Insured losses from storm seasons routinely hit $100 billion per year – but we can’t always blame a major storm like Hurricane Katrina or Hurricane Ian. Instead, so-called secondary perils like severe convective storms, hailstorms, and tornadoes are increasingly contributing to high insured losses.
To discuss the issue, Greg Lanshe, Diversified Services Global Manager at Global Risk Consultants joined RIMSCast, the popular podcast from RIMS. Listen to the full episode here.
Here are 5 takeaways from the podcast.
- Secondary perils are a rising threat
In 2023 alone, insured losses from severe convective storms hit a record $64 billion, with 85% occurring in the United States, according to Swiss Re. The trend raises critical questions about how risk managers and insurers can adapt to a landscape where these secondary perils are more frequent and severe.
For risk managers, the implications are clear: while major storm preparedness remains vital, there’s a need for equal focus on severe convective storms. Stronger roofs, improved flood protection, and resilient building designs are key to mitigating the risk and improving insurability.
- Expanding hail damage must be on a risk managers’ radar
Historically concentrated in "Hail Alley" (from Texas to Minnesota), hail damage is spreading geographically beyond its traditional boundaries due to changing weather patterns. In 2023, hailstorms of two inches or greater were reported on 141 days, marking the highest number in two decades, according to CoreLogic.
Company leaders must reassess building vulnerabilities in non-traditional hail zones. Selecting more resilient building materials, such as roofs designed to withstand hail damage, can be a critical factor in reducing risk and improving terms during insurance renewals. The ability to present such proactive measures to insurers can lead to more favorable underwriting treatment.
- Practical solutions are available: Learn the "Box of Screws" approach
The "box of screws" approach is a practical, low-cost method for mitigating storm damage risks. It involves immediate, simple improvements like securing rooftop equipment, fastening loose exterior materials, and performing regular inspections of roofs and gutters. These measures are often overlooked but can significantly reduce property vulnerabilities in the face of severe weather, whether from coastal hurricanes or inland convective storms.
By addressing these issues today, risk managers can not only reduce potential damage but also document these efforts to share with insurers. Such documentation can help demonstrate a commitment to loss control, potentially resulting in better insurance terms, including lower deductibles or increased capacity.
- Consider engineering-driven risk mitigation strategies
Beyond the low-cost solutions, Lanshe emphasized the importance of long-term planning and engineered approaches to building resilience. When constructing new properties, going beyond minimum code requirements can enhance a building’s ability to withstand extreme weather events. Such an investment in resilience should be highlighted to insurers during renewal discussions, as it can improve underwriting outcomes.
- Collaborating with property risk engineers is critical
One of the key roles of property risk engineers (like Global Risk Consultants) is helping risk managers navigate the insurance renewal process. By working together, risk managers and loss control engineers can identify a company’s most vulnerable locations and create tailored risk mitigation strategies. Whether it’s for coastal properties vulnerable to hurricanes or inland locations at risk of hail or wildfire, such collaboration ensures that every location is assessed based on its unique exposures. The insights gathered during these assessments allow risk managers to present a compelling story to insurers, showing the steps taken to mitigate risks. It not only improves insurance terms but can also foster a more constructive relationship between risk managers and insurers.
Ready to uplevel your protection against secondary perils?
As secondary perils continue to increase in frequency and severity, proactive risk management is more important than ever. The strategies shared by Lanshe in this podcast provide a clear path forward for risk managers, property insurance brokers, and underwriters seeking to mitigate the impacts of severe weather events.
For more information on natural hazard loss control strategies, follow Global Risk Consultants on LinkedIn or visit our website.
About the Speaker
Greg Lanshe is Diversified Services Global Manager at Global Risk Consultants. He is an expert in natural disaster preparation, property risk engineering, and loss control. He spent 22 years with Zurich North America and five with FM Global before joining Global Risk Consultants in 2017.
