HURRICANE KARTINA IN UNITED STATES

Prepared by:
Mimi Norsabariah Bt Suid
Nur Shahira Bt Esa
Nur Fatin Atikah Bt Mistam
Azreen Aswani Bt Anuar
Nurul Shakinah Bt Sahrudin

Hurricane Katrina was one of the most destructive hurricanes in the history of the United States. In addition, to the tragic loss of lives, hurricane katrina caused more economic damage than any reason catastrophe in the United States. Based on Crawford investigation and claim on cases hurricane katrina in Gulf Coast, New Orleans in 2005, accounted for an estimated $50 to $79 billion in insured losses, not counting federal flood coverage. After hurricane katrina cases, another consequential loss might happen is flood, fire, theft and etc. So, the loss incurred  will be increase, and it will incurred are maximum interruption period to business back to normal.

When a big storm is on the way, most people will do what they can to protect their property. The owner can practice sue and labor charge to minimum the interruption period but will increase cost of working (ICW) for example overtime for workers to a removal debris in premises, additional rent for alternative premise and expenses for hire production equipment.  Besides that, the owner will incurred extra expenses to moving operations to another location in order resume business more quickly.

In addition, offsetting the total lost revenue in some cases might be non-continuing expenses  such as employee wages which are temporarily not being incurred or lower utility usage or makeup sales being experienced. After the business has been repaired and fully reopened, it is often not expected to immediately resume business as if no loss had occurred. In many cases, business builds slowly after a hurricane, as the region returns to its normal activity level. Extended period of indemnity coverage is designed to pay the difference between a business’ actual sales after reopening and sales it would have expected to receive had no loss occurred. Calculations for the period typically begin at the close of the period of restoration. In the case of Katrina, the build-up period for many businesses will truly be extended, it is because of the nature of business where the level of infrastructure destruction is huge.

Hurricane Katrina also can effect to the utility services such as water, gas, electricity or telecommunications that prevents the insured’s business from operating. In some cases, a reduction in utility supply could trigger such a claim. So, this factor will be effect the recovery process and will increase the interruption period.

In conclusion,  there is several ways to minimize the interruption period of the business  in order to go back to normal operation. Length of indemnity period depends on effectiveness of actions taken during business recovery process.