Dear Editor,
I refer to a letter by Mr. Bishwa Panday (3/10/2001) captioned "the public perception is that insurance claims are not quickly settled." Mr. Panday must be complimented for taking a stance on this burning issue that is threatening the insurance industry. It is indeed very sad that the general community did not give public support to the substance of that letter. I am also quite sure that Mr. Keith Evelyn, General Manager of the Hand-In-Hand Fire Insurance Company does not need much more evidence as requested in his SN letter (28/09/2001) captioned "could we have the evidence?"
After having been in consultation with various experts, businessmen and agents of some insurance companies I was shocked to hear that Mr. Somat Ali is in his 7th year in court to get his sum insured after having won a high court decision against which Hand-In-Hand appealed. And it is no secret that the Kissoons have sought the court as a last resort to obtain part of their
claim from some insurance companies. But the most compelling fact in that letter was with regard to Mr Sookraj's claim, which was the most recent.
The initial SN letters had all the relevant facts. The concrete three-storey building was insured, valued and endorsed for $37 million. A valuation was only done one year from the date of the fire. Mr. Sookraj's building suffered a total/complete loss. He was a 3rd party victim to the fire. It is now past 6 months since the date of the fire and he has not yet received his full sum insured.
There are a few points I would like to touch upon.
1) Since the building was valued and endorsed for $37 million only one year from the date of the fire wherein it suffered a total/complete loss, then based on SN letters by Mr. Sookraj that the building was constantly being maintained and refurbished, knowing that building costs have been appreciating in Guyana, what would have made the building less valuable as at the date of the fire? Therefore, logically as at April 2001 the building would have been valued more than $37 million. However, since the policy of insurance has a limit payable, which in this case is $37 million that should be the indemnified value.
2) Informed experts, agents and businessmen told me that the supply of a building estimate was a mandatory requirement by Hand-In-Hand and its adjuster to be supplied by Mr. Sookraj. Technical experts are surprised that an estimate was requisite to be presented for a total loss building.
3) I was also perturbed that Hand-In-Hand would want an adjuster to adjust a completely destroyed building that was 3rd party to the fire. What was there to adjust?
4) A letter in Kaiteur News (16/07/2001) captioned "Burnt-out businessman, Insurance company clash," stated that the adjuster for Hand-In-Hand depreciated the concrete building by as much as eight to nine million dollars. Again, experts were surprised knowing that in Guyana appreciation and not depreciation on concrete buildings exists. Furthermore, since the building was valued only one year from the date of the fire, the applicable rate of depreciation would translate into 22.4% per annum. This would mean that the Sookraj concrete building had a life expectancy of only 4.5 yrs.
I am sure that the Hand-In-Hand Company would realize that the insured party is losing significant interest income and incurring much interest costs towards creditors such as bankers owing to the fact that Hand-In-Hand is still holding the full sum insured of $37 Million?
Yours faithfully
Chris Singh
Editor's note
In his letter captioned "The sum insured in fire insurance is the limit payable, the insured is only entitled to recover the actual loss" (5.8.200l) Mr Evelyn stated:
"The Chartered Loss Adjuster is an independent expert in investigation and assessing insurance claims.
These Loss Adjusters were also contracted by other insurance companies, which had issued policies in respect of other premises in the same area.
The Loss Adjuster's job is to independently investigate the loss, to determine whether the insurer is liable and if so for how much. He is independent, and is not influenced by the wishes of either the company or the claimant.
After conducting full and detailed investigations, the Loss Adjusters determine whether the insurer is liable under the policy, and if so what is the quantum of loss suffered by the claimant.
To this end the Loss Adjuster usually engages the services of structural engineers, architects and surveyors, to assist him in his technical assessment of the amount of the loss suffered by the claimant. This was done in the instant case.
We wish to point out that the standard fire insurance policy is one of indemnity. The policy itself is a contract between the insurance company and the policyholder, whereby the insurance company agrees to indemnify the insured in the event of a loss by an insured peril; in this case, fire.
In insurance law an indemnity means that the insurer is obliged to pay for the loss actually suffered by the policyholder. It is the duty of the policyholder to prove his actual loss.
The sum insured specified in the policy is a statement of the limit, which insurers have agreed to pay, and the amount upon which the premiums are calculated. It is in law neither an admission by the Company of the value of the property, nor is it the amount that the company promises or agrees to pay in the event of a loss. The amount payable in the event of a loss can only be ascertained after the loss has occurred.
After making all necessary calculations, the Adjusters will qualify the loss suffered by the insured. Because companies wish to preserve the transparency and impartiality of the process, the Loss Adjuster, at this stage,is usually empowered to write the insured indicating the calculated amount of the loss and proposing that this amount be paid in full settlement of the claim.
The policy provides that in the event of a dispute as to the amount payable as an indemnity, the parties may refer their differences to arbitration."