Disaster Preparedness - Insurance and "Beyond Insurance"
A picture speaks a thousand words; the lone Filipino woman looking upon her ravaged property. We pray the Filipinos are able to recover from the effects of Typhoon Yolanda.
I was drawn to this November 11, 2013 article in Bloomberg Business Week titled, "Remittances Are Insurance for Typhoon-Ravaged Philippines". What was the insurance coverage in this region? How similar is it to Kenya's under-insured economy?
Storm damage in Leyte, Philippines, on Nov. 11
While Super Typhoon Haiyan struck the Philippines with a murderous rage that left up to 10,000 dead, the storm wasn’t a “significant” event in insurance term. Look at images of the devastation—the splintered wood, piles of flip flops, corrugated metal—and you see why. The province of Leyte, and its capital Tacloban City, aren’t global commerce hubs. The people here rely on fishing and farming. It’s one of the poorest regions in a country that just recently was deemed investment grade by the three major rating agencies.
While the human toll of Haiyan (or Yolanda, as the Filipinos call it) is already high, the financial toll to insurers is likely to be small. Even if the storm costs $14 billion,as Kinetic Analysis estimates, only $2 billion is likely to be covered by insurance. Even $2 billion in payouts could be optimistic, as the Insurance Information Institute (III) says the Philippines is home to “dozens of tiny and under-capitalized firms.” As a result, III notes, the percentage of people owning policies has actually dropped.
So where does that leave survivors? In need of foreign and federal aid, obviously. But another source is likely to help, too: remittances. Filipinos sent home $1.8 billion in September, according to Barclays, up 8.2 percent from a year earlier. Some 10.5 million Filipinos now work abroad and often send home money every month. That’s about one-10th the country’s population, which may explain why one of the first forms of relief was free overseas phone calls. Already, expats have tapped their networks to raise funds for the disaster relief. Bayanihan Council, an association of 55 Filipino groups in the United Arab Emirates, sent a few thousand dollars over the weekend. Groups from Winnipeg to Hong Kong are doing the same thing.
While they may lack the heft and know-how to rebuild cities flattened by the storm, this reaction demonstrates the strong ties that Filipinos have to their home country. Remittances account for almost 10 percent of the Philippines GDP. In a crisis like this, they’re less likely to be concerned with keeping their losses low. They want to know how much more they can do.
Unlike the Philippines, I'm not sure Kenya is at a stage where one or more members of the family can be classified as "Foreign Workers". The November 2nd article in The East African notes the increase in Diaspora Remittances...
Kenya’s diaspora remittances rose by 8.5 per cent in the year ending September 2013, the slowest annual growth in three years, even though total inflows touched an all-time high.
Data from the Central Bank of Kenya shows that total remittances rose to $951 million from $876 million last year.
However, talking about Insurance, we must also talk about "Disaster Preparedness" to cover areas not covered by insurance, or to mitigate insurable risks.
You most probably have a First Aid Kit in your vehicle, motorcycle, house of business?!
You do have the telephone number of an Ambulance Provider?! Has your Insurance Agent signed you up with "Kenya Red Cross" or "AMREF Flying Doctor Services" especially if you're work is in the "Bush"?!
You have a fire extinguisher in the pick-up, obviously since the Traffic Police are always checking on this. What about your vehicle, house and business?!
The "Dirty Word" for Disaster Preparedness" is "Food Storage". You are able to secure your families non-perishable food supply for at least 3 months?! Look, you can't eat palm oil based margarine. We're talking about rice, beans, spaghetti! Foods that have relatively long storage value.
The most important of all! Your body can survive 30 days without food, but only 3 days without water, "clean" water. Water filters range from installed kitchen units, to simple portable water filter straws. Cholera... You can guess is, must be avoided. Oh, and soap! You can get a vaccine! If you've watched Bear Gryllis and Ray Mears' Survival Documentaries you'll understand the need to pack abundant water on family trips. Remember the 1990s, when on one occasion, it rained so much that the diversions on Mombasa Road, along the Tsavo National Park, became impassable for 3 days. Water had to flown in for bus travellers who only had 250ml!!! Before Tanzania got amazing roads, travellers would be stuck for even a week. They had to follow baboons to trace their source of water. Did you hear about the travellers who were stuck in the DRC/Zaire Jungle during Mobutu's outster for 4 weeks, and didn't know Kabila Senior was the new Boss! Well that's another one for those who forgot about SW radio, and only know of FM stations!
