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By Joel Berg

Less than two days after a tornado pummeled the St. Louis airport in April 2011, planes were coming and going. The big question was whether planes would ever again roll up to Concourse C, which had borne the brunt of the storm.

"Chairs were lying all over the place," said Jim O'Brien, executive general adjuster in the St. Louis office of NHI General Adjusters.

Contacted by Lexington Insurance, the airport's insurer, O'Brien first walked through the concourse on Saturday morning. The tornado had struck Friday evening, less than 24 hours earlier. Since then, executives from Lexington, the airport and its broker, Aon Risk Solutions, had been in steady contact via phone and email.

By Saturday, airport officials and the airlines had begun shifting operations from Concourse C to two other concourses, B and D, that had been idle due to declines in air traffic. But the operations shift was an imperfect solution.

Concourse C was the largest at Lambert-St. Louis International Airport and, based on its layout, the most lucrative, according to Jeff Lea, an airport spokesman. The area boasted restaurants, as well as a jewelry store and a Brooks Brothers retail shop.

The airport also stood to collect less money under lease agreements with the airlines, which were using less space on B and D than on C, said Susan Kopinski, Lambert's deputy director for finance and administration.

Full recovery was not a given for Lambert. Airports are good at responding to crashes, natural disasters and other emergencies, said Jack Lai, a senior account engineer for Allianz Global Corporate & Specialty in Chicago. They are less adept at figuring out how to keep planes, passengers and cargo moving after the emergency passes.

"When they try to move gates or passengers, that's when things break down," Lai said, citing problems that befell London's Heathrow airport after it opened a new terminal in 2008. "Everything basically fell apart for several weeks."

On the other hand, Glasgow International Airport in Scotland recovered quickly after a terrorist bombing in 2007. "It all depends on how coordinated the business continuity plan is," Lai said.

The St. Louis airport was unique in having spare concourses, Lai said. "Unfortunately, not too many airports have that kind of luxury."

Relying on the extra space, Kopinski and other Lambert officials aimed to resume full operations as quickly as possible, and they expected to be at 100 percent capacity by Tuesday, just four days after the tornado. It was a milestone they achieved, impressing industry peers.

"The time period ... is very remarkable," said Dawn Mehler, the risk, insurance and contracts manager for Broward County Aviation Department, which owns and operates Fort Lauderdale/Hollywood International Airport in Florida.

But resuming flights was not the only item on Kopinski's to-do list. When she met Monday with the consultants, engineers and accountants involved in the effort to assess damage and plot the recovery, another item topped the agenda: the fate of Concourse C. Could it be restored or would it have to be demolished?

"That had to be determined first, before you could be talking about anything," Kopinski said.

Luckily for Lambert, the concourse was not a total loss. The tornado had damaged roughly a third of the structure, and engineers working for the airport and Lexington decided the building was structurally sound and could be repaired.

Another decision taken that Monday appears to have been equally important to the progress of the claim, expected to pay out an estimated $25 million. Kopinski asked that everyone involved in the process meet weekly, setting the stage for open communication between the airport and Lexington, as well as among the many professionals working on their behalf.

Any large claim -- especially one involving an entity as complex as an airport -- presents numerous opportunities for disagreement. After a tornado, which usually brings hail as well as wind, for example, disputes can arise over whether damage was pre-existing, and thus not covered.

"If you get an unscrupulous insured, they might think it's their lucky day," said J. Stephen Berry, a partner in the insurance coverage group at the law firm McKenna Long & Aldridge in Atlanta. "They've had that rickety roof for five years; a tornado comes along and causes a little bit more damage or maybe causes no damage, and so they make a claim for it."

Another challenge is distinguishing ad-hoc repairs, undertaken to rebound quickly, from longer-term restoration work, said Steve Dimakos, a principal with Quantum Global Advisors, a loss management consulting firm in Chicago.

"You may be building all kinds of temporary structures that may need to be taken down again," Dimakos said.

Officials at Lambert, in fact, had to install temporary doors in the airport's main terminal while they waited to see what federal regulations would require as a replacement, Kopinski said. The original glass in the doors had been installed in the 1950s and upgraded about a decade ago with a film that made them safer in a blast. Regulations have been updated since.

"That added to the complexity of what we had to do," Kopinski said, adding that Lexington, a Chartis company, approved the temporary set-up.

Another complicating factor was a renovation project already under way on Concourse C. Before the tornado, about 10 percent of the work was complete, including the installation of new tile and lighting around several gates, according to Lea, the airport spokesman.

As such, insurers could have sparred over which policy should cover damage--the airport's or the contractors', according to Steven Badger, a partner in the Dallas office of law firm Zelle Hofmann.

"That's often a problem when you've got multiple policies that could be responsive," Badger said.

But Lambert seems to have avoided those headaches, he added. "It appears in this situation that the contract documents and the policies were clear enough to address responsibility for this type of event and, from the public record, there was no ambiguity."

A force behind the comity, according to participants in the claim, was the series of weekly meetings instituted at the outset by Kopinski. The meetings allowed professionals on both sides to head off any potential conflicts.

"That face-to-face every week, I think, definitely drove a more effective process," said the airport's insurance broker, Jo Ellen Thelen, a managing director in the St. Louis office of Aon Risk Solutions. "The realities are that sometimes you can't do that. But if I were to have one of my clients in a city that is a flight away, I would strive to have more meetings with the whole claims team, at least in the beginning. I think it sets the course for effective handling of the claim."

Sanjay Godhwani, a property product line executive for Chartis U.S. and Canada, agreed. "Any time there is a large claim, there are friction points," he said. "But every time you have the right people at the table, things go faster."

On April 2, less than a year after the tornado, Concourse C reopened for travel. Passengers were greeted by new tiling, brighter ceilings and other improvements that had been part of the renovation under way before the storm. One new addition was signs outside restrooms designating them as tornado shelters.

The airport's insurance policy, which was renewed this summer with Lexington, is substantially the same, according to Lea, the airport spokesperson.

Not every client may be able to say the same. Insurers have been scrutinizing how they underwrite tornado risk, according to brokers and industry observers. Last year, there were 1,691 tornados in the United States, up from 1,282 in 2010, according to the National Weather Service, a spike that some believe is driven by changes in the Earth's climate.

Insurers have broached the concept of percentage-based deductibles, and clients are facing more questions about their buildings. Insurers in the Midwest are asking whether businesses have hail guards installed around rooftop air-handling units, said Tom Hebson, a regional executive in the St. Louis office of Heffernan Insurance Brokers.

Roofing materials also have come up, Hebson added. "I think there's a definite push to improve the materials they're using," he said. "But it is at a cost."

Although the uptick in tornados is unusual, Hebson said, "I think most people see it as an anomaly."

JOEL BERG is a freelance writer and college professor who lives in York, Pennsylvania.

October 1, 2012

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