Preparing for catastrophes and disasters 03 October 2013 Andi Vossberg.
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Transcript of Preparing for catastrophes and disasters 03 October 2013 Andi Vossberg.
Preparing for catastrophes and disasters
03 October 2013Andi Vossberg
2
1. Individuals
2. Insurance Industry
3. Government / Municipalities
4. Other parties
View of different stakeholders
3
1. Property damage
2. Injuries
3. Fatalities
4. Looting
Individuals
View of different stakeholders
4
1. Large number of claims
2. Many major claims
3. Sound coordination of claims personal
4. Shortage of loss adjusters
5. Too many claims assigned to an insufficient number
of adjusters
Insurance Industry - 1 -
View of different stakeholders
5
6. Late appointment of adjusters with
international experience
7. Infrastructure
8. Little or no cooperation from the insured’s
in many cases
9. Generous advance payments without
supporting documents
10.Clients damage vs. own damage
Insurance Industry - 2 -
View of different stakeholders
6
1. First aid
2. Denial of access
Government / Municipalities
View of different stakeholders
7
1. Telecommunications
2. Public utilities
3. Hospitals
4. Aid organizations
5. Hotel facilities
Other parties
View of different stakeholders
8
• Day / night
• Weekend / working days
• Summer / winter
• Economical cycle > boom / recession
• Election years
Date of the event
Timing of event influencing the loss amount
9
• Ensure efficiency in claims management
• Avoid organizational shortfalls
• Avoid loss of reputation
• Reduce overall cost
Proactive planning
10
• Proactive or preventive actions
• Measures during catastrophe and its immediate aftermath
• Loss mitigation, repair, restoration, subsequent procedures
in the medium term
Designing countermeasures
1. Review corporate catastrophe plan
Establish employee internal teams and duties
Identify and prepare alternate place to conduct business
Data base back ups
Review employee personal contingency plans
Repeated awareness & training of contingency plans
2. Secure portfolio information
List of probable loss by CRESTA Zone, Geo coded information even better
Aggregates by risk
Insurers view:
11
First steps before the occurrence
3. Local and international adjuster teams selection
Establish rates
Secure agreements and service providers contracts
Prepare uniformed forms and instructions as to the construction costs and
unitary prices
Secure list of approved experts
Inspect high exposure risks
Insurers view - continued:
12
First steps before the occurrence
13
Cooperation with loss adjuster and insurer to optimize reporting
Smaller losses: Bordereaux showing loss amount on single risk basis
Large single losses: Reinsurers are interested in detailed reports.
Complex and facultative losses: General involvement of leading reinsurer
to be initiated by the cedents
The reinsurer
First steps before the occurrence
14
No. Insurer Insurer Reinsurer AdjusterVolum. anal.
expert
Accounting expert
Restoration company
Insured
1 Identify Cat scenarios and areas of risks that may be affected X X X X
2 Elaborate own business continuity plan X X
3 Review general policy terms X ●
4 Issue policies and properly inform insureds on scope of cover and limits X
5 Inspect the risks and draw up loss prevention recommendations X ● X
6 Agree collaboration with adjusters, experts and restoration companies X X X X X X
7 Obtain individual contingency plans for adjusters, experts and restoration companies X X X X X
8 Obtain individual contingency plans from adjusters, experts and restoration companies X X X
9 Inform loss adjusters and accounting experts on scope of covers and limits X X X
10 Agree on method of reporting X X X X
11 Prepare check lists X X
12 Establish funds for dealing with losses immediately X X
13Annual meeting: to update contingency plans with all parties involved (for hurricane scenarios, before the start of the hurricane season)
X X X
X = involved party; ● = Optional
Preparation phase– coordination of activities between parties involved
15
No. Insurer Insurer Reinsurer AdjusterVolum. anal.
expert
Accounting expert
Restoration company
Insured
1Organize an emergency meeting to coordinate concrete activities when a hurricane is imminent or in the immediate aftermath of a cat event
X ● X X X X
2 Quantification of staff needs X X X X X
3 Assign specific works and tasks X X X X X
4 Instruct/engage adjusters, experts and restoration companies X ● X X X X
5 Inform again loss adjusters and accounting experts on scope of covers and limits X X X
6 Coordinate travel to the disaster area X X X
7 Coordinate lodging and service offices X X X X
8Purchase / hire of generating equipment and fuel, including operating and servicing personnel
X X X
9 Coordinate mobilisation of restoration equipment and materials X
10 Mobilisation to the disaster area X X X X
11 Obtain accommodation / food / drink in the disaster area X X X
12 Mobilisation of equipment and material X X
13 Set up provisional / temporary offices, workshops for restoration work X X X
14 Hire sheds to carry out the restoration work and keep the salvaged goods X X X
15 Inspect the risks affected / agree on measures to minimise damage X ● X X X X
16 Start restoration work asap X X X
17 Estimate of total damage X X X X
X = involved party; ● = Optional
Actions following the NatCat occurrence coordination of activities between parties involved
16
No. Insurer Insurer Reinsurer AdjusterVolum. anal.
