Flood Response: Applying Hard Lessons from the Past, and Learning New Insights

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1 Flood Response: Applying Hard Lessons from the Past, and Learning New Insights John Kett CEO & President April Insurance Auto Auctions, Inc. All rights reserved. 1 manner without the express written permission of Insurance Auto Auctions, Inc.

2 2005 Hurricane Katrina-biggest CAT event to date. The evolution of responses is night and day. Katrina: no pre-planning, no tow trucks available, no resources to support. Harvey: had land pre-identified, staff ready to deploy, tow trucks on stand-by. Massive transformation in short time Insurance Auto Auctions, Inc. All rights reserved. 2 billion How we convert this Insurance Auto Auctions, Inc. All rights reserved. 3 2

3 Global disasters in 2017 cost $306billion 0.15 Inches per decade 2018 Insurance Auto Auctions, Inc. All rights reserved. 4 Into this. Lessons we have learned as we prepare for upcoming storm season. Critical we continue to improve: weather events are increasing in quantity and intensity. In 2017, natural disasters cost more than $300 billion disasters, double from Many factors that contribute to extreme weather events: increased population, greenhouse gas emissions, increases in precipitation levels. NOAA data shows since 1901, the average total annual precipitation has increased over land areas in the United States at a rate of about 0.15 inches per decade. What are the critical factors in a CAT? 3

4 Knowing the intensity of the storm and where it would hit. The volume expected from each carrier to secure just enough land and not too little/too much. Towers prepped and mobilized-securing vehicles could start almost instantaneously. DMV s would be flexible and fully staffed so titles could be quickly processed. Prepped and ready to trigger marketing to all buyers. How do you get as close to perfect in a catastrophe response when every catastrophe is different? Sandy was a salt water event in a densely populated area with limited access to fuel and supplies at the beginning. Aftermath of Matthew spread across 5 states Unprecedented rain in Baton Rouge came without warning. Harvey was a water event in one of the largest metropolitan areas in the US. Breakdown of 3 different years, 2012, 2016 and what we learned from each year. Achieve a perfect plan by learning from the past. Those who fail to learn from history are doomed to repeat it. - Winston Churchill 2018 Insurance Auto Auctions, Inc. All rights reserved. 7 4

5 URRICANE ANDY 14 storm surge of 7 2 Mutombo 2012: Hurricane Sandy throughout the Northeast. Oct 29: Sandy made landfall striking near Atlantic City, N.J., winds of 80 mph. ctober mph wind k A full moon made high tides 20 percent higher than normal - the right angle shape of the NJ/NY coastline amplified Sandy s storm surge. Sandy s strength and angle of approach combined to produce a record storm surge of water into New York City. Auto Auctions, Inc. All rights reserved. The surge level at Battery Park topped 13.9 feet. Approximately 150k insurance total loss units were recorded. Sandy was the largest volume event on record for IAA at that time. SUPERSTORM SANDY 14 storm surge of water 7 2 Mutombo October mph wind k units 2018 Insurance Auto Auctions, Inc. All rights reserved. 5

6 LOUISIANA FLOODS August feet 30-50k units September 2016 Flood waters across 5 states 20-30k units HURRICANE MATTHEW 2018 Insurance Auto Auctions, Inc. All rights reserved. 2016: two back to back weather events, flooding in Louisiana and Hurricane Matthew. August 2016: Louisiana flooding inches of rain in one day with no advanced warning in a concentrated area. For three consecutive days, the Amite River at Port Vincent broke the previous record level of 14.6 feet. 30 days later in September of 2016, Hurricane Matthew hit. Matthew was a Category 1 hurricane-cost the US $1.9B in damage. Storm produced 20-30k total loss units. Louisiana Flooding and Hurricane Matthew, along with other CAT events made 2016 the largest CAT year in IAA history at the time larger in volume than Sandy. 6

7 HURRICANE HARVEY August inches of rain k units September 2017 Category 4 Hurricane 15-20k units HURRICANE IRMA 2018 Insurance Auto Auctions, Inc. All rights reserved. August 2017: Hurricane Harvey. 9 days of heavy rain - 51 total inches in Houston. Over 175K vehicles total loss eclipsing 2012 Sandy volume and 2016 Louisiana Flood and Hurricane Matthew volume. September 2017: Hurricane Irma hit the Florida Keys as a Category 4 devastating the area. Estimated 6.5 million Floridians ordered to evacuate: largest evacuation in the states history. People took their cars out of the state, making less significant total loss event. Harvey and Irma, combined with other storms, set a new CAT volume record in one year for IAA. SUPERSTORM SANDY Taking a closer look, the challenge Sandy presented was not the amount of ground it covered as much as the location of that ground Insurance Auto Auctions, Inc. All rights reserved. 12 7

8 New Orleans 2,684 Sandy - more a water event than a hurricane - hit the most densely populated area in the US. The last large storm in terms of total loss vehicles was Hurricane Katrina in 2005, at that time it was the largest event on record. New York City 27, census: population density of New Orleans was 2684 people per square mile. Compared to New York City, which at the time Sandy made landfall was more than 27,000 people per square mile Insurance Auto Auctions, Inc. All rights reserved. 13 Byproducts of close quarters are the parking environments with as much of a vertical element as a horizontal one, leading to obstacles from underground garages. Sandy was a tidal event - waters receded, leaving vehicles in odd positions, including stacked on top of each other. Complicated recovery situation - significantly affected time it took to get to the vehicles Insurance Auto Auctions, Inc. All rights reserved. 14 8

