hosted by Inland Marine Underwriters Association. I am Eileen Monreale, education training specialist for IMUA, and I'm really excited to moderate today's webinar. On your screen, you will see the attendee control panel where under handouts, you can download the copy of the PDF of this presentation. It's also where you will find the question box. And we look forward to you sharing your questions with our presenters. They will answer them at the end of the presentation, but they absolutely look forward to them. To encourage your engagement, IMUA will award a $25 Amazon e-gift card to the most engaged attendee as a token of our appreciation. It's really also just to show attendee appreciation. And we all do learn better when we're engaged, so stay engaged and ask questions when the presentation is finished, we will be happy to address them. So if that control panel minimizes by default, simply click the orange arrow to bring it back. And you can also view the menu on the control panel and uncheck the auto-hide option if that happens to close on you. And now I'm honored to introduce our presenters today. Fiona Dujourn is the Director of Subrogation, SIU, and an internal expert team at Intech Specialty and Insurance Company. My printer is going off. I didn't even hit anything. Fiona has been in the insurance industry for over 30 years with multiple line expertise. In her spare time, Fiona enjoys traveling with family and friends and learning about different cultures. We're also honored to have Kevin DeGarmo. He is the Subrogation Manager for Ascot Insurance Company. Kevin has focused his career on subrogation since 2007 and served as a board member and president of NASP, the National Association of Subrogation. Kevin lives in St. Louis, Missouri, and enjoys spending time in nature with his family. He is a diehard fan of the Kansas City Chiefs and St. Louis Blues, which I had to Google to find out that it's a hockey team. So I've already learned something new. Excellent. Welcome, Fiona and Kevin. The floor is all yours. Thank you, Eileen. Thank you very much. Absolutely, I'm delighted to have you. All right, I think it's all yours, Fiona. Okay. Well, good afternoon, everyone, or good morning, possibly, to some of you. Thank you for joining us. Today's agenda, we'll touch on what is subrogation, why is subrogation important, the subrogation process, avenues of recovery, contracts, legal considerations, and we will have some Q&A, and all of the above relates to our builder's risks, subrogation. Now, why is subrogation important? Subrogation is a revenue stream for the carrier, but beyond that, subrogation serves as a marketing differentiator for the industry and provides an added value service to the insured. That, of course, drives customer satisfaction. The recoverable dollars that we receive impacts the insurance loss ratio, and that is really a great service to have for the organization, as well as recovery of the insurance deductible. Sometimes we are able to recover the insurance deductible in its entirety, or on occasion, we recover some of it, depending on which state we're in and the laws that apply. It also serves to allocate risk to the appropriate parties, and society benefits largely from this process, because we are able to identify unsafe products as well as practices. So this bodes well for us in general. What is subrogation? Oops, sorry. What is subrogation? I think we all know what subrogation is. It refers to the legal practice of substituting one party for another in a legal setting. We must have, obviously, for subrogation, we must have an insurer, a policyholder, and parties responsible for causing the loss or damage. Once a claim is paid, the insurer becomes subrogated underwriters of the insured, and we stand in the shoes of the insured and pursue the responsible party to the extent of the claim payment. All right, so what is builder's risk insurance? As everybody on this call probably knows, builder's risk, also known as course of construction insurance, is a specialized type of property insurance that provides protection for contractors, builders, and property owners involved in a product, in a project, pretty simple. And builder's risk subrogation is just simply the pursuit of recovery from a negligent third party when covered damages occur under a builder's risk policy. So builder's risk subrogation is not that different from standard subrogation, but there are some unique aspects that we'll touch on today. And again, this is meant to be an introductory look at builder's risk subrogation. We are planning to have a more in-depth advanced session sometime in the next year. So what types of property are covered? Typically, in a builder's risk policy, as all of you probably know, we've got buildings, structures, frameworks. The materials and supplies are typically covered. You can have coverage for owned and rented equipment. Property in transit to the job site can be covered, or property that's being transported along the, inside the project. We have debris removal coverage caused by covered incidents, loss of income when there are construction delays because of a covered loss, and even landscaping property like trees and sod. So those are all types of property that can be covered by the policy. And the types of projects that are insured, pretty much any construction project can be insured with a builder's risk policy. So examples include energy production facilities, such as refineries and alternative energy. We have hospitals, real estate, multifamily housing, hospitality, sporting venues, water treatment facilities, even civil work, such as bridges, street, road construction, dams, schools and colleges, office buildings, et cetera. I mean, we could go on and on, but you've got the idea. So let's talk about the subrogation process. The first step in the subrogation process is recognition. And this to me has always been the most absolutely critical step in the process. The adjuster is really, really, really critical. You're recognizing that there could be even a slight chance of recovery in a timely manner is key. So some questions that should be asked by the claims adjuster at the beginning of the claim handling would include things such as, is a third party potentially responsible for the loss or damage? Pretty basic, but good thing just to have in mind when you make that first contact with the insured. What or who caused or contributed to the loss or damage? Were there any external forces or hazardous environments, equipment, products, vehicles that caused or contributed to the loss? And when I say contributed, that's one thing to really keep in mind. I want to really want to focus on that. You don't necessarily have one necessarily approximate cause. You could have multiple causes or multiple parties who all contributed to the loss and may ultimately contribute to a settlement. Was someone negligent? Did anyone act inappropriately? Were there directions or omissions that caused or contributed to the incident? And is there any contractual responsibility that provides another avenue of subrogation? We'll touch a little on contracts later, but we all run into contracts all the time in insurance and those could be applicable to the loss. And obviously this isn't an exhaustive list, but this just gives you an idea of kind of where we start. So the second step is the actual referral. So once the adjuster recognizes subrope potential, the subrope department needs to get prompt notice of that loss. So once the adjuster identifies there could be recovery potential, and what I always tell people is if you're in doubt, go ahead and refer it to subrogation. We'll look at it. But prompt referral to either your subrope department, your third party recovery partner, your law firm, your subrope attorney, that's really, really critical. And we'll get into a few of the reasons why a little bit later. But the subrope handler, once it's referred to subrogation, the subrope specialist, the attorney, the third party, they'll work closely with the claim handler to manage and direct the investigation. So if you're an adjuster on this call, this is a huge benefit to you because this takes something off your plate. This allows the subrope specialist to take on most of the investigative tasks and allows the claims adjuster to really focus on the adjustment of the claim. The subrope specialist generally has the expertise and the knowledge to appropriately drive the recovery investigation. And we know that the adjuster is busy. The adjuster has to deal with the broker, the agent, the insured, you know, multiple parties. So typically, once subrogation gets involved, we let the adjuster focus on the claim handling and the subrogation specialist will focus on the investigation that's necessary to actually perfect recovery. And then the third step really is the investigation. The investigation, you know, it absolutely depends on the facts of the loss. You know, there are a lot of checklists out there that subrogation professionals use. A lot of law firms provide these. They're great resources to have on hand. If you want to reach out to Fiona or I afterwards, we can point you in the right direction with those as well. But really, just to give you kind of a sense or really just to give you kind of a flavor of what we're looking for, you know, here are some questions that the adjuster should probably think about. You know, the very first one is evidence. You know, the first time that the adjuster gets on the phone with the insured or their representative, we should be talking about evidence and securing the scene where the loss occurred. I can't count how many times in my career we've had subrope potential completely lost because the evidence wasn't preserved. You know, usually if builders risk, the