• By the source below
  • 22 Apr, 2016

 ANZIFF Vol 39 Issue 1 | Mar 2016

For Australian consumers who bought Patties brand Nanna’s and Creative Gourmet mixed frozen berries early last year, the risk of hepatitis A also allegedly came with the purchase. The berries were linked with 31 cases of this serious illness and the resulting product recall in February 2015 wiped more than AU$14 million from the annual profits of Patties Foods.

The Patties Foods berry scandal was a warning to all companies to pay closer attention to supply chain quality control. But it also highlighted the serious financial risks associated with product recalls and was a red flag for many companies to consider purchasing product recall insurance.


The complexities of an increasingly global supply chain, coupled with a tightening of product safety regulations around the world are leading to a rise in product recalls.

In 2014, there were more than 500 product recalls in Australia and this year is already proving to be a busy one. In the first two weeks of 2016 hoverboards, dining chairs and motorcycles were being removed from sale due to dangerous potential faults.

In the US, the National Highway Traffic Safety Administration reported 803 separate vehicle recalls in 2014. In New Zealand, there were 27 food recalls in 2014 compared with 13 the year before. Companies in China carried out 72 consumer product recalls; however, its product recall system covers limited categories and is currently under review in order to enhance customer safety, China Daily says.

It’s not just the lesser-known brands that are suffering recall issues. Leading electrical goods company Samsung is tracking down 144,451 washing machines (with 45,047 currently unaccounted for) that have been responsible for 252 fires and other incidents in Australia since 2013. Supermarkets in New Zealand removed packets of Beehive Shaved Champagne Ham from their shelves in December 2015 over fears they could contain listeria. In the US and Canada, popular label Lululemon recalled 318,000 women’s tops in June 2015 as their elastic drawstrings were deemed at risk of causing harm to wearers. Meanwhile, Volkswagen’s recent and highly publicised recall and refit of 11 million cars worldwide will be among the biggest product recalls in history.


In most cases it is the supplier that initiates a recall (under Australian consumer law ‘suppliers’ include manufacturers, importers, distributors and retailers). They are required to notify in writing the Commonwealth Minister responsible for consumer affairs within two days of initiating the recall. They must cease production and distribution and remove unsafe products from the marketplace. They are also required to notify the public through avenues such as advertising or social media announcements and to inform those within their domestic supply chainn some instances, product recalls are initiated by the Australian Competition and Consumer Commission (ACCC).

“The ACCC can either guide or attempt to convince a supplier that a recall would be desirable,” explains Kieran O’Brien, Partner with law firm DLA Piper. “Of course, there can be situations where the regulator says they are going to institute a direct mandatory recall. That’s rare, but it has the power to do so, and so it should because there can always be an organisation that just doesn’t listen.

“A manufacturer or supplier that allows matters to get to that stage clearly leaves itself open to sanctions down the track."


For companies not large enough to self-insure, product recall insurance is increasingly viewed as a strategic purchase and a key feature of an overall risk management policy. While public liability insurance covers third-party losses arising from bodily injury or property damage, product recall insurance predominately covers a company’s own losses, including business interruption caused by reputational damage or the loss of gross profits, usually for a period of 12 months.

Product recall insurance also covers the cost of recalling products and may cover rehabilitation expenses, such as the advertising costs associated with restoring consumer confidence and the cost of promotional offers. In most instances, it also includes the cost of crisis consultants and public relations advisers to help mitigate reputational damage associated with product recalls.

Michael Lincoln, Underwriting Manager, Crisis Management Solutions at Liberty International Underwriters, says some product liability insurance products provide product recall extensions. However, he describes them as the “poor cousin” of market-leading Product Recall Insurance. “It may provide either first- or third-party recall costs, but does not cover what is commonly the most expensive parts of a recall, such as replacement costs and business interruption,” he says.

