Snow likely to rain on insurers’ earnings

By Becky Yerak
Posted Feb. 3 at 1:26 p.m.

First-quarter results of Northbrook-based Allstate Corp. and other property insurers are likely to include higher catastrophe losses due to the winter storms that have swept much of the country.

Winter storms are the third-biggest cause of catastrophe losses, behind hurricanes and tornadoes, according to the Insurance Information Institute.

From 1990 to 2009, winter storms resulted in about $25 billion in insured losses, it said. In 2010, U.S. insurers paid out $2.6 billion in winter-related losses,  the highest amount since 2003, the information institute said, citing statistics from Munich Re.

Wind-related damage to a home is covered under standard homeowners and renters policies, the institute said.  Wind-driven snow or freezing rain that gets into a wind-damaged home also is covered, as well as freezing conditions such as burst pipes or ice dams. That’s when water can’t drain properly through gutters and seeps into a house.

Melting snow can cause damage, with the average homeowners’ insurance claim for water damage and freezing coming to $5,896 in 2007, the most recent data available from the institute.

With leading market share of 15.5 percent in 19 Midwest and Northeast states, Bloomington-based State Farm is the most exposed, and, among publicly traded companies, Allstate, with No. 2 market share of 8.1 percent, is likely to see claims, said Paul Newsome, managing director for Sandler O’Neill, a financial services broker-dealer in Chicago.

But he said it’s difficult to predict the amount of damages.

“Sometimes auto insurance policies  see very little claim activity if the storm is well forecast and people are able to plan ahead to not drive,” and keep their cars sheltered. “On the other hand, there are sure to be some claims from the Lake Shore Drive traffic pileup, which saw cars that were simply abandoned during” the storm, he wrote in a report.

Allstate said it would report its catastrophe losses at the appropriate time. The company is scheduled to report fourth-quarter earnings  next week but could offer commentary on the storm’s impact.

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One comment:

  1. Scot R. Feb. 4 at 11:14 a.m.

    Anyone experiencing water damage in their home or business should work with certified water damage remediation professionals (IICRC and RIA are known and respected certifications), preferably accredited and in good standing with their local BBB, and who understand estimating software called Xactimate which is used commonly by adjusters.

    These organizations will understand how to help those who have suffered a water damage related loss to submit their claim(s) to insurance, and will in most cases have a good understanding of what information the insurance companies need and the ability to work with them on keeping costs down while still having repairs done satisfactorily.