Setting things straight

Apologies if this is a little personal and close to home. But the misinformation being spread needs to be countered with the facts.

Facts are based on math and logic, not opinion.

Below the stated facts is my current call to action on client portfolios – very important reading.

If one person is sick at work with a stomach bug, do you send everyone else home and leave that person in the office or do you send that person home?

No different now.

Some stats to help those of you that have bought into the fear being spread by the press:

1. 20-40% of the population will get the virus regardless of whether we lockdown or not.
2. Of the current 331,000 of active virus cases, 96% have mild flu like symptoms, 3% are serious, and 1% are critical.
3. The incubation period is not 14 days. The average is 14 days for those we know contracted it. In reality the incubation period could be anything from 3-4 days to up to 22 days.
4. Staying home will not eradicate the virus. That’s nonsense. No virus is eradicated from people not getting it. Viruses are only eradicated from people getting the disease (speak to any virologist) and building an immunity or from a vaccine. Currently, a vaccine is about 12m away. So, does that mean we stay at home for 12m?
5. The death rates vary widely by country so those reported in the press are way off. The average death rate amongst the more efficient countries is 0.9%, whereas its 6.5% for the least efficient countries. The difference between the cluster of countries – older populations, more smokers, poorer health systems, less testing, culture and hygiene. Also, the death rate is derived by dividing the number of deaths by the number of confirmed cases. Considering the efficient countries have only tested 120,000 to 150,000 people, there’s already 10-20 times more people that have the virus that don’t know and/or haven’t been tested, and possibly more. That puts the death rate for the efficient countries on par with the common flu!! Do we stay at home and lockdown the country for the common flu?? SARS had a death rate of 9.6% and MERS had a death rate of 34% – did anyone notice when that occurred?
6. Age – the death rate below the age of 60 is 0.38% and even lower if you consider, as above, that more of us have it but don’t know. Of that 0.38%, all but a handful of cases had a preexisting condition. Of those that had no reported pre-existing condition, they had one but didn’t know they did. No deaths for those under the age of 10. Lastly, and away from the stats, the US has mobilized the army and national guard and Britain are a few days away from doing the same. Do you know why that it is? Yes, it’s to help with medical care, logistics, and sanitation. But the most important reason why isn’t being mentioned – martial law. No job, no money; no money, no food; no money, no electricity; what do people do when they have no food and no electricity to keep warm? If you need help figuring that out, I can’t help you!

From a portfolio perspective, I recommend you do the following right now:

1. Don’t panic
2. Don’t make any changes to portfolios, wait for markets to settle (I will let you know)
3. Accumulate cash in portfolios – don’t rebalance, bank distributions, bank investments maturing like TDs and hybrids
4. Use that cash to buy into the plethora of equity raisings we’re going to see over the next few months – Cochlear went first yesterday with a $850m raise at $140 per share – that’s a 44% discount to the peak and a 16% discount to the day before the announcement. On average, large cap stocks will be raising equity at a 15-20% discount to prevailing prices, whilst mid and small cap stocks will be raising equity at a 25-35% discount to prevailing prices. Fund managers are salivating over these opportunities.
5. The bond market is returning to normal following the bazookas fired by central banks. The banks have more to do and are committed to doing “whatever it takes”. DON’T SELL YOUR BOND FUND – bond managers are salivating over the opportunities they’re about to get given how wide spreads are and the backstop / floor being provided by central banks.
6. Stop reading the press and stop watching the news. False and misleading information now constitutes more than 90% of viewing and reading. They are spreading fear, fear feeds the narrative of lockdown, lockdown means mass unemployment, mass unemployment means no economic recovery.

Some insurers have already started to pay claims to bushfire-affected businesses on the NSW South Coast, as their business interruption insurance policy provides for weekly payments.

Having this support has been important for affected firms to stay in business. It allows them to maintain their cash flow and pay regular outgoings such as rent and wages.

Under a business interruption policy, a business that suffers an insurable event can claim for loss of income. Policyholders in the best position have been those that have been able to quickly provide their financial information to support their claim.

Christopher Connolly, underwriting manager with underwriting agency Interruption Underwriting Agencies (IUA), explains.“The fires happened on New Year’s Eve. The first business day was Thursday 2 January.

We started to pay claims the following Friday 10 January, which was within 7 business days” he says.

Affected businesses such as restaurants, shops and other local stores have been able to claim under a prevention of access clause in their policy.

The clause is triggered because the authorities issued directives that closed the roads. This meant the annual influx of tourists the South Coast receives could not reach the businesses in the towns affected by the road closures.

Some roads remained closed at the time of writing.

This article from the Steadfast online magazine Well Covered, discusses risks of underinsurance, how to avoid mistakes and ensure homeowners have the right insurance in place, particularly in fire-prone areas.

Read the full article here

North Qld is not just known for Cyclone and rainwater claims. Check out the latest claim lodged by our staff.

A Townsville couple thought they had water damage when they heard their ceiling collapse during heavy rain, turns out the cause was a well fed python falling through the ceiling.

