Preparing for the Storm: Solutions To Safeguard Your Forest Products Business from the Effects of Convective Storms
Convective storms, which include hail, tornados, and straight-line winds, are among the biggest insurance risks today, and they can wreak havoc on the forest products industry in particular.
Hail, one of the most common types of convective storms, can cause severe damage to roofs, machinery, and equipment, leading to structural weaknesses, leaks, and even complete roof failure. Tornados can generate intense winds that can level buildings, uproot trees, destroy machinery, and scatter dangerous debris for miles. Straight-line winds, which means strong, non-rotational wind created by thunderstorms, can also cause extensive damage to roofs, structures, equipment, and machinery.
Convective weather and severe thunderstorms have become one of the most significant contributors to annual insurance and reinsurance losses globally. For 2023 in the United States alone, this powerful weather phenomena caused $50 billion in insured losses.
Historically, insurers have viewed severe convective storms as an attritional loss. But considering the growing prevalence and rising costs of these storms, perceptions have changed, and insurers are sharing the risk by adding newer and broader deductibles in property insurance policies. At Continental Underwriters, Inc., it’s our mission to help you reduce your risk and protect your business. When it comes to convective storms, that means a proactive approach to both your physical infrastructure and insurance coverage. This article will help you get started!
At a Glance: The Impact of Convective Storms on Forest Products Businesses
Roof Damage: Hail can contribute 50% to 80% of severe convective storm insured losses in any given year, with roofs representing the highest damage, requiring repairs or replacement.
Timber Damage: Severe storms can cause direct damage to standing timber through high winds, lightning, or hail, affecting the overall timber supply for the industry.
Harvesting and Logging Disruptions: High winds and adverse weather conditions can pose safety risks for workers and hinder operations, leading to delays in harvesting schedules.
Infrastructure Damage: Storms can damage infrastructure critical to forest products businesses, such as roads, bridges, and processing facilities.
Supply Chain Disruptions: Road closures, damaged transportation infrastructure, or logistical challenges can interrupt the flow of timber through the supply chain.
Market Fluctuations: Reduced timber availability may lead to increased prices, affecting the profitability of forest products businesses.
Insurance Costs: Forest products businesses may face increased insurance costs due to the risk of storm-related damage. This can include coverage for timber loss, property damage, and downtime.
The bottom line is that forest products business owners are shouldering more and more of the risk associated with convective storms. In addition to broader and higher deductibles, property rates are increasing, and new wind and hail policy deductibles are being applied to properties in vulnerable regions.
Solutions for the Insured: Hazard and Risk Mitigation Strategies
Now that we have a baseline understanding of convective storms, the potential damage to forest products businesses, and the impact on insurance, we can move onto ways you can protect your business.
Hazard mitigation is one of the most crucial steps in safeguarding your business from convective storm damage. This includes regular inspections, proper maintenance, and infrastructure reinforcement to identify weak spots and address them before a storm hits. Here are some critical points to consider.
- Ensure the property and buildings are well constructed and properly maintained—regularly clear gutters of debris and address loose roofing/wall systems
- Secure objects that can potentially become projectiles in high winds
- Store vehicles and equipment in areas that are protected from hail and falling tree branches
- Regularly inspect and maintain infrastructure to identify and address vulnerabilities
- Prioritize repairs if storm damage occurs to prevent further damage from from water seepage
- Whenever possible, design and construct infrastructure, including processing facilities, storage areas, and transportation routes, with resilience to withstand severe weather
Whereas hazard mitigation can and should be acted upon immediately, risk assessment is an iterative process of continual improvement. Make sure to involve your team in the process as much as possible. On the one hand, this creates a deeper level of understanding and buy-in from employees. On the other hand, they may have insights that can help improve your efforts.
- Identify vulnerabilities in operations, infrastructure, and timber stands
- Develop comprehensive storm response employee training and recovery plans
- Consider worst-case scenarios when developing plans—they may be stressful to consider, but being prepared for the worst is far more effective than hoping for the best
Consider implementing an early warning system for extreme weather at your business. This can give extra time for workers to not only prepare for storm hazards, but also to seek shelter.
Despite the best preventive measures, convective storm damage can still occur. That’s why having adequate insurance coverage is essential. Insurance policies that specifically cover convective storm damage can provide financial protection and peace of mind.
When considering insurance coverage, carefully review the policy details. Some policies may have limitations on certain types of storm damage or require higher deductibles for convective storm-related claims. It’s important to choose a policy that aligns with your business needs and risk tolerance, but here are some thoughts to get you started.
- Review insurance coverage for storm-related damages—pay close attention coverage limits, exclusions, and deductibles
- Keep in mind that higher deductibles may result in lower premium costs, but may also result in a greater financial burden in the event of a loss
- Cosmetic roofing endorsements
- Values carried
- Consider coverage from a holistic point of view, including property damage, business interruption, timber loss, and other aspects that may be more important to your business
We Can Help You Weather the Storm
Safeguarding your business from the effects of convective storms requires a proactive approach. By understanding the different types of convective storms and their impacts, mitigating hazards, assessing and addressing risks, and aligning your insurance coverage with your needs, you can minimize the potential damages and financial losses caused by these storms.
Taking these measures is a big step toward securing the long-term resilience and sustainability of your business. If you have any questions or would like to find The National Solution to Your Local Risk™, reach out to our team today!