For many businesses, the start ofthe 2012 U.S. East Coast hurricane season coincides with aparticularly precarious time: Although the economy in some areas ofthe world appears to be edging toward recovery, budgets remaintight and insurance rates for Property Catastrophe coverage are upas much as 25 percent.

Against this backdrop, agents and brokers have a critical roleto play in supporting their clients. With catastrophic riskslooming, they can help clients with pre-loss planning.

Should a loss occur, they can guide clients through thecatastrophe-claims management process. Agents and brokers who excelin both areas bring substantial value to their clients that canstrengthen relationships and enhance their business.

An effective property-insurance program starts with a thoroughunderstanding of a client’s exposures. Supplement what clientsshare in routine fact-finding meetings by gleaning information fromclient Websites, financial filings, investor communications andthrough news sources. Google Maps can help verify clientlocations.

In arranging coverage, be sure to understand the basis ofvaluation for each asset. Is it replacement cost, actual cash valueor selling price? Match the property-insurance policy wordingaccordingly. Compare any publicly available information to theschedules in the policy, note any discrepancies and discuss themwith the client. This is especially critical if the policy containscoinsurance provisions or margin clauses.

If the client is involved in manufacturing or distribution, noteany and all interdependencies among various facilities. Does theclient manufacture at one location and transport products toanother site for distribution? Assess any potential exposures,especially those involving time-element issues: These are becomingchallenging for underwriters in light of the substantial losseslast year from Thailand and Japan.

Regularly discuss with your client any changes in their businessplan, including acquisitions, divestitures and plans for expansionor joint ventures. Most importantly, as always, be sure to documenteverything in writing.

Begin pre-planning for a potential cat loss by reviewing theproperty-insurance policy with the client and members of the brokerteam. Make sure everyone knows what’s in the policy and then moveforward with the following steps:

• Set up a claims team in advance of any potential event. Workwith the client to interview different experts ahead of time. Thatwill help everyone think through the process and set the protocolsbefore a loss occurs.
• If possible, identify a claims adjuster who is agreeable to allparties and have them written into the policy. This is especiallyimportant if there are multiple property insurers on aprogram.
• Help clients develop procedures and protocols for the businessunits so they can refer to them in the immediate aftermath of aloss.
• Use the value-collection process every year to educate theclient on Property Damage and Business Interruption coverages sothey understand what’s in their policy.
• Review all client locations in catastrophe-prone areas. Thiswill help you and the client assess the adequacy of limits and makeany necessary deductible calculations.
• Understand deductibles and how they work. The policy might havea straight dollar deductible, percentage deductible or aggregatedeductible. With a percentage deductible, know the values subjectto the percentage. Are they reported values or actual values? Willthe deductible be applied separately to buildings, contents andbusiness interruption? If there is a waiting period of 24 hours, isthat one day, or three eight-hour shifts? Make sure everyoneunderstands how deductibles will be calculated in the event of acatastrophic loss.
• Review the business-continuity and loss-mitigation plans andask if updates are needed.
• Communicate the property-policy obligations and opportunities.Each policy has provisions in the wording that your client needs tounderstand. There are policy provisions to get advance payments inthe event of a loss. Be sure claims-preparation fees areincluded.
• Understand timing requirements for reporting a loss. Is it 30days, 60 days? If there is coinsurance or a margin clause, makesure the client understands where that is, what it means and how itwill apply in a loss.
• Document any exclusions or onerous conditions. There may bedefinitions for flood that delineate where the flood exclusions orother provisions apply. Document the covered property and thecovered perils.