Risk managers warned to prepare for active hurricane season
–31 May 2008
Risk managers and insurance companies should consistently employ robust enterprise risk management strategies and business continuity programs, particularly important as the start of the 2008 Atlantic hurricane season approaches and leading forecasters expect this year will be an active one for hurricane and tropical storm formation, according to Aon.
The National Oceanic and Atmospheric Administration's updated forecast calls for 12 to 16 named storms between 1 June and 30 November. Other major forecasting organizations also believe conditions are ripe for an active storm season.
“While predictions of hurricane activity are important, insurance and reinsurance buyers must remember that any storm can cause massive destruction, whether that storm occurs in a season of above-normal activity or below-normal activity,” said Steven Drews, lead meteorologist and associate vice president of Impact Forecasting LLC, a unit of Aon Re Global. “Hurricane Andrew in 1992 and hurricanes Dean and Felix in 2007 each caused massive destruction -- during periods of relatively light activity.”
The low severity of property catastrophe losses since 2006 -- resulting in part from the relatively small number of landfalling hurricanes and tropical storms in the last two years -- is one driver of what Aon Re Global expects will be favorable pricing for traditional property catastrophe reinsurance programs for insurers' mid-year renewals.
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