How to prepare for global warming effects Disclaimer: Information in this article is observational in nature. It is not intended to be a substitute for general safety recommendations, such as from your local first responders. Information is not intended to serve as legal advice, e.g., for adhering to workplace compliance requirements around safety. Please consult appropriate authorities and use the information in this article at your own risk.
As the planet continues to warm, small businesses face many challenges. There’s been an increase of 0.32° F (0.18° C) per decade in the global average surface temperature since 1981. This is according to the National Oceanic and Atmospheric Administration (NOAA). Those increases add up to cause big changes. Like increasing the likelihood of disasters that businesses have to prepare for, like hurricanes and wildfires.
As NOAA notes, “over the past decade, research has demonstrated that climate change due to global warming has made many extreme events more likely, more intense, longer-lasting, or larger in scale than they would have been without it.”
Know The Challenges
Having to prepare more for natural disasters won’t be the only issue. Businesses could also face increased economic challenges due to global warming. NOAA points out that tourism could be affected by climate change. Even if a business manages to avoid damage, the region’s losses from extreme weather could affect tourism. This will hurt businesses like restaurants and retail shops.
Small businesses in particular likely need help in terms of how to prepare for global warming effects. Their size could mean they’re not prepared to handle the financial impact of a climate-related downturn. However, insurance agents and carriers have opportunities in this area.
We’ll explore how to help small business owners in this article. Finding ways to adjust insurance coverage to match evolving risk levels. This can help these companies better navigate global warming effects, while also supporting deeper ties between insurers and their clients.
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Continually Evaluate Risks
One of the best ways insurers can help small business owners in terms of how to prepare for global warming risks is to help with continual risk evaluation. Climate change is not static. Neither is business risk. The risks that businesses face can continually change. As can their approach to managing these risks and their overall risk tolerance.
One year a small business might be particularly concerned with how property damage from a potential storm could affect their business. Especially if they’ve seen similar types of businesses affected in their region.
They might be more focused on managing risk by making building enhancements that reduce the chances of severe damage caused by a storm. In other years, they might be more worried about what their supply chain will look like due to extreme weather in other parts of the world. That might lead to risk mitigation measures like diversifying their supply chain so that they’re not as reliant on one supplier or one region.
Small businesses also may need to reevaluate risk as their own companies evolve too. A small business that expands to more than one location could face new property risks in those additional locations.
Insurers may be able to help in this regard. By identifying property risks and business continuity risks. Given their experience working with many different types of businesses, insurance agents may be able to guide small business owners toward resources and best practices that help with risk evaluation and risk management.
Yet this shouldn’t just be a one-time activity. Insurance agents can build relationships with clients and add value to their services by reviewing risks more regularly. Insurance agents could hold meetings with clients to review risks and assess how a company’s current insurance coverage aligns with any new risks or new business priorities for the coming year.
“Many businesses understand the basic concept of risk management, but aren’t sure where to start. As their agent, you’re in the perfect position to provide them with expert guidance through the learning process,” notes InsurTech company Zywave.
Assess Insurance Coverage
Related to continual risk evaluation, insurance agents can help small businesses in terms of how to prepare for global warming effects by assessing how insurance coverage aligns with what these companies are looking for.
For starters, insurance agents can help small business owners gain a better understanding of what their current policies cover, including any gaps that might leave these business owners exposed if an extreme weather event occurs.
The results might be that a small business has adequate coverage and doesn’t need to make any policy changes. That can still give the business owner peace of mind while potentially increasing their trust in the insurer. Rather than trying to push a sale, you can deliver value by helping them understand their coverage.
In turn, that could lead to future sales. Like if the small business expands in later years and comes to you for additional coverage at that time. Plus, building these solid relationships can lead to important benefits like referrals, which can help grow your business perhaps even more than if you just pushed current clients to buy bigger policies.
Reviewing insurance coverage will lead small business owners to genuinely realize that they don’t have enough coverage to meet global warming risks. Insurers may be able to offer solutions such as a business owner’s policy (BOP). That combines property, liability, and business interruption coverage into one plan that meets a company’s budget and risk management needs. Maybe a company needs a separate type of policy. Like flood insurance, to cover certain climate-related risks that standard coverage might not protect against.
By making these types of recommendations, insurers not only can grow their businesses by selling larger policies but also by building rapport with clients who appreciate you helping them genuinely manage their risk via insurance.
In addition to reviewing risks and insurance coverage, insurance agents can help small business owners prepare for global warming effects by sharing information on this topic. That’s not to say that insurance agents are environmental experts who can guide clients through the ins and outs of climate change, but they can still build relationships and provide value to clients as they come across relevant information.
For example, businesses that upgrade to more energy-efficient equipment, such as HVAC systems, may be eligible for rebates from local utility companies. Those savings could help businesses later deal with financial fallout stemming from severe weather. So, if insurance agents know about these types of financial incentives, they may want to pass along that information when discussing climate-related risks and insurance coverage.
Talk with multiple businesses about how they’re preparing for climate change. Answers on that, or dealing with disaster risk in general, will give insurance agents a resource. You may be able to pass along this information among companies. Similarly, they could connect some small businesses with one another so that they can share resources.
A hair salon owner, for example, might not regularly network with a very different type of business, like a pet food manufacturer. But perhaps an insurance agent has a wide range of clients and can facilitate networking among different types of businesses who can share various information with one another about how to prepare for global warming effects.
Making these types of connections can help. Have more in-depth risk and insurance coverage discussions. These can go a long way toward helping small business owners manage environmental challenges while also helping insurers build stronger client relationships.