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Case
Study III (Salvage Optimization- The power of competition): Sugar
damaged due to Inundation at a warehouse under Standard Fire and
Special Perils Policy and declared as total loss by Adjusters.
Facts
of the case:
• As
reported to us, 28000 bags of 100 kg each got
water damaged due to
Inundation in warehouse.
•
Adjusters had pronounced the material as total loss
as the two lower
most rows kept submerged in water
for more than two weeks.
•
Insurers chose to avail our salvage valuation
optimization service.
•
Adjusters suggested around 10% to 15% recovery
• Claim
Value was around INR 4.25 Crore
Our
Response:
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Step 1: |
The
salvage market maker immediately, based on details furnished by the
Insurers and Adjusters, displayed the salvage on our website. |
|
Step 2: |
It was
planned as to in which areas the said material would find market and
those areas were specifically targeted throughout U.P. and Haryana. |
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Step 3: |
Our team
visited the site of loss. |
The
Result:
-
Based
on our market feedback, we suggested 63% recovery for sugar that was
declared as ‘Total Loss’;
-
The
buyer was procured from Panipat (Haryana) through viral marketing
technique;
-
When the
news of 63% salvage realization reached Adjusters, they inquired
from the buyer already with them who earlier suggested 10% to 15%
recovery.
-
The same
buyer who earlier suggested 10% to 15% recovery now showed the
audacity to suggest 65% recovery.
-
We
suggested online auction to Insurers and got permission.
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Both the
buyers came on the auction platform without knowing each other and
within 20 minutes the recovery further shot up to 87%!
FINAL
RESULT:
• The
salvage was sold to the buyer procured by us
and partly to the other
buyer.
• During
our supervision of actual lifting of the sugar
salvage, total 4000
bags were found short and actual
lifting was effected for only
around 24000 bags as
against 28000 bags originally intimated.
The
above case study gives a classic example of how an environment of
competition can get the price shoot up in seller’s favor. Although
everyone including us was very happy after having achieved 63%
recovery, but we never knew that still there was so much hidden
margin in the deal, which came out only when we let the market
dynamics play their role and let them determine the price as per law
of economics without human interference.
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