Daily Market Update

Global risk association seeks to create a standard for risk managers… Why water risk should be part of a business’ assessments… And a new flood law means lower premiums but higher risk.

International standard for risk management planned
With the increasing global risks driving demand for more dedicated risk managers there is a problem facing employers and those in the industry; what exactly is a risk manager? Easy to answer on a basic level but when you try to drill down into what their experience and qualifications should be, it’s less clear. The International Federation of Risk and Insurance Management Associations (IFRIMA) has set itself a challenge to define what the core knowledge and competencies of a risk manager should be. A working group of representatives from across the industry aim to produce a short and clear document that sets out a standard that can be used by employers and the industry in considering training and certification requirements. The first version of the document is hoped to be completed early next year.
Assessing water risk
In developed nations we take water for granted; it’s readily available to us, for drinking, for bathing, in the hot-tub and for business processes. However, one of the concerns about climate change is that while we may see increased floods in some seasons, we will have increased droughts in others. For some businesses, the importance of water to their everyday activities may not have been assessed. Consider the manufacturing plant that requires water to drive machinery or the catering firm that needs water for effective cleaning. Whether the risk is the availability of water or changes in its usage, it is a real risk that should be part of risk management. Read the full story.
New law on flood insurance could be bad news for homeowners
A new law in Massachusetts comes into effect later this year that will make flood insurance more affordable for homeowners, but it’s not necessarily good news. Currently lenders can require that residents insure their properties against floods up to the full value of the home and may insist on contents insurance too. The new law means that the minimum requirement will be only up to the value of the outstanding mortgage. Requirements for contents insurance will not be allowed and there will be a minimum of $5000 deductibles. However, the positive side of lower premiums may be a false economy. In the event of a flood devastating a home, the owner could be facing a $5000 payment for the deductibles, no cover for their contents and while the mortgage would be cleared, there would be no extra money for rebuilding. Those with a modest mortgage could see their investment wiped out. Of course, homeowners have a choice and many will still opt to cover the entire loss and pay higher premiums, but there is a concern that those on tighter budgets may leave themselves vulnerable at a time when flood risk is increasing. Read the full story.

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