Tony Parington, Director and Underwriter at Sterling Insurance, says coverage largely depends on the circumstances surrounding a product recall. “You have to look at the trigger,” he says. “Imagine if you were to produce bottled water and it’s perfectly safe but the colour of the water was not the prettiest. You want to distribute it all over town but you realise that no one is going to buy it because of the colour. In that scenario, if that water cannot harm anyone and it’s just an aesthetic thing, there’s no claim. That’s a commercial loss to your business.”


Product recall is a risk faced by any company that manufactures, imports or distributes consumable or non-consumable goods. Jae Ramsbotham, Senior Underwriter Crisis Management at AIG, says analysing this risk is a significant task for underwriters. “We need to thoroughly analyse the company’s operations and processes and the exposures pertinent to the industry,” she says.

In assessing the risk, an underwriter generally seeks evidence of a company’s quality assurance programs, including food and site security measures. They will also request documents such as food safety audit reports, recall and business continuity plans and supplier or manufacturer contractual agreements.

 “We would then work with the client’s insurance broker to establisha tailored policy that meets the needs of the clients based on the information provided,” says Jae. “An underwriter is charged with finding the very tight balance between client satisfaction, coverage, premium cost and commercially viable terms for all.”

Some product lines are considered high risk. Tony says dairy products often present red flags. “Cheese and dairy products often have a lot of claims and that’s just the nature of the beast,” he says. “You can always argue that there’s never going to be enough premium pool to pay for those claims.”

In some instances, products are simply too difficult to insure for recall. “We get people coming to us [for recall insurance] for building products,” says Tony. “It could be a bolt or a screw that’s used in trucks. The problem in that scenario is how do you recall it? You can only trace it to a certain point.”Tony adds that individual and cites the pigment used to colour red lipsticks, which is often made from crushed cochineal bugs. “If you have that as an ingredient and it was somehow contaminated, how do you recall all of those products?”


Insurers stress that clients should inform them as soon as possible in the event of a product recall. “The adverse media coverage that may follow even a single product recall incident poses a significant threat to consumer confidence, hard-won retail space, important contracts, market share and brand credibility,” says Jae.

“Zero risk does not exist,” she adds. “Even the best risk management programs may reduce the likelihood of an incident but do not completely eliminate risk. Accidents do happen and when they occur a company has to be able to manage the consequences.”


Between 2010 and 2013, up to 40,000 homes across Australia were wired with 4,000km of substandard electrical cables sourced from Infinity Cable Company. With insufficient plastic insulation, the cables are expected to become prematurely brittle, leading to fire and electrocution hazards.

In August 2014, the Infinity cables were recalled by 18 electrical retailers and wholesalers due to safety concerns.

Suresh Manickam, CEO of the National Electrical and Communications Association, says he would like to see an industry push for recall insurance to be a mandatory requirement for wholesalers and distributors in order to protect both contractors and consumers.

“It’s pertinent in our industry because faulty products have the propensity to kill,” he says. “While mandatory recall insurance would certainly address the symptoms, we also need to tackle the root of the problem, which is that products are coming into the country that are not up to Australian standards.

”The owner of Infinity Cable Company currently faces a criminal charge and the company is in liquidation. Meanwhile, the recall is estimated to have cost AU$80 million.

By the source below 16 May, 2017
See how an effective ransomware attack comes together. This is why today's enterprises require effective security. For more on how Cisco looks to keep ransomware at bay, go to: .
By the source below 15 May, 2017

The highly-anticipated tax cut for small businesses will provide much needed relief for mum-and-dad owners, with an Australian Small Business and Family Enterprise Ombudsman (ASBFEO) report highlighting the amount of tax paid by the small business sector overall has increased, while the contribution made by big business has fallen.

The ASBFEO’s   Small Business Counts   statistics report released today, includes ATO figures showing the small business share of company tax revenue has increased two per cent in recent years, while input from the big business sector has fallen three per cent.

