Marine insurer the TT Club has said an analysis of its claims for the past three years highlights the growing threat of extreme weather events.
The underwriter studied its claims and found inland operations suffered damage caused by extreme weather in 32% of cases. Unsurprisingly, locations near a coast are more susceptible to weather related incidents (68% of cases) with 16% of claims involved heavy rainfall causing flooding.
In terms of property damage strong winds and microbursts featured in 74% of weather-related claims through the period. Wet damage while in storage accounted for 13% of reported claims; 31% of these as a result of flooding.
The club said recent, and on-going meteorological events, particularly in the Vancouver area are “timely instances” of extreme weather such as unprecedented rainfall, tidal surges and wind microbursts becoming more common. Whilst many storm events are considered geographically seasonal, such as those in the Tropics, the global supply chain as a whole must take adequate steps to prepare for isolated severe weather events. Typically wind strength is most ferocious in coastal areas. However, it is often the surge and flood risk that can cause greater problems, both on the coastline and further inland.
TT Club’s risk management director, Peregrine Storrs-Fox explained: “The associated losses of such incidents can be far reaching; water is unforgiving and has the ability to penetrate and cause significant damage. Flood water is inevitably dirty, increasing damage and in many instances creating health challenging situations. Extreme weather events can be challenging to predict but operators of warehouses, terminals and port areas need to keep ‘fresh’ their assessment of the changing risk profile in relation to climate experience.”
The club added that understanding of meteorological trends, particularly in light of global warming, is doubtless advancing. “The capability to monitor, record and predict weather patterns will continue to develop,” it added. “This understanding will not physically protect property, equipment and operations but, when utilised as an integral component of thorough risk assessment, it should inform operational decision-making.”
The insurer’s analysis has also found that 65% of cargo damage incidents are attributable in part to the way that goods are packed within a container or cargo transport unit (CTU). That data for 2020 suggests 25% of wet cargo damage was caused by water ingress to the CTU through pre-existing damage that probably should have been identified as part of the cargo packing process. Many claims therefore can be avoided with a robust pre-loading condition checking procedure and correct packing processes.
“Climatic change is a fact of life,” concluded Storrs-Fox, “as such risk assessment exercises by supply chain stakeholders must necessarily take account of extreme weather events, as unpredictable as they may be. However, sensible operational measures and the employment of best practice procedures pertinent to individual organisations’ functions will go a long way towards avoiding disastrous consequences when the next rainstorm hits.”