قالب وردپرس درنا توس
Home / Insurance / Perspective: Risk analysis lessons from Hurricane Ian

Perspective: Risk analysis lessons from Hurricane Ian



Weather events such as Hurricane Ian have become flashpoints for discussion and understanding of the effects of climate change. With the loss of life, loss of property and the necessity to rebuild, it is natural that we filter the impact of climate change on our lives through the lens of our most severe weather experiences.

Viewing such events, however, only through a disaster-oriented view, obscures the deep understanding we can gain from these disasters. Where and how we build in regions that experience and/or are at risk of frequent extreme weather events — hurricanes, wildfires, floods — must be assessed with a long-term lens, rather than solely through the eyes of Mother Nature̵

7;s latest climate provocation.

When we talk about climate change, we often ignore the fact that many of these apparently risky places to live and do business have been largely supported by the availability of insurance coverage. You can build a condo on the coast of Miami in large part because you can insure the building or business against the inherent risks of building a structure on or near a coastal flood zone. This fundamental understanding of our real estate markets supports the sale of scenic locations, even if the locations are subject to relatively high disaster riskpp. This will not always be the case.

Floridians know it’s getting harder to buy property insurance in the state. Rates are rising, and state-backed Citizens Property Insurance Corp., an insurer of last resort, just hit 1 million policies in August, its highest number ever. Property owner in Northern California’s wine country is also familiar with insurance coverage challenges, with much of the region becoming uninsured due to the frequency of wildfires.

Nuanced approach

The reaction when people see hurricanes developing is to immediately desperately ask what we can do about climate change. But trying to tackle climate change as a whole is an immeasurable task. What we need instead is a nuanced paradigm shift, one where property owners and companies operating in commercial locations consider not only their insurance coverage but also the full scope of potential exposures, past loss history, product inventory, worst-case scenarios and the like. concerns in the long term.

If you have been to or live in certain parts of Texas, you may notice that car dealerships keep their unsold car inventory under cover. It’s hot in Texas, so you might think the purpose of the canopies is to keep cars cool, but it’s not. The cars are below them because car dealers realized that hail was a frequent occurrence in Texas. Because they were the owners of the unsold inventory, the car dealerships went to install a solution that accounted for the occurrence of hail – a measure completely separate and apart from whatever insurance coverage the car dealer had to protect against potential losses.

Long-term vision

Businesses of all kinds operate on an annual basis; sales forecasts are annual; public companies have quarterly reports, all of which summarize performance during four different parts of a single year. The insurance industry itself is based on looking at the previous year’s events.

But year-to-year planning is not sufficient for our changing climate, especially in areas that already have endemic risks associated with their physical location. Businesses of all types should begin collecting, aggregating and analyzing available data to gain a more informed view of the risks their business or property is likely to face.

If a shipping company has a warehouse in Charleston, South Carolina, that has seen three major floods in the past five years, it may be time for its CEO to consider whether decisive action needs to be taken. Should it consider actions similar to those taken by auto dealers in Texas and invest in a solution to reduce the effects of flooding? Or should the CEO instead consider abandoning the warehouse altogether?

Understanding how to observe trends over more significant periods of time and accounting for these trends in real estate and business operations is one of the biggest challenges facing CEOs, business owners, and property owners in the coming decade. These are the questions we must all learn to ask ourselves in the wake of disasters like Hurricane Ian.

Erroin Martin is chief revenue officer at Archipelago, a technology company focused on real estate risk data for large commercial property owners. He can be reached at erroin@onarchipelago.com.


Source link