Liability Claims Investigation

Blood, Fire, Rubber and Smoke

24 September 2008

Tom Battell, Adjusting Solutions LLP

David Martin, Adjusting Solutions LLP

Introduction and ContentPresentations• Tom Battell –Liability Investigation Overview• David Martin – Product Liability Investigation

Workshops• Explosion Case Study• Case Study Feedback• Questions

1. Widen understanding of investigation and strategy on liability claims

2. Improve performance in delivering the policy promise

3. Reduce risk of the “tail wagging the dog”

Purpose

THE APPROACH

• What has really happened?• When did event/breach and loss occur?• How did it occur?• Who are the parties?• Where is the alleged injury/loss/damage?• Why might there be a liability or a defence?

BE OPEN MINDED – NO PRECONCEPTIONSBE NICE!

First Steps - Desktop (before visiting site)

• Insured background/business/people • Previous losses/incidents• Market/competitors/customers• Web/Financial/Locus search • PR Issues• Legal Research• Coverage• Claimant(s) and representatives

BE PREPARED

First Steps - Site Visit

• Safety

• Create Good Relations

• Evidence/Records/Circumstances

• Experts/Statutory Bodies

• Containment and Mitigation

• Parties/Relationships/Contracts

• Subrogation/Recovery Aspects

ALL EYES and EARS

Assessors

Claimant (s)

Customers

Statutory Bodies

Lawyers

Parties and Agendas

Adjusters

Broker

Insured

Suppliers

THE INVESTIGATIONWhich Route? Defective Product

Defective Workmanship

Inadequate Advice

Negligent Actions

Negligent Omissions

All of the above

Pure Accident

AVOID RED HERRINGS - HOOK THE MACKEREL NOT THE SPRAT!!

EVIDENCE GATHERING (Get it while you can!)

• Physical Evidence

• Recorded Evidence• Documentary Evidence

• Witness Evidence

• Expert Evidence

• Circumstantial Evidence

PRESERVE WHILE ALLOWING MITIGATION

THE LEGAL ROUTE

• Contract, Tort, Strict or Statutory• Duty owed, Breach of Duty, Resultant Loss,

Foreseeability• Contractual terms and UCTA• Limitation, Minors, Latent Damage• Effective date of action• Contributory Negligence• Subrogation

Don’t let the legal obscure the straightforward

1. Manage Expectations

2. Salient and Tactful Enquiries

3. Appropriate Communication to All

4. Early Notice of Uninsured Aspects

5. Prompt Actions and Updates

Progressing the Claim

Quality Case Management

6. See the Whole Picture

7. Clear Strategy and Direction

8. Cohesive Assessment and Reporting

9. Continuous Financial Appraisal

10.Commitment and Impetus to Closure

Progressing the Claim

Quality Case Management – cont.

• Damage/Injury must be sustained • Pure Financial Loss• Claims made or losses occurring• Retroactive dates• Conditions precedent to liability• Own property exclusion• Penalties and fines• Series claims and deductibles

Policy Application – or not

Product Liability InvestigationCase Study

Leading edge print cartridge • Ink supplied to spec by TP supplier • Reformulation by TP causes blockages• All direct customer claims resolved – except

one using standard terms• Negotiated agreement• Low value low volume account • Claimant’s customers high profile and badly

affected

The Claimants position

• Business badly affected • Replacement printheads • Additional expenses (engineers etc)• Loss of direct sales

• hardware• software

• Loss of indirect sales• hardware• software

Sales & Purchase Conditions• Negotiated Contracts• Specifications • Installation & Usage Instructions• Statutory Requirements• Insurance Coverage• Legal Compliance• Statements

Words, words and more words!

The Contractual Snake

Customer, Consumer, End User

Retail, Supply, Installation

Import, Wholesale, Primary Distribution

Manufacture, Assembly, Storage

Component Manufacture, Primary Assembly

Design, Raw Material, Ingredient

PotentialScale, Exposure Risk and Cost Increase

The Loss Pyramid

• Statute

• Tort

• Contract

• Territory

• Custom

• Appointment of team playing lawyer

Liable or just bluffing?

• Product supplied (not service given)• Damage or not ! • Pure Financial Loss• Claims made or losses occurring• Retroactive dates• Own product/component exclusion• “Rip ‘n Tear”• Series claims and deductibles

Policy Application – or not

• Injury, Physical or Financial• General, Special and Liquidated Damages• Measurement of Loss • Limitations • Mitigation effects• Savings• Structured Reserving

What’s it worth?

• Often forgotten or left late• Preserve evidence, take statements• Give early notice and reasonable

documentation• Offer inspection facilities• Enforce contract terms• Consider CFA options• Chase, Chase and Chase again !!!

Subrogation

• Timing and Early Settlements• Win - Win agreements• Joint/Multi-Party• Cut Through Settlements • Reputational Risk Appeasement• Commercial Settlements• Apologies, Grovelling and all others forms

of Repentance

Enterprising Solutions

CONCLUSION

• Be open minded• Desk top preparation• Thorough site investigation• Secure evidence - consider experts• Check legal routes and defences• Ensure quantum properly logged• Support mitigation• Be enterprising – create a resolution