9 2018 Insurance Auto Auctions, Inc. All rights reserved. 15 IAA and tow partners implemented a plan: single unit haulers removing vehicles one by one (bigger tow trucks would not fit in the confined spaces). Many parkways in the New York area forbid heavier truck traffic, so the one-car approach was the first stage of a multistep process to get vehicles to storage. Each recovered vehicle was moved to primary staging area, then picked up by two and four-car haulers, and taken to IAA facilities. Larger haulers made it to IAA staging areas, workers triaged and categorized vehicles by insurance provider and moved to storage yards. Breezy Point pre-sandy, we could get to Medford in to 45 to 60 minutes. With issues, that trip took 4-6 hours one-way. 9

10 Facility Footprint Pre-Sandy Facility Footprint Post-Sandy 2018 Insurance Auto Auctions, Inc. All rights reserved. 16 Multi-stage vehicle distribution strategy grew out of another challenge: population density of the region-land. For Katrina, IAA needed to secure only two additional sites because of the size of the available lots - a process which took seven days. IAA relied on phased approach. Oct 29: Sandy came ashore near Atlantic City, with surplus land already set aside at its facilities. IAA procured additional acreage as better estimates came in of the total volume. IAA Secured the first parcel of land - a three-acre patch - three days after Sandy made landfall. Weeks after, reached total of 18 separate agreements totaling approximately 450 acres, creating a network. 10

11 LESSON LEARNED: PRE-IDENTIFIED LAND Fast forward to Acres 22 Locations IAA expanded/secured over 500 acres in 22 locations across the Gulf and Atlantic coasts. Lessons learned: being prepared means being proactive and less reactive Insurance Auto Auctions, Inc. All rights reserved. 17 Sandy brought areas of opportunity in CAT response, many applied in Louisiana and Hurricane Matthew. LOUISIANA FLOODS / HURRICANE MATTHEW Louisiana flood and Hurricane Matthew were back-to-back weather events - IAA leveraged key partnerships to assist in the response. Two of the of the most important partnerships involved towing and titles Insurance Auto Auctions, Inc. All rights reserved

12 2018 Insurance Auto Auctions, Inc. All rights reserved. 19 IAA worked with the Louisiana EMS director to develop an order that lifts out-of-state tower restrictions as part of the governor s State of Emergency declaration. Developed a working relationship with the government explaining our role in the clean up led to greater cooperation. With restrictions lifted and tower recruitment easier, IAA s Transportation Department expanded our vehicle recovery efforts through a marketing blitz that recruited tow operators across the U.S. Extensive network of tow providers secured: IAA deployed 370+ trucks to the field during the height of the recovery. Utilized our mobile CAT Command Center to support dispatch operations across southern Louisiana. Leveraged relationships with state DMVs and dedicated team in title service center. Working with the states/expanding title staff, IAA was able to process titles faster in compliance with each state. Lesson learned from Sandy: process the titles at a centralized location, away from affected areas and branch Insurance Auto Auctions, Inc. All rights reserved

13 LESSON LEARNED: PARTNERSHIPS >90% <120 Volume Days Working in collaboration with the Texas DMV offices to expedite the processing of titles allowing us to process and sell over 90% of volume in less than 120 days. Able to secure in excess of 1,000 additional tower resources and deploy within only a few days and 70% pick-ups within 14 days. Partnered with national race course manager to access on demand hundreds of acres across most of the gulf and Atlantic seaboards Insurance Auto Auctions, Inc. All rights reserved. 21 Similar to Louisiana and Matthew, Hurricanes Harvey and Irma were also 2 back-to-back events, but even closer in time. HURRICANE HARVEY / HURRICANE IRMA Resources were ready to support with recovery efforts and communication Insurance Auto Auctions, Inc. All rights reserved

14 2018 Insurance Auto Auctions, Inc. All rights reserved. 23 Revised our tower plan and recruited faster. We were able to secure and deploy more than 1,000 additional tow resources within a few days. Picked up 70% of vehicles within 14 days. Developed a Tow App that allowed towers to receive and see their assignments via a smart phone. Provided towers with details at their fingertips, and provided the critical information of when a vehicle was picked up and delivered to a storage yard in real time. 14

15 Brought on Human Resources. Took a page out of the carriers playbook and recruited and assigned our CAT team. The second wave came once the storm past and we had a better sense of size, scope and location of the recovery effort. Hundreds of team members were deployed between Harvey and Irma. 24 Getting vehicles sold quickly is equally important. To accelerate vehicle liquidation process, we provided new/enhanced methods of bidding and buying. Accelerated the launch of both Buy Now Direct and IAA Timed Auction in response to Hurricane Harvey. Resulted in selling vehicles faster and achieving better economic results and higher levels of customer satisfaction. IAA Buy Now Direct IAA Timed Auctions 2018 Insurance Auto Auctions, Inc. All rights reserved

16 COMMUNICATION 2018 Insurance Auto Auctions, Inc. All rights reserved. 26 Combined our planning, technology development, financial commitment and execution on the ground. We provided our best response ever and likely the best in the industry. We can do better-still have work to do. We are not resting on our laurels. The next event might be different from Irma or Harvey. Lesson learned from 2017: Communication. IAA and carrier customers need to improve communication - changing estimated volume, where vehicles will be inspected, and criteria of title types. Key lessons learned: Pre-identified land and human resources. Partnerships with tow networks, government and local municipalities Partnerships with tow networks, government and local municipalities. Consistent communication to and from customers. Overall lesson: continuously learn from experience. Use experience to plan for the future... plan needs to be flexible. Every catastrophe is different. Pre-identified land and human resources 2018 Insurance Auto Auctions, Inc. All rights reserved. Consistent communication to and from customers 16

17 THANK YOU! 2018 Insurance Auto Auctions, Inc. All rights reserved. 28 manner without the express written permission of Insurance Auto Auctions, Inc.