For the most part, this story deals with larger properties but the comments here apply to the smallest of properties.
Catastrophe seems to be just about everywhere these days. Last year three major hurricanes hit the U.S. in a three-week period. Fires raged out of control in California, Oregon, Washington, Montana and other Western states.
Earthquakes are not unheard of either.
Catastrophe losses were huge in those events and especially in homes and businesses. In the hospitality sector Alexandra Glickman — who is the managing director of Real Estate & Hospitality for Gallagher — said those who were more honest about the value of their property did better in settlements.
“There are organizations worldwide — big risk management accounts and small ones — who are not reporting adequate values to their insurance broker or carrier. When a client reports having a $150 million hotel, but then suffers $350 million worth of damage during a catastrophe — there’s a real disconnect,” she said.
Glickman said Gallagher is a stickler with its clients on the importance of being honest about asset values. Honesty may cost a little more but in the end, when there is catastrophe, honesty is always the best policy.
A recent Travelers Companies Risk Index survey said 43% of businesses polled said business interruption is their greatest concern. Yet 40% don’t have a business-continuity plan in place and 10% said they didn’t know if one exists.
Marshall & Swift provides data for building builders. In its survey:
• 75% of commercial businesses are underinsured by 40% or more
• 70% of business leaders didn’t think their insurance is adequate
• 63% say they don’t conduct regular coverage reviews their agent or broker
Travelers Scott Humphrey said, “Considering the high number of natural disasters in 2017, it’s more important than ever for businesses of all sizes to take the proper steps to protect employees, properties and assets. Preparing for the unexpected, including the impact of severe weather, is fundamental to an effective risk management program.”
In his interview with Insurance Business America, Humphrey said insurance agents — like the independent agents of the PIA — are there for businesses to help them figure out their insurance needs.
“A good business contingency plans starts with companies correctly identifying what and where the threats to their businesses are. For example, in the North East the top weather-related exposures might be hurricanes and winter storms, whereas out West, companies might be more concerned about wildfire. They don’t have to boil the ocean; they just have to think about the worst-case scenario and build a plan around that,” he said.
Humphrey added that not addressing business losses is an attribute of human nature.
“We tend to think bad things won’t happen to us and so we brush off long-term planning in favor of immediate short-term needs. Our mission at Travelers is to educate consumers about the risks they face and help them to manage those risks effectively. Ultimately, a company with confidence in its risk management procedures is going to be a better business, both results-wise and for the end-customer,” Humphrey concluded.
Source links: Insurance Business America — link 1, link 2