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…
PRESENTATION BY NEWTRON GROUP
Designed for insurance professionals.
Your Secret Weapon to Improve Claim Process Efficiency
Newtron Group
Introduction
This learning module was designed to be an introduction and technical training for efficient recovery
procedures for commercial and industrial equipment and systems losses. It is intended as a support tool for
professionals in the property insurance and property restoration industries to reduce losses and business
interruption.
DISCLAIMER
This learning module was prepared as an account of work sponsored by Newtron Group and includes content
sourced from case studies based on past claim recoveries. Neither Newtron Group nor the case study claimants
nor any agency thereof, nor any of their employees, makes any warranty, express or implied, or assumes any
legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus,
product, or process disclosed, or represents that its use would not infringe privately owned rights. Reference
herein to any specific commercial product, process, or service by trade name, trademark, manufacturer, or
otherwise does not necessarily constitute or imply its endorsement, recommendation, or favoring by Newtron
Group or any agency thereof. The views and opinions of authors expressed herein do not necessarily state or
reflect those of Newtron Group or any agency thereof.
Learning Module Table of Contents
Part 1
What is the duty of the insurance professional’s team?
Part 2
The Critical Path Method in Detail
Part 3
The Secret Weapon to Improve Claim Process Efficiency
Part 4
Case Studies Based On Real Equipment & System Loss Claims
Part 5
What is a SERC?
Part 6
Large Loss Systems & Equipment Recovery Services
Conclusion
Request claim support 24/7/365 at www.NewtronGroup.com or call 1.800.238.3734
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Newtron Group
Part 1: What is the duty of the insurance professional’s team?
Their duty is to minimize and resolve the loss.
An effective team will investigate, quantify, and control the loss. They are dedicated to minimizing
the loss, compensating the insured for what is fair under their policy, and delivering efficient customer service.
In the case of equipment related losses it is an insurance professional’s duty to investigate the cause, the nature
of the loss, and gather facts and data, such as:
•
•
•
•
•
•
The origin and cause
Identify affected equipment, a full description, pre-loss records, and intended use of the equipment
The part of the equipment or system that was damaged or failed
If there was a loss of electronic data
The total cost of the loss
If there will be business interruption and if so, what is the projected amount
This information is important in order to determine which policy or policies should be employed to respond to
the claim, to what extent each policy should respond, and to identify subrogation potential.
The Improper assignment of coverage, missing opportunities for subrogation, and delayed investigation will
ultimately distort each policy issuer’s bottom line.
Effective investigation will help to
properly quantify.
An accurate reserve must be defined as quickly as possible
when a claim is reported. In order to properly quantify and set
reserves for the claim it is necessary to determine:
•
•
•
•
•
•
The scope of damage
What emergency measures need to take place
What is repairable and restorable versus what needs to be replaced
Temporary measures to mitigate the loss and stop or slow down deterioration
Opportunities to minimize business interruption and extra expenses
The line between loss related and betterment expenditures
Depending on the type and extent of the loss there may be items or systems which are restorable and can be
returned to pre-loss condition through professional decontamination and repairs. It is imperative to get an
experienced vendor that understands when to write off equipment and when it can be restored. Writing off and
replacing equipment is usually 70% more expensive and causes 50% or more business interruption time than
restoration. Restoration is a proven method for reducing expenses and business interruption time that every
insurance professional should leverage for each commercial or industrial equipment exposure.
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Newtron Group
Keeping within an
accurately quantified
reserve is maintaining
control.
The efficiency of an equipment or system
loss reduction and recovery process is
dependent on how well it is controlled
from start to finish or from loss to full
recovery.
Control can be viewed at from multiple perspectives. Here are some definitions specific to its application for
equipment related losses:
•
•
•
To ensure the recovery process finishes within the reserves set for property loss and business interruption
To prevent the claim resolution from stalling or being stopped by unexpected challenges
To choose the right path for recovery after evaluating the other potential recovery options
It’s like choosing the best path to take for a road trip, staying on the optimal route and arriving at the
destination on time. To maintain control is to keep the recovery team on the chosen critical path.
