Record snowfall in New England tests insurers’ claims handling capabilities: A.M. Best

The amount of snowfall in the New England region this year will test insurers’ claims handling capabilities and processes as they scramble to adjust and monitor the status of all of the claims, said a Feb. 24 briefing report from A.M. Best Company.

Carriers writing business in the New England region, which consists of the states of Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont, identify winter storm loss events as a key risk in their enterprise risk management processes. A.M. Best suggested that one positive takeaway from the severe weather is that affords carriers the ability to test the accuracy of the tolerances they established for storms of this frequency and/or severity.

The report, entitled “Record Snowfall in New England Tests Insurers’ Claims Handling Capabilities,” says that companies that A.M. Best recently spoke with are closely monitoring claims and anticipate increased activity being driven largely by water damage from ice dams and roof collapses caused by heavy snow loads.

The report noted that over the past several years, “deductibles on homeowners’ policies have gradually increased and some specific property damage coverages/limits have been modified in order to contain losses.”

As of Feb. 16, Boston in particular has had its third snowiest winter on record, with approximately 96 inches of snowfall and more expected in the coming weeks. Additional statistics show that 90 inches of snow has fallen in the past month alone, there have been four calendar days with at least 12 inches of snow, and at least a half inch of snow had fallen six straight days in February; all of which are records for the area.

The snowiest winter season in Boston occurred in 1995-1996 when more than 107 inches were recorded. “Economists estimate the winter weather conditions have cost the state of Massachusetts more than USD one billion in lost business activity,” the report said. In addition to the snowfall, the entire region has dealt with wind gusts of 50 to more than 70 miles per hour that has hit the coast on a few occasions and flooding has led to significant structural damage in some areas.Preliminary feedback from insurers affected by the storms indicates that claims volume and losses have been manageable so far. “While there undoubtedly will be numerous claims across the region for issues such as collapsed roofs, water damage caused by ice dams and business interruption, it is A.M. Best’s view that insurers who write higher valued, seasonal property coverage in the coastal areas of New England will likely experience the most severe individual losses,” the report said.

“While A.M. Best’s initial expectation is that these events are unlikely to impact ratings, ultimate losses will depend on the insurer’s ability to properly prepare and deploy sufficient claims resources to areas that were impacted by the storms,” the report said.

Statistical analysis shows “incredible” rarity of Boston’s recent snows: a 1-in-26315 event http://t.co/eCFIyinifq pic.twitter.com/epvlnQefpI

— Eric Holthaus (@EricHolthaus) February 25, 2015