Insurance at Work
On the 23 April 2014, I was asked by M & R Insurance Brokers to assist with a major fire claim that was literally still burning in the Melbourne suburb of Mordialloc.
The Insured, Bolwell, manufactures fibreglass parts for several major truck manufacturers, with one in particular representing a major proportion of their revenue.
My first task was to review their insurance program and how it would respond in this circumstance. Having completed a review of the insurances I was able, with some confidence, to explain to the directors and senior management that the program was well set up, there was no apparent areas of under insurance and that being insured with Allianz they were with a quality insurer.
I and a colleague spent most of the day on site working with the Insured; local authority, loss adjusters from Cunningham Lindsay and others to understand the issues and provide advice on the way the policy would respond. The adjusters worked well with us and we quickly agreed on the contractors to engage for the make safe to to have gas and electricity reconnected, so that the undamaged sections of the production facility could recommence operations as quickly as possible. Additional security and other necessary services were also arranged. LMI Media photographed and videoed all the damage as a record for use during the claims process.
I visited the site over the ANZAC weekend and was glad I did, as further trades people were required, which I was able to arrange.
On the following Monday, we met with Cunningham Lindsay and explained the business recovery program that the Insured had put into operation, with the peace of mind they had based it on the advice I was able to give them on day 1 and, subsequently, on the quality and adequacy of their insurance policy. That same day, the first trucks rolled out of the remaining factories with finished product destined for their major customers, to ensure that the fire did not adversely effect their customers’ operations.
At this meeting, a formal request was made for a substantial progress payment to assist the Insured with funding the Increase in Cost of Working expenses they were necessarily incurring to resume normal business operations as quickly as possible. This request was quickly agreed to, in principle, pending the necessary forensic reports on the cause of the fire.
Just two weeks after the fire, Allianz authorised the first progress payment of $1,000,000 to the Insured. Much work still confronts the Insured in reinstating all the destroyed assets and returning their business back to where it would have been, but for this unfortunate event, but they and their all important customers have the confidence that they will succeed with the help of their insurance.
This is another case where the cost of that insurance has not been discussed or even thought of. To save their business, the Insured needed a policy with a broad coverage that offered financial protection for the loss of the assets and to reimburse the increase in cost of working and pick up any short fall in sales. With the program put together by M &R Insurance Brokers, they got that.
Secondly, they wanted (and got) first class service from their insurance broker; their insurer, Allianz; the insurer’s agents, the loss adjuster, Cunningham Lindsay and from their claims preparer, LMI. In each case, they got the service they needed.
The final ingredient was having their insurance with a company which had the financial strength to fund a progress payment quickly. Again, Allianz performed admirably.
From my perspective, this claim reinforces the view that I and LMI can add the most value to a claim when appointed at day one. We were able to provide meaningful advice, which allowed this Insured to make important business decisions. We were able to ensure that trustworthy contractors were appointed who would not let them down, or try and gouge them at a time of need, remembering that this was over a long weekend. From the start, we set up a protocol to ensure all costs associated with the fire were captured.
Far too often we get appointed when a claim is off the rails and we are trying to pick up the pieces. It is much better for all concerned, Insured, insurance broker, insurer and loss adjuster, if the claim stays on the rails from the get go. Early appointment allows advice on loss mitigation and allows the prompt and accurate calculation of the claim.
One final point I would make is that two years ago the Insured received some risk management advice to improve the fire protection between their buildings. While there was a cost and inconvenience to the business, the Insured took the advice on board. By doing so, coupled with what was some great work by both the MFB and CFA brigades, the fire was confined to just one department. When you consider the occupation of the adjoining building, this fire could have been a great deal worse.
The take-away point here is not to ignore risk management advice, it just may save you a heap of heartache and possible business failure.