Here are some guidelines you could think about.
What You Can Do Now: Under Threat of a Natural Disaster
Natural disasters can strike anywhere at any time. These resources from the US NAIC may be helpful, plus we've added First Liberty Kenya recommendations and comments in italics.
- Make sure you have bottled water, a first aid kit, flashlights, a battery-powered FM & SW radio, non-perishable food items, blankets, clothing, prescription drugs, eyeglasses, personal hygiene supplies, and a small amount of cash or traveler’s checks. Have some tools in the house, you can't dig with bare hands.
- The mobile phone networks failed in the Philippines after some days, so maybe an extra battery for your phone.
- For personal safety, identify what storm shelter is available to your family and prepare an evacuation plan. Talk to a security consultant, who could advice you on a Panic Room, if you anticipate looting like in the case of the Philippines. Know your OCS - Officer Commanding Police Station and be respectful, whether (s)he's a Corporal or Inspector. Don't demean their Juniors. You don't know who'll help you out in a tight spot. Organise a Neighbourhood Watch, as we saw the Asian Community got organised to "sort things out" during the Westgate incident. Learn Self Defence skills!
- Choose two meeting places: one right outside your home or work in case of a sudden emergency, such as a fire; and one outside your neighbourhood in case you can’t return home. You may only think of The Designated Area in your Employers' Evacuation Plan, but what's YOU'RE family's plan to get home from work?!
- If you need to evacuate your home, turn off all utilities and disconnect appliances to reduce the chance of additional damage and electrical shock when utilities are restored.
- Mitigation - There are steps you can take to help mitigate - or lessen - some of the damage to your home caused by natural disasters. Generally a mitigation plan will begin with a survey of your home and the area around your home to identify objects like yard debris that could compound damage your home in high winds or under threat of wildfire. "Fire Breaks" on farms help reduce the impact of fire by saboteurs.
- Keep a readily available list of 24-hour contact information for your insurance agent and insurance company. Make a list that includes your policy numbers, your insurance company and insurance agent's phone numbers, website addresses and mailing addresses. Also, check to see if the company or your agent has set up an emergency information hotline, in case of storm damage. It is a good idea to store this information, and a home inventory, in a waterproof/fireproof safe or a safe deposit box. Also consider sending an electronic copy to someone you trust. If you have to evacuate your home, you want this information to be easily available to you.
- Keep copies of Identification Documents, Birth Certificates & Marriage Certificates in waterproof plastic pouches. Back them up online together with Title Deeds and other documents.
- A home inventory can be invaluable when deciding how much insurance your life situation requires to adequately insure your home in the path of a natural disaster.
- I used to have an Expatriate General Manager who used to have a small "ready-to-go" bag in his office, for use during emergencies. You can search YouTube on various options.
10 Things You Should Know About Purchasing Home Insurance
- You Need Home Insurance Homeowners need to purchase home insurance to protect their homes and personal property. Those who rent need insurance to protect their furniture and other personal property. Everyone needs protection against liability for accidents that injure other people or damage their property.
- Decide How Much Coverage You Need The better your coverage, the less you will have to pay out of your own pocket if disaster strikes. In some cases, your lender decides how much coverage you need and may require you to buy a policy that covers at least the amount of the mortgage. It is important to note that the amount of coverage you buy for your house, contents and personal property will affect the price you pay.
- Compare Excess / Deductibles The deductible is the amount you have to pay out of pocket on each claim and applies only to coverage on your house and personal property. Make sure when choosing a policy that you are comfortable paying the excess / deductible if you make a claim.
- Replacement Cost or Actual Cash Value? You have the option to choose to insure your home and belongings for either replacement cost or actual cash value. Replacement cost is the amount it would take to replace or rebuild your home or repair damages with materials of similar kind and quality, without deducting for depreciation. It is important to insure your home for at least 80 percent of its replacement value. Actual cash value is the amount it would take to repair or replace damage to your home after depreciation.
- Shop Around Before You Buy You are not required to purchase insurance from the company your lender recommends. There are a number of unbiased sources available to find out what different insurers charge for identical products and services, including your state insurance department, consumer publications and your public library.