unique thing is this is a project that's ongoing and the owner of the project wants to continue working regardless of the accident. So there's a balance there that you have to reach with the insured that we protect the scene so that we can prove what caused the loss, but at the same time, allow the insured to move forward with their project. So after evidence retention, you know, all parties to the loss will need an opportunity to inspect the evidence. This might even include destructive testing. And then the next piece is usually expert retention. So, you know, often the experts that we need for the segregation process will be different than those needed by the claim adjuster. The claim adjuster is often more focused on coverage. Is this a covered cause of loss? Is there any type of fraud? Are there any issues that could impact coverage for the loss? So they may need a cause and origin just to say that, yes, it was an accidental fire and it wasn't intentionally set. Whereas Subro, we need to get a lot more detailed. We need to get various experts involved who can help us truly identify what the cause is while also ruling out other causes. And Fiora will talk a little more about experts later. And then another key step in the early in the investigation process is identifying potential witnesses. So especially on these projects, these builder's risk claims, you have multiple parties involved, you know, not just involved in the project itself, but involved in manufacturing the things that might have been involved or in use when the loss occurred. So what witnesses are there? Who was actually on the job site? You know, often there are job site logs on a project will identify who is on site when and what they're supposed to be doing there. You can also get incident reports from the various contractors. Usually there is some formal process for documenting any occurrences like this that happen, but getting those witnesses up front and getting the identities and contact information for all the parties involved really, really is almost as critical as the evidence. You know, the longer we go, it's very common in construction for workers to change jobs, to move on to other projects. So the sooner we can identify those witnesses and those parties to the loss and talk to them, the better opportunity we'll have to successfully pursue recovery. All right, I think we've got our first poll. Fiona, you want to take that? The first poll is, should a several specialists allow the Subrogation Council to manage the investigations completely? Let us know what your answers are. And we may not have fully touched on this yet, so this might be a trick question. Yep. We'll give everybody a... There we go. Give everybody a few more minutes to enter. So far, most people are saying false. That's good. That's good. That's one thing we don't want to do. We don't want to abandon the investigation to Subrogation Council. Yeah, they very well may be the one most appropriate for guiding the investigation, and you may want all your documents and correspondence and things to go through council, but we don't want to abandon the case. If you abandon the case to council, then you lose control. And really, really, we need the Subrogation specialist at the carrier to really remain actively involved. I think, Fiona, you had some thoughts on that. Absolutely. You know, Subrogation specialists, we have done this so many times. We've handled thousands of files. We also know the etiquette internally with our brokers, with our risk managers at the insured. We can weigh in on so many things, you know, that council cannot weigh in on. Sometimes, believe it or not, council's strategy directs in one direction, and we may disagree, and we may be totally correct to disagree with their opinion with respect to experts and things of that nature. These are all things that we have done for years. So I think, to Kevin's point, we should never abandon a case to an attorney. You will lose control. You'll lose control not only of your strategy. You'll lose control of your expert, and you'll lose control of your spend. And you could lose control of the case. And you might upset the insured and or the broker if they don't realize that you've engaged council. You know, what I usually like to try and do in a case is introduce whoever we've brought in, whether it's a third-party Subro vendor or an attorney, introduce them to whoever you're going to be dealing with on the claim so that the insured knows that they are representing you, they're representing the insured's deductible, and they understand why this person is, you know, in contact with them. I have had cases where a broker or an insured has gotten really upset when an attorney, Subro attorney, just calls them out of the blue and starts, you know, hammering them with all these questions. So it's always good to just make sure everybody's on the same page and, again, you know, stay actively involved in the case. Absolutely. And this is a nice segue into unique aspects of managing builder's risks, Subro claims. Without a doubt, there must be a close working relationship with the claims adjuster. The claims adjuster gets the claim first, as Kevin said. It needs to be very collaborative through what is typically a very difficult adjustment and investigative process. From the onset, we must work together with the claims adjuster to perfect our subrogation file because this will impact the outcome of our recovery if there is a viable avenue of subrogation. As it relates to budget setting, management and oversight by the subrogation specialist. This is a favorite topic of mine. On larger losses, understandably, we will be spending money to investigate this case. We will also be spending money on retaining several experts to investigate the loss. As I have explained to everyone that I've worked with, if you approve a budget of $50,000, I've never quite had anyone or any expert come back to me and say, hey, we only utilized $40,000. I'll give you a credit for $10,000. I don't think that has ever happened in my career. So be mindful of what you are approving and take a look at the scope of work that is attached to that as well because that is going to guide you. In terms of a cost-benefit analysis, this is something that every subrogation specialist must have. And the cost-benefit analysis is sometimes, believe it or not, it is not driven by counsel. It is not even driven by the market. It is driven by the subrogation handlers that have key interest in understanding the backdrop of this claim. We need to look at values of the claim. We need to change that as the claim evolves by considering the new information that is presented. Recovery potential is always a moving target. It never stays the same. Something changes what recovery potential will be, and we always need to keep that in mind with, again, the scope of work and take a look at that cost-benefit analysis. We're going to be asked if we should do certain things in the future by our management or by underwriters, and we're going to have to clearly justify what we didn't do, why we didn't do it, and what we plan on doing and why we need to do it. And it's all in that simple cost-benefit analysis. In terms of retention of counsel, retention of counsel is also very critical. Let's do it early on. These are large losses. It will be prudent to retain counsel early. Even if you're not the lead and you're in the following position or if you are the lead, the table stakes remain the same. There are many different fee arrangements that we can be creative with with our attorneys. We have our contingency fee arrangements. We have our hourly. We have our flat fee. We can create a mixed version of any of those if we determine it is required, and that all depends on the work that has to be done, the scope of the loss, and all those good things. So pay attention to terms of retention. Also, I will say that we all know who the subrogation attorneys are for builders' risk cases. We know their strengths. We know their weaknesses. We even know where we might have opportunity. So let's keep in mind that when we are retaining counsel, one, we go to the best in the market, okay, the ones that will impact us significantly by handling our recovery claim in a successful and efficient manner. Yeah, and also keep in mind that you can negotiate contingency fees with law firms. If you have a case, it's very common. I've run into this a bunch of times where we have a very clear liability case, but the other party is just either nonresponsive or the carrier is nonresponsive, and we have to get several counsel involved just to get them to stand up and take notice of us and pay attention to our subrogation claim. And in those cases, you may not want to agree to pay a full 25% contingency fee. It may be limited work that's required by the attorney, which in that case, consider hourly or consider negotiating the contingency fee to a lower percentage. Yeah, agree, Kevin. And we have to ensure that counsel manages expert findings and determines when the report is written. This is a very, very, very key point. You know, it's very easy for an expert, if they're not guided, to start writing their report. No. The first thing we do is we advise our claim handlers that we're working with that no reports should be put in writing. We can all coordinate and have discussions with our experts, but we absolutely do not want to put anything in writing. We oftentimes listen to all the facts. We work together with counsel, and we guide our experts with respect to what is placed in that report that is going to be shared later on down the line with defense. Yeah, and going back to the cost-benefit analysis, in many cases, if your expert goes out there and, you know, right off the bat, he's able to