Insurance to the Rescue
Courtesy of iii.org
Hurricanes and storm-related flooding are responsible for the bulk of damage from disasters in the United States, accounting for annual economic losses of about $54 billion, according to the Congressional Budget Office (CBO).
These losses have been on the rise, due, in large part, to increased coastal development. More, bigger homes, more valuables inside them, more cars and infrastructure – these all can contribute to bigger losses. The CBO estimates that a combination of private insurance for wind damage, federal flood insurance, and federal disaster assistance would cover about 50 percent of losses to the residential sector and 40 percent of commercial sector losses.
Recent research illustrates the benefits provided by mangroves, barrier islands, and coral reefs – natural features that frequently fall victim to development – in terms of limiting storm damage. In many places, mangroves are the first line of defense, their aerial roots helping to reduce erosion and dissipate storm surge. A healthy coral reef can reduce up to 97 percent of a wave’s energy before it hits the shore. Reefs — especially those that have been weakened by pollution, disease, overfishing, and ocean acidification — can be damaged by severe storms, reducing the protection they offer for coastal communities.
In Florida, a recent study found, mangroves alone prevented $1.5 billion in direct flood damages and protected over half a million people during Hurricane Irma in 2017, reducing damages by nearly 25% in counties with mangroves. Another study found that mangroves actively prevent more than $65 billion in property damage and protect over 15 million people every year worldwide.
A separate study quantified the global flood-prevention benefits of coral reefs at $4.3 billion.
Such estimates invite debate, but even if these endangered systems provided a fraction of the loss prevention estimated, wouldn’t you think coastal communities and the insurance industry would be investing in protecting them?
Well, they’re beginning to.
The Mexican state of Quintana Roo has partnered with hotel owners, the Nature Conservancy, and the National Parks Commission to pilot a conservation strategy that involves coral reef insurance. The insurance component – a one-year parametric policy – pays out if wind speeds in excess of 100 knots hit a predefined area. Unlike traditional insurance, which pays for damage if it occurs, parametric insurance pays claims when specific conditions are met – regardless of whether damage is incurred. Without the need for claims adjustment, policyholders quickly get their benefit and can begin their recovery. In the case of the coral reef coverage, the swift payout will allow for quick damage assessments, debris removal, and initial repairs to be carried out.
Similar approaches could be applied to protecting mangroves, commercial fish stocks that can be harmed by overfishing or habitat loss, or other intrinsically valuable assets that are hard to insure with traditional approaches.
Business Insurance and Women
Courtesy of Women have made great strides in the business world in the past few decades. And business insurance is essential to protecting their hard-earned capital, according to the Insurance Information Institute (I.I.I.).
Forty years ago women owned just 5 percent of all small businesses in the United States. Today, they own one-third, generating nearly $1.5 trillion in revenue and employing over 7.9 million people. Between 1997 and 2015, the number of women-owned firms increased by 74 percent, according to the 2015 State of Women-Owned Businesses Report. And the majority of new women-owned firms launched in 2014 were owned by minority women.
“Whether launching a new business, growing your business or competing in the global marketplace, it is essential that women business owners get the right type and amount of coverage,” said Loretta Worters, a vice president with the I.I.I. “Without adequate insurance, a natural catastrophe, employee lawsuit or even the death of a business partner could destroy what they’ve built,” she warned.
In recognition of Women’s History Month, the I.I.I. recommends the following six strategies to ensure that your business is financially protected:
1. Assess your risks. What business property, including inventory and equipment, do you own? Do you have employees? What is the nature of your business? This basic snapshot will help an insurance professional provide recommendations about the type of coverage your business needs.
2. Find the right insurance professional. When shopping for insurance most business owners use an insurance broker—you’ll want to find one who is familiar with the risks of your specific business. A qualified broker can help collect all the necessary information and paperwork to apply for a policy, and comparison shop among several options and quotes. Here are some tips for finding the right fit: Finding the Right Insurance Professional for Your Business.
3. Compare rates. As a general rule, you’ll want to get business insurance quotes from at least three different companies. Try to find policies that offer similar coverage so that you can clearly compare prices.
