Recession breeds insurance scams

By Tony Pugh

McClatchy Newspapers

KDVR Web Staff

July 27, 2009

11454 W. 44th Ave. Wheat Ridge, Colorado. (July 21, 2009)

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DENVER - The powerful hail and wind storm that downed trees, crushed homes and cars, and cut off power to tens of thousands of people in west metro Denver last week caused at least $350 million damage, making it the second most costly storm in Colorado history.

That's according to an estimate Monday from the Rocky Mountain Insurance Information Association.

Golf ball-sized hail and strong winds battered roofs, uprooted trees, and pounded vehicles in Wheat Ridge, Lakewood, Arvada, and Englewood last Monday night and early Tuesday morning.

The RMIIA said there have been 32,900 homeowner insurance claims and 19,500 auto claims filed so far as a result of the storm.

This latest storm damage, in combination with a week of wild weather from June 6-15 that caused an estimated $161.1 million in damage to property and cars in Aurora, Parker, Centennial and Fort Collins, makes it the most expensive catastrophe season in Colorado since a 45-minute hail storm caused $625 million in damage on July 11, 1990.

Insured losses so far this summer total more than $511 million and severe weather season isn't over yet.

This season is reminiscent of the mid 1980s and early '90s, giving us a real wake-up call that now is the time to be thinking about how much insurance coverage you have to fix your car, repair or rebuild your home and replace your personal belongings," said RMIIA executive director Carole Walker.

The Columbus-based company reported a 5.8 percent increase in the total value of premiums written during the quarter, but this was offset by a $36.9 million deficit in catastrophic-loss payments to customers, it said.

"The second quarter is when we have traditionally been most vulnerable to catastrophic losses," said Chief Executive Bob Restrepo, adding these losses usually come from wind and hail damage.

The company's shares were down slightly on the news, standing at $17.90, down 13 cents or 0.7 percent in late-morning trading.

Recent Colorado storms' costs lash insurers

Changes on the way for hail warnings

COLTER HETTICH Special to Scripps Texas Newspapers
Updated Sunday, December 27, 2009

SAN ANGELO, Texas — Hail measuring three-quarters of an inch in diameter will no longer be considered a symptom of severe weather by the National Weather Service.

Beginning Jan. 5, hail must reach 1 inch in diameter or winds reach speeds greater than 58 mph in order for the NWS to issue a severe thunderstorm warning.

The decision comes after four years of National Weather Service research and independent studies, including Texas Tech research that found significant roof damage does not occur until hail reaches 1 inch in diameter, according to a National Oceanic and Atmospheric Administration Web site.

Seth Nagle, a meteorologist in San Angelo, said the weather service tested the new standards in the Midwest before applying them nationwide.

“Eighty-six percent of the responses were supportive of this,” Nagle said. “Of the 63 responses, 52 rated it 8 or greater as a positive change.”

Although the weather service’s Web site cites “concerns about the public becoming desensitized by numerous warnings” as one reason for the change, Nagle said it did not play a key role in the decision.

“It was simply related to, ‘At what point does hail really cause damage?” Nagle said.

Mark Rowlett, KTXS-TV chief meteorologist, said the National Weather Service met with local meteorologists to explain the decision and to answer questions. During the meeting, Hector Guerrero, warning and coordination meteorologist with the weather service, pulled a nickel and quarter from his pocket to illustrate the difference between old and new criteria.

“They’re still going to note three-quarter-inch hail in the storm reports, but the fact that they were close in size just means it’s not going to be a big issue for people and their safety,” Rowlett said.

Some homeowners might be as concerned for the safety of their roof as themselves. Harold Word, owner of American Roofing in Abilene, said significant damage does not occur until golf ball size or larger, but smaller hailstones can leave visible marks, exposing shingles to the elements and damage over time.

“The marks knock the grain off, and the sun will deteriorate (the shingle) in not too long,” Word said. “The grain protects it.”

Roofs may be able to take smaller than 1-inch hail with minimal damage, but vehicles are a different story.

“If there’s a lot of it, nickel-size hail will cause some damage,” said Claud Champion, owner of Barrett Collision Center and Body Shop in Abilene. “Especially in your newer, lighter made cars, metals are relatively soft.”

Joe Perez, owner of J & R Body Shop in Abilene, said even dime-size hail could cause minor damage.

“Nickel-size will pretty much do around $4,000 of damage to a car,” Perez said. “But mother nature hasn’t been good to the body shops. We haven’t had a good hailstorm in a couple of years.”

Patti Kelly, public affairs and media relations specialist for State Farm Insurance, said the weather service terminology change won’t affect insurance claims processing.

“It does not have any bearing on how we handle claims,” Kelly said. “We will look at each claim on its own merits.”

