Catastrophic Losses in the Chemical Industry and Subrogation – the Expert’s Perspective

Devasting fires and explosions can wreak havoc on a chemical processing plant. After the smoke settles and the site is safely secured, engineers begin the process of investigating the what, why, and how surrounding the incident. While many engineers may be familiar with incident investigation and associated root cause analyses, in parallel the legal and insurance industry evaluate another very important aspect of the loss – its potential for subrogation. After the loss, the facility’s insurance carrier begins the complicated process of managing the facility’s insurance claim process. While the insurance carrier provides reimbursement to the policy holder for expenses covered by the policy, the insurer has an opportunity to recover those payments if the loss is the fault of a third-party (i.e., a company that is not the insurance policy holder (first-party), or the insurance company (second-party)). If a third-party is responsible for the loss, such as negligence of a contractor performing work on site, then the insurance company can step into the shoes of their insured and initiate litigation against the liable third-party for the financial damage the insurance company has suffered. Understanding the potential for claim recovery through subrogation can become a key consideration of the investigation and legal teams in the aftermath of the incident. This presentation will review key aspects of the subrogation process, how they intersect within the broader context of incident investigation, and how engineers and attorneys can work together to efficiency navigate the process at the request of the insurance carrier.