Welcome
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.
Meatworks
Fire
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?
Odd
Spot
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?
For
a copy of our Company Profile please
contact Joe or Susan. 
Extra
Costs Times Three
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.
Opportunity
from Adversity
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.
Underinsurance
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: -
When
is a Claim Finished?
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.
Recent
Losses
To see a list of recent losses,