A storm with the ability to produce three-quarter-inch hail likely can produce 1-inch hail, as well, Rowlett said. Rarely are severe thunderstorms warnings issued because of wind alone.

“I don’t think it’s going to change a lot; wind and hail sort of go hand-in-glove,” Rowlett said.

The hail revision might result in fewer warnings, but Rowlett does not foresee a significant decline.

“I think they’ll err on the side of caution,” he said.

Local television stations do not issue severe weather warnings independently from the weather service but will issue “significant weather advisories” if they observe imminent danger not yet acknowledged by the National Weather Service.

The 1-inch criteria was implemented in Iowa, Illinois, Missouri, Wisconsin, Minnesota and other Midwest states on April 1. Fourteen states, including Texas, will be added beginning in 2010.

 www.theage.com.au/photogallery/victoria/wild-weather-hits-melbourne/20100306-pph5.html?selectedImage=18      

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THE insurance industry is expecting 40,000 claims for home and car damage to pour in after the freak hail storm that wreaked destruction across Melbourne and parts of Victoria.

The Insurance Council of Australia (ICA) has invoked its Catastrophe Coordination Arrangements and established a taskforce to handle the massive inflow of claims expected to reach into the hundreds of millions of dollars.

Hail stones the size of cricket balls smashed into cars and houses in a one-hour burst on Saturday afternoon, causing havoc and severe damage.

Part of the roof of the Southern Cross railway station and the nearby Etihad Stadium collapsed under the huge weight of water that fell in the downpour.

Vehicles in car yards in eastern Melbourne were badly damaged with their windscreens shattered and panels dented and roofs were torn off houses in the wild storm.

The ICA declared the storm a catastrophe just two hours after the event.

The peak industry body is encouraging policy holders to contact their insurance company and not to be concerned if insurance documents have been lost.

It says that while water and mud-damaged possessions, such as carpets and soft furnishings, can usually be removed for hygiene reasons it is best to take photographs and record details of each item.

Home and vehicle insurer RACV says it has received 3000 claims but that figure is growing all the time.

"In my 10 years in the job it's the worst I've seen,'' RACV claims officer John Simpson told AAP.

"Cars have been damaged by hail or inundated if they were in car parks or in the CBD when the storm hit.''

He said Melbourne's eastern and southeast suburbs were hit the worst.

Etihad Stadium chief executive Ian Collins said the storm caused some serious water damage to the arena with the worst-hit section in the entertainment and dining areas.

He said the stadium's playing field, seating bowl and retractable roof escaped damage.

"It's too early to put a dollar value on the damage but it would be considerable,'' Mr Collins said.

CARLSBAD — Hail measuring from marble to golf ball size pounded North Carlsbad Sunday night for about 10 minutes, causing damage to roofs, vehicles and city street lights.

North Carlsbad residents described the noise from the hail as deafening. After the storm had passed, the hail blanketing the ground looked like snow.

On Monday morning, residents were able to get a better look at the storm's damage

The city's two major car dealerships on the north side of town — Fordtown and Ross Hyden Auto Store — reported damage to their inventory of vehicles; and local insurance agencies said they were swamped with calls from customers reporting roof and vehicle damage.

"Within the first 25 minutes after opening the office, we started getting a lot of calls about residential roof damage and damage to cars," said Montgomery Insurance agent Tessa McMillan. "We don't have an adjuster on site. We represent several insurance companies and we will forward the information to them. They will set up appointments with their adjusters."

State Farm's Tom McMullan said that his office also began fielding calls from customers the minute the office opened Monday.

"The morning has started out busy and I think it will remain that way for most of the day," McMullan said. "Had the hail storm blanketed the entire city, we would have really been deluged with calls. We would have probably had to call State Farm's catastrophic team

Van Nunley, Fordtown general manager, said although the vehicles on the sales lot were "not beat to pieces," every vehicle sustained hail damage.

"We definitely got hit. We are still in the process of assessing the damage," he said. "We have contacted our insurance company. Once the adjuster comes out to assess the damage, we can make a determination whether a vehicle can be fixed or sold as is."

Ross Hyden Auto Superstore manager Todd Hyden said vehicles on the dealership's sale lot appear to have sustained moderate damage.

"We will have a better idea about the damage to the vehicles once our adjuster comes and takes a look," Hyden said.

Wendell Malone, area Skywarn coordinator for Eddy County, said the hail storm lasted about 10 minutes and dumped hail ranging from about the size of a quarter to golf ball size.

"It piled up an inch deep with a 6-inch drift. The hail shredded our chinaberry tree," Malone said. "The super cell thunderstorm approached the city from the southwest. The area from Church Street north really got pounded. The south side of town didn't get anything."

Malone said he received e-mails from residents who reported hail up to 2 inches in diameter in the Westridge Drive area.

One of the e-mails came from David Gordon who lives in the 1300 block of Westridge Drive.

