In this increasingly competitive and uncertain business environment, it is becoming clear that the insurance industry needs to work together to reduce exposure to claims, minimise job cycle times, reduce costs and enhance customer satisfaction.
To mitigate against the repercussions that a catastrophe such as flooding can have on our industry’s needs, global restoration specialist Munters MCS, brought together a plethora of eminent industry specialists from around the world, to discuss and address the issues concerning catastrophe and the learned steps that can be taken in order to initiate prevention.
Following the extreme weather events experienced around the world last year and the impending threat that these once rare phenomenon may become a regular occurrence, authorities in insurance, loss adjusting and risk management from countries including the USA, UK, Ireland, Germany, Holland and France were brought together to address the following questions; how do we better deliver restoration services in the instance of a catastrophe? How can we prevent certain catastrophes from ever happening? And finally, is there any value in adopting a policy of prevention rather than cure?
The 17-strong discussion group threw a unique perspective on how organisations involved in a catastrophe such as flooding, can better collaborate to enhance final outcomes and tackle the image and expectations that individuals have when faced with one.
To launch the first session the topic of whether the Government should be more proactive in responding to a catastrophe, was voiced? It was felt that a centralised, dedicated, response team that is automatically dispatched to affected areas, as oppose to the current fragmented approach from individual insurance companies, would significantly aid in improving the expectation levels of those affected by the catastrophe. This would not only offer a more timely response, but would act to provide a more succinct coordination process between all groups involved, providing consistency and a more targeted approach to organising capability, resources and machinery. Having one bureau to solely manage the catastrophe would make it easier to open communication channels directly with affected individuals, enabling regular progress updates, improving overall image and consequently, provide a benchmark for future assessment and improvement.
The first step in this process would be to establish classifications of how these various groups involved would work together by talking to other countries that already use such methods. This would then need to be followed by the implementation of a shared and accepted definition as to what constitutes a catastrophe, what is the marker, who is responsible for responding, and at what levels?
Next up for discussion was the adoption of a more consolidated approach between insurance companies and the Association of British Insurers (ABI), with the view of encouraging mitigation rather than competition. Adopting such an approach would enable the industry to provide individuals with more concise policies, by which they could clearly identify what they were getting for their money and the differences in service levels. This would not only aid the policyholder in comparing initial policy quotes, but would also assist in managing service level expectations during a flood. This should be implemented through the creation of an industry-wide policy structure, which is committed to and driven by insurers, ABI, loss adjustors and suppliers.
Other suggestions included a Government Policy to address uninsured properties and a level of commitment from the insurance companies to help home owners and business to reasonably afford insurance following a flood. The introduction of a policy similar to that used in France, was discussed as a way forward, whereby all flood restoration is funded through the Government, consequently placing more pressure on local authorities to undertake the regular maintenance and cleaning of drains and roads. Another suggestion was to make it a legal requirement for all homes and companies cited within flood prone areas to have a basic level of flood insurance. Ultimately it was concluded that certain stipulations and more acceptance of responsibilities are required across the industry.
The second session primarily focussed on prevention, who is responsible for it, how to address it and what further measures can be taken. It was felt that the initial issue to address is the need to raise awareness among insurers, suppliers and the public, so all fully understand the level of risk. This could be done through a national awareness campaign that acts as an education process to demonstrate that flooding can happen to you, even if you don’t live by a river. By undertaking such a campaign everyone both residential and commercial policyholders would know what positive preventative measures can be taken against flooding even if they have previously never been affected. This programme could then be supported through the introduction of a domestic disaster recovery programme, which would assist with the exchanging of information and knowledge transfer. Other areas that the group deliberated were the introduction of legal requirements on what minimal measures can be taken against flooding. In flood prone areas insurance companies could then realistically consider insuring homes and match premiums against associated risks as long as the minimum of proactive measures had been adopted. In order for such a scheme to nationally work, this should be a co-ordinated approach by the whole industry, as oppose to individual companies introducing their own incentives for reducing premiums. Other proactive measures include the introduction of minimum flood requirements within all new homes and commercial dwellings, enforced by Government by refusing planning permission if such preventative methods are not incorporated.
It was felt that by actively rallying Government, insurance companies could encourage the introduction of a prevention code of conduct and an active drive to change building regulations. In turn this would create a better understanding of proactive measures that can be introduced to prevent future flooding, these simple techniques include gaining a more detailed understanding of the surface water collection within the UK and how better co-ordination of overall planning consent for homes, the planting of trees, driveway drainage, etc. can impact upon flooding. A suggestion to include flooding in a building’s Home Improvement Plan (HIP) report was voiced, this would ensure that future owners are aware of the potential threat and the solutions that have been, or could be, put in place to prevent future flooding. The industry needs to actively lobby to force design elements, like the Thames Flood Barrier and encourage quick effective solutions that are already in use in Europe e.g. Aquatube – an inflatable solution that is erected as soon as a flood warning is given, this is particular effective in areas that are flood prone. Introducing a statutory pool of money and the investment of VAT accumulated from previous floods, to pay for flood defences would make solutions more viable.
Creating a list of lessons learnt from across the industry, by drawing on recent incidents, sharing individual learnings and alternative techniques that can be put in place for protection. This will provide the opportunity to openly share techniques, trends and provide tracking, using methods such as GPS to underwrite policies. These methods will also aid identification when processes are not being followed, encouraging the industry to become more proactive rather than reacting once a flood has happened and also provide useful data for mitigation. In areas prone to flooding, area risk assessments should be undertaken rather than expecting individuals to take responsibility. This could be supported by an advertising campaign, so that before the flooding season begins the industry as a collective or Government promote preventative measures, positioning them ahead of the game. Acting as a catalyst for becoming more risk aware, this would highlight the reasonable precautions that individuals and businesses can benefit from by protecting themselves, neighbours and the local community and encourage a sense of ownership. Insurance companies should use the marketing information and bond they already have with policyholders to communicate preventative methods, demonstrating the cost of not preventing against flooding, alongside the cost of the measures and the upheaval of continuity on life and or business.
- Overall the group concluded that the following key points needed to be addressed:
- A combined wisdom of lessons learnt for both domestic and business, brought together to make individuals aware.
- More emphasis as a duty of care on individuals to undertake a certain level of mitigation.
- More comprehensive flooding information to be included in a HIP report.
- A more coordinated approach by insurance companies to work with the ABI to share information and drive change.
Commenting on the success of the event Munters MCS Global VP of Sales & Marketing, Alex Kiffen said: “Being able to unite a variety of industry related contributors from around the globe and address specific concerns in relation to catastrophes and prevention, demonstrates the significance and priority that the industry places on these subjects. Overall the event provided a stimulating session for which we could all hold an open discussion and an opening platform to influence change.”