Part 2: The Critical Path Method
in Detail
A Critical Path is a chosen plan of action to get from A to B.
In an equipment related claim it is the path chosen to get
from the loss to full recovery. Critical Path Method (CPM)
is a technique used in Project Management to construct a
model of the project using the following:
•
The creation of a list of all activities required to complete the project to get from A to B
•
The duration of each activity to construct the full recovery schedule
•
Identifying opportunities to schedule parallel tasks to reduce the timeline and to reduce risk
•
Identifying logical end points such as milestones or deliverable items to measure progress
The chosen critical path will contribute to determining the value of the reserve which should be set to
successfully complete a full recovery to pre-loss condition.
By choosing the best critical path, optimizing it using sound project management techniques and identifying
unique opportunities, the time and cost for project completion can be significantly reduced.
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Newtron Group
Part 3: The Secret Weapon to improve claim process efficiency
is Control!
For a medium to large sized systems and equipment loss ($100,000+), it is often a good idea to have technical
resources assigned from the beginning of the claim handling process. They can help investigate, quantify, and
consult during the critical path development, and assist with the reserve setting process. A technical expert or
project engineer embedded in the claim right from the onset can support the control aspect by doing the
following:
•
Assist with optimizing the critical path on an ongoing basis to minimize overall project time and cost
•
Monitor the recovery process to ensure that it stays on the critical path
•
Assist with navigating around road blocks or technical barriers when they come about, and recommend
innovative solutions when the unexpected happens
•
Keep track of costs and have the foresight to identify extra costs and betterments
•
Keep communication channels wide open between the adjuster and the Insured to ensure that
intelligent decisions can be made, and to avoid surprises at the end of the recovery
•
Perform a technical audit on all the invoices submitted for the claim
The following projects are examples that show how maintaining control by adjusting the
critical path and using the proper technical resources can improve claim efficiency.
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Newtron Group
Part 4: Case Studies Based On Real Equipment & System Loss Claims
THE PROJECT
Recovery of an Ice-damaged Private Golf Course
Irrigation System ($1.3M Loss)
A golf course irrigation system was damaged by
winter flooding and rolling chunks of ice from the
Credit Valley River. The damage had the potential to
shut down the location for the full upcoming golf
season and cause massive business interruption.
THE CHALLENGE
The irrigation piping was filled with dirt and debris from the flooding and ice flow. There were also minor
damages to sprinkler heads and breaks in the piping system throughout.
Newtron Group was assigned to work with the
irrigation system contractor and the Insured to
determine repair or replacement options.
Restoration was chosen as the critical path to help
reduce business interruption time. Upon execution
the traditional flushing techniques failed because the
debris was just pushed around the water loops.
Control of the claim was being lost at that point
because the chosen critical path was at risk of failure.
CONTROLLING THE CRITICAL PATH
The original critical path had to be improved, but not replaced. By carefully examining all the alternatives and
weighting the risks, a decision was made to add backflow preventers and valves in strategic locations to separate the
system into three manageable linked water loops. This had enabled the control of water flow in the desired directions
without cross-contamination, and allowed simultaneous actions to take place. By implementing such a technique,
timely repairs were made possible and the recovery team regained control of the critical path.
THE RESULTS
•
•
•
•
•
The repair and restoration took 5 weeks to complete instead of 16 weeks to remove the
old system and replace it with a brand new system.
This reduced business interruption by 11 weeks and saved the golf season.
Newtron Group’s engineer conducted a technical audit of final invoices to ensure
all the cost entries were in order.
The final repair cost was $600,000, which was $700,000 lower than the estimated $1.3M for a new system.
Tensions were reduced for both the adjuster and the Insured, and all parties were happy with the results.
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Newtron Group
THE PROJECT
A Power System Replacement for a FloodDamaged Server Room at a Major
International Airport ($10M Loss)
A server room with 60 computer cabinets had its
sub-floor power distribution conduits flooded.
This server room controls critical real-time
functions of a major international airport.