say, hey, look, due to the extent of the damage, we can't determine. There's no way we can determine what caused this loss. You may not even want to have them issue a report, and you can save money by just having them give you a verbal or just give you a brief summary instead of a full-blown report. So it's another way to manage your expenses is managing, you know, the expectations of what you want the expert to produce on your behalf. Absolutely. And, of course, we do have the coordination of inspections. This is huge because we are dealing with multiple parties, okay, that have to be present at the time of the inspection, and we're also dealing with multiple experts, okay. We may be dealing with one or more attorney firms. So coordination is key, and also notice to all parties is critical to avoid spoliation issues. So these are all things that we must consider. Yeah, and one thing, just, I'm sorry, just one thing I just wanted to add there is this is one of the key reasons why I often will assign several counsel is because the coordination of these multiple parties and making sure they're all on notice and making sure all the experts coordinate their, you know, their inspections, it is really difficult for a single person to do. I like to turn some of this over to the Subro attorney so that they can handle the logistics of the inspections. Absolutely. Our contract, that is, there are contracts that exist in any builder's risk claim, and we want to get a hold of that contract from the get-go. To Kevin's point, we want to review what is contained in the contract. If there's hold harmless, waiver language. So that is one of the first things that a Subro specialist will work with a claims adjuster on to instruct them to secure any contracts that exist. Another key thing that we need to do, the contract is kind of our guide. It's our Bible, literally. And while I wouldn't, typically I don't just rule out subrogation just because there's some hold harmless or waiver language. You know, there are ways that you can get around waivers. But you do want to be aware of those early on because that will help determine what you're going to spend on this case. You know, multiple times I've run into cases where we have a great case, it's six months down the road, and all of a sudden, oh, here's this contract that we didn't know existed. And you read that contract, and it's got ironclad waivers. And here we've already spent $25,000, you know, proving what the cause is, but we can't go after the target. They're immune, basically. So it really is key to try and get those contracts early on. And then discuss with counsel whether waivers or hold harmless language actually applies, or if there's some way around it, like, for example, gross negligence or, you know, something else that could get you around a waiver. With respect to market calls, these are calls that we usually have with the rest of the market that shares in this risk. Be proactive if you are a lead. We must ensure that there's agreement on strategy, agreement on spend, you know, just an agreement on the general mechanics of how we're handling subrogation. And as Kevin said, do not abandon the claim to subrogate counsel. We need to be involved here. I mean, it's easy for us to sit back and say, well, counsel will handle it. No, that is not how it's done. We do have to be proactive. And this avoids a bad situation that can occur if we are proactive. Because what we're doing here is we're making sure that there is buy-in on our strategy, there's buy-in on our approach, and things of that nature. It also, as a lead, it sets expectations with the other market members, which is key. No one can say that we did not agree to do this together collectively. So these are all very important things that we must do. Have those calls. If counsel is not scheduling those calls, ask for counsel to schedule the calls. Because we need to be on top of it. It goes into the management of the claim. We have to set expectations internally with leadership. This is something that is apparent to all subrogation handlers in all the various insurance companies. You're all on the line today. Our management sees a large loss and they expect under the circumstances that they've been exposed to, they expect a good recovery. Be factual and share the facts with them when you do your roundtables or your committees and explain that this can be a moving target, but clearly explain why. Provide your rationale. It may be contractual, but also share with them that you've probably looked into that third party that could have potentially caused or contributed to the loss or damage that was sustained. So this is very, very key. And something that I do want to mention is that oftentimes the lead insurer, they are a lead, but they're not as proactive as they should be. It's quite OK for you to represent your organization that you work for, who's borne a certain percentage of this risk. It's quite OK for you to be partners with them or even control the case to some degree. I mean, I think we've all, all of us that are on this call that are subrogation specialists have led subrogation actions on builder risk cases where we're only 20 percent and we aren't the lead. And the reason that was done was because the lead just did not step up. And that's OK. As long as a few of us are on that call that know what you're doing, that know what we're doing, we can lead that case. And it's usually a nurse to your benefit, because at that point in time, you're also working closely with counsel and you're also challenging counsel with respect to some of the actions that are being taken. Another thing that I would urge you to do is even if you aren't the lead, ensure that you do pick up the phone and you do share with counsel your thoughts. You can do that sidebar if you'd like. And you can urge counsel to take other steps that you may believe are relevant. And I think, again, all of us on this call that are subrogation specialists, we've done that and we've changed the course of the investigations just by simply raising a point that basically tells everyone, let's stop the bleeding. There is no subrogation potential here. We've melted off all the fat in 20 cages and we're not going to do the same thing for the next 20 cages that are sitting there that contain samples that were secured from areas far away from the origin of this fire. So these are all things that we have to consider. Yeah. And also, you know, this is a small, you know, we're a small industry. We all know each other and we see each other again and again, you know, the more active you are in these market cases, the more they'll be, you know, your peers will know who you are and know what you expect. You know, if you always sit back and just let them do everything, you know, then they may not be proactive in the future and engage you. You really need to kind of make a name for yourself that you are going to be proactive in any market losses that we have in common. You know, one loss you may be lead and the other you may be follow, but just, you know, develop that reputation of being someone who is proactive on their subrogation cases. Yep. And again, to conclude this style, this slide, revisit all of the above frequently. Have active discussions with your claims adjuster. That is literally your buddy on the file. Work closely with them. It's amazing what comes out of that relationship. Take a look at your experts, call your experts up, even ask them, what are you doing and why are you doing it and things of that nature. So maintain an active report with everyone. Yeah. And make sure we've already said this, but make sure that when there are significant changes to the recovery potential on a claim, make sure everybody's aware your underwriter, your claims management broker, the agent, you don't want a surprise coming, you know, six months down the line on a case that they thought we were going to get a recovery on and all of a sudden, you know, you found contractual language that, you know, ends the case. Make sure you're sharing that proactively. Absolutely. Several coordination with claims handlers. A subrogation specialist, simply put, is just not a great claims adjuster and a claims adjuster is likely not the best person to handle a builder's risk subrogation case simply because they are dealing with a very complex loss. They are reviewing coverages, they are involved in an extensive adjustment process and they're also involved with the investigation. Our skill sets are unique and different with different priorities, but our goal is common for the companies that we work for. We all are looking for a positive outcome. There are certain things that we do have to coordinate and we've spoken a lot about them. Coordination requests are typically done via the claims handler, especially during the first several months of the loss, the insured has suffered a huge loss and we should not be bombarding them from a customer service standpoint with five individuals from intact insurance or Ascot or whatever the case may be. They should be dealing almost entirely with the claims handler. And so we coordinate all document requests critical to the perfection of the subrogation file through our claims adjuster. Let's keep in mind who the points of contacts are and our claims adjuster will introduce us to those contacts as the claim progresses. One of the reasons why we must pay attention to that is the adjustment process does conclude and at that point in time, we will be required to coordinate with all of these individuals that are actively involved in the claim. Preserved assignment is a whole other topic and we do have a slide for that, budgeting we've spoken about. Preservation of evidence, we all know what that means. If you do not preserve the evidence, there'll