Houston is amazingly flat, with high ground existing mostly on freeway interchanges. On top of that, add three bayous and at least two rivers that drain state-sized basins through the city and surrounding residential communities. When it rains in Southeast Texas the water flows toward Galveston Bay, and a few times each year at least one or two bayous crest their banks and flood intersections and houses.
Here’s why that is amazing. Fewer than 20 percent of Houstonians purchased flood insurance. Flat ground, lots of water, rains often, prone to hurricanes and 80 percent of the people who flooded thought they didn’t need flood insurance.
Then Harvey arrived and you could hear the sound of thousands of homeowners lifting their feet out of the flood water to kick themselves.
Now Houstonians are facing a situation where one-half to one-million dollar homes are gone for lack of a $400 annual premium payment. After all, their house had never taken on water before.
Shifting gears, let’s take a look at grain storage, which can be amazingly dangerous. Conveyors fill entire banks of silos and run long hours with grain dust permeating tight enclosures.
When trucks and trains arrive, the conveyors run. At harvest time, the conveyors run 24/7. At least once or twice a month one of these facilities blow up.
There’s an analogy here to HAZMON systems that can monitor conveyor bearings and temperatures. HAZMON SCADA will shut down the line well before it overheats, glows red and sets off an explosion. In these multi-million dollar facilities the stakes are high, with workers at risk and livelihoods at stake for lack of a $50K system.
The guiding principle of insurance is simple: insure what you can’t afford, not what you can afford.
Most people can’t write a check to replace their home and its contents. Similarly, most companies can’t write a check to rebuild a silo and compensate a grieving family.
These are two seemingly unrelated risks, floods and grain explosions—but the parallel is clear, and we can take a lesson from this auspicious comparison.