Insurance claims are major business for lawyers, builders, salvage companies, Insurers, brokers, bank managers, Revenue, the Gardaí and loss assessors and loss adjusters alike.
Even though the vast majority of property and injury claims settle perfectly fairly, there is major fraud happening on both sides of the claims process.
This has been going on forever and will continue. The honest claimant is therefore at a major disadvantage in the claim process.
This is for a number of reasons – Insurers write the policy and they dictate what is insured but more importantly what is not insured. Insurers define the claim management process, they use experts and are experts in managing that process and their expertise is supporting their position. It is not in the interest of the Insurers to make it too easy. Insurers adopted the position for many years that the claim process was under their total control and that the loss adjusters acted purely for the Insurer and in fact that the insured was not entitled to independent professional advice.
The game has changed to some extent but there is further to go.
The Consumer Protection Code went some way towards rectifying this position. It has not solved the problem fully. It does require Insurers to notify the claimant that they are entitled to professional advice but at their own expense, i.e. it is not an insured fee. Ironically, this is an area that insurers can, and in some cases do, actually cover in the policy – but they are few and far between. The Insurers that do cover the fees generally try to control who they pay for, and at what price so it may not be a decision for the claimant to make in their own interest.
In my view, it is grossly unfair particularly in larger claims where the costs of processing the claim are driven up in many cases by the Insurers’ investigations. It is wrong that the claimant who has suffered loss and damage to their property or business should have to bear this cost (loss assessors fees), when it is in consequence of the insured event and therefore should be insured.
It is absolutely clear that the claims process is extremely complicated. Even a chimney fire today could involve a broker, an lnsurer, a loss adjuster, the fire brigade, and various builders who quote for repairs. CCTV reports to clarify the extent of damage to the chimney flue possibly even forensic investigations in some instances. The only party who can co-ordinate this with the Insured’s interest in mind is the Loss Assessor.
It is most unreasonable for anyone to expect a person who works in a factory or the owner of a hotel business to understand all the complexities of an insurance policy.
It is a fact now that insurers are reviewing claims history, disclosure at inception of the policy, the cause of the damage, the likely cost of the claim, forensic investigations and many more aspects of the claim before accepting liability and offering to pay any money.
These processes can take many weeks at least and many months at worst.
In the past 10 years in Ireland even though many many claims are settled and paid by insurers and people are generally satisfied, there are equally many claims that end up in the in the Courts or Arbitrations.
Insurers have not, in the recent past, covered themselves in glory, the issues that FBD had in relation to the rebuilding of many of their clients chimneys in private houses hit the headlines a number of years ago. The work was grossly unsatisfactory and it was identified by Engineers that some of the repairs were actually dangerous. This clearly was an exercise by Insurer in saving money that backfired.
We have also recently heard about the RSA issue with claims processing and reserves and how that impacted on the revenues for the company throughout Europe. It is also less known that this approach to processing claims actually filtered down through to the loss adjusters and claims handlers and the whole claim process in RSA slowed down dramatically and became grossly unsatisfactory. The Chief Executive lost his job in consequence but that didn’t help the unfortunate whose house burnt down or flooded.
We are also all well aware of the Quinn Insurance methods and approach to their client’s claims and how the public view of the claim process in Quinn insurance was far from acceptable in the context of the requirements of the Consumer Protection Code and the needs of somebody whose house just burned down – had a mortgage – in negative equity – and there no access to alternate funds.
This is when you need your insurers to be on side and honouring the contract fairly and fully. The doctrine of “utmost good faith” applies to insurers as well as insured but if you are on the wrong side of that issue, it is virtually impossible for a person making a claim to even consider trying to argue that point legally.
Cleary’s have found in the recent past that if your Insurer is causing problems in the claim process, where slow decisions of acceptance of liability or investigations going on for months and months – it is extremely stressful & highly technical. This brings a financial pressure on the claimant that may force decisions one would otherwise not take.
We have a case in process at the moment where Insurers instructed loss adjusters to visit the site on day 2 after the incident. Loss adjusters reported within 2 weeks to Insurers. On day 16 a forensic investigator was appointed who visited the site, interviewed witnesses and also reported to Insurers and this took a further 4 weeks. Four weeks after that, we heard from the Insurer’s lawyers asking further questions and looking for further detail about the site and the circumstances of the fire. We believed complete detail had been presented already to the previous two parties. A letter then arrives from that the lawyers looking for further detail giving us another six weeks to reply. While all of this is going on, liability had not been accepted and the six figure loss is impacting on the client’s business. The client cannot make decisions because the Insurers have neither accepted liability nor repudiated liability. It is now week 16! The owner does not know where he stands. He may actually prejudice his own position if he pays for the repairs himself.
