Communication and information key to mitigating property damage losses

For claims adjusters, good communication and providing timely information are keys to preventing minor property damage losses from turning into major catastrophes.
The subject “Little, Loss? Total Loss?” was the theme of the 42nd annual CICMA/CIAA joint conference held in Toronto, Ontario on Feb. 3.
James Giffen of Crawford Canada said it is important for adjusters arrive on the scene of a damage loss in time to get to know the contractors and make appropriate plans for remediation.
He observed that contractors are sometimes performing clean-up operations on a property before the adjuster even arrives. This puts the adjuster in a weak position when it comes to communicating to the contractors the type of remediation that should be done, how it should be done and the true cost of the remediation for the client insurers.
Adjusters should not only get to know the contractors on the job, but they should also make sure that the insured is aware of what the contractors need as well.
For example, Giffen recalled the remediation of a commercial water damage claim, in which blowers were plugged in to dry out the affected area and thus prevent the water from turning into mould. The problem was, the building security wasn’t aware of this, and so each night the guards turned off electricity in the building zone where the blowers were located, following their standard operating procedures.
Making sure all parties involved in the claim — insurers, brokers, contractors and insureds — is critical to loss mitigation, said Phil Moore, vice president of accounts at Disaster Kleenup Canada. He told the story of a burst water pipe in one condo unit that prompted the owner to call for the aid of an adjuster.
The adjuster told the property to turn off the water shut-off valve. But when the adjuster later arrived at the scene, he found out then that the property owner didn’t know the location of the water shut-off valve. Suddenly, the one-unit insurance claim turned into a 36-unit insurance claim, Moore noted.
In communicating with claimants, adjusters have to be careful that the feeling they are right doesn’t prevent them from settling a claim at an early stage or delay the remediation efforts.
Joseph Turcotte, a claims manager from FM Global, recalled one water damage claim that he estimated would cost Cdn$600,000. However, his client, the insurer, warned him early that the claim engaged complicated building code issues.
Turcotte said he balked when he first heard from the insured that the building needed to meet the new building code standards: the insured was suggesting the entire roof and foundations of the building had to be replaced and a new sprinkler system be installed. The proposed repairs were to cost Cdn$60 million.
Turcotte felt strongly that legislation did not require the insured to build back up to contemporary building code standards. The whole issue ended up in the courts for months and the ultimate settlement was significant. “The lawyers got rich,” Turcotte noted.
Chris Giffin, president of Giffin Koerth engineering, noted that excellent communication can even save a client costs. They key to break down “silos” of information, he said.
For example, Giffin’s firm was asked to help drain off water from a golf course in the Caribbean. The course had been subjected to 170 inches of rain during a period in 2007 that saw an average of only 36 inches of rain. The course was entirely flooded.
Breaking down the “silo” of information around the resort’s finances, Giffin’s engineering firm learned the resort spent $1.8 million each year to irrigate the course. By installing a pipe and pump system in the drainage pond on the fourth hole of the course, the firm was not only able to drain the excess water, but they were able to lower the resort’s irrigation costs for the year down to between Cdn$300,000 and Cdn$700,000.