THE CHALLENGE
Newtron Group was assigned to take over the project because eight months had passed since the date of loss,
and no critical path was defined to enable recovery other than building a new server room. The power
distribution system for the water damaged server room had to be replaced but the servers could not be shut
down for a long period of time as they control critical real-time services including security. Potential business
interruption losses could not even be quantified should any unscheduled power outage occur.
Newtron Group worked closely with the airport
authority and their electrical contractor to create
a logical critical path. They collectively chose to
design and install a new overhead power
distribution system to replace the damaged subfloor system, and do the cutover within a very
tight overnight time window that would have no
room for failure. The only other option was to
design and build an entirely new server room at
a cost of roughly $10M.
THE RESULTS
•
•
•
•
•
In order to enable the project, the airport authority had to invest in a new
Uninterruptible Power Supply (UPS) to minimize the risk of an interruption of all
airport services in case the server room was completely shut down.
The new power distribution system was successfully installed and server cabinets were cutover
to the new overhead power system with no disruption of airport services.
Custom drip guards where added on top of the new power system to help protect against
future water damages.
Newtron Group’s involvement enabled the project to be completed on time and on budget.
There was a cost savings of approximately $7M relative to replacement of the entire server room
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Newtron Group
THE PROJECT
The Recovery of a Fire Damaged
Insulation Manufacturing Plant
($2.1M Loss)
There was fire damage to multiple
processes within the fibreglass
insulation production line.
THE CHALLENGE
A Newtron Group technical system
consultant was assigned by the
adjuster to attend weekly meetings
to monitor and report on the critical
path. Progress for the production line recovery process had delayed because upon review the TSSA (Technical
Standards Safety Authority) denied approval of the proposed like kind and quality production line. They saw a
fire risk associated with an outdated labeling process which burns a mandatory identification label onto the
product by using heat. A new process acceptable by the TSSA had to be planned and developed, as basing it on
the existing technology would have caused at least another three months of business interruption time.
A new critical path was designed that introduced an alternative heat-free inkjet labeling process that could be
safely integrated into the production line. It required the manufacturer of this technology to come to Canada
with the equipment and resources to needed to customize their original single inkjet design into a multi-jet
computer managed design to fit the new dimension and process requirements. It was successfully engineered
and integrated into the existing production line which allowed the critical path to move forward.
THE RESULTS
•
•
•
•
The TSSA roadblock was removed from the critical path.
The the new, innovative design and the installation of this process was approved, which avoided at least 3
months of production delay.
Newtron Group was able to track a total of $700,000 in production system equipment upgrades.
This removed the tedious task of trying to identify and separate betterments at the end of project, which
resulted in a smoother claim settlement.
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Newtron Group
THE PROJECT
Printed Circuit Board Production Equipment Failure – Recovery ($720,000 Loss)
The client is a 20-year-old Canadian Printed Circuit Board (PCB) Manufacturer,
located in North York Ontario, providing all types of PCB’s for various clients. One of
only a handful of PCB manufacturer’s in the Greater Toronto Area.
The loss occurred between July, 2015, and March, 2016. Four different PCB
production machines were claimed to have failed at different times over this ninemonth period.
One specific machine used to plasma-etch PCB’s, caused a 30% loss of production
capability. Another failed PCB scoring machine caused a 40% loss of production
capability. Production loss from these two machines was outsourced to competitors
as the insured lost the ability to deliver to his clients reliably.
For 28 weeks, multiple local service contractors were unable to repair the two PCB
test machines and the PCB Scoring machine, so the insured was losing his mind. The
final straw that caused the insured to submit a claim to replace all four machines was
the failure of the plasma-etching machine in December, 2015. The insured felt that
costs were mounting yet solutions for the plasma-etch and the two test machines
had not been found.
Newtron Group was then called into action on April 7, 2016 after the insured
submitted their claim.
THE CHALLENGE
The two PCB test machines and the PCB scoring machine were all older than 20
years. Attempts were made by multiple local contractors to repair these three
machines but parts were obsolete, and ultimately the repair attempts failed. The
insured could not wait and replaced the PCB scoring machine in December, 2015.
