Earlier today, Colorado State University's (CSU) Department of Atmospheric Science issued an updated forecast of the 2010 Atlantic hurricane season. In 2010, CSU predicts an above-average Atlantic hurricane season, and anticipates an above-average probability that major hurricanes will hit land in the U.S. and Caribbean. CSU's forecast is consistent with other 2010 forecasts.
More than half 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. It is prudent 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:
- 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.
- 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.