How Zurich’s post-claim efficiency saved university from ‘six-figure’ loss

  • Facing large business interruption costs after both its expensive spectrometers were damaged, a UK university worked closely with Zurich to expedite the claim
  • Zurich used its expertise to deal with the technical claim
  • Insurer was happy to utilise the university’s knowledge, listening to their issues and suggested solutions – ensuring the best result possible

For most organisations being unable to provide a service or operate a vital piece of machinery for any length of time can prove extremely costly.

This is what one large UK university faced when its two nuclear magnetic resonance spectrometers, which are used to determine the structure of organic compounds, were damaged following routine maintenance, taking both out of operation.

The university used the machines – complex and unwieldy instruments that are usually too expensive for most private laboratories to own – both for research purposes in-house, and as an income stream by taking work from other institutions.

Faced with substantial six-figure business interruption costs and daily losses running into thousands of pounds, the university needed a speedy solution to the problem.

An understanding of the situation

Zurich Municipal quickly reviewed the situation – building up a full understanding of the issue and listening closely to the loss adjuster as well as the university, who were the real experts in handling such technical equipment, and liability was immediately accepted.

This allowed the university to press ahead with sourcing a replacement for one of the machines instead of waiting to repair it, which significantly reduced down time, as well as quickly initiating repairs on the other.

“Obviously, we would never pretend to be experts and we quickly recognised that the experts in this were from the university. Our approach was to listen to the issues they had and try hard to work flexibly with them in order to concentrate on doing what insurers do best,” says David Reed, a member of Zurich’s Major Loss Team.

“There were repair options available to us, but replacement of one of the machines was a far quicker option and it gave the university the chance to reschedule and stagger works.”

The university had anticipated business interruption losses, in excess of the property damage element of the claim, to amount to a “substantial six-figure sum” over an indemnity period of up to eight months. But prompt decision-making by Zurich Municipal and the loss adjuster reduced this time to around just two months.

This allowed the university’s chemistry department to delay research, stagger activity, negotiate with suppliers and reach quid pro quo agreements with higher education partners.

“Zurich Municipal trusted our analysis and focused on reducing significant business interruption by paying a bit extra initially on the material damage side of the claim to accelerate reinstatement,” said the university’s Head of Chemistry.

“The end result was that we were able to maintain core activity after a fashion, and the business interruption element of the loss was almost entirely mitigated.

‘Confidence’ with Zurich Municipal

“Zurich Municipal also came up to speed on the technical aspects very quickly, so our academic staff had confidence in what was happening. Wherever there was uncertainty, Zurich Municipal trusted the experts rather than equivocate and took the route most likely to provide the best outcome for the university, in the knowledge that this would also be the best outcome for Zurich Municipal.”

The damage itself occurred after routine maintenance was carried out on the extraction/filtration units of the spectrometers. Unfortunately a university operative then failed to turn the heating back on, creating a sudden build-up of debris within the spectrometers.

“Obviously we’d rather not have had the loss and we’ve spent serious money on process controls to ensure this particular loss can never happen again, but this has been a model team effort all round, with everyone working together to make the best of a bad situation,” added the university’s Head of Chemistry.

“The cost of the claim was halved, if not more, because of the steps taken by Zurich Municipal and the process was seamless, meaning we didn’t have to make wholesale changes. The acid test of an insurer is not the day-to-day account management, which you don’t really see, but rather how claims are handled.”