Experiences from Puerto Rico: Claims still being adjusted

“On 20 September 2017, Hurricane Maria, then a category 4 storm, struck Puerto Rico, crossing the island from south-east to north-west. The wind field was so large that it covered almost the entire island. Losses were huge. The damage was greater as a result of Hurricane Irma, which, though not hitting Puerto Rico directly, had shortly before brought two days of extreme rainfall to the island, leaving the ground soaked.

When I arrived in the capital, San Juan, on 16 April, it was still impossible not to see the damage caused. Destruction of the electricity network, which is almost exclusively dependent on overhead transmission lines, had delayed the reconstruction of buildings and infrastructure. Whilst around 90 percent of the power grid was again operational in April, in December – some three months after the devastating hurricane – only little more than half of customers had had their power supply restored.

This not only made reconstruction more difficult, but also posed a problem for the adjustment of claims because the long delay in carrying out repairs resulted in additional consequential damage, for example due to water penetration and moisture. On top of that, there was a lack of awareness about the services that the so-called “restoration companies” could provide to limit losses, by recovering and cleaning the equipment that had been affected by water or humidity. One of these companies arrived in the country shortly after the hurricane with their equipment for water damage restoration, only to have their generators confiscated at the airport for other purposes.

If that was not enough, insurers were confronted with administrative challenges and restrictions imposed by the competent authorities. Puerto Rico does not have a sufficient number of loss adjusters to cope for an exceptional event such as a natural catastrophe. Consequently, experts from the USA were to have been brought in to assist. However, as hurricanes Harvey and Irma had raged in the USA shortly before, loss adjusters in North America were almost fully occupied in the areas affected, and were not available to provide support in Puerto Rico. The search for the urgently needed experts took weeks, due in part to the fact that foreign loss adjusters not registered in Puerto Rico were not initially granted work permits. Only from the end of 2017 did the authorities issue individual work permits for a limited period of six months.

Furthermore, the permitted period for claims settlements was not adapted to the exceptional circumstances following Maria, as would have been expected when a regular year’s worth of claims is produced by one single catastrophic event. Settling and paying the huge volume of claims within 90 days proved to be unrealistic for the insurance companies. To escape fines, they have been closing some claims before the deadline and reopening them afterwards. By the end of January 2018, some 230,000 claims had been filed, which might not correspond to the actual number of losses.

Despite the local challenges, positive feedback was received from one of the largest insurance companies in Puerto Rico. Representatives from the company had taken part in Munich Re’s “EQ Simulation” workshop in 2011, at which we had simulated an earthquake. The company was able to profit from the knowledge it had gained and respond to massive claims quickly and efficiently, in spite of all the difficulties it faced.”

Unlike people in Cuba and the Dominican Republic, in Puerto Rico we had long been spared the damage caused by severe hurricanes. The last two to hit the country were Hurricane Hugo in 1989 and Hurricane Georges in 1998, both category 3 hurricanes and hence weaker than Maria. It was as far as 85 years ago that a severe category 4 made landfall. We were consequently relatively unprepared for the Maria hurricane, due to the fact that most of the storms in the past had missed Puerto Rico, even though the island is really in the middle of the Caribbean hurricane region.

The country’s communication network in particular was in a desperate state following the direct hit. There was no television anywhere in Puerto Rico, and only one radio station was working. People outside the country were better informed than we were, and every day worried family members were calling from overseas. This state of affairs persisted for weeks, during which a large part of the population was practically unaware of what had happened in the country. Many did not know how their relatives had fared. And then there was the constant fear that lay over the country after Maria. If there was a power cut, long queues formed immediately at food shops and gas stations. That was still the case in April, more than six months after the hurricane.

I did, on the other hand, find that people in the country have come closer together in the days and months following the hurricane. For instance, many traffic lights were not working at the time, so motorists stopped to let pedestrians cross. Or passers-by helped to regulate the traffic. This was something completely new in Puerto Rico. When power was restored to the traffic lights, it became apparent that the traffic had been better off without them. In the country, people have been gathering to prepare meals together. Locally, people are working together in many ways, helping each other with repairs and sharing the work to be done.

After the hurricanes, another government agency gave us the opportunity to move to another building with power and air conditioning, but we decided not to move because we needed our archives. We adapted to the circumstances, writing letters by hand for example. Now, everything is working again. We were lucky in that the building remained largely intact. We are making good progress with settling our claims.

As for now, in the middle of a new hurricane season, life has returned to normal in most instances. Electric power, as well as the communication networks, are back. Nevertheless, the electric infrastructure is still vulnerable for the most part. Meanwhile the government has focused its efforts in providing the island with a modern and more resilient infrastructure that includes not only electricity and communications, but also housing, and road infrastructure as well.

The people, on the other hand, have learned from the experience. Neighbors are working together to find ways of resiliency for their communities. In some cases, particularly in remote mountainous areas, some have managed to provide renewable energy infrastructure to buildings that are currently being used as a community centres, where they have refrigerators and other facilities for communal use. On a personal level, people have been taking measures and precautions in advance of the hurricane season.

Maria was certainly a wake-up call. Even if you can never know exactly when and where a hurricane will strike, we hope we will be better prepared for the next time.