Creta Farms: From a catastrophic fire to insurance compensation
The damage and its consequences
On March 14th, 2014, a large fire broke out in the central warehouses and cold rooms of Creta Farms, in Rethymno, Crete. The fire spread to two buildings and, unfortunately, completely destroyed all the building facilities and their contents. Fortunately, the fire brigade prevented the fire from spreading to other premises and production facilities, but unfortunately the company was left overnight with almost zero stocks of raw and auxiliary materials, as well as finished products.
The consequence of this disaster was, of course, that the company's production could only continue for a few days and in the following weeks sales would fall sharply. The company, apart from the sudden loss of its stocks, was also left without storage space, both for new deliveries and for the products produced after the damage.
Such catastrophic events for companies of this size can be fatal and even the continuation of their activities is in danger. The biggest problem that the company would face was with the specialized raw materials and auxiliary materials that are imported and had very long delivery times.
Creta Farms' actions
The company and its executives contacted suppliers and customers immediately to inform them of the damage that had occurred, but also to assure them that their production and network had not been affected. Everyone without exception was willing to help in any way. Especially their suppliers immediately accepted the orders given to them, while many of them put them in immediate priority. Their customers, respectively, showed due understanding and some assured, without any obligation, that they prefer their shelves and refrigerators empty, rather than replacing Creta Farms with products from other companies. These moving gestures from suppliers and customers showed that the company would overcome this hurdle and continue stronger.
Also, the company, and especially the partners, immediately sought the help of their insurance broker, the insurance syndicate that insured the facilities and, as pioneers, they sought the support of FAIR Consulting, the only company in Greece that provides technical advice on damage management and claims preparation.
Creta Farms entrusted FAIR Consulting with the task of managing the damage, with the first goal of the management and its executives to dedicate themselves to the protection of the company and its customers and to continue its activity under the new conditions that arose after the catastrophic damage to its stocks.The second goal of the cooperation of the two companies was the rapid gathering of the necessary data for the assessment process of the damage, the negotiations - mainly at a technical level - with the loss adjusters appointed by the insurance syndicate and the overall preparation of the claim file, with the estimates on losses per insured capital and according to the provisions and the general and special terms of the insurance policy.
Actions of the insurers and the brokers
The broker as well as the insurance syndicate, which included the largest insurance companies of the country, moved immediately and just a few hours after the incident, appointed the largest and most reliable loss adjusters' company.
By the evening, an autopsy and a meeting had been organized for the next morning, with the participation of high-ranking executives of the insurers and the broker, loss adjuster executives, FAIR Consulting's senior technical consultants and their associate, specialized in business interruption and of course the CEOs and senior executives from the production, financial and technical services departments, from Creta Farms.
During this first meeting it was understood that all parties involved in it would do everything possible to minimize the time of collection and processing of the large volume of data, that is absolutely necessary for the assessment of property damages and the loss of profits.
Establishment of the response team and the contact persons
At that first autopsy, the initial counts were also made and a protocol and contact persons were determined between the participants. This organization, although not fully understood at the time, laid the groundwork and contributed greatly to the speed of communication and data transmission. Due to the excellent relations that existed, clarifications were given quickly, even in telephone calls.
At the in-company meeting, which took place that same day, where the consultants of FAIR Consulting also participated, the strategy and the specific tactics to be followed were agreed upon. Based on the rapid collection of data, they agreed on the least possible involvement of Creta Farms executives and, of course, the minimization of the time for the final negotiations, which would also result in the minimization of the compensation for business interruption.
Claim preparation
From this point on, the FAIR Consulting' loss assessors and the four Creta Farms executives who would deal with the damage began a collaboration that was unprecedented. For the following weeks, there were many hours of telephone communications and meetings, with the aim of the best possible organization of the data and of course the best processing, for the most correct and well documented outcome in the estimations of property losses and loss of profits. Several times, from the initial processing of the necesssary data requested by the loss adjusters, there was a need to supplement them with additional data, which better documented or improved the estimation of the damage. Communications were immediately made with the company and the loss adjusters and, after all the information was provided, it was decided within the company which solution would be preferred. These communications and the experience of loss assessors' team prevented problems and bottlenecks in the process and saved time in negotiations and processing by the loss adjusters.
Negotiations with the loss adjusters
The most difficult and substantial part of the negotiations, between loss assessors (claim preparers) and loss adjusters, related to the nature and extent of the damage. For this reason, autopsies were performed, where with mutual concessions about the exact quantities and the extent of the damaged items (building, improvements, electromechanical equipment, stocks, additional coverages) were determined accurately and without any doubt. Although many of the technical issues had been resolved and pre-agreed at the engineering and technical level, the negotiations that followed were tough, but in a well mannered fashion that ultimately helped in the final settlement.
Final negotiations
After 7 or 8 weeks, the results of the loss adjusters' expert report had already begun to be finalized and the gray areas, which would be the focus of the negotiations, had started to appear. After a meeting, in which all parties participated with their respective executives, the first official briefing was made by the insurers, with the support and assistance of the loss adjusters and FAIR Consulting.
This briefing regarded the initial estimates and the estimates for the compensation of the individual insured funds. At the same time, extensive information was provided on the loss adjusters' arguments and the reasons why they differentiate from the original claims of Creta Farms.
After this update, FAIR Consulting drafted a detailed report, accurately recording their views on the points where there is some room for increased compensation and the points where there is no such margin.
It often happens that entrepreneurs, as well as the executives of companies recovering from a damage, feel wronged by the loss adjusters' esimates. Thus, they insist on specific minor differences (technical or evaluative) and on issues that are already dealt and agreed upon in the specific and general terms of the insurance policies or even by the practices that are internationally accepted.One of the most difficult tasks of the loss assessors, which also benefits the settlement process, is to explain to everyone and especially to the decision makers where there is room for improvement in the loss adjusters' estimates and where these margins are non-existent. Many times, what the loss assessors communicate, having taken the terms of the insurance policies into account, may sound completely absurd, but in reality they just help the decision makers not to spend their energy on issues that have no hope of differentiation, at least out of court.
Loss settlement
The final settlement of the damage was completed relatively quickly and precisely in two short meetings, in a close circle. The work previously done by the loss assessors, loss adjusters and brokers was apparent in the short time of completion of the technical settlement (as the agreement came in 11 weeks from the day of the loss), in maintaining the presence of an excellent atmosphere between insured, insurers and brokers and foremost in the fact that all parties were sufficiently satisfied by the settlement outcome.