Liability Claims Investigation Blood, Fire, Rubber and Smoke 24 September 2008 Tom Battell, Adjusting Solutions LLP David Martin, Adjusting Solutions LLP

Introduction and Content Presentations 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 PRECONCEPTIONS BE 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 INVESTIGATION Which 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 Investigation Case 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

Design, Raw Material, Ingredient Component Manufacture, Primary Assembly Manufacture, Assembly, Storage Import, Wholesale, Primary Distribution Retail, Supply, Installation Customer, Consumer, End User Potential Scale, 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