He measured in at 2.5 metres, 9 kgs and was released in the bush.

Insurance will fix everything, except the home owners shock.

All business owners have a lot of challenges, but many fail to contemplate what might happen if their business is suddenly unable to trade. From illness or injury to a fire at your supplier’s warehouse, there are many ways that your profit generation could be suddenly halted. While there are many rewards to being a business owner, the threat of the unexpected should not be overlooked. One of the most effective ways of keeping yourself and your business safe is through Business Income Protection Insurance. While many people have personal income protection, income protection for business owners is a much more focused form of coverage that could keep you much more safeguarded against the unexpected.

What is Business Income Protection?

Disruption to your workflow can be caused by many uncontrollable events. Business Income Insurance (also known as Business Interruption Insurance) policies are intended to cover your living and working costs while you are unable to trade. Whether you are forced to close your business due to long-term disruption or need to cease trading temporarily, Business Income Protection can make sure that when you are able to reopen the doors you will be in a much more secure position. When work is disrupted, business owners still have bills to pay, staff wages, and supplier costs that need to be maintained. And that can be very challenging if you are not generating any profits.

Why you need it

If there was any damage caused to your business premises, such as a fire or a flood, would your current finances keep you afloat? Any kind of damage, disaster, or business interruption can have a dramatic effect on a business. Without the reliability of ongoing profits, many business owners simply lack the resources needed to stay financially secure during unexpected breaks in trading. Business Income Insurance is intended to keep you financially stable as you tackle disruption, and can be a useful resource when you’re trying to get your business back up and running to pre-disaster levels.

Did you know?

Income Protection Insurance can cover individuals or businesses, but research in 2016 revealed that only 31% of Australians have their income protected.

Research by the Australian Centre for Business Growth suggests that 13% of Australian SMEs fail due to external factors such as natural disasters, changes to regulations, or even shifts in global trends. However, the actual number may be much higher than this.

Income Protection Insurance is not a new type of coverage. In fact, the first recorded policy that was designed to protect income was back in 1880!

What it covers

Most Business Income Protection policies will vary according to your needs. However, you can expect that your policy will cover:

• The costs of relocation (temporary or permanent)
• Property damage to products or premises
• Theft of equipment that prevents you from operating
• Fixed costs
• Expenses caused by disruption
• Wage payments to staff
• Taxes
• Loan repayments

What isn’t covered?

Generally, Business Income Protection will not cover you if your business is harmed by you intentionally, particularly in cases where damage was caused by intoxication. You will also find that most policies will only cover your costs if your business suffers a loss or inability to trade as a direct result of a specific disruption.

Businesses exist to make a profit. If a business is unable to make money due to any kind of external factors that are out of the owner’s control, having Income Protection can give you the financial safety net that you need to recover and continue trading.

There are countless circumstances that may have a negative effect on your business, many of which are impossible to predict. The good news is that it is possible to prepare for any eventuality, thereby safeguarding your business from potential financial ruin. The best way to do this is with the right business insurance.

However, as a business owner, what specific types of business insurance are you responsible for? What insurance are you required to have by law? Furthermore, which types of insurance are worthwhile considering despite not being mandatory? Let’s find out.

Workers’ compensation

If your business has any employees, then workers’ compensation is a must. Essentially, it is a type of accident insurance paid for by employers which provides coverage should an employee be injured on the job. The insurance will pay for medical-related costs and will provide wage-loss compensation in the event that the employee is unable to work for a period of time following the accident/injury. Workers’ compensation also applies to circumstances when an employee contracts a work-related illness. Workers’ compensation is solely the employer’s responsibility – there are no deductions made from the employees’ salaries in order to pay for it.

Public liability insurance

Public liability insurance, although mostly optional, is required by law for certain types of businesses in Australia. In essence, it protects your business from financial ruin should you or your employees ever be accused of negligence. It may offer cover in the following situations:

• injury or death
• providing negligent advice
• property damage
• consequential loss, which occurs in very rare cases where a negligent act causes a third party business to lose expected revenue.

Third party personal injury insurance

This type of insurance is required by law, but only if you own a motor vehicle or a business vehicle. Many business owners will be pleased to discover that third party personal injury insurance is often included in their vehicle registration fee. Ultimately, it provides cover for any costs relating to injuries that a motorist may cause to others in a motor vehicle crash anywhere in Australia. Most third party personal injury insurance will cover treatment, care and support of the injured parties, pay for claims management expenses, and settle worries regarding both past and future economic loss in relation to the injury.

In order to remain compliant, all Australian business owners must make sure that they have invested in the right insurance as per the law. Remember, however, while there are specific types of business insurance that every employer is responsible for, there are many other types that are not mandatory, but that can greatly benefit your establishment in the long run including professional indemnity insurance, cyber liability insurance and stock and asset insurance. It is worthwhile to consider all of these types of insurance if you are in search of total peace of mind that your business is properly protected and ready to face any challenge that may come its way.