As Puerto Rico prepares for tropical storm Dorian, the Puerto Rico Electric Power Authority (PREPA) has just filed its first insurance claim for damage caused by Hurricane María two years ago.
According to PREPA’s chief financial officer, Nelson Morales, it wasn’t until about two weeks ago that the public utility was able to complete the information necessary to file the first claim to insurance companies that cover risks in PREPA. This group of insurance companies includes Mapfre Global, which would cover 60 percent of PREPA’s insurable risks while London insurers, whose names were not provided to this newspaper, cover the remaining 40 percent.
Although it took the public corporation nearly a year to restore its entire power grid and its billing process was not normalized until late 2018, PREPA’s first claim after María was for $100 million, Morales said.
PREPA, under PROMESA Title III restructuring process, was the most affected by Hurricane María in September 2017. According to multiple media reports, its collapse contributed to the deaths of hundreds of people, once hospitals and elderly care centers were left without power and hundreds of businesses could not reopen for weeks and even months.
“We focussed on restoring the grid,” Morales said in an attempt to explain the delay in filing the claim, noting that PREPA operates a complex system that, among other things, has 330 substations damaged which had to be documented.
Morales also said PRPEA will soon file additional claims that could reach the policy´s cap, which in 2017 totaled $550 million. The official explained that PREPA’s insurance only covers the generation fleet and similar assets since transmission and distribution networks are not insurable.
PREPA also has coverage for business interruption and loss of income in case the corporation faces this situation for 30 days. That coverage is about $15 million, according to Morales, who during the interview indicated that back then, claiming insurance for this concept was not contemplated.
Morales said a division of King & Spalding is assisting PREPA in the claims process.
El Nuevo Día revealed last week that, in 2017, insurance producers contracts in the Treasury Department’s Public Insurance Area were awarded after an alleged “distribution” of contracts influenced by Katherine Erazo, linked to former Governor Ricardo Rosselló Nevares´ political fundraising group. This newspaper also revealed yesterday that dozens of agencies have not been able to recover their insurance claims almost two years after Hurricane María. According to sources, lack of expertise of insurance producers may partly explain this situation.
According to the Comptroller’s Office Contracts Registry database, in 2017, Edwin I. Rivera Brokers had PREPA account. Sources point that its owner, Edwin Rivera Malavé, has actively contributed to fundraising events in favor of Rosselló Nevares and has a close business relationship with Erazo. A few weeks ago, El Nuevo Día unsuccessfully requested an interview with Rivera Malavé and also tried to contact Erazo.