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Minnesota Insurers May Face Worst Year Ever for Catastrophe Losses in 2010

This is more bad news about the property loss problems in the State of Minnesota.

This is an article from BestWire about Minnesota insurance companies’ probable losses in 2010. This is bad news considering Minnesota is already the 3rd worse state for property claims. Expect to see double digit increases on homeowners’ insurance renewals and higher mandatory deductible minimums.

OLDWICK, N.J. November 12, 2010 (BestWire) — Unusual weather this year, including more than 100 tornadoes and a windstorm in late October, will lead to huge catastrophe losses for insurers in Minnesota.

“We’re looking at $2 billion in catastrophe losses” said Mark Kulda, spokesman for the Insurance Federation of Minnesota. Kulda cautioned that the figure is a preliminary estimate, based on comments from some of the federation’s members, who have said this year has been the worse for insured losses.

The prior worse year was 1998, Kulda said, when insurers paid $1.5 billion in claims, due largely to tornadoes, including storms that caused devastating damage in St. Peter and Comfrey, Minn.

Between January and July 31, Minnesota was hit by 99 confirmed tornadoes, including four powerful F4 tornadoes in June, according to the National Oceanic and Atmospheric Administration. Minnesota typically ranks about 10th in tornadoes among states. This year, Minnesota is topping the list, Kulda said.

The Enhanced F, or Fujita scale, is a damage scale that meteorologists use to rank tornadoes from zero to five. Based on damage to 28 separate indicators, an F-0 tornado is estimated to have wind gusts of 65 to 85 mph, an F-4 tornado is estimated to have wind gusts of 166 to 200 mph, and an F-5 tornado is estimated to have gusts topping 200 mph, according to the NOAA. Some 60 tornadoes tore through the state on June 17 (BestWire, June 18, 2010). Areas hardest hit include Wadena, in north-central Minnesota, where the high school was destroyed, and the town of Albert Lea, in southeastern Minnesota, Kulda said.

Minnesota and other states were hammered by a massive storm system in late October. One large insurance company had 2,107 claims in Minnesota following the storm system that hit from the Dakotas, as far south as Mississippi and Alabama, east to the Carolinas and Virginia beginning the evening of Oct. 25 through Oct. 28, spokesman Dick Luedke said.

The same large insurance company received about the same number of claims in Illinois, more than 1,100 in Wisconsin, nearly 700 in Indiana, and more than 500 in Michigan, Luedke said.

A 2nd large insurance company received more than 1,800 claims in Minnesota, Illinois, Ohio, Indiana, and Missouri from the October storm system. That figure includes 883 property-damage claims in Minnesota, spokesman Jerry Davies said in an e-mail.

“Many customers were affected by the October 2010 super storm, and our top priority is helping them through the claims process so they can rebuild or restore their property as quickly as possible. We will report catastrophe losses in our next quarterly earnings release,” spokeswoman Christina Loznicka from a 3rd large insurance company said in an e-mail.

The storm system swept down from Alaska, moving south and east, with low pressure so intense that it set a record in Minnesota, said David Imy, a meteorologist with the NOAA Storm Prediction Center in Oklahoma.

Over water, Imy said, such low pressure is equivalent to a category 3 hurricane.

The storm caused blizzard conditions in North Dakota, and there were more than 50 reports of tornadoes in several states, including Indiana, Ohio, Illinois, Wisconsin, Kentucky, Virginia, North Carolina, South Carolina, Georgia, Alabama and Tennessee. Not all of those tornado reports have been confirmed, Imy said, but he added that winds of 50 to 80 mph were very common with the storm system.

In addition to the tornadoes and late-October storm, Kulda said the southern tier of Minnesota experienced heavy rain fall beginning in late September, which produced severe flooding. He said the state typically experiences flooding in the spring when snow melts, but flooding in the fall is unusual. More than 20 southern counties were declared federal disaster areas, making them eligible for federal aid, according to the Federal Emergency Management Agency.

(By Diana Rosenberg, senior associate editor, BestWeek)BN-NJ-11-12-2010 1137 ET #)