British Insurance Awards 2011: Setting the standard

The speed and effectiveness of Fitzgerald Consulting's response to the catastrophic earthquake in Chile last year has won it many admirers - not least the BIA judges, reports Daniel Dunkley.

On 27 February 2010, an earthquake measuring 8.8 on the richter scale struck Chile at 3.34am. It was one of the largest earthquakes ever recorded.

Minutes later a tsunami inundated over 500 kilometres of coastline, while 700 people were killed, 12 000 injured and one million people lost their homes or workplaces. Shock waves caused damage in Santiago; over 400kms from the epicentre. 250 aftershocks of magnitude 5.0 or greater were recorded.

In the first few weeks after the earthquake, insurers built a picture of the scope of losses and the potential business interruption impact.

It soon became apparent that the insured damage was extensive. Initial reports estimated insured losses between $2bn (£1.2bn) and $8bn and threatened the economic stability of the country, while the latest reports show losses are now estimated at $8.8bn.

This was the most costly catastrophic event of 2010 for insurers and the most significant insured event to ever affect South America.

This year's winner of the Major Loss Award was recognised for its swift, brave and effective response to this disaster. According to RSA, its reaction will be "regarded as the template for managing catastrophe events worldwide."

FitzGerald Consulting acted immediately. The team, which had experienced the 11 September attacks in the US, landed 48 hours after the event despite severe disruption to flight schedules following damage at Santiago International Airport.

The firm won significant customer confidence by being the first to arrive in Concepción where immediate insight was gained into the scale and complexity of many of the losses.

It also liaised directly with reinsurers on all major losses, explaining strategy and technical issues and confirming progress at market meetings, both in the UK and in Santiago.

The large number of claims that were driven towards early settlement provided a tremendous boost to the client's brand awareness.

FitzGerald's achievement can be quantified; 25 000 homeowners' claims were finalised by July 2010; 98% of ‘small & medium' claims by December 2010 and 75% of all major losses before the first anniversary in February 2011 when claim payments totalled over $1bn.

Using an example of the Chilean wine industry's recovery as an example, particularly impressed the BIA judges. The industry; a major contributor to the national economy, was hugely aided by the firm. Advice from FitzGerald's viticulture experts saw that effective mitigation measures were quickly agreed and supported by substantial interim payments, thereby protecting insurers and reinsurers' ultimate exposure.

The majority of all of the firm's losses were settled within twelve months, with outlays totalling over $1bn. There was also 100% recovery of reinsurers' liabilities without delays, disputes or compromises.
Scott Webb, group technical claims director at RSA, offered praise: "The feedback from my colleagues at RSA and within our re-insurer and Lloyd's partners to FC's sterling work has been magnificent."

Winning words
After collecting the major loss award Fitzgerald's managing director Bev Fitzgerald said: "We are absolutely thrilled because we have worked for 18 months in Chile. Our client RSA poured hundreds of millions into helping our clients manage in the aftermath of the earthquake.

"Chile was a huge project. The London insurance market did a good job and it has done the country a lot of good. It is how insurance should work and we are pleased to be a part of it. Because of the award and work we have done in Chile, we are going to open a business in Chile and have already secured a contract with a mining company there."