Demerara Mutual to pay its share of claim Arson suspicion could complicate settlement By Gitanjali Singh Stabroek News September 25, 2000 Demerara Mutual Life is to pay its ten percent of the $382M Park Hotel fire claim by the Kissoon family but four other co-insurers, still dissatisfied with the investigations, are yet to decide on payment. Sources tell Stabroek News that a final settlement may be further complicated because of suspicions over arson. The sources say that the international adjuster who was retained in this matter said he was told by a fire officer that arson was a distinct possibility. The four co-insurers say they want to be sure the claim is "genuine". "We wish the public to understand that on the issue of claim settlement, it is our responsibility to the insured, our shareholders, policyholders, re-insurers and the community at large to ensure that sufficient detailed investigations are conducted into a fire of this nature, in order that there be no doubt that on the balance of probability, all aspects of the claim are genuine. This must be done before we commit funds in settlement," the four co-insurers stated in a letter to this newspaper. North American Life Insurance Company (NALICO), Hand in Hand Mutual Life Insurance Company, Colonial Life Insurance Company (CLICO) and the Guyana Cooperative Insurance Service (GCIS) are the four co-insurers who feel that "sufficient and detailed investigations" have not yet been concluded and want the debris from the fire to be tested to determine if any accelerant was used. However, Peter Rees-Watkins, international adjuster appointed by the companies said that it will be futile to test the debris when the walls of the hotel have come crashing down. Rees-Watkins said a local fire brigade officer informed his group that he suspected arson in the fire. Rees-Watkins and Bish Panday, a local broker, reached a settlement of $382 million for the fire damage which is the largest dollar settlement ever in the insurance industry here. However, the four companies state that they never authorised the loss adjuster to settle or reach a settlement on their behalf. It was based on the adjuster's settlement that the largest insurer, GTM has paid its 25% of the $382M claim as well as Caribbean Home Insurance Company Limited (10%). In the letter, the four co-insurers pointed out that the loss adjuster must report his findings to the insurance company but has no authority to commit the company to settle. Whatever the insured agrees to accept is not binding on the insurer, the letter said. The co-insurers are each expected to provide 15% cover except GCIS which has to cover ten percent of the loss. These companies are assuring that the investigations will be pursued with great urgency, having due regard for the anxiety of the policyholder to have the matter concluded. They held the view that the police have not concluded their investigations though this newspaper has seen a statement from the police to Kissoon's official Hemraj Kissoon that the investigations have not revealed any criminality. The co-insurers said the analyst's report and the government electrical inspection report were still outstanding while the fire service report was received. Rees-Watkins told the co-insurers recently that under normal circumstances the vast majority of insurers expect adjusters to handle claims up to and including the issuing of a form of acceptance unless there were contentious issues. "There were no contentious issues in this claim as far as we are aware but because of the size of the loss, we considered it appropriate to liaise with leading insurers to ensure their agreement before the form was issued," Rees-Watkins said. The form has been issued. Rees-Watkins said that the form was so worded that it did not bind the insurers to pay providing they had a valid reason for declining. "We are unaware of any issues on which this claim could be declined," he asserted. The adjuster also explained that it would be futile to test the debris at this point in time. "Once walls are breached, however, the presence or otherwise of accelerant (is) somewhat immaterial as the responsibility for placing it could not be laid at the door of the insured. Weather conditions also played a part and prolonged rainfall once the roof covering was destroyed made it highly improbable that any trace of accelerant would remain," Rees-Watkins explained. These factors, he emphasised, were relevant to the Park Hotel fire. He said he was still not clear what conclusion would be reached, in the remote chance that forensic examination revealed the presence of an accelerant in one or more of the samples retained by the Guyana Fire Service. He added that whilst the fire service officer his company spoke with considered arson a distinct possibility in the May 6 fire there was no indication as to who was suspected. Stabroek News was told that the co-insurers had been unable so far to recover the samples of the debris from the fire department. The police report had said that there was no criminality suggested in the findings of its forensic examination of the debris and the fire service had said it could not determine the source of the fire. Stabroek News was also told that suspicion was not a basis for denying an insurance claim. Follow the goings-on in Guyana in Guyana Today