Tropical Cyclone Marcia tracked down Queensland’s east coast fringe from the Rockhampton region to the Gold Coast on Friday 20 February/Saturday 21 February 2015. Coming ashore north of Rockhampton as a Category 5 cyclone.
The system progressively lost energy before moving back out to sea as a low-pressure system. The number of claims and severity were far less than normally expected given the initial intensity of the cyclone.
There has been significant interruption to public utilities, especially electrical supplies. Power has been cut off to much of the Rockhampton area. Some more remote locations will be “off-line” for longer. The wider area, with a population of about 115,000 was severely impacted as many businesses were unable to trade.
Most commercial insurance policies for business interruption include an extension to cover loss of profits from utility outages caused by Damage. Such extensions usually incorporate a time excess ranging from 24 to 72 hours, or a waiting period that excludes losses that do not extend beyond the waiting period.
The analysis of claims needs to consider the results that would have occurred. in the absence of the interruption to the utility. In some circumstance there may be concurrent causes that influence trading losses .It is important to distinguish between Insured and Uninsured losses. Proper forensic analysis is therefore essential.
The business interruption policy does not typically respond to the Event itself, but rather physical damage at the Premises or to property covered by a policy extension such as the Public Utilities extension.
Similarly, if a region is isolated, or wide area damage occurs, the trading prospects are reduced for a longer period. In these circumstances, the insured loss flowing from the interruption to the utility may be a lesser proportion of the reduction in trade.
Whilst many businesses, especially those whose products are perishable, suffer severe and permanent loss, many others see turnover return above normal levels post reopening as consumers replace commodities not available during the interruption.