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Respectfully submitted,
Glenn Gibson
Chief Executive Officer
Crawford Adjusters Canada PricewaterhouseCoopers
Jim Forbes
C.A., C.B.V., C.F.E.
National Property & Casualty
Insurance Industry Leader
Financial Advisory Services











"Proper Planning Prevents Poor Performance"



The 'big fire' arrives without warning accompanied by an immediate need to deliver a flawless performance by the loss adjuster.  The ability to perform at this level is entirely dependent upon how quickly and efficiently you answer the bell.

The goal of this paper is to provide a 'roadmap' to more effectively plan and proactively deal with a major fire by using effective case-management techniques.

Success in handling a major fire loss will be dependent upon 'teamwork'.  An effective 'team' requires strong leadership. 



In considering your readiness to handle a major fire, you might consider the following points:

1.      As an insurer (underwriter), have you pre-selected your preferred loss adjuster?  What experience, training and education does h/she have? 

2.      Once the loss hits, how quickly can the adjuster have a complete copy of the policy declarations, wordings and pre-loss inspection reports? 

3.      Do you have a formal emergency response plan?  Does it include:

a)  Determining the level of response using pre-agreed protocols.  This could apply not just to major fires but environmental spills, serious personal injury, etc."  Have you defined what you consider a "large loss"?  Is it based on a damage or reserve threshold?  Serious personal injury?  Environmental exposure? 

b)  A listing of emergency phone contacts including pagers, cell phones etc.  This list should be matched to an 'escalation protocol'.

c)  Mobilization and deployment plans for internal and external resources, i.e. fire services, emergency response teams, etc.

d)  Clearly defined roles for all personnel, i.e. Local manager, regional manager etc.

e)  Clearly defined chain of command.

f)  Media/communication plan (internal/ external).

g)  Supplies.

h)  Equipment.

i)  Occupational Health and Safety Officer.

j) Environmental Protection Officer.

4.      Were your loss adjusters or business continuity consultants' part of the planning process?  Do they have a current copy of the entire plan?

5.      Do you have a 24-hour, 7 day a week after-hour response system in place to effectively deal with your emergencies?  "Time is of the essence" to effectively control and handle a loss. 

6.      Have you ensured that your 'After-Hour Service' has 'protocols' in place?  Do they know that if one level does not respond, then the call escalates to another level?  Whom else do they have to notify in the 'chain' if the loss meets a certain criteria?  Do they have back-up phone numbers?  What 'experts' need to be put on stand-by in case their services may be required?

7.      If a loss does occur, what instructions do on-site personnel have to protect the interests of their employer?  Should they be taking photographs?  Should they begin videotaping activity including firefighting efforts?  Do they take names of witnesses?  Do they record names of "officials"? 

8.      Have you considered the individuals in your organization should be part of the first response group?  Your selection should be limited to the fewest number of people who will be the most effective.

9.      Have you considered the impact of municipal, state and federal disaster plans?  Have you considered how these plans might influence your ability to investigate and handle a loss?  Who has jurisdiction?  Much of this information is available and may be obtained by contacting local government disaster coordinators.

10.    Will your adjusters have the right equipment on hand at the time of loss?  Equipment may consist of the following:  film, digital camera, portable printer, diskettes, AC/ DC power source, calculator, video, safety boots, safety glasses, hard hats, coveralls, breathing apparatus, measuring tapes, flashlights, hammers, hand tools, shovels, brooms, evidence gloves, nylon evidence bags, mason jars, evidence tags, recording devices, cell/satellite phone, laptop/question templates, financial/inspection release forms, insurance forms, paper, proper corporate identification etc. 

11.    Have approved vendor lists been developed?  Do these lists pre-select subject matter experts? 

a) Experts (Origin & Cause, Metallurgical, Electrical, Environmental, Structural, Project Management, Seismologist, Hydrologist, Transportation, Forensic Accounting etc.)  The selection of the 'right' expert has been the subject of much debate.  In the U.S., the "Daubert Rule" suggests that any expert must be eminently qualified to give appropriate evidence as a subject matter expert and no "junk science" must be involved.  The reader can research extensive material on this topic but its fair to say that the engaging of the appropriate expert should not be taken lightly.

b) Contracting Specialists (Building contents, IT, equipment, dehumidification, HVAC, off-site storage, etc.)

c) Law Firms who specialize in fire litigation.  Do they know the impact of NFPA 921?  Spoliation issues?  Solicitor-client privilege?  What sort of court time do they have?  What training / education have they committed themselves to in this specialized field of litigation?

12.    Has "pricing" of services been pre-negotiated with all experts? 

13.    On local levels, have needs been addressed to obtain equipment rental demolition/debris removal, etc.?  Its not the time to do it after the fire has taken place.

14.    Have contracts or deals been established with private security firms or off-duty government authorities to preserve and protect loss sites?

