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FM Global: Every dollar spent on hurricane protection can prevent US$105 in business property loss disruption

Insurer analysed data on 1,800 client organisations for the past decade

London, UK —Take it to the bank: Every US$1 a business spends on hurricane protection reduces loss exposure by an average of US$105.

That’s based on a new analysis by FM Global, one of the world’s largest commercial and industrial property insurers. “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 the company. “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 arrive at the ratio, FM Global tallied an estimate for over 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. These estimates are calculated based on actual losses that have occurred at tens of thousands of properties insured by FM Global.

Actions to take

Cost-effective prevention is worth considering as the 2018 hurricane season begins. FM Global advises businesses in hurricane-prone areas to expect a one-two-punch of wind and water.

To help minimise the effects of costly wind damage, organisations 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.

Any business exposed to flood risk should invest in developing and practicing a flood emergency response plan (FERP). Facilities with well-organised flood emergency response plans have nearly 70 percent less damage, and resume operations sooner than those with no plan or an inadequate one, FM Global loss history has shown.

For additional information on preparing for natural hazards, visit https://www.fmglobal.co.uk/research-and-resources/tools-and-resources/nathaz-toolkit.

About FM Global

Established nearly two centuries ago, FM Global is a mutual insurance company whose capital, scientific research capability and engineering expertise are solely dedicated to property risk management and the resilience of its client-owners. These owners, who share the belief that the majority of property loss is preventable, represent many of the world’s largest organisations, including one of every three Fortune 1000 companies. They work with FM Global to better understand the hazards that can impact their business continuity in order to make cost-effective risk management decisions, combining property loss prevention with insurance protection. www.fmglobal.co.uk

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