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Pacific Northwest Storm Challenges Insurers

For the second time in a year, insurance carriers' CAT response teams faced the unique challenges associated with a Pacific Northwest storm.

Almost exactly a year after what was billed as the worst storm in a decade, the Pacific Northwest suffered another devastating storm during the first week of December 2007 that swept the coastal regions of Oregon and Washington, causing widespread flooding. The rural nature of the majority of the areas that were hit -- along with uncovered flood damage -- resulted in lower losses than the 2006 storm or this past fall's California wildfires, but the geographical spread of the event presented special challenges to insurers' catastrophe response teams.

With the arrival of the brunt of the storm on Dec. 3, areas along the Oregon coast reported winds of up to 120 miles per hour. By the following day, up to six inches of rain reportedly fell over Western Washington, while the town of Bremerton, Wash., experienced a 24-hour total of 10.78 inches, according to the National Weather Service. More than 100,000 households lost power across both states, and Interstate Route 5 -- the main West Coast traffic artery that extends from Canada to Mexico -- was closed for four days, interrupting an estimated flow of 54,000 vehicles daily between Seattle and Portland. And at least seven storm-related deaths were reported.

The storm presented unique challenges to insurance catastrophe responders, according to Jim Daues, SVP, property claims, for Los Angeles-based Farmers Group ($15 billion in 2006 written premium). A typical hurricane event may involve a 50-mile swath of territory, and even this year's California wildfires -- atypical for the distance they covered -- extended across only 150 miles, Daues explains. But there were hundreds of miles between affected areas in the Pacific Northwest.

"In a hail storm or a hurricane, an adjuster can often visit three or four houses without getting back in his car. But in this situation there was a fair amount of drive time," Daues comments. "Adjusters spent more time on the road, which meant that we had to get more people up there just to compensate for the extra drive time."

Farmers deployed about 100 adjusters in cars throughout the area, as well as its 45-foot Mobile Command Claims Center vehicle, which is equipped with satellite communications capabilities and its own generator, according to Daues. The vehicle is used to "establish a presence in a town or area, and provide a place where you can report a claim or ask a question," he says.

Proactive Efforts

Safeco ($4.3 billion in net written premium) deployed adjusters around Seattle and Portland early in the storm in response to accumulating claims data. Based on ongoing analysis of weather patterns and communications with area agents, however, the carrier's CAT response team also deployed to coastal areas, notes Don Freihofer, resource analyst with the Seattle-based carrier. "We were asking why we weren't receiving claims from the coastal areas because we have a significant book of business there," he recalls. "We pulled a list of all the homeowners and made outbound calls."

Such proactive efforts typically are not necessary, Freihofer says. But flooding and power outages were so severe and widespread that policyholders and agents had more urgent concerns than submitting claims, he explains.

Like the other carriers, Washington-exclusive carrier PEMCO (Seattle; $318 million in 2006 premium) sent out a force of adjusters equipped with wireless laptops, GPS navigation capabilities, estimation software and check-writing capabilities. "We were geared up from the get-go and didn't need to bring in adjusters from other areas," says Jon Osterberg, a spokesman for the carrier. Unfortunately, though, PEMCO adjusters weren't always able to deliver good news. Because of the prevalence of flooding, some policyholders' damage was not covered, Osterberg relates. "In some cases we'd get there and have to say that they'd have to get coverage from FEMA," he says.

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio

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