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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.

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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.”

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Kelly Sheridan is the Staff Editor at Dark Reading, where she focuses on cybersecurity news and analysis. She is a business technology journalist who previously reported for InformationWeek, where she covered Microsoft, and Insurance & Technology, where she covered financial ... View Full Bio

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