IAA's Catastrophe Response Strategy Brief: Real Estate Capacity
Published June 11, 2020 - Written by IAA, Inc.
9 min read
IAA looks at their operational execution, one of the key components that make up our catastrophe response strategy.
This brief was updated on July 7, 2022
Every weather catastrophe is dynamic and different. Timing, intensity, landfall location and population are just a few factors that determine the overall result of a catastrophe. Because weather events, such as hurricanes, have many constantly shifting variables, any response process has to be proactive yet flexible to ensure a timely and appropriate response.
IAA’s Catastrophe Response Strategy provides an unmatched level of service to our customers in their greatest time of need. Over the last 40 years, IAA has invested significant research and resources in developing its industry leading catastrophe response discipline. It comprises four key areas: Real Estate Capacity, Operational Execution, Transportation Logistics and Vehicle Merchandising. We employ a continuous improvement methodology to ensure our Catastrophe Response Strategy remains superior in the market.
Real Estate Capacity
During catastrophic weather events, there can be a rapid increase in insurance vehicle claim volume. The proximity of storage yards to the event and their safe accessibility by insurance professionals and their policyholders is critical. Strategically determining where to secure additional capacity to meet increased volume demands is fundamental to the service and response IAA provides during catastrophes.
The location of yards, the organization of vehicles, and the accessibility to customer assets is critical to ensuring an efficient response process. Storage yards need to be close to the actual event to minimize the time to transport vehicles, and to decrease travel time on adjusters and appraisers. Part of IAA’s strategy is to organize storage yards by seller customer to reduce the need for insurance staff to search through vast, unorganized locations for their vehicle units. IAA uses their standard vehicle storage structure and spacing within catastrophe storage yards to ensure adjusters can perform their duties safely and efficiently.
IAA’s industry leading Catastrophe Response Strategy includes our Flexible Capacity Model allowing us to secure additional acreage where and when it is needed providing our customers ample space, efficient accessibility and close proximity to the affected area.
IAA Flexible Capacity Model™
When it comes to delivering a capacity footprint, IAA has one goal – providing ample acreage in the right locations to service our customers. In alignment with nearly all emergency-planning protocols, IAA utilizes a Flexible Capacity Model given the unpredictable behavior of all weather related catastrophes.
The Flexible Capacity Model leverages properties that are leased, owned, and contractually optioned to ensure IAA can provide inventory space where needed, rather than where property is owned.
In comparison, a fixed capacity model for catastrophes results in significant challenges for clients managing a large influx of vehicle claims. Owned properties located further away from areas affected by a catastrophe create:
High risk of inaccessibility
Longer travel times for adjusters and appraisers
Inability to shift and move to meet uncertain nature of weather events
Longer transport cycle times potentially affecting policyholder satisfaction
Inefficient transport dispatch and routing
The IAA Flexible Capacity Model provides the ability to shift, potentially several times, based on a storm’s path to absorb increased volume across multiple locations. An example of this was Hurricane Dorian in 2019. Over 4 days, the storm shifted and traveled over 980 miles potentially hitting 12 locations. IAA’s Flexible Capacity Model ensured we had property near all potential landfall locations.
IAA Real Estate Overview
IAA’s historical success in servicing catastrophes and our capacity to manage them is unmatched in the industry. A fixed capacity model is not designed to shift or adjust to meet the dynamic nature of weather-related catastrophes. Our Flexible Capacity Model provides real-time agility to meet the very uncertain nature of weather events.
CAT Designated Properties
We hold storage yards across the U.S. designated as Catastrophe properties, used only during a catastrophe and controlled by IAA.
3,500+ | Acres of property in the U.S.
1,000+ | Acres of property in Florida
425+ | Acres of property in Gulf Region (TX, LA, MS and AL) and Southeast Coastal Region (GA, SC, NC and VA)
IAA Operational Branches
Any excess acreage at one of IAA’s over 210 branch locations throughout the U.S., Canada and the United Kingdom designated for CAT overflow upon the occurrence of a catastrophe.
210+ | Full branch facilities
50 | Located in all fifty U.S. States
IAA Real Estate Options
We hold multiple storage yards and real estate parcels with option agreements. This gives IAA the exclusive option to utilize the property in a catastrophic event. Agreements define “events” broadly and include “events” deemed a “catastrophe” by our customers. All real estate options are reviewed and re-confirmed every six months.
