Industrial floorings manufacturer fire: £1.52m settlement

A large manufacturer of industrial floor coatings with operations across the UK suffered a devastating fire in its Warrington factory. This unit not only manufactured products for all three group companies but also housed a research facility and sales offices. The entire operations of the group were therefore severely affected.

Floor coatings manufacture involves the use of highly-flammable and volatile materials. In view of this, the insurer’s loss adjuster questioned the company’s compliance with the terms of the insurance policy and in particular its security and safety procedures. Faced with such a difficult negotiation, the management turned to Morgan Clark.

The claim

Morgan Clark’s immediate priority was to safeguard the future of the business. They found alternative premises for the sales offices so that customer contact could be continued, while some product manufacture was transferred to another unit and to sub-contractors. However, to receive full cover for its losses, the company still had to prove compliance with the terms of the policy.

Morgan Clark liaised with the insurer’s loss adjuster while it conducted two meticulous physical forensic investigations, and sat in during interviews with all 30 members of staff. Eventually, after protracted disputes and numerous solicitors meetings, the insurer accepted that the group had complied with the terms of its insurance policy but challenged the size of the claim.

While this was happening, Morgan Clark also worked with the company to find the most satisfactory way to re-instate the business within the terms of the insurance policy. In particular, they advised that there was the option to re-build on another site, and that this presented an opportunity to rationalise the group’s activities and save costs.

The results

Morgan Clark drew up in partnership with the company’s management an action plan to mitigate losses, and assessed the costs and benefits of these actions. After lengthy negotiations, the insurer finally agreed to the full £1.52 million claim, and also agreed that the manufacturing unit could be re-located to another group site instead of being re-built on the original site.

As a result, the company rationalised its operations and consolidated activities into fewer companies. Although the disruption led to the loss of some customers, this was more than offset by the savings achieved through re-locating the manufacturing unit.