expert
Accounting expert
Restoration company
Insured
1Carry out survey, evaluation and documentation of individual losses together with the Insured’s representatives
X ● X X X X
2 Clearly separate direct damage from improvements or normal maintenance works X X X X
3 Draw up correct basis for unit prices and labour X X X
4 Estimate real cost of indemnifiable repairs and fix property damage reserves X X X
5 Coordinate repair and replacement work X X
6 Obtain financial data on the operation affected X X X
7 Estimate repair times and establish LOP reserves X X X
8 Recommend advanced payments where appropriate X
9 Advanced payments where appropriate X X
10 Verify appropriate execution of repair / replacement work affected X X X X
11 Obtain and verify invoices for repair / replacement X X
12 Quantification and sale of salvage X X
13 Final report on property damage X
14 Obtain accounting data on all of the property affected X X X
15 Verify that operations are resumed after completion of repairs
16 Final indemnity payment X
17 Final indemnity payment X X
18Draw up recommendations to avoid similar / identical losses in the future or at least minimize them as far as possible
X X X
X = involved party; ● = Optional
Loss Adjusting– coordination of activities between parties involved
Chile in the immediate aftermath of the event
18
Weakness of the infrastructure in the affected area aggravated the situation
- Utilities (electricity, water, telephones/communication network incl. cell phones)
interrupted for several days
- Damaged roads, fallen bridges, i.e. difficult access
- Hotel capacities largely reduced
Curfew limited the mobility during the initial weeks
Employees of industrial companies did not go to work for several days in order to
stay with their families
Lack of manpower and of construction material retarded the beginning of loss
minimisation measures and of repair works
Chile – The immediate aftermath of the event
19
Chilean law requests:
Loss adjustment only through locally authorised loss adjusting companies
Full settlement of claims affecting private lines within 3 months of the loss
notification
Chile – The immediate aftermath of the event
20
Challenges:
Mass losses at private buildings/apartments (mortgage insurance)
- Multiple loss notifications from the insured, the broker or the bank
- One building/several owners/different insurance policies
- Difficulties to decide on demolition vs. repair
Large industrial risks: Lack of clarity of certain insurance policies, i.e. on sums
insured for business interruption
Uncertainties regarding preliminary loss estimates, in particular with business
interruption claims
“Public adjusters” who work for the insured and raise expectation of higher
indemnifications
Chile – The immediate aftermath of the event
21
Role of loss adjusters
Number of loss notifications superseded by far the initially available capacity of
local loss adjusters
Large complex losses required help of affiliated international organisations,
including forensic accountant experts in BI
4 – 6 weeks needed to drastically increase office space, manpower and
equipment . Beginning of efficient work only then
Large number of claims made it unable to comply with 3 months settlement
request. This timeframe had to be extended
By the end of 2010 vast majority of householders’ claims were settled
22
Total 31 Aug. 2010 28 Feb. 2011
Paid indemnification: USD 2.190 bn USD 4.656 bn
Commercial / Industrial 31 Aug. 2010 28 Feb. 2011
Number of claims notifications: 31,866 31,811
Liquidated claims: 16,970 28,294
Closed claims (paid or to be paid): 8,793 15,666
Not indemnifiable (e.g. below deductibles): 7,298 12,152
Paid indemnification: USD 3.365 bn
Homeowners 31 Aug. 2010 28 Feb. 2011
Number of claims notifications: 190,199 189,491
Liquidated claims: 156,242 188,478
Closed claims (paid or to be paid): 105,694 125,904
Not indemnifiable (e.g. below deductibles): 46,336 62,574
Paid indemnification: USD 1.291 bn
Statistics
Stipulations in Chile
Deductibles are regulated for residential and commercial risks as follows:
• Residential risks: 1% of sum insured, min. UF 25 (approx. USD 1.000)
• Commercial risks: 2% of sum insured, min. UF 50 (approx. USD 2.000)
Consequences
• Homeowners complaint against deductibles
• Political Issue. Superindendence asked insurance industry to withdraw
deductibles
• Insurance industry did not accept withdrawal and explained why
deductibles are an absolute need in Nat Cat
23
Mass claims – impact of deductibles
0 25 50 750
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
Claims below deductible (22.000)
Number of Claims vs. Deductible [UF]
Mass Claims – Residential Risks Portfolio (example)Number of Claims
Deductible [UF]
Num
ber
of c
laim
s
UF 1 = approx. USD 40
24
25
0 25 50 750
20,000,000
40,000,000
60,000,000
80,000,000
100,000,000
120,000,000
140,000,000
Deductible [UF]
Indemnity 100% [USD] vs Deductible [UF]
UF 1 = approx. USD 40
Claims below deductible (ca. USD 28 m)
Mass Claims – Residential Risks Portfolio (example)Amount of Indemnity
THANK YOU VERY MUCHFOR YOUR ATTENTION.
Andi Vossberg
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