Claims

09:38 AM
Connect Directly
Twitter
LinkedIn
Google+
RSS
E-Mail
50%
50%

Climate and Claims: The Harsh Winter’s Effects on Insurers

This winter slammed the U.S. with snow, ice, subzero temperatures, and increased activity for insurers.

Temperatures are predicted to hit the high 50s today and bring a seemingly tropical break from a cold, wet winter that can’t end soon enough. The snow, ice and freeze of the past two months have proven devastating for policyholders and hectic for insurers receiving an influx in claims.

“This is as cold as I remember it being in quite a while,” says Megan Linkin, Ph.D., natural hazards expert at Swiss Re. The reinsurer works with research institutions and relies on forecasting models to better understand incoming weather patterns. Extreme winter weather is not unusual in this country; however, it is sporadic enough that Swiss Re does not have a regular winter storm model for the U.S.

Forecasters anticipated the recent extreme weather conditions prior to the polar vortex that hit much of the U.S. in mid-January. “Through the end of December and beginning of January, there were indications in the forecast that there were going to be a series of cold outbreaks coming through,” Linkin explains. The surge in wintry conditions can be explained by scientific studies that indicate an increasingly wavy jet stream caused by melting arctic sea ice.

[ The Most Important Mobile Capabilities, According to Policyholders. ]

It has been a couple of years since insurers in the northeastern U.S. experienced a winter like this one. “The last two winters have been mild,” says Nicholas Depola, catastrophe coordinator at State Farm. “This is more of a normal winter for us in the Northeast.” While State Farm did not have to alter any of its disaster response procedures for this winter, it did increase its resources to better accommodate policyholders.

The latest blast of winter weather in mid-February resulted in 5,129 homeowners’ claims and 945 auto claims throughout the east coast, not including New York and Pennsylvania. Because in-person appointments are State Farm’s go-to strategy for responding to policyholders, employees faced challenges when attending those meetings in extreme weather conditions.

“We do get out there in snow storms and ice storms,” says Depola. “Our primary means of responding to policyholders is to see them in person, and the goal is to get to the policyholder and keep appointments that we’ve made.” In addition to in-person visits, State Farm communicates via phone and secure emails to handle claims and address customer concerns.

Depola coordinates catastrophe response for the nine states that make up the northeastern region. While claims were prevalent throughout all nine this winter, he notes that they were mostly homeowners claims concentrated in Pennsylvania and other southern states. A recent Pennsylvanian ice storm, for example, resulted in a significant amount of fallen trees, power lines and fences. During the polar vortex, claims of frozen pipes increased throughout New York, New Jersey and Pennsylvania.

Population density is not the only factor in claims increases, though he notes that this contributed to the state-by-state differences. “The way homes are built is also a key factor,” Depola continues. “The further south you go, homes are built a little differently. Policyholders who live further north are better equipped to handle winter weather.”

In addition to in-person visits, email and phone communications, State Farm uses social media to reach out to policyholders during emergencies. Each of its public affairs specialists has an individual Twitter handle that they use to assist customers and send out messages related to damage prevention and claims response.

This winter’s frequent blasts of cold, snow and ice do not indicate a permanent change in winter weather patterns. “It’s very difficult to link one individual weather event to climate change,” says Linkin. However, physics suggests that the wavy jet stream behind this extreme weather may bring heat waves and cold snaps throughout the early spring and late fall.

Fortunately, the worst of the winter weather has passed. “It seems as though our extreme patterns are moderating a bit,” says Linkin. “But this winter has served as a reminder that everyone should have a plan in place and be ready to deal with snow, ice and cold if and when it comes.”

[The mobile employee -- as well as the mobile customer -- are here to stay. Is your insurance company prepared? Learn how to set up and maintain a mobile infrastructure that can support today's needs and tomorrow's expected mobile demands. Attend the From BYOD to 802.11ac: How to Build A Next-Generation Mobile Infrastructure session at Interop 2014 in Las Vegas, March 31-April 4.
You can also REGISTER FOR INTEROP HERE.]

