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Major earthquake could mean ‘weeks and months of response time’ for insurer’s contractors


March 25, 2014   by Greg Meckbach, Associate Editor


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After a severe earthquake, it could take months for civil engineers to complete their work for insurance carriers, and some claims professionals will rely on aerial photography due to restrictions on entering disaster areas, according to speakers at a recent event.

After a catastrophe such as an earthquake, policyholders will need engineering design work in order to fix a property, said Michael Ropret, manager of structural engineering for Concord, Ont.-based Rochon Engineering Corp., whose services include fire investigations, vehicle accident reconstruction and civil engineering.

Ropret made his comments Monday at the Toronto Earthquake Symposium, hosted by independent claims adjusting firm Catastrophe Response Unit (CRU). Speakers at the symposium suggested a major earthquake will likely entail a longer response time for insurers than weather catastrophes.

“I think you are talking about weeks and months of response time because the sheer volume of locations that are going to have to be dealt with is going to be very, very large,” Ropret said. “The engineering services that would be available would be provided by any and all firms in the provinces where it occurred, so the best bet would be to go to the consulting engineers’ directory in that province for the resources that would help with those.”

After an earthquake, insurance carriers may have to rely on professionals other than those on their preferred list, suggested Tim Dempsey, CRU’s director of catastrophe claims.

“If they want these preferred contractors to do the work around the epicentre of the earthquake, it is probably not going to happen, not for a long time,” Dempsey warned. “If you have got a wing of a house that has been shaken off and the interior has been exposed to the natural elements then yeah, get somebody to tarp that up or do some kind of temporary repairs.”

An earthquake “is one of the most destructive natural disasters that anyone could ever go through,” said Kyle Winston, CRU’s president and co-founder. Winston referred to a report from AIR Worldwide – titled Study of Impact and the Insurance and Economic Cost of a Major Earthquake in British Columbia and Ontario/Québec, in which AIR modelled the effects of two hypothetical earthquakes affecting Canada.

The report, which was commissioned by the Insurance Bureau of Canada and released last October, makes detailed predictions of the effects — including economic and insured losses — of a magnitude 9.0 earthquake off the west coast and a magnitude 7.1 quake northeast of Quebec City.

“Every level you go up on the (Richter) scale, the magnitude of impact is going up by a factor of ten, so when you start to hear about an event that is at the high end of that scale, you really have to be concerned,” said Ropret. “I have only seen some mild tremors in this particular area of the country, but I think there is something pending on the horizon some day and we should be prepared for it.”

He added roads, sewers, watermains and bridges will be affected after a major event.

“Getting to the locations is going to be key,” said Ropret. “Somebody is going to be assessing the conditions of the roads, the bridges and the municipalities and the provincial governments will have their own people responding.”

And in many cases, there will be restrictions on access for response crews, suggested another speaker, Hugh West, national sales executive for insurance at Bothwell, Wash.-based EagleView Technologies Inc.

EagleView’s services include side-by-side aerial photos of properties before and after catastrophes.

“For any given property, we can provide a number of different images, for a single property. You can see how the property changes over time,” West said. “You don’t have access to the areas but with the imagery it allows you to triage your crews to make decisions on where you are going to send people, and ultimately contact the insured a lot sooner in the claims cycle.”

Because the photos are taken from airplanes, West said most of EagleView’s images have a resolution of three to 12 inches per pixel, rather than the 18 to 19 inches per pixel available from satellite photos.

EagleView has about 77 Cessna airplanes that fly low and slow over properties, he noted.

“We cut out the belly of the aircraft,” West said. “We drop a camera system in.  It’s a lot more expensive than the actual airplane and when the airplane is flying it is continually capturing imagery. It’s taking five pictures at a time.”

With five cameras facing the ground at an oblique angle, these images can give insurers more information on a property than a vertical satellite photo, he suggested.

“When you have … just a top down view of a satellite image, you do not have a lot of context as to what that structure is doing, the different sides of the property,” West added. “When you have different oblique angles, you can really get a lot more context to that property.”

EagleView geo-codes locations using data from the global positioning system (GPS) satellite system. Then EagleView technicians stitch the photos together.

EagleView responded last May after a tornado hit Moore, Oklahoma. Dozens died in the tragedy, which caused more than US$2 billion in insured losses.

Over Moore, West said, EagleView took 21,737 images over a strip 23 miles long and two miles wide, which took up 1.2 Terabytes of computer memory. He added the first images were available to insurers on May 24.

“Our goal is to have that information available in two to three days,” he said, adding EagleView was restricted from flying May 21 because President Barack Obama flew in to the disaster area.

After an earthquake, insurers still need to deal with civil authorities in order to allow adjusters in, suggested Dempsey. Before joining CRU, Dempsey had worked for NCA Group, where he managed the response to the January, 1994 Northridge earthquake in Los Angeles.

“The effect that an earthquake has on people, it’s different, let me tell you,” Dempsey said. “You’ve got to worry about this guy out here who is calling, raising hell, saying, ‘I’ve got cracks in my walls and my house is going to fall down. You have to tear it down and rebuild it.’ Those are things that we are going to have to deal with.”


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