“A healthy small-business sector is a prerequisite for a growing economy; there’s no doubt SMEs are doing their fair share when it comes to paying tax, not to mention creating job opportunities,” ASBFEO Kate Carnell said.

“The Federal Government’s foreshadowed company tax cuts for businesses with a turnover of up to $10 million will give 99 per cent of Australian businesses a tax reduction, and will provide a much needed shot in the arm for the sector’s growth prospects, enhancing the ability of small businesses to employ,” she said.

Compiled over the past 12 months, the ASBFEO statistics report brings together data and analysis from a range of sources including the ATO, ABS and Austrade, and has been released to mark the office’s one year anniversary.

“This report provides a unique insight into the sector; it ultimately reinforces the size and importance of the small businesses to the Australian economy, and outlines its growing diversity,” Carnell said.

Among the report’s findings, Carnell said the number of small businesses currently venturing into offshore markets is on the rise.

“Encouragingly, ABS data shows more and more small businesses are entering export markets, with 44 per cent of goods-exporting firms classified as small business,” Carnell said.

“Many are also entering the global market place at an early stage of their development, giving rise to the ‘born-global’ phenomenon,” she said.

Carnell said while many small businesses are at the cutting edge of innovation, she’d like to see more small businesses go down this path.

“Our report highlights ABS data showing small business accounts for 17 per cent of business expenditure on R&D; while this is encouraging, it’s a figure I think the sector can – and will – build upon, particularly as more small businesses realise the benefits of entering into strategic partnerships with larger companies, especially in industries like defence,” Carnell said.

Carnell said the purpose of the report is to be a resource for governments, public policy makers and researchers that will improve their knowledge and understanding of the Australian small-business sector.

“We’re inviting feedback on the report and welcome comment from small business and others on how we can ensure this document is the go-to publication for small-business stats in Australia,” Carnell said.

The full report can be found on the ASBFEO website: where a feedback form is also available.

By the source below 15 May, 2017

The Privacy Amendment (Notifiable Data Breaches) Bill 2017 ( bill) amends the  Privacy Act 1988  (Cth) ( Privacy Act) and imposes an obligation on businesses to notify individuals and the Information Commissioner of data breaches. While the introduction of a mandatory data breach notification regime is significant, the threshold for notification is quite high.

When will it take effect?

The notification laws are expected to come into effect within the next 12 months. The bill was passed by both houses of parliament on 13 February 2017 and is currently awaiting Royal Assent.

Who is affected?

All entities that are currently subject to the Australian Privacy Principles ( APP entity) in the Privacy Act, which includes:

  • Australian Government agencies;
  • all businesses and not-for-profit organisations with an annual turnover for the previous year of more than $3 million;
  • health service providers, or holders of health information (subject to the operation of the  My Health Records Act 2012  (Cth));
  • credit reporting bodies; and
  • holders of one or more individuals’ tax file numbers.

Also, if an APP entity has provided personal information to an overseas entity, these notification obligations may still apply as if the APP entity itself held the information.

What are the notification requirements?

An  ‘eligible data breach’  is central to this legislation. An eligible data breach happens if:

  • there is unauthorised access, disclosure or loss of, personal information held by an APP entity; and
  • a reasonable person would conclude that the access, disclosure or loss is likely to result in serious harm to any of the individuals to whom the information relates.

‘Personal information’  means information or an opinion about an identified individual, or an individual who is reasonably identifiable, whether true or not. Common examples may include individuals’ dates of birth, addresses and credit card details.

‘Serious harm’  imposes a fairly high threshold, and is where a reasonable person would conclude that access to, or disclosure of, personal information would be likely to result in serious harm, taking into account a range of specified matters1 including:

  • the kind of information and its sensitivity;
  • the persons who have obtained the information through the breach;
  • whether the information was encrypted; and
  • the nature of the harm.

The Office of the Australian Information Commissioner has previously considered  ‘serious harm’  to include identify theft and financial fraud.2

There are three categories of obligation surrounding an eligible data breach.

