State Farm's lightning-related claims cost more than $200 million last year

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2013-06-26

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With the start of peak lightning season, State Farm calls lightning one of nature’s most underestimated dangers, reporting that it paid more than $200 million in related insurance claims across North America last year.


Citing data compiled by Environment Canada, State Farm Canada notes in a statement that the country receives an annual average of 2.4 million lightning strikes, killing 10 people, injuring 164 – more than 94% of related deaths and 74% of injuries reported since 1986 have occurred between June and August – and igniting 4,000 forest fires that result in hundreds of millions of dollars in property damage.


State Farm paid more than $200 million in lightning-related insurance claims across North America in 2012, with the average claim being about $6,400. In Canada, the 131 lightning claims received cost approximately $1.3 million.

The Insurance Information Institute (III), based in New York, reports an analysis of homeowners insurance data in the United States by III and State Farm found there were 151,000 insurer-paid lightning claims in 2012, down almost 19% from 2011. The average lightning paid-claim of about $6,400 last year, however, was up 25% from 2011, the institute notes in a statement, issued in recognition of Lightning Safety Awareness Week, which runs from June 23-29.
“Taken together, these two factors resulted in $969 million in total paid lightning claims, up 1.7% from 2011,” the III statement adds.

In the U.S., State Farm reports the top five states ranked by the number of lightning claims paid by the insurer are as follows: Georgia with 3,844 claims costing approximately $21.5 million; Louisiana with 1,989 claims costing about $9.1 million; Texas with 1,825 claims costing around $17.7 million; Alabama with 1,713 claims costing about $11.5 million and Tennessee with 1,591 claims costing approximately $12.5 million.

State Farm Canada points out that as the number of electronics in homes and businesses rises, so does the risk of damage. “Plasma and high-definition television sets, home entertainment centres, multiple computers, smartphones, gaming systems and other expensive devices continue to have a significant impact on the number of claims,” notes the insurer.

“The average cost per claim continues to rise, in part because of the huge increase in the number and value of consumer electronics in homes,” Loretta Worters, vice president of the III, says in the III statement.

A whole-house surge protector is the best starting point for reducing the risk of damage or fire, State Farm Canada recommends. Localized surge protection for power cords to important or expensive electronic equipment and any telephone and cable/satellite TV lines connecting to that equipment can enhance protection.

While indoors, State Farm Canada advises disconnecting electrical appliances, including radios and television sets, before a storm and not touching them during a storm. In addition, do not handle electrical equipment or telephones since the electrical current from the lightning strike will travel through wires and cords.

III reports that the incidence of lightning claims in the U.S. in 2012 continued its downward trend. Paid lightning claims from 2004 to 2012 dropped 46%, a decline that may be attributed to increased use of lightning protection systems. Despite the drop, the average cost per claim rose 142% over the same timeframe.

The III suggests that investment in a lightning protection system will help protect property, belongings and equipment. Lightning protection systems are designed to provide a specified path to harness and safely ground the super-charged current of the lightning bolt. The system receives the strike and routes it harmlessly into the earth, thus discharging the dangerous electrical event.
Damage caused by lightning, such as fire, is covered by standard homeowners and business insurance policies, while some home and business policies provide coverage for power surges that are the direct result of a lightning strike, the institute adds.

An Environment Canada weather summary, issued at 4:46 am Wednesday, notes that for the third time in less than a week, thunderstorms have brought locally heavy rainfall over southwestern Manitoba resulting in further flooding problems in some areas.

“The storms moved east across southern Manitoba, including Winnipeg and the Red River Valley Tuesday night, bringing locally heavy rain, strong wind gusts up to 100 km/h and frequent lightning,” the statement adds.

If a meteor explodes in the sky and damages your building, are you covered?

All-Risk policy would offer protection for this rarest of occurrences, say insurers
February 15, 2013

Meteors enter the Earth’s atmosphere as often as five to ten times a year, but few do so as spectacularly as the one that exploded in the sky over Central Russia on Friday.

According to Space.com, it was the largest event of its kind since the Tanguska event of 1908. The meteor entered the atmosphere at a speed over 54,000 kph and according to preliminary estimates exploded with the force of at least 100 kilotons of TNT.

The force of the explosion caused injuries to as many as 1,000 people. Many of the injuries were caused by flying glass from shattered windows. It also damaged approximately 3,000 buildings, including collapsing the roof of a local factory and damaging the walls of the Arena Traktor, home of the local Kontinental Hockey League team.

