Filed Under:Claims, Catastrophe & Restoration

Through the Looking Glass

Subrogation Issues for the Catastrophe Adjuster

Flooding, tornados, severe storms, and other catastrophic losses present unique complications when evaluating potential for subrogation recovery. In 2011, there have been many catastrophic losses: flooding in Australia with 35 fatalities and overall losses at $7.3 billion; severe storms and tornados affecting Missouri, Oklahoma, Arkansas, Minnesota, and Kansas, including a devastating twister that leveled the town of Joplin, Mo. on May 22. There were 170 fatalities related to U.S. severe storms, with overall losses at $7 billion.

Separately, 330 tornados hit five southern states between April 22 and 28, 2011, impacting towns in Mississippi, Oklahoma, Georgia, and Tennessee, resulting in 350 fatalities, with overall losses at $7.5 billion. New England also sustained a 6.3 magnitude earthquake, resulting in 181 fatalities and overall losses estimated at $20 billion. The enormity, scale and shortage of available resources in the loss areas further complicate recovery efforts.

Training should also cover the need to obtain contracts or involved leases and their provisions’ potential impact on subrogation. Rapidly obtaining these documents is critical because it shapes who may be a viable, responsible party to pursue. Further, how best to preserve key critical witness statements about the loss needs to be covered.

Spotting product failures poses additional training requirements. The key is to accurately identify the product (type, brand, model/serial number, manufacturer, seller, and so on). The subrogation investigation training must also stress the need for prior repairs, maintenance, and recovering exemplars from the loss site.

Getting to the Scene
Reaching the loss site can be challenging for professionals because of the devastation to roads, airports, and waterways. It is not uncommon for private helicopters to be contracted to get CAT members to severely impacted areas. It may be critical to photograph the loss areas from the air. A pattern of destruction versus no destruction may be apparent from above. Building construction issues implicating potential subrogation may exist because of differing materials and construction techniques used within those substantially similar buildings to explain damage versus no damage, and you may not be able to recognize those conditions from a street-level view. Video of the loss areas is also highly recommended.

“You must run at least twice as fast as that!” said the Queen
Management of a CAT loss requires “running twice as fast,” because of the lack of resources in the affected areas. Steps to follow include determining:

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