15.    What controls are in place in terms of information dissemination? 

16.    The key decision-makers must be a short list and available for instant contact.



Once a loss happens and your emergency plan is triggered, the adjuster will be faced with many challenges. beginning with gaining access to the fire scene.  In numerous instances, the public authorities will restrict access, which will create its own set of unique challenges for the adjuster or the private fire investigator.

On arrival, your adjuster should seek to identify himself or herself to the senior public authority in command.  Quite often, this will be difficult, as the front-line level of authority will seek to keep you away from the loss site.  Persistence may be required on the part of your adjuster since it is critical for the person in command to know of your presence and role.  At bare minimum, the senior public authority must know where they can reach your adjuster at all times.  As the 'emergency' situation diminishes and the site is ready to be released by the authorities, the adjuster's role will take on greater importance.

The policy of insurance requires the insured to protect their property from further loss or damage.  This can put the adjuster into a difficult position, at times, particularly if there is any suggestion that the policyholder may have committed an "intentional act" to cause the loss.  This does not, however, remove the onus on the policyholder to authorize steps to protect the property.  If the adjuster gets jammed up in this type of situation, a critical path letter delivered to the policyholder should be considered.

The role of the public authorities is to determine the cause of the loss.  Their investigation conclusions can have a huge impact on the claim process.  The authorities should be made aware of the investigative steps you will be taking to determine the cause after they leave the site.  Your adjuster should request a de-briefing from the authorities of their scene investigation before they depart.  If applicable, the authorities should be given clear instructions of your wishes to maintain continuity of evidence at the site once they are releasing the scene.  Any issues relating to spoliation of evidence should be relayed early in the process.  Clear communication, up front, by the adjuster is critical to the evidentiary chain.



Given that on arrival at a fire scene, you may be prevented from entering the fire scene, there are still a number of investigative steps you might perform or consider.  This includes:

1.      Document weather conditions at time of loss.

2.      An early 'walk about' on the perimeter of the loss site should be considered.  If it is"arson", consider where the arsonist may have parked their vehicle or where a container might have been discarded.

3.      Early efforts to canvas the area around the scene of the loss to uncover witnesses.

4.      Statements from the discoverer(s) of loss event.

5.      Complete perimeter photographs and/or video before site is disturbed.  Progress 'shots' should be taken during the course of the investigation.

6.      Arrange for the insured to be present.  Be sure you know who (?) your named insured's are on the policy.  Consent and/or authorizations should be signed for each of the following:

a) Authority to access the premises and to remove any evidence that relates to the origin and cause of the fire.

b) Authorization to board up the premises to protect the property from further loss or damage.

c) Authorization to provide security and protect the property.  Entry to property should be logged and controlled.

d) Authorizations to interview the insured's accountant, bank officials, etc. to obtain financial records.

7.      Leases and insurance records.

8.      Building plans from municipality.

9.      What other 'paper' documents are available through public access?  (Mortgage, land title, tax rolls, court records etc.)

10.    All discussions with the insured should be properly recorded.  This can be done by video or audiotape.or.reduced to writing.  Effective use of open-ended questions should be considered. 

11.    All interviews and discussions should be recorded in an effective fashion using good note-taking techniques.

12.    Give thought to when (?) where (?) and who (?) will conduct a detailed recorded interview of the insured.  Have you an interview plan in place with a template of pre-determined questions?

13.    Determine other 'interested parties' to the determination of cause?  Consider what 'agreements' might have to be struck to allow for a joint investigation.  What is going to happen with the removal; storage and/or testing of significant evidence from the loss site.

14.    Consideration of your civil laws regarding 'spoliation of evidence'.  This should be done in concert with approved legal counsel.

15.    Entrance plans for tenants outside the area of loss should be discussed and agreed upon.

16.    A lead investigator should be in place early.  A site meeting should set out the documentation plan.  This plan should include complete photographing/ videotaping of the scene before any overhaul is completed. 
Attention should be given to doors, locks, windows, and alarms where applicable. 

17.    Site security is of prime importance and has to be coordinated with the public authorities.  A site log should be considered to document who and what is going in and out of the loss site.  This may become an important issue later if allegations are made about spoliation of evidence.

18.    The loss adjuster should ensure that he is aware of any insurance contract provisions that might contain "warranties or conditions".  These might require the policyholder to maintain his alarm, sprinkler or burglar systems.  If a loss occurs and these systems were not maintained in accordance with the policy terms and conditions, it could preclude payment of the entire claim.

19.    Notify the insurer of the first wave of information and establish clear communication methods on a 24-hour basis.



A number of plans evolve out of the initial scene attendance.

1.      The investigation into the cause of the fire will be a continuous process that will eliminate or confirm investigative leads.  In determining the truth behind the cause of the fire the adjuster will be able to determine the impact on insurance coverage or perhaps this might lead down the path of subrogation.  This latter path could expose a product failure that could result in a product liability investigation for a major manufacturer.

2.      The control and investigation into the damage issues will evolve.  Part of this plan will deal with damage mitigation issues as well as with the physical restoration of the premises.

3.      The process of documenting and calculating the business loss will be driven by internal and external accountants, consultants, and adjusters.

