In August of 2022, the Risk and Finance Magazine of Bolivia in its No. 61, has published an interview to Roberto Revenga, CEO at VANTEVO CLAIMS ADVISORS.
You can read the complete interview here.
We are all well aware that ascertaining the cause of a loss event is essential in order to clarify the cover for the claim, determine liability for the same and to take measures to prevent it from happening again.
In the case of serious fire losses, sometimes given the degree of destruction caused by the fire, it is not easy to pinpoint the origin of the same, despite contracting experts in root cause investigations.
In cases of Machinery Breakdown claims, the study of their cause is less complicated, but nonetheless often requires the intervention of metallurgical or electrical laboratories, depending upon the presumed origin of the loss event.
It is only by means of a metallurgical analysis that you can verify whether the fracture process of a blade or metal part has been a slow and gradual one or sudden and unforeseeable, besides being accidental. In the first case, the loss would not be covered whilst in the second, it would be. Again we would need the assistance of a metallurgical laboratory to ascertain whether any corrosion or erosion was slow and gradual or accidental and fast, and therefore possibly covered in this latter case.
At VANTEVO CLAIMS ADVISORS, we tend to use the laboratories of Engineering Schools, since in the event of any dispute, the courts usually positively weigh the reports signed by professors, since they assume they have the knowledge and independence to issue their opinion.
There are not normally any problems with the conclusions reached in the laboratory reports, since these are usually clear and conclusive, and their conclusions are objective and well documented, and accordingly can be accepted by all the parties involved in the claim.
At VANTEVO CLAIMS ADVISORS, we usually ask that, in addition to ascertaining the “root cause” of the loss event, they suggest measures to avoid similar claims in the future and their recommendations normally are very interesting.
The fundamental objective of a Risk Manager is to protect the safety of the workers, the assets and the Profit and Loss Account of their company and therefore, one of the things they must do, is to contract a suitable Policy to cover all of the company’s risks.
Risk Managers should be supported by a Broker who will help and advise them in the complicated task of designing the very best Policy for their company and who are the best Insurers and Reinsurers for their purposes.
In addition the Risk Manger must be involved in drawing up and updating the company’s emergency and contingency plans. These latter, also called “business continuity plans” are essential to minimise the Consequential Losses in the case of the occurrence of a loss event.
What should Risk Managers do in the case of a major loss event? In our opinion, with the help of their Broker, they should appoint a Loss Assessor who can help, on the one hand, to minimise the Consequential Losses and normalise the production of the company after the loss event and, on the other, to help them prepare and defend the claim that must be presented to the Insurers and their Loss Adjusters following the same.
Most claims are satisfactorily resolved with the help of the Brokers, but there are others that, given their size and complexity, require the support of Loss Assessors. They are experts in claims and have experience of dealing with emergency situations such as those that arise after a major loss event, especially when their cost can be assumed – either partially or entirely – by the Insurance Company under the “Fees of the Insured’s expert” clause that is ever more frequently being found in Policies, especially in those that cover large risks.
It is even more important to have the support of a Loss Assessor in the case of the loss event occurring in a facility far from the company’s headquarters, and moreover if it occurs in a plant situated overseas.
Am expert Loss Assessor will not only help the Insured to try to avoid any loss of sales, which might bring about the loss of clients, but also to get the Insurer to agree to “payments on account” to pay the costs of repairing the damage.
It has been demonstrated that presenting a well-documented and verifiable claim assists in the speedy and amicable closing of a claim and that is why the Loss Assessor appointed by the Risk Manager to act for the Insured has such an important role to play.
Vantevo, which is an international and independent consultancy, with professional engineers and economists who are experts in major claims, can help Risk Managers to “resolve” the claim in a fast and professional manner, after which they will find their position in the company to be strengthened, since they will have demonstrated the value of their work at a critical moment for the business, as would be the case if it were to be affected by a major loss event.
A claim that is well handled and swiftly resolved works to the benefit of all parties involved in the same: the Policyholders, the Insurers, the Brokers, the Experts as well as the Risk Managers.
We have explained on more than one occasion how, in the Insurance world, the occurrence of a loss event is the moment of truth.
Policies are contracted in order to cover the assets and the liabilities of individuals and companies in the event of an accident occurring that brings about Material Damage and/or Consequential Losses.
In most cases, the covers under the Policy are clear, it is easy to ascertain the cause of the loss and also to agree the amounts of the indemnities that are payable on the basis of the Policy. The Insurance Broker assists the Insured to recover the amount of the loss and damage sustained that is covered by the Policy.
