January 15, 2010 

Written By Attorneys: Robert R. Runyon, III and Jennifer A. Coughlin

This article is an interpretation of current law and is offered for informational purposes only. This material is not legal advice and should not be construed or used as a substitute for the advice of an attorney.

In the wake of Tuesday's catastrophic earthquake centered approximately ten miles west of Haiti's capital city, Port-au-Prince, insurers are continuing in their efforts to assess the full impact of this tragic event. The estimated property damage is now expected to reach billions of dollars, far exceeding funds of just under $8 million being made available by the Caribbean Catastrophe Risk Insurance Facility.

Industry sources have opined that the majority of damaged property was uninsured, and will be addressed largely through governmental and private relief efforts. For those reasons, early reports indicate that the effect of this event on the domestic and international insurance markets will be less severe than would otherwise be expected of a loss of this magnitude. However, a number of carriers insuring commercial risks located in Haiti have yet to fully weigh in on their potential exposure. In light of the widespread damage affecting the infrastructure and telecommunications network, as well as limited access due to ongoing relief efforts, it may be some time before insurers and reinsurers are able to definitively assess the full nature and extent of potential claims. The country's watersheds are presently being monitored by the Caribbean Institute for Meteorology and Hydrology for heavy rainfall that may cause flash flooding and landslides in areas already devastated by the earthquake, which could potentially exacerbate the damage and result in additional claims.

Beyond the logistical challenges affecting loss adjustment in the near term, insurers will likely face issues involving time element and extra expense, as well as the impact of exclusions and policy provisions relating to mitigation efforts and governmental action.

NLdH will continue to monitor this event and its impact on the insurance industry.

For more information, please contact Michael Hamilton or Rob Runyon at 215.358.5100.