The Stanley furniture story: the team approach to success.
It is not a pleasant experience to see the future transformed in a day--especially when the change results from a significant loss.
Stanley Furniture manufactures wooden furniture in the upper-medium price range for every room in the home. Operating in a competitive market, we rely heavily on our brand's reputation: a dedication to quality and the ability to quickly fill orders. Success in the latter is critical.
In February of 1993, on the eve of going public, a fire interrupted operations at Stanley Furniture's production facility in Stanleytown, Virginia. The initial estimate of the time necessary to rebuild was twelve months--a length of downtime that would challenge us to serve our customers and could have led to a loss in market share.
Fortunately, that loss did not occur. Our management team met immediately after the fire to develop a plan to mitigate our loss and ensure comprehensive financial recovery from our insurance carrier. As with other major financial transactions, we knew that it would take a team of experienced professionals working together for us to achieve our goals. We identified certain executives internally to focus on the claim recovery, while others addressed loss mitigation. Some of us handled both aspects of the project. We sought outside expertise and hired the best insurance consultants and independent claim accountants to work with us throughout this process.
We also established a temporary manufacturing site next to one of our plants, which allowed us to produce and continue to sell key products and greatly mitigate our loss. We estimated and reviewed our business interruption claim monthly so our carrier and adjuster could validate the claim and submit cash advances regularly in order to maintain critical cash flow. Through regular team meetings we met our common goal of resolving differences and limiting the loss. We resolved a claim in excess of $10 million dollars in a fair and reasonable period of time.
Despite an original estimate that it would take a full year to restore full operations, Stanley Furniture rebuilt the Stanleytown facility in less than twelve months.
All of us were challenged by the amount of time we spent dealing with the claim, working it in tandem with our normal duties. But the Stanley family and its advisers pulled together. More than ten years later, our company and its people look back on that incident as proof that business interruption insurance truly can and does work. Having the right insurer and working as a team with that insurer helped us turn around after the fire and have one of our best years ever.
I hope no reader of this book suffers a loss like we did. But accidents happen, and losses do occur. My message is that business interruption and property insurance works. Claims demand that a company's management team collaborate with its carrier to properly manage the claim process. Creating and working with the right team means the difference between success and failure.
Doug Payne Chief Financial Officer and Executive Vice President Stanley Furniture Company
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|Publication:||The Business Interruption Book: Coverage, Claims and Recovery|
|Date:||Jan 1, 2004|
|Next Article:||Insuring changing exposures: the evolution of business interruption coverage.|