Mactavish has called for the CEOs of Zurich and Liberty to personally oversee a £30m disputed claim that it says, if paid, could save the company.
Following the breakdown of emergency talks with the government, British Steel announced this morning that it would enter insolvency, an official receiver from the government’s Insolvency Service taking control of the company.
British Steel had initially been asking for £75m in emergency support from the government, though the request was later revised down to £30m.
Its collapse would put 5000 UK jobs directly at risk, in additional to 20,000 further down its supply chain.
The unresolved claim relates to an incident in June 2017 that damaged a blast furnace at the company’s steelworks in Scunthorpe. As a result operations were shut down for several weeks.
Beside Zurich and Liberty, the claim also involves Aviva, RSA, Aspen, AIG, Amlin and Scor.
British Steel is also seeking further damages for the slow response to and incomplete investigation of the claim.
Bruce Hepburn, Mactavish CEO, told Post: “There’s potentially an additional claim here, because if it is concluded that the insurance claim was contributory to the demise of British Steel then there is an additional claim for damages.
“It will be one of the first major damages for late payment claims in the UK. It will be absolutely transformational.”
Policyholders have been able to claim damages from insurers for the late payment of claims since the Enterprise Act 2016 came into effect in May 2017.
After an initial investigation by the insurers lasted nine months, the claim was rejected in May 2018, at which point British Steel hired Mactavish to review the investigation.
Mactavish said that through working with technical specialists, forensic accountants and insurance lawyers, it has identified “major deficiencies” with the investigation, and that the insurers should settle the claim in full.
British Steel submitted an updated claim in March this year, to which insurers have yet to respond according to Mactavish.
A Zurich spokesperson said: “We are currently in the process of working with British Steel to progress a complex property claim. We are reviewing all the evidence related to this claim, including additional information that has only recently been provided, and remain focused on resolving it as quickly as possible.”
A spokesperson for Liberty Specialty Markets said: “We are working closely with British Steel to review a property claim in the light of further information recently provided by management. We look forward to resolving this matter promptly.”
Hepburn said: “From our review, we feel that Zurich and Liberty’s investigation was incomplete and wrong.
“It did not interview many of the relevant staff or even identify the blast furnace blowout as the key cause of the claim, which we believe categorically establishes cover under the terms and conditions of the policy.
“Given British Steel’s current situation, settlement of this claim would have made a major contribution to securing the survival of this British institution that had finally been returned to profitability as a viable producer of high-end steel products.”
British Steel is the successor to Tata Steel, which was bought for £1 by Greybull Capital in 2016. It was rebranded and returned to profit in 2017.
Hepburn continued: “This claim should really have been settled long before administration was looming, but given the current urgency then the CEOs of both Zurich and Liberty should be overseeing this claim personally to ensure they provide an answer to British Steel’s revised claim immediately.
“They have been investigating for the best part of two years and have had the latest data pack addressing their questions for over two months now. This is more than long enough and in the circumstances this delay could prove to be the decisive factor in forcing British Steel under.”
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