Leading insurance companies highlight the exposure of organizations across the construction industry and built environment, such as contractors, owners and operators, to the negative impacts caused by weather events and schedule delays across the total facility lifecycle. Due to increasingly accelerated schedules, reduced margins and compounded competition, companies in turn are increasingly sensitive to adverse weather and weather events, such as rain, snow and other precipitation events, low and high temperature events, wind and wind gust events, frost and ice events, thunderstorms and lightning events, as some of the many examples. Adverse weather and weather events pose threats to both the productivity and safety of project teams and work crews outdoors.
Weather delay and weather downtime insurance pays for predetermined weather events
As a result, weather delay and weather downtime insurance products for the construction industry and built environment enable stakeholders to define the parameters and thresholds for weather events by the work day and work shift, and in some cases, by the work hour, as provided by leading weather risk management software, such as WeatherBuild Solutions. Accordingly, the weather delay and weather downtime insurance pays a predefined amount for meeting or exceeding the parameters and thresholds for predetermined weather events. Further, companies can customize how the insurance pays, based on risk exposure, risk sensitivity and risk tolerance, to align with corporate best practices or project specific requirements.
Pays out on actual outcomes or forecast events depending on a company’s risk exposure
Weather delay and weather downtime insurance can pay out either based on actual outcomes and deterministic data, or forecast events and probabilistic data, depending on a company’s risk exposure, risk sensitivity and risk tolerance, to align with corporate best practices or project specific requirements. In some cases, actual outcomes and deterministic data cause loss of productivity, and in other cases, forecast outcomes and probabilistic data cause loss of productivity, depending on the stakeholders’ preventive measures. Further, weather events can be based on either: 1. forecast event probability and intensity, such as WeatherBuild weather events; or, 2. actual measurements, from WeatherBuild Station reports.
Eliminating the need for mediation, arbitration and litigation over weather events
With weather delay and weather downtime insurance products, the insurer covers the cost of adverse weather, not the contractor, owner or operator, eliminating the need for mediation, arbitration and from time to time, litigation over adverse weather and weather events. When weather causes schedule delays and cost overruns, decreases labor and equipment productivity, jeopardizes material performance and work results, the weather insurance product covers either an actual loss or the threat of a potential loss. As a part of customizing weather delay and weather downtime insurance, a company defines the deductible in the number of critical periods and the payout for exceeding that number, together with insurance structuring and origination specialists.
No claim negotiation or adjustment unlike requests for extension in time for weather delays
Then, at the of each risk period, the stakeholders count up the number of actual periods lost. For many of the leading insurance companies, pay out for any excess is immediate, and requires no claim negotiation or adjustment – unlike the processes and procedures for contractors first to file weather delay claims and requests for extension in time with owners and operators, and second to submit evidentiary data in order to substantiate adverse weather and weather events. After owner and operators define the hedge-able weather risk and the cost to hedge, stakeholders can work together to better define schedules and budgets, both with and without the defined weather risk. The weather insurance products unlock value when the savings exceeds the premium.
Headquartered in Cambridge, MA, WeatherBuild® offers a suite of decision support solutions that empower contractors, owners and operators to improve situational awareness and make better-informed decisions about weather events, schedule impacts, safety risks and probable outcomes.
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