Jill Dalton of Manhattan-based risk management firm Marsh Inc. tracks the weather, particularly hurricanes, far more than most people. As managing director of Marsh's Global Property Practice, Dalton counsels property owners and investors on managing hurricane risk, among other catastrophes, and how to best work with their insurers.

The National Oceanic and Atmospheric Administration (NOAA) expects as many as 10 named hurricanes to form over the Atlantic Ocean this year. Though just one hurricane hit shore in 2006, some insurers are still cutting their exposure to hurricanes. Nationwide cancelled 25,000 homeowner policies in Florida while pushing through a whopping 54% increase for the balance of its Florida premiums. Other commercial insurers are also reducing their exposure to hurricanes by underwriting fewer policies along coastal areas. NREI recently spoke to Dalton about how commercial property owners can best navigate this tricky insurance market.

NREI: Last year was relatively quiet on the hurricane front. Did the lull in any way soften pricing for wind-related property coverage along the coast?

Dalton: The market for this insurance is very fluid. It's also much more competitive than it was in late 2005 and early 2006 after that active hurricane season.

NREI: NOAA is calling for another active hurricane season in 2007. So have insurers roundly pushed up premiums and deductibles based on that forecast?

Dalton: Underwriters are closely monitoring their exposure. They're also paying closer attention to any accumulated risk they may have in the coastal markets where hurricanes tend to come ashore. The deductibles in wind-prone areas are still very high, too. After Hurricane Andrew, we saw deductibles rise by 2% to 3% on average. But after Hurricane Katrina, deductibles increased by roughly 5% on average.

NREI: Can owners of commercial real estate assets on the coasts who fortify their properties against storms expect any pricing breaks?

Dalton: The real money to be saved is in making property improvements to protect your business. That means creating business continuity plans and sharing them with your insurer. The more that the insurer knows about your crisis management plans, the more comfortable the insurer will be covering your properties.

NREI: Does storm activity in the current season directly impact the pricing of policies being written in July?

Dalton: If it's a benign season, the pricing should only get more competitive. But remember that the insurance market isn't just based on catastrophic events in wind-prone areas. If there's a major earthquake in California or a terrorist attack on U.S. soil, that will affect the insurance market as well.

NREI: What were some of the lessons learned after the brutal hurricane season of 2005?

Dalton: Every business needs to have a strategic plan so that last-minute chaos can be avoided. Executive management and crisis management teams need to approve and participate in creating the business continuity plan, too. Companies can actually conduct an exercise and simulate the effects of a catastrophic event. That should help them identify their constraints and capabilities during the recovery effort.