| When is a claim finished? | About Claim Solutions... |
Welcome to the first edition of the Claim Solutions’ Newsletter. We hope to bring you four editions a year Winter, Spring, Summer and Autumn. 
Our aim is to provide you, the Insurance Broker, with a quarterly claims update including breaking news in relation to insurance claims, interesting and sometimes unusual interpretations of insurance policies and a summary of recent events which may be the subject of insurance claims.
“It will never happen to me”
Is this the attitude towards losses expressed by your clients when you confront them with the insurance premium?
You might like to provide them with the list of events which may have been the subject of insurance claims listed on page 4.
Perhaps this will encourage your clients to appreciate the value of insurance.
We hope you find the content of this newsletter useful and informative.
Your feedback and enquiries in relation to the services provided by Claim Solutions are welcome.
One of the major losses of the past quarter, billed as reminiscent of Coode Island, was the fire at a Brooklyn meatworks.
News reports focused on the significant property damage, hazardous fumes and loss of employee jobs. The fire has ramifications beyond the Brooklyn meatworks.
Some meat processors may experience an increase in supply as alternative facilities are sourced to replace the processing capacity lost at Brooklyn.
The capacity of other meat processors may be limited. Suppliers and customers of the Brooklyn meatworks may be adversely affected.
Suppliers including farmers may incur additional transport costs to redirect livestock to other facilities.
Customers such as small goods manufacturers which normally obtain their product from the Brooklyn meatworks may be unable to obtain their usual volume or it may only be available at an increased price.
Do your clients have a customers/suppliers extension on their Industrial Special Risks policy?
Who says Insurance Claims are boring? The Odd Spot for this quarter comes from our archives.
A well-known production company was making a feature film which required several scenes to be shot in rugged bush land at the top of Mount Ben Lomond in Tasmania.
Due to the inaccessibility of the area all equipment, crew and actors had to be flown in and out by helicopter at considerable cost.
Unbeknown to all, the lead actor who has since appeared in many feature films, suffered from a medical condition causing constant nose bleeds at high altitudes.
Nose bleeds were not part of the scene and shooting had to be regularly postponed while doctors attended to the problem.
An additional cost was incurred to hire equipment, crew and actors to complete the filming.
Whoever thought nose bleeds could be the subject of a business interruption?
An Industrial Special Risks policy requires the Insured to take all reasonable actions to minimise the extent of loss.
Did you know that a typical policy might contain three separate covers for Increased Costs?
The first is part of the Gross Profit cover and responds to extra costs which are necessary, reasonable and incurred for the sole purpose of minimising a Reduction in Turnover. The extra costs claimed cannot exceed the Gross Profit saved i.e. the economic limit.
A similar cover is available under the payroll section of the wording providing a second item under which extra costs can be claimed.
The third item of cover is known as Additional Increase in Cost of Working. This is a broader cover which responds to extra costs beyond the economic limit and which may be covered to maintain normal business operations.
Extra costs should be claimed under the appropriate heading to ensure the policy responds correctly.
Our claims experience shows that many clients’ turn adversity into opportunity. They insure their property with the intention of rebuilding a similar property if it is destroyed.
However most elect to replace their property to a different design, layout, configuration or specification. This may require some contribution from the Insured but often results in a better business.
Of the claims currently being prepared by Claim Solutions approximately 60% are underinsured.
Underinsurance of both Property and Business Interruption is common.
The value at risk on property should represent the reinstatement value unless indemnity conditions are specified.
Professional Building and Equipment valuations are the best method to determine the reinstatement value. Clients are often unwilling to incur the cost of professional valuations.
Alternatively a guide to reinstatement values of buildings may be obtained from industry publications and quotations or enquiries with suppliers may provide a guide to the reinstatement value of major items of plant.
The value at risk on Business Interruption policies should reflect the Gross Profit and/or Payroll of the business over the potential maximum indemnity period.
Many clients appear to be underinsured because they: -
- Do not understand future rather than past Gross Profit/Payroll needs to be insured.
- Do not understand that the insurance concept of Gross Profit/Payroll may be different from the accounting definition.
- Underestimate the growth in their business from the renewal date.
Many months ago a client signed a final form of release allowing the Insurer to make the final payment in relation to a major claim for reinstatement of Property and Business Interruption.
The conclusion of the claim - or so we all thought.
During the course of the claim the builder was submitting invoices for building reinstatement direct to the loss adjuster. Payments to the builder were being made direct from the Insurer to the builder.
Copies of builder’s invoices were requested but not supplied.
An invoice from the builder recently arrived on our client’s desk for a substantial cost.
An apology accompanied the invoice explaining that the costs related to work performed during the early stages of the claim but were not included in previous invoices.
Verification indicated the cost was valid but was not submitted on a timely basis due to inadequacies in the builders accounting system.
The Insurer was requested to re-open their file and reimburse the builder.
Insurers were reluctant to consider the cost as the final release had been signed and they were not satisfied the work performed related to fire reinstatement.
The late arrival of the invoice unnecessarily prolonged the settlement and cost of this claim.
Solution: -
Invoices need to be submitted on a timely basis direct to the Insured.
Claim Solutions provides a specialist insurance claims service. Our firm is recognised as one of the leading practices in this field with both national and international companies featuring amongst our clients. Our aim is to provide an efficient, professional and complete claims service which responds to your needs in times of crisis.
The Articles which appear in this Newsletter are not intended to be a substitute for specific technical advice.
