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Bracing for Fiona – A pre and post analysis of hurricane risk in Puerto Rico and the Caribbean

September 21, 2022

Five years after Hurricane Maria, Puerto Rico braced again as Tropical Storm Fiona, expected to become a Hurricane by landfall, made its way to the Caribbean Island.

Before Maria, the 100 x 35 mile island was not directly hit by such a powerful Hurricane since Hurricane San Felipe, in1928.[1] The storm ravaged Puerto Rico. According to a Harvard study over 4,600 people died, whether from direct impact or delayed medical response and treatment.[2] Remediation of damages from Hurricane Maria is reported to have cost over $91 billion dollars in losses, mostly in Puerto Rico. The insurance industry was grossly underprepared to face this catastrophic event. Not enough adjusters were assigned, delaying response time in light of an avalanche of catastrophic, often total losses. Carriers were forced into liquidation due to the overwhelming amount of loss, underwriting and reinsurance issues.

In this three-chapter blog, we address the preparations for landfall, the immediate aftermath, and the response and impact of the storm upon a still not recovered Island.

Following Hurricane Maria, the public power company was privatized in the hopes of a more secure and reliable system. However, as of Saturday, September 17, 2022, many people already reported over 6 power outages through the day- and rain or wind had not started.

None expected to retain power within moments of landfall, and all residents wondered if they would be left in the dark for weeks or months at a time. They were right. An hour after landfall, the entire power grid succumbed, leaving the island in the dark, indeed. should anticipate Additional Cost of Living claims related to power loss, as well as Business Interruption claims in the event of lengthy power interruptions.

How can carriers prepare for what is to come after Fiona’s direct impact on Puerto Rico? First and foremost, carriers should begin securing and mobilizing an adequate roster of independent adjusters, ready to respond to multiple claims coming in a massive wave. This is key. Puerto Rican homeowners and businesses weathered multiple carriers going out of business, and  Maria claims are still being litigated. The compound effect of the lingering losses, and potential for new claims, commands a plan of action for carriers.

In the wake of Maria, the Puerto Rico legislature retroactively amended the Insurance Code to allow for the appraisal process, which was not available previously, recognizing the use of adjusters working on behalf of insureds (such as “Public Adjusters”).  This changes provided a more streamlined system, doing away with the then- administrative procedures which made claims and insurance litigation a lengthy and hurdled process for homeowners.[3] State-side plaintiff-oriented firms traveled to the island, bringing insurance specific litigation experience, honed in Florida, Texas or Louisiana (states which recurrently address large weather CAT losses).  Insureds will have more resources, tools, knowledge and advocates to bring forth their claims and seek recovery for their losses. Before Maria, insurance litigation was not a litigator’s bread and butter… after all, it was about 85 years since a big storm devastated the island, with the exception of Hurricanes Hugo and Georges, which paled in comparison to Maria. They are now more prepared and ready to respond. The insurance industry must brace for a different type of litigation response, in all likelihood, with more aggressive counsel.  

Carriers, likewise, need to prepare for these claims and secure competent advice in the adjustment process, and perhaps, for future litigation. In CAT events, preparedness, securing an appropriate roster of skilled adjusters to respond to demand, and establishing proper response guidelines and schedules will be key to minimize negative outcomes. 

In my next blog, I will report on the impact of Fiona, the scope of damages and tips for loss response.

Thais Passerieu is a Senior Associate with Butler and is admitted in Puerto Rico and Florida. Her practice is focused on first-party coverage matters, specifically homeowners and commercial claims. In her five years at Butler, she has litigated hundreds of hurricane and wind losses, providing representation and pre-suit advice to Florida and foreign carriers. Please contact her if you have any further questions.


[1] El huracán María, el más fuerte en tocar tierra en Puerto Rico en 85 años, ataca con vientos destructivos e inundaciones | The Weather Channel

[2][2] John D. Sutter, Leyla Santiago for CNN- El huracán María habría dejado más de 4.600 personas muertas en Puerto Rico: superando en miles las cifras oficiales | CNN

[3] See Not Off the Hook…Trouble in Paradise for Puerto Rico Insurers – Butler Weihmuller Katz Craig LLP