Best Practice for Property Claims

Third Annual Willis Real Estate, Hotel and Gaming SymposiumSeptember 16, 2014

Speakers

Tim Kraft – Risk Manager – JBG Companies

 

John Cadarette –Managing Director –The Claro Group, LLC

 

David Passman – Director Willis Property Claims

Moderator

Steve Sachs – Director Willis Real Estate and Hotel Practice

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Process Objectives Minimize impact on guests and tenants, brand and reputation

Understand the claim process and understand your needs as well as responsibilities and obligations

Details are key –recovery and a claim from a large or catastrophic event is not easy or simple

Understand that this is a process for both you as well as the insurer

Consider alternate options for guest and tenant services and/or products

Understand what the expectations of the boys and girls in the corner offices will be

 

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What to Take Away

Recognize the critical elements of a successful disaster recovery plan

Know when and how to negotiate and manage resources for large loss claims

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Expect the Unexpected

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Pre Loss Planning (Plan, Plan, Plan and then Plan some

more) Understand your policy and how it will respond to various loss scenarios –

Consider practice table top exercises to understand how policies will operate post loss

The insurer will bring in an adjustment team consisting of all sorts of experts. Identify who you may need to engage. This will include brokers, consultants, accountants, engineers, logistics and transportation consultants and yes, even under certain circumstances, attorneys

Analyze and compare how your Business Recovery Plan and your insurance policy correlate

Develop a communication plan for your internal team and management. Develop a loss handling procedure and communication protocol with your team, as well as with the insurers, their adjuster and consultants. A well designed and executed communication plan is critical to a successful recovery

 

 

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Pre Loss Planning (Plan, Plan, Plan and the Plan some

more) Make sure roles and responsibilities are understood

Details are key to a well documented claim-understand your information and document collection process and abilities and do not be afraid of asking for assistance if needed

You are expert at running your business. We are expert at the claim process. Melding the two will help develop a well documented and understandable claim

 

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After the BIG Bang! Report the loss at the soonest opportunity even if all the information is

not complete

Be prepared to consider emergency repairs or mitigation efforts. Your broker and consultants will work to expedite your insurer’s response. If it makes sense to you, it will probably make sense to the adjuster and insurer

We will arrange initial calls and will manage site inspections. We want to respond to all initial reasonable questions by the adjuster in an accurate manner so the insurer can start developing an accurate reserve

Agree with the adjuster and consultants on a process to develop a scope of damages, methodology of repair and costs. Identify areas where we agree to disagree and agree on further work to resolve

Develop a process where both sides keep everyone up to date on developments and status of everyone’s activities

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After the BIG Bang! Cash is king –develop milestones and process to submit partial claims

and develop a plan to issue partial payments responding to those submissions

Understand that issues will arise where we agree to disagree. Your team will work to develop a dispute resolution process and implement same. Willis has developed various techniques we utilize to resolve disputes

Understand where you believe your claim to be rock solid and which areas may be subject to negotiation

There may be expenses you incur to protect you brand and market. Do not be shocked if some of these are not insured expenses

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Managing Large Losses

The Story

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Managing Large Losses

The Challenge

Negotiating Large Losses

– Technical Expertise

– Negotiation Skills

– Really Understand the Provisions of Your Policy

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Managing Large Losses

I. Determine Management Objectives

A. Meet with Management

1. Identify Issues Specific to Location

II. Designate single person in charge of claim

A. Brokers will be critical to providing initial notice and updating carriers on a regular basis

B. Calendar deadline for filing Proof of Loss

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Managing Large Losses

III. Meet with Company Disaster Recovery Team

A. Confirm Objectives

B. Agree on Roles

C. Develop Detailed Scope of Loss on First Day CRITICAL – Establish internal cost code to track

all time and expenses

D. Team Should Meet Once or Twice a Day and Revise Scope at End of Each Day

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Managing Large Losses

IV. Timely and Strategic Communication

A. Internal – key to have main point of contact to maintain control (may want to have under the direction of in-house counsel to establish privilege)

B. External – should coordinate with corporate communications department or specified person Caution: every analysis, email, memo or press release eventually may be viewed in litigation context . Do not speculate in writing and think, “would I enjoy being cross examined over this?”

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Managing Large Losses

V. Involvement of Insurer - The Objective is to Make Insurer a Member of Your Team

A. Communicate Story of the Loss

B. Create Win - Win Relationship

C. Identify Your Business Objectiveand Strategic Issues – Realistic Claims Philosophy

1. Establish early on that you are carefully and fully preparing a fair, credible claim for all losses to which you are entitled under relevant policies

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Managing Large Losses

2. Carefully consider including highly questionable or non-covered claims as it will likely impair your credibility

D. Establish a Core Team as soon as possible

1. Risk Management, Legal, Business Unit Reps, Development, Construction, Operations

2. Outside Consultants: claims preparation experts, brokers, attorneys, technical experts

E. Use Insurer as Resource

1. Equipment, specialty contractors, materials, etc.

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Managing Large Losses

G. Discuss Advances and Payment Requests

H. DOCUMENT ALL MEETINGS!

F. Involve Insurer in Business Versus Insurance Meetings

– Written minutes at all meetings with emphasis on who, what, and when

– Have specific action items and review at next meeting

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Managing Large Losses

VI. Business Interruption Loss

A. Promptly Set up Meeting with Insurer, its Consultants and Your Management and Accounting Personnel

B. Define How Income/Revenue is Earned and Is Impacted at The Facility

C. To Extent Possible, Agree on Information and Method of Documenting Loss

D. Provide Insurer and its team with regular updates

One thing is certain – your initial estimate will be wrong!

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Managing Large Losses

VI. Business Interruption Loss (cont.)

E. Establish Anticipated Time Frame For Initial BI Loss Period and Extended Period

F. Attempt to Identify Issues Prior to Final Negotiations

G. DOCUMENT ALL MEETINGS!

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Managing Large Losses

VII. Post Loss - Meet With Underwriters

- Review Loss/Lessons from Loss in detailed, principled manner to ID possible policy changes

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Ten Commandments of Managing Large Losses

1. Provide notice to all relevant carriers

2. Determine management objectives and identify issues specific to the location

3. Communicate with Disaster Recovery Team to:

a. Confirm objectives

b. Agree upon roles

4. Develop detailed scope of loss by the end of the first day and update

daily at scheduled team meetings

5. Utilize a Win-Win strategy

6. Include insurance adjuster in business meetings versus insurance meetings

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Ten Commandments of Managing Large Losses

7. Discuss Advances and Payment requests early in the process

8. Document all meetings

a. Who attended

b. Actions agreed upon and to be accomplished by whom

9. Require Insurer’s consultant be identified and on site as soon as possible

10. Business Interruption Loss – have an immediate meeting with Insurer’s “Accounting Firm” and your financial personnel and management to educate them as to how you earn your revenue in the context of the policy and agree upon information required to document the loss (document the meeting)

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Managing Large Losses

Conclusion:

A Time To Shine In The Midst Of Darkness

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Questions?

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