When will the nonsense stop?
Back on the 4th October 2011 I expressed my concern on the fact that some insurers and loss adjusters were using a single judge decision in the US and applying to the losses arising in Christchurch following the earthquake. See http://www.allanmanning.com/?p=14
The issue there is that some are arguing that the interruption would have been just as bad if their building had not been damaged as the government would have prevented anyone entering the area of the damaged building in any event. I believe the but for test that is being used, is being applied back to front. If it were not for the damage to all the buildlings there would be no exclusion zones.
It has gone one step further in Australia recently when an adjuster applied a percentage downwards adjustment to the expected turnover of a retail business stating arbitarily that during Phase 1 we have assumed Standard Turnover of 60% of the average figures for January 2010 for the 2.5 days of closure; thus: – $35,018/15 x 2.5 days x 60% = $3,502.
The adjustment, the loss adjuster explain,s reflects the negative impact on psychology of the residents following the terrible events in the town. Business would have been severely affected for reasons other than physical damage.
I did not realize that the qualifications or experience of the adjuster had extended their skill set to include psychology to the extent that he could rightly claim this or qualify it to such accuracy. My daughter, Susan, has two degrees in this field and travels to the US later this year to complete her PhD in this area laughed when I explained what was being proposed, agreeing it was complete nonsense.
The fact that the Insured’s insurable property sustained damage by an insured peril is being relegated to being only 60% of the cause of the disruption. What will this adjuster use to calculate the special circumstances next, Tarot cards?
Is it any wonder that insurance is getting so much bad press, that it is so difficult to sell business interruption and why more and more brokers and their clients turn to claims preparers like LMI, lawyers or the media to get a fair go.
Never in my 40 plus years of handling claims have I seen such an argument used and I wonder what the Insurer will say when they see this being used to rip off one of their SME clients a measly $2,335.
Revell Weightman the LMI claims preparer handling the claim nor I will allow this nonsense to prevail.