CLIMATE CHANGE

TRANSCRIPT

[Bruce Silverman] Hello, everybody and welcome to another edition of "Managing Risk for Tomorrow Today" with Jeff Kleid. I'm Bruce Silverman. Jeff is the founder of Victoria insurance, 800-979-0176, jdkleid@eliterisk.com. He's been in insurance for a very, very long time. Very interesting, a very creative professional in this industry. Can't wait to jump right into it. Jeff, we're going to talk about climate change today. It's a very controversial subject, a lot of people on different sides of things. But when it comes to insurance, and climate change, it's all about creativity, and understanding how climate affects different areas of this large nation. So Jeff, first of all, welcome into your podcast, and let's jump right into it. Climate change, how are you feeling about it?

[Jeff Kleid] I feel like it's here to stay; not going anywhere. But, you know, I think I don't get caught up in like the whole, you know, the whole, like, there's a hole in the earth sky thing. I mean, it's real, my opinion, but I don't get caught up in it from from what I do with insurance, but it's here. I mean, we got to deal with it. And I think every industry, every company, every person, you know, whether you rent a rent a room in an apartment, or you own a mansion, or you have a construction business, or you have any other type of building, you're dealing with it.

[Bruce Silverman] So from that standpoint, what can businesses do? What can individuals do to protect themselves? Insurance in general, for a layperson, like me, is is difficult to understand, you know, you sit with your insurance agent, and they go over the policy, your head is spinning with all the different numbers, and all the different coverages? How do you know that you're properly covered? For the area of the of the nation that you're in?

[Jeff Kleid] I don't know if you can. Well, I mean, you hope you're properly covered because of the professionals that are around you, you know, you have insurance people that help you. The problem is, is you don't necessarily know what you're covered for anymore. Because things are changing and evolving. So there are you know, I mean, look, in every, every region, there's something different. Where you are in Florida, you got hurricane alley, right? You've got, you know, from Texas, up the Gulf through Hurricane alley, you on any given day, like I remember growing up, you used to get, you know, I see on the news.

Two weeks from now, there's gonna be a hurricane and it's gonna hit and now we get two days, right. And some guys some guys out there with like a coat, and it's like, calm and they're doing whatever, and all of a sudden, fast forward to your point, I don't even know if you get two days anymore. Like I honestly think in certain certain things, they come up, you know, they have two days, whether you are paying attention, the the the individual, the business, that's an excellent point. You know, like, like, people people do truly get stuck it up. years ago, if you were in a hurricane, it was because you didn't want to leave. Not gonna say you're stupid. I'm not gonna say anything. And by the way, what I would say is out here in California, you have wildfires, wildfires have been an issue for years. I go back, let's see, my youngest son is almost 18 when my youngest son was in a car seat. So he was probably, you know, a couple years old, we had a wildfire that kind of took over where we lived, and I'll never forget it. I remember the party in the cul-de-sac because the fire wasn't there yet. It was like all around us and fire departments were staged and everything. At the end of the day, by the time it came for us to evacuate, which we ultimately did have to do, where we went next, which was 10 miles away. But as the crow, crow flies, it was six miles through the dirt with evacuate there too. So people just don't realize what they have to prepare for. And insurance is just like one facet and insurance used to be your house burns, it gets replaced, your business burns down gets replaced.

The problem is, we can't be about that anymore. Because the cost of insurance has gotten so, so high, and what people need to realize, and most most business owners realize this, even if they don't like it, most individuals don't know this or realize this. You can't just charge a bunch of money for something if you can't justify the cost. So the insurance companies don't get to just charge a bunch of money. You know, like with health, health insurance, you can't just charge a bunch of money for health insurance. If you're not having claims, you have to be accountable. There's there's actuarial studies and there's underwriting that go along with it. So the problem exists in climate there is real climate issues.

You know, Colorado has frost and snow. Clearly Texas has everything right. The Gulf has the Gulf Have has wind hurricane, then you have clearly freezing temperatures like we had a couple of years ago. Nobody was prepared for that. You know? And it's funny when you say nobody, right? You put it in quotes. It's like, well, yeah, it's inevitable, it's gonna happen. But what you do is you do this modeling that says, This isn't going to happen for 1000 years, and you think you can go okay, but that 1000 years was 999 years ago. But really, it could happen. We could be in the 1000 years, because the one that happened before that maybe wasn't the same. Maybe it truly wasn't the thing that we got.

