My client joined us in December 2012. They manufacture automotive components. The direct insurance company they were dealing with decided they couldn’t offer them renewal. The client had been with them for a few years and thought they had good cover.
When they came to us, we put them through quite a rigorous engagement process, determining their needs and values. The biggest thing for them was determining that their business interruption insurance was correct. They appointed us on 1 December. It was far more expensive than they had expected, but they put it in place.
Early morning on the 31 January, about 60 days later, I received a phone call from the general manager to say they’d had a fire.
The fire involved an accident by one of their employees, who was also severely injured. The fire had blown a hole in the roof and destroyed their specialist equipment. We had the placement with Vero and reported it that morning. Within hours a senior loss adjuster was on-site, who brought with him a disaster engineer. From there, the loss ran its course. We involved risk accounting people to help manage the claim, quantifying and qualifying, ensuring that every possible sub-limit within the policy was used. The loss ran to about $3 million.
Had they not acted on our reassessment, they would have been monetarily affected to the tune of $1.5 million, as only 50% of the loss would have been insured. The biggest part of the claim was loss of profit, but their old policy had a co-insurance clause on the business interruption policy.
I don’t think they ever expected to have to make a claim. It’s the most recent experience I’ve had on a claim where, if it hadn’t gone as well as it did, these people could quite easily have been out of business. Their business was relatively profitable, but on a very fine margin, and if they didn’t have the support of their insurer, their broker, and their claims management expertise, they would have had to get a multi-million dollar overdraft, which they’d never have been able to support.
To the credit of the insurer, they didn’t muck about. They got in and determined it was an accident; they determined it was an insured event on the spot. They sent the assessor out with permission to start spending money to keep these people in business.
I think the best thing that we did as the servicing broker was to engage a claims management specialist. You can’t be afraid to say, “I don’t know the answer. I’ll go and get the expert.”
Along the journey of the claim, there were some interesting conversations. The assessor that the insurer sent to manage the business interruption claim was there to limit the loss, while we were there to make sure that the client got what they were entitled to and what they’d paid for.
The first progress payment to the client was made within less than 30 days and it was a sizeable six-figure sum, because they were laying out money left, right and centre on increased costs of working and mitigation costs and all those sorts of things.
Their business is still growing. They recently purchased a new building to move their operation. The gentleman who was hurt in the event still works in the business to this day. Just last week we renewed their cover for another year and it continues to be a successful family business.