The Emotional Cost of Flooding, and Why New Ideas are Essential

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Tony Boobier
by Tony Boobier

About 30 years ago I was a property insurance claims inspector. It’s where I cut my teeth on the topic of insurance. The claims function is often known as the ‘moment of truth’ because, although people pay their insurance premium, most hope that they will never need to use their insurance cover. It is when they make the claim that their ‘true’ experience of insurance happens, which can be a great one, or sometimes not so great.

One particular flooding incident resulted in me visiting the damaged property in the middle of a field by boat. Another one I remember is when the water ran over the top of my wellies during a visit (‘My feet are wet now, so I may as well carry on…’) Events like these left a deep personal impact. I subsequently wrote about flooding in my first book on Insurance Analytics and have contributed to other publications on flood restoration.

Insurers and reinsurers will be actively trying to estimate the cost of physical damage. Flood water is never clean, and decontamination is often critical as part of the drying process. Fraudulent behaviour by policyholders happens even at times like this. When once it was ‘best guess’, companies are increasingly using analytics to estimate their exposure and likely loss. With the average repair cost being £50,000, the final total ‘this time around’ is likely to be well over £1 Billion.

In addition to physical costs, there is a tremendous emotional cost as well. Final repairs could take as much as a year to complete in some cases. Delay and disruption to lifestyles creates an unwanted ‘emotional rollercoaster’ for affected homeowners and businesses alike.

While some will be rubbing their hands at the opportunity as supply exceeds demand, the human cost also extends to those inspectors and loss adjusters on the ‘front line’, as well as emergency services. They at least have a dry bed to return to, but it’s going to be a stressful experience for a while, and will test contingency plans to the limit. It’ll also have a big impact on ‘business as usual’, so it’s probably more bad news than normal if your house burns down
As we increasingly enter the digital age, at a time when climate change seems to cause more flash flooding, it’s important to think about what the future claims process might look like. Insurance execs and insuretech ‘disruptors’ need to be actively exercising their minds around this topic, which brings with it a compelling ROI.
I know what the future doesn’t look like – and that’s a digitalization of the existing system. Isn’t it time for new and better thinking about a problem that’s unlikely to go away?


(Taken from my LinkedIn site)

Tony Boobier