Taking risk out of equipment insurance

UAA has a brand new office in Newcastle’s CBD
UAA has a brand new office in Newcastle’s CBD.

Things don’t always go as planned in construction work. But when any unfortunate incidents happen, it’s important to have the right people by your side, as claims managers from Underwriting Agencies of Australia explain.

In June, Underwriting Agencies of Australia (UAA) opened its new office in Newcastle for its Australian National Claims and NSW Underwriting Team. Newcastle is the birthplace of UAA, which has been insuring cranes and other mobile equipment for the construction industry since 1972.

While UAA today boasts underwriting and sales offices across all major cities in Australia and other parts of the world, the UAA executive team of Michael Murphy (Murf), Stan Alexandropoulos, George Grasso and Jane King are very proud to announce the opening of their new office in Hunter Street, in a complex which towers over the working Newcastle Harbour.

“It is a huge step up in a modern building after almost 30 years in the former office in Scott Street and most deserving to the incredible team in NSW,” Murphy says.

A deep understanding of the industry and a responsive approach to incidents are key reasons UAA remains the number one insurer for the construction equipment sector.

Michelle Morrissey, National Claims Manager and Keith Palmer, Regional Manager for NSW and ACT explain the importance UAA places on every team member understanding the challenges faced by the construction sector.

Morrissey has been with UAA for 11 years and she oversees claims for all of Australia. She manages a team of 12 Claims Consultants who manage claims across every state in Australia from start to finish for everything from a small Elevated Work Platform (EWP) to some of Australia’s largest cranes as well as machinery across all other industries in-between.

Palmer is the Regional Manager for New South Wales and ACT and he looks after his team of underwriters. Within his team there are nine underwriters and two business development managers. He has been with UAA for 14 years having started in 2007 as a business development manager himself. He has over 40 years of experience in the insurance industry.

Palmer explains how UAA assesses individual clients and prepares an insurance schedule and premiums to suit individual business needs.

“UAA provides insurance products and services through licensed insurance brokers. As underwriters we don’t deal with clients directly. When a broker comes to us with a new client, they will present a quotation slip which outlines the covers required and a schedule of cranes and other equipment. We obtain information regarding the client’s experience and ascertain the type of works they are involved in. We have ratings for various types of cranes including mobile cranes to Frannas, tower cranes and crawlers. Premiums are determined on the mix of the schedule and also based on the client’s claims history and experience.”

Palmer then explains how premiums are determined in accordance with risk.

“We will examine the type of work the insured is undertaking and in which area, taking into account if it is metro or regional areas. We examine the high risk work they may undertake such as wind farm work which means they have a higher exposure to risk. We also examine some of the additional issues such as whether the client dry hires the equipment, and if so, what the formal terms of the hire arrangements involve and whether there are damage waivers provided.”

Mitigating the risks

But what happens when there is an incident? Morrissey explains how UAA works with the broker to quickly get resolutions in place.

“Our response to an incident begins with the initial notification of claim, but sometimes with our ‘high severity incidents’ we may end up notifying the broker. As you can imagine, if say a crane rolls over, it can be big news, so we monitor social media and news outlets to ascertain if it is one of our mutual clients and if so, we will initiate the claims process as an immediate response to assist the client.

Keith Palmer and Michelle Morrissey (centre) flanked by the Underwriting and Claims teams in Newcastle.

“Depending on the severity of the incident, the initial process will be to mobilise assessors to the site and see if they can assist in anyway with the potential recovery process of the crane. It also provides them with the ability to mitigate any potential additional damages to the crane and assist with controlling costs to save on the clients’ claims experience and reduce any unnecessary loss of time. The assessor will begin interviewing all the parties and depending on the severity of the incident we might have investigators accompanying the assessor to the site to collect additional evidence associated with the event that may assist the client and UAA deflect liabilities to other responsible parties,” she says.

But the underwriter’s job does not end there, as Morrissey further explains.

“Once the item is recovered, we assess the severity of the damage and determine if it is a total loss or a repairable situation. In the background, we are always trying to mitigate any potential loss of income for the client by reducing down-time. If we are in a position where the item is repairable, we have the repairs done to the highest quality and as quickly as possible. We want to get the equipment back into the hands of the insured and back working as soon as possible,” she says.

