The Ides of Winter

Julius Caesar was once warned to “beware the Ides of March,” leaving Vancouver residents who have braved a series of winter storms to wonder what he may have said about November, December, January and all the other days in between.

Storm after storm has swept through the lower mainland and Vancouver Island, wreaking havoc and driving up damage costs. Looking at the string of storm systems on a satellite map, one climatologist likened them to “jumbo jets lined up and waiting to land on the tarmac” – the tarmac being a metaphor for the Victoria and Vancouver areas.

For insurers, this perpetual pounding by Mother Nature means adjusters are constantly on the move, banking serious overtime, increasing staff and, in many cases, working six- or seven-day weeks with little or no reprieve.

Compounding the sense of urgency is a shortage of contractors in a hot construction economy, experts say. Moving quickly from one storm site to another, inundated contractors make band-aid repairs, only to see those repairs being undone by the next storm.

SHATTERED RECORDS

It is common for this part of the country to be hit with stormy weather come November. It is, after all, a monsoon climate, explains David Phillips, a senior climatologist with Environment Canada. “They probably get about 55% of their annual precipitation in the months of November, December, January and February,” says Phillips. “That’s the very nature of their basic, overall climate. Always has been and may always will be.”

Vancouver’s rainfall for the month of November stood at 255.78 mm, a record-breaking 181.6 mm above average for the first 16 days of the month.

Lindsay Olson, vice president of the Insurance Bureau of Canada (IBC)’s Pacific region, agrees B.C. residents should expect be hit with stormy weather every now and again around this time of year. But while most of the individual storms in 2006-07 have been bearable, she says, the ongoing, cumulative nature of the storm activity has basically brought the Vancouver and Victoria areas of the province to its knees.

To start things off, heavy rainstorms in early November dumped 130 mm. of precipitation on the Greater Vancouver Region. The storm essentially muddied the area’s water supply, causing the province to issue a boil water advisory for several days. [Olson said local insurers didn’t provide coverage for business interruption caused by the boil water advisory because there wasn’t a “physical trigger” to the premises of the businesses affected by the advisory.]

The early November rainstorms caused a lot of damage, but insurers say Mother Nature dealt her first real wallop on Nov. 15, 2006. “That one was a very big one because it had both wind and water damage,” Olson says. The storm caused early estimates of insured damages totalling Cdn$40 million.

Another snowstorm quickly followed. In and of itself, this second storm “wasn’t all that big of a deal,” Olson says, but it “added onto everything else and just made it all worse.”

Then came Dec. 15, 2006. Winds in excess of 100 km-h exceeded those of Typhoon Frieda in 1962. The storm heaped more precipitation on an already precarious situation. “By this point, most companies had given up on trying to segregate the losses,” Olson says. A global estimate of all of the storm damage in B.C. this winter – including the storms of Nov. 15, Dec. 15 and all of the storms in between – has swelled to more than 9,300 claims in total and more than Cdn$130million in damages (for private sector insurers) and counting. This global estimate includes storms occurring in the new year, up to press time in late January 2007.

Storms can bring misery in many ways, Phillips says. Damage losses can result from a high number, strong intensity or long duration of storms. They can also arise from a mixture of a variety of conditions including wind, rain and snow – or, as Phillips puts it, a “real buffet of weather conditions.” It’s unusual to see all of these factors play a role in a single storm season, though, Phillips says. “I think in many ways, this year has been the granddaddy of them all.”

NATURE WAGES WAR

He compares the string of weather activity to a blitzkrieg. The earliest storms of the season may have been the strongest, he says, but the storms that follow, while they might not be as large, may have a bigger impact. “It’s not the wind that does you in,” Phillips says. “It’s the fact that you all of a sudden have so much debris, and this debris becomes like guided missiles.”

A series of storms will weaken infrastructure, he notes. “Trees will be standing in water and the next puff of air will blow them over, whereas in the first two events they withstood their ground.”

Claims filed thus far have been a real mixed bag, Olson says. “The majority have been wind damage, water damage resulting from wind and also falling trees.” Flood losses are generally not insurable under homeowner’s policies, she notes, adding that flooding damage in the Fraser Valley was subject to compensation by the provincial government.

