CHICAGO — The need for greater insurance policy clarity and certainty was among the key lessons learned from last year's Superstorm Sandy, according to panelists participating in the Harold H. Hines Jr. Memorial Symposium in Chicago.
Following Sandy and the disputes it raised in some cases about coverage applicability, “It's far more important to me to get adequate terms and conditions and policy certainty than it is to get rate,” said Erik Nikodem, property executive for the U.S. and Canada at American International Group Inc.'s property/casualty unit in Boston.
Another panelist, Alfred P. Tobin, managing principal and national property leader at Aon Risk Solutions in New York, offered a similar view at the symposium. “I think clarity of terms and conditions is really something that jumped out with Sandy,” Mr. Tobin said.
Mr. Tobin said Sandy highlighted a need to “get back to basics.” One of the lessons he learned was that every client's policy was different. “Folks who are buyers in this room, read your policy,” he said to the audience. “Know what you're buying.”
From a property owner's perspective, Marco Flores, director of risk management for Equity Office Properties Trust in Chicago, said it's difficult to prepare perfectly for an event such as Sandy.
“As much preparation as you're going to do it's probably not enough,” Mr. Flores said. “You can't account for every situation you're going to run across.”
Still, he said he was impressed by the way his company — which has large concentrations of properties in Boston and New York, as well as industrial properties in New Jersey and Pennsylvania — responded as the storm neared. “It was amazing to see how a company could pull together, prepare before the storm,” Mr. Flores said.
Looking at Sandy's effect on property in New York's Lower Manhattan area, Mr. Nikodem said most of the office buildings were considered highly protected risks and resistant to wind storms. However, flooding from Sandy's storm surge exposed a number of risk management steps that need to be taken going forward, he said.
“I've never seen the magnitude of loss coming out of these assets that we saw with Sandy,” he said. Among lessons learned were to raise elevator cars in a flood event and not to store diesel fuel for emergency generators in substructures. Also, “There was not a lot of mitigation with respect to simple things like sandbagging,” he said.
Presented by the Chicago Chapter of the Risk & Insurance Management Society Inc. and Business Insurance, the annual symposium honors Harold H. Hines Jr., who worked in the insurance and risk management community for more than 30 years and, at the time of his death in 1984, was president and CEO of Rollins Burdick Hunter Co., now part of Aon P.L.C.
Gavin Souter, editor of Business Insurance, moderated the June 6 event.