Coverage for cleaners aims to tackle “onerous conditions”
Coverage for cleaners aims to tackle “onerous conditions” | Insurance Business Australia
Insurance News
Coverage for cleaners aims to tackle “onerous conditions”
“Until now there’s been very few options for brokers”
Insurance News
By
Daniel Wood
Until now, David Jones (pictured above) says brokers providing coverage to commercial cleaning companies could find very few options from insurers in a hard market with lots of red tape.
In December, Jones’s firm, Edge Underwriting, launched a new public liability coverage for the companies that clean shopping centres and food courts.
“We now have a fully authorised, Lloyd’s backed solution for public liability for cleaners,” said the managing director to Insurance Business. “Up until now there’s been very few options for brokers in this space which has seen them having to use UFI [unauthorised foreign insurer] security.”
Tackling the industry’s “onerous conditions”
Jones said this ability to offer fully authorised security through Lloyd’s is one of the biggest differences between his coverage and others on the market.
“There are strict rules in place for when UFI security can and can’t be used by insurance brokers,” he said. “UFI security also comes with strict disclosure requirements and some broking houses refuse to use UFI security.”
Another industry challenge the offering aims to tackle, said Jones, is the often “onerous conditions” in many cleaning contracts. These can include the insurance requirements, hold harmless indemnity agreements and full waivers of subrogation.
These extensions apply, said Jones, to current and future cleaning contracts.
For example, the offering provides $100,000 to cover lost keys. Jones said when the master keys for a shopping centre get lost or stolen it can be very expensive to replace all the keys and locks.
What claims do cleaning firms make?
Jones said among the “myriad of claims” that come from cleaning firms, two risks stand out.
The first is wet floors resulting in trips and falls. The wet, slippery floors can come from the cleaner’s wet mop, rain and food or drink spills.
Jones said the risk of these claims can be particularly high for these companies because many perform their floor and window cleaning duties during business hours in busy shopping centres and food courts.
Worker-to-worker claims – a growing insurance problem
The second costly claims area is worker-to-worker (WTW) recovery claims as a result of injuries to contractors. Jones said the cost of these third-party claims has become a “massive problem” and one of the victims is cleaning firms who are often independent contractors.
“Which has added to their woes of trying to get insurance because a lot of insurers have pulled out of these labour-based industries like construction, cleaners and a lot of the trades because of the worker-to-worker losses,” said Jones.
His insurance covers these claims.
Sustainable pricing has returned
However, Jones said his offering does also coincide with the return of sustainable pricing to the market.
“Up until around four years ago, the running joke for pricing liability insurance in Australia was that you simply took the Canadian price, halved it and doubled the sum insured,” he said. “The Australian market was severely under-priced and unsustainable and inevitably poor results followed.”
WTW claims have been increasing since the 1990s, said Jones, when the deregulation of the labour market kicked off a rise in the number of independent contractors and other third parties in the labour force.
In 2010, an Actuaries Institute paper observed that while the actual number of work-related injury claims in recent years was stable, the cost of these claims for insurers was increasing. A key driver for these increasing costs, said the paper, was WTW claims.
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