Kelly Sheridan is an associate editor for Insurance & Technology. Prior to joining InformationWeek Financial Services, she was a staff writer for InformationWeek and InformationWeek Education. Kelly has also written for trade publication Promo Marketing and a number of ... View Full Bio

Comment  | 
Print  | 
More Insights
Comments
Newest First  |  Oldest First  |  Threaded View
Kelly22
50%
50%
Kelly22,
User Rank: Author
3/17/2014 | 4:34:22 PM
re: Climate and Claims: The Harsh Winter’s Effects on Insurers
Good point, Kathy. I definitely noticed more social media complaints and photos from this winter than from previous ones.
Becca L
50%
50%
Becca L,
User Rank: Author
3/17/2014 | 3:30:16 PM
re: Climate and Claims: The Harsh Winter’s Effects on Insurers
I thought this winter, was generally warmer than winters on records, with fewer days below freezing, and I don't even know if we had any days below zero. If it weren't for the freak storms I'd say we're going soft calling the NE winter "bad."
KBurger
50%
50%
KBurger,
User Rank: Author
3/14/2014 | 5:40:36 PM
re: Climate and Claims: The Harsh Winter’s Effects on Insurers
Don't forget also that building codes continue to evolve, there's more information about how to stormproof residences, and also underwriting/risk assessment has become that much precise. So even if the weather is empirically more severe, insurers' exposure probably is improved, or at least no worse, compared to other bad winters. What also has changed is that people have more ways (social media, mobile video/photography etc.) to document and complain about the bad weather than they did during the miserable winters of the 90s and earlier.
Kelly22
50%
50%
Kelly22,
User Rank: Author
3/14/2014 | 2:04:36 PM
re: Climate and Claims: The Harsh Winter’s Effects on Insurers
I thought that as well. Yes, the last couple of years were mild and made this winter seem especially awful, but I thought it was still unusually cold and snowy for the NY/NJ area.
Kelly22
50%
50%
Kelly22,
User Rank: Author
3/14/2014 | 1:57:49 PM
re: Climate and Claims: The Harsh Winter’s Effects on Insurers
Haha, I'm with you on the dumb storm names - especially those that hardly result in any snow at all. I'm sure the south had a spike in weather-related claims this winter, but Nicholas had a better perspective on the northern region.
Jonathan_Camhi
50%
50%
Jonathan_Camhi,
User Rank: Author
3/13/2014 | 11:18:16 PM
re: Climate and Claims: The Harsh Winter’s Effects on Insurers
I think the perception around this winter was also worse though because last year we had a much warmer winter with almost no snow. I wonder if by "normal" he was measuring against historical averages or something.
Nathan Golia
50%
50%
Nathan Golia,
User Rank: Author
3/13/2014 | 5:30:58 PM
re: Climate and Claims: The Harsh Winter’s Effects on Insurers
Interesting that the State Farm rep categorized this as a "normal" winter for the Northeast. Anecdotally, it seems like this combined a very cold winter (which happens) with a snowy one (which also happens), for a rare confluence of both perils. Clearly the past two years have been mild Gă÷ last year especially Gă÷ but I would think that the bitter cold that has accompanied most of the major storm activity is at least somewhat of an outlier. But that's why they get paid the big bucks.
KBurger
50%
50%
KBurger,
User Rank: Author
3/11/2014 | 8:59:41 PM
re: Climate and Claims: The Harsh Winter’s Effects on Insurers
It would be interesting to know whether carriers had an unexpected volume of winter-related claims from non-typical regions -- Atlanta, S. Carolina & other southern locations that experience severe weather but not necessarily during the winter -- and if those claims are more complex or costly because the homes are not built for winter weather. I am sure carriers (and policyholders) are hoping the severe winter weather is not a harbinger of severe spring weather. I have heard the weather channel pundits say often that the most severe weather actually is in the spring. At least at springtime TWC doesn't bestow those stupid names on storms like they have started doing during the winter. Grrr!
Register for Insurance & Technology Newsletters
White Papers
Current Issue
Insurance & Technology Digital Issue Oct. 27, 2014
Innovation? Check. Core modernization? Check. Security? Check. Today's insurance IT challenges don't stump this year's Elite 8.
Slideshows
Video