Are You Disaster-Ready? What You Need to Know Before Hurricane Season Introduction In 2019, Chubb published a White Paper entitled “Staying Ahead of the Storm: Preparing for Upcoming Hurricane Seasons,” which noted that major hurricanes during the two previous years, 2017 and 2018, caused storm-related damage totaling hundreds of billions of dollars, while at the same time outlining the lessons learned for mitigating hurricane losses in the future. The 2019 hurricane season was not nearly as costly as the previous two. However, hurricanes in 2019 did cause above-average property damage for the fourth year in a row1, highlighting the critical importance of applying risk management lessons learned from year to year. 1 Are You Disaster-Ready? What You Need to Know Before Hurricane Season The 2019 Storm Season At the same time, Hurricane Barry pummeled Louisiana as a Category 1 Impact of the The 2019 hurricane season was also the storm, dropping heavy rainfall in that 2019 Storm Season fourth most active on record for named state as well as Arkansas, and costing Atlantic storms. Producing 18 named $600 million.3 storms and 20 cyclones, the damage left behind totaled $11.6 billion.2 Hurricanes in 2019 caused above- During 2019, two hurricanes reached average property damage for the Category 5 status: Hurricane Dorian fourth year in a row, highlighting the critical importance of applying risk • Hurricane Dorian hit the Virgin Islands, Bahamas, and Eastern seaboard, leaving behind management lessons learned from $4.68 Billion $4.68 billion worth of estimated damage, year to year. • Hurricane Lorenzo and Hurricane Lorenzo, formed of the western coast of Africa, made its Since tropical storms and hurricanes $362 Million way north to the United Kingdom and deliver overpowering wind, rain, and Ireland, damaging the Azores along the • Tropical Storm Imelda fooding that can cause structural and way, causing estimated damages around environmental devastation, strategies $5 Billion $362 million. to mitigate such widespread loss might • Hurricane Humberto seem minimally efective, at best. Meanwhile, tropical storm Imelda, Fortunately, that is not the case. With $25 Million though technically not a hurricane, proper disaster planning and regular caused slightly more damage than • Hurricane Barry practice drills, storm damage loss can Dorian, leaving behind inland fooding in often be reduced to a substantial degree. $600 Million Texas that resulted in losses amounting to $5 billion. Hurricane Humberto landed in Bermuda as a Category 3 storm, causing $25 million in damage. 2 Are You Disaster-Ready? What You Need to Know Before Hurricane Season What Good Disaster Readiness What Risk Managers Need Looks Like to Know Take the example of Marathon Marathon Petroleum’s disaster readiness To adequately address property Petroleum, the second-largest oil refner plan, drills, and pipeline surveillance and casualty loss mitigation, risk in the country, located in Houston, are specifc to its industry. Still, their managers need to prepare a Texas. Their disaster preparation is guiding principle can be applied to other comprehensive disaster plan that strategically sophisticated and well- industry sectors, as it encompasses many protects their company’s personnel practiced. The company’s emergency lessons learned. as well as noncompany frst response team conducts several responders, its physical plant or annual drills marshaling employees, To adequately address property and location, and its ability to engage in as well as local, state, and federal casualty loss mitigation, risk managers business recovery and continuity. emergency agencies. Drones survey need to prepare a comprehensive pipelines for damage, while employees disaster plan that protects their working throughout the storm use company’s personnel as well as non- of-site apartments — safe rooms at company frst responders, its physical the company’s refneries house those plant or location, and its ability to remaining on-site. engage in business recovery and continuity. At the same time, the plan What did the company’s storm should address potential company preparedness achieve during those two liability exposure from secondary devastating hurricanes? While Marathon hazards (pollution, explosions, scaled back its oil refning operations and the like) that can emerge due during the storms, production continued to storm damage. as personnel remained in place to maintain operations, and monitor the pipelines to prevent costly accidents. 