This highlights the inadequacy of our current Consumer Protection Code and indeed the claim processes. The only message is to get your representation early and hope that all goes well.
Clearys Claims ManaWhgers
Headless worms, machine-to-machine attacks, jail-breaking, ghostware and two-faced malware: The language of cyber-security incites a level of fear that seems appropriate, given all that is at stake. Hackers are launching increasingly sophisticated attacks on everything from critical infrastructure to medical devices.
Research company Gartner estimates that there are approximately 6.8 billion connected devices in use in 2016, a 30 percent increase over 2015 and they also predict that by 2020, that number will jump to more than 20 billion connected devices. Put another way, for every human being on the planet, there will be between two and three connected devices (based on current U.N. population projections).
The sheer number of connected devices, or the “Internet of Things,” presents an unprecedented opportunity for hackers. “We’re facing a massive problem moving forward for growing attack surface,” said Derek Manky, Global Security Strategist at Fortinet.
“That’s a very large playground for attackers, and consumer and corporate information is swimming in that playground,” he said. Many consumer connected devices do not prioritise security. As they proliferate, expect the number of attacks to skyrocket. “A lot of these products and services, oftentimes security will take a backseat, so it puts a lot of information at risk,” said Manky.
In its 2016 Planning Guide for Security and Risk Management, Gartner puts it like this: “The evolution of cloud and mobile technologies, as well as the emergence of the ‘Internet of Things,’ is elevating the importance of security and risk management as foundations.” Smartphones present the biggest risk category going forward. They are particularly attractive to cyber criminals because of the sheer number in use and multiple vectors of attack, including malicious apps and web browsing.
“We call this drive-by attacks — websites that will fingerprint your phone when you connect to them and understand what that phone is vulnerable to,” said Manky.
Apple devices are still the most secure, said Manky. “Apple’s had a good security policy because of application code review. So that helps, certainly, to filter out a lot of these potential malicious applications before they make it onto the consumer device,” he said. “With that, nothing is ever safe,” he said.
This year has seen the emergence of entirely new worms and viruses that are able to propagate from device to device such as “headless worms”: malicious code targeting “headless devices” such as smartwatches, smartphones and medical hardware.
“These are nasty bits of code that will float through millions and millions of computers,” said Manky. Of course, the potential for harm when such threats can multiply across billions of connected devices is orders of magnitude greater. The largest we’ve seen to date is about 15 million infected machines controlled by one network with an attack surface of 20 billion devices. Certainly that number can easily spike to 50 million or more,” said Manky. “You can suddenly have a massive outage globally in terms of all these consumer devices just simply dying and going down.”
Expect a proliferation of attacks on cloud and cloud infrastructure, including so-called virtual machines, which are software-based computers. There will be malware specifically built to crack these cloud-based systems.
“Growing reliance on virtualisation and both private and hybrid clouds will make these kinds of attacks even more fruitful for cyber criminals,” according to Fortinet.
At the same time, because apps rely on the cloud, mobile devices running compromised apps will provide a way for hackers to remotely attack public and private clouds and access corporate networks.
As police services and government departments boosts their forensic capabilities, hackers will adapt to evade detection. Malware designed to penetrate networks, steal information, then cover up its tracks are emerging and will continue to spread. So-called ghostware will make it extremely difficult for companies to track exactly how much data has been compromised, and hinder the ability of police services to prosecute cyber criminals.
“The attacker and the adversaries are getting much more intelligent now,” said Manky.
Alongside ghostware, cyber criminals will continue to employ so-called “blastware” which destroys or disables a systems when detected. “Blastware can be used to take out things like critical infrastructure, and it’s much more of a damaging attack,” he said.
“Because attackers may circumvent preventative controls, detection and response capabilities are becoming increasingly critical,” advises Gartner in its report.
Many corporations now test new software in a safe environment called a sandbox before running it on their networks.
“A sandbox is designed to do deeper inspection to catch some of these different ways that they’re trying to change their behaviors,” said Manky. “It’s a very effective way to look at these new threats as we move forward.”
That said, hackers in turn are creating malevolent software that seems benign under surveillance, but morphs into malicious code once it’s no longer under suspicion. It’s called two-faced malware.
This is at least partially the sheer volume of attacks is so high — Fortinet sees half a million security threats per minute.
“Companies should definitely enforce more security policies,” said Manky. “Security’s becoming a board level discussion, so that’s already happening, and it should continue to happen.”
Part of any cyber-security strategy should be the use of antivirus software, the education of employees not to click on unknown attachments or links as well as keeping software up to date, also know as patch management.
