Russia
appears to be in a giving mood this holiday season. As the allegations of Russian election
tampering escalate, Russia has been kind enough to send the United States
another gift – the return of the Polar Vortex.
But, what is the Polar Vortex anyway?
According to the National Weather Service, the Polar Vortex is a large
area of low pressure and cold air surrounding both poles. The term “vortex” refers to a counter-clockwise
flow of air that helps keep much colder air near the poles.
For some
time, meteorologists have noted the build-up of ultra-cold air in Siberia,
which now seems destined to hit the U.S. over the next several weeks. Apparently, forecast models of the upper
atmosphere are very similar in scale and magnitude as the now infamous January
2014 Polar Vortex and are hinting at formidable shots of cold weather hitting
vast stretches of the U.S. during mid to late December and through the remainder
of winter.
If the
forecast models prove accurate, parts of the Midwest, East and Southeast could
see temperatures plummet to more than 30 degrees below their historic averages
– meaning high temperatures in only the single digits and lows well below
zero. On the bright side, these forecast
models could also mean significant needed rain in California and possibly huge
snowfalls in the Rockies.
It is
currently unclear what the impact would be to the U.S. economy from this latest
chapter of the Polar Vortex franchise.
If the forecast models are even close to being accurate, which is always
debatable, the potential cost to the U.S. economy could approach the $5 billion
level experienced in 2014. During our most recent experiences with the Polar
Vortex, many in the insurance industry considered the Polar Vortex to be a
weather catastrophe as a result of the extensive property damage and business
interruption throughout the U.S. Of
course, the impact of a 2016-17 Polar Vortex would vary by region and
industry. However, many industries could
certainly expect greater than normal incidents of freezing pipes along with the
potential for power outages. As in 2014,
there is also the potential for losses in energy, tourist and transportation
sectors as a result of the ultra-cold weather.
Similar
to the potential impact to the U.S. economy as a whole, the insurance industry
can reasonably expect to experience a significant rise in claims if the Polar Vortex
in any way mirrors the levels in 2014.
As experienced in 2014, there were a plethora of coverage issues
resulting from the Polar Vortex including number of occurrences, freeze/thaw
damage, deductible/waiting periods, civil authority, ingress/egress and many
others. Of particular interest were the
positions taken by many policyholder representatives in 2014 that the entire
Polar Vortex was actually one occurrence.
While no two policies are exactly alike, one can anticipate that
policyholder representatives will again trot out the one occurrence argument asserting
that the 2016-17 Polar Vortex is one occurrence that encompasses any loss or
series of losses arising out of this one alleged event.
Consequently,
people should not only plan accordingly for these potential gifts from Russia,
but the insurance industry in particular should also leave room under the tree
for prospective claims that could likewise be forthcoming this holiday season.
Posted by William Zieden-Weber
