Tuesday, September 10, 2019
By NEIL HARTNELL
Tribune Business Editor
Hurricane Dorian’s catastrophic impact “demands that insurers take” a more conciliatory approach to how claims are handled, an outspoken QC urged yesterday.
Fred Smith QC, the Callenders & Co attorney and partner, told Tribune Business that Bahamian property and casualty insurers - and their international counterparts - needed to take “a more generous perspective” by providing clients with “interim payments” so they can rebuild their lives following arguably the most destructive storm in Bahamian history.
Arguing that loss adjusters had too often sought to “beat down” the value of claims payouts stemming from recent hurricanes that hit Grand Bahama, Mr Smith said a swift insurance response that went beyond “pennies on the dollar” was essential for the “survival” of some businesses and homeowners.
Lamenting the lack of consumer protection for insurance clients in The Bahamas compared to other nations, he argued that the government should consider “stepping in” by enacting “emergency legislation to ensure insurance claims are managed on an equitable basis”.
“One of the big issues we have in the wake of Dorian is people need interim payments or payments on account so they can survive,” Mr Smith told Tribune Business. “Unfortunately, in the wake of previous disasters, adjusters are often motivated to show how efficiently they have acted on behalf of the underwriters.
“They refuse to make interim payments, and insist on questionable settlements, often for pennies on the dollar, by the victim. Many unsuspecting consumers, in many instances, don’t know it’s a final settlement or, if they do, have no choice but to accept to close a hole on their roof with a bit of plywood.
“The catastrophic nature of Dorian demands that the insurers take a different approach to The Bahamas on this occasion. We need to rebuild... I urge the insurers and their adjusters to approach this catastrophe from a generous perspective, and to help by providing interim payments until people can properly address the full extent of their losses with professional help so they can make comprehensive and appropriate claims,” he continued.
“Please do not take advantage of the claimants and beat them down. It’s important for the insurers to act swiftly so people can engage in an emergency rebuild and recovery mode.” I urge the Government to perhaps step in and enact emergency legislation for the management of insurance claims on an equitable basis.”
Mr Smith said he had yet to see insurance loss adjusters in action despite driving around Freeport and Grand Bahama to assess the “destruction first hand” following Dorian’s near-two day stall over the island.
The insurance damage assessment and claims processing is now under way in Grand Bahama (see other article on Page 1B), although the scale and nature of the damage in Abaco has inhibited adjuster access to the hardest hit areas of Marsh Harbour and the surrounding cays.
Emphasising that he did not wish “to pick a fight” with the insurance industry, and understood the “valuable role” it played in protecting hundreds of millions of dollars in commercial risks, Mr Smith said his concerns were founded on what he argued is a lack of protection for consumers compared to other countries.
“My anxiety and oft-expressed frustrations are a result of the model of governance that unfortunately exists in The Bahamas,” he told Tribune Business. “The normal victim, consumer and claimant protection that exists in the more sophisticated economies simply does not exist in The Bahamas....
“Regrettably, we don’t have an Insurance Commission that is an effective watchdog over the insurance companies. The Insurance Commission does its best, but it does not have the tools to manage the insurance industry in The Bahamas - both to promote insurance and to protect the insured.
“Our judicial system is quite unlike the Americans, our neighbour, which has embedded in their system jury trials and punitive damage awards in civil cases which have held big business, financial institutions and government to account,” Mr Smith added.
“Many of the insureds in The Bahamas are not sophisticated consumers. They don’t have access to legal aid. The normal mechanisms that weigh in favour of the consumer, particularly in times of crisis after a hurricane, don’t exist in The Bahamas. I beg the insurance companies and their adjusters not to take advantage of people in Grand Bahama and Abaco.”
Pointing out that mortgage borrowers, both homeowners and businesses, were required by the lenders to take out all-perils catastrophe insurance and other products to cover their homes, Mr Smith said these institutions were noticeably absent when it came to protecting clients in the event of a claim.
“Regrettably, when claims are to be made, all of the societal, economic and capitalist constructs that force people to buy insurance don’t exist to also protect them and make sure their claims are properly dealt with,” Mr Smith said.
“Insurance companies always hire the best and brightest legal minds, and are able to pay them to delay and contest cases for many years and prevent them coming to trial. The victims of disasters and losses are not very often, by the nature of their circumstances, able to resist.”