Fact #2 – Operational and Data Complexity
Turning again to the three insurance fields—health care, auto and property—and the logistical challenges confronting an industry professional relative to work environment and expectations (with the general exception of EMT-type or battlefield medical work), there is a clear progression of complexity from health care to auto to property.
In health care, a service is provided in a (relatively) antiseptic office. The damaged property (the patient) typically can provide intelligent information to the service professional about its condition (e.g., “I have headaches intermittently”). The property can also provide intelligent feedback as to the effectiveness of the treatment (e.g., “It still hurts when I walk”). There are no artificial outside agencies that can affect the provision of services, and relative to expectations, the service professional likely has decades’ worth of empirical data regarding the efficacy of the proposed treatment.
In auto, the service is provided directly to the property (the auto) in a controlled environment (the body shop, which is likely dry and has a temperature between 60 and 80 degrees) with no outside agencies that can affect the provision of service. Most specifically, the owner drops the vehicle off and picks it up when the repairs are completed. The owner does not participate in the repair process and certainly doesn’t hover over the service professionals, suggesting to them what they should do. While it is true that the auto cannot talk back to the professional like a patient can about what is wrong with it (other than through some onboard computer systems), there is, on average, three to 10 years of specific, objective, scientific repair data on the particular property (e.g., a 2002 Infiniti G20) that can be helpful to the service professional in prescribing “treatment.”
In property, the service is provided in a completely uncontrolled environment (indoors/outdoors, high humidity/low humidity, hot/cold, wet/dry, clean/dirty) with multiple outside agencies that can affect the provision of services (property owners telling the professional what they can or can’t do, turning off equipment at night, walking through contained areas and spreading contaminants to wider areas, etc.) Other factors that must be considered are any health issues of the property’s inhabitants (immune system issues, asthmatics, etc.), how far the property is from the professional’s office (nearly 100 percent of health care and auto repair services are provided at the professional’s office, not in the field), and time. A damaged auto doesn’t get ”worse” five days after an accident whereas it could easily cost two to three times more to mitigate a water-damaged structure five days after the ”accident” versus starting mitigation within a few hours.
Additionally, while 95 percent or more of auto crash repairs are worked on by a single “restoration company” and are generally limited to no more than $40,000 in repair cost (average cost is less than $3,000), a structural property loss is often worked on by not just the primary restoration company, but many subcontractors (electricians, plumbers, roofers, etc.) and frequently, third-party professionals (industrial hygienists, art conservators, structural engineers, etc.) Not surprisingly, given the many different types of structures (apartments to resort complexes to office high rises,) the cost of restoration can range from $500 to $50 million. Finally, not only can the property not talk to the professional, but there is very little specific, objective, scientific data available on a particular property to assist in providing treatment. Data on a 1973, four-bedroom Colonial is meaningless. Property professionals must therefore apply industry-specific training and scientific knowledge to each completely unique situation.
(To be continued…)