Case Study: Diamond Mine Fire
When imagining a fire breaking out at a mine, we tend to envision the worst. Fortunately, in the case of a diamond mine, the blaze was contained to the top floor of a paste backfill plant. It was under construction at the time and all occupants were evacuated unharmed. Although damage to this ten-storey facility was limited to the structure and equipment near the top floor, it was still estimated to cost well over $10 million.
The building, close to completion at the time of the fire, was being built to produce cement fill for future operations. As such, mining operations were not interrupted. Fortunately, it was still possible for construction to continue in other undamaged areas of the plant in order to meet the projected opening date.
But this does not mean the loss was challenge-free. In fact, the many setbacks started with the location of the mine, which was very remote. As a result there was a general lack of supplies, along with limited contractor and labour availability. These shortages, coupled with difficulties working with local government, inflated costs and project timelines so that they became a major hurdle. Further compounding the problems were communication issues between the building owner and contractor.
Third party objectivity and specific expertise were required to navigate the highly technical claim so an independent company (not SPECS) was retained to evaluate the loss. However, the chosen service provider was unable to provide the expanded services needed to handle all facets of the loss, including consulting and guidance.
As costs ballooned and schedules were subjected to added delays, SPECS was engaged to help steer the direction of the project and speed it up towards settlement. Offering comprehensive consulting services and experienced in managing the complexities of technical losses, the SPECS team stepped in to assist with project design, establish and maintain timelines, and control costs.
The first order of business was to clarify the scope of work and the methodologies. This was essential to allow the project to progress, as the restoration company was not willing or able to recommend appropriate procedures. Moreover, a proper scope of work was integral to the goal of shortening the project timeframe, while also keeping an eye on the indemnity spend.
The SPECS technical consultant arranged a meeting with stakeholders to recommend approaches that would help the project move forward. As a non-vested party, SPECS was able to assess the site’s condition independently, ensuring that the facility would be restored to the pre-loss condition without unnecessary or unapproved repairs or upgrades. For example, the plant was 95% complete when the fire broke out, so one of the technical consultant’s questions to the contactor and owner was, “how clean is clean?” The newest, undamaged wing had two inches of concrete dust on it, but since the building was primarily going to operate as a concrete factory, this level of cleanliness wasn’t out of the ordinary during normal operations. The reality was everything would be covered in dust within 10 minutes after the start of production. The more cleaning deemed necessary, the greater the indemnity spend by the insurer…and the greater profit to the contractor and restoration firm. So, the conversation turned to what should—rather than could—be cleaned, as well as what would be considered an acceptable level of cleanliness by the mining company. Discussions such as these, and the resulting decisions, served to redirect the contractor and resources to reduce unnecessary expense.
Following this initial meeting, SPECS clarified the communications protocol so that the contractor, policyholders, and insurance representatives were involved throughout the process. Transparent and open discussions not only facilitated an improved flow of information and detailed grasp of the claim, but also a heightened level of trust. In turn, this paved the way for thorough cost analysis by SPECS’ experts. Conducted with a high degree of accuracy, a review of labour and material components ultimately uncovered further savings. By the time the final valuation was finished, SPECS had reduced the indemnity spend by almost 15% more than what was delivered by the previous independent evaluation company.
The insurance client and the diamond mine operators were very satisfied with the course of action and the final outcome. The efficient settlement came down to process, perception and expertise.
As it turns out, clarity—a quality often sought after when selecting a diamond—became the key element in understanding and successfully resolving a complex claim.