IRONROCK Insurance Company Limited is targeting September to settle 90 per cent of Hurricane Melissa claims for which it is either lead insurer or sole writer, after paying out more than $1.2 billion since the storm.

IronRock CEO Christian Watt gave the update at the company’s annual general meeting (AGM), held last Tuesday at AC Hotel Kingston. The general insurer had paid out US$5.7 million ($891.59 million) and $317.5 million in Hurricane Melissa-related claims by the end of May.

“When I look at my portfolio for the policies that we are the lead on or that we write and don’t share, I’m actually at a 78 per cent closure [rate],” Watt explained after the AGM, adding that the company aims to settle 90 per cent of claims by September.

The company has settled 56 per cent of all Hurricane Melissa-related claims, but the aggregate settlement rate is lower due to business interruption claims and some co-insured policies taking longer to be settled by the lead general insurer.

Co-insurance is an arrangement in which several insurers share the risk on a large policy, with one company acting as lead insurer. For example, a $1-billion policy may be split among several insurers, meaning settlement can take longer when the lead insurer must complete the adjustment and claims process.

Watt noted that the company’s settlement rate in its home and motor portfolio ranges from 88 to 90 per cent. IronRock, which began operations in 2016, is the smallest general insurer in Jamaica.

Although IronRock is a small player, Watt said the company moved quickly to settle client claims following the Category 5 hurricane. While the adjudication process through third-party adjusters slowed the settlement process for many general insurers, Watt said IronRock modified its approach to get funds out to policyholders quickly.

“When we recognised the adjuster capacity was short, we took the decision to do a bit of triaging, create some thresholds, determine which claims were reasonably assessable by our own team so that we didn’t need to wait on an adjuster,” Watt explained.

He indicated that the company made its first payment 23 days after the storm for a house in western Jamaica. He also highlighted that another payment was made 34 days after the storm for two cars that were submerged in mud and assessed as total losses.

“We’ve had zero issue of paying any one of our clients and paying them on time once the settlement has been agreed. The challenge that the industry has had is getting the official reports of what the damage was in order for me as an insurer to propose an offer or settlement,” Watt detailed on the adjuster situation.

The more difficult claims involve partial losses and complex policies. While a policyholder may be able to verify that a covered event occurred, the challenge is quantifying the damage. An adjuster must verify the estimates provided to repair or replace assets damaged by the storm. That can be more complicated for hotels and large commercial properties with damaged machinery, equipment, furniture and inventory.

These challenges are further complicated wherein policyholders were underinsured at the claims event. Thus, a loss of $4 million could result in the general insurer paying $1.6 million on the claim and leaving the policyholder to cover the difference. Watt said half of the claims settled so far were affected by underinsurance.

“We have done an assessment of our claims; 50 per cent of the claims settled to date suffered from underinsurance and the other 50 per cent settled to date did not suffer from underinsurance. Within the set that has been affected by average clause, the average underinsurance is approximately 75 per cent,” the CEO detailed in his explanation.

The Hurricane Melissa experience has also pushed the company’s first-quarter (January to March) insurance revenue up 21 per cent to $593.93 million as the property, liability and accident segments record improvements.

“We have seen an increase in demand for our policies following Melissa. Some of our clients who were not damaged on renewal said, ‘We’d like to move our values,’ ” Watt noted.

An improvement in the investment income and tight expense management resulted in a net profit of $6.97 million compared to a net loss of $7.83 million in the prior period. The company’s tax remission as part of being listed on the Junior Market of the Jamaica Stock Exchange ended on March 31, which means that it will now be subject to the full 33.3 per cent tax rate applied to regulated companies going forward.