Snowpack Prediction Revisited: Flood Risk Remains

Storms Return

A year ago, our team highlighted the powerful December 2021 storm system along the West Coast as it dropped heavy snow in the mountains of the Sierra Nevada, and the Cascade Range (Leonard, 2021).

The storm systems were excellent news for the drought-plagued region and its struggling mountain snowpack; without it, a resulting decrease in the extent of alpine tundra ecosystems could threaten some species. (EPA, 2016).

Fast forward to January 2023, and the Sierra snowpack has ballooned to more than double its usual size for this time of year! “A flurry of storms unloaded historic amounts of rain and snow across California over the past month. The deluges, fueled by a parade of atmospheric rivers, filled reservoirs and have improved drought conditions across large swaths of the state” (Lee, 2023). The snow will continue to replenish California’s water supplies as it melts during the warmer months. This is great news for the environment, however, just as we pointed out a year ago, this does bring increased risk for property owners in California. The storm could disrupt travel and damage buildings due to potential flooding. The replenished snowpack sets the stage for potential “flood issues as we move through the snowmelt season, said Michael Anderson, state climatologist with the California Department of Water Resources, at a media briefing on Jan. 16″ (Lee, 2023). Rain falling on snow, in particular, can cause a rapid melt that overwhelms downstream rivers and reservoirs” (Lee, 2023).

It’s Over, Right?

Historically, immense snowfalls in the mountains of the Western United States can cause more flooding in Mexico, Baja California, Arizona, and New Mexico in the spring and summer following winter storms, like in the 1862 flood “that killed thousands, wiped out mines and ranches, and submerged the state capital” (Becker, 2018). This event was capped by a warm intense storm that melted the high snow load, and the resulting snow-melt flood was disastrous (Becker, 2018).

Risk Management Techniques

Reach out to us ( for help with your flood control systems. Flood vents, floodplain management, and wind mitigation are all vital aspects of a risk control strategy for climate risk.

Flood Vents:

A flood vents are a useful guard against the buildup of excess moisture or water which are not healthy for structures to endure. They are permanent openings in walls that allow for the free passage of water. Flood Vents protect houses and buildings during floods by preventing hydrostatic pressure buildup that can destroy walls and foundations. This mitigation technique, allows floodwater to freely flow through an enclosure such as a crawlspace or garage (FAQs SmartVent).

Characteristics of effective flood vents:

  • Free passage of water flows automatically in both directions without human intervention
  • Minimum of two openings
  • No higher than one foot above grade

Flood vents are useful for allowing for the automatic entry and exit of flood waters for an at-risk property. It is a “wet floodproofing” technique is required for residential buildings. Commercial buildings have the option to wet floodproof, which can be more cost-effective compared to dry floodproofing (FAQs SmartVent). Dry floodproofing includes measures that make a structure watertight below the level that needs flood protection to prevent floodwaters from entering.  This type of floodproofing is often used to protect non-residential structures, water supplies, and sewage systems (FEMA).

Mitigation + Floodplain Management:

Further, property owners should also transfer risk to an insurer.

  • Purchase flood insurance
  • Look into Flood Hazard Areas (SFHA)
  • Look for Flood Insurance Route Maps (FIRM) near your area



Becker, R. (2018, May 26). The hardest part of preparing for disasters is overcoming human nature. The Verge. Retrieved February 15, 2023, from

EPA – What climate change means for California. (2016, August). Retrieved December 17, 2021, from <>

FAQs. SmartVent. (n.d.). Retrieved December 17, 2021, from <>

FEMA: Dry Floodproofing. Dry floodproofing. (n.d.). Retrieved December 17, 2021, from <>

Lee, J. (2023, February 1). California’s snowpack may face an emerging risk that scientists are just discovering. San Francisco Chronicle. Retrieved February 10, 2023, from,and%20the%20Desert%20Research%20Institute.

