The National Construction Code (NCC) governs construction of the majority of the structures that are built in Australia.

• The NCC sets the minimum requirements in relation to construction.

• Australian Standards are referenced within the NCC and set out design and construct requirements to ensure that a material, product, method or service is fit for its purpose and consistently performs the way it was intended.

• Many Strata Schemes around the country do not meet minimum construction standards


Wind Loading Code – AS/NZS 1170.2

• The Wind Loading Code specifies design requirements for structures around Australia based on different regions.

• For example, the ultimate design wind speed for Sydney, Melbourne and lower Australia is around 130-145 km/h. For Nth of Bundaberg, QLD and Nth of Carnarvon, WA it is around 230-250km/h.

• Why is this important?


Plumbing and Drainage – AS/NZS 3500.3

• AS/NZS 3500.3 specifies the requirements for the design and installation of stormwater drainage systems. Relevant work includes metal roofing, gutters, downpipes and stormwater drains.

• Most systems must be designed to 1:100 events

• For example the Ave rainfall intensity (ARI) for Brisbane at 1:100 is 306mm/hr. The ARI for Sydney at 1:100 is 262mm/hr.

• Many Strata Schemes in Australia are constructed to take advantage of maximising space and consist of flat roof construction with box gutter systems.


Consequences of not mitigating risks?

• When an Insured Property suffers wind damage or rainwater ingress there is usually an underlying cause other than the storm event itself.

• Most trades engaged to “fix the cause” unfortunately do not have a detailed understanding of the Australian Standards.

• Providing a band aid fix places the Bodies Corporate at risk of future re-occurrence, future claims, inconvenience that goes with those future claims and resultant increases in premium and policy excesses!


How can we manage future storm risk?

• SCI wishes to provide much more than just a claim settlement service to our clients.

• SCI has access to experts around the country that can assist in correct identification of issues.

• SCI would look to Strata Managers to assist our investigations wherever possible so that true underlying cause can be established to ensure those issues are correctly remediated.

• Correctly identifying underlying cause can also lead to opportunities of recovery where construction may not have been performed to Code requirements.


Working in Collaboration

• Some angst and frustration in attritional claims handling.

• The main reason for the angst and frustration appears to be based upon the provision of information.

• What can we do collectively to give a better service offering to our Bodies Corporate?


Q&A

This material is for training purposes only. The information contained in this presentation is general in nature and does not constitute financial product or legal advice. References to policy terms and conditions are by way of summary only. For full details of policy terms, conditions, benefits and exclusions refer to the relevant Product Disclosure Statement and Policy Wording available from Strata Community Insurance.

2020 Autumn Forum€¦ · Accidentally lost or stolen $5,000 - no proviso. Consequent upon forcible...

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