Weather the Storm: Preparing your property and business for El Niño

By now, you may have seen reports about the developing El Niño conditions in the Pacific and their potential impact on East Africa. The Kenyan and Tanzanian meteorological offices are forecasting a higher likelihood of wetter-than-normal conditions for the upcoming rainy season in October, November and December.

With less than a month to go before heavy rains are expected, we would like to encourage all our clients to take the opportunity to review physical preparedness and insurance arrangements.

Preparing Your Business for the Rains

There are practical steps you can take now, such as inspecting and clearing gutters and draining systems, fixing roofs, or moving or raising stock. You might also consider relocating property entirely, particularly out of basements or away from flood-prone areas.

This is also an important time to review your property insurances to ensure that the policies remain appropriate for your current exposures.

In particular, check that:

• flood and storm perils are covered.
• any new property, equipment, or stock has been included.
• any new locations have been declared to insurers.
• the amount insured reflects the current replacement or re-instatement values.

The Importance of Adequate Sums Insured

One area where issues often arise following flood claims in the East African markets is the adequacy of sums insured. Following a significant flood claim, a Loss Adjuster is appointed to assess and quantify the damage. If the rebuild or replacement costs exceed the declared sums insured for the damaged property, the Loss Adjuster may reduce the claim amount proportionately in line with the amount of underinsurance.

We therefore strongly encourage you to ensure that buildings, machinery, equipment and stock is insured at current replacement or reinstatement values and not written down values.

Do not Overlook Business Interruption Cover

Underinsurance can also affect business interruption claims. The annual turnover or gross profit figures declared to insurers should reflect realistic current and forecast trading levels and, where appropriate, should align with budgets and projections for the relevant indemnity period.

It is worth reviewing these figures now to ensure that your Business Interruption cover would provide adequate protection should your operations be disrupted by a significant flood or other insured event.

Be Prepared Before the Rains Arrive

If you have any questions or would like to discuss your flood or severe weather exposure, please do not hesitate to drop us a line at pink@jwseagon.com, where our General Insurance team at JW Seagon is here to assist.