lost their garage doors. In some cases when they also left their automobiles onsite, there was also an auto loss on the premises. The point here is that is not sufficient just to collect information about the construction type or the year built of these homes. We really have to dig deeper into specific details about the construction, in particular in this case, garage doors.
I’m going to walk you through additional slides that have very similar points. Across the top we have another neighborhood. Here we have another neighborhood in Slidell, Louisiana. The predominant damage pattern across the neighborhood, a large residential subdivision of hundreds of homes, was very minor roof covering damage, typically not even close to the deductible level. So, for the carriers here there would have been no insured loss. However, for a portion of the homes what we discovered is that in the rear of the homes they had both aluminum porches and double entry French doors, both of which are known to be very vulnerable to high hurricane wind speeds. To the left of screen we see the remains of what formerly was the porch at the rear of this residence and on the right of the screen I found one of the few homes that didn’t sustain damage to these two features.
But again, this is the problem that you often see. Construction and occupancy wasn’t sufficient to differentiate these homes. What the underwriter really needed to understand is the fact that there were these aluminum porches and French doors which are very vulnerable to hurricane wind speeds.
The same story can be said for commercial properties. In this next slide we have basically BOP both. One area is in Houston, TX and one area is just outside of Baton Rouge. In case they each had a particular architectural design feature which was a parapet wall. What happens is these parapet walls extend slightly higher than the roof level on the building and when they get exposed to high wind speeds they’ll deflect and knock all the masonry veneer off the surface. If you look to the right and it’s somewhat visible in the bottom photo, this debris typically falls and then is driven into windows at the premise, resulting in high levels of content and interior losses.
This is my last example; but hopefully, you’re getting the point. Here we have two buildings that are constructed with EIFS, which is an exterior insulation finishing system. The building on the left is interesting because I had visited the same site during Katrina. They had repaired it and then I returned after Gustav and as I was walking by I couldn’t believe it. It had been damaged again, the same building at the same point and the same damage pattern.
Even more surprising that I met someone that maintains their valuables inside this building and to their displeasure they told me the story of how they met with the engineers and they were told that this situation was corrected. Obviously, it was not. But it is commonly known in the engineering field, particularly in wind vulnerability, that EIFS is a highly vulnerable coating and this type of damage is seen time and time again.
This is important information to collect about your commercial risks in order to effectively price them and make your cat decision making.
That’s the background and I don’t think anyone ever complains or doesn’t see the value in collecting more data. But particularly in these interesting times that we’re experiencing in the markets, the real question is cost. How can we get this data and what are the true costs for it? How can we do it and get it integrated into our existing system?
What I have here is one of the potential avenues. You can collect better data through your existing distribution system with the agent. I think everyone’s familiar with this process. The agent will talk to the insured, he’ll collect usually just enough information to quote the policy, and at the end of the day their goal is to quote and bind. They don’t see a lot of additional incentive to collect additional information about insured risk. But after that stage, the information passes on through your information systems, through the policy quoting system and then on to your policy management and your other data systems, perhaps the accounting system.
The challenge that you’ll often have is underwriters want to collect as much information as they can out of these systems. Many of them are legacy systems that have been in existence for some time. Any request to either add new data or construct a new report is typically costly. Again, you always have the factor that it’s difficult to get an agent to collect more information. Because if you’re more demanding on the agent, they might bring that business elsewhere.
What’s another alternative? Many companies have either in-house or outsourced field inspection, either for rating purposes or for loss control purposes. Again, I think most people are familiar with this process. Very quickly, moving from left to right, what will happen is the inspector is out in the field and he’ll create this combination of photographs and notes which describe the risk that you want to insure. For most companies, this is largely a paper process meaning that after the inspection is conducted, back at the office the inspectors are going to transfer all their notes and sketches and photographs into some type of a format, often either PDF or Word. At that point this information is stored away in either an electronic system as a PDF or some sort of electronic document or as a hard-copy paper file.
This is a valuable source of information because it’s the ground truth. Someone has actually been to the risk. They’ve got very good information. Not just about construction, occupancy – some of the typically collected details – but more details such as the window type, the number of stories, the square footage. Underwriters are often very interested in getting to this data. The problem is effectively extracting it.
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