The harsh insurance reality of North America’s latest death storm

The harsh insurance reality of North America’s latest death storm | Insurance Business

The harsh insurance reality of North America’s latest death storm
The bomb cyclone which struck eastern North America last week (January 04) might not be as physically explosive as the name suggests – but its impacts will likely ricochet through the insurance industry.

Millions remain shivering in the wake of severe Storm Grayson after a dramatic drop in air pressure (a bomb cyclone) resulted in very strong winds, icy conditions and a massive dump of snow.

The violent storm has been blamed for at least 17 deaths. It forced schools to close, knocked out power to thousands of households and caused the cancellation of almost 5,000 flights.

“When insurance adjusters hear the words ‘bomb cyclone,’ their nerves understandably frazzle. But what real damage will this weather phenomenon bring to the homes in its path? In a word, ice,” said Alex Kubicek, founder and CEO at Understory, a weather detection and analysis network.

“Ice accumulation and ice dams are the number one cause of winter insurance claims and, when untreated, can result in permanent roof damage and leakage. Because this bomb cyclone [has brought] with it ice, snow, and wind, it is slated to contribute some of the largest losses we’ll see throughout the upcoming year.”

A bomb cyclone, also known as a ‘bombogenesis’, occurs when a storm’s central barometric pressure drops at least 24 millibars in 24 hours. The lower the pressure, the more powerful the storm. Weather Channel meteorologist Jon Erdman said Storm Grayson’s pressure dropped 53 millibars in 21 hours, making it one of the most severe storms the East Coast has ever experienced.

There are things insurance companies can do in advance of a severe storm like this to help mitigate damage, according to Kubicek, whose company Understory offers ground-truth-based weather detection, providing real time datasets and graphical views of the movement and intensity of weather events.

“To warn customers in advance and mitigate damage, insurance companies need actionable, accurate weather data. Ground measurements are the only way to accurately understand where freezing rain and icing will occur,” Kubicek commented.

“Without ground measurements, insurers won’t know where the freezing line is, and customers won’t be armed with the information they need to prevent damage to their homes. Ground measurements may not stop a bomb cyclone in its tracks, but they can mitigate its trail of destruction.”

Advanced weather detection might help to mitigate home insurance claims because it allows insurance companies to notify homeowners about the weather situation and guide them on how to safely remove the ice before it causes lasting damage.

But it won’t just be homeowners filing claims in light of Storm Grayson’s wintery wrath. Stranded travelers will likely be filing travel insurance claims and businesses who lost power may find cause to submit business interruption claims. 

One thing’s for sure: it may be cold outside, but the bomb cyclone will certainly heat things up for the insurance industry.


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