Businesses adapt the threat of climate change
Twenty years ago, data on climate change was primarily only used and needed by researchers and federal agencies. But as extreme temperatures, major floods and torrential storms continue to knock out communities across the globe at an alarming rate, understanding the causes and threats of climate change has become a lesson everyone involved must learn. Analysts at the Insurance Information Institute say three of the top six years for catastrophic losses have occurred since 2005, totaling more than $140 billion in insured losses.
Furthermore, with reports from federal researchers indicating that climate change in the U.S. is accelerating at a faster pace due to more greenhouse gas emissions, climate-related risks are sure to increase. The more often these disasters strike, the greater the consequences for those affected , including businesses whose day-to-day operations, product development and services are often seriously impacted. As a result, more corporations today are addressing their risks from climate change by adapting their businesses in order to deal with severe weather threats. Several have altered utility systems installed at their facilities to improve energy efficiency and reduce pollution.
In Boston and throughout New England, many companies have moved electrical units from basements to their rooftops in order to avoid flood damage, while others are swapping wooden electrical poles for steel poles to guard against wind damage. Loss prevention specialists and researchers say product testing for losses like flooding has more than tripled in the last five years due to the frequency and severity of major storms pummeling the East coast. Across the country, however, engineers are working to combat a lack of water due to rising temperatures that cause extreme drought. Researchers in the Southwest are testing special fire sprinkler systems that reduce the amount of water used by misting flames instead of dumping out gallons of water.
Insurers are also having to learn more about the varied effects of climate change and how their clients will be impacted. This involves a solid understanding of various coverage options for property damage, including business interruption and contingent business interruption, carve outs and exclusions and other limits, depending on the type of policy. Environmental and property insurance experts can assist companies who may be unprepared for climate change by helping them to determine which types of products are most appropriate, as well as help map out cost-effective options for smaller businesses looking to obtain coverage.
For more information on planning ahead for climate change risks and loss prevention, contact the WGA Risk Managementt team.
About the Author
Chuck Rogers is a Senior Vice President, Senior Account Manager and the Staff Engineer at WGA. He is responsible for the design, marketing and implementation of Property and Casualty programs and advises all aspects of his specialty area, Loss Control Engineering.