The Pinnacle

Issue 45 (August 2023)

Time for a spring review?

As we look forward to spring, this issue of Pinnacle looks at some of the latest news and cases brought before court. We remind customers of the value of The Fair Insurance Code and we spotlight the dangers of machinery at work, again. And we look at how a tiny magnetic toy became a danger not only for children, but for a well-known company.  As always, keep safe, grab a coffee, and read on.


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It is with a heavy heart that we inform our friends and followers of the passing of our dear friend and colleague, Jason Hurcum, after a courageous battle with cancer.

We know that many within our community, who had the privilege of knowing Jason both personally and professionally, share in our profound sadness at his loss. Jason was a highly regarded and well-liked Claims Team Manager with over 30 years of experience in the insurance industry.

We consider ourselves extremely fortunate to have had Jason as a valued member of the Apex team. We miss you mate, always on our mind.

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Fair Insurance Code

The two recent weather events will create another premium spike in regions that, until now, avoided the most significant premium increases after the Canterbury and Kaikoura earthquakes. In fact, the recent weather events have highlighted to insurers and reinsurers that any part of New Zealand might be exposed to similar events more regularly in the future. 

For a number of years insurers have become more selective about where they will provide cover. The availability of insurance in coastal and flood prone regions has reduced but usually not to the extent that makes cover impossible to obtain. The Insurance Council of New Zealand (ICNZ) has recognised the enormity of the recent weather events, saying: “Now is the moment to reset and ask questions about whether to rebuild in some locations, and if we do, how to rebuild better to protect ourselves.” (Tim Grafton, CEO of ICNZ on 16 February 2023).

Looking at the global picture, Martin Bertogg, head of catastrophe perils at Swiss Re, summed up the predicament of global insurers and reinsurers when he recently said: “While inflation may subside, increasing value concentration in areas vulnerable to natural catastrophes remains a key driver for increasing losses. For our industry, this is a call both to reflect (on) the latest exposure even more carefully in risk assessments while continuing to support society in being better prepared.”

The recent Lloyd’s results also reflected on their similar experience and trend when they reported a $1.55 billion loss in the 2022 year.

https://www.icnz.org.nz/wp-content/uploads/2023/01/Fair_Insurance_Code_2020.pdf

Warning on Machinery Hazards

Prosecutions highlight the duty to ensure machinery is both safe to use and used safely. Two recent prosecutions again highlight the need to ensure that workers remain safe, so far as reasonably practicable, when using machinery.

In the first case, a meat works company was sentenced in the Hastings District Court to a fine of $280,000 and reparations of $48,000 after a 17-year-old sustained significant hand injuries. The victim was two weeks into the job and was trained to use a lamb brisket cutter machine by a co-worker who had started on the same day as him. The co-worker demonstrated how to use the machine with one hand. When the victim followed this method, his right hand was struck by the brisket cutter blades. This partially amputated his thumb, index finger, middle finger and ring finger. Supervisors, senior management, and the company owners were unaware of the brisket cutter being used single-handedly and, until this incident, did not believe it could be used in such a way.  The matter went to trial in December 2022 and the company was subsequently found guilty of health and safety failures. The Judge noted in his decision that “training was completely inadequate and… positively dangerous.” The case underscores the need for businesses to ensure that their training for new workers is comprehensive and structured, and that work practices do not “drift” into unsafe methods. This is especially important where engineering controls such as guarding cannot be used on a machine.

In the second case, a multinational company was sentenced to a fine of $180,000 and further reparations of $10,000 after a worker’s arm got caught in a bark-stripping machine which did not have the appropriate safeguards in place for use in New Zealand. The incident occurred in June 2021 when a worker was troubleshooting on the debarking machine. The rollers closed and trapped his wrist. He required surgery for a broken arm and a dislocated wrist. The investigation found that significant safety modifications were made to the debarker machine before it was put into use. But the company did not ensure the machine met New Zealand safeguarding standards. Nor did it bring in a qualified expert to assess the adequacy of the safeguarding of the machine. After the sentencing, WorkSafe reminded those bringing new machinery into the country to do their due diligence to bring the equipment into line with New Zealand safety standards and to get the right experts and advice.  

Machinery is a common cause of injury in the workplace. WorkSafe says about 80% of acute work-related injuries involve machinery and equipment. Notably, it warns that protecting people from machines is a priority, and that it is increasing its focus and enforcement activity in this area.

Review or renew?

If you’ve read something that’s rung alarm bells or piqued your interest and would like to know more, just talk to your friendly Apex Insurance Adviser. We’re always here to give you sound, unbiased advice on how to best protect your business and employees and how to ensure you’re getting best value from your insurance policies. Find our contact details here.

Contractual liabilities not covered under a liability policy

The directors and officers of a company can be held personally liable for errors or omissions for wrongful acts in managing the company. This can lead to significant personal loss of reputation and financial damage.

That’s why Apex recommends that you always take qualified legal advice when considering agreement to a contract, failure to do so could lead to a claim made against the directors and officers hence the need for Directors and Officers insurance.

Commerce Commission prosecutes company for selling dangerous toys 

The former owner of GrabOne has been fined $87,750 for selling toys made up of small, high-powered magnetic balls, commonly known as buckyballs. The prosecution was brought by the Commerce Commission (ComCom) under the Fair Trading Act and followed other prosecutions by the regulator for selling unsafe toys. 

The buckyballs were supplied between October 2020 and September 2021 in breach of an unsafe goods notice which bans the supply of any magnets, sold in sets of two or more, that are a particular size and strength. 

The ban on these types of magnets is in place because if more than one of the magnets are swallowed, they can attract to each other within the body which is extremely dangerous.  At least one child in New Zealand did swallow two of the magnets from one of the magnetic toys supplied, and significant surgery was required to remove them. 

The company sold 213 of the magnetic toys between October 2020 and September 2021. After being contacted by ComCom, it recalled the sets and contacted customers to notify them of the recall. ComCom says that product safety is a priority area, and it is committed to ensuring that businesses comply with their product safety obligations.

Further information on the product safety standards and unsafe goods notices.

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Disclaimer

This publication has been prepared for your general information. While all care has been taken in the preparation of this publication, no warranty is given as to the accuracy of the information and no responsibility is taken for any errors or omissions.

This publication does not constitute financial or insurance, or home loan product advice. It may not be relevant to individual circumstances. Nothing in this publication is, or should be taken as, an offer, invitation, or recommendation to buy, sell, or retain any insurance product or make any deposit with any person. You should seek professional advice before taking any action in relation to the matters dealt within this publication.

No part of this publication may be reproduced without prior written permission from our company. A disclosure statement is available on request and free of charge.

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