It was nothing less than a scene of mass devastation. The town of Tully, North Queensland, suffered more than any other that fell in Cyclone Yasi’s inexorable path in February.
With 90 per cent of the buildings of Tully's main street suffering from extensive damage and up to a third of the town's homes having at least their roofs torn away, personal stories of tragedy were easy to come by. But the damage done to the Tully Sugar Mill by the cyclone's 300 km/hour winds threatened to have the greatest effect on the region's fortunes. Nearly 40 onsite residential properties were damaged, as was the tramway infrastructure required to transport crops to the mill. Most importantly, the mill's cooling towers, so essential to the manufacturing process, had been torn down.
The Tully Sugar Mill is more than just a business. As well as being the town's single largest employer, more than 200 farmers in the district rely on the mill for the processing of their crop. And with the harvest little more than four months away, the fortunes of a whole community were in jeopardy if rebuilding work could not be completed in time.
The mill, owned by Tully Sugar Limited (TSL), is insured by Vero and on 7 February, just five days after the cyclone struck the town, the insurer’s Event Response Team arrived in Cairns to begin their operational response.
This story has a happy ending: Tully Sugar Mill went back into production ahead of schedule, with Vero's exclusive Lend Lease project management model playing an integral part in the successful outcome. Insurance & Risk Professional caught up with some of the key figures from the insurance response.
THE BROKER - Paul Simmons, Aon Risk Services Australia
"When we arrived at the scene to assess the damage, I was actually quite surprised to see that the mill had stood up to the cyclone as well as it had.
"I'm aware of category 3 or 4 cyclones passing over mills in the past, but this was a category 5 cyclone passing directly over the site, so this was probably as bad as it could get for a sugar mill and it withstood it pretty well.
"There were a lot of roofs off buildings, the mill's cooling towers were down and there were some concerns about the tramway infrastructure used to get the crops to the mill. But I think that, overall, the damage looked worse than it was.
"My main role at this stage was to support and communicate with the client. Although the sugar production season was only four months away, I think we were all pretty confident that the mill would be up and running in time.
"The sugar mill industry as a whole is very industrious and the response from the client, TSL, was typical of that. By the time we arrived they had already put in a lot of thought and work into their response and into the ways in which we could help them. That was tremendously helpful.
"The successful completion of the repair works is definitely a good news story for the insurance industry."
THE UNDERWRITER - Peter Stone, Qld Underwriting Manager, Vero Corporate Property
"What surprised me most when first visiting the site wasn't the damage to the mill, but the amount of activity taking place. There were a lot of people on the ground and a lot of things were being done. "TSL were very proactive. By the time we arrived, they already had a list of damages and ideas for how we could help them. That made our job much easier.
"From the point of view of the mill, the damage to the cooling towers was the most urgent issue to address. If we weren't able to get those repaired quickly, the mill wouldn't be able to crush cane. From an underwriting perspective, if we didn't get it running the business interruption claim would have been much more substantial. There were no major issues with the claim. With some of the older buildings we had to negotiate different rebuilding strategies, but that's not uncommon for a claim like this.
"Overall, it was good news from an underwriting point of view, but what was most positive was the big effort we made from a relationship point of view. We knew these clients and their business needs. They knew who their points of contact were and who to turn to for advice. That really is the critical part of the whole story: realistic plans were put forward by the client and when that happens, outcomes are easier to achieve."
THE COMMERCIAL ASSESSING MANAGER - Trevor Bettenay, Senior Leader, Assessing & Supplier Performance, Suncorp
"From an operational standpoint, we were very pleased that our Lend Lease model worked so effectively. This model was put into place in late 2008. Prior to that, Suncorp had been involved with Lend Lease in 2006 to assist with reconstruction after Cyclone Larry. That was for personal lines claims, but we quickly identified that the normal work they were involved in was commercial construction.
"We now have a team of professional project managers we can call on all over Australia whose role it is to manage quality and compliance of rebuilding in a timely manner. We were able to get members of that team up to Tully within two weeks of the cyclone hitting to talk to TSL about the level of support we could offer them.
"This was important for TSL, because their management team have day jobs and managing mill repairs is not part of those jobs. The project manager, Wendy Eales, then began work to develop a program and confirm the milestones that needed to be achieved to allow the mill to go into production by June.
"We worked to the milestones that TSL had given us for the time when they normally went into production in June to the 'drop dead date', which would have been 1 September. We achieved a date of 27 June, which was two weeks after the normal starting date, but well in line with the best-case scenario plans in place.
"I think it's essential for major insurers to have that sort of proven plan of action. We now are confident that we have a model that is market competitive and able to respond to the pressures that we face from an underwriting perspective. With Aon, we have proved that we're able to respond to large-scale catastrophes in a timely manner to meet customer needs, while remaining market competitive.
"The loss-adjusting community has traditionally lacked the ability or scale to manage everything end to end, from the claim to repairs. The Lend Lease model has proven its worth and the industry is now following us in this project management approach."
HOW THE TULLY CASE UNFOLDED
You can view a series of videos showing the immediate aftermath, claim progress and resolution of the Tully Sugar Mill case on Vero's website.
Part 1: Click here.
Part 2: Click here.
Part 3: Click here.
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