On 29 January, 2019, CEERISK Consulting hosted a technical claims workshop at offices in Jordan that focused on managing claims involving contaminated hi-tech equipment. Delegates from leading insurers in the local market and the Jordan Insurance Federation (JOIF) attended the workshop and contributed to discussions about the challenges facing insurers following a contamination loss.
During the workshop, CEERISK experts Mamoon Alyah and Yazeed Jarrar, presented two case studies to highlight the issues facing insurers and loss adjusters when managing a contamination claim. The first case study involved a fire in a battery room that resulted in heavy smoke contamination to $85 million worth of IT equipment located in an adjacent data centre. The second case involved damage to many pieces of medical imaging equipment that were contaminated following flooding from heavy rain.
During discussions, it was emphasised that though contaminated, the equipment was NOT damaged and therefore it could be restored to pre-loss condition using specialised engineering techniques. For restoration to be effective, the workshop participants agreed that prompt action was necessary to mitigate any damage.
Based on discussions at the workshop, a methodology for handling contaminated equipment was developed. It focused on three main components:
- Mitigation, which would be necessary to prevent contamination from causing physical or chemical damage to the equipment
- Defining the extent of contamination based on specialised chemical testing, according to recognised industry standards
- Developing reinstatement options when it applies, taking into account the OEMs input and securing their cooperation
By the conclusion of the workshop, delegates understood the importance of prompt mitigation and accurate testing to determine the nature and extent of damage. CEERISK team and delegates at the workshop formulated a plan that can be implemented at the early stages of claims involving contamination to hi-tech equipment:
- Securing immediate expert involvement to develop and implement mitigation
- Relying on scientific principles to evaluate the type and level of contamination
- Establishing effective communication with all stakeholders, including the OEMs
- Securing cooperation of the insured to achieve a prompt and cost-effective resolution of the claim
- Develop recovery plans to minimise PD and BI losses
- Exploring all reinstatement options based on nature and extent of damage in addition to other factors, including the type of the equipment and the conditions of the property
