Local insurers could see big bill from stormResidents pass a destroyed car as they walk through a tornado-ravaged neighborhood in Moore, Okla., where damage is expected to exceed the $3 billion caused by the May 22, 2011, storm in Joplin, Mo., 215 miles to the northeast.
As emergency crews continue to clear the devastation from the tornado that ripped through Moore, Okla., some central Ohio insurers are dispatching teams of their own to start assessing damage and begin the process of helping customers who lost cars, homes and businesses.
Monday’s deadly storm flattened neighborhoods, killing at least 24 people and injuring 237.
Columbus-based Nationwide has dispatched representatives and agents to assist customers affected by the tornado.
“We’re mainly reaching out to customers in the storm’s path to see if they have claims,” Nationwide spokeswoman Elizabeth Stelzer said.
She said it’s too early to provide estimates on how many claims have been filed because efforts are still focused on search and rescue, and providing aid.
Nationwide deployed its mobile catastrophe response unit, which includes employees from Oklahoma and other states, to the area to take claims from policyholders, as well as to provide aid and hand out items such as water and baby formula. Efforts to reach policyholders are being hampered because many cellphone towers were destroyed, Stelzer said.
Like Nationwide, Bloomington, Ill.-based State Farm, the No. 1 insurer in Ohio by market share, has sent catastrophe teams to the region. The company does not know yet how many claims have been filed.
Another Columbus insurer, State Auto Financial, stopped selling car and homeowners insurance in Oklahoma several years ago, spokesman Kyle Anderson said. The company continues to sell commercial insurance in Oklahoma, but that state is one of the company’s smaller markets.
Concern about the frequent and strong storms was one of many factors that caused the company to stop selling personal lines of insurance, he said.
“It was part of an examination of the business we did throughout our operating territory,” he said.
State Auto also has pulled at least some business out of other states as well, including Florida and parts of the Northeast.
At least three members of State Auto’s catastrophe team have been sent to the area to assist commercial customers, Anderson said.
It could be a few weeks before claims numbers start to shape up.
Mary Bonelli, a spokeswoman for the Ohio Insurance Institute, said it’s almost impossible at this stage in such a disaster to provide a figure for the total insured losses. Damage, however, is likely to exceed the $3 billion caused by the Joplin, Mo., monster storm that killed 161 people two years ago today, Oklahoma Insurance Commissioner John Doak told Reuters news agency after touring the devastation in Moore yesterday.
Monday’s tornado is the latest in what has been a string of powerful and deadly storms that struck the U.S. over the past five years.
The Insurance Information Institute places the 2011 Tuscaloosa, Ala., tornadoes, which cost $7.5 billion in insured damages as the costliest tornado event.
Whatever the damage total, natural disasters continue to occur more frequently than they previously did, Bonelli said.
Insurance companies can’t increase premiums to compensate for past losses, but she said that companies can use data from the past 10 years to set future rates.
Tornadoes have been on the rise over the years, with 1,376 documented in 2003 and 1,692 in 2008. (There was a rare drop, to 939, in 2012.)
Last week, Nationwide helped customers after about 10 tornadoes tore through northern Texas.
“What we are seeing is a significant uptick in natural disasters,” Bonelli said.
And with that uptick comes the increase in costs. Severe thunderstorms, including tornado events, cost $14.9 billion in insured losses and $27.7 billion in economic losses in 2012, according to insurance group Munich Re.
“There’s a new norm out there, and insurance companies are getting their arms around this model,” Bonelli said.
By Amy Friedenberger