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"Company that sold Clerys made €7.7 million in flood damage claim"

  • 15-08-2015 11:01pm
    #1
    [Deleted User]
    Posts: 0 ✭


    This seems hard to believe if, as we were told in school, you can't make a profit from insurance (The 'Indemnity' principle of insurance):

    "FINANCIAL ACCOUNTS FOR the property company that sold Clerys department store have revealed it made a profit of more than €7.7 million because of flood damage in the building two years ago..."

    Company that sold Clerys made €7.7 million in flood damage claim

    Is it actually possible to make a 'profit' from an insurance claim? Or is this just a carelessly-written article?


Comments

  • #2
    Aka Ishur
    Registered Users, Registered Users 2 Posts: 740 ✭✭✭Aka Ishur


    [Deleted User] wrote: »
    This seems hard to believe if, as we were told in school, you can't make a profit from insurance (The 'Indemnity' principle of insurance):

    "FINANCIAL ACCOUNTS FOR the property company that sold Clerys department store have revealed it made a profit of more than €7.7 million because of flood damage in the building two years ago..."

    Company that sold Clerys made €7.7 million in flood damage claim

    Is it actually possible to make a 'profit' from an insurance claim? Or is this just a carelessly-written article?

    Imo impossible to say with out the details but it does say that it was over the book value. I would think the insurance contract could include profits, bonus clauses any number of things.


  • #3
    The J Stands for Jay
    Registered Users, Registered Users 2 Posts: 5,877 ✭✭✭The J Stands for Jay


    [Deleted User] wrote: »
    Or is this just a carelessly-written article?

    Journal.ie then it's probably carelessly written.


  • #4
    [Deleted User]
    Posts: 0 ✭ [Deleted User]


    McGaggs wrote: »
    Journal.ie then it's probably carelessly written.

    Same story is now available on The Irish Times:

    Clerys property company made €7.7m over flood damage


  • #5
    amdublin
    Registered Users, Registered Users 2 Posts: 20,653 ✭✭✭✭amdublin


    I just don't understand how this can happen???


  • #6
    michael999999
    Banned (with Prison Access) Posts: 7,771 ✭✭✭michael999999


    amdublin wrote: »
    I just don't understand how this can happen???

    Its Ireland, unfortunately these things seem to happen a lot!


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  • #7
    AlexisM
    Registered Users, Registered Users 2 Posts: 250 ✭✭AlexisM


    amdublin wrote: »
    I just don't understand how this can happen???
    The article references book value so it could be something to do with the way stock is valued on a store's balance sheet.

    Store buys goods with retail value of €100 for €50.

    Store expects to sell half of the goods at full price (value €50) and half of the goods at half price (in the sales, so expected value is €25) - total book value is €75.

    Flood damages stock - store claims for full retail value of €100 - realising an additional profit that they would otherwise have been unlikely to get.

    But on paper the insurance payout is not 'wrong' - the goods had a retail value of €100 so that's what the store was given - even though store economics mean that you never sell all of your goods at full retail price.

    This is probably a simplification of what went on but I think it's quite common for an insurance event to be a good thing for a store - they get insurance value greater than their expected sale value.

    I remember several years ago (could be 20-25), one of the big stores (Switzers maybe) had a bumper year when all their stock got damaged but they weren't closed for that long - so they got a full season's income from the insurers (with the super profit as above) - plus they managed to restock a lot of goods so they had their normal profit too.


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