The Insurance Guy: Real-Life Risk Management Thanks to Sandy
Whether (no pun intended) people knew it or not, the recent burst of information, activity and preparedness ahead of the arrival of Hurricane Sandy this week actually served as a perfect real-life example of what is normally understood to be terms from the insurance world.And while we saw devastating results of the storm in New York, New Jersey, Connecticut and beyond, we fared quite well here in the Berkshires. I always believe that the mountains throughout this county provide an extra layer of protection from some of the terrible storms that others across this country deal with.
Insurance is basically defined as the transfer of risk from one party to another, thereby helping to reduce the financial uncertainty surrounding different types of losses. This is typically accomplished through insurance by spreading the risk from one person to a large number of persons with the pooling of insurance premiums. The concept is that not all insured's will suffer a loss to the same degree at the same time. Regarding Sandy, a few states were hit very, very hard, but many states were spared any damage.
We also saw playing out in real life other methods of handling risk. Avoidance of risk took place when many individuals and families literally got in their cars before the storm arrived and left the area where Sandy would be impacting. They avoided being personally injured, although they were not able to take their homes with them. One of the most obvious actions that was taken prior to the arrival of the storm was the boarding of windows, and the removal of objects from yards, and the early closings of schools and businesses. All of these steps were taken to reduce the severity of the losses that would take place.
Some people make decisions on where to live and work based somewhat on annual weather patterns and the types of storms that regularly impact an area. When one selects to live in an area that is generally devoid of many of those types of storms, they are doing their part to prevent such losses. And while, clearly, every possible loss cannot be avoided, there are decisions that can be made to mitigate the overall impact when something bad does happen.
Fortunately, the worst-case scenario never materialized for us. It is however, a good reminder that we should all probably approach things in life with a robust amount of good information, energy and game plan; and not just when the "storm of the century" is bearing down on us.
And as far as the big one missing us this time, it is clearly something to be thankful for when we are enjoying our turkey in November. That we still refer to as indulgence.
Dave Bissaillon dabbles in real life while working daily as an account executive at Smith Bros.-McAndrews Insurance Agency in Adams. His occasional column will touch on insurance and other fun stuff.
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