Insurers See Soaring Claims From May Storms

By Michael Ha

NU Online News Service, June 4, 4:30 p.m. EDT?Major insurance companies are seeing soaring amounts of auto and homeowners claims in the wake of storm fronts that swept over 27 states and caused hail, flooding and some 520 tornadoes last month.[@@]

"Including all of May and up to this morning, we had over 25,000 claims in total, auto and property combined, from the following states: Wisconsin, Indiana, Illinois, Michigan, Iowa, Ohio, Pennsylvania, West Virginia, Kentucky, Tennessee, Missouri, Nebraska, Arkansas, Kansas, Oklahoma, Alabama, Louisiana, Texas," said Robert Phillips, a spokesman for Bloomington, Ill.-based State Farm Insurance Companies.

Mr. Phillips added that while his company doesn't have any dollar figures for estimated losses, "I am sure the claims number will continue to increase. That's for certain."

The Allstate Corporation also said it has been receiving a significant number of claims, according to spokesman Bill Mellander.

He said during the period of May 25 through June 2, the Northbrook, Ill.-based Allstate had 4,116 property claims and 2,031 auto claims. "Those are claims associated with events we have declared as being caused by tornado/rain/hail outbreaks that occurred between that time," Mr. Mellander explained.

"It affected policyholders in a number of states, ranging from Nebraska, Iowa, Kansas, Missouri, Illinois, Indiana, Michigan, Ohio," he said. Allstate generally doesn't discuss dollar figures as related to catastrophe loss estimates, Mr. Mellander added.

For the industry-wide results, the Jersey City, N.J.-based Insurance Services Office spokesman Dave Dasgupta said his firm is still working on developing overall insured property-loss estimates. "It's still too soon for insurers to be in a position to report the number of claims and estimated losses. So it will probably take at least another week or so," Mr. Dasgupta said.

The most recent storm front, which lasted through the Memorial Day holiday weekend, affected regions as far apart as Louisiana and the New England states. That storm front came on the heels of earlier storm activities in May.

The National Weather Service in the month of May issued more than 1000 severe-weather advisories in response to 520 tornadoes. It also put out severe flood warnings for a number of states including Iowa and Illinois.

Already, a few insurers have begun to announce their preliminary CAT loss estimates stemming from the storm activities.

Fairfield, Ohio-based Cincinnati Financial said it has estimated damages of $50 million pretax from severe weather storms between May 17 and May 31 that affected policyholders in 18 Midwestern and Mid-Atlantic states. Joan Shevchik, a Cincinnati Financial spokesperson, also commented that based on these "very preliminary" estimates, storm losses are expected to contribute some seven percentage points to the company's second-quarter property-casualty combined ratio.

Cincinnati Financial Chief Executive John Schiff stated, "All of us at the Cincinnati Insurance Companies extend our deepest sympathy to people whose lives have been disrupted by these storms. We assure policyholders in all of the affected communities that we are working hard for your recovery from property losses." Mr. Schiff also noted that teams of experienced claims representatives are assisting local staff in several areas with a high concentration of reported claims, including Louisville and Lexington, Kentucky and Canton, Ohio.

Additionally, Allmerica Financial Corp., based in Worcester, Mass., said this week that it expects to incur about $13 million in pretax catastrophe losses from tornadoes, thunderstorms and hail occurring mainly in Michigan from May 20 to 27. The company noted that the charges would be reflected in its second-quarter results. ""Catastrophe losses of this magnitude are not unusual to our business, and total catastrophe losses remain in-line with our expectations for both the quarter and year-to-date," commented Allmerica Chief Executive Frederick Eppinger.

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