(Insurance Claim Case Study)
Typhoon Damages Continental Airlines
Introduction
Super Typhoon Paka, as the storm came to be called, was a 12-hour session of destruction for the island of Guam. Stirring up winds in excess of 200 miles per hour, the tropical cyclone tossed buildings, planes and ships across the island like discarded toys. Among these was the headquarters of Continental Micronesia, a subsidiary of Continental Airlines. The main offices, the marketing buildings, and the planes were damaged by the powerful typhoon.
Case Description
Continental Micronesia maintained its home base on Guam, and the storm caused direct damage to the facilities there, which led to a severe and complicated disruption in the scheduling of flights into and out of Guam, to and from neighboring islands and other countries being serviced by Continental. In addition to affecting these flights, Continental´s fleet of undamaged airplanes were overused to accommodate the out-of-commission crafts, carrying passenger loads far beyond budgeted capacities and creating excessive wear on those planes.
List of Issues
- Continental and its insurance carrier had major differences of opinion regarding the cause and extent of its business income loss.
- Was Continentals income loss a result of the physical damage to its Guam facilities or a result of a general decline in area tourism?
- Was Continentals loss affected by a widely varying currency exchange rate?
Solutions Applied
Adjusters Internationals team, including forensic accountants, traveled to Guam to meet with various Continental personnel, and also to Houston, Texas, to the corporate headquarters in order to formulate the airlines careful and precise rebuttal to its insurance carriers denials of cause and scope.
Continental provided publications and statistics relating to area tourism for several economic quarters preceding Paka. With this material, Adjusters International was able to demonstrate to the insurance carrier that the general decline in tourism was not a major component of Continentals business income loss.
Adjusters Internationals accountants also were able to show that another macro trend the varying yen/dollar exchange rate was not the cause of the loss of earnings Continental experienced post-Paka, keeping at the forefront the details of the typhoons impact on Continentals Guam holdings.
Outcome
The multi–million dollar settlement was granted when the Adjusters International team fully demonstrated that the airline´s scheduling problems stemmed directly from the physical damage to the Continental facilities as a result of Typhoon Paka and that these caused their loss of income.
Continental Airlines, Inc
The claim was quite intricate for it involved a hub station that had been damaged by a typhoon. Adjusters International exhibited experience in the claims process and provided Continental with the tools needed to finalize the claim.
Monica Ho
Manager, Property & Casualty Insurance Risk Manager
Continental Airlines, Inc
Who We´ve Helped
What Our Clients Say
Helpful Resources
Industry Partnerships
