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Incremental Costs for Supplier of Parts to Aerospace Industry

We were instructed by Insurers to assess the incremental costs incurred by an OEM supplier to the aerospace industry.

Following a fire at its manufacturing facilities in South America, the Insured was required to ramp up production in France and Germany to ensure no manufacturing delays were suffered by customers, which would result in financial penalties for the Insured. In order to mitigate potential losses, the Insured hired additional plant and machinery, relocated staff and increased production hours in Europe.

Whilst potential losses were mitigated by the Insured, we were required to verify that the costs were incremental, were incurred solely as a result of the incident and for the sole purposes of avoiding losses in the indemnity period. We were required to ascertain that the additional staffing costs complied with the relevant laws in South America and Europe and that claimed production inefficiencies resulted in actual incremental costs.

 

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