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 amountsof auto and homeowners claims in the wake of storm fronts thatswept over 27 states and caused hail, flooding and some 520tornadoes last month.[@@]

"Including all of May and up to this morning, we had over 25,000claims in total, auto and property combined, from the followingstates: 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 StateFarm Insurance Companies.

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

The Allstate Corporation also said it has been receiving asignificant number of claims, according to spokesman BillMellander.

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

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

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

The most recent storm front, which lasted through the MemorialDay holiday weekend, affected regions as far apart as Louisiana andthe New England states. That storm front came on the heels ofearlier storm activities in May.

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

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

Fairfield, Ohio-based Cincinnati Financial said it has estimateddamages of $50 million pretax from severe weather storms betweenMay 17 and May 31 that affected policyholders in 18 Midwestern andMid-Atlantic states. Joan Shevchik, a Cincinnati Financialspokesperson, also commented that based on these "very preliminary"estimates, storm losses are expected to contribute some sevenpercentage points to the company's second-quarter property-casualtycombined ratio.

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

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