“A lot of these devices are not going to be patched that quickly or they might not have an update mechanism on them,” said Manky. “Certainly, any time a patch becomes available, companies should enforce that because these are closing a lot of the holes where attackers are navigating through.”
Here is how Gartner frames it for business seeking to protect themselves in 2016 and beyond. “While some traditional controls have or will become less effective, techniques such as removing administrative privileges from endpoint users should not be forgotten. Similarly, vulnerability management, configuration management and other basic practices have to be priorities in organisations that have not yet implemented them effectively.”
And ultimately, something is better than nothing, advises the firm: “Addressing priorities does not mean striving for perfection, but rather ensuring, at least, that critical exposures are remediated (or, if applicable, mitigated with compensating controls) and that the residual risks are minimal and acceptable (or at least enumerated and tracked).”
This article from the UK’s Financial Conduct Authority provides confirmation of all of the claim issues that we see all of the time. Some of these issues are easily dealt with while some are not. The Executive Summary refers to “unregulated firms such as Loss Adjusters and Third Party Administrators (TPAs)” and are often involved in the claims process. The implication here is that this contributes to difficulties for the consumer/claimant.
The findings section speaks for itself, the main issues being:
Our view is that the insurer is in the driving seat. They write the policy, they control payments, they deal with all background investigation into disclosure & claims history, warranty & liability investigation and forensic investigation. Clearly a mine field.
It is clear that the claimant must, in any claim situation, have access to specialist claim advice. It is only then that the pitch is levelled to some degree.
Follow these tips to help prepare for high winds and freezing temperatures this winter.
When strong winds are forecast:
What you should do after a storm:
A burst pipe in your attic, if unaddressed, can be as devastating as a flood through the front door. It probably represents the greatest risk posed to your home by freezing conditions. Freeze thaw action can also cause structural damage.
How to prepare for the freeze:
In the event of a burst pipe:
In the event of a leak:
Frost damage is one of the risks of property ownership that many people overlook. Of course, if your property is well constructed and you live in a temperate climate, you probably don’t have anything to worry about. But even so, the last few winters in Ireland have been especially harsh with more and more incidences of frost damage occurring. So what should you do if your property suffers from frost damage?
The most detrimental side effect of frost damage is burst water pipes, especially underground pipes. Not only can this lead to further problems such as high water bills, but there is no way of telling where the burst is or how bad it is without the help of some expert professionals, so it pays to be prepared. As a preventative measure, you should ensure that your property is adequately insulated, especially the roof. You should also consider insulating the walls.
In the event of frost damage, it is vital that you turn off all taps completely, as drips can freeze and block the pipe, adding further hold-ups and possibly damage. Also ensure that all stop taps and valves have been switched off or closed. Next, you should thaw any exposed pipes by placing a cloth soaked in hot water over them, or alternatively, a filled hot water bottle. Do your best to keep the property warm; use electric heaters if you have reason to believe your heating pipes may be damaged from the frost also (although this is unlikely if the heating been used recently).
The next step is to contact an underground leak detection professional who can search for any inaccessible pipe damage. At this point, you should also contact a loss assessor who will visit the property, gather records and make an inventory of damage, estimating the amount of losses as a result. Once the loss assessor’s survey is complete, you can submit an insurance claim and commence repair works; however, be sure to keep records of what repairs are carried out and all details about them, as this will aid your claim.
Once any damage has been repaired and your insurance claim has been processed, it is worth investing in pipe insulation to avoid a repeat occurrence. This is best done after the adverse weather has improved so it can be completed without delay and will not have any further impact on your property.
Here in Ireland, there is often a tendency to overlook such possibilities as storm damage due to our usually temperate climate.
However, with the stormiest winter on record occurring just last year in 2013, many people are now realising that coping with extreme weather conditions is becoming more and more of a necessity. This is particularly true of businesses and properties along the coastline, but those inland are not exempt either. If your property suffers from storm damage, here are a few key points to remember.
Luckily, these days we have at least 24 hours warning if a significant storm is imminent, which gives property owners an opportunity to prepare for any potential damage. Remove any important documents, electrical devices like computers and hard drives, or other valuable items from your property and keep them somewhere safe, preferably away from the area the storm will hit. Stack sandbags at the entrances to the building and turn off any electrical, heating or water supplies. Consider reinforcing windows with wooden boards if necessary.
Once the storm has hit, briefly assess the building for any immediate damage but only if it is safe to enter. Check for damage to the roof – particularly the roof tiles with can lead to leaks if removed – windows, floors, cables and electrical components, and look carefully for any cracks, leaks and structural damage. Remember the most important element, however, is that the building must be safe to occupy before anyone enters it.