Property damage caused by a meteor is, however, an insurable risk.

“A commercial property policy provides all-risk coverage that covers property damage and resulting time element loss if there is direct physical loss or damage to insured property unless specifically excluded,” says Timon Mueller, head of property underwriting for the Americas for Allianz Global Corporate & Specialty. “In general, all-risk policies do not have a meteoroid exclusion, therefore direct physical loss or damage to insured property is covered including the resulting time element loss.

Commercial property policyholders in North America would likely be covered in the event of an incident like the one that occurred in Russia. “In the US in general the policies are written on an all risk basis compared to a named perils policy. Named peril policies are more common in Europe,” say Mueller.

Claims from meteor damage are very rare. “This has translated to a low loss history historically for the insurance industry for this peril,” says Joe McKeown, assistant vice president, property, large commercial & specialty at RSA. However there is the potential for large losses from meteorite damage. “We hope the claim experience continues to allow us to provide this coverage to our customers,” he says.

Canada’s top 10 riskiest online cities for cybercrime risk

Did your city make the list?

For the second time in a row, Burlington, Ont. topped Norton and independent research firm, Sperling’s BestPlaces, list of Canada’s top 10 cities that have the highest number of cybercrime risk factors.

“In our examination of the riskiest online cities, we’ve considered a number of factors that can potentially affect online safety,” said Bert Sperling, founder of Sperling’s BestPlaces and lead researcher for the analysis. “By looking at data from consumer lifestyle habits as well as cybercrime data provided by Symantec, maker of Norton products, we’re able to provide a holistic view of the various factors that put a person at potential risk.”

The study determined the per-capita rankings by examining several consumer behaviors – from the prevalence of PCs and smartphones, to social networking and accessing potentially unsecured Wi-Fi hotspots, among others.

Burlington ranked high in all four categories measuring cybercrime data per capita, including attempted malware infections, attempted web attacks, attempted spamming and attempted bots by city. Burlington also ranked high amongst Internet use and expenditures.

“This is the second time that Burlington has come out on top in this ranking,” said Rick Goldring, mayor of Burlington. “We choose to look at the positive aspects. This report shows our residents are connected and are reaping the benefits of using the Internet for both personal and business needs. This is a good opportunity to look at these risk factors and remind residents – even those in other cities – to protect themselves and their information online.”

The Top 10 Riskiest Online Cities in Canada are:

1) Burlington, ON
2) Port Coquitlam, BC
3) Vancouver, BC
4) Langley, BC
5) Calgary, AB
6) Fredericton, NB
7) Toronto, ON
8) New Westminster, BC
9) Edmonton, AB
10) Victoria, BC

Norton reminds web surfers to protect themselves against cyber risk. Proceed with caution when using Wi-Fi hotspots
 and make sure you’re using a secured network if conducting online purchases or banking from a laptop, tablet or smartphone. Also, use complex and unique passwords for each site, including a combination of uppercase and lowercase letters, symbols and numbers. Make passwords as random as possible, and change them regularly. Lastly, stay educated.

Check out our new mobile application

Technology is constantly changing and in order to help serve our clients better we have added a mobile applications called Insurance Companion which is compatible with Blackberry, Iphone and Android phones. Visit our website to download the app.

Some of the many features include the ability to:

•    Contact us with the touch of a button, by phone, email or go directly to our website.

•    Report Automobile Accidents directly to your broker using a simple form, insuring no details get overlooked. You can even take photos of the accident.

•    Locate the Nearest Collision Reporting Centre and Body Shop. Utilizing GPS technology you can find what you're looking for quickly.

•    Submit Property Claims quickly and easily, including photos, right from your phone.

•    Report Special Home Inventory Items of precious belongings, including descriptions, estimated value, and photos.

•    View Archived Accident Reports at any time.


To download the application please visit our website at: www.mollerinsurance.com 

Don’t Let Winter Catch You Off Guard: 10 Things You Can Do Now to Winterize Your Car In the fall …

1 .Have your mechanic check your battery fluid levels, battery posts and cable connectors. Bad connections can keep your car from starting.

2. Worn windshield wipers reduce visibility in bad weather conditions; replace them annually to keep visibility clear.

3. To avoid problems with visibility, ensure that your defroster and heater are working properly.

4. Invest in snow tires for the winter (they're mandatory in Quebec). The deep treads give you more control while driving in the snow or on slippery roads. Make sure your tires are also properly inflated as tires lose a pound of pressure for every 10 degrees the temperature drops.