The plasma-etch machine also had multiple repair attempts by the manufacturer’s local rep at a cost of
$25,000.00, for vacuum pump refurbishment, but this also failed to resolve the problem. Troubleshooting the
plasma-etch machine by the SERC (Systems and Equipment Recovery Consultant), along with the US
manufacturer’s phone support was required to overcome the challenge. Vacuum leaks are notoriously difficult
to find, however through trial and error, the SERC identified the root cause of the failure to be a vacuum leak at
one of the instrument fittings, so it could be fixed.
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Newtron Group
THE CRITICAL PATH
The critical path was very simple. Assess the machines to identify the problems, repair the required components,
test the machines, and finally launch into full production.
Unfortunately, the local vendor and manufacturer identified and agreed on the wrong components as the cause
of the failures.
The critical path for repairing the machines was now threatened due to multiple challenges, and the insured
could not wait any longer due to the projected business interruption time.
That’s when Newtron Group sent in a SERC to get the project back on track and into a state of recovery as soon
as possible.
THE RESULTS
•
A SERC was assigned on April 7, 2016 and through deductive reasoning during the assessment and
testing was able to complete the following:
o Identified a loose bracket holding a proximity sensor so it could be repositioned and tightened,
which made the machine run normally again. The Insured then removed this machine from the
claim.
o Identified two 29-year-old control circuit boards which had failed, were obsolete and
replacements were no longer available. The machine was deemed failed due to ageing and wear
and therefore not eligible for coverage.
o Identified and repaired a vacuum leak on an instrument fitting, which allowed the plasma-etch
to be recommissioned for full production.
•
Total machine repair cost including the SERC’s time was 12% ($88k vrs. $720k) of the cost of machine
replacement.
•
Business interruption was reduced to 36 weeks from a projected 48-60 weeks.
•
The client was extremely pleased with the SERC’s actions that resulted in a 95% recovery in 11 days.
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Newtron Group
THE PROJECT
Impact Damaged Textile Warper Machine Breakdown – Recovery ($500,000 Loss)
The client was a 73-year-old Canadian Textile Manufacturer, based in
Trenton Ontario, which weaves all types of fabrics for many different
industries – residential, contract apparel, and uniforms. There was
impact damage to the remote pendent on a Warper textile machine
on November 24, 2015. The company lost 70-80% of production
capability due to the machine breakdown, which forced them to layoff
many employees due to business interruption.
THE CHALLENGE
The root cause of the breakdown was a local contract electrician who installed the wrong model of an
emergency safety relay and modified the machine’s control signal wires to bypass critical emergency stop
signals. The electrician also incorrectly identified a variable frequency drive (VFD) as a failed component and
recommended its replacement to the client.
The client then replaced the VFD at a cost of $20,000.00, but found out
the network communication was incompatible with the machine’s
older programmable logic controller (PLC).
For 6 weeks, multiple local service contractors were unable to restart
the Warper so the client was extremely frustrated and had lost all trust
in the local service contractors’ abilities to repair the Warper machine.
He then attempted to get the manufacturer’s US service rep to solve
the problem, but the US rep was unable to cross the border due to problems with the Canadian Border Control.
Finally, a Swiss-based service technician was found but was not available for the next 4 weeks.
THE CRITICAL PATH
The critical path was focused on repairing the machine and it was now threatened due to multiple barriers. The
company could not wait for a replacement due to the projected business interruption exposure of 17 weeks,
and none of the traditional vendors could solve the problem.
A different kind of vendor had to approach the challenge. One that was qualified to trouble shoot mechanical
problems, and communicate clearly with the manufacturer to realise the best critical path to restoring the
Warper.
That’s when Newtron Group sent in a SERC, Systems and Equipment Recovery Consultant, to get the project
back on track and into a state of recovery as soon as possible.
