Mitigating deficient design
To begin, both the design and construction of Citibank Center were deficient.
Not only had the structural engineer
failed to account for potentially destructive quartering winds, the construction
company had knowingly compromised
the integrity of the building’s structure to
reduce labor and materials costs.
After receiving the Princeton University civil engineering student’s troubling
findings, the structural engineer had determined the building could be toppled
by a storm calculated to occur in New
York City once every 16 years if the tuned
mass damper lost power. Following this
catastrophic event, claims would have
been filed for defects caused by both design and construction.
One wonders if any of the companies
or individuals involved in the construction of the building and in making decisions following discovery of the defects
had thought to transfer the risk of reputation damage to an insurance product.
Even if they had, it may not have been
available at the time.
Had Citibank Center been felled by
damaging winds, there is no question
virtually every other imaginable risk
would have been realized. The claims
process would have been wide and deep.
Families of individuals who died as a result of the disaster would have submitted
life insurance claims. Those who were injured would have filed for workers’ compensation benefits. Businesses forced
to close would have filed for business
interruption coverage. Companies that
lost key personnel would have filed key
person insurance. Claims would have
been filed against property insurance
and liability insurance. Individuals who
were injured or became ill, and who were
covered by health insurance, would have
filed these claims.
It is said success has many fathers,
while failure is always an orphan. When
it comes to insurance claims, though, failure is never an orphan. We just get busy
trying to make insureds whole again.
Actions taken by the many individ-
uals and companies who designed and
built Citibank Center could have caused
claims to explode. This helps to demon-
strate why both carriers and brokers
need to conduct vigorous due diligence
before transferring a client’s risk to an in-
surance policy. To whatever extent pos-
sible, when decisions with the potential
to affect us are made, we deserve a seat at
Jenean Meier (jmeier@kmrdpartners.
com) is a claims advocate at KMRD
Partners, Inc., a nationally recognized
risk and human capital management
consulting and insurance brokerage
firm located in the Philadelphia region,
serving clients worldwide.