On the Stroke of Midnight
It was approaching 12 o’clock on New Year’s Eve, the villagers gathered in a small church in South America had to evacuate due to a sudden flood. As they headed to higher ground they saw fire burning on the flood waters that were rapidly consuming their homes, schools and crops.
The heavy flooding and resulting rockslide had broken an LPG pipeline upriver, the thick gas floated over the river course until it found open fire in a kitchen and deflagrated. Thirty people, including children, had severe burns on their body. ADVANTA was notified three days after the incident and a team of adjusters was swiftly deployed to start evaluating the losses and working with the Insured to mitigate further damages. The Insured was an operator of the affected LPG pipeline, who immediately transferred the injured to nearby clinics.
The state of affairs was very tense in the immediate aftermath as there was substantial national media coverage and demands for criminal charges to be raised against the Insured and for the revocation of the LPG pipeline’s operation permits. Local and state politicians were soon involved and there was mounting pressure on the Insured in light of the widespread impact the incident had generated.
Although the root cause was an unpredictable natural event, liability was promptly established as strict liability laws made companies that owned or operated using dangerous products responsible for any damages, even without establishing negligence.
It was resolved that a construction company would be hired to undertake the reconstruction of affected houses and buildings with the consent of each claimant. This decision in conjunction with all other remedial efforts that the Insured undertook in the aftermath of this incident, improved the communication with each of the affected parties.
To assess the value of the damages, proper ownership of each asset had to be established which proved challenging as many claimants held no official documents confirming their ownership of the affected property. Damage determination was performed in numerous categories including; damages to buildings, other goods, crops and the environment. In addition other areas assessed were; medical and legal expenses, loss of income and personal compensation.
The damages to buildings were repaired by the construction firm hired by the Insured using industrialised technology which resulted in structural and safety improvements to the previous constructions. Medical expenses were also reviewed and paid directly to clinics and doctors, after a close follow-up of the patients’ evolution and treatment.
There were substantial damages to the local vegetation during the fire, hence trees were replanted where possible. Yet considering some crops such as orange trees take up to seven years to regain full production levels, economic loss for this period had to be calculated. In the case of environmental damages, certain restoration measures were implemented and compensation was agreed with the local community which involved the construction of a new town hall.
A committee was also formed with independent experts that designed a formula for compensation based on local jurisprudence and international parameters. Their role was to calculate an indemnity sum for each claimant who had suffered any injury ranging from minor burns to permanent scars. Due to the transparency in all the remedial efforts, swift response and consistent communication with the affected parties, just settlements were promptly reached upon assessment of all damages and calculation of the final indemnity figure for each claimant.
In summary, ADVANTA played a key role in this case, collaborating closely with the Insured, Broker and affected parties to ensure the swift and impartial settlement of claims. Acting proactively and following closely the immediate needs of the affected parties enabled the prompt remediation of what was a critical situation for the claimants. The ongoing flow of data from all stakeholders, close collaboration and informed decision-making also resulted in substantial savings in legal costs and any further reputational and legal consequences for the Insured.
Tomas Fourcade can be contacted at firstname.lastname@example.org.