Leonard, D. (2021, December 13). Storm blasting California with massive mountain snow and flooding rain. The Washington Post. Retrieved December 17, 2021, from <

Wikimedia Foundation. (2023, January 29). Great flood of 1862. Wikipedia. Retrieved February 15, 2023, from

3 Risk Management Actions to Prepare for 2023

    1. Conduct diligent inspections of your commercial property and the surrounding area for specific exposures to loss. [1]
    2. Analyze exposures to natural disaster. If property is located in a disaster-prone area, implement mitigation and response measures that will protect it. [2]
    3. Conduct accurate Insurance-To-Value calculations to remain fully protected when loss events occur. [3]


Natural disasters: The frequency and severity of natural disasters continue to rise. “Natural disasters cost the global economy $227 billion in 2022, with under half of those expenses ($99 billion) covered by insurers. This marks the third consecutive year in which natural disaster losses exceeded $100 billion.” [4] Extreme weather events continue to become increasingly devastating and costly. “Weather experts believe severe storms, extreme temperatures, wildfires and flooding are the new norm” due to climate risk trends. [5] “Wildfires again plagued the West Coast in 2022 and widespread drought and heat waves in the Western and Central United States depleted several reservoirs.” For the Midwest, impacts included hailstorms, a powerful derecho and “historic inland flooding caused issues throughout Kentucky and Missouri.” [6] Of course, “one of the most devastating weather events from 2022 was Hurricane Ian. Altogether, the hurricane resulted in 131 fatalities and an estimated $100 billion in total damages.” [7] The insurance industry is attempting to adopt innovative solutions to keep up with weather-related losses; weather readiness is a key area of focus.

Inflation issues: “Fluctuating demand for various building materials, and wage increases across the construction sector” were some of the root causes of inflation issues. [8] “If a loss occurs, property owners could face higher claims costs and encounter underinsurance concerns.” [9] This is why it is so important to consider Insurance-to-value calculations (ITV). Contact me at for a free consultation from my team. As building expenses and valuations are impacted, insureds must demonstrate increased diligence in “performing correct ITV calculations and maintaining ample commercial property coverage.” [10] “An accurate ITV calculation represents as close to an equal ratio as possible between the amount of insurance a business obtains and the estimated value of its commercial building or structure, thus ensuring adequate protection following property losses.” [11]

Reinsurance capacity concerns: “Current natural disaster and inflation trends have proven particularly difficult for the commercial property reinsurance space to navigate.” [12] As a result, “capacity will likely become further constrained in 2023, therefore impacting overall commercial property insurance rates—especially for policyholders with CAT exposures.” [13] CAT = catastrophic loss.

Supply chain struggles: “Production and delivery bottlenecks, widespread labor deficits, extreme weather events and geopolitical conflicts have contributed to a range of supply chain struggle —prompting project delays and increased recovery expenses amid property losses.”  Supply chain risk is rooted both in the economic climate and the physical climate. “Businesses may face increased claims severity if losses require them to rebuild structures or replace property on slower schedules and at higher prices.” [14]

[1] – [14]

2023 P+C Market Outlook Executive Summary – Retrieved  from

Amplified auto losses: are your limits adequate?

It is a sign of tough times when even the insurance companies are struggling. Inflation is driving up auto insurance losses and combined ratios. The amplified insurance claims have inflated at an even faster pace than the Consumer Price Index (CPI) and the premiums charged by carriers. [1]

According to the American Property Casualty Insurance Association, auto insurers saw $14.9 billion in overall capital losses for Q1 2022. [2] Additionally, Loss Adjustment Expenses (LAE) increased 10% in the first quarter 2022. [3]

The reasons for the capital losses, instead of insurers’ typical gains, were increased frequency and severity of losses. [4] US private passenger auto losses spiked 25% in 2021 from 2020. [5] Claim severity reached a record $5,743 in Q1 2022, up 36.5% from 2020 Q1. [6] The average bodily injury claim severity is up 24.2% in this same period. [7]

Insurers are bleeding as a result, as the increase in premiums was “far below the rate of escalating losses.” [8] The worst part? These trends are expected to continue into 2023 or longer. [9]

What does this mean for you as an auto insurance buyer? Bodily injury claim severity is up, therefore, state minimum limits are not adequate. Inflation does not only apply to food and energy; it spans across a multitude of prices. This includes the cost of insurance claims, which have outpaced premiums and CPI. Consult with us to review your limit adequacy.