Suspected breach

Within 30 days of an APP entity suspecting that there may have been an eligible data breach it is obliged to carry out a reasonable and expeditious assessment of whether there in fact has been such a breach.

Actual breach

If an APP entity has reasonable grounds to believe that an eligible data breach has happened, it must notify:

  • affected individuals; and
  • the Information Commissioner.

An APP entity is also required to provide such notification if directed to do so by the Information Commissioner.

Remedial action

If an eligible data breach occurs, and the APP entity takes action before the breach results in serious harm to any of the affected individuals, then the breach is deemed to have not been an  ‘eligible data breach’  and no notification steps are required.

The notification

The APP entity’s notification to the Information Commissioner and the affected individuals must be provided as soon as practicable after the APP entity becomes aware of the breach, and must contain:

  • the identity and contact details of the APP entity;
  • a description of the eligible data breach;
  • the kinds of information concerned; and
  • recommendations of the actions that the affected individuals should take in response to the eligible data breach.

What are the consequences of non-compliance?

If an entity or individual does not comply with the requirements of the legislation, they risk facing civil penalties of up to $1.8 million or $360,000 respectively or compensation orders to individuals who have suffered loss or damage as a result of the non-compliance.

What do I need to do?

If these amendments are likely to impact your organisation, we recommend action be taken now to prepare for the commencement of the bill. Such action may include implementing:

  • the Australian Signals Directorate’s recently introduced  ‘Essential Eight’   strategies to mitigate cyber security incidents; and
  • a data breach response plan, such as the example plan on the website of the  OAIC .

We also recommend a whole-of-business approach towards minimising cyber risks and the associated fall-out from a cyber event should be taken. As part of this, companies should consider how their present insurance coverage responds to cyber events and whether obtaining specialised cyber risk insurance coverage is necessary, particularly in light of the impending commencement of the bill.

Download Publication here

Austbrokers Coast to Coast can offer comprehensive solutions for all risks mentioned. Please contact us on 07 5586 9955

By the source below 15 May, 2017
A woman from Florida has been convicted of fraud after she tried to fake an injury at work in remarkable fashion.

Sheyla White made a workers’ compensation claim after a sprinkler fell from the ceiling of the office where she worked which she claimed bounced off her desk and hit her in the head in 2015.

While the sprinkler did crash from the ceiling, CCTV footage shows a different story.

The sprinkler hits the desk in front of White, who pauses and picks up the sprinkler. She then proceeds to bash herself in the head with the sprinkler, and feign injury.

After the sprinkler injury, White’s employers filed a compensation claim which aroused the suspicion of their insurer. It then launched an investigation and contacted the Florida Division of Investigative and Forensic Services which requested security camera footage from the employer.

The game was well and truly up.

White was arrested in August 2016 and convicted of workers’ compensation fraud, the Daily Mail reported.

She managed to avoid the maximum five year prison sentence and was sentenced to 18 months of probation.

** Austbrokers Coast to Coast offers Risk Management Solutions including advice on how to protect your business against this sort of fraudulent activity. This service is free to our clients.
By the source below 15 May, 2017

Australians are being warned to ignore a convincing but fake email-borne Origin Energy electricity bill that has been doing the rounds since 10 May.

Tens of thousands of the bogus emails started hitting inboxes at 8.30am on 10 May, according to enterprise email security provider, MailGuard.

The email, which MailGuard describes as “well-cratfed”, features Origin Energy branding, and employs the subject heading, “You Origin Electricity bill”, and is dated 16 May.

The amount due figure varies between individual scam emails, a tactic used to help it evade traditional antivirus software.

Another tactic employed by the cybercriminals behind the scam to further trick recipients into thinking the email is the real deal, is the inclusion of a line addressing privacy concerns that links to the real Origin Energy site.

If email recipients click on the “View bill” button, they are directed to a replica Origin Energy website, which links to a malware payload, which comes in the form of a JavaScript dropper, according to MailGuard.

