As more insurance stakeholders understand the risks environmental change poses, they see the value of restoring vs. replacing after a loss. (Photo: Shutterstock)
Climate change undoubtedly presents one of the biggest challenges for insurers, their clients, and our society as a whole. The recent report by the Intergovernmental Panel on Climate Change states that the expected net present value of damages from an increase of 2°C of warming are expected to be $64 trillion by 2100. Insured losses in 2017 in the U.S. were the highest on record, at $138 billion, due to major hurricanes and storm events that experts link to climate change.
Today, an increasing number of insurance stakeholders are not just aware of the risks environmental change poses; they are changing their practices relative to the restoration of contents. Insurance executives have acknowledged that 'sustainably restoring contents' benefits all stakeholders, including investors, policyholders and underwriters. Any damages to insured assets require either restoration or payout. Balance sheets and profitability are highly exposed to whether contents are either restored or replaced.
After property damage has been sustained, typically, the first thought a homeowner or adjuster may have is that anything damaged ought to be discarded. That initial thinking poses costly consequences for homeowners, insurers and the planet.
It's no secret that landfills are filling up fast.
The impact of a consumer-driven, throwaway society is at a critical point given how greenhouse gases have been linked to increasingly destructive natural catastrophes. It's a vicious cycle — contents damaged post-disaster are often discarded rather than restored, only to be purchased all over again.
According to FEMA, 2005's Hurricane Katrina led to more than 99 million cubic yards of debris, much of it ending up in landfills. Hurricane Michael was the last to strike during the 2018 hurricane season; that category 5 storm left more than 36 million cubic yards of debris in its wake.
The capacity of landfills in the U.S. is diminishing at a rapid rate. In 2017 alone, landfills received 11.2 million tons of textile waste — things like clothing, bedding, and carpeting, according to the EPA.
The good news is that several government agencies are working to manage natural disaster debris. The goal is to ensure that communities, individuals, businesses, schools and local governments work together to reduce trash.
|Contents recycling
From a cost standpoint, it's better to restore than to replace. Restoration costs, on average, are typically five to 15% of an item's value.
The role of contents restoration supports environmental sustainability — call it "responsible" restoration. By restoring contents to pre-loss condition using environmentally friendly processes, contractors can prevent such items from being discarded and replaced. At both the individual and business level, firms utilizing state-of-the-art technology can restore significantly more contents efficiently.
Restoration doesn't just help the environment. Customers can breathe a sigh of relief because they don't' necessarily have to lose sentimental attachments to soft contents like their clothing or hard contents like furniture, appliances and electronics.
|Cleaning green
The use of green detergents, along with state-of-the-art technology that can restore Category 2 and 3 claims, also helps to rescue damaged contents from filling landfills. For example, proprietary wash systems require less water and use hydraulic pressure and a specific blend of environmentally friendly detergents with no harmful chemicals, to restore contents to a food-grade clean condition. Non-caustic detergents and organic sanitizers aid in the cleaning and restoration of leather goods. Specific cleaning cycles and proprietary greenwash recipes can restore soft contents, including items damaged by dirty water, smoke, sewage and mold. This contents restoration process reduces significant waste and removes organic and inorganic contaminants.
Ultrasonic technology, for example, can be used to clean hard content items. Using high-frequency sound waves, microscopic bubbles agitate around submerged items. Contaminants can include smoke, sewage, dust, dirt, oil, pigments, rust, grease, algae, fungus, bacteria, limescale, polishing compounds, flux agents, fingerprints, soot wax and mold release agents. Much more powerful than hand cleaning, this technology is safe and very effective for cleaning most hard surface household goods.
The corrosive and conductive nature of fire residue, smoke and water can quickly damage electronic circuitry and equipment controls. Most electronic components can be restored for less than one-third of the replacement costs utilizing specialized cleaning and drying equipment.
In the wake of expected increases in weather-related disasters, this generation of leadership is required to place climate resilience and contents sustainable development at the heart of the insurance business model.
Russell Jacobs is the quality assurance manager for ECONA Network, North America's largest full contents restoration network with over 276 certified service locations. A third-generation dry cleaner who grew up in the family business in Memphis, Jacobs has 25 years of experience in contents restoration. Contact him at [email protected].
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