What does it mean for a business to be resilient – and what is your business doing to get there?
If the COVID-19 pandemic taught us anything, it’s how essential grocery stores are to the communities they serve. For many, it was the first time they fully recognized the critical role these businesses play – not just in providing food, but in being a resource for the community during times of crisis.
A grocery store’s ability to adapt and stay operational in the face of disruption is more than a competitive advantage – it directly impacts its insurability.
Rising risks: Climate events, insurance pressures
Beyond the pandemic, climate-related disruptions have increased dramatically. From 1980 to 2024, the U.S. experienced an average of nine severe weather events annually that caused more than $1 billion in damage.
However, the recent five-year average (2020-24) has surged to 23 such events per year, with 27 disasters in 2024 that cost more than $1 billion each. These include hurricanes, tornadoes, wildfires and severe rainstorms, many of which are growing in intensity.
While public debate around climate change continues, insurance companies – which play a key role in protecting business assets – are already adapting to this challenge. A realization that years of premiums were underpriced, coupled with increasing claim payouts, has insurers reassessing rates and the insurability of businesses.
As a result, many food retailers have seen property insurance premiums rise 20-40 percent over the past three years.
Why climate resilience matters to insurers
Regardless of one’s stance on climate change, insurers expect businesses to understand and address climate risk. For essential businesses like grocery stores, resiliency planning isn’t just smart – it’s crucial for securing favorable insurance terms and, in some cases, maintaining coverage.
Resilience means having documented, actionable plans that demonstrate the ability to operate through and recover from events such as hurricanes, floods, wildfires and power outages. This positions a business as a lower risk to insurers and improves the likelihood of affordable, continuous coverage.
Start with these five questions
To begin building or strengthening the case for insurability, consider documenting responses to the following:
- Is there a well-documented plan for maintaining operations during a major disruption?
- How will refrigerated goods be protected during extended power outages?
- What strategies are in place to mitigate flood risk or other physical damage?
- Has your building’s structural integrity been evaluated and reinforced?
- Can your business rely on local suppliers if traditional supply chains are disrupted?
Having these answers clearly outlined can strengthen your position when negotiating with insurers. While many owners have informal plans, insurers increasingly value – and sometimes require – thorough documentation.
ESG and resilience: The new standard
Many insurance brokers are requesting environmental, social and governance reports, especially from food retailers with multiple locations. ESG data helps insurers understand how prepared a business is for environmental and operational risks.
But how does a food retail get the data needed to communicate an understanding of climate risk? And are there resources to help write an ESG report and/or resiliency plan?
Independent grocers should look for help from outside organizations that have expertise in both benchmarking a store’s use of resources and aligning it with a comprehensive resilience strategy. This signals to insurers that a business takes risk management seriously – making it a more attractive policyholder.
Businesses with multiple stores should work with an outside partner to create an insurance program with their insurers. Develop an ESG report for a portfolio of stores using ESG data and align this with a resiliency plan. This is good resource management and will have benefits in the long run.
Bottom line: Resilience is strategic advantage
Demonstrating a clear understanding of climate risks and a well-developed plan to navigate them not only helps maintain or improve insurance coverage, it’s also good for business. With rising risks and costs, proactive resiliency planning offers a tangible return – stronger insurance relationships and greater operational stability.
Peter Cooke is also advisor to the New England Environmental Finance Center and can be contacted at [email protected].