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Risk in Context

Western Hemisphere’s Strongest Hurricane Ever Threatens Mexico: Be Prepared

Posted by Raymond Hutnik October 23, 2015

October 23, 2015 — Hurricane Patricia, the Western hemisphere’s strongest hurricane ever, with maximum sustained winds of 200 miles per hour, is bearing down on Mexico’s Pacific coast with a speed and intensity that could cause significant property damage, service interruption, and coastal and inland flooding. This potentially catastrophic Category 5 storm is expected to make landfall tonight, threatening significant population centers and tourist destinations such as Puerto Vallarta and Guadalajara.

The Mexican government has activated its emergency response committee and initiated a series of preparatory actions in advance of the storm. Affected businesses and residents have been warned to quickly and safely prepare themselves for this fast-moving and life-threatening storm.

Hurricane Patricia’s late-season arrival is a sobering reminder of the need for well-established storm preparation and response plans, including claims protocols, that can help minimize potential losses, speed up claims payments, and help fund your recovery.

Pre-loss Claim Planning

Given the unprecedented power of this storm, pre-loss claims preparation is especially important. It can help prevent coverage surprises following a loss and can simplify and expedite the claims settlement process. Ensure you:

  • Carefully review each policy with insurance and legal advisors.
  • Fully understand what your insurance policies actually cover.
  • Clearly define with insurers, brokers, and others the roles and responsibilities of each party following a loss.
  • Have plans in place that will help to mitigate damage and document losses, including the development of templates and guidelines for claims reporting and timelines, document requests, and cost tracking.
  • Have pre-approved service agreements in place for all recovery and remediation services vendors, including forensic accountants, crisis management experts, outside counsel, independent adjusters, contractors, engineers, etc.

Post-loss Claims Management

One of the most important claims practices after a storm like Hurricane Patricia is to immediately document losses. Other characteristics of best-in-class claims management include:

  • Meeting as soon as possible post-loss with senior insurer claims personnel to establish definitive loss management, communication protocols, and agreed loss management objectives, including a funding protocol.
  • Tracking and accounting for industry trends that may impact your claim or how insurers may view or interpret coverage for this specific event.
  • Understanding how your property policies’ time sensitive provisions and coverages may operate, especially with respect to civil authority closures, service interruption, and ingress or egress issues, and carefully documenting the beginning of such impacts, their specific cause, the location of property damage that may trigger them, and the duration of the impact.

By effectively preparing for and managing insurance claims, you can help ensure that your recovery is properly funded after a natural catastrophe such as Hurricane Patricia and that your losses are resolved in a timely manner.

Related to:  Marsh Risk Consulting

Raymond Hutnik

Ray Hutnik is the global practice leader of Marsh Risk Consulting’s Financial Advisory Services (FAS) Practice