Storm damage a catalyst for higher insurance premiums

- certain factories saw workforce depleted to 25 per cent due to storm

By Matthew Vella
Insurance companies speaking to The Malta Financial and Business Times yesterday said the scale of damages from Monday’s storm which would be recorded by the end of the week, in terms of motor insurance claims could possibly one of the highest yet.
Brokers told this newspaper that claims were flooding the agencies from all directions. Ivan Muscat, insurance broker at Aon Select, said that both personal and commercial claims had been submitted already in the first few days following the storm:
"It is still too early to quantify the amount of damage. Surveys are still being carried out. Certainly there is a significant amount of claims next to the normal number."
Other insurance companies speaking to this newspaper reiterated that the quantification of insurance claims was still in its early process, and would not reveal the extent of these claims. Elmo Insurance spokespersons told this newspaper that the claims received were "a lot", although they were not ready to divulge any details regarding the quantity and value of claims received over the two days since the storm.
Around 1,000 calls for assistance were received from households on Monday, with 20 fire engines being deployed, saving 60 people from their cars. Police received over 200 calls for help whilst tow trucks were in constant call to aid stranded motorists.
According to Malta Employers Association Director-General Joe Farrugia, certain manufacturing companies had their factories running with just 25 per cent of their workforces due to workers who could not reach their workplace. In other cases, depending on the location of the company and on the workers’ travel routes, work continued as usual. Mr Farrugia said that in certain cases, agreements had been reached between employers and workers who did not report to work, to have the day deducted from their leave allowance.
Asked if such a storm would be affecting insurance prices in the future, Mr Ivan Muscat said it was still to early to comment on the effects such a storm may have on prices. "We have not yet quantified the extent of insurance claimed. Hopefully, storms like these will remain a one-off throughout the year."
Mr Muscat said that as a broker, it was in his interest to keep insurance prices as reasonable as possible: "We still have to see how the extent of claims will affect the long-term portfolio of our underwriters."
First Insurance broker Jean Portelli said the amount of claims due to storm-related damages could also be conducive to higher premiums: "As brokers we are imagining insurance companies to have an idea of how this could be something of a seasonal occurrence, and so conducive to higher premiums in the coming year. The extent of this damage was so great I don’t think they were prepared for it. For Malta this was the first time we ever came close to a national alert, quite close to becoming a catastrophe."
Mr Portelli said around three out of seven motor vehicle insurance claims were for cars which had been garaged during the storm, where water had seeped through. Other claims included lightening damage.
"In cases such as floods, cars insured comprehensively can claim liability, but in terms of third party insurance, the problems with these occurrences is how to prove negligence by a third party when claiming liability.
"When your car is directly damaged by the floods, a comprehensively insured owner can claim liability. A third party owner may have to claim that damages occurred from a third party due to the negligence of that third party owner."
Claims under ‘storm, tempest and flood damage’ include damage to furniture, interiors and masonry. Motor vehicles insured under a comprehensive cover are eligible to file claims for mere damaged paintwork to outright collision or if they have been dragged away by the flooding. Third-party insurance, covering collision, fire and theft, could in most cases not be considered for insurance for flood-relating damage, which would be considered as an ‘act of God’.