So climate, the function of it, people have to grab control of what they have. And so, you know, now you find some solutions, which is clearly data is key. The best part about it, even though it comes quick, if you have prepared materials, like for example, when it comes to floods, you can figure out, at least to some extent, the size of flood wall should be what you have to do. And I think I think they learned this with Hurricane Katrina, like with if you remember, it was I think it was Lake Pontchartrain or something like that. It you know, it cracked and when you know, when overflow? Well, depending on where you're located in relation to it, you know, what's going to happen with the water? Yes, the water is going to come through, yes, it's going to do whatever. But what if you could proactively divert it with a portable wall or something that deflects the water and makes it go around, and let's say it's a six foot wall, doesn't mean you're not going to get any water, it means you're going to keep the integrity of the structure in place, and you're going to minimize or mitigate that loss.

[Bruce Silverman] it makes a lot of sense. And we've spoken so many times. And one of the things that I've really noticed about you is your creative creativity, when it comes to looking at problems finding the solutions. And I think when you think about insurance, you don't necessarily think that is a creative industry. You think that it's very much more black and white, but you have always been able to find creative solutions.

[Jeff Kleid] I mean, yeah, I mean, I guess, I guess if because, you know, at least least where it started was here in the San Fernando Valley, which is, you know, it's hot. It's right by the ocean. It's right. in Malibu, I mean, look, there's four seasons in California, right? There's fire, flood, earthquake and rain, like, and I...

[Bruce Silverman] I would have said, There's hot, hotter, hotter and hottest...

[Jeff Kleid] Well, and that's in the valleys, like where I am now in Orange County, you know, 70 degrees every day, plus or minus, which, by the way, is not the case this past couple of weeks. But in general, you know, your four seasons, you know, what they are, like, you know, in Malibu fire will come through your area, at some point, you want to know, basically, what you need to do is decide how protected should my house be? Like, for example, you know, if you usually they only like shine a spotlight on less celebrities or the stars that have had issues. You go back, you look at Mark Hamill, and no, he wasn't a client. So I use this as an example because he wasn't the client. I believe his house burned down at least two times, for sure. Three times, possibly. And so he watched the reconstruction of his house, but he chose to live in Malibu. And there's nothing wrong with that. I think it's awesome. But people with finances and ability tend to live in the places that are the least desirable. You know, you got the guys in the you know, you have both extremes, right, you've got the Florida Keys, which is kind of a mix of people, you've got, you know, like this, this Jupiter Island and these other really nice pockets of Florida, where people spend millions and millions of dollars, it's inevitable, they're gonna have to batten down the hatches like there's nothing that doesn't say that's gonna happen. Malibu, you know, there's gonna be a fire and more importantly than that, you know, you can't necessarily get out it's one road in one road out each way. If the canyons covered, you have to figure it out.

[Bruce Silverman] It's the same thing in the Florida Keys. I mean, there's really one lane, sometimes two lanes to go north to get out of the keys. And on a good day, from the the southern part of the peninsula before the keys start. It's a good four hours to get from that bottom part south of Miami to Key West on a good day. You know, when there's a hurricane coming, and everyone's going north is a part of evacuation. You know, it can take seven and 10 hours to get, you know, from Key West to the mainland. I know you know, growing up in South Florida being in South Florida normally takes me anywhere from nine and a half to 10 hours to get from from my area to Atlanta. Well, I think it was either Hurricane Katrina or Wilma or one of those. We knew it was going to be bad. And I got in my car at 315 and I didn't Pull into the hotel in Atlanta until 315. In the morning, wow. 18 hours in the car with a dog and two small children. You know, that is one of those things that you don't necessarily think about in terms of living in an area that does have hurricanes. And you brought up a really interesting point a moment ago, hurricanes in South Florida, Texas, a little bit of everything you go a little bit north of, you know, we're Texas is included in this, and you got Tornado Alley. So every area of this nation has different aspects of the climate that they deal with. And over the last number of years, we have seen extremes either extremely hot temperatures, extremely cold temperatures, as you had mentioned before, more hurricanes, more wildfires. So we're seeing more frequency is my point. Well...

