5/1/2009

It's Not Nice to Fool Mother Nature

Site-specific weather analysis offers an expert approach to evaluating weather-related claims.

By Kevin E. Hopler

“Fooling Mother Nature” was the message behind a television commercial for margarine back in the 1970s, and today the insurance industry is at her again as it continues battling with an unprecedented number of fraudulent weather-related claims associated with constantly changing weather conditions across wide swaths of the U.S. However, as more claimants are finding out, you may be able to fool Mother Nature, but not the weather expert. With huge advances in the science of meteorology, a weather expert can sniff out the clues of weather-related claims fraud in the industry.

With the cost of damages from natural catastrophes and weather-related incidents rising exponentially over the past century, insurers have increased vigilance over the claims and payout process. Due to the variability and spontaneity of weather, insurance companies nationwide are confronted with hundreds of new claims each day: personal injury, property damage, motor vehicle accidents and, occasionally, widespread catastrophe. Embedded in those claims…that’s right—fraud. Recent fraudulent claim investigations include filings from hurricane Katrina, large hailstorms in Ohio, and alleged lightning strikes on personal property. No matter the type of weather-related claim, investigation by adjusters is needed to determine validity.

While claims due to weather are encountered year round, the complexity of summer-related claims increases significantly due to the “mesoscale,” or localized intensity of thunderstorms. Figure 1 displays thousands of damaging weather reports, resulting in hundreds of millions in property damage every year. With large numbers such as these, claims professionals need a reliable source for weather data to substantiate incoming claims. Although not all claims require a full, detailed analysis of the weather conditions, some more-complex claims that stem from a severe thunderstorm could benefit greatly from the expertise of a forensic meteorologist who can undertake a site-specific weather analysis. These include inquiries due to tornadoes, flash flood, hail, damaging winds, and lightning.

There are a large number of private consulting firms that will conduct a thorough and detailed investigative analysis to identify the type, duration and intensity of weather conditions at a particular location, date and time. Many firms even have a certified consulting meteorologist on staff, which greatly enhances the qualifications of the individual and firm. Through the employment of an expert meteorologist and increasingly advanced weather data, claims professionals can determine the likelihood that weather was a causative factor in a claim.

Looking for Weather-Event Markers
Research collected from the National Oceanic and Atmospheric Administration (NOAA) indicates an average of over 1,000 damaging-tornado reports submitted annually across the U.S., which amounts to more than a billion dollars in property damage (Figure 1). A tornado derived from a supercell thunderstorm is one of nature’s deadliest and most violent storms with potential for devastation of a single site in only seconds. A tornado or funnel cloud can strike quickly, disappear, and touch down again with little advance warning. The path of an average tornado can be tracked to some degree but can quickly change direction. In the case of a widespread, powerful, tornado outbreak, there will be extensive visible evidence to justify the claim. However, there are numerous cases when a policyholder submits a tornado claim in a suburban or rural location. Was this the case of isolated tornado damage on a single property, or was the damage unrelated to weather? In this claim, a professional meteorologist will collect the necessary weather data, research it, and apply expertise to determine the likelihood of the event.

Floods cause widespread damage across the U.S. and can affect entire river basins in multiple states. A flash flood is a much more localized event confined to a small or isolated sub-region. Flash floods typically stem from an intensifying thunderstorm that produces rainfall rates that can exceed one to three inches in less than an hour. A common misconception when investigating flash flood-producing thunderstorms is that a surface weather observation 10 miles away from the claimant’s site can verify or contradict an insurance claim. This, however, is not an accurate review of data since thunderstorms can be sporadic and can span less than the distance between the site and surface observation station.

Hail is a common component of a severe thunderstorm, and the size of hail is dependent on the strength of the updrafts in the storm itself. Hail is most known as a threat to personal property and crops. NOAA research indicates that just over 4,000 reports of damaging hail (greater than 0.75 inch) are submitted annually. Over 30% of these reports occur in Texas, Oklahoma and Kansas, where there is a high frequency of severe weather on an almost daily basis. Depending on the strength of the storm, hail can range in size from as small as a few millimeters producing little or no damage to rare historic cases of softball size (4.5 inches) causing complete devastation (Figure 2).

Back in June 2007, across Akron and Canton, Ohio, a record number of homeowners filed claims for roof damage from a large hailstorm. Although a large number of these claims were validated, disreputable area contractors were urging homeowners with normal wear and tear to their roofs to claim damage from the hailstorms. Having an expert meteorologist research and analyze the claim could have saved insurance companies tens of millions of dollars or more in losses.

