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Extreme weather is becoming more and more a fact of life in Bermuda. While the typical June-to-November hurricane season has always threatened our island, heavy winds and rain from increasingly powerful Caribbean hurricanes and cyclones pose greater risks to our population, homes, and businesses.
As a people, we’ve been tested countless times over the past 400-plus years but talk to any shopkeeper here today and it’s apparent these powerful storms now pose an existential threat to our local business community. Bouts of heavy rain not only limit tourist foot traffic, but they can also inflict significant property damage that can force business closures for weeks at a time. At the same time, macroeconomic factors like inflation could.
So how can the Bermuda business community build resilience in this new environment?
According to the Bermuda Weather Service, 2023 was the wettest year in more than a century, with 77-plus inches of rainfalling here by year’s end. And it’s unlikely to be a one off, a recent report published in the Royal Gazette detailed how a changing climate will affect our community in the years to come, including more frequent storms that bring flooding, high winds, and rising sea levels.
The costs to rebuild after these extreme weather events is expected to be staggering. Our last major hurricane, Gonzalo, caused as much as $400 million worth of damage when it struck here almost a decade ago. Since then, the cost of concrete and block – the basic building materials that keep us safe in heavy storms – has increased by more than 100 percent, according to Royal Gazette estimates.
While a changing climate and price increases stand to test Bermuda, these challenges are an opportunity for our business community to build overall resilience in the future so they can weather any storm – not just those created by Mother Nature.
One way to help customers thrive in this new reality is by working closely with business owners to create tailored risk solutions that are as unique as their business challenges. Right now, our economy is stable, with growth hovering above two percent during the past year, will it last? That remains to be seen. Now is a great time to reassess business plans, identify gaps and vulnerabilities, and realise cost savings that provide an edge when the lean times inevitably come.
Consider this scenario: In the event of a natural disaster, insurance policies typically cover the value of physical commercial property and lost revenue based on the value of the last assessment. Given the recent uptick in prices, that means many business owners are significantly underinsured on their property – and don’t even know it. Why? Because recent near-double-digit inflation means property values, rebuilding costs, and revenue all have all gone up.
To avoid this kind of scenario, commercial clients should be proactive and adopt a holistic approach to their financial and risk management footprint. This can take the form of property and casualty coverage, or even healthcare coverage and retirement for business owners and their employees. All businesses need to understand their risks and their options to make the decision that’s right for them, and we have the expertise to meet their needs, no matter their size or situation.
Given the shifting landscape, one way we can help our clients stay prepared for anything is through semi-annual in-person meetings to see if any major internal factors like new locations or hires may affect their coverage. Another way is determining whether outside factors like price increases, legislative changes or regulatory updates may require policy amendments.
Adjusting to a new reality is never easy, but the Bermuda business community was built for this. Our resilience has been tested time and again over centuries, and yet we’ve always prevailed – and we will again.
Learn more about building resilience at argus.bm/ready.