The U.S. has been suffering some of the biggest snowfalls on record and has suffered major losses to the orange crop in Florida. The UK has suffered snow, ice and much lower temperatures than normal causing much disruption. Some areas of Asia have had significantly lower temperatures and higher snow fall than during a typical winter. All these factors demonstrate how weather patterns can fluctuate and how phenomenon such as El Nino can alter the norm and bring insurance losses to businesses who aren’t prepared.
The recent winter storms in the United States are now said to have cost more than $2B in insured losses (via Business Insurance) according to risk modeller EQECAT Inc. These huge losses are mostly for the kind of risks it’s easy to estimate (collapsed roofs, burst pipes) but on top of these losses will be business interruption type losses (much more difficult to estimate).
This all highlights the need for sufficient weather risk management and weather insurance cover. The options are available for businesses to protect their cash flow from the vagaries of the weather, however they still aren’t widely understood and many businesses this winter will have needlessly lost money from a risk that they could have been covered for. The challenge to the weather risk community is to get the word out about their product ranges and to ensure that businesses are educated enough to understand what options are available to them. The total loss to businesses from extreme conditions this winter may never be fully tallied but it’s safe to say that a large portion of that loss could have been covered by effective weather risk management techniques.
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