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New research from a global property insurer has highlighted the importance of investing in hurricane protection measures after it revealed savvy consumers could significantly cut their loss exposure.
FM Global analysed data from 1,800 client organisations and found that businesses reduced their loss exposure by an average of $105 for every $1 they spent on protective measures.
“Businesses often wonder if they are getting a good return when they invest in preventing hurricane-related wind and flood damage,” said FM Global senior vice president, engineering and research manager, Brion Callori. “This analysis has yielded a pretty convincing answer.”
To arrive at the 1:105 ratio, FM Global tallied an estimate for over 10,000 wind and flood related investments and their associated reduction in property loss and business disruption exposure for 1,800 clients from 2008 to 2017.
Notably, the ratio doesn’t take into account the business repercussions of a major hurricane loss such as damage to reputation, market share and shareholder value.
While hurricanes can occur right across the country, they’re particularly prevalent in Western Australia and data released by RAC just last month showed that insurance claims for weather damage in the region have almost doubled in the last two years.
In addition to highlighting the value of hurricane protection, FM Global also shared advice for brokers to pass on to their commercial clients.
“To help minimize the effects of costly wind damage, organisations should have backup power generators ready, rooftops inspected and secured, doors braced, windows covered, and vulnerable objects put away or strapped down, including rooftop equipment and solar panels,” it advised.
The insurer also noted that any business exposed to flood risk should invest in developing and practicing a flood emergency response plan.
According to loss history from FM Global, facilities with well-organised flood emergency response plans have nearly 70% less damage and resume operations sooner than those with no plan or an inadequate one.
“Businesses can prevent costly flood damage by elevating or sealing off valuable equipment, fastening storage tanks, inspecting fire protection equipment, and preparing to turn off utilities,” added the insurer. “Flood protection products that meet rigorous certification testing standards can reduce the need for sandbags.”
