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UPFRONT

NEWS ANALYSIS

Not just selling insurance In the wake of natural disasters, brokers and agents are increasingly focusing on risk management to help clients weather the storm

FROM HURRICANE DORIAN and severe flooding in the Midwest to the Sonoma County wildfire in California, 2019 has brought its fair share of natural catastrophe events to the front steps of homes and businesses across theUS. As severe weather events continue to impact communities, insurance agents and brokers are increasingly emphasizing the importance of risk management to their clients. “Risk reduction is the best way to go about risk management, and what you can’t reduce, you transfer to the insurance side,” says Wes Robinson, national property president at Risk Placement Services [RPS]. “Claims are emotional, claims are complicated, and they’re complex insurance documents that we deal with. If you can avoid or reduce that,

high-tide flooding each year by 2030. By 2050, the picture gets even worse, with an expectation of 25 to 75 days of flooding. At the same time, the flood insurance penetration gap is still a significant problem – penetration is only around 15%. “There’s been this belief that if you’re not in what FEMA considers a high-hazard flood zone, you’re not going to have a loss from the peril of flood,” says Christa Nadler, executive vice president at RPS. “What’s happened over the course of the last few years is we’ve seen more and more flooding outside of those high-risk zones. All these people haven’t been buying insurance because they’re in Zone X, and they feel confident that because their loan or mortgage companies aren’t requiring them to buy it, they don’t have the exposure.

“There’s been this belief that if you’re not in what FEMA considers a high-hazard flood zone, you’re not going to have a loss” Christa Nadler, RPS that is the absolute best risk management practice you can have as an insured.” Flooding in particular will be a problem for many US cities in the coming years. According to the National Oceanic and Atmospheric Administration, coastal cities can expect a median of seven to 15 days of

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We have spent a much larger amount of our time educating our clients on the fact that just because you’re in Zone X doesn’t mean you don’t have the ability to flood.” While floods tend to capture the headlines, there are other weather events that have also caused damage in the past year.

“One thing that’s really coming to a head is the hail type losses,” says Martha Bane, managing director of Gallagher’s property practice. “They’re becoming more repetitive, they’re impacting the same assets more and more frequently, and once the damage has been repaired, there’s nothing that stops that same roof from being damaged extensively in the same year with a second hail event.” As these and other events become more frequent and property insurance programs become more challenging to place, brokers are working with clients on improving the data they can provide underwriters. Those in fire-impacted zones, for instance, can see benefits from implementing loss prevention plans like brush clearance, especially wildfire-exposed Californians, who tend to get a lot of automatic declines for insurance. The same risk mitigation benefits apply to a

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22/11/2019 4:16:56 AM

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