The Worst Storm in a Decade Brings Widespread Destruction and Tests Insurers’ Resources

An unusually mild Atlantic hurricane season was a source of relief for both Southeastern residents and the P&C industry. But almost as if in retribution, a quick succession of winter storms brought catastrophe to the Pacific Northwest. The greatest impact was felt from the Dec. 14, 2006, storm, the brunt of which struck Washington and Oregon.

What was described as the worst storm to hit the region in more than a decade resulted in widespread destruction of property and left more than 1.5 million residents without power across the two states, leading Washington Gov. Christine Gregoire to declare a state of emergency. At least six people were killed, and catastrophe risk modeling company AIR Worldwide Corp. (Boston) estimates U.S. insured losses from the storm could exceed $500 million.

Seattle-based Safeco's ($6.4 billion in revenue) response to the storm began with monitoring various weather-related Web sites to track the possible area of impact. When it was clear that a major event was in the offing, the carrier set in motion a two-pronged approach involving service support from a Dallas location and adjusters in the field, according to Judy Thompson, catastrophe claims technical consultant for Safeco.

Safeco adjusters are typically equipped with cell phones, although satellite phones are available when necessary, Thompson says, adding that all adjusters have GPS systems used to plot locations and schedules to ensure the most efficient sequence of site visits. They use CCC Information Services (Chicago) software for auto estimates and Xactware's (a subsidiary of Jersey City, N.J.-based ISO) Xactimate for property estimates.

"That enables adjusters to write the estimate, print it out and review it with the insured," Thompson says. "They also have the capability to then link up via wireless and upload the estimate along with any digital photos or comments into the claim file immediately."

Safeco's claims-file environment is completely paperless, Thompson adds, so all uploaded information immediately becomes part of the file and available for multiple purposes. "It's a very fluid, quick-paced environment," she says. "If someone has requested a rental car, that's immediately entered into the system, so when the rental company calls, authorization is already there."

Having anticipated a severe impact, Los Angeles-based Farmers Group (a subsidiary of Zurich-based Zurich Financial Services; $67.2 billion in revenue) sent catastrophe scout Nathaniel Brown into the region on the night of the storm to prepare the way for its claims field force, according to Susan Bithell, the carrier's state executive director for Washington. The company's claims-reporting systems provided its CAT adjusters with real-time claims information so that many were able to contact customers before the adjusters got on planes to the Pacific Northwest, she says.

"We were on the ground before any of our competitors," Bithell asserts. "Where other carriers may have failed to make immediate contact with insureds, our adjusters were able to establish timely first contact."

Mobile Command

Farmers also dispatched its Olathe, Kan.-based Mobile Command Claims Center, a 45-foot long, 13.5-foot tall, 9-foot wide vehicle stocked with VOIP phone-equipped satellite uplink, inverter batteries and generator. The Bus, as it's referred to internally, has seven claim stations inside and can accommodate several more outside underneath an awning, weather permitting, according to Dan Buchman, claims administration manager for Farmers.

"This was the first time we deployed our mobile claims unit, and it resulted in a very pleasant experience for our adjusters and our customers," says Farmers' Bithell. "It just shows how technology can enable our ability to deliver good customer service."

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