An Explosive Claim

Dan Mueller sighed and poured himself an iced tumbler of Old Buzzard bourbon and water.

The long-time risk manager for the Turkee Jerkee snack factory in Monongahela, a small town southeast of Pittsburgh, had just gotten back from a trip to see his underwriters in Boston, New York and Chicago.

From the deck that overlooked his backyard, he could see the small circles as trout kissed the surface of the Youghiogheny River, sucking in the last midges of autumn as they drifted among the fallen leaves. He was grateful to be back in his home in Northern Appalachia.

“You can have the big cities,” he thought to himself. “I’ll take this any day.”

At his side during those renewals was Joe Turnbull, a regional vice president for one of the largest brokerages in the country. Joe had been Dan’s risk management partner for the past 30 years.

Joe and Dan were long-time golfing buddies and served on the board of the Elizabeth Country Club: From Dan’s perspective, they made a good business team. They were from the same generation and did things the same way: Old school was good school in their view.

Their record keeping was old school too. No fancy software programs for them. They knew how to read a policy and where to find one when they needed it, in their filing cabinets where they had always been.

The property/casualty insurance program they had put together for the Turkee Jerkee plant in 1981 had remained pretty much unchanged in recent years, except for some increases in limits and the addition of new carriers, as the business grew past the $5 million in annual revenue threshold. Joe assured Dan the language in the new carriers’ policies matched up well with the existing language, they had no gaps in coverage to worry about.

The Turkee Jerkee plant had a good safety record and the company’s 2012 property/casualty renewals had resulted in small decreases in premium on the key elements of their coverage, their all-risk property coverage and their comprehensive general liability coverage.

That was the way Dan Mueller’s work world looked as he drank his bourbon.

Five months later, Dan heard the sirens of the local volunteer firefighting companies spring to life in the early morning hours. His neighbor was a volunteer fireman, and Dan looked out his drive to see him run to his SUV, flip on his blue volunteer firefighter’s cab light and speed off into the darkness.

Dan didn’t know that it was his company that his neighbor was trying to save. That knowledge came in the form of a phone call 20 minutes later from the company’s vice president of administration.

“There’s been an explosion at the plant, we need you here immediately!” she said, fighting to make herself heard against the cacophony of the firefighter’s sirens in the background.

When Dan reached the plant, the vice president told him that three of the overnight maintenance crew had been killed instantly by an explosion which had ripped out the back end of the facility. Two other workers, both with more than 20 years on the job, had been life-flighted to the James R. Reynolds Memorial Hospital in Greensburg with second and third degree burns over more than half of their bodies.

Complicating matters, she said, was that the neighboring water treatment plant had suffered significant damage.

Eric Fierstone, the company’s CFO, was huddled with the son of the company founder in the shadows cast by emergency response vehicle spotlights.

“The whole back of the plant is gone,” Eric told Dan, who at this point was slack-jawed with shock.

“Both production lines were hit,” Eric said. “I don’t know when we come back from this,” he said.

Eric hadn’t meant it that way, but the news of his co-workers deaths, and that last sentence in particular, hit Dan hard. It was Dan’s job to make sure that insurance payments got the plant back up as soon as possible. So he had better get started doing his job.

Dan called Joe Turnbull but the call went to straight to voicemail.

“Damn it Joe, wake up,” Dan said.

As Dan waited for Joe to respond, he did more mental sifting. He had a $9 million primary layer on his property all-risk and another $5 million when he looked at his excess layers.

General liability and employers’ liability combined was $15 million with a $10 million excess layer.

There were endorsements on the primary and excess property layers that should cover the damage to the water treatment plant.

“Might just make it,” he thought.

He hated to think that way with three people dead, but that was doing his job too.

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(The Scenario continues on page 2)