Effective case management of the loss revolves around developing a "critical path plan".  This plan can include:

4.      Members of the investigative team should document and control damage issues relating to the contents, equipment and/or tool components of the loss. 

5.      Other members of the adjusting team may document specific damage issues to the building as it relates to the area outside the area of origin of the loss.

6.      The lead fire investigator needs to be making a number of early recommendations:

a)  What is the air quality in the building?  Is it safe for access?

b)  What structural safety concerns should be addressed?

c)  Are temporary lighting and heat required?

d)  Special equipment needs to overhaul scene and/or began reconstruction.

e)  Site security controls?

f)  Debris removal? 

7.      As the dig evolves, further consideration of subject matter experts should be given.  These experts may include the following fields:  electrical, mechanical, HVAC, metallurgical, chemical, toxicology, materials, environmental, etc.

8.      While your investigation unfolds, consideration should be given as to how the insured might mitigate his claim with respect to issues of:

9.      Electronics restoration.

10.    Document restoration.

11.    Magnetic media recovery.

12.    Interview teams should be briefed to ensure there is a clear understanding of specific areas to be covered in the interviewing process. 

These teams will be directed to interviews by the public authorities. 

These interviews will be of witnesses, tenants, public officials, etc.  Interviews should be taken of witnesses, tenants, public officials, etc.

13.    Investigative material should go back to the group leader who will accumulate this information.  If the case involves arson, the material should be segregated into the Arson Triangle (Motive, Means and Opportunity).  Many of the same dynamics will apply in cases involving subrogation.


Business Continuity Issues

On any major commercial loss, a document trail must immediately unfold.  This is critical in evaluating the business loss with a view to obtaining an early advance payment for the policyholder.  Some of the documents might include:

1.      Historical data on the business.  Copy of organizational chart outlining internal and, perhaps, external reporting functions.  This information may be quickly available through promotional brochures or perhaps the corporate web site.

2.      Place(s) and/or factory(ies) where the business is carried out.

3.      Copies of financial statements and budgets for the past three years. 

4.      If available, copies of monthly financial statements for previous two years.

5.      Sale Information (turnover).

a) Historical volume data by day, month and year.

b) Size/ type of market for product line(s).

c) What is the market mix?  Countries?  Product type?

d) What are market conditions?

e) Obtain copy of customer lists.  Review impact of loss on top ten customers.

f) Contractual arrangements that impact sales.  e.g. force majeure

g) Inventory levels by product group.

h) Methods of tracking inventory.

I) Consider seasonal issues that might impact the sales cycle. 

6.      Major changes made in recent years and/or proposed in the future:

(a) Types of production.

(b) Sales policy.

(c) Expansion or reduction in the number of lines.

(d) Expansion or contraction of factory(ies).

(e) Formation of subsidiaries.

7.      Patents or trademarks to protect principle products.

8.      A close review must be done of the operating expenses of the business.  This might include:

a) Historical data on costs covering three years of monthly data prior to the loss.

b) Variable cost savings.

c) Consumable supplies, services and materials.

d) What expenses do not continue as a result of the loss.  Examples are advertising, depreciation, utilities, miscellaneous supplies and expenses, repairs and maintenance, wages and benefits, rent, property taxes (rebate) etc.

e) Are the loss-related expenditures being captured in separate loss-related general ledger accounts apart from normal operations?

f) Were any cost inefficiencies incurred as the facility was brought back online after an outage?

g) Need to understand nature of loss expenditures in order to differentiate between extra and expediting expenses.

It is critical that any analysis you are performing is keeping a close eye on the relationship between the costs to reduce the loss and the turnover of the business.

It is also important to review the benefits of any non-recoverable continuing expenses when you do your analysis of the numbers.


Business Interruption Considerations

Again, there is a lot of documentation to gather, but obviously you are dealing with a "contract" of insurance and a close review of the policy wordings is critical.  In particular is whether you are dealing with a 'Gross Earnings" policy as opposed to a "Profit" policy.or.perhaps a manuscript wording that provides unusual coverage.  All of the information that we have itemized as "business continuity" issues will form the basis of determining the indemnity dollars that are available to the policyholder in the event of a loss.



This paper gives you a snapshot into the many action items that face a loss adjuster on a major claim.  Teamwork is essential in accomplishing what needs to be done.  How would your selected loss adjuster or expert do if they were "tested" on their action plan for a major hit?  Have they pre-planned?  Will they answer the bell promptly and efficiently?  Are they aware of all the issues they need to consider to protect your interests?  Do they have the leadership skills to "take control" and exercise appropriate case management skills to produce effective results?

The common vision that we all should have is that if a major event happened the response would be quick, responsive and effective.  Consider the words of George Bernard Shaw:

"People are always blaming their circumstances for what they are.  I don't believe in circumstances.  The people who get on in this world are the people who get up and look for the circumstances they want.and.if they cannot find them.. they make them!"

To repeat, "Proper Planning Prevents Poor Performance".

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