Gordon reported: "We measured some hail up to 2 inches. The hail was very intense for around 15 minutes. We may have sustained significant damage to our gravel roof and three vehicles. We could also see very large hail about 200 yards to the south of our location, taking our street lights (out) on West Pierce Street."

Luis Camaro, city of Carlsbad public works director, confirmed that several street lights were broken as a result of being pounded by hail.

"I know it knocked out a street light on Eighth Street. I live in that area. We had marble to golf ball size hail where I live. I imagine there are several street lights that probably got broken last night because of the hail," Camaro said.

Camaro explained that the city has an agreement with Xcel Energy whereby the city pays the electric bill for the street lights and Xcel is responsible for their maintenance.

"When we have an outage, we call them and they replace the lights," he added.

"LOOKS TOTALY BUSTED"

Heather Blanke and her insurance adjuster Duane Haltom of Safeco Insurance look at the hail damage her 2008 Honda Accord suffered during Wednesday night's hailstorm. Her car was parked at her mother's house on University east of Friends University during the storm. She said it hailed for 30 minutes straight. Haltom said the damage to Heather's car was extensive and the car may be totalled.

Kevin Ten Eyck/Courtesy
Morning after hail damage near Maple & Martinson

The hail storm Wednesday caused at least $1.5 million in damage in Sedgwick County, according to preliminary estimates compiled by the Kansas Division of Emergency Management.

But preliminary numbers about claims, released by major insurance companies on Friday, show the toll might go substantially higher.

State Farm Insurance alone projects it will receive calls from 7,000 clients in Sedgwick County about damaged cars.

And that's just the cars. Insurance companies are getting thousands of calls from clients telling them about tattered rooftops, pockmarked siding and dimpled cars.

State Farm officials quoted one of their agents in Wichita, Don Payne, as saying "I've had several customers into the office who have said their automobile now looks like a golf ball with all the hail dimples."

State Farm also warns customers to beware of scams.

"As an agent, after every storm I unfortunately always hear stories of people who have paid a substantial amount of money up front to repair firms, only to have the 'repair firm' skip town," said State Farm agent Mike Dillmon. "I always tell my customers to make sure they use local, reputable vendors that will be around after the others leave town."

The Better Business Bureau serving Southeast, Central and Western Kansas also said it has received calls about roofers stopping at random and offering estimates.

In most cases, the contractor was not from the Wichita area. Roofing contractors need to be licensed and insured in the area, according to the bureau.

Insurance claims

Hail as large as baseballs and tennis balls hammered neighborhoods in Wichita and areas north and east of the city, weather officials said.

Governor Mark Parkinson has signed a State of Disaster Emergency declaration for six counties hit by severe thunderstorms and high straight-line winds on Wednesday. Named in the declaration are Allen, Anderson, Bourbon, Franklin, Linn and Sedgwick counties.

The reports coming in to insurance companies show a numerical snapshot, not only of the damage they have found so far, but what it might be when finally tallied.

By Friday afternoon, Farmers Insurance Group of Companies had received calls on about 2,790 claims, including for autos, homes and businesses, said Jerry Davies, a company spokesman.

He said the number will rise.

Farmers has 55 people working with clients who suffered damage.

State Farm spokeswoman Tamara O'Connor said they had received 2,000 auto claims and 500 homeowner, rental, condo and business claims by Friday afternoon.

"We think it's going to go much higher," she said.

About 300 State Farm agents and catastrophe team members are now working the damaged areas in Sedgwick County. "We are committed to being there to keep our promises and take care of our customers during this time of need," O'Connor said.

American Family Insurance received more than 2,500 claims from customers whose homes or cars were damaged, the company said in a statement, and it anticipates more than 5,000 total claims.

The company said it was sending a catastrophe team to the area.

Allstate, another large insurer in the area, did not want to release numbers or projections, in part "because many times, people don't even find some of their damage until days later," said Nicole Alley, a company spokeswoman.

But she said the damage will be substantial, and the company has sent members of its national catastrophe team to Wichita.

Butler Co. damage

Butler County officials are still assessing damage.

Preliminary reports suggest "isolated pockets" of damage, said Butler County Emergency Management director Jim Schmidt.

At Kellogg and Andover Road in Andover, "they got half-dollar sized hail for 20 minutes," Schmidt said. "That'll do some serious damage to your roof, windows and siding.

"A lot of people with supposedly permanent siding found out that it's not."

Schmidt said large hail was also reported in Rose Hill, Augusta and rural areas.

"But it was nothing like they had in Wichita," he said.

Reach Roy Wenzl at 316-268-6219 or rwenzl@wichitaeagle.com.

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"Substantial damages to vehicles 60% increase in calls for hail damage replacement windshield, back glass,ect ect over night."

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