Supply chains are vital in keeping businesses and their products moving in the wholesale and retail industries. Being aware of the risks at play is key in handling disruptions.
Weather events and high property rates are two trends to keep tabs on. Damaging weather brings property harm to your business and its supply chain partners. Meanwhile, rising property premiums make it hard for organizations to find coverage for events like catastrophic weather. Proactively protecting the supply chain from these risks will be vital for a business's bottom line and longevity.
Increasing weather events
Bad weather events are increasing and leaving costly impacts. As of September 2023, 15 "weather/climate disaster events" with losses exceeding $1 billion each have already occurred this year. Even if your business isn't in a high-risk zone, these weather events can throw off other areas of your supply chain.
Heat waves, wildfires, and floods have recently increased. Protecting warehouses and other supply chain points is important as weather conditions worsen. The focus should be moving operations in high-risk areas to low-risk locations. Bad weather's effects go beyond damage, affecting the premiums insurance carriers can offer businesses.
Rising property rates
As damaging weather events continue, insurers are becoming more hesitant to offer the same coverage terms at renewal. That is, if they are willing to provide renewal options at all. Many household name insurers are pulling out of Florida, California, and other states as they grapple with remaining profitability in the face of severe weather. Munich Re estimated $43 billion in insured global natural catastrophes in the first half of 2023. What stands out is that U.S. severe convective storms alone made up just under one-third of that $43 billion global estimate.
Florida's crisis is an example of natural disasters and supply chain problems resulting in expensive property insurance. The Insurance Information Institute predicts that property insurance rates for homes and businesses could increase by an average of 40%. These rates can triple for companies that have had a lot of losses or don't have good ways to prevent losses.
Making the right decisions during this trend is important. You can choose carriers that fit your budget and coverage needs, self-insure, or seek an alternative solution. Still, other companies in your supply chain may decide to move or shut down operations in certain areas if premium rates aren’t ideal.
How Marsh McLennan Agency can help
As weather events continue, wholesale and retail organizations will face big challenges. Marsh McLennan Agency has the solutions and services to help you protect your property.
Our Property Stratification of Values tool maps traits by location for natural hazards such as hurricanes or earthquakes that could affect your property. Property Catastrophe (CAT) modeling can provide further insights into potential losses based on your building location and characteristics. Our CAT modeling includes everything from severe storms to inland floods and wildfires.
Your industry faces many complex risks. Let our solutions and services guide you through them. Read our Business Insurance Trends report to help grow your understanding of the weather and premium trends facing your wholesale and retail business.
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