September 16, 2004—Hurricane Ivan devastated the Cayman Islands on Sunday, knocking out electricity, water, and phone service for most of the territory. In addition to the damage caused by the storm, the threat of looting continues. Authorities have declared a state of emergency and instituted a curfew to limit crime.

With food and fresh water in short supply, the threat of violence remains as humanitarian aid is distributed. Some companies are engaging private security firms to assist in protecting facilities and helping ensure aid reaches those in need. Additionally, businesses may find it necessary to evacuate employees if food, water, and relief aid are insufficient.



The deadly tropical storm, its strength close to Category 5, the top of the scale for measuring hurricanes, yesterday unleashed gusts of up to 155 mph and an unrelenting downpour on the British-ruled Cayman Islands.
The Daily Telegraph, September 13, 2004

In the wake of Hurricane Ivan, executives should be asking several questions to gauge their organizations' ability to protect their people as well as handle related insurance claims such as:

• Is it safe to return to the premises?
• What private resources are available to help protect our business from looters?
• If it becomes necessary, how can we evacuate our employees safely and in an orderly manner?
• Do our property policies cover us if we suffer damages?
• How should we adequately capture, manage, and report damages?
• Have we established accounting and technical protocols to accurately measure and track the extent of our losses?
• Have we accurately accounted for all business interruption losses and recovery costs?
• How should we present our claims to ensure the maximum recovery from insurers?
• If we cannot recover insurance claims, how can we recoup losses?
• Do we have the expertise and experience required to prepare, file, and negotiate our claims?

Professionals from Marsh’s Risk Consulting Practice as well as Kroll, which was recently acquired by Marsh, will be on the ground in the Cayman Islands as of today to assist in protecting employees and property as well as to begin the process of calculating damages and working on insurance claims in areas that have been stabilized.

In areas that remain unstable, professionals from Kroll can assist organizations by providing security services as well as medical assistance. With ex-military as well as medical professionals, Kroll can help tend to the injured and assist in safeguarding employees. If evacuation becomes necessary, Kroll can not only provide aircraft but also assist in evacuating employees in a safe and orderly fashion.

Filing Insurance Claims
As order is restored, organizations will begin the process of filing insurance claims and trying to get back to business as usual. Given the nature of the devastation and insurance policy coverage triggers, the complexities related to obtaining a full recovery and restoring business operations should not be underestimated.

While much attention will be paid to the loss of property, businesses will need to account for business interruption losses and recovery costs. For example, losses related to the inability to enter property as a result of emergency decrees by government officials (Civil Authority coverage), or those that are attributable to a loss of utilities (i.e., spoilage due to a lack of power), may need to be taken into consideration.



The islands' representative in London, Jennifer Dilbert, told the BBC's Caribbean Service that flood waters were receding and roads were being cleared. However, unconfirmed reports from the territory speak of looting and disorder, despite an overnight curfew.
BBC, 9/15/04

Those businesses not directly in Hurricane Ivan’s strike zone, but engaged in business with affected companies in the Caribbean, should closely review supply chain or other operational impacts and their policy coverages, as they too may be eligible to file claims with their insurers.

As soon as possible, organizations should review their policies and coverage with their brokers or agents, and work to determine what aspects of the loss are covered as well as the documentation required by insurers. Coverage areas may include: property damage including spoilage, business interruption, extra expense or other time element losses, such as service-interruption/off-premises power, civil authority, and ingress/egress. An evaluation and understanding of coverage, deductibles, and triggers, as well as filing requirements, are critical in expediting the claims recovery process and any discussions with insurers.

Marsh’s forensic accountants and professionals with construction expertise can help organizations measure and document all aspects of property damage, business interruption, and extra expense damages. At the same time, they can assist in establishing processes and accounting protocols to track loss-related costs and expenditures. Engaging in such a rigorous process will allow organizations to determine initial damage estimates, and lay the groundwork for more detailed loss measurement and recovery.

It is vital that organizations take the time to engage in a full review of their policies, and agree with their insurers on a detailed loss management plan, so that they can maximize the possibility of a full recovery with their insurers.

Though no one can predict with complete accuracy when, where, and with what force a hurricane will hit, businesses should be ready to account for losses that occur when a storm like Hurricane Ivan strikes, so they can move quickly to recover and begin business as usual.

If you have any questions or would like additional information, please contact us.