Scott has more than 35 years in the Insurance industry and over twelve years in Strata Insurance as a National Underwriting Manager, National Technical Manager, National Adjusting Manager. Driscoll Strata Consulting (DSC) specialises in understanding
- The interaction of the various Strata Legislations and the Insurance Contracts Act.
- The effect of the Australian Building Code and building defects on the Strata Insurance market.
- The link between building maintenance and subsequent claims.
- The impact that stable and correct Owner / Strata / Body Corporation's governance has on Strata Insurance.
- Strata Insurance in the adverse Australian catastrophe zones.
When not correctly understood and applied, these factors can lead to adverse effects on the Insurer’s portfolio and loss ratio - and therefore both the Insurer's profit and optimal customer experience.
My specialist knowledge and experience will improve loss ratios for the Insurer in times of increasing costs, while maintaining the Corporation's right to a strong outcome.
Collapse of building companies and rising material costs has led to increasing loss ratios for Insurers and negative outcomes for Corporations. Improving loss ratios and gaining strong outcomes for both Insurers and Corporations can be achieved through better claim management.
DSC specialises in complex Strata claims management through a wholistic approach, employing years of experience and expert knowledge to optimise outcomes.
DSC seeks to achieve this by understanding the Strata specific interactions of the various jurisdictional Strata Acts and the Federal Insurance Contracts Act, thereby achieving outcomes compliant with GICOP.
Better claims management results in great underwriting standards.
Great underwriting standards result in better claims management.
DSC audits both underwriting and claim files to discover patterns of poor management - such as duplicated costings, incorrect building code usage to justify costings and gaps in staff training and strata knowledge.
Auditing files reveals Claims Leakage that help to develop risk-based pricing models and recommendations to both underwriting and claims management procedures.
DSC can assist with training modules in Strata and Community Title legislations and the effect these have on the Insurance Contracts Act and GICOP requirements.
Insurance for Corporations is compulsory but complicated as there is no standardised approach across Australian jurisdictions.
At a minimum, Corporations must insure the building for full replacement and have Public Liability coverage.
Unlike home insurance policies, Strata policies are different and you may not have appropriate coverage.
DSC can assist owners Corporations to understand the policy to ensure it meets the requirements under the particular jurisdiction you are in, and ensure that in the event of a claim the Corporation receives the benefits that the policy responds to.
Increasing premiums due to claims
DSC can assist in identifying the reasons for increasing policy costs or terms and develop strategies to address this and achieve a more moderate response.
Scott has been called as an expert witness in multiple jurisdictions due to his expert knowledge of Strata and Community Title Legislation, Strata insurance and the building industry.
From lot owners’ disputes to more complex matters DSC can assist.
The most significant error made by INSURERS in the application of the Strata Policy to an event is to direct the deductible or excess to the LOT OWNER rather than correctly to the OWNERS CORPORATION who owns the policy. This frequent error leads to either unpaid or incorrect deductibles being applied which in turn leads to increased loss ratios.
What is poorly understood and compounds this error is the fact that some jurisdictional Strata legislations allow the deductible or excess to be 'on charged'.
Such an example occurs in Queensland where under the ‘Standard Module’ (Section 203 (3)) ... an event affecting only 1 lot, the owner of the lot is liable to pay the excess unless the body corporate decides it is unreasonable in all the circumstances for the owner to bear the liability. (Section 203 (4)) ... an event affecting 2 or more lots, or 1 or more lots and common property, the body corporate is liable to pay the excess unless the body corporate decides it is reasonable in all the circumstances for the excess to be paid for by the owner of a particular lot, or to be shared between owners of particular lots, or between the owner of a lot and the body corporate, or between owners of particular lots and the body corporate.
In practice, how should this work?
The Insurer directs the charge of the deductible or excess to the Insured which is the Owners Corporation who is responsible for payment. The Body Corporate then utilises the appropriate legislation cited above to determine if and how they may levy this to their Lot Owners. This is not a transaction for the Insurer to undertake.
DSC does not make these basic errors and can identify this pattern of error (and others) through an audit process and provide training and other mechanisms to avoid this frequent and costly misunderstanding.
The use of Industrial Special Risk (ISR) wordings may cause confusion with intended coverage and undesirable outcomes when the policy is called upon to respond to an event. These outcomes may include coverage of non-expected costs (increased Loss Ratio) or exclusion of expected responses (poor customer experience).
It is widely considered that some 90% of policy holders do not read or understand the policy issued. The Insurance Contracts Act (ICA), the General Insurance Code of Practice (GICOP) and the Australian Financial Complaints Authority (AFCA) all require the Insurer to issue policies that are applicable, and where confusion exists these bodies will rule in favour of the insured.
When an Insurer's underwriter is able to incorrectly add or subtract clauses to the Policy, then error that leads to confusion by the Insured is likely.
An example of such a policy that was issued poorly was one that not only covered the building for full replacement, the loss of rent for owners renting their lots, pet relocation costs for owners with pets onsite but also 'internal fixtures and fittings and chattels not covered elsewhere'.
The first error is that in all jurisdictions, Acts do not require an owner's corporation to insure the personal items of the lot owners or tenants. The second error is that these are items that the insured does not own and therefore has no responsibility to insure. The third error is that the policy failed to provide cover for lot owners to be relocated in the event of claim - considered to be an industry standard - but provided for their pets!
DSC can assist with the design of standardised ISR wordings or the production of set Strata Packages.
Insurers Guarantee - GICOP Section 86
If we have selected and directly authorised a repairer to repair your damaged property, then we will accept responsibility for the quality of their work and the materials they use.
It is an industry standard that Insurance repairs are held to a lifetime warranty - over and above the usual warranties of repairers individually, so Insurers must therefore hold the repairer to a higher standard.
GICOP Section 86 however can often be misused.
When a repairer advises the Insurer that the Australian Standards are (x) and therefore in order to cover the warranty requested we need to do (y) which is more than the loss suffered, this results in betterment for the Insured (and the repairer!) and an increased loss ratio for the Insurer if in fact that advice is wrong. The repairer is seeking to dupe the insurer with an inflated scope of works or costings under the guise of Australian Standards and claims managers are not sufficiently trained to pick these issues up. For example - A loss requiring original electrical circuits to be increased from 1 to 2 with earth leakage detection to bring up to the Australian Standards. The repairer however replaces entire switchboard in order to justify the lifetime warranty that results from GICOP Section 86 - which is more than necessary increased betterment for insured, a definite increased profit for repairer and resultant increased loss ratio for Insurer!
DSC can undertake file audits to identify both claim leakage trends and the associated causes that can result from misunderstanding of the requirements of both the Australian Standards and GICOP Section 86.
DSC can also assist with training programs in this area for claims and underwriting staff.
I am an Insurance Professional with over 35 years experience in both Property and Casualty Insurances. For the last 12 years I have had a focus on all aspects of Strata Insurance in National positions, establishing Underwriting and Claims platforms, technical training of staff and establishment of a National Specialist Strata Adjusting team.
Additionally, I have been called on to provide expert testimony in various states in Australia in relation to Strata and Insurance.
Insurers are looking for better loss ratios.
The Insured (Corporations) want strong outcomes.
I believe that these two goals are not mutually exclusive and that better outcomes can be obtained by the correct understanding and application of Policy, Legislation and Australian Standards.