Earlier this year there were two explosions at a significantly large hydroelectical power plant in South America. A fire ensued and upon first review by insurers and loss adjusters this could have been a total loss in the range of hundreds of millions. As a result of intense mitigation activity on the part of the facility, supported by (re)insurers, which included negotiations at government level to use spare cables from a different country, the insurance claim, for its complexity, was substantially reduced.
According to the loss adjusters and brokers who worked on the loss, it was all down to finding ways to have immediate communications among teams. Chatting groups through mobile apps such as WhatsApp proved to be extremely valuable as email communication turned out to be too slow for the appropriate actions to be taken. Immediate decisions were required to source and procure replacement parts and secure the requisite authorisation.
All parties were immediately informed of any information they needed to be aware of by the loss adjuster and this satisfied reinsurers internal requirements for regular information on the loss. For the power company this meant they could focus on getting the asset back up and running rather than being inundated with questions from re/insurers.
This loss was a great example of a robust loss management plan where various alternative solutions for the master plan and for critical tasks were created. Through clear and easy communication paths the loss adjuster and broker were able to work through the solution as a resolution team with all the information disclosed.
So what are the take-away issues which were key to the successful management of this claim:
Pre-planning: The importance of co-ordinated claims handling, both from the local and international placements. Prenominated adjuster panels (with appropriate expertise) are essential and in this case enabled immediate site visit. It is very helpful that the adjuster and the insured (and its broker) spent time getting to know one another prior to the loss.
Communication: Look for ways to have immediate communications among teams. Chatting groups though mobile apps have shown to be very useful. A strong communication network between the stakeholders enables quick decision making with regard to claim strategy and management.
Project risk management: Have a specialised person dedicated to look for approaching mistakes and problems, so it can be avoided or solved before they appear.
Project plans: Work out in parallel various alternative solutions for the master plan and for critical tasks, especially regarding the contractors and supply of parts. Whilst the availability of the replacement cables so quickly in this instance was somewhat fortuitous, this emphasises the need for robust loss scenario testing and contingency/continuity plans or the need for strategic spares.
Policy requirements: The importance of having adequate expediting and extra expense limits, which will have a significant impact to the final business interruption claim. A significant factor in mitigating the consequential loss was due to the rapid transportation of the cables by way of bespoke airfreight.
Cash flow: The ability for the broker to secure, and (re)insurers to deliver, prompt and substantial interim payments to fund the mitigation activities and ultimately put the insured back in business as quickly as possible.
For more information please contact Shoga Ogunbona, Claims Executive on +44 (0)20 7466 6656 or email email@example.com