Is Your Team Prepared for Storm Season? There is Still Time to Prep!

We are over halfway through the 2022 Hurricane Season and entering what is recognized as the more active time of storm season, the tail end. Although the National Hurricane Center predicted this to be an unusually active season, we have seen a relatively quiet season thus far with the exception of a few early storms. While we all look for our proverbial wood to knock on, it is important to communicate with our clients a few key preparations as we prepare for the latter part of our current storm season:

·      Replacement Cost Valuations – Replacement Cost Valuations (RCV) have seen some decline but are not yet stabilizing from what was an all-time peak. It is critical to review these policy limits, especially with clients who have large property exposures. Ensuring our clients are comfortable with their coverage limits, as they compare to actual replacement costs, will help maintain advisor trust post-loss.

·      Business Income and Extra Expense – We have seen several major losses lately related to both storm and non-storm or catastrophe and non-catastrophe events. The application of business income insurance coverage is increasingly misunderstood. It is important to remind clients that, at its core, business income replaces net operating income plus ongoing and continuing operating expenses. Use a business income worksheet to help navigate your client to their correct limit of coverage. For a quick calculation of an appropriate business income limit, monthly net incomes and monthly continuing/ongoing expenses should be applied to the insured’s estimated post-loss downtime.  Examples of downtime activities to be estimated might include site clearing, permitting, engineering and reconstruction. Extra expense coverage is also a part of business income coverage. This coverage should include an estimate of all costs and expenses needed to get back up and running as quickly and expeditiously as possible. While loss of income claims are never simple to adjust, this process should help ensure reasonable coverage.

·      Inventory – We should encourage our clients to take a regular inventory of their assets. Examples of assets might include buildings, personal property, inventory or stock, and raw materials. Whether documented in line-item spreadsheets or quick video, it is critical to document these assets on a regular basis so they can be more easily reproduced post-loss. Work with your clients to estimate what they consider as their ‘maximum average’ exposure as a base-line for coverage. Their averages may not be enough and their maximum may be too much – therefore what is their ‘max average?’

·      Plan – One of the most important aspects as an advisor is to assist your client in creating a disaster preparedness plan! Do you stay or do you go? What do you do first, post-loss? How will a storm impact your supply chain? Your physical plant? How are you able to get back up and running as quickly as possible while the insurance process plays out? These are the real questions that will come up during a loss and should be prepared for in advance. Your client should establish and document the plan - and share it with key personnel. They also need to share this plan with you as their risk advisor. A well-documented plan allows for swift and efficient action when the time comes to put it in motion.

You may think we are in the clear as we are halfway through storm season but this time of the year quite often produces the largest and most dangerous storms. Be sure to connect with your clients now to ensure they have considered the above tactics and offer your assistance and knowledge as a trusted risk advisor. You can reach out to us at info@sspins.com or www.sspins.com for additional resources on storm and disaster preparedness.

Ryan Sewell, CPCU , CLCS has more than 14 years of experience in the property-casualty brokerage field with an expertise in the commercial, real estate & hospitality, and non-profit spaces. He is a Partner with Sterling Seacrest Pritchard and can be reached at rsewell@sspins.com.