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Days before Hurricane Florence is expected to slam into the U.S. East Coast, insurers are starting to see potential claims costs tick upward as people flee and companies halt operations.

Evacuations, already affecting more than 1 million people in and around North Carolina, start the clock ticking on business-interruption insurance policies, which help replace lost income for companies when natural disasters strike. Hartford Financial Services Group Inc. and FM Global are among insurers with exposure in the region that are sending staff to help with anticipated claims.

“You’d have to expect, just based on the forecast, that it’s going to be a significant impact to businesses,” including prolonged disruptions, said Rick Miller, head of the U.S. property practice at Aon Plc. “Certainly businesses that take a direct hit, their facilities could be impacted for months.”

Making matters worse for insurers, forecasters say that Florence may stall over land, potentially dumping rain for days and causing power failures. The storm, expected to make landfall late Thursday or early Friday, may trigger “catastrophic flash flooding,” the National Weather Service said. Companies from agricultural firm Cargill Inc. to carmaker Daimler AG suspended operations in Florence’s path.

Florence could become the most powerful storm to hit the area in more than 60 years if its intensity continues. One estimate pegged the potential total costs of the storm at $30 billion.

Banks are also limiting operations. PNC Financial Services Group Inc. had closed 24 branches in the Carolinas and coastal Virginia as of Tuesday afternoon, according to spokeswoman Marcey Zwiebel. Wells Fargo & Co. closed 20 North Carolina and Virginia branches and announced plans for 46 other early closures in the Carolinas, spokeswoman Ann Wasik said.

While the early evacuations could boost business-interruption claims, they can also allow firms the leeway to button up properties ahead of the storm.

“The better prepared anybody is, it can potentially reduce the impact of the claims if you can better harden your facilities against damage,” said Robert O’Brien, a managing director in the national property-claims practice at Marsh, a unit of Marsh & McLennan Cos.

Commercial insurer FM Global said it has a team in Atlanta, including more than 30 claims adjusters who are helping companies prepare for the storm and are ready to deploy into the area after Florence hits.

The effects of storms can ripple throughout the economy, especially if some companies hit by the hurricane are crucial suppliers to other firms, said Gary Love, vice president of operations underwriting at FM Global.

“It’s easy to think about the roof blowing off, the windows being shattered, but there’s more subtle parts of business interruption,” Love said. “You may not be physically damaged but you now don’t have electricity, or you don’t have water or you don’t have gas, so you can’t operate.”

Bryan Wood, a meteorologist and storm-damage analyst for Assurant Inc., said that Florence will hamper businesses even after it degrades from hurricane status.

“You look at power outages after hurricanes, they can last for a week more,” Wood said. “The winds themselves will decay pretty quickly, it’s just that persisting rain that’s going to be pretty dangerous.”

John Kinney, chief claims officer at Hartford, said three-quarters of the small businesses hit by Superstorm Sandy in 2012 had to close their doors for at least a day, with the average duration being about seven days. Only 11 percent of those businesses endured structural damage.

How Companies Are Preparing for Florence: Smithfield to Cargill to Volvo

Corporations are preparing for the arrival of Hurricane Florence on the East Coast of the U.S. by shuttering factories and encouraging workers to keep their homes and families safe from the Category 4 storm. Here are some of the latest developments.

Smithfield Foods Shuts 2 Pork Plants (5:26 p.m. ET)

Pork producer Smithfield Foods Inc.’s Tar Heel plant, with 4,440 employees, has the capacity to process 35,000 hogs a day. Its Clitnon facility can process 10,600 hogs, with 1,819 employees. Both will be closed Thursday and Friday, a spokeswoman said by email.

October hog futures fell 2.6 percent to 54.48 cents a pound on Tuesday. It was the contract’s first decline in seven trading days, breaking the longest winning streak since it debuted in May 2017.

J.C. Penney Closes 7 Locations in the Carolinas (5:16 p.m. ET)

J.C. Penney Co. closed four stores in South Carolina and three in North Carolina on Tuesday ahead of the storm. The company is among retailers including Ross Stores Inc., Kohl’s Corp., Burlington Stores Inc. and TJX Cos. that each have 6 percent to 7 percent of their total stores located in the Carolinas and Virginia, according to Bloomberg Intelligence.

