Publication | BRG

What Businesses Can Do to Prepare for Hurricane Season 2023 and Understand Their Business Interruption Coverage

Robert Glasser

May 2023

The Colorado State University (CSU) Tropical Meteorology Project recently predicted “a slightly below average 2023 hurricane forecast.” CSU forecast thirteen named storms, compared with an average of 14.4 for the period from 1991 through 2020.

CSU’s report cited the “likely development of El Niño as a primary factor” but with “considerable uncertainty as to how strong El Niño would be if it does develop.”

“Given the conflicting signals between a potentially robust El Niño and an anomalously warm tropical and subtropical Atlantic, the team stresses that there is more uncertainty than normal with this outlook,” the CSU report summary said.

Most financial and risk managers are comfortable understanding and purchasing their property and liability insurance needs and limits to protect their companies from a loss due to an insured peril. However, their comfort level drops dramatically when it comes to business interruption coverage and limits. Due to this discomfort and unsurety surrounding business interruption coverage, extensions of coverage, and respective limits, many middle market organizations find themselves underinsured and short of cash when faced with a major loss.

When you met with your broker to review your insurance policy, you should focus on your reported or insured values for your business interruption coverage and the numerous extensions of coverage’s offered based on your organizations specific operations and needs. Calculating the appropriate business interruption values will help you select the proper coverage and respective limits and enable you to better manage—and more importantly—minimize your financial risk.

Unexpected occurrences can happen to any business, and a company may not be fully prepared when it is directly or indirectly affected by an outside event. Whether the event is a hurricane, flood, earthquake, or fire, the disaster can be catastrophic. Even when there is advanced warning for an event such as a hurricane, prudent companies prepare for the unexpected while also considering the safety of employees and customers. A catastrophic event can shut down a business for an extended period, dramatically affecting a company’s ability to generate future profits and pay employee wages.

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Robert Glasser

Managing Director

New York, Denver