be spoliation, okay? Simply put, that tanks your entire subrogation claim. With respect to subro updates, in our organizations, updates should come from subrogation specialists or counsel. I strongly advise to not take subrogation or not ask your claims handlers for subrogation updates. It avoids secondhand information being, you know, shared with the organization. We also need to set realistic expectations with our underwriters and our claim management, hence it's best to touch base with the subrogation handlers. Our underwriters are heavily involved with these losses and they might be renewing this account. So we need to be very realistic and be in touch with them so that they understand what is going on with this large loss. Additionally, our underwriters may be doing something else that requires them to have insight into this specific loss that we are not aware of. So keep them updated as well. Business management has seen that they have, you know, a $50 million builder's risk loss and they are looking to recoup as much as they can. Unfortunately, that does not mean that they are going to recover $50 million, but we may be left with that job of saying we're only going to be receiving potentially $5 million. So let's be reasonable, let's be factual, and let's set expectations appropriately. And one thing I want to add there, it's not on the slide, but it really is a collaborative relationship with underwriting and risk management as well, because since we in SUBRA are frequently doing really deep dives into what caused certain losses to occur, we may uncover issues with our own insured that underwriting and risk management needs to be aware of. Our insured may not have safety protocols in place or they may be using old equipment that's, you know, subject to fires or to breakdowns, and underwriting can't go out and look at every single loss. So we are really the eyes and ears of underwriting and risk management. And I have frequently gone back to underwriters with information I developed during a SUBRA investigation and said, hey, you may want to send a risk manager out to look at XYZ because of what we uncovered, or we are rarely going to have recovery potential on this account because the insured does these types of things. So it really is, it's not just coordination with claims handlers, but it's also with your underwriters and risk managers. And we come to one of our favorite topics, which is expert selections. Now there are a lot of good experts in the industry. Don't be guided only to an expert because they work for a big expert firm. That does not necessarily mean that you will be getting the best expert. Also, it might be quite costly because they are a big name. So be mindful of that. We might need multiple experts in various areas. I typically, and I think most of us typically, will coordinate the retention of those experts with subrogation counsel. Subrogation counsel has handled a myriad of builder's risk cases. Based on fact, they know who the best experts might be for this particular loss. And it's good to have their input because they are also going to be handling this subrogation claim. Moreover, something that we all need to be mindful of, we not only need a good expert, but we need an expert that will stand the test of time, in a courtroom, facing challenges presented by the defense, okay, as well as at mediation, and an expert that can also stand up and dispute facts with the expert on the other side, okay, that's been hired by the defense. So an expert essentially makes or breaks your subrogation claim. And we have all seen both sides of that coin in our career, where you have an excellent expert, but when they're placed on the stand, they just do not hold past muster. And we've seen those experts that are good and are excellent, but they do go on the stand and they do a fine job. So these are things that we absolutely must consider. Also, our experts must have the ability to connect with jury and make complex matters understandable to a layman. So it's great to have a very, you know, scientific expert, but he also needs to know how to break it down. Again, with respect to experts, retention, let's keep in mind that one of the first things that we do is we secure that scope of work, and then start discussing the budget. Why do we need to get involved from the get go with the claims handler, and with Subrogate Counsel, we need to set that stage, we need to ensure that everyone is on the same page. Because remember, our claims handler will assign the expert, and they're basically having them investigate the loss, and they're determining coverage. After a certain point, we pick up the management, Subrogation picks up the management of that expert. And we may need them for a much longer time than a claims handler may need them. We may also need to retain other experts. So whatever cost is being incurred, we need to understand that that cost eventually transfers over to Subrogation. And I'm not negating the fact that we do have to pay an expert well for the job that has to be done. However, we do have to manage these cases, because an expenses and costs incurred, these are large losses, they are very complex, and they can require multiple experts. And if we are not mindful of our spend, we can run into a lot of problems when we are 75% into this claim. Understand as well, if we are the lead, we have a duty as well to the market, okay? We have to do our due diligence, and ensure that we are handling this and assigning individuals with the utmost good faith. So these are all considerations that we must be aware of when we are working with our experts. All right, so negligence theories. Again, this isn't necessarily specific to builders risk, but it's something that comes up in every potential Subrogation claim, and it's worth running through. Some common examples, obviously fire losses, water losses, such as broken pipes or discharge. I actually, I've got a builder's risk claim that settled not too long ago, where the plumbers came in and installed fixtures in the bathroom. The main water supply was turned off. When they installed the fixtures, they left the faucet handles in the on position. Days later, weeks later, I don't remember how long it was, someone else with the project turned on the water main, not realizing these faucets were open, flooded out. This was a residential community that was being developed, flooded out the entire house. The water ran in this house for days, because they were working farther down the road, but they had turned on the main water to this project, and it flooded out the place. That's just something you see happen in these types of projects. Collision losses can happen on big projects, big builders risk projects. You got a lot of equipment moving back and forth. You've got subcontractors. You've got third parties who may be on site, third parties who aren't protected under the terms of the builder's risk policy and could be a potential target. We've got product failures, design defects, improper use, lack of training, supervision, missing or incorrect instructions or manuals, equipment malfunctions, incorrect specifications, and job site security issues. This is a very small portion of the types of risk you could run into that could generate recovery potential. All right, so we've got another poll. This one is, it's okay to release a budget of $100,000 to the assigned expert. True or false? I think I know what Fiona might say on this one, but I'm not positive, so we'll give everybody a minute or two to vote, and then we'll see what Fiona says. Fiona, I just noticed it says organizers and panelists don't vote, so I'm sorry. You don't actually get a vote in this matter. No, I don't get to vote. So let's see what everybody else had to say. You know what my vote is. There you go. There you go. 83% false. False. That's not true. So it looks like everybody agrees with you, Fiona. Yep. Absolutely. Excellent. That's the way to go. Don't release it. Yep. So let's look at a couple of real-world examples, and I know we're pretty far along, so I'll try and go through these pretty quick. So let's look at one. Say there's a structure fire that happens on one of these job projects. First question, do we need a cause and origin? In fact, in most cases, the answer is yes. Even if it seems obvious what caused the loss, it's very likely that the target defendant is going to point fingers at somebody else. And the best thing you can do is at least get that initial cause and origin. Who was working in the area immediately prior to the fire? What type of work were they doing? Were they doing hot work? Were they welders? Were they electricians? Were there flammable materials? Was there somebody who was doing staining on another part of the project and threw their rags into another room, and those rags spontaneously combusted? Was electrical installed and powered on? Did the project utilize on-premise security? I hate to keep giving these examples, but I have one we just recently settled, a million dollars, where we had a big fire and there was on-site security, but the security guard got a call during his shift that he needed to go pick up diapers. So he did. He left, went and got diapers, went home, didn't come back. While he was gone, a fire broke out. And that fire burned for at least an hour before it became realized, because it was after hours. This was the middle of the night. And we were able to actually make a million-dollar recovery from the security company. So we were able to maintain our policy limits for their negligence in allowing the fire to spread. They weren't the proximate cause, but they were the cause of the extent of damage. And then asking about what kind of equipment was being used in the area. When you have an area that has a lot of