They often deal with the same small local pool of buyers for salvage disposition and when the supply of salvage balloons (as it does after a catastrophe), local buyers' limited cash resources cannot keep pace.
Even in ideal situations, when not under the stress and constraints of disaster recovery, traditional methods of salvage disposition do not typically provide the highest possible recoveries.
The potential for maximizing recoveries is small for the remaining 90 percent of commercial insurance salvage that does not find its way to the open market.
Additionally, in order to maintain control over damaged goods or to adhere to strict brand-and-label agreements, many insured companies have the right to retain the salvage under the protection of policy brand-and-label clauses or control-of-damaged-goods clauses in their insurance policies.
We analyzed the market and saw an opportunity to use the benefits of the Internet and business-based processes to take salvage goods to the next level," Richardson said.
The result: Salvage proceeds have been raised by 50% to 100%, which ultimately reduces insurance claims and losses.
Current claim and underwriting practices, particularly those involving the handling of commercial salvage, are rooted in years of tradition.
These practices often consist of destroying the salvage or negotiating to leave it with the insured.
It is estimated that less than 10 percent of commercial insurance salvage currently finds its way to the open market.