Mactavish, the UK’s leading expert on insurance governance, is representing British Steel in a dispute with Zurich Insurance and other insurers including Liberty, on a £30 million insurance claim that, if settled, could help save the company and the jobs of the 4,500 staff who work there along with 20,000 more across their UK supply chain. The claim remains unresolved after two years, even as emergency negotiations with the government and potential administration proceedings continue.
British Steel is also seeking further damages from the insurers to compensate for their slow response and incomplete investigation of the claim.
The insurance claim was submitted following an incident in June 2017 which damaged a blast furnace at its Scunthorpe premises, requiring it to be shut down for safety reasons. It was several weeks before operations could be restarted. The insurers’ investigation of the incident lasted for nine months and they rejected the claim in May 2018.
British Steel hired Mactavish to review the investigation. The firm identified what it believes to be major deficiencies with the investigation and believes strongly the insurers should settle the claim in full. Its findings are based on the views of leading technical specialists, forensic accountants and insurance lawyers.
In March this year, following further investigations by British Steel to respond to questions raised by insurers, an updated final claims pack was submitted detailing extensive technical and legal evidence of why the claim should be covered, but despite the urgency of British Steel’s financial difficulties the insurers have yet to respond.
Bruce Hepburn, Chief Executive Officer, Mactavish: “From our review, we feel that Zurich and Liberty’s investigation was incomplete and wrong. It did not interview many of the relevant staff or even identify the blast furnace blowout as the key cause of the claim, which we believe categorically establishes cover under the terms and conditions of the policy.
“Given British Steel’s current situation, settlement of this claim would have made a major contribution to securing the survival of this British institution that had finally been returned to profitability as a viable producer of high-end steel products. This claim should really have been settled long before administration was looming, but given the current urgency then the CEOs of both Zurich and Liberty should be overseeing this claim personally to ensure they provide an answer to British Steel’s revised claim immediately. They have been investigating for the best part of two years and have had the latest data pack addressing their questions for over two months now. This is more than long enough and in the circumstances this delay could prove to be the decisive factor in forcing British Steel under.”
Mactavish advises organisations of all sizes on their insurance requirements and has worked with a quarter of companies in the FTSE 100.
Mactavish is the UK’s leading independent expert on insurance placement and disputes. It has been operating in the commercial insurance sector for over 15 years. Its Chairman is John Coomber who is a former CEO (UK) of Swiss Re. He was a member of the Swiss Re Group Executive Board responsible for Life &Health reinsurance worldwide.