Weather Is a Big Deal in South Central States

June 16, 2008

Well before the June 1 start of hurricane season claims costs from weather related damages were on a steady climb across the South Central states of Arkansas, Oklahoma, Texas and Louisiana.

Late May, early June hailstorms in central Oklahoma likely will add another $20 million in claims to the state’s mounting bottom line that includes $60 million from back to back storms earlier this year. Those figures don’t include costs of the May 10 storm that virtually wiped out Picher, Okla., a town that was already destined for ghost-town status due to its designation as a Superfund site and environmental disaster due to pollution from now-closed lead and zinc mines there.

Arkansas has racked up nearly $108 million in insured damages from five storm systems this year, according top the Arkansas Insurance Department. Estimates of insured damage from storms in north and central Texas this spring have topped $300 million.

Oklahoma Takes a Look at Weather

Oklahoma traditionally has been the home of unpredictable weather. So three years ago the Oklahoma Insurance Department Oklahoma in conjunction with the Oklahoma Climatological Survey began putting on an annual conference to look at historical weather trends, climate change and weather-related insurance issues. This year’s Climate and Loss Mitigation Conference was held in April.

Attendance at the conference has been growing every year, said Insurance Commissioner Kim Holland. She explained that because Oklahoma is largely an agrarian state, much of the conference centers on how weather and climate change impact the state’s economy from both from an insurance and agrarian perspective.

Holland said Oklahoma in the past couple of years has actually seen fewer storms compared with other periods in the state’s history.

“Our big exposure obviously is tornadoes, wind and hail,” Holland said. She said while Oklahoma experiences “lots of tornadoes every year,” because it is not densely populated many times they don’t hit structures.

“What we do suffer from particularly from the standpoint of loss is wind and hail issues,” she said. “What we are talking about particularly in this conference is just whether the degree to which intensity of storms has changed or not in Oklahoma or in other parts of the country.”

While it is difficult tell if the intensity of storms has changed over time, Holland said the cost of damages caused by recent storms has definitely risen. “Where storms hit more densely populated areas we’re seeing more extensive damage and frequency levels are higher,” she said. “For instance, this year alone we had three storms right in a row and the total [cost of damages from] those storms is over $60 million. … That’s not insignificant at all.”

Hurricane Forecasts

The team led by veteran weather researcher William Gray from Colorado State University says the 2008 storm season will be active, with 15 named storms and eight hurricanes, four of which will be major. The National Oceanic and Atmospheric Administration predicts 12 to 16 named storms, including six to nine hurricanes.

Because only one hurricane hit the United States last year — Hurricane Humberto, which made landfall in a sparsely populated area of southeast Texas and caused minimal damage — officials fear people will become complacent about the risk. The National Association of Insurance Commissioners, meanwhile, says that nearly half of U.S. consumers are insufficiently prepared — in terms of insurance coverage — to deal with potential losses from weather related disasters.

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Insurance Journal West June 16, 2008
June 16, 2008
Insurance Journal West Magazine

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