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Advisen Front Page News - Friday, October 13, 2017

   
Handling with care: A view of the claims experience after Hurricane Maria

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Handling with care: A view of the claims experience after Hurricane Maria

By Erin Ayers, Advisen

26 days, four major catastrophes. Now, a long road to recovery rises in front of Puerto Rico, Texas, Mexico, and many Caribbean islands, and the insurance industry will play a key role in rebuilding. FM Global, the world’s largest property insurer, recently talked with Advisen about the process of beginning to assess the damage and handling the claims.

With much of the infrastructure in Puerto Rico destroyed by the 155 mile-per-hour winds of Maria, getting claims handlers on the ground wasn’t an immediate option for the insurer, but by Oct. 3, FM Global had established a base of operations in San Juan.

“We think that that’s a pretty remarkable achievement. Maria really created a logistical nightmare,” said Doug Backes, FM Global’s vice president of claims. “You can’t just get on a plane and go to the island.”

Instead, FM Global chartered a plane to transport adjusters to the island, joining resident field engineers who live and work on Puerto Rico.

“Once we’re there, that’s 10 percent of the battle,” said Backes. Leading up to Maria’s Sept. 20 landfall, FM Global’s field engineers had been making “canvassing” visits to clients, working with them to prepare for the onslaught of the storm.

Once on the ground, field adjusters – all employees of FM Global rather than independent adjusters – faced fuel shortages, transportation difficulties, challenges connecting with clients, and a damaged hotel as its base of operations. However, the team quickly embarked on its task of visiting every loss location.

“We’re not leaving until the losses are stabilized,” said Backes. The goal will be to get every client as near to pre-loss state as possible, including quickly securing property to avoid looting or additional damage. Even sites that have not experienced much damage may be in for long closures, though, leading to business interruption losses.

Backes explained that FM Global hopes that much of the damage could be tempered by extensive investment in loss prevention leading up to Maria.

“Our clients have spent a lot of money to withstand these types of winds,” he said. “We’re really cautiously optimistic.”

The rebuilding process will also include efforts to ensure that facilities remain up to all standards, according to Backes. Wind damage and flooding can compromise other significant protections, such as sprinkler systems.

“Time will tell how the reconstruction period will be impacted because of all the infrastructure damage on the island.”

Backes offered a few tips for minimizing damage and easing the restoration process, including separating wet items or products from dry items, as well as wiping down equipment or spraying it with oil to prevent rusting.

“A lot of this is common sense, but unless you’ve gone through it, it might not come to mind,” he said. “You have to establish some sense of environmental control.”

Having pre-arranged services with restoration firms can be critical as well – with Harvey in Texas and Irma swiping Florida and the Caribbean, professional restorers are in short supply.

Signs of progress are showing, however, Backes reported, with a few businesses opened up in the Puerto Rican capital.

“When the fast food restaurants are getting back in business, it’s a sign things are starting to come back.”

Though 2017 might seem like a worst-case scenario, the insurance industry has been through bigger cat years. The year 2011 saw dozens of catastrophic events, including a Japan earthquake and flooding all over the world. The next year included Superstorm Sandy, a major event on its own for the Northeast.

“This is really what we’re in business for. We’re in a volatile business, and that’s what our clients rely on,” said Backes. “It’s a crazy series of events that have occurred in 26 days, but it’s in no way unprecedented.”

Editor Erin Ayers can be reached at eayers@advisen.com.

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