When it comes to hurricanes, the cost of inadequate coverage and preparation can be extremely high.
The first quarter of 2019 saw an almost 38 percent decrease in catastrophe losses stemming from hurricanes, typhoons and other natural disasters – well below the 15-year average. Plus, early projections for 2019’s Atlantic Basin hurricane season are calling for a near-average hurricane season by measure of the number and severity of storms.
But even mild hurricane seasons can yield extreme losses. Indeed, this latest host of statistics and forecasts concerning extreme weather might give people a false sense of security.
Steve Bowen, director and meteorologist and head of Catastrophe Insight at Aon underscores the importance of looking beyond the projections: “Hurricanes are unique. It’s not necessarily the frequency of these storms. It’s where they end up going and the potential implications beyond wind – such as coastal and inland flooding – that add to the damage.”
Moreover, Jill Dalton, managing director of Property Risk Consulting at Aon suggests that periods of calm are ideal for ensuring proper protection for when a storm strikes. “The time to prepare for a storm is well before the storm hits. Understanding exposures and having emergency plans and response teams in place is critical.”
Early forecasts for the 2019 Atlantic hurricane season predict an average season. Projections from Colorado State University and Tropical Storm Risk’s forecast an average of 12 severe storms, including six hurricanes – two of which are major.
Projections aside, where the storms track, says Bowen, matters far more than how many. So in a hurricane-exposed area, preparation is essential – regardless of how average a year it is projected to be.
Preparing For The Worst
Hurricane preparedness, while it can seem like fundamental risk management, is still imperative to get right. Dalton advises that organizations consider five areas of preparation:
Getting The Coverage Right
With the insurance industry responding to the two costliest back-to-back years on record, policy limits and deductibles may have changed at this year’s renewals. Given the market conditions, Aaron Davis, managing director of Risk Solutions Property practice at Aon, recommends that companies plan ahead and prepare for worst-case scenarios. “It’s critical to approach insurance markets with accurate and verifiable data about property exposures, and insurance buyers should be willing to canvass the entire market for possible coverage,” says Davis.
“Communicate any coverage changes to local facilities management and C-suite stakeholders,” advises Dalton. “Translating percent deductibles into financial impact is critical. In our experience, it’s best to understand how those percent deductibles will be calculated before the loss happens.”
Hurricanes May Be Unpredictable, But Preparation Is Still The Way
As hurricane season gets underway, those organizations in exposed areas must be ready to address a storm – a lack of preparation leaves an organization vulnerable to the storm, affecting people and overall business operations. Conversely, proper preparation helps ensure as much continuity – and safety – as possible during such an event.
Says Dalton, “When a storm hits – and one will – teams need to be confident in who to go to so that people are safe and that the business gets back on track as soon as possible.”