3,000+ | Acres of property in the U.S.
670+ | Acres of property in the Florida.
580+ | Acres of property in Gulf Region (TX, LA, MS and AL)
1,030+ | Acres of property in Southeast Coastal Region (GA, SC, NC and VA
Exclusive NASCAR Real Estate Agreement
In 2020, IAA converted the agreement with NASCAR into an exclusive relationship. The ground breaking agreement extends through the end of 2030 and includes tracks located in Miami, FL, Daytona, FL, Darlington, SC and Richmond, VA.
2016 | IAA established industry’s first real estate partnership with NASCAR for Richmond Raceway. Post Hurricane Matthew IAA entered long-term relationship to utilize NASCAR tracks for CAT response.
14 | Racetracks in catastrophe prone areas are available upon notice to NASCAR.
IAA Competitive Advantages
Consistent delivery of the industry’s leading CAT service and response in all events over the last 40 years.
Significant capacity in CAT prone areas to handle large-scale vehicle events based on the exposure in the region and through property lease, acquisition and options.
Substantial additional space in more than 50 locations throughout coastal regions.
Best solution in the very uncertain environment of the annual hurricane season where a storm’s intensity, direction and speed can change by the hour.
Optimal locations allow insurance companies’ assets to be located in highly organized yards close to the affected area.
Exclusive partnership with NASCAR providing usage of all 14 facilities.
Customer’s accessibility to their vehicle assets in localized yards and IAA vehicle alignment methodology that allows for safe and efficient inspections.
Certain statements contained in this release contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and which are subject to certain risks, trends and uncertainties. In particular, statements made in this release that are not historical facts may be forward-looking statements. Words such as "should," "may," "will," "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates" and similar expressions identify forward- looking statements. Such statements include statements regarding the expected timing and associated benefits with respect to this catastrophe brief on our business and plans regarding our growth strategies and margin expansion plan, and to our customers and company generally. Such statements are based on management’s current expectations, are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from the results projected, expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to: uncertainties regarding COVID-19, and other potential future health crises, including new more contagious and/or vaccine resistant variants, and the impact on the duration and severity of the COVID-19 pandemic and measures intended to reduce its spread, including the availability, rate of public acceptance and efficacy of COVID-19 vaccines; the loss of one or more significant vehicle suppliers or a reduction in significant volume from such suppliers; our ability to meet or exceed customers’ demand and expectations; significant current competition and the introduction of new competitors or other disruptive entrants in our industry; the risk that our facilities lack the capacity to accept additional vehicles and our ability to obtain land or renew/enter into new leases at commercially reasonable rates; our ability to effectively maintain or update information and technology systems; our ability to implement and maintain measures to protect against cyberattacks and comply with applicable privacy and data security requirements; risks associated with online commerce security and credit card fraud; our ability to successfully implement our business strategies or realize expected cost savings and revenue enhancements, including from our margin expansion plan; weather-related and other event beyond our control which may adversely impact operations; failure to attract and retain key personnel, have inadequate succession planning, or manage labor shortages; business development activities, including acquisitions and the integration of acquired businesses, and the risks that the anticipated benefits of any acquisitions may not be fully realized or take longer to realize than expected; our expansion into markets outside the U.S. and the operational, competitive and regulatory risks facing our non-U.S. based operations; our reliance on subhaulers and trucking fleet operations; changes in used-vehicle prices and the volume of damaged and total loss vehicles we purchase; economic conditions, including fuel prices, commodity prices, foreign exchange rates and interest rate fluctuations; trends in new- and used-vehicle sales and incentives; and other risks and uncertainties identified in our filings with the Securities and Exchange Commission (the “SEC”), including under Item 1A “Risk Factors” in our Annual Report on Form 10-K filed with the SEC on February 28, 2022, as such risk factors may be amended, supplemented or superseded from time to time by other reports we file with the SEC, including subsequent Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K. Many of these risk factors are outside of our control, and as such, they involve risks which are not currently known that could cause actual results to differ materially from those discussed or implied herein. The forward-looking statements in this release are made as of the date on which they are made and we do not undertake to update our forward-looking statements.
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