[1] – [9]

The New Normal? Auto Insurers Continue to Struggle with Inflation. American Property Casualty Insurance Association. (n.d.). Retrieved November 4, 2022, from


Prices for this Crucial Protection are Cooling Off

Around this time last year, our team predicted Directors and Officers Liability Insurance (D&O) price increases trending downwards towards flat renewals. Read it here

As 2022 winds to a close, the decreases are coming to fruition. According to Aon’s latest D&O Pricing Index, the average price per million in limits for D&O insurance fell for the second consecutive quarter. [1] “On average, primary policies renewing with the same limit, deductible and carrier saw a 4.0% premium price drop in Q3 compared to Q3 2021.” [2]

“Q3 marks the second quarter of year-over-year price decreases for the public company D&O market, following 17 quarters of increases. At the height of the hard market in D&O, the average price increase reached 26.2% in the first quarter of 2020” [3]. Q3 saw the number of securities class action filings dropped 8.5%, Aon reported, citing Stanford Law School’s Securities Class Action Clearinghouse. [4] This likely acted as one of the root causes of the premium cool-downs.

D&O should not be viewed as an expense, but as an asset to any company; policies cover managerial decisions that result in adverse consequences for both large and small companies alike. [5] It remains an excellent time to evaluate your current D&O risk management strategy. At Conrey, my team and I attack the root cause of what drives D&O rates with a proprietary system of data analytics and enterprise risk management proven to reduce total cost of risk. Contact me at to see how I can do this for your business.



Erin Ayers. (2022, November 2). D&O prices fall for the second consecutive quarter: AON. Advisen Front Page News. Retrieved November 4, 2022, from


IRMI – Directors and officers liability insurance. Directors and Officers (D&O) Liability Insurance | Insurance Glossary Definition | (n.d.). Retrieved September 28, 2021, from

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Resilience: Efficiently coping with loss events like Hurricane Ian

Published on September 29th, 2022, by Kyle Langan

As the nation holds Florida in its prayers, hoping the state and its people stay safe in the face of Hurricane Ian, our thoughts are with everyone impacted. A catastrophic loss can happen to anyone at any time; therefore, resilience is crucial. Fortunately for the areas and people stuck in Ian’s path of destruction, the United States is a resilient society. To ensure business and personal resilience, we must ask ourselves, do we view insurance as an asset or an expense?

What is meant by resilience? 

Resilience means having features in place for the following: preparation, prevention, protection, response, and recovery after an accident or disaster. [1] For example, the “U.S. relies on the National Security Council to instill ideas and actions of resilience in their national prevention and action plan for a crisis scenario.” [2] The U.S. is also very advanced terms of economy and insurance penetration; there is sufficient capital in the U.S. to fund response and recovery to a disaster. [3]

A greater presence of insurance (higher insurance penetration) strengthens resilience

A place with a greater presence of insurance will be better able to withstand natural disasters like the recent Hurricane affecting Florida’s eastern coast. [4] With greater insurance penetration, comes a more resilient society. [5] Several economic studies in the last few years have shown that high insurance penetration assists a country’s economy after a major natural disaster. [6] The greater the proportion of insured losses, the less of a decline there will be in economic output following a natural disaster, and therefore the faster the country can recover. [7] In countries with very high insurance penetration, there can even be a positive effect on economic output. [8]

