Natural disasters pose an ongoing threat to every region of the world, with consequences intensifying over time. Greater population in previously uninhabited or under-populated areas means higher risk for injury or death. More business and residential development in zones particularly prone to natural disasters, coupled with the rapid escalation of property values in those locales, has led to heavier monetary losses when catastrophes strike.
For example, with $85 billion in damage, Hurricane Katrina was the second-costliest natural disaster in the history of the United States. Volcanic ash clouds floating over Europe this spring cost the airline industry $200 million per day. Hail, wind, floods, earthquakes, summer and winter storms—all told, natural catastrophes accounted for $22 billion in insured losses worldwide ($12.7 billion in North America) in 2009, and that was a below average year.
As natural (and man-made) disasters become more expensive, insurance companies, adjusters and restoration companies need to work together to achieve a level of preparedness that will better equip the country to adequately face these natural tragedies.
Prep Work
Being prepared to respond to a catastrophe is more than having a written set of guidelines that claims reps understand and will follow when they need to. No, disaster preparedness is getting your ducks in a row... now.
Start by setting up a relationship with a reliable restoration company that has experience in catastrophic events and the capacity to mobilize quickly. Emergency restoration companies may be best prepared to handle catastrophes because they are specialists at fast-response service and are likely to have the equipment and expert personnel at the ready.
Some restoration companies have multiple locations and are represented in more than one city. If their distribution network is nationwide, they are going to be capable of responding to disasters from most locations. That's an important factor in cases where the local branches or franchises of a company are destroyed in the very area that needs service.
You should also establish a relationship with specialty restorers, those who can handle losses of property that have extraordinary value. Art, high-end landscaping, antiques, Persian rugs and personal hobby equipment, such as darkrooms or wine collections, all come to mind, but there are many others to consider. A thorough going-over of high-value policies is recommended.
After you've made the initial contacts and arrangements, follow with a backup plan. Build a deep bench of restoration specialists. In cases of widespread disaster damage, you may find you need more than your A-team.
Principal Steps in Restoration
A claims representative who knows how a standard restoration company proceeds will be better able to ask the right questions and inform customers of the progress of their claims. Each restoration is defined by the source of the destruction, what was damaged and the extent of the loss, but some general steps are broadly applicable across cases.
- Stabilization of the environment. In some cases, the ground itself might be unstable. In other instances, buildings, roadways or utilities might be damaged and present hazards. Entry to the loss site may be delayed while officials evaluate the area. There could be a need for temporary water and electricity to be brought in.
- Assessment of damages. Once the environment has been stabilized and the affected area is safe to move into, restoration companies generally assess the damages and complete a more detailed evaluation of work that needs to be done. When the adjuster and restoration specialist work together to properly document the damage and scope of the restoration activities, they can significantly reduce insurance companies' settlement expenses and speed up processing time.
- Clear and consistent communication. Consistent communication should eliminate many problems and last-minute surprises from cost overruns. Professional restoration isn't inexpensive, but it should cost less than a blanket decision to dispose of and replace everything affected by a covered peril. Moreover, when there is a question of value, the restoration company should be there as your partner to advise and evaluate in the decision-making process.
Mitigation at the Source
While a disaster preparedness plan at the insurer's end helps expedite quality claim service, the best way to avoid excessive natural catastrophe claims is by equipping businesses and homeowners with catastrophe-response knowledge.
There are a few simple steps businesses and homeowners can take when a disaster strikes. If the property is still safe for them to inhabit or use, they can take measures right on the scene to prevent further loss. Although that requirement may be in the policy, many insureds don't have the foggiest idea of what to do to stop ancillary damage. Your restoration partner most likely has a quick-list that could be distributed to your customers detailing mitigation measures they can take in the wake of a property-loss event.
Consider your restoration company as your affiliate and turn to them as such. The best ones will be able to demonstrate competence in emergency response, as well as provide other advisory services that help the claims adjuster and reduce the cost of loss. In a catastrophe scenario, the last thing anyone wants is unreliability.
Check out potential restoration partners through references and performance histories, determine their availability to you and your insureds in both proximity and timeliness, and make sure you or they have a backup branch or restorer you can count on in the event your A-team gets clobbered. Anticipate the perils—water, mud, wind, fire, mold, trees, whatever else your company is insuring against—and get to know your potential high-end property exposures so you can have adequate restoration capability for them.
Lauren John Reid is CEO of
PuroClean, a franchise network offering fire, water, mold and biohazard damage restoration services. For more information, visit
www.puroclean.com.