How insurance industry responds after a super typhoon

By Francisco D. Papa Jr.

JUST as we were in such high spirits with the active cases of Covid-19 at their lowest and seemingly under control, nature has once again dealt the Philippines a serious blow. Super Typhoon "Odette" (international name "Rai") entered the country on Dec. 18, 2021 and ravaged southern Philippines, inflicting heavy damage on Cebu, Palawan and Roxas City and decimating the islands of Siargao and Dinagat. The typhoon made landfall multiple times and displaced hundreds of thousands from their homes, killing more than 300 and affecting millions of Filipinos. The scale of the losses as of this writing is still difficult to ascertain as many areas are still cut off from any communication and remain isolated. The Category 5 typhoon could not have struck at the worst time with only a few more days before the Christmas holidays.

After seeing the initial images of the devastation in the wake of Typhoon "Odette" in the local news, grim memories of Typhoon "Yolanda" (international name: "Haiyan"), the Category 5 typhoon that also hit the Visayas region almost 10 years ago, comes to mind. Insurance companies then mobilized and dispatched their claims representatives and adjusters, albeit at great struggle, to the hardest-hit cities like Tacloban.

It appears that the insurance industry will have to go the extra mile once more to help the victims of Typhoon Odette and step up the processing of insurance claims of those fortunate enough to carry typhoon insurance. For these individuals and establishments, the burden to recover will be eased.

Typhoon insurance is an add-on coverage to a fire insurance policy. In practice, it is taken together with flood insurance and other "acts of nature" like earthquakes, volcanic eruption and other convulsions of nature. Therefore, for typhoon losses to be covered, the insured need to pay additional premiums to cover this added exposure. It is not uncommon for insurance policies to sometimes miss out on the inclusion of typhoon and acts of nature cover because the basic fire insurance policy actually excludes convulsions of nature. Nevertheless, once the extra premiums are paid, the basic fire policy may be extended to include these perils.

Typhoon insurance claims are relatively more difficult to process compared to motor car claims, which is pretty straightforward. There are many documents required to substantiate a typhoon claim. It is a much longer process and an insurance company normally has to appoint an independent insurance adjuster to help them with the documentation and the ascertainment of the actual loss. It is for this reason that catastrophic events like Ondoy, Yolanda and Odette always take a herculean effort from the insurance industry to service the many claims that follow.

Fortunately, in the case of Typhoon Odette, the office of the Insurance Commissioner is front and center as Commissioner Dennis Funa has issued IC Circular 2021-71 to help manage typhoon-related claims. In the circular, the commission has requested for the relaxation of existing "company procedures and mechanisms" to facilitate claims processing, as well as policies related to claims notification and completion of claims requirements. This can mean that Odette victims may dispense with traditional documentary proofs of the damage and professional adjustment.

It is now up to the insurance companies to do their part and deliver on their promise to their insured to settle claims the quickest way possible. After a destructive typhoon, insurance companies employ different strategies to manage the expected increase in typhoon claims that will be filed by their insured. Insurers, of course, would like to be able to attend to each claim with dispatch. So, insurers sometimes enter into special agreements with insurance adjusters and salvors containing pre-arranged engagements after a disastrous typhoon. This is done to facilitate response time to their clients. In the aftermath of a typhoon, it is the practice for insurers to communicate with their insured and insurance intermediaries to inquire if their clients' properties sustained typhoon damage. Insurance agents and brokers, being representatives of insurers and clients, have a key role to play in a claim as well. Familiarity with the terms and conditions of the insurance policy along with the insured properties may do much in expediting the claims process.

"All hands on deck" is the call to help the typhoon victims... and surely the insurance industry is there to answer!

Francisco D. Papa Jr. is an AB Economics graduate of the Ateneo de Manila University and has more than 30 years of experience in the nonlife insurance sector.

Source: manilatimes.net