Risk reduction can also be achieved through managing exposure. [9] This includes cutting back on development in high-hazard regions such as coastlines or areas that are prone to flooding. [10] “This harbors enormous potential, but it is a potential that is often neglected in the pursuit of short-term gains, or because poorer people simply have no other places to live.” [11] A further component is reducing vulnerability. [12] For example, “the loss susceptibility of buildings can be reduced by enforcing stricter standards for more loss-resistant construction methods or by using more suitable building materials, while protection measures like dykes can help to reduce the risk for entire areas.” [13] After that come measures for acute catastrophe management, such as early-warning systems, evacuations and emergency aid. [14] These name just a few of the many ways societies, businesses, or individuals can practice preparation, prevention, protection, response, and recovery, therefore improving their resilience.

[1] – [14] (Höppe, 2017)


Höppe, P. (2017, March 9). Resilience: Munich re topics online. Retrieved September 15, 2022, from


Starbucks benefits from its D&O in DEI lawsuit

Published September 2nd, 2022, by Kyle Langan

Starbucks Corp executives and directors have been sued over the entity’s efforts to promote diversity. The plaintiff, a Starbucks shareholder, alleges that these efforts insinuate racial discrimination because corporate policies require the company to make race-based decisions that benefit minorities and violate federal and state civil rights laws. [1]

“In a complaint filed on Tuesday, the National Center for Public Policy Research objected to Starbucks’ setting hiring goals for Blacks and other people of color, awarding contracts to ‘diverse’ suppliers and advertisers, and tying executive pay to diversity.” [2]

“Thirty-five current and former Starbucks executives and directors, including interim Chief Executive Howard Schultz, are among the defendants.” [3] The plaintiff claims that although these efforts appear diverse, equitable and inclusive, they actually harm the company and its owners. [4]

The only policy that would likely cover the exposure in this situation is directors’ and officers’ liability, also known as D&O. Does your current risk management strategy include management liability protection?  The more common General Liability policies do not pay for financial losses of a company, but management liability insurance can. Management liability policies include three main types: D&O, Employment Practices Liability (EPL), and Fiduciary Liability.

The oft-misunderstood coverage that will defend and finance this type of loss is D&O. It is an available safety net that your company can rely upon if you have it in your portfolio of protection, but sadly many companies may have overlooked, or never considered D&O.

Like the name implies, D&O indemnifies and defends for claims made against the entity, and those that serve on the board, as well as the company’s officers. [5] This policy type covers managerial decisions, or indecisions, that allegedly result in adverse consequences for both large and small companies alike. [6] This line of management liability protection is available to all company types: for profit, non-profit, private companies, and those publicly traded.

D&O should not be viewed as a company expense, but rather as an asset. An effective risk manager will break down the cost structure of this protection and implement a plan to prevent economic losses of this nature. Lastly, entity coverage covers claims that are made directly against the organization, as well as those individuals on the board and that hold a corporate office within it.

At least the officers and directors named in the above suit will be properly indemnified by their D&O policy; the big question is what if this suit landed on your desk come Tuesday morning?  Are you properly protected?


[1-4] Person, & Stempel, J. (2022, September 1). Starbucks executives, directors are sued over Diversity Policies. Reuters. Retrieved September 2, 2022, from

[5-6] IRMI – Directors and officers liability insurance. Directors and Officers (D&O) Liability Insurance | Insurance Glossary Definition | (n.d.). Retrieved September 28, 2021, from


Advantages and Disadvantages of Captive Insurance

What is a captive?

“Captives are a form of alternative risk transfer. Commonly, they utilize a hybrid risk financing structure, meaning they both retain and transfer risk. A captive insurer is a subsidiary formed to insure the loss exposures of its parent company and the parent’s affiliates. Its primary purpose is to reduce the parent’s cost of risk” (Elliott, M. W., 2018).

“A single-parent captive (pure captive) is owned by one company that insures all or part of the loss exposures of that company or its subsidiaries. A group captive is a captive insurer owned by a group of companies, usually operating under similar businesses, rather than a single parent” (Elliott, M. W., 2018).

