Six in 10 tourism insurance claims still unresolved

WESTERN BUREAU:

Nearly two-thirds of the Hurricane Melissa insurance claims filed by hotel operators are still awaiting full settlement, according to a new Jamaica Hotel and Tourist Association (JHTA) survey.

The finding comes as insurers approach their end-of-September target for settling the vast majority of claims arising from the Category 5 hurricane.

JHTA President O’Brian Heron said operators are reporting settlements substantially below their losses after using their own resources to finance repairs and reopen businesses.

“Our members did their part. They held cover, declared their exposure, and filed in good faith,” Heron said.

“The issue is not access to cover. It is cash. Claims are being paid slowly and settled short, and that leaves a working-capital hole across the sector.”

According to the survey, only 39 per cent of tourism claimants said their claims had been fully settled and paid, leaving 61 per cent somewhere in the claims process.

Seven in 10 reported deductions above what they understood their agreed average clause to provide, while approximately one-third said deductions exceeded 40 per cent of the value of their claims. Two-thirds expect to recover less than three-quarters of their losses, and only one in 10 expects to be fully compensated.

Complexity of claims

Twenty-eight per cent of hotels have still not reopened following Melissa, according to the JHTA.

Insurers have previously pointed to the complexity of some claims and a shortage of licensed property loss adjusters as factors contributing to delays. Heron rejected those explanations as sufficient justification for the continued wait.

“Complexity is not an acceptable excuse for delay, still less for silence, and it does not justify deductions beyond the policy terms,” he said.

“Insurers accepted our business on the basis that they had the capacity to respond when the need arose.”

The September deadline followed an August industry initiative involving the Financial Services Commission (FSC), Insurance Association of Jamaica, Jamaica Insurance Brokers Association and Loss Adjusters’ Association of Jamaica, aimed at accelerating outstanding Melissa claims.

The insurance industry targeted settlement of major eligible claims and the vast majority of outstanding claims, apart from complex and litigated matters, by the end of September. The FSC has also been reviewing complaints surrounding the application of the average clause.

The JHTA is calling for insurers to publicly disclose how many commercial and tourism claims remain open and provide outstanding claimants with a named contact and written timeline for resolution.

The JHTA has also linked the insurance situation to wider financial pressures facing tourism operators as the Government considers increasing the GCT on the sector from 10 to 15 per cent.

“Our position is clear: the sector cannot afford it, and that case stands on its own merits,” Heron said.

“But operators are now making it while fighting a second battle, to recover money they are contractually owed for losses they have already paid to repair from their own resources.

“Our members bought insurance precisely so they would not need special treatment,” Heron said. “What they need now is for that promise to be honoured in full, and in time to make a difference.”

No respondents reported claims in dispute or litigation.

janet.silvera@gleanerjm.com