“If needed, and if possible, we will see if we can source, repair or manufacture required parts locally instead of going overseas and therefore dependant on shipment time frames. The assessment and examination of a damaged machine and its causation assists in streamlining the indemnity process. Once all costs are finalised and paid, whether it is repaired or a total loss, UAA further examines subrogation actions required and continues to manage the claim until it is finalised. We are one of the only insurers in Mobile Plant and Machinery in Australia that has the authority to act quickly, lodge, pay and finalise claims in house, here on shore in Australia.”

Tailoring policies

Palmer explains how policies are tailored to individual businesses taking into account the profile of the equipment in the fleet and the industries they are servicing.

“Fundamentally, tailoring insurance packages to meet the requirements of individual clients is the job of the broker. Though we do assist the broker in ensuring all appropriate covers are considered in accordance with client risk profile. The broker is the clients’ insurance advisor and they need to discuss with the client their particular circumstances. We need to ascertain all types of information received, such as, what type of income the equipment is generating and also consider the potential repair period for the equipment if there was an incident. For example, for cranes you can be looking at a six month period or longer particularly in the current climate. Indemnity periods also needs to be calculated, what level of lost income the equipment potentially has and also what potential alternatives might be available in the market to hire another equipment to minimise the loss.

“These are some of the factors the broker needs to consider with the insured and quite often the broker will consult with us to discuss what might be appropriate in certain circumstances. Right now, the economy is travelling well with a lot of infrastructure work, for example, and a lot of the cranes and mobile plant equipment are constantly out working so there might not be too many alternatives in terms of replacement options, and there might be times when you can’t hire an equipment, even though you want to. Potentially, we would see this as a loss of revenue situation and appropriate cover to consider. So, there are many factors to take into account,” he says.

For UAA to be able to accurately assess the risk involved with a new or renewing client and then set premiums accordingly, the broker works closely with his team providing information that the premiums will be based on, says Palmer.

“The important information is generally included in the claims experience. If it is a well-managed company with experienced and competent staff that reflect low frequencies in incidents and claims experiences, this will then favourably impact the clients’ premiums over time. The types of equipment they use can also be a factor. The articulated pick and carry cranes for example, seem to have a higher frequency of incidents and have
a different (higher) underwriting rating compared to other types of cranes. If there are a number of this type of crane in the fleet schedule, then it is obviously reflected in the premium and deemed a higher risk,” he says.

Morrissey then discusses the various steps that follow an incident.

“The key is to get the right people and experts on the claim as soon as an incident occurs. Our reputation as a viable insurance partner to our mutual clients is based on how quickly we can respond, the experience of our experts we appoint, and how quickly we can assist a mutual client in getting their machine back to work again. This is so critically important to us and extremely imbedded into the culture of our claims team,” she says.

There are nine underwriters in the UAA underwriting team. The team members come from various backgrounds with varying experience. The Operations Manager has been with UAA for six years and there is over 60 years of combined underwriting plant and machinery experience in our team. The claims side of the business features a solid team with various degrees of experience and expertise, all within the insurance industry.

There are 12 claims staff that manage all claims nationally from UAA’s Newcastle office, each individual with the responsibility of managing claims for each designated state of Australia. Their responsibilities also include managing the relationships with Insurance Brokers and mutual clients in their respective allocated State, claims cycle time, quality and cost and quick outcomes for clients.

“As I’ve said, generally speaking we as underwriters don’t have too much direct involvement with the industry clients. Because we deal with intermediaries, we don’t deal with clients directly and the contact is mainly through the broker. That’s not to say our management don’t on occasions, meet with and speak with the clients, generally in conjunction with a broker,” says Palmer.

“Being a service industry, service is our primary focus, and we pride ourselves on quick response times and we set a high bar for ourselves. UAA has always been highly regarded for its high level of service, our nimbleness and this has been the corner stone of our success, competitive advantage and differentiation in the market over the years,” he adds.

“With our claims team, we want our guys to be very involved in the industry. We want them to be aware of any particular nuisances with equipment. We often send team members out with assessors so they can have an understanding of how an assessment takes place and to really work with the experts to understand the mechanics of the machines, certainly seeing the industry at first hand assists in putting things into perspective and further respecting the challenges the crane industry faces on a daily basis and the enormity of their machines, as opposed to viewing in 2D, often black and white via a desk,” says Morrissey.

This article was originally published in the August edition of our magazine. To read the magazine, click here.

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