How Will More Winter Weather Impact Insurance Industry?

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  • The East Coast has been repeatedly hit with major storms this winter, stretching from Georgia to New England, and that usually means significant issues that lead to increased claims. However, while exactly how much damage they might end up doing is yet to be seen, the chances are it’s going to be considerable for many in the insurance industry, and insurance agents will likely have a lot of work to do as a consequence.

    From 1993 to 2012, the insurance industry paid out some $27.8 billion in claims resulting from winter storms, according to the Insurance Information Institute. Predictably, much of that money is paid to those with homeowners or auto insurance.

    “Winter storms accounted for 7 percent of all insured catastrophe losses between 1993 and 2012, placing them third behind hurricanes and tropical storms and tornadoes as the costliest natural disasters,” said Robert Hartwig, Ph.D., the III’s president and an economist. For reference, III data shows that hurricane losses account for about 40 percent of U.S. claims, while another 36 percent are related to tornadoes.

    How do these problems arise?
    While there are certainly a larger number of road accidents that can take place during a winter storm due to slick conditions, or difficult visibility, many claims come for parked cars as well, the report said. Heavy wind, flooding, falling ice, and even downed tree limbs can cause major damage and lead to claims even when consumers stay home during the worst parts of any storm.

    Those latter hazards also pose significant risks for homeowners, but the problems can be exacerbated for houses in other ways as well, the report said. For instance, melting snow can seep into homes and cause flooding (which typically has to be covered by flood insurance) but when pipes freeze in extreme cold weather, they can burst and cause significant damage to a home as well. In addition, if accumulated snow or ice causes a roof to collapse or otherwise take damage, that too might be covered by home insurance.

    Nonetheless, it might be wise for insurance agents to make sure they’re prepared for a potential onslaught of claims calls from their policyholders in the near future, and also ensure that these people know exactly what all of their plans do and do not cover. This may help to streamline the claims process should it become necessary.