different equipment or appliances or opportunities for a loss to occur, you want to retain all those items, because you may be 90% sure it's the toaster. But the toaster manufacturer is going to say, well, it could have been the stove that was right next to the toaster. Ask if there was any prior issues with the equipment. Was the equipment running rough? Was it shorting out? What's the age of the equipment? Who owns the equipment? who maintains the equipment and then one thing to ask especially in builders risk builders risk claims often they're putting in similar fixtures in multiple parts of the project so they may be using the same light fixture you know all throughout this project if you have one light fixture that started a fire you can use a Templar you can use one of the other ones they have on site to compare it and see was there a defect with this particular item another example design defects design defects occur before the product is even manufactured or building is is is built and when a product contains a defect in the design it can cause it can result in the product failure and subsequent property damages so things like plumbing fixtures that fail under normal water pressure you know if you've got a brand new construction and all the plumbing is new and you start experiencing leaks a very good chance there's something wrong with the with the materials that were used mechanical or electrical defects and trucks heavy equipment and tools the resultant fire remember that under a builders risk policy oftentimes the contractors the subcontractors the sub subcontractors are often all covered and have waivers of liability waivers of subrogation in the contract but if you can find third parties outside of the the project contractors those could be several targets you can have fire suppression systems that fail to function properly plumbing systems that freeze due to improper building design which allows water lines to run in unheated or inadequately insulated areas building wall failures due to improper specifications from an architect or a general contractor who may or may not be part of the project contract building roofs that fail when subjected to normal wind speeds or snow load you know basically on these types of things if if it seems unlikely that the loss should have occurred especially a new construction then there's a good chance you've got a design defect or possibly even a manufacturing defect which is our next example you know materials experts are often needed in these cases you know you may need a metallurgist you may need very specific specialties that goes back to Fiona's point of getting the right experts and evaluating what that cost will be and then you know unlike other types of claims it's not necessary for us to prove the manufacturer acted intentionally or maliciously to prevail but we've got to prove that the defective product or item was the proximate cause of loss improperly managed or improperly manufactured electrical breakers I've had several fires with those nice thing about those is a lot of times with a small loss like that if it's a breaker I had one Chick-fil-a is a small breaker we were able to send that to DPI which is a firm that does engineering inspections for a relatively low cost remotely we shipped it to them I think our total cost was seven hundred and forty dollars and they were able to determine that that yes that breaker was defective and we were able to make a recovery from the manufacturer of the breaker and it really was very very low cost other examples you know improperly manufactured tanks with poorly welded seams you know tires that fail prematurely on equipment that's being used on the job site there's lots lots of different examples okay so thanks Kevin that was great and coordination with parties on market losses I think we've spoken extensively on this we do have to coordinate with everyone literally from the claims adjusters to folks internally to market members you know let's keep in mind with respect to the market the policy will typically dictate who the lead is we've spoken about that a good lead will typically lead and direct the loss and we get involved as the following market and we are part and parcel of the process market members should all participate in subrogation action but let's keep in mind that you will find that case or two or three that you come across where market members some of them will reserve the right to go step aside and retain their own law firm maybe together with one or two other players and move their case forward that happens we've seen it happen from time to time and we can encounter that okay keep in mind that you if keep in mind too if you're a following you can actually you can opt to not participate you know costs are shared among all market members if you really don't feel it's a good case and you don't want to spend additional money you can step away yep and also again one of the good things when you share when everyone participates and you use the same attorney you use the same experts it gives us the ability to share in costs right which is a significant consideration for all of us that are involved in in that particular subrogation action I was just gonna add there sorry Fiona you can you can also often get the adverse carrier to participate in sharing of costs or or if you have multiple insurers who are involved you know for that are outside of the builders risk policy they may share in the cost so always look for those opportunities to share your costs absolutely and let's keep in mind we won't dive much into the last point because this brings up enough material for another course to be had on builders risk you know we can be required to sign joint prosecution agreements that brings into the fold you know all sorts of things we might have uninsured components of the loss and then that what comes into play there would be state law made whole and things of that nature and the made whole principle for those of you that have really dabbled with builders risk cases underwriters and all all of a sudden we are wondering if we will actually receive a recovery but we have our favorite document which is a JPA the joint prosecution agreement where if if that comes into play our attorneys can be pretty great with respect to how they go about approaching what we do and we basically contract out of state law but again that that is a this conversation for another builders risk I knew you were gonna find a way to throw made whole into this discussion least favorite least favorite topic we do another session on made whole I am NOT joining okay and oh I just missed that slide whoops you see oops I think we are clicking I think that we are clicking okay here we go notice of claims so notice of claims and joint inspections it is really very important for us to immediately promptly issue notice letters to every potential defendant that's out there every possible responsible party to this that that is responsible for the loss or damage these notices are issued typically by our subrogation attorney or by the sub rule handler make no mistake whatever that value that claim value comes in at just issue that notice of that notice letter it doesn't matter place everyone on notice for the loss or damage and what you'll find which is a point that Kevin raised when we were discussing this presentation is once those letters go out all of a sudden there are other responsible parties that that are brought out of the woodworks and we can also engage and place them on notice you know I was gonna jump in there what we see what is clear to us from day one there are so many folks on these job sites there's so much there's so many witnesses there's so much information that is on earth there are other potential avenues of subrogation so we issue those notice notices right away time especially if you especially if you get into a product claim you know where there's a product defect because you know you could have multiple manufacturers and suppliers involved that you can't you can't even determine who those parties are until you place the first parties on notice then they'll they'll then tender their claims to all these other or they'll bring in these other parties yeah timeliness of these notice letters it's critical to avoid spoliation arguments we definitely know that so let's ensure that notice letters are issued there's statutory requirements as well but we won't get into that either but we do have to comply in a timely manner joint inspections are absolutely key all potential defendants must be given an opportunity to inspect the scene or the property involved in the loss the scenes must be secured and evidence secured until all parties have had the opportunity to inspect goes right back to our claims adjuster as well that is one of the first things that a claims adjuster is told by a subro handler and by now many claims handlers and RG is that is exactly what they see the moment they receive that assignment we might be required to do further testing we do need to preserve the evidence we may need other experts on board we have to preserve the evidence we have to give everyone a reasonable opportunity if we do not it impacts the outcome there could be spoliation issues it impacts the outcome of the claim if everyone has not had an opportunity to see exactly what is going on with respect to also you know it's applicable it's it's applicable to evaluating negligence theories and also to verify damages we all know that even if liability is accepted the adverse party will always argue damages which brings me to my favorite point measure of damages everyone gets excited oh we have a five million dollar claim what is subrogation potential what is paid out as your indemnity payment is not what is actually recoverable okay it