When people are placed in harm’s way and displaced, the emotional toll cannot be overstated. I thought about this after a Fox Business News interview this morning. Fox was following up on a piece I noted in Wednesday’s post, Hurricane Isaac Slowly Strikes. The reporter asked whether some may simply choose to move to avoid future hurricanes and flooding.
In Tennessee Floods and the Emotion of Disaster, I made the following comment which is relevant to Hurricane Isaac’s victims:
Traveling from one disaster to another and talking with those involved and living through the impact is difficult. Most people need reassurance that others know, understand and care. Others are understandably frustrated and angry with the entire situation. When talking with seasoned catastrophe adjusters, virtually all have stories of just staying, sitting and holding hands with our brothers and sisters as they sob and then get to the point of being able to function. All victims eventually want to know where they stand and what they can do to recover.
I wish I could wave a magic wand and make it all a bad dream.
In Winds Over Bolivar–Stories of Texan Toughness Following Hurricane Ike, I made the following remark which could also apply to the concerns and thoughts of many in Louisiana and Mississippi today:
It is difficult to describe to others the sense of helplessness, frustration, and despair people feel when their homes, jobs, and friends vanish overnight. The community is destroyed. In its place are bewildering and often overwhelming rules regarding emergency situations, insurance, and possible rebuilding. The people in Bolivar suffered as much as any community could from a natural catastrophe. Sadly, many will never return to their neighborhoods.
In the cleanup and recovery following Hurricane Isaac, the truth is that for most, the damage from this storm cannot compare to the devastation following Katrina. Thirteen years from now, we will likely still find scars from Katrina. But I doubt there will be signs of Hurricane Isaac’s wrath a year from now. Yet, for those whose homes and businesses were flooded or who are wading in water today, they will undoubtedly question their decision to live in areas so vulnerable to hurricane damage. Is it worth the emotional and financial cost?
If the insurance product works as it should, it helps answer this question. Insurance plays a vital role to emotional and financial recovery. This is because Policyholders Buy Insurance for Peace of Mind and Not Economic Advantage. In that post, I quoted Professor Malcolm Clarke’s work on this topic:
Stress Aversion and the Purchase of Peace of Mind
Risk aversion grows from stress aversion. One of the causes of stress in human Beings–in the motor car, the work place, or anywhere else–is a sense of not being in control of their situation, or of themselves. For many of those who avoid flying, the reason is not only fear of an air crash but also fear of losing control of themselves, as a result of stress. Research also shows that, in a given risk situation on the roads, the anxiety levels among passengers are higher than among drivers. Drivers feel in control; passengers do not…
One of the ways in which people seek to regain control of their lives, to reduce stress and to move towards some kind of peace of mind, is by taking out insurance. That is why some insurers send their sales staff on courses to learn about the ’emotional needs’ of the customer. That is also why some insurers advertise life insurance for ‘life-long peace of mind’ and travel cover ‘to give you peace of mind when travelling’. A major bank has offered ‘a free home insurance review to ensure peace of mind’. Insurers also point to peace of mind when underlining that the cheapest insurance is not always the best insurance. Advertising of this kind has an enduring appeal, and even the courts have recognized this–in other countries.
Associated with the wish for peace and certainty is a desire for security. Sociologists tell us that on a descending scale of priorities, just after people’s basic needs for food, clothing, and shelter, comes the need for security. Insurers know this too, and security is another prominent feature of the image that insurers project of their products to the insured.
…An important feature of insurance contracts is that a significant part of what policyholders are paying for is peace of mind.
When people have purchased insurance and have suffered a loss, there is a certain peace of mind in knowing that insurance will soften the financial blow that would otherwise add further anxiety to a tragic situation. All of that is destroyed if the insurance policy has significant limitations, deductibles and exclusions of coverage which leave uninsured losses. Peace of mind can also be destroyed if insurance claims handlers are slow to pay or take aggressive non-claims paying positions during the adjustment. This is why departments of insurance need to regulate the conduct of insurance claims departments and be concerned about the trend of modern insurance companies to sell “cheap” insurance through policies that carry high deductibles, low sub-limits of recovery, and numerous exclusions of coverage. Such policies make the insurance contract almost illusory; the promised peace of mind for policyholders and entire communities is never delivered.