Expert Risk Articles

Flood: Going the Extra Mile

In November 2009, the heaviest rainfall ever recorded in Britain in 24 hours was followed by torrential floods in Cumbria, in the north west of England. For most people in this country, it was merely a spectacular news item for a few nights. For the town of Cockermouth though, it was catastrophic. Over 900 properties were deluged as the River Derwent broke its banks, tragically killing a police officer as it did so.

The town's largest employer is the James Walker Group, a UK-based manufacturer of products for sealing fluids with extensive international operations in 68 countries. This operates in a highly competitive industry, and its clients rely on its high quality and dependable services, including fast response and turnaround times. The group's production unit and Materials Technology Centre in Cockermouth employs 400 people and is a key contributor to the local community. On November 19, 2009, the JWG premises were badly flooded, halting production.

Assessing unexpected flood damage

Massive impact

Stuart Pyper, Financial Controller of the group, takes up the story. "Like most businesses of any size, we had a business continuity plan in place. Most of this was designed to respond in the case of a major fire, which we had thought was the most likely business risk scenario. We found that, while a lot of the plan was still useful, the scale of the flood damage was much bigger than we had allowed for. For example, the plan involved using office space in a nearby haulage firm, and their premises had experienced worse flooding than ours.

"We had two to three feet of water throughout the entire factory, with only one small office unaffected. It was a complete shutdown. All our production was affected. The scale of the catastrophe disrupted everyone in the area: for example, all mobile phone networks were overloaded. We were fortunate though in managing a controlled shutdown, made possible by having people on site overnight. If we hadn't been able to do this, a lot of our electrical control gear would have been more seriously damaged."

Long-term effort

The extent of the damage was certainly bad enough, though. On the Friday, no access was possible to the JWG site. On the Saturday, having mobilized everybody concerned, access was achieved. While key personnel began their detailed assessment of the damage, the rest of the workforce devoted themselves to cleaning up and salvaging what could be saved. This included moving finished items onto higher level racking, allowing the company to complete its first shipping of products two days after the flood. The first new production was able to follow around a week later.

A Herculean effort was still needed, including working right over the Christmas period. It was to be six months before its production and customer service levels were fully restored to the pre-flood levels. JWG was insured by Allianz Global Corporate & Specialty, the industrial and specialist insurance brand of the Allianz Group, one of the world's leading financial services providers.

Martin Henson, AGCS's Head of Non- Marine Claims, comments: "Any large loss is an opportunity to demonstrate our client focus. With many insurers, there is a tendency to keep the claims team in the background, but our aim is to take claims out of the back office and into the front office. This is especially important in the AGCS client segment where face-to-face contact and understanding is essential. We had our loss adjusters on site as soon as it was possible and this was essential in the circumstances. Of course, we always hope to partner with prudent clients, and it was a pleasure to see how well prepared JWG had been – and how quickly they had reacted."

A Herculean effort was needed to fight the flood

Teamwork to overcome damages

Effective partnership

As a provider of insurance for large corporates, AGCS understood the needs of the client. Its on-site visits and in-depth analysis by its specialist experts quickly brought it up to speed. This direct contact with the client, in a three-way discussion with the broker, is a signature of AGCS, critical in helping it understand risks and needs, and helping it establish long-term client relationships.

Stuart Pyper: "Allianz were excellent from the word go. The popular conception of an insurance company is that they're happy to take your premiums, but less energetic when a disaster befalls you. This certainly was not the case in our experience. They were very supportive. It was clear from the outset that their aim was to help us to get back into business as quickly as possible: not to minimize their liability. They were cooperative and helpful, in fact more so than I had expected.

Proactive response

"They were also very proactive in terms of interim payments. Because of the scale of the damage, we had to spend a lot of money quickly on new equipment and repairs. As a bigger company, we were probably better off in terms of cash reserves than some others in the area. Nevertheless, the outgoings were a big drain on those resources. Allianz helped prevent cash flow problems occurring. They actually came to us to see whether we needed money, rather than us having to chase them. Once agreed, the interim payments were made quickly." AGCS worked closely with both the client and the insurance broker JLT to support and facilitate the recovery process.

Claims inspectors were mobilized to report on the damage: this included bringing in a specialist claims consultant Ray Hogendoorn from AGCS in Munich to work with the local team. Payments were authorized within two days of the initial inspection. In fact, AGCS made a larger interim payment than first requested by the client, based on their experience of similar events. In March 2010, HRH Prince Charles, the Prince of Wales, visited Cockermouth to review the progress since the floods. His visit took him to the JWG premises where he met Martin Henson and members of JWG's management, who were highly complimentary of the help they had received from their insurer.

Stuart Pyper sums up: "Allianz had a really good understanding of what we needed, and reacted with alacrity. From what could have been a difficult relationship, I found this to be a cooperative, understanding and effective partnership. It was one of the positive things to come out of the whole experience. Obviously, no one wants to go through such a disruptive and stressful event; but these things occasionally happen. When they did to us, we found that Allianz's strenuous efforts on our behalf really helped us get back to normal."

Martin Henson adds: "We are delighted to have helped one of our long term partners in re-establishing themselves so quickly. The fact that this year we have renewed – and indeed expanded - our insurance relationship with JWG demonstrates the joined-up thinking that we aspire to adopt at AGCS, bringing Underwriters, Risk Consultants, Key Account Managers and Claims all together for the benefit of the client. As is so often stated, the incidence of a large loss is the true test of that relationship!"

Client Check List

  • BCP is essential – update and review this regularly
  • Be familiar with your Insurers claims team and protocols before any loss occurs. This will help significantly in the event of a loss.
  • Ensure risk management input to key insured sites, both pre and post-loss.
  • Maintain regular contact and dialogue with your insurer.
  • Expect the unexpected!

Download "Global Risk Dialogue" fall 2010 (4 MB)

  1. Expert Commentary

    When disaster strikes, it can be a very emotional time. Clear focus is far from easy, and pre-planning becomes essential. It is one of the key tools that Allianz Risk Consultaning stresses when working with our clients. When disaster struck Cockermouth in the 2009 flood, James Walker Group were well prepared with disaster recovery and business continuity planning. 

    Although not targeted specifically at flood, their planning paid dividends. They knew what needed to be done and acted fast. AGCS were brought in at a very early stage and were able to assist with confidence in what was clearly a well-organized response. 

    Such disasters can lead to a prolonged interruption, loss of orders and loss of confidence amongst workforce and customers. Ultimately the loss of a business.  With pre-planning and close liaison with key partners such as AGCS, James Walker Group were able to pull the business quickly through the disaster. But that is not the end. Lessons were learnt. 

    With their close understanding of the business Allianz Risk Consultants have provided expertise and advice on future flood protection and flood emergency planning. Disaster recovery and business continuity plans have been reviewed and upgraded leaving the company even more resilient. Without pre-planning the picture might be far more bleak.  

    /assets/Thumbnails/Thumbnails%20for%20Experts%20and%20Contacts/DukeTrevor-thumbnail.jpg Trevor Duke

    Trevor works for Allianz Risk Consulting in London. With more than 30 years property risk engineering experience he has gained a wide understanding of risk issues both on the ground and at a technical level. In addition to providing risk consulting services to major clients Trevor uses his experience to provide technical expertise on a range of subjects.