KI Update, page-26

Hokey, i've posted a few times on the KI Bi claim. I have a good mate in the industry (insurance broker) who has extensive experience in BI claims, including major civil construction risks. He has advised me that the local insurance industry itself is looking at this particular claim due to its unusual nature, risk and complexity.

The main issue with this particular claim is the number of insurers involved (12 to 13 x 'line' insurers i believe). Whilst the KI wall would never have been insured by a single insurer due to the risk, had it been, single insurers usually make 'progress payments' to the 'insured' following the loss to ensure cashflow to the business to enable it to survive. These 'progress payments' are always made in arrears due to the calculations of the 'loss' being based on the previous 12 month trading period to the loss, and also the previous 12 month accounting period.

So when you consider the fact that there are a dozen insurers involved, who all have to agree on the calculation method, you can start to understand the reasons for the delays and the lack of 'progress payments'. Insurers by their very nature want to 'limit' their payouts - imagine the bun-fight getting 12 or so of them to agree......

So the complexity of the calculation process and the sheer number of insurers involved are the primary reasons for the delay.