is vastly different and there are many factors that impact it impact that amount such as you know the ACV the invoice value contracts that are in place but also the adjustment process is what it is it's an adjustment process and there are flaws that we have with all of our adjustments we got or or their issues that may be seen and we pay a claim what is required to pay a claim is not what is required to recover okay so the first thing that we do when it comes to measure of damages we ensure everyone sees what we've seen but also that is my first question to several counsel what is your evaluation with respect to your review of documentation of invoices of every thing that's been giving given to you the plethora of documents what is the outcome what exactly are my hard values with respect to my subrogation claim and this is a discussion that you must have early on with subrogation counsel this is not a discussion that you raise you know as the claim progresses you place it on their radar so they know that you are looking to them to provide you with that analysis and it's usually pretty extensive which will speak to their review of the claims adjustment with or without an accountant I'm not sure we may need a financial firm involved to take a look at our invoices and our documentation and our supports and they will have to validate what is recoverable so this is also something that's very important you want to do a deep dive into the economic loss doctrine while we're over on this side next time around we have an hour more than the other thing the other thing to keep an eye on is you know I'm sure this doesn't apply to any claim adjusters who are on this call right now and if you're a claims adjuster cover your ears but I have seen claim files where the claims adjuster has not documented why they paid what they paid you know they may have made some kind of side agreements they may have negotiated something but the paperwork the paper trail doesn't necessarily support the full measure of damages that would be recoverable so the Subro specialist does have a responsibility to kind of keep an eye on the claim file throughout the process and make sure we're getting the right documentation if it's not there try and get that before the final adjustment of the claim is concluded same with things like Subro receipts and proof of loss things like that you know anything that the insured needs to sign off on you'll make sure those documents are in the file as well so we've got time for another poll I think this is the last poll if you have a small share of the risk you don't need to be involved in Subro efforts true or false should be pretty easy we'll give everybody a few seconds hopefully everybody's still awake I know we're after lunchtime so there we go 96% false that is absolutely correct if you have a small share even if you have a small share as Fiona said you still want to be actively involved all right contracts seems like every slide we do Fiona it could be a whole nother session in and of itself so we might need to make this like a 10-part series of seminars but obviously I mean we we all work in insurance we we know about contracts we live and die by contracts heck the insurance policy is a is a contract so contracts are prevalent in construction projects especially builders risk as most of you probably know on the call standard AI a contracts typically include subrogation waivers or indemnification language that can be really critical to the success or failure of your case owner controlled insurance program called an OSIP that's it's a commonly used insurance product and builders risk claims and oftentimes it will spell out specifically who is covered by this by this product or policy and who is not we have had cases where it lists all the different subcontractors but you know maybe one of the subcontractors hired another sub and that sub is not subject to the terms of the contract and the waivers then you potentially have recovery potential against that party if they are not subject to coverage under the OSIP and that usually should be spelled out usually names who's who's who the contract insurance coverage and waivers apply to suppliers and outside construction managers typically are not covered under an OSIP and so those can often be viable subroad targets and obviously you know just to recap a careful review of contracts really is necessary to effectively evaluate recovery potential and budgets and I think we covered this earlier but the earlier you can get them in the process the better you don't want to find out nine months down the road after you spent $50,000 on experts that there is an ironclad waiver between your insured and the party who caused the loss again contracts we could spend a whole day on this and and we would want to get counsel involved as well and then finally legal considerations again this could be another whole call Fiona mentioned before measure of damages in the jurisdiction waivers we've talked about indemnification clauses you have to be aware of statutes of limitations and repose and how they apply in many states it's dependent on case law it's not clear necessarily in a statute and so you need that case law you also need to know what judicial environment you're in you know if you're gonna be taking this to trial and you've got a big bad insurance company who's trying to sue a small you know mom-and-pop subcontractor you know how is the jury gonna view that case you know are they gonna support the insurance carrier or are they gonna support the mom-and-pop shop you know from their community maybe that that mom-and-pop shop was negligent but do they really want to punish them something to keep in mind cost of litigation versus claim value and recovery potential you know it kind of ties in with the the cost-benefit analysis Fiona mentioned with experts you know you want to find out from counsel what is it gonna cost to take this case to trial you know if it's gonna if it's gonna cost a significant amount of extra expense to see this through to trial you may want to settle the case at a lower value to avoid incurring those costs and avoid the risk that at trial you won't prevail prevail prevail so you know it's something you always have to be thinking about it's like we almost have to be accounting or finance majors when we're when we're reviewing these but it a lot of it really is just subjective and it's great to roundtable these types of cases and and kind of weigh the pros and cons look at your look at your contract with counsel counsel may jump up to a higher contingency fee once suit is filed so if you can settle the case for a few dollars less pre-suit you'll save money on the contingency fee you pay to counsel you know I've settled cases that way in the past as long as the net benefit to the insurance carrier is positive then then you can you can sometimes settle those cases for for less than what you might demand at an actual trial I just wanted to add whatever you do even if you decide to settle a case because you have that cost-benefit analysis document document document your file your file will be audited the insured will request information at some point in time and you need to be able to validate substantiate and support your your thought process and why this case was settled it's just dotting your i's and crossing your t's and complete your due diligence yep see why a three most important letters in claims handling if you need to know what that means see me after the session and then really finally a release language and wording once you get the case settled you're gonna have to carefully review the release language that's when it's nice to have counsel involved but even if you have counsel involved read read the document carefully a lot of times defendants will try and slip in indemnification indemnification Jesus indemnification language into the release in which case you may be taking on the risk for your carrier of defending the party that you're settling with if another party comes forward later in the future so make sure you read that release carefully and that you're not signing up for something that you didn't expect and that the release is appropriate and I think that's it yeah questions all right now I told I don't Fiona before this yeah go ahead Eileen yeah no this was an excellent presentation and no you both have to participate we have quite a few questions here no let me start start with actually Pierre has a question I understand lawful builders risk and I understand lawful builders responsibilities may void waiver language for instance a general contractor cannot read his overall safe fight response safe site responsibilities can you give other examples so sometimes things like gross negligence that's one we we often see that can get you around a waiver or indemnification language you know if the if the contractor was so grossly negligent that the loss never should have occurred then in some jurisdictions that can get you around a waiver I don't know Fiona if you have other examples or thoughts but that's that's the one that always jumps out to me is yeah no you're right or strict liability there's strict liability in some cases but that could be a whole nother session with counsel about how to avoid waivers I think yeah and it's very involved I mean yeah you would have to have counsel involved and you would have to review that and yeah that's a that that's definitely a whole other topic and one other thing I will mention in that regard just because there's waivers in the contract doesn't mean you shouldn't send a demand to the responsible party I have received settlements on cases where there were clear waivers and the other side either did not identify those waivers or did not think those waivers will stand up make them defend the waiver make them bring it up don't you bring it up proactively and say well we're sending this to you but we know there's a waiver no send it to them let them evaluate it let them make the call as to whether or not they think the waiver applies to their insured and to the circumstances of the loss. Pierre asks another question. In what areas do insureds typically need coaching from insurance companies to help reduce claims? Oh, I think, you know, it depends, right, on what is being insured. That's the first thing. We do have our risk management teams. I think what you would do in a situation like that is if an insured needs some coaching, you would definitely discuss it with your underwriters, and then you would get your risk management team involved. Typically, risk management teams are involved when the risk is being written, but it may be one of those that they weren't involved with. That happens sometimes, right? Or they may have not yet gone out to the insurable interest, so to speak, or the project area. So I think that you definitely can get them involved with risk management. And I've also seen, I mean, it's a good collaboration, because I've seen risk management jump in when a loss occurs and immediately go out and do some triage and do some analysis of what caused the loss, and that can be beneficial to your Subro case. At the same time, it could work against your Subro case. I have had a case where a risk manager went out there and basically just laid all of the blame on our insured, and that was not helpful. I got their written report, and I'm like, oh, God, this is not good. But so that's, again, going back to that collaboration between parties and ensuring that risk management is on the same page with your claims and your Subro people. Gina asks, I apologize if this was addressed already, do you see that AIA documents supersede the Subro? So if I understand the question correctly, basically, the way I interpret it is, are AIA contracts typically causing our Subro potential to be waived? And yes, I do frequently see that. It's very common. AIA contracts, they're standard, just like ISO forms. So it's very easy for a contractor to just use a standard form and sign away all of our rights. I hate AIA contracts, when I'm not the consumer. Now, the guys who are working on my house right now, the contract is great. They're responsible for everything. We have a long question here from Billy. Oh, this is Fiona's question. It is a common that builder's risk policy names, as additional assured all owners, contractors, subcontractors of any tier, any other person's name to the construction contract, and maybe even the architect and engineer in respect of their site activities, not professional duties. The policies typically allow waiver of subrogation to any party named in the construction contract prior to the loss. The typical construction contract waives liability between owner and contractor. This being the case, is there a practical subrogation from owners, contractors, and subcontractors for their accidents, failures, mistakes, workmanship? It's challenging. With builder's risk claims, that is one of the biggest challenges, is the fact that it is, the whole idea of builder's risk insurance is to avoid conflicts when losses do arise on a job site. So the intention really is to try and, you know, have everybody play nice together and not point blame, because if a loss occurs, the point of the insurance product is to get the insured back on track, to get the project back on schedule. So that is, it is a big challenge. Builder's risks claims are not easy because of the waivers and the indemnification and the broad coverage that is typically applied to everybody working on the site. With that being said, though, there are parties that aren't, and there are, you know, again, legally, you know, we need counsel to weigh in, but there are legally sometimes ways around those waivers, but it's very dependent on the specific facts and the way that the policy or contract was written. Yeah. And that is why these cases are typically sent out to counsel, because we are looking for every avenue. We understand that there are waivers, but there might be a way around one of these waivers, depending on the circumstances of the loss, right? And as Kevin spoke to negligence and things of that nature, it all depends on that contract that is in place, how it is interpreted and things of that nature. So these are the reasons why we do assign sub-row counsel. Sub-row counsel. And usually, you know, with these builders risk policies, usually what we see are large losses. So usually the financial impact warrants doing at least some investigation and trying to find, you know, ways around any contractual limitations. And Billy, if you'd like to open your mic, if there's any additional questions, I open your mic for you. And we have a question from Gina. How does that work with photo share when you have multiple companies involved in the layer of the builder's risk policy? How does what work? I think Gina was referring to the earlier question. Yeah. So was that in regards to- The AIA documents superseding the sub-row? Was that possible? Gina- An AIA contract and waivers would apply to all of the market members equally. So it really gets back to, you know, that coordination among the underwriters and having that discussion with counsel. Yeah, and you may have a different perception or legal argument than the lead. And that's where Fiona talked about, you know, stepping up and asking those questions of counsel or possibly even getting a second opinion from another attorney. You don't necessarily have to go with what the lead or another market member has determined. You know, if they say that, no, we have no chance because of these waivers, you may want to get a second opinion from another one market member may want to get an opinion from another attorney. Yeah, and that's fine. I mean, that can be done. But I mean, in many of these cases, what we often find is we do have our market calls. Everyone is involved in the call. We're proactive. So we know exactly every step of the way where we stand. And if a recommendation is being made to close, we usually have buy-in, right? But of course, it has to be sound, it has to be vetted. I mean, you'll never really find anyone that is handling subrogation attorneys, well, subrogation specialists anyway, on behalf of their insurance, on behalf of their employer. You never really find us closing a case out unless it's completely validated. But to Kevin's point though, if we disagree, definitely vet it with another law firm. You're more than entitled to do so. Excellent, and Jane, perfect. Thank you so much, excellent. And Jane, I did put your microphone if you want to open it, the follow-up. I just want to make sure you're clear on the answers. And also a reminder to our attendees, we have the QR code up there. If anybody wants to share feedback, we would definitely look forward to that. Now we have a question from Casey. Standard bill disrisk wording, at least in the ENS space, is that the blanket additional insurance wording says every contractor and every subcontractor of every tier, how would you be able to subrogate against any sub with that wording? I think that's what Billy kind of asked. I assume you'd want, yeah. So I think that has been answered. Yeah, that's been answered. It's difficult, but again, I don't like ruling it out day one just based on the contract. I at least want to get the facts of the loss and see if there are some ways around it. And that's where getting counsel involved. They have vast resources in terms of case history, case law. And they can find cases that may support avoiding that waiver or invalidating the waiver. It's difficult and it's uncommon, but it's possible. So it's worth the effort. Yeah, and let's keep in mind, we still have an investigation that can speak to all of the negligence theories that Kevin raised. So you might have those waivers in there, but there might be a negligence component. It may be a faulty product, something that we're not aware of. So looking at the contract is one aspect of evaluating. You do have to obviously investigate the loss to the extent that you can to determine when do you stop the bleeding. Is this sufficient for us to just say, OK, maybe we cannot identify what the cause of loss was. Or we can identify what the cause of loss is. And there are no other avenues. And yes, this waiver still appears to hold through. We're still going to file a claim against that party nevertheless. And we are going to have counsel take a look to see, are we missing something? Yeah, and as an example, say for example, you've got a clear case where the contractor drove a piece of equipment into the building causing damage. That sounds like it's purely negligence on the part of the contractor or subcontractor who probably is covered under the policy. And he was probably immune from subrogation. However, that manufacturer of that product, did they provide training materials? Did they design the equipment properly? Did they provide the training materials to the party that was using it? You could be going after a third party that has nothing actually to do with this project or is not listed under the OSIP, but who does bear some liability. And if you're in a jurisdiction where there's joint and several liability, comparative fault, even if you could get somebody in for 10% or 20% fault, then that's money. So really, sometimes you have to get really creative and dig really deeply to find out, are there other parties that may have contributed to the loss, even if it seems like a covered party was at fault? Excellent. And we have a question from Deborah. What is your opinion on the success of subrogating a blanket additional