Adjusting to the Tropics
As I sit in my Swansea office, I am anxiously thinking about a difficult meeting scheduled for the afternoon, when an epiphany of sorts , arrives in the form a fax from a colleague in Singapore. There is the opportunity of a job with a local loss adjusting company based in Jakarta, the Indonesian capital and a city of 12 million people.
The previous year, I had declined the offer of a posting to Saudi Arabia and it had been a mistake . I was ready, after more than 20 years of loss adjusting in the UK and Ireland for a radical change. For a variety of reasons, both personal and professional, the timing was perfect.
Interviews in London and Jakarta followed and fortunately went well and I took up my post as Technical Adviser to PT. Japenansi Nusantara (then associated with GAB Robins) in October 2000. At the time, the operation consisted of 16 adjusters based in Jakarta (predominantly electrical, mechanical or civil engineers by training) with 3 similarly qualified adjusters based in Surabaya (east Java) . We now also have a third office in Medan, north Sumatra.
In the previous 20 years I had dealt with a multitude of different claims: from peat burning chimney fires in remote crofts in the beautiful, if bucolic west of Ireland , to politically motivated arson attacks in central London. Nonetheless, my exposure to such claims still did not prepare me for the magnitude of loss I was now to regularly encounter, but which seemed to be accepted in the office with an uncharacteristic insouciance.
We deal predominantly, but not exclusively, with commercial losses and since south east Asia is now the manufacturing hub of the world I should, perhaps , have been less surprised at the preponderance of such high value claims. For despite all of the textile factories, the tin, copper and gold mining operations and the forestry projects, comprehensive risk assessment and loss prevention methodology are still comparatively new and unsophisticated and fires frequently develop into contagious conflagrations. Due to remoteness , poor roads and erratic water supplies , it is not unusual to discover that the fire brigade arrived only after a very long delay.
Indonesia is one of the most seismically active areas on earth with frequent and ongoing movement of some major tectonic plates. Indeed , within two weeks of my arrival in Jakarta, one evening I was in my 26th floor apartment quietly reading , when cracks in the walls opened before my eyes and floor started to groan. Never having experienced the like before , I admit it took me a few seconds to realize it was an earthquake, but I assure you, it’s extremely disturbing when you know that there is absolutely nothing you can do but sit it out and hope it’s not THE big one!
However, on the 26th December 2004 the big one did occur with its epicente off the west coast of Sumatra. With a magnitude of 9.2 on the Richter Scale it was the second largest earthquake ever recorded. The resulting Tsunami affected countries all around the Indian Ocean and Indonesia and particularly north Sumatra (Aceh) were devastated and accounts of fatalities exceeding 200,000 in Indonesia alone, were in no way apocryphal. We were, of course, inundated with claims and rotating teams of our adjusters lived and worked in Aceh in the most appalling conditions, for many months thereafter. Not an experience to be recommended to the faint-hearted.
As mentioned, Jakarta has a population of some 12 million and the city is located at sea-level. It has grown over the last 30 years in an uncontrolled, unplanned manner and the infrastructure is simply not able to cope with sudden surges in demand whether they be on the power supply or on the drainage systems . A few hours of torrential tropical rain in the wet season and rivers, canals and drains are in full flood, inundating much of the city and the outlying areas. Previously, flooding seemed to occur once every five years or so, but it now appears to be an almost annual event causing widespread disruption, disease and suffering particularly to a large population of poor urban dwellers living in shanties. The floods can devastate the many factories scattered around the suburbs.
In the early part of 2002 Jakarta had been hit by catastrophic floods and we received instructions from a Japanese insurer to inspect an integrated textile and garment manufacturing factory, but there was no indication of the size of loss. When I attended, the entire site which comprised 100,000 sq. mtrs. of land with approx. 50,000sq. metrs. of building footprint was still submerged under two metres of water; not a single building had escaped inundation. The total sales in 2000 had amounted to about US$45 million and it had been forecast that sales in 2002 would exceed US$50 million, with the fabrics and garments being exported to customers such as Sara Lee in the USA and Marks and Spencers in the UK.
The claim which was eventually submitted to insurers was in excess of US$60 million for both the material damage and the business interruption combined . Unsurprisingly, in a claim of such magnitude, we encountered some major challenges during the course of our negotiations, but with the goodwill of most of the parties, not least the Co-insurers, the claim was actually settled before the end of the year with savings to our principals of close to US$20 million.
So what is required of the international adjuster? Obviously you must be technically competent, but it is of the utmost importance to fully recognize that you are the guest in a culture where the social and business mores are, no doubt, very different to those in your home country. Failure to adapt can and does, lead to rapid repatriation! And whilst much of the insurance business overseas is based on English insurance law and principles, the adjuster must ensure that interpretation and application are never automatic or stereotypical. A “one size fits all” methodology is unacceptable, whilst trying to explain your position on the basis that, “this is the way it’s done in the UK market”, will not get you very far, particularly when attempting to interpret an ARPI policy which has been drafted in non- standard English , where the underwriter’s intentions are far from clear. Hopefully, this is when the loss adjuster’s objective technical knowledge and the subjective art of adjusting can be synthesized to produce a level of creative innovation which results in equitable resolution.
For those considering working in sunnier climes, I would offer a word of caution. Most people need to live in countries where they feel fully understood and with tacitly shared values, so a prolonged disconnect created by a language barrier and perhaps exacerbated by impenetrable arcane cultural mores can lead to a degree of alienation; feelings of isolation and separateness. So if you are seriously contemplating living ,for an extended period, in some remote and exotic region, possibly where there are few other expatriates, it is certainly advisable to be of a somewhat stoical disposition.
Whether international adjusting will make you wealthy is a moot point, but if you are prepared to be open minded and flexible, there are still many good opportunities for the experienced adjuster and after all, how many jobs are there where you can actually get paid to fly to places such as Borneo, travel by boat up into the interior and then track it by 4WD, through neo-virgin rainforest to get to your site? But don’t forget to take your insect repellant!
I had been requested to write an article about working in my region, so this clearly is not the place for an excoriating polemic about the perceived unwelcome changes and developments in the loss adjusting profession over recent years, but I would still take this opportunity to say that at the international level, the chartered loss adjuster is still recognized as a true professional; one who possesses detailed knowledge of insurance law, combined with the intuitive interactional skills to apply that knowledge in a practical way. Accordingly, I find it sadly ironic that in the very country where loss adjusting had its genesis, the profession currently appears to exist in a state of perpetual distress; a condition aggravated by inadequate remuneration, diminishing status and miserably low morale. The loss adjuster’s skills grow and are honed over many years and will not be so easily replaced. Fees which are depressed to a bare minimum inevitably result in uncompetitive salaries and the most able graduates will therefore migrate to other better paid professions and who can blame them in this day and age? When will the insurance industry recognize the true value of the chartered loss adjuster and act appropriately?
ADRIAN A. BRIDGEMAN. B.Sc. ACII ACILA.
Technical Adviser.
PT. Japenansi Nusantara (Jakarta).