“To evaluate a captive insurance plan, a risk manager must understand its advantages and disadvantages.


  • Reducing the cost of risk
  • Benefiting from cash flow
  • obtaining insurance not otherwise available
  • having direct access to reinsurers
  • negotiating with underwriters
  • centralizing loss retention
  • obtaining potential cash flow advantages on income taxes
  • controlling losses
  • obtaining rate equity


  • Capital requirements and start-up costs
  • Sensitivity to losses
  • Pressure from parent company management
  • payment of premium taxes and residual market loadings” (Elliott, M. W., 2018).


Elliott, M. W. (2018). Risk Financing, 6th Edition. American Institute for Chartered Property Casualty Underwriters/Insurance Institute of America.

What you may not have considered in a hyperinflationary environment

Published July 11th, 2022 by Kyle Langan

Has your insurance broker reviewed your replacement cost valuations recently?

If not, you need to take action.

Walmart Distribution Center – March, 2022

Insureds commonly underreport values and it can have devastating results when a catastrophic (cat) loss arises. [1] A recent example of a cat loss is a fire at an Indiana Walmart distribution center, which is now closed for the foreseeable future. [2] “After the loss occurred, it was discovered that the building was undervalued by as much as $75 million.” [3] The increased cost of construction is an example of an inflationary factor that insureds must take into consideration for adequate protection of their properties. [4]

Boulder, CO Wildfires – December, 2021

In the aftermath of the 2021 wildfires in Colorado, property owners like Arturo Barrios discovered they were “severely underinsured.” [5] This may result in a $300,000 loss for Barrios; “insurance was in place, but it will not come close to covering the full cost of rebuilding.” [6]

According to the Colorado Division of Insurance, up to 67% of those filing claims in Boulder after the late 2021 fires did not have enough coverage. [7]

Let Conrey evaluate the structure of your protection to see if you are in the 67%.

Commercial Property Risk: An Ongoing Effort

Establishing adequate property insurance values is an “ongoing risk management activity that must be viewed independently of current market conditions.” [8] It is difficult to create appropriate building and contents values on a whim, when faced with stringent renewal conditions, “such as limits specific per location, coinsurance, and actual cash value loss settlement.” [9]

Therefore, your broker should structure property insurance programs continually through stewardship, obtain blanket limits, analyze coinsurance requirements and “set proper loss settlement valuations—replacement cost or actual cash value (replacement cost less physical depreciation).” [10]

Insureds must carefully ensure that values for buildings and contents are sufficient. [11] Valuations must also be “in sync with post-loss settlement expectations and the insurer’s policy mandated loss settlement obligations.” [12] These tools become essential when a loss arises because of timely proof of loss, documentation of items lost or damaged, and proper loss settlement from the insurer. [13] This is unlike the victims of the Colorado fires, who discovered improper coverage at the worst time: after the loss.

Property owners should envision the possibility of a cat loss that requires “permanent resumption of operations at a new building and permanent movement of [contents] to new or existing locations, thus changing values at many locations.” [14] This implements a proactive approach to property risk management.

Therefore, during the annual valuation process, these questions should be considered:

  • “Can we continue to operate at this location?
  • Will building ordinances require us to move?
  • Should operations and certain equipment be redeployed at other locations on a permanent basis?
  • How many of these ‘alternate’ premises costs will be subject to coverage?” [15]

If your broker is not raising these concerns about your business, or asking questions from a risk management lens, contact me at

“Determining the correct value of an insured asset pre-loss will greatly improve coverage and increase the potential for an insurance settlement that truly puts the insured in the same position post-loss as pre-loss”. [16] Correct commercial replacement cost valuations can prevent situations like the Walmart distribution center that was undervalued by $75 million, which, as a result, will not reopen for the foreseeable future. [17][18]