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Newtron Group
THE RESULTS
•
A SERC was assigned on January 4, 2016 and identified critical machine problems and, with the US
manufacturer service technician’s phone support completed the following:
o Replaced the incorrect emergency relay model with the correct model
o Rewired the machine’s emergency stop signals to manufacturer’s specification
o Re-installed the original VFD
o Repaired the corrupted PLC software
•
The Warper machine was put back into production on January 8, 2016 - just 4 days after the SERC was
assigned.
•
On January 11, 2016 the client recalled the laid off employees and got production back to 95% capacity.
•
On January 11, 2016, the client ends attempts to source outside Warper machine capacity from
competitors in Quebec.
•
By March 10, 2015 the client fully recovered with all Warper machine issues resolved.
•
The total Warper machine repair cost including SERC’s time was 10% of the cost of a new Warper
machine replacement.
•
Business interruption was reduced to 7 weeks from a projected 17 weeks.
The client was extremely pleased with the SERC’s actions, which resulted in recovery of plant production in a
very short period of time.
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Newtron Group
Part 5: What is a SERC?
A Large Loss Systems & Equipment Recovery Consultant (SERC)
A SERC is a Specialized Systems and Equipment Consulting
engineer with project monitoring and management skills. They
have extensive experience in recovering damaged commercial and
industrial processes involving one or more pieces of equipment,
electrical systems, and their associated controls.
Assign or embed a SERC to monitor and assist the decision-making process during a large loss recovery to gain
the most cost-efficient, fair and reasonable settlement. Control your critical path to restore an industrial or
commercial system or process back to like kind and quality pre-loss condition.
The SERC can also support the Insured’s project manager (in an
advising & monitoring role), or take part in managing the recovery
project to ensure the recovery process stays in control. A SERC
works with the Insured and insurer to track any betterment and
performs the final audit of recovery expenditures.
What are the Benefits from using a SERC?
 Control of the recovery process to ensure that
loss-related expenditures stay below the reserve
 Specialized knowledge and expertise in assisting the loss
recovery team to speed up the recovery process and to
lower the claim cost
 Expert consulting specific to complex recovery projects to
help optimize the critical path & reduce the risk of failure
 Engineering support and implementation of creative
solutions during the recovery process to
remove roadblocks that affect the critical path
 Monitoring the recovery progress and regular communications with all parties to
ensure adherence to the critical path
 Intervene on behalf of the adjuster on technically complex claims that go off the critical path, to
bring delayed projects back on schedule
 Early identification of betterments and effective communication paths reduces confusion and
paves the way for a smoother final settlement
Page 13
Newtron Group
Part 6: Large Loss Systems & Equipment Recovery Services
When a major loss occurs Newtron Group is the ideal company to call when commercial or industrial
equipment, machinery, electrical systems, and electronics require assessment and recovery.
Origin & Cause Analysis: Professional Engineers with an equipment focus who are highly-skilled in
the determination of origin and cause of fire damages and the cause of equipment failures.
Equipment & System Damage Assessments: Engineers or technical consultants are available to
conduct damage assessments and provide recommendations along with valuation estimates for repair
or replacement.
Technical Project Management & Monitoring: Professional Engineers with project management
skills capable of managing a portion of or the entire recovery phase. Alternatively, engineers can be
embedded with the client to monitor and ensure an efficient recovery phase. Additionally, the
embedded engineer can identify upgrades and separate these from loss-related items enabling a
quicker and smoother settlement.
Technical Auditing: Technical consultants are available to review invoices to ensure submitted claim
costs are loss-related, fair and reasonable.
Equipment Repair: Work alongside repair vendors and manufacturer’s representatives to ensure the
proper definition of scope involving equipment losses.
Equipment Reinstatement: Assistance in the reinstatement of existing third party service contracts.
Conclusion
Thank you for taking the time to learn about optimizing the claim recovery process by using Critical
Path Method and about the potential of having a Systems and Equipment Recovery Consultant (SERC)
join your recovery teams to reduce costs and business interruption.
For more information or details please feel free to contact Newtron Group and a qualified
representative will be happy to assist you.
This concludes this e-learning module.
Page 14

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