- Ask Your Agent About Discounts Insurers may offer lower prices for such things as insuring your home and car with the same company, installing deadbolt locks or alarm systems or replacing the roof.
- Basic Coverages Available Whether you own or rent, there are different packages of home insurance offered to protect your home and belongings. Each package protects against a specified number of events that cause damage to property. Three examples are fire, windstorm and theft. In addition, each package policy usually contains four additional types of coverage: property damage, additional living expenses, personal liability and medical payments.
- Where to Shop Check the internet, newspaper and yellow pages of the telephone directory for companies and agents in your area. In addition, ask your neighbors, relatives and friends for recommendations on insurance companies and agents. Remember to shop around to get the best price and service.
- Read Your Policy CarefullyYou should be aware that a domestic insurance policy is a legal contract. It is written so that your rights and responsibilities as well as those of the insurance company are clearly stated. When you purchase home insurance, you will receive a policy. You should read that policy and make certain you understand its contents. Keep your policy in a safe place and know the name of your insurer.
- Review Your Domestic Insurance Needs Every Year Check with your insurance agent at least once a year to make sure your policy provides adequate coverage. The addition of a room, new insulation or remodeling add value to your home and therefore may increase replacement cost.
© 1991 - 2013 National Association of Insurance Commissioners. All rights reserved. Adapted 2013 by First Liberty Insurance Agency
The Benefits of creating a Domestic Inventory
Homeowners and renters: "It pays to know your stuff"
Creating a simple home inventory helps you track what you own and what it is worth, making important insurance decisions easier.
An inventory is especially important for families who have amassed years of personal possessions. Just look at your house: most probably the stuff you've amassed will not fit one lorry-load.
How to create a home inventory
- Group your possessions into logical categories, i.e., by hobby, by room in your home, etc.
- Your list should include celebration purchases like jewelry and art, as well as everyday leisure items such as televisions and guitars.
- Don't forget items you use rarely such as holiday decorations, sports equipment, tools, etc.
- Pull together copies of original sales receipts and/or appraisal documents. Also note model and serial numbers.
- Carefully photograph or videotape each item and document a brief description, including age, purchase price and estimated current value.
- Store your home inventory and related documents in a safe, easily accessible place online, on your computer or in a fire-proof box or safe deposit box.
- Do not store jewelry at home. That's why Banks have safe deposit boxes. Have an Appraiser to Assess the Fair Value of the Jewelry'
A home inventory can be invaluable when deciding how much insurance coverage fits your life situation and makes sure you are adequately protected should you need to file a claim.
Tribute to those who gone through a Disaster
A poem "Song of Sorrow" written by Kofi Awoonor, the Ghanian poet, who died during the Westgate Incident in September 2013.
Dzogbese Lisa has treated me thus
It has led me among the sharps of the forest
Returning is not possible
And going forward is a great difficulty
The affairs of this world are like the chameleon faeces
Into which I have stepped
When I clean it cannot go.
I am on the world's extreme corner,
I am not sitting in the row with the eminent
But those who are lucky
Sit in the middle and forget
I am on the world's extreme corner
I can only go beyond and forget.
My people, I have been somewhere
If I turn here, the rain beats me
If I turn there the sun burns me
The firewood of this world
Is for only those who can take heart
That is why not all can gather it.
The world is not good for anybody
But you are so happy with your fate;
Alas! the travelers are back
All covered with debt.
Something has happened to me
The things so great that I cannot weep;
I have no sons to fire the gun when I die
And no daughter to wail when I close my mouth
I have wandered on the wilderness
The great wilderness men call life
The rain has beaten me,
And the sharp stumps cut as keen as knives
I shall go beyond and rest.
I have no kin and no brother,
Death has made war upon our house;
And Kpeti's great household is no more,
Only the broken fence stands;
And those who dared not look in his face
Have come out as men.
How well their pride is with them.
Let those gone before take note
They have treated their offspring badly.
What is the wailing for?
Somebody is dead. Agosu himself
Alas! a snake has bitten me
My right arm is broken,
And the tree on which I lean is fallen.
Agosi if you go tell them,
Tell Nyidevu, Kpeti, and Kove
That they have done us evil;
Tell them their house is falling
And the trees in the fence
Have been eaten by termites;
That the martels curse them.
Ask them why they idle there
While we suffer, and eat sand.
And the crow and the vulture
Hover always above our broken fences
And strangers walk over our portion.
