Natural Disasters Present P.R. Opportunities
Stephen W. Philbrick
The insurance industry doesn't exactly occupy an exalted position in the minds of many consumers. There is definitely room for improve-ment in the public perception of our industry in many areas. One of the few areas where we do get plaudits is for claims handling during and after hurricanes. The industry has done a decent job of getting people in quickly, and delivering money to recipients promptly. (The recent hurricane Floyd hasn't generated that same kind of positive press because so much of the damage was due to flooding, often uninsured.)
I think that the insurance industry could use hurricanes to do an even better job of putting its best foot forward. If implemented correctly, I think it would provide a happy coincidence of helping consumers and cutting costs for insurers, as well as positive public relations. At the end, I'll try to tie this in to an actuarial subject.
Media coverage of impending hurricanes wouldn't seem complete without the ubiquitous images of storeowners nailing sheets of plywood over store windows. A common story is the shortage of plywood, occasionally accompanied by reports of price increases. While one can be sympathetic to the inexorable economic forces of supply and demand, increases in prices for disaster supplies understandably rankles some.
My proposal is simple to state, although the logistics could take time to sort out. The insurance industry should stockpile plywood, oil lamps, and other supplies at strategic locations, and loan them in the event of an impending hurricane.
Timely provision of plywood and OSB sheathing could reduce the losses to policyholders as well as insurers. As a result, the industry might find itself "purchasing" advertising with a negative net cost. A good marketing expert can figure out how to get the most mileage out of the potential public relations. I would suggest creating some industry association with a catchy name. Until the experts take over, I'll suggest iHELP-insurance Hurricane Emergency Loan Program. Instead of television shots of drab brown plywood sheets, we would see brightly painted sheets of plywood emblazoned with an iHELP logo. Plywood intended for a single use is not coated, and will warp when wet. If this organization loans the plywood sheets and collects them after a storm it would make sense to go with coated material suitable for multiple uses. With proper planning, the industry could stockpile sufficient material to provide the necessary supplies for a major hurricane, and we would stop seeing the pictures of empty store shelves.
Detractors might argue that supplies such as drinking water or oil lamps would not mitigate insured losses. However, as the industry looks for federal legislation relating to tax benefits for catastrophe reserves and protected cells, it can only help the passage of such legislation if the legislators see the industry taking steps to help out people in the event of a hurricane. These steps should include a combination of things that simultaneously help the industry, and some that help the insured, but only indirectly help the industry (via good public relations.)
So how does this relate to an actuarial issue? As I think about the logistics of stockpiling materials—whether there should be a few large locations or more numerous, smaller locations—whether one moves material to a storm area by train or truck, it seems that we need good models—models of storm tracks as well as transportation logistics. And I'm convinced that actuaries can build good models.