In the wake of some devastating natural disasters in the first quarter of the year, insurance companies have been busy responding to claims and helping businesses get back on their feet.
Natural disaster: Cyclone Yasi
Lead insurer: Lumley Insurance
Client: Dunk Island and Bedarra holiday resorts, Northern Queensland
As Cyclone Yasi hurtled westward toward sunny northern Queensland on 3 February, the rest of Australia watched stunned as chaotic scenes unfolded.
Dunk Island, a playground for young holidaygoers, and super-posh resort Bedarra, both owned by affiliates of the Geneva-based McCall MacBain Foundation, were trashed. Cabanas and beach-front villas caved in, palm trees lay strewn across both islands and the gymnasium and other facilities were showered with glass.
During the next six months, the only people working up a sweat on these islands will be builders, specialist contractors and insurance assessors working hard to pump life and cash back into the tropical paradise.
Fortunately, for the well insured, the process of getting back to business does not involve too many stiff drinks. Here is a snapshot of the process.
The backgroundDunk Island and Bedarra resorts are four kilometres off Mission Beach. Both resorts are just a few kilometres away from each other. They were bought 18 months ago and the insurance policy with Lumley Insurance, as the lead insurer, was negotiated at the time of purchase. The previous owners used a different insurer. The resorts are under the same policy but essentially distinct. Jardine Lloyd Thompson is the broker.
Dunk Island caters for a range of budgets and has accommodation for several hundred. Access is via ferry, water taxi and its own fully sealed airstrip. It offers a range of activities, including restaurants, bars, water sports, golf, horseriding, archery, and health spas, and accommodation ranges from standard units to luxury beach-front villas. Staff members at Dunk are housed in a separate village of several unit blocks and mess hall. Bedarra has all-inclusive nightly rate with roughly 16 individual villas. They include spas or plunge pools, private beach, small restaurant and the famous ‘Help Yourself' Bedarra Bar.
What happened when Yasi struck?
Customers and some staff were evacuated on the news that the cyclone was heading toward Mission Beach.
The eye of Cyclone Yasi caused extensive damage to both island resorts. Jetties were ruined and access to Bedarra lost totally. Power and mobile phone cover was lost and only one satellite phone was available. There was severe damage to Dunk, while the extent of damage to Bedarra, where remaining staff members were, was unknown. Most buildings were affected, some severely.
Immediate issues
• Loss of power, water, sewerage
• Access to and from the island due todamaged jetty and airfield
• Communication
• Potential mould growth due tohumidity and lack of air conditioning
• Exposure to the elements
• Feeding and sustaining staff on the island
• Safety measures such as fallingstructures, debris, sewerage/ sanitation issues
• Immediate debris clearance
• Farm animals need to be looked after
• Potential loss of trained and casual staff
• Minimal assistance from SES, army and other clear up crews due to access.
Leaping into action
The company’s insurance broker, Bob Patruno of JLT, was able to travel to Dunk Island a couple of days after the cyclone. He was able to spend time with LMI Group and the Assessors to work with both the insured and the insurer. The insurer discussed the damage with the insured, and spoke with the Claims Preparer about the issues that would require investigation. Specialists were appointed to prepare reports, which were supplied to the insured and the Claims Preparer.
Insurance cover
There were a number of insurance factors to be worked through within the policy wording, and preliminary investigations were commenced. Insurers advised the insured of the policy coverand any restrictions that may apply.
Generally with a large claim, a Claims Preparer gets involved and in this case, Steve Smith from LMI Group was appointed by the owners of Bedarra and Dunk resorts, and liaised with Lumley Insurance over management of the claim. Lumley Insurance appointed Tony Morgan to lead a loss adjusting team from Cunningham Lindsey on the claim.
Morgan said there were enough contractors keen to be involved in the project. “We have processes in place to ensure that costs are appropriate, bearing in mind the logistical challenges involved in what is effectively a remote location,” he says.
“Immediate priorities have been to make safe, mitigate the loss and commence the removal of debris while detailed scopes of work are being drawn up. This work is well under way. The owners took appropriate steps to prepare for the cyclone and ensure the safety of staff.”
Lumley Insurance’s Property Claims Manager, Nigel Day, who himself is a Chartered Loss Adjuster, said the process of getting back to business for both islands would take many months.
“It’s a combined effort and we're all sharing ideas and working together to help the insured resume their business operations as quickly as possible,” he said.
“It’s certainly a large claim, and given it's a remote island resort you can imagine the complexity of the logistics involved in rebuilding. At Lumley we see it as a chance to really showcase our claims capabilities, and one of the things we're working hard to ensure is that communication channels with the insured remain open and the relationship is constructive. We're working with the insured to deal with each issue as soon as it arises in an open forum, and this alleviates any angst and uncertainty. We've developed a good working relationship which is critical given the scale of this loss.”
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