How an Independent Agent Handles a Polar Vortex

So far, 2014 has served up “some of the coldest weather within two decades,” according to economist and Insurance Information Institute (I.I.I.) president Bob Hartwig.

The I.I.I. reports that severe winter weather is the third most significant cause of insured catastrophe losses, coming in right behind hurricanes and tornadoes. And in a recent webinar, Hartwig noted that annual insured losses from snow, ice, freezing and related causes amounted to an average $1.4 billion between 1993 and 2012.

With the number for 2013—slightly above average at $1.9 billion—setting the stage for an even costlier 2014, independent agents have been busy in the trenches, tackling resulting insurance issues on the front lines. “We don’t have a lot of snow on the ground, but we’ve seen freezing temperatures as low as 65 below with the wind chill,” says Steve Bain, president of Bain Agency in Bismarck, N.D. “It’s kind of tough.”

For many, that’s an understatement. “I’m a native Iowan—I grew up on a farm, and I can remember a lot of really nasty winter storms,” says Dana Ramundt, president and CEO of The Dana Company in Des Moines. “But I don’t remember having wind this bad in the wintertime unless it was in conjunction with a blizzard. Last night, we had winds over 50 miles per hour.”

Between frigid wind chills, strong gusts and drastically fluctuating temperatures, January’s polar vortex has kept independent agents’ hands full with plenty of weather-related claims. “We’ve had some 50-degree days and then within 24 hours it’s below zero,” Ramundt says. “Then the snow hits and it melts and freezes immediately, which causes a lot of slips and falls and broken bones, and liability claims and car accidents.”

Personal lines claims haven’t been limited to auto. At Cheney Insurance in Damariscotta, Maine, losses have also involved roof damage from ice dams and improper maintenance of secondary homes. “People go south for the winter, and they have caretakers who show up once a week to try to maintain the heat, but the damage is already done,” says Rosemary Campbell, vice president of personal lines insurance. “We’ve had a couple of huge claims where the pipes burst, and the house flooded with water and then froze.”

High winds haven’t helped matters, either, often taking off shingles at private residences, according to Steve Bain, president of Bain Agency in Bismarck, N.D. “I get calls all the time for roof damage,” he says.

Small businesses—including independent agencies—are suffering as well. The Dana Company, which Ramundt says does “quite a bit of business in the hospitality area,” has fielded a slew of claims from hotels involving frozen sprinkler pipes bursting. At Bain Agency, where commercial lines comprise 75% of business, commercial insureds like contractors have also run into damages during building construction and rehabilitation.

But while juggling client issues with their own operation problems is an ongoing battle, most independent agencies have managed to strike a balance, whether that means shortening work days, allowing space heaters in the office or preparing for the worst. “If we’re going out to the countryside to see a client that’s 20-30 miles out of town, we make sure we have a survival kit in the car,” Bain says.

And fortunately, Midwesterners are accustomed to harsh winters—which means most insureds have had adequate coverage in extreme loss situations. “We try to insure people that are smart enough to get out and prep and take care of their properties,” says Ramundt, who notes that the only instances of inadequate coverage have involved clients neglecting a vacant property. “It never occurs to them when their building is empty to maybe turn the water off. Or they might turn the temperature way down and you have a heat unit malfunction. And then you’ve got coverage issues if they didn’t let the company know.”

Situations like that are why client education remains a top priority for independent agencies. Ricketts and Associates, Inc. in Boise, Idaho taps social media as a resource for helping insureds take preventive steps against losses.

“If you see a deep freeze coming your way, you can do things to prepare,” says Bob Ricketts, agency president. “We’ll normally try to do some postings on Facebook and Twitter—hey, get your furnace serviced. Check your car batteries. Make sure you’ve got your hoses unhooked. Just a little list of reminders.”

Grin and bear it for the good of the clients seems to be a pervasive theme among independent agents, whether that involves a realistic approach—“We have a lot of winter ahead of us yet,” Ramundt says—or a more optimistic one.

“It’s still cold, but we get along with it fine,” Bain says. “Of course everybody looks forward to spring around here.”

Jacquelyn Connelly is IA assistant editor.