Preparation lessons from Maui fire.

The tragic Maui fire has been eye-opening to many as the cost and time to rebuild is dramatically more than expected. The best of us in the insurance industry have been saying fires or losses in remote locations are always complex. The remoteness of a location will have a significant impact on its access to materials and goods due to various logistical, infrastructural, and economic factors. Here's how remoteness can affect access and what to plan for:

1. Transportation Infrastructure/Costs: Remoteness often translates to inadequate transportation infrastructure such as roads, railways, and ports. These limitations can lead to higher transportation costs, longer delivery times, and reduced capacity for bringing in materials and goods. When buying a property or land to develop consider the transportation hubs. Do they have easy access to ports or railways? Lastly, look at the potential location's individual ingress/egress. What good are the transportation hubs if they can not make it onto the property? A bad example is the Oakland Hills. They are within five miles of the big Oakland ports, but no truck can make it around the bends and narrow roads.?
2. Supply Chain Complexity: Remote areas might require multi-modal transportation involving ships, trucks, and even air cargo, which can complicate supply chain management and increase the likelihood of delays. These delays lead to higher costs. What you can do to mitigate these delays is map out a distribution network yourself. Know the vendors you will use ahead of time to avoid time after a loss or in the middle of construction. Perhaps even set up pre-negotiated contracts to go into place only when the services are used.?
3. Limited Distribution Networks: Companies may be less inclined to establish distribution networks in remote areas due to the lower population density and potentially smaller consumer base, resulting in less frequent deliveries and a narrower variety of goods available. This means that even if someone moves your goods they will be hit with more requests than they can handle at the time of a large loss affecting a wide area. As I stated in point two, pre-negotiate with these vendors before you need them so they take your call first.?
4. Infrastructure Investment: Developing transportation and distribution infrastructure in remote areas requires substantial investment. Governments and businesses might hesitate to invest in these areas if the potential returns are uncertain or if the costs are perceived as too high. This goes back to point one. Also, keep informed of local government projects and infrastructure investments. Might still be worth developing land or property if you know it will be future transportation nearby.?
5. Energy and Utilities: Remote areas might lack reliable access to energy and utilities like electricity and water. This can affect the operation of industries, especially after a large loss when energy grids are already taxed. Having your own power with options like solar or generators is a good option if your area loses power. Those won't help in total loss scenarios, but absolutely will in partial loss or business interruption claims.?
6. Economies of Scale: Remote locations often have smaller markets, leading to reduced economies of scale. Alternatively, you may not be able to ship to your location on a large scale. Both of these result in higher per-unit costs for goods, making them less affordable for project or rebuild. Consider these before purchasing a location or property.?
7. Dependency on Local Resources: In some cases, remote areas might have to rely more heavily on locally available resources, which could limit the range of goods and materials they can access. This can impact the variety and quality of products available. For example, local lumber could easily be depleted in the event of a loss affecting a wide area. Consider overstocking on the most used materials.?
8. Natural Disasters and Climate: Remote locations can be more susceptible to natural disasters, which can disrupt supply chains and damage transportation infrastructure, further limiting access to materials and goods. In Hawaii, it is storms that cause shipping delays, but this could also be applicable to snow in mountain regions or heat in desert regions.?

In conclusion, the remoteness of a location can pose significant challenges to accessing materials and goods due to limitations in transportation, infrastructure, supply chain complexity, and economic factors. Overcoming these challenges often requires strategic investments, innovative transportation solutions, and effective coordination between governments, businesses, and local communities. The more that is prepared in advance the better.?

Happy to address any of these points or answer any questions.?

Sarmad Naqvi, CLCS

(510) 590-0635

[email protected]