2024 Hurricane Season Overview
Risk mitigation and creative insurance solutions help companies cope with changing weather patterns and meet current insurance needs. Don’t be lured into complacency. The 2024 hurricane season is behind us, and while the season was uneventful for most, that wasn’t the case for everyone with the highest prediction of storms on record. The year started with Beryl, the most powerful storm to form so early in the season. It hit parts of the Caribbean as a Category (CAT) 4, grew to CAT 5, then slowed to a CAT 2, hitting Tulum, Mexico, before eventually making US landfall in TX as a CAT 1. The early season also saw Hurricane Debbie hitting Florida and South Carolina before temporarily calming down.
A hurricane is categorized into five levels based on its sustained wind speed, using the Saffir-Simpson Hurricane Wind Scale: CAT 1 (74-95 mph), CAT 2 (96-110 mph), CAT 3 (111-129 mph), CAT 4 (130-156 mph), and CAT 5 (157 mph and above).
There were only four named storms until the middle of September. The memorable storms were Helene and Milton, both hitting the West Coast of Florida. Helene traveled up through the Carolina’s, leaving devastation from the substantial rain. Milton continued across Florida, hitting the outer islands off the Tampa area and spawning tornados, which hit several places on the East Coast of Florida. For many residential customers along the Florida Coast and in the Appalachians of North Carolina, it potentially was the worst storm ever. However, the commercial side where GRS operates saw minimal impact.
Many commercial insurers, including Aon, say that the storms of 2024 will not adversely affect insurance rates and cut profits as predicted. Aon says the “primary insurance and reinsurance markets are well-positioned to accommodate losses from hurricanes Helene and Milton.” Still, commercial clients faced financial challenges, as many losses from Helene were not covered due to a lack of flood insurance. Pre-loss planning is crucial, and GRS aims to prevent customers from being lured into complacency. Risk Mitigation needs to be part of a company’s culture; no one wants to experience the panic of “what if” in anticipation of a storm.
Captive Insurance as a Risk Mitigation Strategy
With insurance rates already relatively high, the real challenge for homeowners and business owners is finding an adequate amount of insurance at a reasonable cost. Commercial clients can find alternative ways to build coverage capacity and control rates. One consideration for larger businesses is to set up a captive for the property side of their insurance coverages. Insurance carriers control their risks by layering their coverages. Commercial clients can live with higher retentions or consider setting up a captive to minimize risk and potentially find other advantages.
Captives were initially created to find coverages for risks insurers were unwilling to cover in the steel and mining industry, energy and gas, medical malpractice, etc. According to Captive Resources LLC (CRI), Captive insurance is a type of self-insurance allowing a company to meet its unique risk management needs. Captives can be a good idea because they might offer lower costs, significant tax advantages, underwriting profits, and greater control over coverage and claims decisions. Companies with similar needs can join a group captive or set up their own with a Captive manager. The group captives that CRI supports admit new members carefully to ensure they share risk with other best-in-class companies. They look at:
- Long-term financial strength and stability.
- Management teams with a commitment to safety and solid safety programs in place.
- Loss histories that are better than average for their respective industries.
Today, Captives help companies self-insure to cover large deductibles, increase insurable capacity, and potentially provide a financial return for the investment and risk. What else can a company do to mitigate risk? Continue to invest in cybersecurity and create awareness, focusing on IT backup solutions and protecting data. Keep investing in new technologies to solve for time efficiencies and build a safety culture. Have a facility response plan should weather or other events affect the continuity of your operations.
GRS’s Unique Post-Loss Management Service
GRS provides a cost-effective and uniquely comprehensive post-loss design-build (DB) management service. As the only firm in the US with the expertise to handle simultaneous mitigation, building stabilization, debris removal/demolition, engineering, design, and reconstruction of damaged assets after a significant loss event, GRS excels in reducing the period of loss, which is crucial for minimizing business interruption costs.