Once the building has been deemed safe to enter by the relevant authorities (the fire brigade, for example), carefully document the damage with photos, videos, and written notes before beginning to clear away debris. At this point in the process, you should make contact with your insurance providers to begin your claim. The services of Clearys Loss Assessors will be invaluable at this stage, so it is of utmost importance to contact an assessor. The assessor will survey the property and create an extensive inventory of all damage and resulting losses which will help in your claim.
If the damage to the property is truly devastating, there are often disaster recovery services and government aid available. If the job of cleaning up the property is too big for a small number of people, contact Emergency Services and they will be able to send help.
Subsidence is a tricky problem for a number of reasons. Firstly, it is difficult to prove without lengthy and time-consuming tests. Secondly, there is no ‘home remedy’ – the only way to solve the problem is to hire expert professionals who deal with soil erosion, structural foundations and the like. And thirdly, the longer you leave it unresolved, the worse it will be.
There are many factors that can cause subsidence. It could be because of soil erosion due to inadequate drainage under your property, or if significant tree felling occurs in the vicinity of the building this can cause soil to shift under the foundations. Signs of subsidence include widening cracks in walls or diagonal cracks rather than cracks that run along the joining corner of two walls.
Repairing the visible damage without addressing the problem itself is literally ‘smoothing over the cracks’ – the damage will reappear and will be worse each time. Not only does this leave the problem of subsidence unsolved, it’s also a waste of money, can devalue your property, and will cause ongoing problems.
Unfortunately, if you suspect your property may have subsidence damage, the only thing to do is begin the process of surveying, draining, testing and monitoring with a team of expert professionals who will devise the best course of action. At this point, before any major expenses have been incurred, it is vital to contact a loss assessor. The assessor will visit the property, document the damage (both to the property and to your business as a result), and compile a definitive report which you should then submit to your insurance company to aid your claim. Loss assessors are completely impartial, have expert knowledge, and will work to make sure the most accurate result is achieved from the insurance claim.
To minimise the risk of subsidence, check drains and pipes regularly for blockages or leaks. Make sure that any trees in the vicinity of the building are pruned regularly to reduce their water uptake, and if any new trees are to be planted in the area, they should be a minimum of the length the adult tree will reach from the property. Of course, keep an eye out around the building for tell-tale cracks too, and if necessary, take photos of them periodically to assess whether they are widening or not.
To ensure you are fully covered when you own a rented property, you should read these tips:
A lightning strike can be a very powerful noisy and frightening event.
The wipe out of power to the property may affect all electrical items connected to the house, all copper pipe work and even structural issues. It is therefore impossible to know the extent of damage until power is back, everything is made safe and all electrical items are re-powered one by one.
Our client’s house lost power completely and all local supply was cut off for two days. The house was heated both electrically (under floor) and with an electric air to air heat pump system with heat exchanger.
All the contents of the freezer were thawed out and had to be used immediately or dumped. The house had no heat or other services for the following week. The alarm system was destroyed along with the telephone land-lines and computers which were plugged in at the time.
The violence of the strike broke the joints of the concrete ridged tiles on the roof and dislodged a number if the concrete roof tiles. Water found its way into the house in a number of places following the heavy rainfall during storms in the following days.
This required replacement of plaster board ceilings and redecoration in the areas affected. Before this work could be done the roof had to be stripped and repaired in a number of areas. It took time to source the 20 year old roof tiles and colour and match them.
The weather was too bad to get on the roof for nearly eight weeks after the strike and then the builder was busy on other work.
When the builder was on the roof we discovered that the solar panels were also destroyed and leaking into the roof and down into the insulation in the external timber frame walls.
The Loss Adjusters had made offers to settle the claim which were completely inadequate not only for the cost of work but also because the extent of damage was very difficult to establish and prove without detailed investigations.
The electricians carried out resistance testing on all systems in the house. It was then discovered that 3 circuits in the under floor heating system were shorting and therefore destroyed.
To repair these circuits would mean stripping out the rooms affected, taking up the 150mm screed, replacing the system and putting it all back again. This was extensive work and very costly.
Over time we also discovered that the storm had caused the failure of external LED lightning it had destroyed circuitry in an electrical Robot Lawnmower. The pumps and power supply to two water pumps on the site were also destroyed. Specialist technicians had to replace control panels in the heating system and the alarm system.
The whole event is a major disruption. The insurers were not in a position to assist with any of the repairs. In all our client had nine different Trades and Specialists involved for Quotations and Repairs. Insurers also sought their own competitive quotations. The whole process took six months to complete.
The final hurdle came when the bank would not cash the insurance company’s cheque because the bank account was in the name of husband and wife but the Insurance Policy is in the name of one person and this ridiculous position took another three weeks to sort out.
The total cost of repair was in excess of €30,000.
A few lessons from this case: