A Case Study on Transformer Fire Claim Resolution After a High Voltage Surge

Project Summary:

Subject: Special Case Study on Claims
Client: A leading pan-India plywood/MDF & decorative panel manufacturer
Type of Claim: Fire
Claimed Amount: Rs. 30,97,729/-
Final Settlement Amount: Rs.13,01,000/-
Items Affected: Damage to two Transformers (Make: THERMAX) due to fire
Industry: Plywood/Wood-Based Panel Manufacturer

Reason for Deviation

As per the surveyor’s initial observations, only one transformer was found to be severely damaged, while the other had sustained partial loss. The claim was initially been handled by a different intermediary and major critical aspects of the claim was not addressed properly including the cause of loss (RCA report) which had to be sorted out after the claim got shifted to Salasar through proper mandate received from the client.

Brief Details of the Claim

During routine operation, when the ESP process was running smoothly and the Energy Plant was functioning at full capacity, a sudden explosion occurred at the HT Transformer of Field 1 due to an accidental high-voltage surge through the incoming power line. The intense sparking generated an electric arc, leading to a short circuit and subsequent fire at the transformer’s output section and adjoining areas including the second transformer.

Major Challenges Associated With the Claim

1. The client intended to replace both the transformers with new units, whereas the surveyor was reluctant to consider both as total loss. Surveyor was also reluctant to consider damage to the second transformer which according to them has not been generated out of the same incidence. Additionally, the initial estimate of Rs.19.38 lakhs was later revised upward to Rs.35 lakhs.

2. The client claimed 10,000 kgs of MS plates, which could not be technically justified by them at the initial stage.

3. The surveyor misplaced the entire set of documents twice, allegedly due to improper file handling by staff who left the organisation without proper handover.

4. A significant disparity existed in the salvage value of the affected transformers - Rs.60/kg as per the client versus Rs.600/kg as estimated by the surveyor.

Actions Taken by Salasar to Address the Issues

1. A comprehensive technical justification supporting the consideration of both transformers as total loss was prepared on behalf of the OEM and shared with the client for ratification. This was eventually accepted by the surveyor.

2. Although the client had initially claimed a large quantity of MS plates, it was demonstrated that the weight of old plates removed after prolonged exposure could not be fully recovered, particularly considering the deterioration in atmospheric conditions. The surveyor ultimately accepted this explanation.

3. As the surveyor had misplaced the documents, it became a challenging task for us to re-compile the entire set once again, particularly since some documents had been submitted earlier through the earlier intermediary while others were routed directly through us. It is pertinent to mention that the policy was arranged through our intermediary, to whom an initial set of documents had already been provided. Nevertheless, through continuous follow-up with the factory personnel, we were able to successfully collate all required documents and resubmit the complete set to the surveyor.

4. Regarding the anomaly in salvage value, it was clarified to the surveyor that the salvage buyer had physically inspected the materials and submitted quotes considering the copper elements in the transformers. Although the surveyor initially agreed, the insurer later raised concerns about non-compliance with CVC guidelines (as salvage exceeded Rs.5 lakhs). After persistent follow-up with the Insurance company, the matter was resolved, and the insurer agreed to restrict the salvage value to Rs.7.89 lakhs instead of Rs.8.84 lakhs which they intended to deduct from assessed loss amount.

Final Conclusion

Despite several hurdles and complications, though the claim amount was not large, the matter was effectively handled by Salasar. The claim was ultimately settled amicably by the insurer, reflecting diligent follow-up and systematic resolution of each concern.