The earthquakes, storms and floods that defined 2011 are still reverberating through the insurance industry.

In addition to the financial ramifications of the estimated $116 billion in catastrophe-linked insured losses, last year's events have altered industry practices in areas such as underwriting, risk management and loss mitigation.

Cliff Hope, Atlanta-based executive vp and chief property underwriter for U.S. property for Aspen Insurance Holdings Ltd, said underwriters are tweaking the terms, conditions and deductibles of commercial policies for flood risk.

“We've seen a large shift in the way people underwrite flood,” he said. “Underwriters are pulling back on their limits for flood coverage.”

Mr. Hope said underwriters also are redoubling efforts to ensure that valuations on buildings are adequate so they can control their flood exposures by sublimiting. “One of the things we learned in 2011 is that if buildings are not valued correctly, you run into situations where people are underinsured,” he said, adding that underwriters now need to measure their aggregate exposures in all geographic areas of the country, not just known catastrophe regions.

The cumulative effect of these changes is reflected in the marketplace as insurers alter the mix of business they are willing to accept, Mr. Hope said. “Insurers are excluding business in some cases, which is opening the door to excess and surplus lines business to address these exposures,” he said.

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Floods also brought to light a series of issues surrounding business interruption insurance. “What we've seen is brokers trying to broaden wording on contingent business interruption coverage in case of a supply chain breakdown, specifically because of the Thailand floods,” Mr. Hope said.

In a report released in April, Marsh Inc., a unit of New York-based Marsh & McLennan Cos. Inc., detailed how Thailand floods together with the twin earthquakes that struck Christchurch, New Zealand, brought to the fore issues surrounding how the denial of access clause in business interruption policies is treated by insurers when a catastrophe lasts for a prolonged period.

In the wake of a second earthquake that struck Christchurch, the government restricted public access to the city's central business district as well as shopping malls, hotels and businesses regardless of whether they sustained damage. Accordingly, Marsh advised buyers of commercial policies to check their policy to determine if the business interruption insurance covers against losses emanating from events as well as specific damage.

“An extended period whereby access is denied (as seen in Christchurch and Thailand) can expose any limitation,” Marsh said in the report. “It is very helpful if the denial of access extension covers not just denial of access, but hindrance as well.”

Another hard-learned lesson in 2011 was the greater awareness of risk surrounding supply chains.

Eric Jones, Dallas-based manager of business risk consulting for FM Global, said his team has seen an uptick in demand for services in the wake of last year's events. Mr. Jones said the widespread business disruption that resulted from the floods that inundated Thailand last summer has caused risk managers across industries to reassess the robustness of their suppliers as well as the capabilities their own facilities in the event of an emergency.

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“Companies are beginning to understand that if you outsource production to the Pacific Rim you better understand what your internal capabilities are as a whole,” he said, adding that in addition to understanding their ability to mitigate a loss, companies need to take the next step and embed flexibility in operations and resiliency in their business models. “If a facility in Japan goes down, can you quickly start up elsewhere? Companies that are successful now recognize that business resilience is a competitive advantage as we go forward in a volatile world.”

It is important for risk managers to present an effective business case for risk improvement items to the corporate level, Mr. Jones said. Many of the decisions regarding the constituents of a supply chain are made to achieve economic considerations, and thus have inherent tradeoffs from a risk management perspective, he said.

“When it comes to supply chains, the focus is often on cost reduction and profitability and not necessarily risk reductions,” he said. “These events have brought risk management to the forefront and now maybe companies will weigh their options differently.”

Moreover, Mr. Jones said there are small measures companies can take to mitigate risk, such as seeking geographically diverse vendors and duplicating tooling and schematics for factories and storing them remotely.

Likewise, Dale Seemens, Newark, Del.-based senior risk engineering consultant for Zurich Financial Services group, agreed risk mitigation need not be expensive.

“During Hurricane Irene, one of the things we saw was that storm sewer systems were backing up and then water would come up through the drains and flood the buildings. One thing we have been working with our customers with to mitigate this is to put check valves on storm sewer system lines to prevent water from coming into the building,” Mr. Seemens said. “It's a very inexpensive fix.”