Aon Risk Solutions | Aon Global Risk Consulting | Claims Preparation, Advocacy and Valuations 1

P I C G Conference | The Value of Claims Preparation in NAT CAT Situations May 2015

Insured’s NAT CAT Issues | General

In NAT CAT situations Business Interruption losses tend to be the area where most delays and disputes occur:

Historically PDBI policies were not structured in a way in which addressed all aspects of a NAT CAT loss i.e. multiple suppliers damaged in a single insured event

Distinct of lack of the Insureds management time

Lack of policy understanding

Disconnection between the Insureds loss calculations and the policy (without Claim Preparer)

Trends are recognised too late (post loss)

Lack interdependency clarity / Inaccurate or out dated information (pre loss)

Lack of understanding of the inherent risks in global supply chain (pre loss)

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Insured’s NAT CAT Issues | CBI Issues

o Supply chains are often multi-tiered with different sub-limits

o Proof of loss difficulties o Availability of stocko Unique supply / available alternativeso Alternative suppliers not unavailableo Components are uniqueo Components may be used in a number of

different productso One product may be interrupted due to

supply shortage from a number of components

o Mitigation / lead timeo Remodelling of end-producto Alternative suppliers need testing /

certification

o Wider Area Damageo Difficult to identify suppliers which are

affectedo Liaise with commodity buyero How much was supply of each component

affected?o How have the suppliers been affected?o What is the expected production outage of

the supplier?o Increased costs to mitigate outageo Loss calculation? Production v Sales

How to Obtain Policy Response Assurance

Increased understanding by way of NAT CAT risk quantification:

– Sophisticated tools are available to quantify and manage the risks facing Insureds businesses. Allowing Insureds to quantify potential losses and develop more effective insurance programmes.

Informed risk management and transfer decisions, identifying heavily exposed parts of the portfolio

Accuracy of information provided

Pre-loss BI reviews (Declared values, Indemnity periods, extensions, policy wording and structure, policy limits)

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The Benefits of Conducting Pre-Loss NAT CAT Reviews

Allowing the Insured to understand their risk exposures so they can transfer risk to insurers where desired

Eliminating the potential for under insurance

Providing the client with the reassurance that the policy in place will respond to a loss in the desired manner and that there are no unintentionally uninsured exposures due to incorrect reported values and limits

Eliminating the potential of over insurance resulting in unnecessarily excessive premiums charges

Providing brokers and clients with a tool to better negotiate renewal terms with the market

In the event of a claim occurring, providing a benchmark for the claim methodology that will ensure clients receive full indemnity and an expedient settlement

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Who are Claims Preparers?

Forensic Accountants

Loss Adjusters

Experienced claims advocates

All who were previously engaged by Insurance companies and tend to have a speciality in Business Interruption and general property insurance

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The Benefits of Claims Preparation & Management

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Getting the Insured on the Road Getting the Insured on the Road to Recovery…to Recovery…

Often when a loss occurs the client does not know where to begin

The initial decisions made with regard to mitigation and reinstatement can be crucial to both the short and long term recovery of the affected business as well as how successful an insurance claim can be

We can provide practical claims advice; be the main point of contact with insurers and their representatives; and prepare all claims submissions including the often misunderstood Business Interruption loss calculation

Catastrophe Teams//External Partnership/

Loss Consultants

Local Facility Operations

Finance/Risk Management Dept

“One Voice”Insurers/

Third Parties

VendorsRestoration Contractor

Building ContractorArchitect/Engineering

Roofing ConsultantIndustrial Hygienist

The Benefits of Claims Preparation & Management

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Claims Preparation | Benefits to the Insured

Receive timely and expert guidance through the claims-related issues; this can often be the difference between the policyholder’s successful and unsuccessful recovery after an incident.

Ensure claim is maximised whilst being properly prepared and presented in accordance with policy cover.

Provides expert funded resource to prepare the claim whilst key employees focus on a recovery of the business.

Creates a ‘level playing field’ to counter balance the array of advisers employed by the insurer to handle the large and complex claims.

A claims preparer knows the process and requirements of the Insurer, particularly in relation to interim payments and how to speed up settlement. Timely payments at a time of disruption are crucial to maintain cash flow.

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Claims Preparation | Benefits to the Insurer

Expectations are managed from the outset. Early and informed loss estimates (Orders of Magnitude) produced by claims

preparers assist in setting up adequate reserves. A well prepared claim can accelerate settlement resulting in a reduction in the life

cycle of the claim and associated costs. Policyholders without resource can be completely focused on recovering the

business leading to a drawn out and frustrating claim process. Good and prompt professional advice can lead to a shorter period of interruption

and a reduced exposure. It can also enhance the ‘claims experience’ received by the policyholder and lead to greater satisfaction and customer retention.

Encouraging a policyholder to access expert advice fully supports the ethos of ‘treating customers fairly’.

Additional support to avoid misunderstandings that may lead to dispute.

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Questions ?