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Saturday, June 3, 2017

Chennai Silks fire ~ what the media states on Insurance claim !!

The busiest place at all times, T Nagar, the textile hub is bellowing smoke ~ a huge building that would not miss the eyes as one descends on the flyover, is standing precariously amidst reports that it is getting pulled down with jaw crushers.  When fire strikes, lives are suddenly turned around. Often, the hardest part is knowing where to begin and who to contact.  Those property owners find themselves brought down to knees not knowing what to do, what is going to happen, amidst a flurry of Qs from all sides and floating rumours of every aspect – as you suddenly find technical experts everywhere, especially on social media.   I have not seen an Insurance Official speaking to media on a claim  or media giving so much of importance on Insurance – see it now

Though not following it too closely, today saw a couple of videos – first one on a Tamil TV showing Insurance Officials talk about the loss and the way forward another too talked about the insurance aspects and how fast the compensation could be coming that was on a site with ‘.tk’ extention – which is the domain ID of Tokelau, a territory of New Zealand located in the South Pacific. It is stated that Tokelau allows any individual to register domain names and as the restrictions are much less, many clamour to have their domain registration there.

Here below is what is read in various newspapers – specifically on what Insurance is and what Insurance does to this loss in particular !

What was once one of the tallest buildings in Chennai’s North Usman Road – the commercial hub of the city- is now a smouldering ruin of iron and steel. The fire that was raging in the Chennai Silks building for 38 hours was finally put out by firefighters at around 8.30pm on Thursday. The seven-storey building is a shell of what it once was. Four floors caved in, ravaged by the fire, while the fa├žade has been destroyed by flames, smoke and firefighters, who used every possible means to contain the blaze. What remains of the Chennai Silks showroom stands dangerously on this arterial, crowded stretch, that is home to silk sarees, and gold jewellery. 

The demolition process began on Friday morning, once the state government gave the nod to demolishing the Chennai Silks building, which had violated several norms. The process which will be spread out over the course of three days, is being carried out by the Chennai Corporation, Public Works Department, technical experts from IIT and Parveen Traders, a private entity. From Thursday evening, more than 20 trucks of debris were brought to the site in T Nagar to form a bed of debris, to create the ramp.
The News reports that - New India Assurance Company Ltd will soon appoint assessors to determine the loss suffered by The Chennai Silks showroom that was gutted in a fire in Chennai, said a senior insurance official. The multi-storied textile showroom is covered under a package policy for shops, the official said preferring anonymity. The policy covers stocks, building, cash-in-till, sign boards and other assets for damage due to fire and other perils. "The fire was put out today (Thursday). The surveyors will be appointed soon," the official told IANS. The Coimbatore region of New India Assurance Co Ltd bagged the insurance for the showroom for the first time. Earlier it was insured with National Insurance Company.

The loss is estimated to run into several crore of rupees as stocks, building and other assets have been destroyed. "We understand the jewellery has been safeguarded by moving it to a different place. To that extent our loss will be less," the official added. The Chennai Silks group's jewellery outlet was also located in the fire-hit building. According to sources, all branches of Chennai Silks have been covered for an insurance sum of Rs 250 crore.  Another official, from National Insurance Company, said that legal violations would be dealt by with the course of law but insurance claims will not be affected.

The Hindu Business Line reports that :   Chennai Silks’ fire insurance cover is expected to help recoup a significant portion of the losses, according to the company’s insurer. “Chennai Silks is reported to have taken insurance cover to the tune of Rs. 40 crore for the property that went up in flames after a fire broke out on Wednesday morning,” according to a senior official of New India Assurance Company, with which Chennai Silks has insured its Chennai store and other shops. The seven-storey textile-cum-jewellery showroom, located in the busy commercial hub of the city, T Nagar, was also facing charges over alleged violation of building norms.  This is will be the first big claim of Chennai Silks for losses due to fire in the property. It had earlier claimed loss of Rs. 1.5 crore for damage to its property in Trichy some years ago.

“The claim process will take six months to one year for such big claims as various parameters have to be assessed before arriving at the final settlement,” said the official. “Nowadays, insurance companies educate the people on property insurance and make sure that commercial establishments take adequate cover against fire and other disasters. Banks also encourage customers who take large loans to get adequate property insurance cover,” he added.

The New Indian Express in its report :  The structure was deemed illegal and was on the verge of being partially demolished before the building owner moved the courts to avoid the move. But that may have little bearing when the insurance claim is settled for the loss of building and stock in it due to the fire, said sources in the industry.

“The building has been paying tax to the city corporation, water tax and all other taxes which a normal building would do. So where is the question of illegality when the government bodies are giving it legal status? We will take that also into account,” said sources from the insurer, New India Assurance, regarding structure’s legality. However, a final call on this is with the surveyor. There is another view from within that the surveyor may not take into account only four floors that have been constructed legally. Sources told Express that the insurance company has deputed a team of officials at the site, and the head office has been intimated about developments.
Officials refused to provide details about stock that has been insured, maintaining that the surveyor has to assess all records and check documents before settling claims. The entire process, they added, was in the preliminary stages. The retail brand is likely to have insured buildings as per market value under reinstatement and not as per book value, that is the purchase price of the property, they added.

Deccan chronicle’s report stated that Insurers are to assess damage in a week. New India Insurance Co. Ltd has insured Chennai Silks’ damaged building and stocks for a sum of Rs 60 crore and it will take about a week to assess the damage for claims, senior officials told Deccan Chronicle. New India Insurance, a public sector general insurance company, took over the insurance premium of Chennai Silks only last year, before which, the insurance cover was with National Insurance, known sources told DC.

According to sources, all branches of Chennai Silks have been covered for an insurance sum of Rs 250 crore. “Due to the fire that continued for over two days, it would be difficult to get a clear picture of the damage and to settle the claims just now. We are not aware of the extent of the damage,” said an official of New India Insurance.

Despite numerous people raising questions over giving insurance cover to Chennai Silks despite numerous violations, officials from insurance companies said that settling claims is purely subject to insurance policy details submitted by the owner. For getting damages settled through claims, violations would not be a botheration,  officials from the insurance sector said, adding that the policy proposal submitted to the insurer is signed by the property owner in ‘utmost good faith.’ This means that everything filled in the proposal form is taken to be true.

“Getting the claims settled would be an easy process. It would take a while before insurance company sends surveyors to evaluate the losses and the damage,” said an employee of an insurance employees union. The sole catch for not getting claims settled, in the case of violation in terms of extra floors, is that the owner would not get claims for the stocks on the floors other than that mentioned in the proposal. “The proposal needs a clear mention of the number of floors in the building and the stock on each floor. If that has been mentioned, then getting the insurance claimed settled is not a problem. Even hazardous substances like diesel, kerosene needed for operations of the building are covered under the claims,” the officer said.

Another official, from National Insurance Company, said that legal violations would be dealt by with the course of law but insurance claims will not be affected. Officials added that Chennai Silks did not have a public liability policy in place, which means that any other building or establishment in the vicinity that suffered damages will not be liable for legal settlement of claims through insurer of the former.

That is only a collation of what has appeared in the Press, there of course are loose end and liberal interpretations of how Insurance Policy operates;  how it provides indemnity, and how sooner !!! 

More to follow !
With regards – S. Sampathkumar

3rd June 2017.

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