insureds, ATIMA, in the absence of an underlying construction contract waiver? I don't think I fully understood that question. I don't get it. I'll read it one more time. What is your opinion? What is ATIMA? I'm not sure what that is. We have too many acronyms in the insurance world. And I've heard that, but I can't, as it may appear, as interests may appear. Let me see if I can, Deborah, if you wanted to open your microphone, I'll maybe give you that ability. I think it says, as their interests may appear. Yeah, and that sounds to me kind of like the other questions we've had, where typically, you do have all parties are being named and are immune. But it depends on the facts of the loss and whether other parties were potentially involved. If that's not the intention of the question, yeah, if that wasn't the intention of the question, you want to follow up with us offline, that's fine, too. Yeah, I'm happy to talk about any of this stuff offline with anybody. Can you hear me? Yes. OK, so I think the question is, we effectively see in a lot of our contracts where, similarly to the vein of some of the other questions, contractors, subs of all tiers, architects, et cetera, may be blanket additional insurance on the policy. But then there's an additional caveat to say, only as their interests may appear. And the intent of that, from underwriting to my understanding, is, well, let's say you have the electrical sub. Then their interest is only in the electrical work. But they could still be segregated if their work product then damaged other trades that were not a part of their particular subcontract. And my experience has been that it's largely state-driven. So I was curious on your opinion of success when you do see that language. Yeah, I can't say from my, I haven't had a lot of experience where that has come up. So I can't really speak to the history of success. That's one where I'd want to have counsel involved. And I would want to get their opinion. But Fiona, it looks like you've got something. I mean, it's definitely an interesting question. And if I understood it, I mean, yeah, we could go after that electrical, you know, that party that's involved. But in the specific way she described it, I believe that we would have an opportunity to recover against them. But we would have to have counsel review the wording and the language. But as she explained it, I would agree that we could go after that potential electrical contractor or whomever it is. Yeah, I agree. Again, my bottom line with all of these is typically it's at least worth looking into, especially if you've got a large loss. At a minimum, you'll reach out to several counsel, give them the facts of what happened, give them a copy of the contract, and let them opine. Usually there will be no charge to you for that. So it's worth getting that opinion. Excellent. And we have, well, maybe we'll take two more questions, considering the time. Can you speak to the fact that these can take years, and normally you'd get very small settlement. Also, in certain cases, state by state, there may be coverage that are not qualified for subrogation. In other words, time element. Yep. That really is, that's where the cost-benefit analysis comes in. Time value of money. That's a big thing that I always look at. We had some cases when Fiona and I were at Allianz, where we ultimately sold some of our recovery claims to a hedge fund, because they were offering us money up front, and we expected these cases were going to take several years to play out, and the outcome was uncertain. So that's something you always have to evaluate, is what is your recovery potential, and what is the time frame for getting that resolved? You know, I do like to say that a closed claim is a good claim. You know, if you've got a claim with very low recovery potential, or limitations that are going to limit the amount you can recover, I would try and get those settled up front. While you can save expenses and save time, and time is money. Every minute that your subro specialist has to put into pursuing and following a case costs you money. If you think it's going to be a small, or likely a small recovery in the end, settle it today, get it done, and move on to the next claim. I don't disagree with that, Kevin. But conversely, we've all had large losses that have been open for several years. And they've gone through the court system, they've gone through mediations, they've gone through Deere's liability, and it appears to be small. But somehow or the other, those are some of the cases that do come out of the woodworks, and we do end up, maybe we're not even handling the file, or we've inherited the file. And those are files that actually throw a couple million dollars at us, when we least expect it. I mean, I think that's in everyone's pending, right? It's those cases that we have, that we do not expect, maybe even a sizable recovery, but something changes. You know, things happen. I've been a part of claims where, you know, I thought I would recover several million dollars, and I ended up getting $25,000 years after. Or I thought I'd be getting a small share, and I ended up getting several million dollars. So facts change, investigations change, attorneys that are handling these cases change, arguments are made that we didn't anticipate, you know, at the beginning of the claim five years ago, or when the other subrogation handler had the case. So I would say, you know, if it's clear cut, and everyone agrees, yes, time value for money. But I'm also a huge advocate for rolling with it in certain cases. I mean, just recently, not necessarily a builder's risk case, but we've gotten large recoveries on cases that have been with us for over seven years. So... But just watch your expenses, because the last thing you want to do is pour money into something. You know, I had one, I had an equipment fire claim. And we did, the expert and the attorney kept telling us, oh, you've got a great case, you've got a great case. We kept putting money into it. And before we knew it, we had, you know, we were close to the full value of the claim, just in expense costs. And that's the worst thing you want to happen is at the end of the day, you say, well, yeah, we got a recovery, but it cost us, you know, more than we received. So you've got to just be mindful of expenses if you have a case like that, and make sure that you can appropriately manage it. Yeah. And you've heard us go on and on about expenses and costs, right? And it's a fine line. We do have to balance what we see, the contractual wording, but we do have to act in the utmost good faith and investigate everything, leave no stone uncovered, because let's keep in mind, right, some of our insurers, they have their own attorneys as well, right? So we want to act prudently, investigate, leave no stone unturned, and seek the best outcome, even if there are waivers. It doesn't mean that you should close the file out, right? We know that there's a slim chance that maybe we can get around some of those waivers, depending on the circumstances of the loss. And that's what we're here to do, because our organizations do pay a tremendous amount of money out on builders' risk cases. And I've heard that sometimes, you know, echoed throughout claims departments. And I'm like, hey, you know, no one ever closes out that claim. They do refer it to subrogation. What does the saying, how does the saying go? When in doubt, refer to subrogation. Let us take over, and let's try to take a look at it and have the adequate powers to be, like attorneys take a look at those cases. Excellent. Thank you for that. And I just want to remind, once again, we have a link to the survey in the chat. We also have the QR code to the chat. Fiona and Kevin are very happy to come back and present part two of this. So let us know what you'd like to see. Looking forward to your feedback. And here's the last question. We're going to get it done in one, two minutes, because we are at time. So the question from Casey. If the plumber has gross negligence, like not connecting a four-inch pipe together on the fourth floor of a building, could you ever subrogate with that AI wording? It depends. It does. We will leave it at that. It depends on the state, and it depends on the specific details. I would say that it's unlikely, but I never say never. Yeah. And that's why we do need, with counsel, we do need to do a second presentation next year. But this time with counsel. Yeah, if people want it, we can do a deep dive into the legal issues that we encounter, and we can have case studies and really kind of flesh that out more. Excellent. Well, this has been fascinating. It's a great topic, and by all the questions, obviously, there's a lot of interest. Thank you so much, Fiona and Kevin, for sharing your expertise with us, and also for our attendees. Thank you for your questions and your participation. So Fiona and Kevin, ready to announce who you think was the most slash best engaged? Okay. We had a lot of... I think it was, was it Pierre that had the first ones and had like three or four in a row? And Casey. Pierre. And Casey. Pierre Prevost, you are the proud winner of the engagement award, so you will receive a $25 Amazon e-gift card. There you go. Thank you, Eileen, for making that decision for us. Yeah. Yes. Yes. And thank you to everyone for attending today. Looking forward to your feedback, and especially Kevin and Fiona, once again. Thank you so much. This is wonderful. Oh, thank you. Thanks everybody for attending. Thank you. Bye.

Inland Marine Underwriters Association

webinar

subrogation

builder's risk insurance

Eileen Monreale

Fiona Dujourn

Kevin DeGarmo

insurance industry

claims adjusters

contractual obligations

AIA contracts

legal coordination

risk management