Businesses and homeowners are not financially covered for recent weather extremes
Recent weather trends can put your business on the hook and mean a difference between seeing red or black in the bottom line.
Financial impact of severe weather mounts as communities rebuild from storms
The first four months of 2022 goes down in history for severe storms. Last month generated the most March tornadoes on record at 292. From the loss of life and property, there's the enormous burden of rebuilding these communities. Stephen Bennett, co-founder and chief climate officer for The Demex Group, joins FOX Weather.
March 2022 finished with a record-breaking 249 tornadoes, January and February 2022 marked the driest consecutive on record in California for ski resorts, Kansas City broke the 130-year-old snowfall record and hurricane season 2021 was the third most active ever. Most homeowners and business owners are not financially prepared for these extreme weather events.
In recent years, the U.S. has experienced weather extremes not seen before in recorded history. Home and business owners generally look to insurance to cover the loss.
An aerial view of damage caused by tornadoes in Mayfield, Kentucky, United States on December 14, 2021.
(Tayfun Coskun/Anadolu Agency via Getty Images)
"The primary financial recovery mechanism is insurance," Stephen Bennett, Chief Climate Officer and Co-founder of the Demex Group told FOX Weather. "So typically your property insurance, your homeowner's insurance or your renters’ insurance will come in to help you rebuild, essentially rebuild your life, rebuild your structure, your home, replace the things that were damaged or were lost in that severe weather event."
A 2019 study found that 40% of homeowners living in "high-risk flood zones," according to FEMA.gov are "not at all worried about flooding in the next decade" and don’t carry the specific insurance.
A group of people wade through flood waters in downtown Annapolis, Maryland, on October 29, 2021. - The US National Weather Service implemented a flood watch for the cities of Baltimore and Annapolis as well as Anne Arundel, Baltimore and Howard counties. Washington, DC, and parts of Virginia faced the same alert.
(JIM WATSON/AFP via Getty Images / Getty Images)
Companies and individuals that don’t plan for the risk can quickly end up on the red side of the spreadsheet. A 1997 study, based on data from the California Department of Insurance, stated that 93% of homeowners insurance companies either stopped offering earthquake insurance or imposed strict limits after the 6.7 magnitude, Northridge earthquake in 1994.
The Demex Group plots weather and climate data for weather-dependent industries like insurance companies, golf courses, construction sites, plowing companies and even parking lots. Their research and forecasts, based on recent weather and climate trends advise companies on how to spread insurance risks and plan for tough years.
Snow scenes from a blizzard that hit North Dakota on April 12-14, 2022.
(Ashley Janssen via National Weather Service, Bismarck)
"Insurance companies are actually seeing these types of [severe weather] events change," said Bennett. "Weather patterns are shifting. It used to be that we typically saw severe weather in the spring and then a secondary season in the fall. We're starting to see that spread out across the calendar where we're seeing severe weather and well into the winter."
Drone footage of a tornado strike in Elgin, Texas.
(Brian Emfinger, Live Storms Media)
He pointed to unprecedented December 2021 tornadoes in North Dakota and Minnesota. Before December 2021, the NWS had not recorded a single December tornado in Minnesota and only issued two Severe Thunderstorm Warnings for Wisconsin in the past 26 years.
TORNADOES, DAMAGING WIND IN UPPER MIDWEST WEDNESDAY
According to NOAA, 2020 and 2021 both experienced the highest amount of billion-dollar weather related disasters, 22 and 20 respectively.
2021 RANKED SECOND FOR HIGHEST NUMBER OF BILLION DOLLAR WEATHER DISASTERS ON RECORD
Damaged homes are seen in Grand Isle, Louisiana, in February 2022, six months after Hurricane Ida devastated the coastal town.
(FOX Weather)
"And insurance companies themselves, who are the primary mechanism to provide for financial recovery, they are seeing losses that they haven't experienced in their businesses before as the severe weather season expands," explained Bennett. "What our company is doing is appraising the risk of financial loss based on that extension of the hurricane season, which is linked to shifting weather patterns."
Demex then shows the insurance companies how to spread risk out across the year as to not leave them struggling with survival after an unanticipated disaster.
Recent studies indicate that more public policy changes are needed before homeowners opt for expensive coverage for disasters infrequently experienced.