3 Are You Disaster-Ready? What You Need to Know Before Hurricane Season Comprehensive Disaster Planning: After a disaster preparedness plan is Property owners should consider An Overview complete, regular disaster drills, during strengthening their buildings and which every aspect of the company’s structures beyond the level required A good disaster plan must frst address plan is sufciently practiced, becomes to comply with local building codes. human safety. These elements could critical. The plan should also be updated Severe storms are likely to continue include procedures for employee regularly to include new insights and throughout this century, and building evacuation before the storm’s arrival, learnings on preparing, weathering, and code requirements may not sufciently safeguarding on-site or of-site facilities for recovering from a disaster. protect some buildings and structures workers remaining on or near work sites to from potential storm damage. Some keep the operation running, and strategies hospitals, for instance, are installing to ensure the safety of employees’ homes With proper disaster planning and submarine doors to protect their and families during storms. Separately, a regular practice drills, storm damage facilities against fooding. That kind of designated disaster communication person loss can often be reduced to a loss control and safety measure may or team is critical to inform personnel, substantial degree. not be feasible for all property owners. clients, and contractors, before, during, Still, every business that has potential and after a storm. exposure to the risk of hurricane The fnal concern of a comprehensive damage should investigate and consider disaster plan involves potential property The next aspect of disaster planning strategies to reduce their risks during the and casualty losses. To address these, would cover the physical plant and next hurricane season and beyond. risk managers should survey their its operations, which may include an operation for areas likely to sufer damage of-site computer backup systems, and during catastrophic storms. Without the shutdown of plant equipment and proper safety and damage mitigation machinery before the storm. After preparation, areas of vulnerability addressing the immediate risks, it is can pose a wide range of risks to third essential to plan for business continuity parties, including risks of electrical and recovery, such as cultivating fres and environmental contamination. alternate supply chain arrangements for Storm-damaged areas can trap or injure raw materials and equipment suppliers, employees and frst responders, and as well as alternative transportation for expose them to dangerous chemicals sending goods to the market. and fooding, as well. 4 Are You Disaster-Ready? What You Need to Know Before Hurricane Season To Be Fully Disaster Prepared This paper is designed to acquaint property owners with some of the necessary steps they should take to protect their companies — long before catastrophic storms arrive — during hurricane season and beyond. For a more in-depth look at what can be done before, during, and after a storm to mitigate property and casualty losses, please refer to the paper that follows: “Staying Ahead of the Storm: Preparing for Upcoming Hurricane Seasons.” 1https://www.iii.org/fact-statistic/facts-statistics-hurricanes 2https://blogs.scientifcamerican.com/eye-of-the-storm/a-review-of-the-atlantic-hurricane-season-of-2019/ 3https://www.nhc.noaa.gov/data/tcr/ The information contained in this document is intended for general informational purposes only and is not intended to provide legal or other expert advice. You should consult knowledgeable legal counsel or other knowledgeable experts as to any legal or technical questions you may have. Neither Chubb nor its employees or agents shall be liable for the use of any information or statements made or contained in any information provided herein. Chubb is the marketing name used to refer to subsidiaries of Chubb Limited providing insurance and related services. For a list of these subsidiaries, please visit our website at www.chubb.com. Insurance provided by ACE American Insurance Company and its U.S. based Chubb underwriting company afliates. All products may not be available in all states. This communication contains product summaries only. Coverage is subject to the language of the policies as actually issued. Surplus lines insurance sold only through licensed surplus lines producers. Chubb, 202 Hall’s Mill Road, Whitehouse Station, NJ 08889-1600. 5 Staying Ahead of the Storm Preparing for Upcoming Hurricane Seasons By Matt Booker and Chris Fanslau Preparing for Upcoming Hurricane Seasons Recent hurricanes resulted in record commercial property damage and business Executive interruption losses. The disasters also illuminated a lack of efective planning for storms, both at the community and industrial level. In 2017 three hurricanes in rapid Summary succession — Harvey, Irma, and Maria — ranked among the