Flood warnings are still in place across England, Wales and Scotland following Storm Bert which brought winds of more than 80mph, killing at least five people and flooding hundreds of homes and businesses across the UK. With more flooding likely this week and clean-up costs projected to cost millions, the full picture of the losses – insured and otherwise - is not yet available.
Speaking with Insurance Business, Peter Farrelly (pictured), chief operating officer for Sedgwick in the UK, noted that news of the storm started to filter through on Sunday evening. “We could see what was developing in South Wales, and Pontypridd in particular, where locals described it as similar to Storm Dennis 2020,” he said. “And you have the combination of damage to commercial and residential properties.”
The storm activity spread out from Pontypridd, developing through to Gloucester and Worcester, with reports of similar flooding – one month’s worth of rain – in parts of Northern Ireland. As the situation escalated, Sedgwick went into what it calls ‘surge mode’, he said, which is where it has an excess of claims beyond business as usual, at a set amount, and put into place its contingency plans for responding to surge events.
As of Monday, the firm registered claims volumes about 60% in excess of business as usual, with that rising steadily as more business owners and residents get in touch with their insurance companies and notify them of any losses. “For lots of people it can take a day or two to gather the information and gain a better picture of the extent of the damage,” he said. “But it’s very important that policyholders notify insurance companies as soon as possible to allow them and their loss adjusters the opportunity to respond immediately.
“We had a team of adjusters in the affected areas on Monday morning and again on Tuesday, and that will continue for the next number of weeks – to inspect the damage, assist in mitigation tasks, and agree recovery plans with those affected.”
Offering his top advice for business owners – and the brokers who support them – Farrelly emphasised that it all comes down to recovery. The priority for loss adjusters is helping an affected business to get their doors open again as quickly as possible, he said, and that all starts with a great recovery plan. As soon as that plan is agreed, and in place, recovery can start to take shape.
The first step is for impacted businesses to identify the extent of the damage. That includes detailing the key items of equipment required for day-to-day operations and whether those items have been damaged. If they are damaged, it’s time to start discussions with suppliers on how long the lead time will be to replace any given items. If it’s fundamental to the business operations and it’s going to take months to repair or replace, the business owner should look at the possibility of hiring out that equipment.
“Engage with your loss adjuster, engage with the insurance company” Farrelly advised. “We have specialist suppliers, we have specialist contractors who, rather than waiting six or nine months to replace a machine, can have it restored within a matter of weeks depending on the extent of the damage.”
Another day-one consideration is for the business owner to assess whether they will need to move out of their premises. If so, they should look into hiring alternative premises, in accordance with the provision in their insurance policy for increasing costs of working incurred to allow the policyholder to resume trading. That’s particularly relevant for manufacturing premises which can feasibly relocate to another industrial estate or commercial unit. “Your loss adjuster will assist in identifying potential premises and giving advice on what is possible.”
Subcontracting can be an option, he said, as by engaging with a competitor to manufacture what you usually produce, you can maintain some level of trading. It can be a risky decision, as your customers may go directly to your competitor but it is a feasible recovery strategy. But whether you’re relocating your premises, or subcontracting, as a business owner, you need to be continually thinking about what measures you need to undertake to return to business as usual.
“It’s a very careful discussion between the loss adjuster, the broker, the insurer, and, of course, the policyholder,” Farrelly said. “And those measures can be a very proactive discussion. It’s no exaggeration to say what you agree as a business owner with the loss adjuster, with the broker, with the insurer - within that first week - will determine the ultimate outcome, which may be months or years later.
“If you don't get those initial measures right, you could pay the price for it later. If you get those initial measures right, within that first week, it won't be plain sailing, but it'll be an awful lot easier than it would have been otherwise. So, agree the recovery plan. Document it, timeline it. Make sure that all roles and responsibilities are identified and recorded, and make sure you stick to that recovery plan.”
