During January and February we were battered by storms in the UK – Malik, Dudley, Eunice and Franklin to name a few.
Indeed, Eunice was the labelled the strongest storm in the UK in three decades, causing major disruption with damage to power lines, buildings, risk of flooding and significant danger to life in parts of the country.
Experts now estimate that cost of these storms has reached at least £400 million (source: Moody’s), which gives you just a snapshot of the claims picture.
Storms and extreme weather events such as these are becoming much of a fixture of our forecasts throughout the year, with climate change underlying as one of the root causes.
So, what does it mean for the insurance industry and its affected businesses and consumers? We explore this topic below.
What is the effect of climate change currently?
While we often hear the term ‘climate change’, it’s difficult to know exactly what it means for people and businesses in their local communities.
According to the Met Office, climate change is pushing up our global temperature year on year, increasing the risk of events like localised flooding, forest mortality, fires, failing fisheries and a loss of biodiversity – to name a few.
If the global climate continues to change at the rate it is going, the world we live in will quickly become a very different place – and will likely become much more challenging for businesses.
Who does climate change affect?
Climate change affects everyone in different ways, but among the industries that are most heavily impacted are agriculture and commercial fishing. This will also have a knock-on effect throughout the supply chain.
Extreme weather events such as the recent Storm Eunice would come under ‘Physical Risks’. This means that there is an immediate danger of damage to property and infrastructure.
Bear in mind too, the high likelihood of business interruption, not only from direct damage but also issues such as loss of power or prevention of access.
Having a Business Continuity Plan (BCP) in place just in case your property is flooded or damaged gives yourself peace of mind that you know your business would be able to recover swiftly.
‘Transitional Risks’ covers changes that occur after the event has taken place – such as a change in Government regulations. For example, implementing a low-emission zone in a busy city could be considered a transitional risk.
Major weather events will put pressure on the insurance market as the frequency of claims increases.
Protecting customers against climate-related risk
Businesses are working hard to reduce carbon emissions. This will reduce the impact of climate change down the line but in the meantime, businesses need to develop strategies to minimise the effects of more and stronger storms and weather extremes.
Planned maintenance of property should now be taking higher priority, as well as paying more attention to the effects of weather in the businesses’ BCP.
Efforts are being increased to help protect their businesses against the risks presented by climate change and extreme weather. This includes schemes such as Flood Re, which ensures the industry can continue to provide affordable flood insurance to at-risk homeowners.
How Gravity Risk Services can help
At Gravity Risk Services, we are dedicated to helping our clients in future-proofing your business. Our team will conduct a full risk assessment of your business to mitigate the risks that you face, including those caused by extreme weather such as
storms, fires and floods.
Contact us on 0121 270 5809 to arrange a FREE CONFIDENTIAL health check on your current insurance arrangements to make sure they are adequate before the next storm hits.