5. In Canada, blizzards can come out of nowhere. Put together or purchase a winter safety kit that includes a warm blanket, flashlight, gloves, boots, flares and water. Don't forget to keep a good ice scraper, washer fluid and non-perishable foods in your trunk.

When the bad weather hits …

6. Clear ALL the snow on your car, not just the snow on the windows. Leaving snow on the roof of your car can be dangerous for other drivers if it lands on their windshield and reduces their visibility.

7. Plan your route in advance and give yourself extra time to get to your destination so you can drive at a safe speed and not worry about rushing.

8. Leave extra space between you and the car ahead. It takes longer for you to come to a complete stop on slippery roads.

9. Turn on your headlights if visibility is poor. Do not rely on just your car's daytime running lights. This helps you see and be seen.

10. If the weather is severe, pull over until it is safe to drive or avoid driving at all if you can. Before driving in bad weather, make sure to bring a fully changed mobile phone with you so you can call for help if you get stuck.

Call it the $214,929 fender-bender. Reasons Why?

This email was recently circulated in our office and we thought it would be a good idea to upload it to the blog for everyone to take a look at, it's an interesting read for those who are wondering why insurance rates are so high right now. 

Call it the $214,929 fender-bender.
As Ontario’s 9 million motorists and the province’s auditor general fret over the highest auto insurance rates in Canada — despite having the lowest death and injury stats per capita of any province — insurers and customers circle each other in a complex dance of profits versus claims.
It determines how much everyone pays in premiums, a hot-button pocketbook issue.

Insurers point to cases like this:

In fall 2009, a four-door Toyota Avalon was rear-ended in the GTA, its right rear bumper scratched. Two occupants were injured in what an insurance source termed a “relatively minor accident.”

Based on similar collisions, refinishing the bumper as well as assessment and whiplash treatments for the driver and passenger might hit $10,000.

But more than 100 accident benefit claims were submitted on their behalf to their insurance company, including 42 applications for medical assessments of injuries and 66 separate plans for treating the injuries.

Among the deluge of documents — known in the insurance business as “papering” and meant to swamp busy claims adjusters — were claims for several medical aids, including a “portable supersonic muscle relief device.”

“It wasn’t just the large number of devices but the amount of money for them. We went online and saw you could buy them for a lot less,” said the industry source. “One was 10 times its retail price.”

Thankfully, the obvious scam — not necessarily attempted by the occupants of the car and more likely by an unscrupulous clinic — was red-flagged and a fraction of the total claims of $214,929 has been paid. The file remains open.

“This is one example of what we see every day,” said the source. “It’s way above average for a relatively minor accident. It’s a ridiculous amount.”

Such is life on the front lines of the insurance wars, a political flashpoint for Finance Minister Dwight Duncan.

The industry is heavily regulated by the government, which approves rates and sets benefit levels, as it balances the needs of motorists with more than 100 companies that lost a total of $1.7 billion last year on their auto business — some profiting, others in the red depending on the claims they faced.

In Toronto alone, there were 46,484 traffic accidents to the end of November, an average of 139 daily, police say.

The average auto accident injury claim in Ontario is $56,000, five times higher than the average in other provinces where accident benefit levels are often lower.

“Most consumers are honest people,” says George Cooke, chief executive of Dominion of Canada General Insurance Company.

“The ones that are costing the system a lot are the minor injuries that people try to make into something more.”

On the flip side are accident victims — particularly ones with serious injuries — who feel their medical professionals’ requests for legitimate treatment are being denied or stalled by insurers under financial pressure.

The rejection rates are hard to pinpoint because an agency called Health Claims for Auto Insurance, an electronic system for transmitting auto insurance health claim forms between insurers and health care facilities, won’t provide a breakdown, says Nick Gurevich of the Alliance of Community Medical & Rehabilitation Providers, representing rehab professionals.

“It’s a very common problem,” says Dr. Donna Ouchterlony, director of the head injury clinic at St. Michael’s Hospital that sees 3,000 patients annually.

“We decide what we need for our patients and write treatment plans. They’re frequently denied, particularly for immigrant, non-powerful people who can’t afford good lawyers.”

It’s been worse since insurance reforms took effect in September 2010 reducing accident benefit levels for various categories of injuries with the goal of keeping premiums down, she says.

“They just deny everything and wait to see what’s going to happen. They wait to see if people fight back,” Ouchterlony adds.

