When Hurricane Ivan hit the Caribbean, the population was already prepared for the worst. But Helen Groom reveals in this four-page report that the islands and the insurance industry faced a huge problem
No escape: a loss adjuster's struggle in the devastation
' Frank DeLessio arrived on Grand Cayman a day and a half after Hurricane Ivan hit and thought there had been a political coup.
"We really didn't get a full picture of the devastation when we flew in. It was a shock after we landed. It was almost like rebels had overrun the place," says the technical director of loss adjuster Axis.
"I have lived through eight or nine major hurricanes and this was the first time I felt so isolated. The amount of devastation in such a combined area and the total inability to escape was unique. There was nowhere to go to escape the problem. It was the worst I've ever seen."
The insurance industry was shut down for the first few days. And for the first 10 days it was like being in a commune.
"People really helped each other. We called it 'Survivor Cayman' like the television show.
I put a stop on anybody coming in because there was nothing they could do," says DeLessio.
There was no sanitation, no electricity and no shops to buy food. "We were boiling water on the beach with a camp fire, and praying for rain so that we could wash in fresh water," says DeLessio.
DeLessio managed to ship in some generators and get a few cars. "But we had to use tour buses as taxis as there weren't enough, and we had to queue for fuel. It was a unique experience.
"We had no contact with the outside world. We found out that the outside world wasn't hearing a lot of information about how bad it was."
By the second week after Ivan there were about 15 adjusters on the island, and by the third around 20. "We got close to 30 adjusters at our peak time. This was the last place to be hit by a hurricane during the season so people were hard to come by."
Much of DeLessio's job in the first weeks was about organising things. "We had to get an office, furniture, support staff, and computer equipment. Setting up an operation like this is a very large cash drain, and it's a major effort."
And he had to be something of an agony uncle. "The insureds were happy just to talk to someone. We worked from sun up to sun down. It was very invigorating, a very adrenaline filled couple of weeks."
He had a large portfolio from the three main insurers on the island. "We estimated we would have about 2,000 claims to deal with, from the very small to over $100m (£53m)."
He is still getting new files. "But the number of claims we're dealing with now is starting to plateau. The smaller claims have been settled, and the larger more complicated ones are at full throttle. It will be at least June before the office on Cayman is scaled back." IT
Settling the pay-outs
Jamaica has seen many whirlwind bowlers on its cricket pitches, but lessons learned from the 1988 Hurricane Gilbert made sure the West Indies wasn't stumped by Hurricane Ivan.
Karen Bhoorasingh, general manager for operations of the West Indies Alliance Insurance Company (WIA) says: "The whole of the country was more prepared for Ivan than for Gilbert. The government reacted to the threat and we had so much more warning."
Ivan passed Jamaica on the Friday, and WIA was open for business on the Monday. In line with other Caribbean insurers, it developed a catastrophe plan which was put in place once the island was on alert. This meant loss adjusters were notified and the whole process was "manageable".
"We said to brokers call us before contacting loss adjusters, so we had a handle on what has happening and had an idea of what the loss was before we appointed loss adjusters."
The first week of the disaster was about management. "Customers need to know we have appointed a loss adjuster.
"By the second week they need to have been visited by a loss adjuster. This gives them someone to contact and they can see that something is being done.
"The next stage is an initial assessment, then interim payments, and then a final settlement."
Following the rush of claims in the first few days following Ivan, the rate of notifications tailed off within the week.
Bhoorasingh says she was even able to visit brokers during this time, a reflection perhaps of the lessons learned from Gilbert.
By the end of January, 70% of the claims arising from Ivan had been settled. "The remaining 30% are the difficult ones," says Bhoorasingh.
"This part is the technical interpretation of the policy wording and the people skills of the claims handlers and underwriters. It can make the claim settlement very amicable, or cause it to go very badly."
WIA had, at the end of January, processed more than 450 claims, all dealt with by a team of six people. Approximately 90% of this commercial book is property.
The demands of reinsurers has also changed. "Reinsurers were on the phone wanting loss estimates the next day," she says.
"Last year was the worst renewal season for reinsurance. I think that there are a few reinsurers who found that there could be fall-out from a hurricane and some of them are reassessing.
"They are not sure of their roles here anymore. Their traditional role was to protect the insurer, but now they want to be involved in the claims process as well."
Catastrophes get me going
Helen Groom talks to former Axis chairman David Waller
David Waller enthuses about the hurricanes that brought devastation.
The former Axis chairman says: "As a loss adjuster, something like this really gets the adrenaline going."
"Catastrophes are good for business. They bring in a lot of work, but in some ways they are a distraction, because you have to focus everyone on them. Carefully laid plans for the year tend to go astray."
He notes that in the days before Hurricane Ivan hit, those working in Jamaica were expecting an island-wide hit.
Devastation was expected to be similar to that caused by Hurricane Gilbert in 1988.
In preparation, Axis set up four offices across the Island. The main base at Kingston, with offices in Mandeville, Montego Bay and Negril - one of the main resorts on the north west coast of Jamaica.
A quick judgment had to be made on the number of people needed to cope with the aftermath of the hurricane. But the situation was made difficult by the fact that this was a multi-island hit, says Waller.
In the end, Ivan grazed the coast of Jamaica, causing less damage than had been feared. The storm hit on a weekend, and the first adjusters were on site on Monday.
"We had to assess the claims which needed the most urgent attention. That's not necessarily the biggest claims. It's just that some people can't cope and you need to be there to give them help," says Waller.
Each claim necessitates a different approach. Smaller claims are handled by a single adjuster, and for the larger resorts or hotel chains, a team of adjusters works with a risk manager.
"It's the luck of the draw whether your property gets damaged or not," he adds. A relaxed attitude to winds of more than 140 mph battering your house.
But Waller has lived through four hurricanes, so is in a position to know better than most.