Editors' Cuts

Claims Perspective: Texas and Boston Explosions

Chris McMahon
Insurance Experts' Forum, April 19, 2013

In terms of insured claims payouts, the fertilizer factory explosion in West, Texas, likely will generate more claims and higher loss figures than the Boston bombings, according to Mike Barry, VP of media relations for Insurance Information Institute.

Adair Grain Inc.’s West Fertilizer Co. factory fire and explosion has so far caused 12 confirmed deaths, more than 200 reported injuries, and damaged homes, businesses and vehicles. According to local reports early Friday afternoon, 60 people were then missing.

The factory produced anhydrous ammonia, a crop nutrient resulting from a combination of nitrogen and hydrogen, and according to a report from Bloomberg the facility stored as much as 270 tons of the material. The chemical combination is highly flammable and explosive, and was the explosive ingredient used in the Oklahoma City bombing, which killed 168 people on April 19, 1995.

“All the coverage is focusing on Boston this week, but in terms of insured claims payouts, the fertilizer explosion in Texas is likely to generate even larger dollar claims,” Barry said.

Insurance claims resulting from the factory explosion likely will be covered by life, health or P&C insurers, but it is still too early to understand fully the insurance implications, as the area is still in active search and rescue mode. Insurers and policyholders will be working to assess the damage and process claims when they are able access to the area.

"Based on what we know at this point, there appears to be extensive property damage to homes, businesses and automobiles. Building owners may have property insurance to cover their damage and loss of rental income,” said Joe Woods, VP, state government relations for the Property Casualty Insurers Association of America (PCI). “They may also have business interruption coverage for lost income,” he said, adding that insurers are committed to helping the families and business owners affected.

According to recent Bloomberg reports, reports, business interruption will be most likely to drive insurance costs as the aftermath of the Boston bombings continues to play out and the city remains shut down. In the Bloomberg report, Risk Management Services estimated business-interruption payouts to companies shuttered by the blasts likely will exceed insured property damage costs, which may be less than $1 million. RMS said the appraisal does not include costs of treating the injured.

Chris McMahon is a senior editor for Insurance Networking News.

Readers are encouraged to respond to Chris by using the “Add Your Comments” box below. Healso can be reached at chris.mcmahon@sourcemedia.com.

This blog was exclusively written for Insurance Networking News. It may not be reposted or reused without permission from Insurance Networking News.

Comments (0)

Be the first to comment on this post using the section below.

Add Your Comments...

Already Registered?

If you have already registered to Insurance Networking News, please use the form below to login. When completed you will immeditely be directed to post a comment.

Forgot your password?

Not Registered?

You must be registered to post a comment. Click here to register.

Blog Archive

Too Much Manual Effort is a Show Stopper

Examining the administrative burden of doing business in the E&S market.

The Efficiency CIO vs the Agility CIO

There is a role for both types of CIO, each organization has different priorities whether they’re an insurer, intermediary, vendor, start-up, etc.

Becoming a 24/7 Insurer

Insurers should be in the business of making life safer and better for consumers all the time.

Putting Your Investments Where Your Transformation Is: Part 2: Optimizing Your IT Investments Portfolio

Sam Medina continues a 3-part series on Transforming the IT Investment Budget in order to fund new programs and initiatives without the necessity of additional capital expense.

The Mobile Side of Digital: From OK to Great

What are the mobile leaders, including Allstate, Progressive, State Farm and Geico, doing to go from standard to strong?

Using the Data Deluge to Empower Consumers

Insurers can learn from the use of activity tracking in other fields to help their customers make better decisions.