Jennifer Ryan of East York feels caught in that squeeze.

“They’re treating us like they feel we’re fraudulent,” says the physiotherapist at Holland Bloorview Kids Rehabilitation Hospital.

Her husband, Andrew Ryan, 32, was riding his bike to work two years ago when he was hit by a car, careened off the hood and went helmet-first into the ground, suffering a mild brain injury and other bodily damage.

He’s had an estimated $70,000 worth of treatment funded by the insurance company Belairdirect. Part of his claim has already gone to mediation but more is in dispute with further physiotherapy and speech therapy recommended by the family’s medical providers but not by the insurance company’s assessors.

Ryan tried returning to work as a multimedia designer but couldn’t perform to standard and often fell asleep on the subway, missing his stops.

“If he was a single guy living by himself there’d be nobody looking after him and keeping him on track,” says his wife. “The insurance company is like, ‘This has gone on long enough.’ ”
Belairdirect acknowledges the conflict.

“We worked with Mr. Ryan to help him recover,” says spokesman Gilles Gratton. “Mr. Ryan has disagreed with some treatment decisions. We’re participating with him and we want to resolve these issues.”

In his latest report, Ontario Auditor General Jim McCarter looked at insurance premiums, the estimated $1.3 billion in fraud annually (an amount which is disputed) as well as drastic increases in injury treatment costs in recent years. He declared, frustrated: “Somebody’s got to get a handle on this.”

Ontario is not the only jurisdiction in this pickle.

“We are seeing a sharp increase in our bodily injury claims costs. I think that’s a problem for insurers everywhere,” said Adam Grossman of the Insurance Corporation of British Columbia (ICBC).
The government-run auto insurance company just raised its basic premium 11.2 per cent — the first hike in four years after seeing a $200 million rise in claims costs in the last year to $1.7 billion for bodily injuries. That’s an increase of $350 million from five years ago.

“This is not sustainable,” said ICBC chief executive Jon Schubert.

The next frontier in Ontario is taking a deeper look at fraud and how to prevent it, but scam artists are just one of the bugs that must be worked out.

About 33,000 insurance claims — almost half the annual total — are in dispute by motorists and stuck in a one-year backlog awaiting mediation or arbitration by the Financial Services Commission of Ontario (FSCO).

Both insurers and the rehabilitation industry are watching closely, recognizing that the new $3,500 cap on minor injury assessments and claims — the bulk of accidents — depends on how those cases are decided.

“The longer it takes to get these cases through the system, the longer there’s uncertainty and the more difficult it is for insurance companies to budget and price their products appropriately,” says Ralph Palumbo of the Insurance Bureau of Canada.

The $3,500 minor injury guideline will be reviewed in a couple of years with an eye to setting evidence-based treatment protocols.

FSCO, an agency of the finance ministry, is adding resources so cases can be mediated in the legislated 60 days by the end of March providing insurance companies and their clients have lawyers ready, said a spokesman for Duncan.

It all means the debate over insurance rates will continue.

“Premiums follow the money,” notes Palumbo.
AVERAGE AUTO PREMIUMS BY PROVINCE IN 2010. BC $1,092
AB $1,087
SK $832
MB $943
ON $1,432
QC $717
NB $813
NS $807
PEI $757
NL $985
Source: Ontario Auditor General
AVERAGE TOTAL CLAIMS COSTS BY PROVINCE PER INSURED VEHICLE IN 2010 BC $915
AB $768
MB $719
ON $1,328
NB $493
PEI $449
NL $746
(SK and QC unavailable).
Source: Ontario Auditor General
Torstar News Service

Winter Tires -Traction, Control, Performance and Safety

This video describes in detail just how effective winter tires can be in contributing to your personal safety. Good to know as the snow will be flying soon!

Check out IBC.ca (Insurance Bureau of Canada for more information)

Welcome to the official first Moller Insurance blog post!

First off thanks for coming to our new blog. Our web designer has been working on the site for a couple months now and it's all finally coming together. It's one of those things we can cross of our new years resolution list before it even gets here!

Our main purpose for the new website as well as this blog is to be able to provide ongoing eduction and tools to help our clients understand insurance. Your insurance needs can change year to year and it's always important to be sure you have the right insurance to protect what you value most. We will be updating the blog weekly with interesting articles, educational videos and even some interesting stories from our clients.

Thanks for your interest and we look forward to hearing some of your feedback!


The Moller Insurance Team