5 insurance firms abandon steel plant
Industrialist Abeto Uy has found out that trusting his steel manufacturing business to insurance companies is ironically a risky affair.
Abeto, whose steel companies pioneered several manufacturing technologies in the Philippines, has sued five insurance firms for refusing to pay his group’s claim, after a fire destroyed the cold mill plant of unit Steel Corporation of the Philippines in Munting Tubig, Balayan, Batangas province on Dec. 7, 2009.
Charged before a regional trial court of Makati City were Mapfre Insular Insurance Corp., Philippine Charter Insurance Corp. (now known as Charter Ping An insurance Corp.), Asia Insurance Philippines Corp., New India Assurance Co. Ltd. and Malayan Insurance Co. Inc.
Abeto, chairman of the Philsteel Group of Companies, could not comprehend the actuations of the insurance companies, despite an independent investigation confirming no foul play on the fire incident. His insurers are respected in the industry and have built a reputation of trust.
Malayan Insurance, for one, is a member of the Yuchengco Group of Companies, while Mafre Insular counts Mapfre of Spain and Insular Life Assurance Co. Ltd. of the Philippines as its owners.
Court documents showed a fire razed the SCP plant in 2009, destroying the cold mill equipment worth $33.8 million. The accident also caused business interruption losses amounting to $8 million. The Balayan cold mill plant, along with the rest of its manufacturing facility, was valued at $216 million.
Adjusters Crawford & Company Philippines Inc., BA Insight International Inc., with international forensic experts Forensic Services Inc., International Recovery Services Inc., and Standard Insurance Co., acting as part of the panel of insurers, conducted an ocular inspection at the fire scene and damaged cold rolling mill and recognized SCP’s claims.
SCP actually requested six insurance companies, including Standard Insurance, to either pay for the burned cold rolling mill or replace it. The six did not heed SCP’s request, forcing Abeto to originally file a case in Batangas City.
Withn the case being heard in Batangas City, Standard Insurance of investment banker and sportsman Ernesto “Judes” Echauz, SCP’s sixth insurer, attested to the fire accident and paid the company the amount of $5.025 million in May of 2014, representing 12 percent of the pooled policy.
The five other insurers refused to pay their share of $29.8 million plus business interruption of $8 million, prompting SCP to file another case in Makati.
Paging the Insurance Commission
SCP has also filed a complaint against the five insurance firms with the Insurance Commission in May for the continued non-payment of the balance of its claims.
The Insurance Commissioner can impose sanctions against the five that have not honored their commitment to pay the claim for damages incurred by SCP. He can suspend or revoke the licenses of erring companies found to have violated the Insurance Code.
Abeto, meanwhile, is confident he will win his case in court after Standard Insurance bolstered his claim. The long delay in the payment of insurance or rebuilding of the cold steel mill facility in Balayan town has displaced a number of workers and their families and halted the business operations of SCP.
SCP is a pioneering registered company with the Board of Investments and the only steel firmthat qualified under Republic Act No. 7103, or the Iron & Steel Industry Act.
It is one of the companies owned by Philsteel Holdings Corp., which produces cold rolled steel, the raw material used for innovative technology for galvanization, called Galvalume, that applies a protective zinc and aluminum coating to steel sheets, to prevent rusting and extend their life.
The holding company also owns Philippine Steel Coating Corp., Philmetal Products Inc., Steelframe Philippines Inc. and Philsteel Ventures Inc.
Abeto is credited with contributing to the development and modernization of the local iron and steel industry. He formed SCP in response to the government’s call for a private sector-led integration of the middle to downstream sector of the local steel industry, one of the linchpins of industrialization.