NASHVILLE, Tennessee – The shortage of qualified construction workers and the resulting inflation are impacting public entities’ risks, a pair of experts said Saturday.
The labor shortages are increasing the costs of repairing property damage caused by severe weather events, Lauren Tredinnick, president of public entity risk solutions at Munich RE, said during a session at the Public Risk Management Association’s annual conference.
Ms. Tredinnick said Colorado State University’s recent forecast of an extremely active Atlantic hurricane season and the widening of the so-called “Tornado Alley” have insurers bracing for above-normal amounts of property damage, she said.
While there is capacity for coverage, she said the forecast of an overly active hurricane season has sparked interest from some insurers outside the United States to offer coverage for property damage.
Ms. Tredinnick said the footprint of Tornado Alley has changed in recent years by shifting east and north and that the number and severity of tornadoes have increased dramatically.
The risk of catastrophic losses used to be limited to the coasts but has spread, she noted. For example, claims for damage caused by hail and severe thunderstorms have increased dramatically over the last few years, and there aren’t good models to predict convective storms, she said.
The increase in the number of catastrophic weather events occurring across the globe is impacting reinsurance markets, which in turn affects insurers for local entities.
As a result, it is important for public entities to ensure that their properties are accurately appraised, said Wes Crago, a program administrator for Clear Risk Solutions.
“You have to keep your property rates at market value. If you don’t have accurate property values, you’re going to have a difficult conversation with your insurer if something happens,” he said.
In a positive development for public entities, the market for cyber coverage has improved with the entry of additional insurers, Ms. Tredinnick said.
Mr. Crago said it is imperative for public entities to guard against cyberattacks by taking steps such as ensuring software is up to date and requiring multifactor authentication. He also said public entities should offer experiential training on handling a cyberattack.
