Florida, Airplanes and Hurricanes
When you live in Florida, you tend to become obsessive about weather radar. On a normal summer day, I check into WeatherTap a half-dozen times a day just to see what's popping. (Usually, that's a lot.) For the past week, I've been watching Tropical Storm Fay slog slowly across the state and I'll concede some disappointment that she missed us entirely. I shuttered up the house and was standing by for mobile homes, dumpsters and my neighbor's garden shed to go tumbling down the street. Alas, it was not to be.
This got me thinking about how little hurricane preparation Florida residents actually do, including aviation interests. You would think that with the National Hurricane Center blasting out warnings five times a day and the media consumed with reporting on the approaching storm, that people would undertake basic preparations like food, water and flashlights. But many don't. In 2006, after Hurricane Wilma clipped south Florida and whacked the Miami area, people were lining up the next day for FEMA-provided bottled water. To me, this represents such a fundamental lack of survival instinct that I don't see how such people actually feed themselves.
You'd think that it would be advisable to move threatened airplanes out of the storm's path, but most owners don't. The majority seem content leaving their airplanes in tiedowns or in hangars that may or may not survive the storm and the common refrain is, "That's what insurance is for."
This attitude makes me crazy, for it's the very embodiment of a dismaying combination of ducking responsibility while expecting someone else to bail you out of a jam you almost certainly had the wherewithal to avoid. It's what we used to call a "welfare" attitude. And it's one reason that Florida has, in some respects, become unlivable. Most visitors to Florida are shocked to learn that insuring a home against hurricane wind damage in this state is practically impossible. At best, many insurance companies have dropped customers without warning, in the middle of a policy period, or, worse, fled the state entirely. It's a major crisis here, aggravated by the tanking of the real estate market.
Part of this is due to the insurance industry's boneheaded and irresponsible practice of isolating Florida as its own market rather than conflating the risk into a national pool. Further, few if any of these companies practice proactive loss prevention. I called our insurer just after we moved here and asked for a list of hurricane loss prevention strategies. No one returned the call. A year later, the company dropped us as a customer and left the Florida market. The ugly reality is that it doesn't take much of a hurricane to wipe out the insurers in Florida, sending them scurrying for the Georgia line.
Factor two in this equation is that homeowners, builders and local governments do little more than the basics to encourage or force hardening of buildings against hurricane wind damage. Conceding that building codes have gotten stricter, they're not strict enough, in my view. The sad fact is that a hurricane slices through the state, smashes the crap out of a wide swath of real estate—to the surprise of those who are lined up the next morning for bottled water—and what do we do? Rather than wising up and building the hurricane-hardened structures we know how to build, we cheap it out and put up more of same crackerboxes, the long term survival plan being essentially the hope that it won't happen again.
The aviation aspect of this is that the insurance companies don't encourage loss prevention, either. Rather than get involved with active programs to relocate airplanes or offer discounts to owners who do it on their own, they're willing to take the losses and adjust premiums accordingly. If the overall P & L is looking good, why bother, right? Our friends at AVEMCO explain the reasoning in this week's podcast with editor Russ Niles.
While I see the point, I also think this is short sighted and encourages owners to avoid confronting their personal responsibility to protect their property against loss. Insurance companies measure risk with big picture actuarials and if a run-of-the-mill storm like Fay chews up a few airplanes, it gets lost in a rounding error. But four years ago, Hurricane Charlie destroyed 150 airplanes at just one airport and, increasingly, it's not hard to see how a major Florida hurricane could wipe out 1000 airframes that are just sitting there waiting to be shredded.
What most policyholders don't get—except maybe in Florida—is that it doesn't take much loss to see premiums escalate or to have companies abandon markets entirely. But the larger issue isn't the losses themselves, which the aviation insurers can probably absorb because there are enough of them to distribute the risk. The larger problem is that when insurance companies avoid active loss prevention, it sends the wrong message to policy holders because it suggests to them that they don't have a dog in the fight. It encourages the notion that insurance is somehow a substitute for planning, for preparation, for the kind of forethought required to survive.
In short, it encourages victimhood. And before you know it, you're standing in line for a bottle of water.