Cautionary tales

It’s been said anyone not failing every now and then simply isn’t doing anything very innovative. IRP spoke to some of the industry’s most experienced hands about things going wrong and how they learnt from the experience.

Class battles

He’s is renowned as one of the finest thinkers in the industry but LMI Group Managing Director Professor Allan Manning faced a major obstacle early on when he failed to make the grade for university.

One of the biggest disappointments in my 20s was missing out on getting into the University of Queensland’s Law faculty as my Tertiary Entrance score was too low. It was made worse as there was only one point in it. I went back to night school and increased the grade of my weakest subject (English) by two grades only to find that the Tertiary Entrance score had gone up by exactly the same amount as my improved score.

Rather than defeating me or holding me back, it was one of the positive turning points in my life and career.

I was quiet disheartened after having twice failed to gain entry but a mentor redirected me to the Commerce Faculty, where I was able to take law electives as my major and get the law courses I wanted under my belt. What I had not reckoned on was that the Commerce Degree gave me the all-important education

in accounting and finance which allowed me to focus on Business Interruption, an area that I continue to find challenging and extremely interesting to this day.

The forced change of direction also ended up assisting me in other ways, as the effort I put into improving my English grade allowed me to write the numerous books and articles that I have in a style that people find easy to read, making technically heavy topics interesting. (It also gave me a life-long love of Shakespeare, Wordsworth, Churchill and other poets and writers.)

The fact that I did not get the Law Degree that I was so set on initially did not stop me in any part of my career, particularly when you consider I was appointed as an Adjunct Professor in the Law School at Victoria University and am a Director of LMI Legal Pty Ltd, a law firm specialising in insurance.

While disappointing at the time, I am now grateful to the setback as I believe that rather than defeating me or holding me back, it was one of the positive turning points in my life and career, although I certainly did not appreciate it at the time.

An eye-opener

It was a bitter pill at the time but having a client unfairly refused a claim taught Peter Blanco of De Conno and Blanco Insurance Brokers a valuable lesson.

We had a long-term client who had a personal accident policy with us, placed with a specific insurer for 10 years. He was preparing to do some painting one day when he had an accident and a cement particle flicked him in the eye, causing retinal detachment and loss of vision.

Prior to this incident the insured had never suffered from any illness or injuries to the eye. He had a routine eye test 12 months prior to the accident which confirmed that his vision was healthy and unremarkable.

He claimed for loss of income and a capital benefit, which was rejected by the insurer. The claim went on to Internal Dispute Resolution and then to the Insurance Ombudsman, now FOS. It was rejected on both occasions as it was stated the insured was unable to prove beyond the balance of probabilities that the loss of vision was caused by a trauma.

If an insurer does not appear in Standard and Poor’s strength rating don’t risk placing business with them.

He elected not to take further action as he believed the system had let him down.  Unfortunately, it seemed that way.

There was a lesson to be learnt from this and that is, if an insurer does not appear in Standard and Poor’s strength rating don’t risk placing business with them.  In addition to their financial capacity to pay claims, you must also consider the culture of the insurer towards settlement of claims.  Read broadly and be informed.

Networking with other brokers might give you insight to potential problems. We have a duty of care to our clients, so be proactive rather than reactive.

Balancing on the cutting edge

An abiding passion for staying at the forefront of technological change has given Mike Donnelly, the Managing Director of Donnelly Insurance Brokers, plenty of frustrations.

As an early adopter of technology Donnelly’s has faced many problems with the implementation of different computer systems over the past 35 years. But we also recognise that we would not be in business without technology advantages given that our market niche is for smaller high-volume policies.

Our first computer 35 years ago was a Wang PC I bought for $30,000. I designed a program specifically to include online premium rating, policy issue, trust accounting and closings to insurers. Unfortunately the program took 18 months to write because of its complexity, causing us major processing problems. We eventually had to accept less functionality to get the system implemented.

We have moved computer systems five times, always seeking a more effective solution for our business but often we have been on the “bleeding edge” causing much frustration.

Since then we have moved computer systems five times, always seeking a more effective solution for our business but often we have been on the “bleeding edge” causing much frustration with non-performance of the systems to our expectation.

Generally broking administration systems start life as accounting programs with limited CRM capabilities. Our latest system was designed by brokers for brokers as a distribution system rather than an underwriting system. It is therefore focused on what attributes a broker needs in their system and is user friendly.

I have had a dream for many years as to how I thought a brokers’ distribution system should work and how it could assist insurers with their efficiencies too. I am now confident that my vision will be realised very soon as insurers develop products to interface through web services to brokers’ systems.