A client may only see a slick double act between broker and insurer, with perhaps a cameo by a loss adjuster during a smoothly settled claim. But to pick up the pieces and get the organisation trading again takes more than three individuals. Major property claims, for example a fire, are among the most complex and time consuming. Katie Puckett asks Zurich’s major loss team to unravel a recent claim
It is Friday, 30 May 2008, 7.25am and as staff begin to arrive for work at Melton Borough Council’s offices, switching on lights and computers, an electrical fire starts on the first floor. It spreads rapidly through the building, a typical 1980s build with three storeys, gutting the upper floors and leaving only the ground level, and that is severely damaged.
While the fire is raging, council staff in a nearby building contact the insurer Zurich, from which it bought the policy directly. It is clear from the start that this will be a case for the major loss team. Claims technician Kevin Drain takes charge. He immediately calls in a forensic investigator, Burgoynes, to determine the cause of the blaze.
“For insurers, establishing the cause of the fire is a key issue,” he says. “If it starts due to negligence on a supplier or contractor’s part it’s important that we preserve any evidence as early as possible, and it could provide us with the possibility of recovering whatever we pay.”
Drain also contacts loss adjuster Cunningham Lindsey and Midlands area manager at Zurich Peter Cragg arrives while the fire is still burning to assess the scale of the damage and begin the recovery operation.
“It was quite clear that it was going to be a significant loss,” explains Drain.
“It happened on a Friday, so we wanted to make sure that things are in place before the weekend, so the organisation can operate on a limited basis from day one.”
Cragg says that over the past year, his staff have spent in excess of 1,100 hours on the logistics of getting the council up and running again.
Councils are legally obliged to provide essential services even in the event of a major catastrophe. Fortunately, the council’s contingency plan meant it had office space with IT services for more than 60 people in nearby Nottingham. But where would the rest of its workforce of over 250 people be housed?
On the Monday morning after the fire, Drain and Cragg attend a full-day meeting in a building opposite the burnt-out council offices. The council’s short-term needs are top of the list. During the next two to three weeks, there was a presence from either Zurich or Cunningham Lindsey every day.
The remaining staff were working from home, from other premises the council owns around the town, from suppliers’ offices or from hurriedly hired space around the town. However, as a small Leicestershire market town, Melton Mowbray does not have spare office space for 200 people available easily.
Over the next year, Cunningham Lindsey will appoint many specialists to help the council return to normality, working with its existing suppliers and supplementing their expertise with Zurich’s own teams.
As a third of the original building is still standing Cunningham Lindsey appoints building consultants including chartered surveyors and engineers to determine what can be saved, and a demolition contractor to make the remaining offices safe. A specialist cleaning company comes to collect anything not damaged by fire, smoke or water from the sprinkler system.
The IT equipment is destroyed but items of furniture such as desks and cabinets are able to be salvaged. The company will clean them using specialist chemicals and store them until the council’s new building is ready. The ground floor is converted into a standalone building so some of the staff can move back in, using the council’s agreed suppliers of building services, furniture and carpeting.
Meanwhile, the council must continue to provide essential services although its staff are spread around the town. IT consultants are contacted to set up new and temporary systems and telephones so the council workers can work as if they are all in the same building. The new wide area network covers 10 sites, and Zurich also pays for a document scanning system so all staff can access paperwork remotely, which the consultancy team must train the council’s workers to use.
The fire has not only destroyed the building, it has also disrupted the lives of the council’s staff who are working in inconvenient and cramped conditions on systems that they may not be familiar with. The last thing the council wants is to lose its skilled employees as well. Transition consultants are called in to provide softer skills, helping staff adjust to the changes.
Rebuild the offices
The council decides to rebuild its offices in a different place, in a run-down part of the town, but it must first go through a lengthy public consultation process to comply with UK and EU legislation. Zurich will pay up to the reinstatement value of the old building, and provide support for the new project.
The council will have building surveyors, but Zurich also appoints its own to conduct an independent valuation. It will take more than three years to build the new premises, and Drain says the claim will cost “several million” to settle, not to mention the time and effort of so many people across the industry.
“It was the council’s first loss of any size,” he says. “As a small council, it had never had anything like it so it was very inexperienced and didn’t know what was going to happen. Our job is to make sure that we guided it and gave it all the experience we’ve gained from dealing with previous losses.”