Business Insurance For Extreme Weather Risks In Canada Does Exist
Construction. Retail. Agriculture. Manufacturing. When it comes to extreme weather risks in Canada, no industry or business is immune. Extreme weather takes many forms. Whether it is a wonky Polar Vortex, flooding due to unseasonably warm temperatures, frost after Victoria Day or an out of control wildfire, extreme weather can irrevocably damage your business.
When a worst-case scenario happens, your business needs commercial insurance that covers property damage that results from bad weather. Studies estimate roughly 4 out of 5 economic sectors are impacted by climate risks. These risks can include heat waves, earthquakes, storms, drought, excess rainfall and more.
After an extreme weather event negatively impacts a business property, there’s a lot more than bricks and mortar rebuilding to worry about. Calling in your claim is just the beginning of the recovery process. You will also need to quickly contact your employees, suppliers and business partners. And, depending on the nature of your business and the extent of extreme weather-related damage, you may need to activate your crisis and/or disaster recovery plans. You may also decide to launch crisis communications, talk to media and reach out to the general public.
All of these actions take time, energy and money. After an extreme weather event, all will be in short supply. This is why it is so vitally important to get insurance for extreme weather risks in Canada in place for your commercial operations.
New extreme weather risk insurance now available across Canada
ALIGNED Insurance brokers are constantly on the outlook for new insurance solutions for Canadian businesses. With extreme weather risks happening more frequently across the country, we keep watching for new and innovative insurance products that respond to Canadian weather-related risks.
Parametric insurance is one such product. Specifically designed to address claims related to extreme weather damage, parametric insurance is now available to Canadian businesses from AXA Global Parametrics, an insurance and reinsurance broking company incorporated in France.
How does extreme weather risk insurance work?
The idea behind parametric insurance is to use existing and ongoing extreme weather risk research to establish probability parameters. Types of parameters can include temperature, rainfall, windspeed, crop yield and earthquake magnitude. These parameters are used to benchmark norms for specific geographic areas. An extreme weather risk situation generally means a change in temperature or rainfall amount that is either above or below a certain parameter aka “the norm”.
When a climate event occurs that is outside of what’s considered “the norm”, parametric insurance is designed to quickly and transparently expedite claims payments. AXA Global Parametrics measures extreme weather risk exposures. When a parameter occurs above or below a certain level, insured clients who suffer a loss will receive the payment of a claim within a few days for a pre-defined amount and threshold.
Parametrics insurance is built to deliver when you need it the most. In the event that your insured business property is damaged by an extreme weather risk event, this coverage is designed to help your business recover.
What industries are best suited for extreme weather risk insurance?
There is a multitude of industries that can benefit from parametric insurance. Below are a few specific examples provided by AXA Global Parametrics:
- “Agriculture – coverage against low yield due to drought, excess rainfall or cyclones
- Food and Drink – coverage against decreased sales of cold drinks during a cool, rainy summer
- Construction – coverage against work delay costs due to extremely cold temperatures
- Retail – coverage against a drop in seasonal clothing sales (winter coats, bathing suits…) due to adverse weather
- Renewable Energy – coverage against a decrease in renewable energy production due to adverse weather (lack of wind or solar radiation)
- Gas and Energy – coverage against a decrease in energy demand due to a warm winter
- Tourism and Leisure – coverage against a drop in visitor numbers and subsequent lower food and beverage sales in theme parks due to extreme weather conditions (excess rainfall, cyclones…)
- Transportation – coverage against increased costs for airline companies due to cold temperatures and snow (aircraft de-icing)”1
Extreme weather is happening. Your business needs protection. Talk to an ALIGNED Insurance broker about extreme weather and options to manage risks to your business. We can help you get insurance for extreme weather-related risks in Canada. Connect with one of our Canadian Business Insurance Brokers today
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Source(s): 1AXA Global Parametrics: Parametric Insurance – Innovation strengthening climate resilience; Canadian Underwriter: The two main benefits of parametric insurance; Insurance Bureau of Canada: Study of Impact and the Insurance and Economic Cost of a Major Earthquake in British Columbia and Ontario/Québec
Read more about extreme weather risks, commercial insurance and related business coverages