A spate of extreme weather patterns has pushed claims for property losses to all-time highs and portends an alarming shift in trends for club insurance coverage and premiums.
The intensive flooding from June’s record rainfall in West Virginia that swamped The Greenbrier resort and forced cancellation of The Greenbrier Classic PGA Tour event was just the latest and most dramatic example of how club and resort properties are subject to growing exposure and vulnerability to the extreme weather patterns that now seem to have become a four-season, 50-state norm throughout the U.S.
The only thing that’s rising faster than water levels or piles of debris from assorted other disasters, it seems, are the numbers that reflect the alarmingly cumulative effect of weather-related extremes on insurance claims for property damage.
In May, Business Insurance magazine reported that, according to the Aon Benfield Group Ltd., April’s combination of earthquakes, storms and floods around the world portended the worst April for natural disaster-caused insured losses in five years. In the U.S. alone, Aon Benfield reported, five outbreaks of severe convective storms in April caused total aggregated economic losses that were estimated to exceed $4 billion, and insurance losses beyond $3 billion. Major flash flooding just in the greater Houston area resulted in total economic losses that were expected to exceed $1 billion, Aon Benfield added.
|SUMMING IT UP
• The average club property suffered at least a six-figure claim from weather-related damage in the past two seasons, and many reported multiple claims.
• Insurance supply lines and premiums for club and resort properties are expected to soon reflect a reaction to increased claims activity within the industry.
• Clubs should start to plan now for a review of property coverage, exposures and limits prior to their policy renewals.
And while The Greenbrier’s plight was an especially prominent and extreme example of how club and resort properties can be devastated by these catastrophic events, it was by no means an exception when it comes to the industry’s susceptibility. The average club suffered at least a six-figure claim in the past two seasons, insurers to the industry report, and many reported multiple claims.
A Change in the Wind
What does this mean for how club properties are viewed by insurance carriers? After several years of a buyer’s market, where more carriers were attracted to clubs as potential customers and were eager to add club property coverages at little or no additional premiums, a change is now certainly in the wind, industry observers predict.
Many carriers will now be inclined to abandon the club and resort market entirely after being reminded of just how vulnerable golf courses, which are often built in or near flood plains and have direct exposure to rivers and streams, can be when conditions become especially severe. Those that decide to continue to offer their lines to the industry will certainly be more selective in which properties they will underwrite, and far less inclined to extend any sort of discount or incentive where premiums are concerned.
So even if club properties have already locked in their coverage for this season, insurance company representatives advise, they should already begin to prepare for expected adjustments at their next policy renewal date. By finding time now to thoroughly review property coverage, exposures and limits with current insurance representatives, and also being open to considering proposals from other carriers, managers may find ways to avoid significant premium increases or coverage reductions, through adjustments that can include proper asset valuation or identifying risk-appropriate opportunities for savings through higher deductibles.
These reviews are already included at no additional charge in most insurance-coverage packages, insurers note, yet many managers fail to take advantage of them, usually out of an unfounded fear that they will lead to attempts by the carrier to find and add additional coverage. Many times, though, quite the opposite occurs—a review, especially if it includes a complete property tour, will result in insurance representatives finding that a club has taken steps that warrant better or less-expensive coverage, or noting areas and following up with suggestions that can lead to savings.
Regardless, insurers are now communicating a strong new message to their customers: The gathering storm prompted by a weather-extremes cycle that shows no sign of abating should be seen by any prudent club or resort manager as an unmistakeable signal to take a proactive approach where insurance coverage, and protection, is concerned.
“We may not be able to prevent you having to close a course because of bad weather,” says one insurance executive. “But if you take the time to work with us now, that can certainly go a long way to helping us have you properly prepared to limit the damage and get open and back up and running as quickly as possible.”