Natural Disasters

This Week In Risk Management: November Issue #1 | by Jonathan Selby | The Shield | Nov, 2021

Jonathan Selby

“Dodging” is the theme of this post, whether it’s dodging catastrophes or live rounds from a prop gun. While these topics might seem incredibly grim, let’s take a respectful step back to ponder how these tragic events could potentially shape our future — and why they should.

In efforts to course-correct on climate, Thomas Buberl, CEO of Axa, leads a coalition of major insurers called Net-Zero Insurance Alliance (NZIA). The goal is to move away from the “dark ages of burning coal” and move toward underwriting companies on board with climate transition. What this means for coal plants is that insurers are quickly becoming few and far between.

Removing insurance options could undoubtedly sink coal plants worldwide. Some individuals think the movement is a little sideways — bullish, even. So, the question is whether the NZIA will rally the private sector and achieve what other activists have failed? And is this okay? Lastly, if NZIA fulfills its mission, who’s in line next for the chopping block?

Winter Storm Uri kerplunked the power grid in Texas earlier this year, sending chills down the energy sector’s spine. That was just the beginning of how energy players face a changing market. However, many experts have seen this “wild ride” in the early 2000s and several other times before.

According to Ricky Bryan of IMA Financial Group, there’s always a pattern of hardening rates in first-party liability coverages, and then the casualty market follows suit. Unlike the past patterns, some new coverages are taking center stage: Cyber Liability and D&O Insurance.

These emerging patterns don’t surprise us here at Founder Shield in the least, but we wonder how many new CAT-driven themes we’ll see bubble up in the insurance industry.

California has potentially faced more extremes this year than any other state. As a result, the California Department of Insurance encourages people to “re-imagine” their insurance options.

Here’s the gist, purchasing individual insurance can be expensive, especially coverage relating to climate or natural catastrophes. It’s more affordable, though, when the cost is spread throughout a neighborhood or a specific business district.

Although a pilot program hasn’t been implemented yet, California’s ideas were more to stir conversations among its residents. Our opinion? The overarching idea isn’t all that new as it’s similar to risk retention groups and how they provide alternative risk transfer. We raise an eyebrow to how California will manage the requirements for these policies — some people will be underinsured and others overinsured. Then what, Cali?

Kevin LaCroix of RTExec brings up a good point that lawsuits will surely surface, alleging breach of fiduciary duties related to climate change. Consider the company leaders who don’t address climate-change-related business risks. Following best practices will be more than a suggestion; it will be necessary. There are SO many discussions here — but we must move on.

If you haven’t seen recent headlines, cinematographer Halyn Hutchins lost her life to a “live round” incident on Alec Baldwin’s new movie set, Rust. Lamentably, Brandon Lee died in the 1993 filming of “The Crow” when a prop gun fired a real bullet. And yet, here we are again.

In the insurance world, liability is always top-of-mind; however, liability is more than pointing a finger or casting blame. Instead, it’s about who will accept accountability. In the case of the “Rust” Production Company, the verdict is not clear. Still, they did carry several insurance coverages, and the investigation is still underway.

No amount of deliberation will bring the beloved cinematographer back to life. However, her death forces the movie industry to revisit the rules and regulations surrounding the use of firearms — and bumps liability concerns farther up the priority list for business owners in all industries.

Lastly, we’d be thrilled to hear what you have to say about these topics. Please let us know in the comments!

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