Austin, W. K. (2008, July). Insurance property valuation and loss settlement clauses-important considerations. Insurance Property Valuation and Loss Settlement Clauses | Expert Commentary | Retrieved July 11, 2022, from

Brasch, S. (2022, July 7). They lost their home in the Marshall Fire. here’s where they stand six months later. Colorado Public Radio. Retrieved July 12, 2022, from

Gallagher Property Market Update — Summer 2022. (n.d.). Retrieved July 11, 2022, from

Georgiou, M. (2022, June 14). Underinsured homeowners struggle to rebuild after Boulder wildfires. Newsy. Retrieved July 12, 2022, from

WLWT. (2022, May 2). Walmart distribution center in Indiana to close after massive warehouse fire. WLWT. Retrieved July 11, 2022, from

[1, 3, 4, 17] Gallagher

[2, 18] WLWT

[5-7] Brasch

[8] IRMI

[9-16] Austin, W. K.


State of the Market: 2022’s Second Quarter Underway

Property and Casualty

Property and casualty insurances’ hard markets are poised to continue as the first quarter of 2022 is now behind us. “Even with many carriers reporting improved loss ratios and record earnings, tightening capacity and rate increases are not quite behind us” (Amwins, 2022).

Carriers continue to de-risk their portfolio by limiting their exposure to high-risk property perils and locations including Florida, wildfire-prone areas in California and Colorado, and coastal properties (Amwins, 2022).

For the casualty market, “carriers remain comfortable with the rate environment, attachment points and deployed capacity on individual accounts” (Amwins, 2022). On the reverse side of things, insureds should focus on their own capacity, as well as compliance and control. These are the three major components within a risk financing structure for an entity.


Insurers are actually offering some additional limits but keeping a close a eye on the “continuation of large settlements and judgements from sympathetic juries as social inflation will continue” (Amwins, 2022). For businesses, limiting exposure to Employment Practices Liability (EPL) Risk should be a high priority. Frequency and severity are increasing rapidly. For example, the Residential Mental Health and Substance Abuse Facility industry saw 380 EPL claims over the course of 2015 – 2020, totaling nearly $37M in losses (Advisen, 2020). Businesses should keep this trend on their radars and practice caution, especially in highly litigious states like California. Having strong company culture that encourages a healthy team-like atmosphere is the best way to reduce risk and prevent EPL losses, which arise when unhappy employees sue a company for its employment practices.


“Insurers and reinsurers alike are re-evaluating their risk exposures in loss-prone regions and lines of business and are either exiting entirely or significantly limiting their capital deployment in those areas” (Amwins, 2022). Reinsurers like MunichRe pay massive amounts of losses after insurers’ retentions are exhausted, so the reinsurers will also exit markets that primary insurers are struggling to produce underwriting profits in.


“Market conditions for healthcare liability in the U.S. remain challenging as the industry continues to face lingering effects” of the pandemic; staffing shortfalls are a primary concern (Amwins, 2022). “Challenging classes have seen limited capacity available in the excess layer. Additionally, The London markets and syndicates are adding a cyber exclusion to their medical professional liability policies to address the issue of silent cyber” (Amwins, 2022). Cyber risk is commonly added as an exclusion on many policies, which is why entities should purchase stand-alone cyber policies that can address business interruption exposures that tail cyber losses. Cyber exposure is currently the most dynamic and emerging risk that companies across all industries face. To circle back to the Residential Mental Health Facility industry, it saw 389 cyber losses totaling $962M in damages from 2015 – 2020 (Advisen, 2020). It was the highest severity and second highest frequency of loss, behind medical malpractice.

Amwins is a leading London specialty insurance distributor. This article offered highlights from the company’s recently published report of the risk markets for Q2/Q3 2022. You can read the full article HERE.


Advisen Insurance data, media, and Technology. Advisen Ltd. (2020, April 29).   Retrieved January 31, 2022, from

Amwins: Q2/Q3 2022 state of the market. Amwins. (n.d.). Retrieved April 14, 2022, from