Disasters, as everyone knows can take many forms. From hurricanes to floods, earthquakes to twisters and so on. Regardless of the actual event there is a common thread to the immediate aftermath; chaos. A very, very expensive chaos.
I would like to take you through a semi imagined event, the cleanup of a category 5 hurricane landing in Florida. Now, we don’t know when that will happen we just know that it will. With rising seas and warmer waters we can also be pretty sure that category 5 hurricanes may well become the norm rather than the exception.
After the hurricane has passed several things happen in quick succession which may be broadly categorized as being planned or unplanned, at least from a FEMA perspective. Examples of the planned would include restoration of the power grid and for which equipment has been prepositioned with power utility workers ready.
Then there is the army of anyone with a truck turning up and just hauling stuff to the landfill, then invoicing FEMA or the local authority whatever they feel like. Chaos, but at least at some point power is restored and the roads cleared. Now stage 2 of the cleanup can begin because access has been restored.
It is likely that all of the major insurance carriers will have call centers already manned and able to verify coverage. Problem number one is that each carrier has their own software system which the insured doesn’t have access to. Then there is the broker, this is the entity who typically sold the policy. The carriers priority at this point is to issue a Claim Number, without this nothing can move forward. After the Claim Number is issued it now falls to a combination of the Carrier, the Broker and an Adjuster to process the claim.
So, the Adjuster visits the office building that had it’s windows blown out by the storm; everything inside is a wreck and so the Adjuster declares a total loss. Now the second ‘free for all’ begins with the Carrier obliged to pay whatever invoice they recieve. The Carrier has no idea what exactly they have covered. Yes, they will know that they covered all the computers, servers, LCD screens, phone system and the like but they don’t know down to the individual item. The same applies to the blown out windows or the carpeting or the furniture. There is a big difference in the insured value of a 3 year old i3 computer and a 1 year old i7 computer.
Then there are the environmental considerations; a wet carpet may well go to the landfill but that is not the best place for the electronics, indeed it may be prohibited.
The first “Free-for-All” may be unadvoidable, the second does not have to be. Imagine there were a system in which in the event of a disaster everything was preplanned and everything that is covered is detailed down to make, model, serial number and geo-location. Also, which entity is going to have responsibilty for each item after the event and when ( the carpets can’t be removed before the furniture). Just as importantly, what the cost will be.
Everybody wins. The insured gets lower premiums because the insurer is better able to calculate risk. The insurer no longer has the second free-for-all because they have everything agreed in advance. The Carriers Re-Insurance costs decrease by potentially millions. Everyone knows who is going to do what and when and what the cost will be.
Now zoom out to 60 thousand feet. With enough uptake, FEMA would have detailed visibility of all recovery activity, past, current and planned at all times. With costs.
Two years after the relatively mild hurricane to hit near Tampa, FEMA is still paying an Ewaste processor to recycle the ruined electronics as a consequence of the event. This could have been done within 6 months.