The malware, which is hosted on a compromised Microsoft SharePoint account, is designed to install malicious files, such as keyloggers and other spyware, on the recipients’ systems.

(An example of the fake email - (MailGuard) is below)

“The scam email originates from a fake domain – – registered in China just days ago. It was sent from servers located in France,” MailGuard said in a  blog post . “Those behind it have gone to considerable lengths to trick victims.”

The ploy bears some similarities to  another email-instigated scam  picked up by MailGuard last month.

According to enterprise email security provider, the scam began with a phishing email ostensibly from the Federal Government’s site, telling the recipient to visit the site to verify their identity.

Recipients who click on a link in the email were taken to a replica of the real myGov site – a “near-perfect” clone of the centralised government services website, according to MailGuard.

Once victims were directed to the fake site, they were prompted to put their credit card details. Once this was done, they were then redirected to the genuine myGov website, in a bid to cover up the deception.

** Austbrokers Coast to Coast can help protect you from this loss through either Cyber Liability or Management Liability cover, please call us for a no obligation discussion in relation to what you may need to implement.

By the source below 19 Apr, 2017

Hair and beauty salons and retail outlets are the focus of a new Fair Work Ombudsman compliance campaign that will target businesses along the east coast of Australia.

Fair Work Inspectors will conduct audits of at least 1600 businesses in randomly selected urban and regional areas of Queensland, New South Wales and Victoria. The campaign will be conducted in two phases, with audits to be conducted in waves.

Acting Fair Work Ombudsman Michael Campbell said the first phase was already underway and the campaign would take approximately 12 months to complete.

“The retail, hair and beauty sectors have been selected for audit because they employ high numbers of workers, particularly young people and workers from migrant backgrounds,” Campbell said. “In addition, previous audits into hair and beauty businesses and the retail industry have found high levels of non-compliance.”

“In 2013, the Fair Work Ombudsman released the results of a national hair and beauty campaign which identified an overall industry non-compliance rate of 55 per cent,” Campbell said. “Victoria recorded the highest rate of non-compliance with almost three quarters of salon operators audited not meeting their obligations under workplace laws,” Campbell said.

The retail industry is Australia’s second largest employer, and Campbell said a previous Fair Work Ombudsman national campaign saw $585 000 returned to 755 workers.

“Our 2012 report revealed that more than 40 per cent of the underpayments identified through the campaign were owed by NSW employers,” Campbell said. “This new hair, beauty and retail campaign will build on our previous work to reinforce the need for all workplace participants to proactively ensure they are meeting their obligations under Australian workplace laws.”

Inside Small Business

By the source below 06 Apr, 2017
It was Gold Coast-based brokerage Austbrokers Coast to Coast that took out Small Brokerage of the Year at the 2016 Australian Insurance Industry Awards. Less than a month later, Dale Hansen was named NIBA's Broker of the Year. There's no doubt 2016 was a year of success for Hansen and the brokerage, and he's extremely excited about times ahead.

An industry veteran with over two decades' experience and passionate about the role of the broker, Hansen is determined to play an active role in promoting awareness in the wider community of the important role of brokers, and precisely what they can achieve. Last year, Hansen told  Insurance Business  he's not buying into the "doom and gloom" regarding disruptors, and sees those businesses as providing an opportunity for brokers to reinforce their value proposition. Talking about current time, he said he's "never been prouder and more excited and enthusiastic to be an insurance broker".

We look forward to following Hansen, particularly the work he undertakes to bring home to the community outside the insurance space the real value that brokers can offer.
By the source below 04 Apr, 2017
New legislation may be enacted to force Queensland unit owners to sell their homes against their intentions if 75% of the property owners in the complex agree.  The existing Body Corporate and Community Management Act 1997 (Qld) may only force unit owners to sell their home if the body corporate has 100% votes in favour of it.