4. Evaluate insurers, policies and services. When purchasing business insurance, price is just one consideration. Make sure a potential insurer is reputable and in good financial condition. In addition, review and compare policies in depth. Does one policy have exclusions that another does not? In the case of litigation, does the insurer provide an attorney or reimburse you for an attorney you choose?
5. Lower your premiums. Choosing a higher deductible can lower your premiums significantly and insurers will often lower your rates for putting in place programs to minimize losses from fire, theft and employee and customer injuries. This is particularly important for start-ups that are low on initial capital.
6. Review your risks and insurance policies annually. Talk to your insurance professional prior to renewing you coverage each year to determine what adjustments should be made to your business insurance policies. If your business is expanding, you have purchased or replaced equipment or have started working with vendors internationally, you may have new liabilities that require higher insurance coverage.
Don’t Overlook These Coverages
Life insurance is vital to any business—both personal and for the company. Should you die prematurely, a personal life insurance policy can replace your income from the business and protect your family. In the event an owner, partner or key employee dies, life insurance will take care of your business.
Another key coverage is disability insurance. More than twice as many people will be disabled during their career as will die before they retire. “Income protection for small business owners is critical for the long-term security of the owner and the company if they cannot work due to an injury or illness,” said Worters.
How To Prevent Student Loss
Courtesy of iii.org
With burglaries constituting approximately 50 percent of all on-campus crimes, it's important for college students and their parents take steps to prevent theft, adhere to safety measures—and review their insurance coverage.
It's best to consult your insurance professional for the details of your family's specific coverage and where you might need additional protections, but here are some general guidelines:
- Students who live in a dorm are covered under their parents' standard homeowners insurance policies – That is, their possessions are protected by "off premise" coverage. However, some homeowners policies may limit this amount of insurance, so make sure you understand your own policy.
- Students who live off campus are likely not covered by their parents’ homeowners policy – Your insurance professional can tell you whether your homeowners or renters policy extends to off-campus living situations. If it does not, to protect student belongings, those living off campus may need to purchase their own renters insurance policy.
- Computers and smartphones may carry stand-alone insurance – If you're getting these items new, at the time of purchase you may be offered insurance or other protections against theft or loss. Also, check the credit card used for the purchase, to see what protections might be available.
- Consider a stand-alone policy specifically designed for students living away at college – This can be an economical way to provide additional insurance coverage for a variety of disasters.
- If your college-bound student is leaving the car at home, make sure to tell your insurance agent – Depending on how far he or she is going away to school, you might be eligible for a premium discount.
It's better to prevent a loss than to deal with the aftermath. To help prevent loss:
- Leave valuables at home, if possible – While it may be necessary to take a computer or sports equipment to campus, other expensive items—such as valuable jewelry, luxury watches or costly electronics—should be left behind or kept in a local safety deposit box. These items may also be subject to coverage limits under a standard homeowners policy, so if they must be brought to campus, consider purchasing a special floater or endorsement to the homeowners policy to cover them.
- Create a “dorm inventory” – Before leaving home, students should make a detailed inventory of all the items they are taking with them, and revise it every year. Having an up-to-date inventory will help get insurance claims settled faster in the event of theft, fire or other types of disasters.
- Engrave electronics with IDs – Permanently engraving a name and other identifying information on computers, televisions, smart phones and other electronic devices can help police track stolen articles.
Guard against theft or damage of personal belongings while on campus
According to the National Center for Education Statistics, burglaries constitute more than 50 percent of all on-campus crimes. In addition, carelessness can cause other types of damage. To help prevent losses, students should:
- Always lock dorm room doors, and keep the keys with you at all times – Know that most dorm thefts occur during the day, and even if you leave briefly, lock up. Share the theft statistics with your roommates, and get agreement that they'll do the same.
- Don't leave belongings unattended on campus – Classrooms, the library, the dining hall or other public areas are the primary places where property theft occurs, so keep book bags, purses and laptops with you at all times.
- Buy a laptop security cable and use it - A combination lock that needs decoding may be just enough to dissuade a thief.
- Be aware of fire hazards – Most campus fires are cooking related so be careful about the types of hot plates or microwaves you to bring to school, and how you use them.