The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

An insurer believes 15 per cent of Hurricane Matthew-related roof damage was preventable, blaming “shoddy workmanship” and enforcement failures for exacerbating losses.

Anton Saunders, RoyalStar Assurance’s managing director, told Tribune Business: “What we are seeing from some of our engineers and loss adjusters going out is that 15 per cent of the roof damage should have been preventable if contractors and roof inspectors did their jobs properly.”

Blaming “shoddy workmanship and a lack of inspections”, Mr Saunders said Matthew had exposed weaknesses in both New Providence and the other hard-hit islands.

“If we enforced the laws and then the inspections, some of the losses would have been mitigated and preventable, especially on the roof,” Mr Saunders said.

His comments are likely to reignite debate over whether the Bahamas has the resources, will and ability to properly enforce its Building Code, and hold contractors to account for flawed construction.

The RoyalStar chief’s remarks indicate that had the Building Code been followed to the letter, a significant portion of Matthew-related losses would have been prevented, easing the post-storm financial burden for homeowners, the insurance industry and the Government.

Mr Saunders, meanwhile, said RoyalStar hoped to pay “90 per cent” of Matthew-related damages to validated claims before Christmas.

“We think about 75 per cent of our claims have been reported, and we are starting to settle them,” he told Tribune Business. “We’re paying out already to our clients.

“We expect that process [of receiving claims] to continue for the next two weeks, and we hope to get as many claims settled between now and November as possible.”

Mr Saunders said RoyalStar’s loss adjusters were completing final damages reports now, and added: “We hope that 90 per cent of the losses will be paid before Christmas.

“You always have those losses that lag on for longer. They’ll be the bigger clients. Those ones take a long time, but they will expect their interim payments in the meantime.”

Mr Saunders conceded that many Bahamian home and business owners had suffered “a double whammy” from the rainstorm that occurred on Sunday, October 16, which caused further water leakages through roofs compromised by Matthew.

He added that RoyalStar already had estimates for its total Matthew-related losses, but declined to disclose them, saying the property and casualty underwriter wanted to inform its reinsurers first.

The Bahamian general insurance market buys huge amounts of reinsurance annually to underwrite the risks covered locally, meaning it is the reinsurers - rather than the Bahamas-based carriers - who will absorb the bulk of Matthew payouts.

“They do pay the bulk of the losses on our portfolio,” Mr Saunders said. “All of us in the Bahamas will have our deductible, and the deductible will be a small percentage of the losses. We all are relying on the reinsurers.”

Both Mr Saunders and Patrick Ward, Bahamas First’s president and chief executive, agreed that the Bahamian industry’s initial estimate of $400 million in total insured losses from Matthew was holding true.

Describing that figure as “reasonably accurate”, Mr Ward said of Bahamas First: “We’ve seen well over 1,000 claims registered already, and that number is increasing on a daily basis.”

Mr Ward said claims were being submitted electronically and via ‘walk ins’ at its offices, plus through brokers and agents.

“The numbers are going to come in steadily for the next couple of weeks, and then tail off after that,” he added.

“There are no real surprises. We are seeing essentially what we thought would be the case. The one thing we’re particularly happy about is that we don’t have any real evidence of widespread structural damage. It’s roof and water damage, especially in the coastal locations.”

Mr Ward said Bahamas First would likely determine the extent of its Matthew-related losses “with some reasonable precision” within the next two weeks.

He added that the Category Three/Four storm “still seems to be” Bahamas First’s record payout for a single loss event, suggesting it would be higher than the $60 million and $28 million it paid out in 2004 for Hurricanes Frances and Jeanne, respectively.

“This will certainly be higher than those on an individual basis,” Mr Ward told Tribune Business, “but I don’t want to throw numbers out there and be irresponsible about it.

“We are already starting to see funds from reinsurers trickle into the country, and we’re already paying claims. Based on the performance in prior years, I would expect the majority of claims to be paid over a three-month period.”

Terrence Rollins, Security & General’s general manager, said the underwriter had received more than 300 Matthew claims to-date.

“As of today, we’ve had over 300 in total,” he told Tribune Business. “I can tell you as a rough rule of thumb that there are probably five property claims for every motor claim.

“I wouldn’t be surprised if we end up with 400 claims when all is said and done, but what it’s going to amount to [in value], I just don’t have the data at the moment. It’s just too early to tell, and for us to give projections and estimates.”

Mr Rollins added that Security & General’s Grand Bahama clients appeared to have suffered more than those in Nassau, although it insures fewer risks in the northern island.