[Jeff Kleid] So that's the whole point is that so with with that frequency, and with what's going on with that the insurance companies have kind of all but said, we're not gonna be on the hook. Like we're not going to get like they try to they've mitigated and minimize the coverages. Even we handle a program that actually like just today, actually, we were asked to get onto an access policy for property coverage. Now, there's a lot of limitations in this property program. They want us to get on access, and really their biggest focus is, there's really little to no chance this will happen, you know, but in reality, there is a chance, but what they really are looking for is they're looking for, you know, how do we get access without paying through the nose, because we are in a technically a designated area.

And so now, which, you know, so we're looking at it, and we go, okay, but how can you mitigate it? Like what can you do? Well, there's a whole bunch of space between these buildings, and it's in it's basically commercial or residential living, but it's very spread out community. And really, it's a matter of how quickly, you know, you have to rely on is there another thing that's going to draw away the fire department? Is there another thing that's going to, you know, limit this? Is there something we can do to stop whatever happens from affecting all the buildings at the location rather than just one? And so when you start looking at, if you can't come up with an answer, that makes sense, you have to pass and if all the insurance companies pass on things like that, nobody will insure themselves. So in situations like large commercial owners, people that own a lot of real estate, or let's say it's a dairy farm, let's say it's a manufacturing facility, let's say it's, you know, you name it go on and on, it can be any type of business or industry, they have to look at it and go, okay, yes, in a normal world, the insurance is going to take take care of it. But if we don't take care of it, the insurance may have us limited to the amount of business interruption expense we can get. Or if they don't, our reputation would be that we didn't get back up and running. So those are the things you have to decide with all the stuff going on.

Probably the best example I can give you is years ago, I had a client who owned a bunch of camps. And they're like, at the time, it was one of the most active summer camps in the country. It was like, a way ahead of its time. I mean, it was doing zip-lining 20 years ago before, you know when when you only went to foreign countries for ziplining. Nobody here, right? People dangling from a thing going all the way through the trees. And it was right here in Southern California. And he was so used to fires and it was actually a big bear who's so used to fires. It happened in I want to say in the spring. And he literally said to me, Jeff, I need to be open June 1 I don't care what it takes. Literally not not even figuratively. He happened to make me a journalist. He gave me a press pass for his company and for his publishing company. I literally took my wife's purple navigator which didn't really blend in with the Big Bear Look. But I picked up the adjuster took my right hand person from my office and we went up there with them while the fire was burning. While they were firemen 100 yards out from us with a fire line to adjust what kind of money they could help him with that will get him back to business. The minute the fire like we were already already ordering these things called years to replace the cabins that were taken down so that he didn't lose the thing because for him it wasn't about the loss of income. It was about the loss of the summer camp attendee.

[Bruce Silverman] And the experience that goes along with it and you just illustrated perfectly the point that everyone needs to know about out working with Jeff Kleid, founder of Victoria insurance, 800-979-0176, jdkleid@eliterisk.com.  And the website, okay, and the website is vclrisk.com, you just made the perfect point. And it's a perfect closing point for this episode, that this is what you do for your clients, you get right in there, you get your hands dirty, you go right up to the line. And you're also creative in not only writing the solutions into the policy, but also how to make sure that your clients can not only stay in business, but provide the products and the services that they're in business for this particular case. It is the summer camp. And the summer camp is a very limited window of experience. It's not like you can postpone it and do it a few months later. If you missed the window. You missed the window. And we're going to talk about this in another episode because in talking about summer camps in 2020, most summer camps in the United States had to close up shop because of COVID 19. And we're going to talk about COVID-19 in another episode. So today's episode was all about climbing change in managing risk for tomorrow. Today. He's Jeff Kleid. I'm Bruce Silverman. Thanks so much for being with us. Look for us again in another episode very, very soon.

[Jeff Kleid] Thanks Bruce.