Whenever we get the chance here at LMA (Lisa Miller & Associates), whether it be to legislators, the news media, or policyholders, we’re always preaching the wisdom of investing in mitigation. It’s especially true for commercial properties. FM Global, one of the world’s largest commercial and industrial property insurers, reports that for every $1 a business spends on hurricane protection, it reduces its loss exposure by an average of $105.
Those figures are based on an analysis it did of more than 10,000 wind and flood related investments and their associated reduction in property loss and business disruption exposure for 1,800 clients around the world from 2008 to 2017. The estimates were calculated based on actual losses that occurred at tens of thousands of properties insured by FM Global.
“Businesses often wonder if they are getting a good return when they invest in preventing hurricane-related wind and flood damage,” said Brion Callori, senior vice president, engineering and research manager, for FM Global in a company statement. “This analysis has yielded a pretty convincing answer. And the 1-to-105 ratio doesn’t even reflect the business repercussions of a major hurricane loss such as damage to reputation, market share and shareholder value.”
To help minimize the effects of costly wind damage, the insurer advises that organizations should have backup power generators ready, rooftops inspected and secured, doors braced, windows covered, and vulnerable objects put away or strapped down, including rooftop equipment and solar panels.
Businesses can prevent costly flood damage by elevating or sealing off valuable equipment, fastening storage tanks, inspecting fire protection equipment, and preparing to turn off utilities. Flood protection products that meet rigorous certification testing standards can reduce the need for sandbags. FM Global’s approach combines property loss prevention with insurance protection. That’s a good lesson to teach homeowners too!
As for savings for residential properties, it’s one we’ve memorized: FEMA estimates that for every $1 spent on pre-event mitigation, $6 is saved in insurance claims. Some of these mitigation measures are so simple, there really should be no excuse why homeowners and commercial owners don’t have these in place as we enter the heart of hurricane season next month. Are you ready?
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