In the aftermath of the deadly tornado that tore south of Oklahoma City Monday, the insurance industry has shown an overwhelming presence and a compassionate response, an industry analyst says.
“I, myself, have watched as people who have nothing come in and get checks written on the spot, or get debit cards—cash cards basically—to cover things like groceries and clothing because everything has been completely lost,” Bob Hartwig, president of the Insurance Information Institute, said today from a command center opened by the state’s insurance commissioner in the area south of Oklahoma City.
“To see the reaction on those people’s faces who come out here into the catastrophe response vehicles and are treated in that compassionate way…it’s very, very moving,” he added, as it was pouring and lighting outside.
Storm Damage and Significance
Catastrophe modeler AIR estimates the replacement value to be $2.2 billion for damaged properties within a .4-mile buffer zone around the tornado’s track and $6.4 billion for those within a one-mile buffer zone.
The National Weather Service has rated storm as an EF-5, the highest rating on the Fujita scale that measures tornado strength. The deadly storm killed at least 24 people when it ripped through communities south of Oklahoma City, including hard-hit Moore, which was also struck by an EF-5 twister in May 1999.
That storm caused $1 billion in insured losses at the time, amounting to $1.4 billion in today’s dollars, Hartwig said. While the 1999 storm had the same strength rating as Monday’s tornado, he said it had caused “somewhat more damage in the metropolitan Oklahoma City area and this storm did not, fortunately.”
“This is a state that is very much accustomed to disaster,” Hartwig said. “It’s in the middle of tornado alley. Insurance rates here are already among highest in country, even though it’s a completely landlocked state.”
Although it had been a “relatively quiet” year for disasters, the storm comes on the heels of the five costliest years in U.S. history for thunderstorm losses, including those from tornados, according to Hartwig. From 2008 to 2012, insurers have paid roughly $75 billion for thunderstorm losses.
Monday’s storm “simply reinforces why the price of insuring property here is relatively high,” Hartwig said. “It’s part of this larger trend, in terms of elevated thunderstorm losses.”
Damage is expected to result in severe to light and moderate claims, he said. They are expected to primarily be for residential home and vehicle damage, although there will be some commercial claims.
Already, insurance agents are facilitating the process for clients to receive checks from their insurance companies to cover additional living expenses, Hartwig said.
“That’s really the first call that many people will make,” he said.
Dan Ramsey, CEO of the Independent Insurance Agents of Oklahoma, said his association has contacted members agents in affected areas, including those in Shawnee, Okla., where another tornado struck on Sunday, and “they seemed to be doing OK.”
“Their phones are working. They want to conduct business,” added Ramsey, whose association is in Oklahoma City.
Ramsey urged other agencies to have a disaster preparedness plan to make sure they can operate in an emergency situation.
“What are you going to do when this happens to your customers?” he asked. “What is your plan? What is your plan if you don’t have telephones? How do you communicate with your customers?”
As for the area of Moore, Ramsey said “mostly, the attitude is very positive.”
“The attitude is, ‘We’re going to pick ourselves up, brush off and get to the task at hand and build it back,’ he added. “There’s a lot of work to do, and I think the nature of the people around here, they’ll do that.”
Victoria Goff is IA online editor.