13/08/2021
posted to "The Owner Builder Club" page. A harsh truth, that will probably result in harsh legal threats. What do you think?
Who's really who, when it comes to owner-builder insurance?
Owner-builder insurance was difficult enough 5-10 years ago, when only a few specialist providers existed, each with their own unique products. The average consumer would ring their existing mainstream insurer who'd say "we don't do that", and the owner-builder would either google "Owner-Builder Insurance" or they'd ask their training provider for a recommendation. Either approach would result in a maximum of 4 products, and usually the same number of specialist providers. But they'd be different products, and different benefits.
Now there's:
1) Allrisk Insurance (probably the best known and by the far the most often recommended by independent companies and consumers), and
2) Don Hutton Insurance Brokers (based in QLD), and
3) "everyone else"...
The everyone else is a significant number, but they all are using the same insurance product and pricing (for a very good reason), and they all have the same limitations.
Let's have a look at the suppliers and how this came about; broker A and agency B got together and formed "the new grand provider" company that "the others" are now using, Director A and Director B each becoming a director of the new company. The new company, a short time later, posted a huge loss, and sold out for $1m to an even bigger insurer (who has incidentally since also entered the market as an agency providing the owner-builder insurance product directly to brokers,.... excluding their real 'competitors' of course).
When you sell a business that is losing money, even when it's for a relatively small amount like $1m, you generally need to make commitments to ensure that the profitability improves, for example exclusively having your other company use that product. There were two directors with 2 large related companies that could do that. This is just a theory; I don't know what the deal was. So it's possibly a coincidence that those 2 companies do now exclusively use that product.
One of those directors mentioned above, also owns another second agency, which also exclusively uses that product now.
One of the biggest RTO owner-builder training providers is also now an Authorised Representitive of one of those two original companies, although it has launched an "independent-sounding webiste" to sell the product.
So when I say Allrisk is recommended by "almost" all the training providers, obviously the above one is not one of those (anymore).
Slightly more cynical aside:
Just about every construction insurer will tell you that claims occur at a higher rate, and most certainly at higher values, towards the end of a project. It could be argued that cutting clients off at 2 years might make your company more profitable over all.
It might even provide the power to undercut your 'real' competitors by a few dollars. If you were up against a competitor that you had a theoretical grudge against, since they'd had the cheapest rates in the market for well over 10 years, it would be easy to imagine this happening.
What happened to the other 'real' providers that existed 5-10 years ago?
One company was started by ex-manager of the second agency belonging to one of the big two companies featured in the story above. That company (which we'll just call Don't-TRUST) operated for only a couple of years, and according to most sources they "went bankrupt". Since they cut the phones off and did not notify any clients what had happened, we can only really guess. They were underwritten by Guild Insurance though, if anyone is still trying to trace their cover back to a useful source.
The director of one of the other big competitors in owner-builder insurance closed up his shop, and became the construction manager for the 'bigger' insurer mentioned in the story above, that bought out .. well most of the market.
Monopoly, anyone?