Macy’s Inc. also said it plans store closures in areas affected by evacuation orders and curfews.

Nucor Suspends Operations at 2 Steel Plants (4:58 p.m. ET)

Nucor Corp.’s steel mills in Hertford County, North Carolina, and Berkeley County, South Carolina, will stop operating while Florence passes through the region, a spokeswoman said in an email.

The Charlotte, North Carolina-based steelmaker doesn’t expect the suspension of operations to impact customer orders, spokeswoman Katherine Miller said.

Prices of coking coal, used by steelmakers, could climb to more than $200 a ton, from about $196 a ton today, as the hurricane disrupts port operations at Hampton Roads, Virginia, according to Clarksons Platou Securities. The storm threatens coal export facilities in the U.S., the supplier about 10 percent of the global market, the firm said.

Apparel Maker Gildan Closes Distribution Center (2:36 p.m. ET)

Gildan Activewear Inc., the Montreal-based maker of T-shirts and athletic apparel, closed its distribution center and offices in Charleston, South Carolina. “The facility itself is likely to not be impacted, but some of our employees would experience difficulties getting back to their homes given the altered transportation patterns and road closures,” Gildan said in an email.

The company also operates three distribution centers in North Carolina and five yarn-spinning facilities in North Carolina and Georgia. Gildan anticipates the storm won’t interrupt those facilities.

Pfizer Halting Work at Hospital-Drug Site (1:07 p.m. ET)

Pfizer Inc. is suspending operations Thursday at two facilities in North Carolina, including a Rocky Mount plant that supplies hospitals with drugs from its sterile injectibles division, Hospira. That business has been under pressure due to product shortages. The New York-based drugmaker said it was working to ensure that the pharmaceutical supply wouldn’t be affected by the impending storm.

Erin Fox, an expert on drug-supply issues at the University of Utah, said any prolonged disruption in operations at Rocky Mount would worsen longstanding supply squeezes for such medications.

Cargill Idles Meat Plants as Ports Close (10:44 a.m. ET)

Cargill, the agricultural giant and biggest closely held company in the U.S., will close meat-processing plants in South Carolina and Dayton, Virginia, on Sept. 14, spokeswoman April Nelson said in an emailed statement.

The Port of Norfolk, Virginia, Hampton Roads plans to close to all traffic starting at noon Sept. 12. The Port of Baltimore is already a step ahead, with no containers inbound or outbound at this time, Minneapolis-based Cargill said. Maryland Governor Larry Hogan has declared a state of emergency.

Daimler Shutters Just-Opened Van Factory (9:54 a.m. ET)

Daimler AG suspended operations at its new Mercedes-Benz van factory in South Carolina after Hurricane Florence prompted orders to evacuate areas in the path of the storm. The plant in North Charleston, which Daimler just opened last week, has been contracted to produce 20,000 Sprinter vans for Amazon.com Inc.’s package-delivery service.

“Mercedes-Benz Vans Charleston plant has suspended operations for Sept. 11 until further notice in anticipation of potential impacts from Hurricane Florence,” the company said in a statement. “We urge our team members, their families and all those in the path of Hurricane Florence to take this time to prepare and stay safe during the storm.”

Boeing Closes 787 Plant in S.C. (6:42 p.m. ET Monday)

Boeing Co. plans to shut its South Carolina operations, including a North Charleston plant where 787 Dreamliners are manufactured. Evacuations have been ordered for coastal areas and operations will resume “once it is safe to do so,” the planemaker said in an emailed statement.

Chicago-based Boeing said its leaders are monitoring the storm and working with state and federal officials.

Volvo Car Group Idles First U.S. Factory (5:07 p.m. ET Monday)

Volvo Car Group, the Swedish carmaker owned by China’s Zhejiang Geely Holding Group Co., said Monday it idled operations starting Tuesday at its new plant near Charleston. The factory is its first in the U.S. and makes S60 midsize sedans. The decision was prompted by an evacuation order in place for Charleston, Dorchester and Berkeley Counties in South Carolina

Topics Catastrophe Natural Disasters USA Carriers Claims Hurricane Agribusiness Virginia North Carolina Manufacturing South Carolina