View this article online: https://www.insurancejournal.com/news/east/2013/10/18/308669.htm
As the one-year anniversary of Superstorm Sandy approaches in late October, Allianz Group’s specialist corporate insurer, Allianz Global Corporate & Specialty (AGCS), warns that while there is heightened awareness, many businesses have not yet implemented adequate changes.
Allianz said many of its corporate customers were hit hard by Sandy, with the insurer responding to nearly 900 claims ranging from damaged cargo to flooded premises, and resulting in a total financial impact for AGCS of $113 million.
Sandy was the deadliest windstorm in the northeastern United States in 40 years and the second most costly in the nation’s history with many businesses and individuals still recovering from its damage. Allianz said that, as terrible as the storm was, there are important business lessons to be learned in its aftermath.
Allianz recommends four key steps that businesses can implement to be better prepared for future extreme weather events:
1. Update and test emergency preparedness plans: Preparation before the storm minimizes property damage and reduces business interruption. Allianz recommends that every business has a comprehensive written emergency response plan that is reviewed and tested annually. A good plan has the support of senior management, site-specific recommendations and clear delineation of responsibilities.
2. Review business contingency plans: The crucial role of business contingency plans has become more apparent as a result of recent natural catastrophes. Sandy hit the Northeast on a Monday, which made it difficult for employees to develop and implement business contingency plans while preparing their homes and families for the storm. A well-developed contingency plan provides businesses with the tools to get back up and running as quickly as possible. For many companies, business contingency plans must take a global view as supply chains continue to expand, particularly in Asia and Latin America.
3. Understand the insurance policy: Business owners should take the time to read their current policy and discuss with their brokers what is covered and where there may be gaps. Determine if the limits of liability are in line with the current dollar value of the cost to repair or replace the damage. Consider adding an extended period of indemnity clause to the business interruption coverage to support the business until it returns to its pre-loss financial condition.
4. Know what to prepare for: Planning for a windstorm involves different preparation than planning for flooding. In the case of Sandy, the storm came ashore at high tide on a full, harvest moon. Full moon conditions at the onset of a hurricane lead to increased storm surge heights and the potential for more severe flooding. The majority of Sandy preparation was based on a high wind event, leaving many businesses unprepared for the flooding caused by the storm surge. As more sophisticated tracking models are introduced in the wake of the storm, more accurate information will be available.
Source: Allianz Global Corporate & Specialty