On average, nearly 3,000 damaging wind events are recorded in the U.S. annually. The meteorological measure of a damaging wind gust is a speed equal to or greater than 57.5 mph. There are many important components of wind, and the overall effects on property or persons can vary greatly depending on sustained wind speed, peak gusts, and direction. For example, a westerly wind gust of 79 mph will be more threatening to a property exposed to the west than one sheltered by a mountain ridge, large trees, or a building.

Wind-or-water disputes characterized the problems with hurricane claims in the Gulf States in the aftermath of Katrina. Which came first—the storm surge and its flooding waters or wind damage? In a catastrophic hurricane, it’s not always clear to the adjuster making the assessment. Was the flood damage a result of ground water, or was there damage to the roof caused by high winds allowing heavy rain to flood the interior? There is also the complication of the property damage claim of a homeowner with no flood insurance. An expert meteorologist can help with the assessment of the order of damage.

While other weather claims usually cause widespread damage to numerous properties, a single lightning strike frequently causes only localized damage to one property. NOAA estimates an average of 20–25 million cloud-to-ground strikes annually, resulting in an average of 550 property damaging lightning events per year. Fraudulent lightning-strike claims can be identified through the use of a lightning-strike report from the National Lightning Detection Network. The reports are used to ascertain, at a high degree of confidence, that there was, or was not, a cloud-to-ground lightning strike in the vicinity of the claimant.

Reliable Sources of Weather Data
A forensic meteorologist in the preliminary stages of claims research uses surface weather observations from first-order weather stations. Surface weather observations are either automated or are taken and recorded by a trained weather observer at a minimum of one report per hour. Currently, there are more than 700 observation stations across the U.S. These stations report sky cover, wind speed and direction, temperature, visibility, precipitation amounts and, in some cases, the depth of snow and ice on the ground. A meteorologist should review such data, as all reports are formatted in meteorological code.

Daily climatological observations are a great supplement to surface weather observations. These reports are taken daily at a predetermined time and contain a summary of conditions over the prior 24 hours. Conditions include maximum and minimum temperature, precipitation, snow cover, and occasionally average wind and sky cover. These observations are recorded by private weather observers, universities, Federal Aviation Administration facilities, and National Weather Service offices.

Another source of reliable data is the network of 159 high-resolution Doppler radar sites across the U.S. called NEXRAD (Next Generation Weather Radar system). Data obtained from these sites is extremely versatile and, with computer processing, can generate numerous meteorological analyses. Some available products include precipitation intensity and total estimates in addition to wind velocity, storm tracks, cloud tops, tornado vortex signature and hail. A forensic meteorologist can determine which products are suitable and will analyze and summarize the findings for the respective claim.

Additional sources include archived zone forecasts, watches, warnings and advisories issued by local National Weather Service offices. These products are a nice place for an adjuster to start, since they’ll show if conditions were, indeed, forecast that could have resulted in the claim that’s being investigated. Local storm reports submitted by law enforcement officials, certified storm spotters and the general public can corroborate official weather data.

When to Bring in the Experts
There is a great variety in the magnitude of weather-related claims ranging from minimal damage to an individual’s home to catastrophic multi-million dollar events that cover large geographical areas. Claims managers and adjusters must investigate thoroughly at the preliminary level then make a determination if an expert meteorologist is needed and will be cost-effective. A forensic meteorologist will provide the specificity that a general investigation is often lacking when simply reviewing weather records from nearby airports or climatological data that is often taken miles from the site in question. A meteorologist can apply scientific principals to surrounding data and obtain remote sensing data, such as Doppler radar, or lightning-strike reports to assist in preparing a site-specific, past-weather report.

Target the meteorologist with specific questions that will help settle or pay the claim. The meteorologist will be able to provide a relatively high degree of certainty that weather was or was not a factor in the loss event. The costs involved in hiring a meteorologist to prepare a site-specific past-weather report can greatly outweigh the costs of paying on a fraudulent claim.
Kevin E. Hopler is a meteorologist/director of sales and marketing at WeatherWorks, LLC, in Hackettstown, N.J. Frank Lombardo is president and certified consulting meteorologist (CCM) for WeatherWorks. For more information, please call (800) 427-3456 or visit www.weatherworksinc.com.



Kevin E. Hopler is a meteorologist/director of sales and marketing at WeatherWorks, LLC, in Hackettstown, N.J.

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