The amendments to the current laws have come about after a recent review and report by the Commercial and Property Law Research Centre at the Queensland University of Technology as commissioned by the Queensland Government. As a result of the review the Department of Justice and Attorney-General are now conducting a public consultation process which ends on 5 May 2017.

The report details recommendations which suggest that if a dissenting owner wishes, they may apply to the District Court within three (3) months to decide whether or not the termination plan should proceed. This recommendation is based upon the current New South Wales reformed body corporate legislation which commenced on 30 November 2016.

Under the reformed New South Wales legislation, lot owners of any scheme, regardless of the age of the scheme or its state of repair, may with the support of 75% of the other lot owners, approve a plan for the collective sale or redevelopment of the scheme. Western Australia is currently considering draft legislation that will implement similar changes.

If the new legislation is adopted it may still require several steps to be followed to develop a strata termination plan. The plan may include two (2) cooling-off periods and afterwards the owners would be given the opportunity on whether to move forward with the termination of an owner.

The proposed amendments are due to come into effect later this year (or early next year). These changes will deal with issues regarding outdated and often deteriorating unit blocks that are being maintained at great expense. Generally, the outdated and deteriorating unit blocks are situated on prime real estate which are in demand by developers to build better and safer apartments. This is an ever changing and interesting area of law and unit owners and body corporates alike should avail themselves of these suggested new laws.

For further information please contact our office on 07 5586 9955.
By the source below 04 Apr, 2017
Human error was the top cause of liability loss by value of claim for Australia and New Zealand, a new report has found.

Allianz Global Corporate and Specialty analysed more than 100,000 global claims in the corporate liability insurance market between 2011 and 2016 with 94% of local claims caused by human error.

The international insurer found that 80% of global losses came from ten causes, with defective product/work leading the way globally at 23%. Collison crash took second place on 22%, while human error rounded out the top three at 19%.

In Australia and New Zealand, human error was far and away the biggest cause for loss defective product/work taking second place with just 2%.

 “Liability losses are ubiquitous and can range from minor incidents to major disasters, always causing third party damage or injury,” said Alexander Mack, AGCS board member and chief claims officer.

“The risk landscape for companies is constantly shifting with liability risks on the rise globally.”

Mack noted that the use of new technology and the rise of the internet of things will create new liability scenarios in almost every business sector as the insurance market becomes more important.

While human error topped the charts in Australia and New Zealand, globally it accounts for just 1% of all claims received by insurers.

In a rising local trend, the report found that Australia is now second only to the United States in terms of securities class action exposures, which could become a key liability risk for the country over the coming years.

Top 10 causes of liability loss by total value of claims

  1. Defective product/work
  2. Collision/crash
  3. Human error
  4. Accidental nature/damage
  5. Slips/falls/falling objects
  6. Water/fire/smoke damage
  7. Environmental damage
  8. Natural hazards
  9. Vandalism/terrorism
  10. Property damage

** Please contact our office to discuss any of these matters further - we will help you make sure that you are correctly covered.
By the source below 04 Apr, 2017

It amazes me how many times people have spoken of Act of God being both an insured or excluded peril under an insurance policy.

There was even a famous Billy Connolly with this as its theme. My nephew, Jeffery, one of the guys sending me a joke questioned me on it and I thought it was worth setting the record straight.

Despite having read thousands of policies of insurance and being involved in the drafting of 100's more, I have never seen the words 'Act of God' appear in a policy as an insured, or excluded peril.

What it means in layman's term is:

a completely unforeseeable event where there has been no human intervention

Things such as fire, lightening, earthquake, tornado, hurricane, cyclone, flood, landslip, and the like.

Under policies such as a comprehensive motor vehicle policy, all these perils are in fact, insured. Most property policies, such as your home and contents, business pack or ISR, the vast majority would be insured, although landslip, action by the sea, storm surge and flood may be excluded.

If you are in any doubt as to the cover afforded by the policy which you have in place, I recommend that you speak to your insurance broker.

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