While damage arising from the Vancouver storms has no doubt been bad, the province has a ways to go before its claims totals set any records for storm activity. Glenn McGillivray, managing director of the Institute for Catastrophic Loss Reduction, notes the 1998 Ice Storm generated about 600,000 claims in Canada and the United States – the largest number of claims from any one event in North American history, only to be surpassed by Hurricane Katrina. In B.C., the 2003 forest fires that ripped through the province’s interior caused Cdn$200 million in insured damages. Nevertheless, claims volume is undoubtedly an issue, McGillivray says. “Companies, especially medium and small companies, can easily be overwhelmed by sheer volume.”

Gary Sawada, president of the Canadian Independent Adjusters Association (CIAA)’s Pacific region, knows this first-hand. He is an adjuster working out of Crawford and Company’s Victoria office. After speaking with fellow independent adjusters in the area, Sawada says he can say with confidence that business has increased six-fold with each passing month. The demand for independent adjusters “is not letting up,” he says. In fact, “it almost seems to be accelerating into the New Year.”

“It started with water damage at the beginning of November, which impacted the central island and Port Alberni, but we also had heavy water here along the west coast,” Sawada recalls. “And then we also had snow, which caused heavy snow loads, falling trees and so forth, [as well as] subsequent water [damage] and a little bit of freezing.” The Dec. 15 windstorm didn’t help matters, he continues. “Then we had little, multiple storms where we were inundated with water and it strained the sewer systems.”

Kernaghan Adjusters were forced to double its staff on Vancouver Island and open an office in Campbell River to keep pace with the claims generated by the stormy activity. Dale Rogoza, Kernaghan’s Vancouver Island branch manager was recently quoted as comparing working through the storm season to being on a battlefield.

Now, Sawada says of adjusters’ increasing workloads, “it’s just keeping the troops motivated, so to speak.” Overtime has become standard; everyone has been working six-day weeks to try and keep pace with the claims and the paperwork. “In terms of emotional costs, it really strains our company,” Sawada says. “It’s stretching our capacity from our infrastructure and from our adjusting standpoint.” He says Crawford has increased its staff and recruited a catastrophe specialist from Winnipeg to cope.

ALL HANDS ON DECK

Crawford’s Kelowna, Kamloops and Vancouver offices, even though they themselves have been deluged with claims, have been helping out the Vancouver Island adjusters in any way they can, Sawada says. And the Montreal office has been accepting digital recordings and transcribing the files into statements and reports. Keeping pace is still posing a major i
ssue, he says, especially since the storm systems are showing no signs of letting up. “We can make our first calls, that’s generally not a problem,” he says. “It’s getting out to do our follow-ups.”

Olson pegs the average cost of claim at about $9,600. This figure suggests the severity of the claims is down, but the volume is up, creating a high demand for the adjusters and claims departments. The problems for companies in meeting these demands are compounded by the shortage of available contractors as a result of the hot construction market in B.C. “Unfortunately, we don’t have a secret stash of contractors,” Olson says. “I wish we did, but we don’t.”

Sawada agrees. “I think to some extent the insurance companies and brokers give us the claims and then we contact the insured. But the people at the receiving end are the contractors and they are just really, really busy.”

A recent conversation between Sawada and one local contractor illustrates just how much the situation has squeezed local contractors. “I spoke with a contractor on Sunday with a new assignment,” Sawada recalls. “He had been in the office since 4 a.m. By this point, it was 1 p.m. He said that all he had been doing [by that point] was taking phone calls. For water damage, they were booking people two or three days ahead when normally they would be there within an hour or two.”

Exactly what is causing the string of events? That’s literally still up in the air, Phillips says. A combination of environmental factors such as climate change and El Nino – in addition to plain old bad luck – may be at play, he suggests.

“We know that our climate is changing,” Phillips says. “What’s so remarkable is that the weather seems to be behaving just as the models tell us it is going to. That can be reassuring, but it can also be very scary.”

McGillivray is confident the costs of such storms will only increase in the future. Essentially, he says, “people are becoming a bigger target. They’re living in places where perhaps they shouldn’t be living.”