The Tropical Weather and Climate Research department at Colorado State University (CSU) is one of the world’s most respected climate research teams. Beginning each April, the team issues periodic tropical meteorology forecasts that have become must-reads for anyone interested in Atlantic hurricane activity. While the April 2024 forecast was scheduled, its content was decidedly unexpected. If the CSU forecast proves accurate, 2024 will go down in history as one of the most turbulent hurricane seasons in several decades.
As Yale Climate Connections recently reported, the current forecast is the most aggressive issued by CSU’s team in its 30 years of April forecasts. The April 2024 forecast predicts 23 named storms and 11 hurricanes, 5 of which are expected to be major hurricanes (rated CAT 3 or higher). To put the numbers in perspective, data from 1991 to 2020 shows an average season to include 14 named storms, 7 hurricanes, and 3 major hurricanes.
How Will Insurance Markets Respond?
The ominous predictions from CSU raise questions about the future of property insurance availability and pricing along the vulnerable Atlantic and Gulf Coasts. A years-long upswing in the number and severity of catastrophic tropical cyclone events has contributed to significant changes in insurance carrier appetite and capacity, with some exiting the most challenging residential and commercial property markets. Coastal areas in Florida and the Gulf Coast face a high risk of catastrophic property loss due to severe weather, and some carriers are implementing restrictions or leaving the market.
Consider Idalia, a CAT 4 hurricane that decimated the Sunshine State in 2023 and caused almost $4 billion in damages, mostly along the coastline. After the storm cleared and cleanup began, nearly 100,000 residents discovered their insurance policies wouldn’t be renewed. The reason? The insurmountable cost of claims incurred by insurance companies. After Idalia, the Florida market lost several prominent residential and commercial property carriers.
Keeping CSU’s predictions in mind, it’s imperative for insurance agents to clearly communicate potential outcomes and challenges to their commercial property clients. Two things property owners in challenging locations need to understand in the context of the aggressive 2024 Atlantic hurricane season forecast are:
- Premiums are almost certainly going to increase.
- Enacting a risk management strategy can be an asset when negotiating a new policy or renewal.
Risk Management: A Proactive Approach
Like other weather events, hurricanes cannot be prevented. However, commercial property and business owners in coastal regions can take steps to mitigate the risk of catastrophic damage and set themselves up for more favorable premiums and policy terms. Here are some important risk management tasks:
- Emergency Plan: Create an emergency plan and be sure to communicate it to all management and staff members.
- Training: Ensure staff members understand and execute the emergency plan effectively. Disaster preparedness training sessions should cover crucial procedures, such as shelter-in-place orders and post-storm safety protocols.
- Emergency Contacts and Documentation: Compile a comprehensive list of important contacts, including insurance carriers, local emergency services, and utility companies. Store this list securely off-site and on digital devices where it will be accessible to key staff members if needed during an emergency.
- Insurance Review: Communicate with agents to review and update coverage details for building values, deductibles, and business interruption insurance. This is essential to ensure the property owner has the right coverage in the event of storm-related damages.
- Preventive Maintenance: Stay current on regular inspections, maintenance, and repairs to help reduce the risk of property damage during severe weather events. This might include tasks such as trimming trees, inspecting roofs, and securing or removing objects that could turn into projectiles during high winds.
- Vendor and Contractor Network: Establish relationships with local vendors and contractors to help secure priority service after a storm. This step is increasingly vital as supply chain challenges now affect materials, labor availability, and cost.
- Maintaining Customer Communications: Keep a well-organized list of customer contact info to ensure a fast communication system is in place before and after storms. It is vital to keep businesses running and maintain customer trust.
MiniCo: Insurance Solutions for Unique Risks
Severe weather has become an important consideration for insurance professionals and property owners seeking coverage. MiniCo has 50 years of experience providing specialized insurance solutions through our 19 programs. From self-storage operations, to farm and ranch property, to nonprofit and social services properties, and more, MiniCo’s dedicated program teams offer flexible insurance solutions and risk management resources to assist you in protecting your clients’ valuable property investment and business operations. Contact us to learn about our exclusive programs, get a quote, and access valuable risk management resources to address severe weather, liability, and more.