However, there are loss events which given their size and complexity require both the Insured as well as their Insurance Broker to seek the support of a Loss Assessor to help them in that emergency situation that gave rise to the occurrence of a major claim.
On these occasions, particularly in the case of companies, it is in our opinion very useful if the Insured can count upon having some professionals by their side to help them:
The intervention in these claims of a Loss Assessor acting on the part of the Insured who defends their interests and helps them recover the amount of the loss and damage sustained is of fundamental importance.
Likewise he can help them to obtain “payments on account” from the Insurance Company to cover the disbursements required in order to pay for the repair of the damage caused by the loss event.
It has been proven that the correct and professional intervention of a Loss Assessor speeds up the finalisation of the claims with the advantages that this can bring for both the Insured as well as the Insurer.
It has also been demonstrated that the presentation of a well-documented and verifiable claim facilitates the work of the Loss Adjuster acting for the Insurer and the reaching of an amicable agreement to close the claim.
This is the philosophy of Vantevo, independent consultants at the service of Insureds and their Brokers: to assist the Insurer’s adjusters to close claims as soon as possible in a professional and amicable manner, in order to there by demonstrate the importance of Insurance for the company and that Policies do indeed perform their purpose, namely to protect the assets of the Insured, especially in the event of major claims that might jeopardise the continuity of the affected business.
Moreover, today with the “Preparation claims fees clause”, this consultancy service can be provided at no additional cost for the Insured, since it is the Insurance Companies who pay for this service.
There are usually differences between the claim presented by the Insured and their expert and the loss adjustment proposed by the experts acting for the Insurers.
Based upon our own experience, at VANTEVO CLAIMS ADVISORS we know that these differences are due to the following five factors:
Once the above differences have been clarified and corrected and an agreement reached regarding the appraisal of the loss, then you must refer to the Policy in order to agree the indemnity payable.
If it is at actual value, then depreciation for wear and tear, age, obsolescence etc. will have to be applied to the replaced items.
In the case of the latter, unless the Average Clause is waived or the Policy is on a first loss basis, the Average Clause must be applied.
If yes, then it must be applied.
To summarise, the differences between a claim and the agreed settlement must be clearly defined and analysed by the experts, since they have to stem from the five factors indicated above and from the conditions of the Policy.
Obviously if a timely and equitable agreement on the payable indemnity is to be reached, it will help a lot if the claim is correctly detailed, structured and documented. This is precisely the job that VANTEVO CLAIMS ADVISORS undertake in those loss events where we are contracted to act as the Insured’s expert advisors. This facilitates a swift, fair and professional agreement between the parties.
We at VANTEVO routinely have meetings with leading Brokers, during which some of them tell us – half joking, half serious – that the Material Damage All Risks Policy, in their opinion, “covers what does not happen and does not cover what does happen in companies”.
For VANTEVO, the MD All Risks Policy has represented a major advance in the cover for industrial assets, since it is the Insurer who must prove the absence of any cover for the loss on the basis of the Policy exclusions.
Under the old-style Policies, which were for named perils, it was the Insured who had to demonstrate that their loss was indeed insured under one of its covers.
Where VANTEVO does agree with these Brokers, is that the General Conditions of the MD All Risks Policies have many exclusions and even some that are indefinite and not very clear, which generates confusion and conflicts at the time of a loss. It is as wrong to say that this Policy covers nearly nothing as it is to state that it covers almost everything.
What this Policy needs, whose greatest advantage for the Insured is that it is the Insurer who must demonstrate that the damage is not recoverable thereunder, is to be adapted to the risk that you wish to insure and in order for this, there are the Special Conditions and Optional Covers.
Amongst other things that can be agreed and reflected in the Special Conditions of the Policy are the form of the insurance for the stocks, the waiver of the Average Clause, the insuring of the assets at their New Replacement Value, the Deductibles, the Automatic Increase Clauses, etc..
It is evident that by contracting Optional Covers such as that for Machinery Breakdown, Consequential Losses, Burglary and Theft, Molten Material Spillage, etc., some of the Exclusions contained in the General Conditions of the Policy can be revoked by means of the express agreement between the Insured and the Insurer, which must be recorded in the Policy Schedule.
In the opinion of VANTEVO CLAIMS ADVISORS, it is essential that the Broker and the Insured, based on the characteristics of the Risk, adapt the Policy in such a way that it is “made to measure” and efficiently protects the risk that is to be covered.
This work of adapting the clauses of the Policy to the needs of the risks is commonly done for Large Risks, but is less frequent in covers for SMEs where there is still a lot of work to be done.
Between us we must ensure that the Policies are drafted better and more clearly so that should a loss occur, they function properly without any conflicts or surprises later.