Disasters Raising Questions of Insurance Adequacy



Adjusters International Disaster Recovery Consulting

Disasters Raising Questions of Insurance Adequacy

By Paul O. Dudey, CPCU Contributing: Donald S. Malecki, CPCU


Hurricanes in the Atlantic and Gulf of Mexico. Earthquakes and widespread fires in the Western United States. Severe weather and flooding in many parts of the world. Terrorist bombings in London’s financial district and the devastating attacks of 9/11 on American soil.

Besides the immense heartache and property damage these events caused, the recent rash of disasters from which few parts of the globe have escaped, has insurance professionals from underwriters to risk managers scrambling to ask—and answer—new questions about how well organizations are protected against such catastrophes. The questions touch issues far more complex and less defined than those associated with traditional insurance planning and administration.

This edition of Adjusting Today examines some of the most critical of these issues, citing considerations and provisions, the understanding of which could be indispensable to protecting an organization’s stability and security.

At a time when too many of our worst fears seem to be coming true, this article is essential reading for anyone concerned with protecting his or her facility or that of a client.

— Sheila E. Salvatore, Editor

In the wake of Hurricane Andrew’s rampage across southern Florida and Louisiana in 1992, many thought they would never again see a storm of such devastating proportions. That was before Katrina.

At the time, the bombing of the Alfred P. Murrah Federal Office Building in Oklahoma City in 1995 seemed to be the worst act of terrorism imaginable on American soil. Then came 9/11. In addition to driving home the sobering reality that disasters like these—natural and manmade — can and do happen, these events once again refocused the attention of insurance professionals everywhere: of insurers, on the relevancy and soundness of their underwriting standards; and of risk managers and brokers, on the adequacy of risk management techniques and insurance protection against such catastrophes.