Responding to New Carrier Demands with Robust Catastrophe Preparedness 

June 28, 2022

By Monica Attanasi-Schultz, AIC, Edward Hanna, CIC, CIH, Kenneth Bogdan, CSP

As catastrophes grow in terms of frequency, severity, and the geographic areas they impact, insurance carriers today are shifting how they rate and assess catastrophe-exposed properties. As a result, insureds – both for and non-profits – must rethink strategies to ensure they’re fully protected. 

Total losses resulting from catastrophes rose dramatically over the last several years through flash floods, forest fires, hurricanes, terrorist attacks, and more. According to Swiss Re, global losses topped $270 billion in 2021, up significantly from $210 billion in 2020. This figure is expected to continue rising.  

Traditionally, catastrophes were thought of as a seasonal risk that impacted insureds with operations in specific high-risk areas. Today, catastrophes can strike anywhere, anytime. Properties that were previously not considered catastrophe exposed may face a much greater risk today. As a result, many carriers are reacting by increasing premiums and revising deductible structures, adding sublimits, etc. 

In light of these changes, insureds should consider reevaluating their own risk management and claims preparation strategies. This is not just for those located along the coasts or in tornado alley. Doing so will help them negotiate better rates, secure the coverage they need from carriers, and best prepare for a potential catastrophe in this new environment.  

At Conner Strong & Buckelew, we have decades of experience in claims and risk management and can help our clients better protect themselves from a potential catastrophic event. Here’s our advice on how companies can protect themselves before and after a disaster strikes:  

Planning for the worst 

The difference between surviving a business interruption and total loss often hinges on one factor—preparation. The best way to prevent a disaster is to have a proper continuity plan in place. Whether the peril is a fire, hurricane, flood or civil unrest, having a plan in place can make the difference in keeping your business afloat. 

Start the process by establishing a planning team tasked with developing a Business Continuity Plan. Typical goals of your plan should include: 

  • Protecting the safety of employees, visitors, contractors and others 
  • Establishing relationships with key vendors to minimize interruptions or disruptions  
  • Protecting facilities, physical assets and electronic information 
  • Preventing environmental contamination 
  • Protecting your organization’s reputation 

Take an “all hazards” approach. Conduct an impact analysis considering the likelihood and severity of the consequences of an interruption. Take steps before an emergency to address hazards, including training employees and establishing contractual agreements with service providers.  

Audit the plan at least once a year. Identify any new hazards or regulations and update the plan as necessary. Defining potential risks that will affect operations and implementing safeguards and procedures designed to mitigate those risks is crucial.  

Here are a few common hazards to plan for: 

  • Fire: Ensure that your fire safety/suppression systems are inspected annually. Inspect your facility regularly to identify fire hazards such as electrical hazards, fuel and material storage concerns and wildfires. Develop an evacuation plan for employees and provide them with training.  
  • Hurricanes and Floods: Monitor weather outlets to ensure that you have ample notification and time to act. Move equipment and materials to higher ground or upper floors in advance of the storm. Move personnel out of harm’s way and set up remote operations out of the storm’s pathway. 
  • Tornados: Ensure that your facility has an internal place of refuge for employees. Tie down small structures and equipment when not in use. Create a tornado warning system to notify employees of imminent danger.  

Preparing for the impact of a claim 

Insureds that experience a catastrophic loss are typically facing tens of millions of dollars in expenses. Even when fully insured, managing such a large claim will require significant time, energy and resources. Filing a claim, documenting the damage and navigating your existing contracts and coverages, all while trying to keep a business afloat, can put a significant strain on leaders.  

A strong relationship with your claim specialists can ensure you receive the full reimbursement you’re entitled to while relieving the heavy lifting of managing the claim. Knowledgeable and experienced insurance brokers play a critical role in working closely with insureds on both the front and back ends of a catastrophe.   

Pre-loss planning 

The most important aspect of pre-loss planning is to fully understand your risks. By performing a thorough risk assessment, you can develop a strategy to best protect and preserve your property in the event of a catastrophe.  

Another crucial aspect of pre-loss planning is to build a response team of experienced professionals that can assist with this process and continually reassess the business’ preparedness. These individuals should also stay ready to act in the event of a disaster. This team should be identified well in advance and include an insurance/risk manager, financial and operations personnel, a broker and claim advocate, a forensic accountant, restoration professionals, general contractors, engineers and other experts that will be critical to getting the business back on track.  

Post-catastrophe response 

Immediately after a disaster strikes, there are a series of steps that will increase the chances of receiving a full reimbursement. After ensuring the safety of employees, leaders should focus on claims management strategy.  

Below is a checklist of steps to take in the first few days following a catastrophe:  

  • Notify your insurance broker and carrier of the loss as soon as possible 
  • Protect any property from further damage and engage your emergency service vendors  
  • Complete initial damage assessment  
  • Meet with vendors, contractors and experts to begin planning repairs 
  • Establish a communication plan to keep all involved parties in touch and up to date 
  • Retain separate ledger for which to track all claim related costs  

Taking a proactive approach 

As insurance carriers change how they assess catastrophic risks, it is more important than ever to prepare for these events and have the right partners in place to help. An insurance broker can be an invaluable resource when an incident arises, providing advice and guidance throughout the claims process.  

At Conner Strong & Buckelew, our team leads the industry in catastrophic preparation and claims guidance and has strong relationships with carriers to ensure coordination and the best possible outcomes for clients. Our robust team of claims consultants and safety experts work side by side with our clients to deliver a holistic approach to managing and preventing catastrophic claims, with expertise in managing claims and implementing safety and risk control programs. You should not wait for disaster to strike. Taking action today could save millions of dollars down the line.  

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FILED UNDER:

Claims Management

Practice Leader

Monica Attanasi-Schultz, AIC

Partner, National Property Claim Advocacy & Consulting Leader

Practice Leader

Edward Hanna, CIC, CIH

Vice President, Enterprise Risk Management Practice Leader, Senior Account Executive

Practice Leader

Kenneth M. Bogdan, CSP

Vice President, Director of Risk Control Services

20-plus years in health and safety management, with a focus on construction and environmental remediation