Approximately 70 percent of the U.S. population lives within 50 miles of a coastline. This population, as well as a significant number of physical assets, is exposed to risks associated with hurricanes and other named storms. At-risk industries include commercial real estate, hospitality, and public entities. (The energy industry is also vulnerable, but has managed prior catastrophes, such as Hurricane Ike, relatively well.)
Recent events — flooding in the northeast and earthquakes around the world — remind us that natural catastrophes have a compound effect on the property insurance market, affecting available capacity and pricing. As such, Marsh underscores the need for risk managers to evaluate their exposures, measure potential losses, and take a number of pre- and post-loss measures to minimize a catastrophe’s impact on their business, their suppliers, and their customers.
Specifically, Marsh recommends the following:
Pre-Loss Measures
* Conduct catastrophe modeling, to evaluate potential financial losses.
* Ensure proper compliance with building codes.
* Develop and regularly update business continuity and disaster recovery plans and procedures.
* Review supply chain management procedures to understand and minimize exposures related to suppliers.
* Develop properly worded and tested claims procedures.
Post-Loss Measures
* Arrange forensic accounting services to measure losses and prepare the financial metrics necessary to file a claim.
* Secure the assistance of a claims advocate from an agent or broker to prepare and manage the presentation of claims to underwriters.
* Secure preferred contractors to assist in necessary repairs following an event.