Forensics

Subrogation

Forensic Services Newsletter

Subrogation is a word used frequently in insurance and for many of our appointments it is given as the reason for engaging us. However in most of the countries of SE Asia, with the notable exception of Singapore, it has remained a theoretical concept. For our consultants, this outcome, more a non-outcome, has been disappointing. Job satisfaction does not derive from technical investigation alone. We also like to see our results having a consequence and this has been largely missing. Thus we go to accident sites and come up with what we believe to be convincing evidence that would be expected to set in motion a process of subrogation, only to never hear of the matter again.

Our impression is that this is now changing. Lawyers are more active with some even specialising in this area. In Malaysia some insurers have appointed a company to trawl their files for possibilities. One factor that has facilitated this change of attitude has been the shortening of the time between the failure analysis and the actual trial. When the period of time approaches 10 years, as it has in the past, it is difficult to maintain momentum with insurers and adjusters losing files and claims managers, adjusters and CEO's changing companies. In contrast, nowadays when we receive a telephone call from a lawyer about an old job, it is a pleasant surprise to find we can actually remember it and all the people involved in the claims process are still in the same positions.

Examples follow of six investigations that resulted in subrogation. In five instances insurers were able to recover some of the claim amount. In one instance the court is still deciding.

  1. A fire at an electroplating line at an electronics factory was shown to have occurred because an equipment manufacturer used an inappropriate epoxy to secure low water electrodes (thermal cutout) in place.

  2. A reactor column in an oil palm refinery was constructed of type 316 stainless steel, except where the manufacturer had inadvertently used a less corrosion resistant grade, type 304, for some of the welds. The photograph at left shows the intersection of a circumferential weld of type 316 (horizontal at top) and a longitudinal weld of type 304 (vertical). The corrosion attack of the latter is apparent.

  3. A fire in a factory started at an oven as a result of an unsafe design.
  4. A motorcar within its warranty period was gutted by fire while parked outside the insured's residence. The fire was shown to have resulted from an electrical fault, with wiring 'welding' onto the firewall.

  5. Cans of fruit juice corroded because of the supply of inferior quality cans. Note corrosion about rim because of poor lacquering in photograph on the left.

  6. Bags of sunflower seed meal were shown to have caught fire by spontaneous ignition. The photo on the left shows workers sitting on Hessian (jute) bags of sunflower seed meal. The bags themselves were not burnt, but the contents were blackened, as can be seen in the photograph on the right.

  7. Regards,





    Barry Dillon