How a small blue bird could help protect us from hail

Julian Brimelow (Edmonton, AB)

In recent years, hailstorms causing billions of dollars’ worth of damage have occurred over Europe, North America and Australia. It is therefore important to continue to improve the lead time of warnings and to include information in warnings that will encourage people to take preventative action. Reporting hail characteristics in real time is a critical step towards achieving this because this information a) is invaluable in helping forecasters issue the best possible forecast, and b) assists researchers by providing them with reliable data to develop even better forecast tools.

Reporting the size and amount of hail is important because the damage potential (or kinetic energy) is primarily a function of both the size and the amount of hail. In copious amounts, even pea-sized or grape-sized hail can be devastating for crops and clog drains in urban areas.  Reporting and measuring hail is, however, a tricky business: hailstones melt quickly, and are slippery and cold. This is where a small blue bird could help us report hail in a way that makes the information useful to forecasters and researchers.

More on that later.

Despite advances in the skill of weather forecasts in recent years (today’s four-day forecast is a good as the one-day forecast 30 years ago), forecasting the occurrence and size of hail remains a challenge. Major limiting factors are that not all thunderstorms produce hail and that when they do, the hail swaths (narrow bands of hail deposited by hailstorms) often cover a small area. This makes it difficult to identify where hail actually fell and what the maximum hail size was. Because conventional weather radar does not directly identify the presence or size of hail, meteorologists are reliant on hail reports from the public.

 Public hail reports have issues though. Consider a day when nasty storms are visible on radar but no reports of hail are received. Was this because there was no hail, or did the storm affect a sparsely populated area, or did no one report the hail for some reason? Even if a hailstorm affects a densely populated area when it is producing the largest hail, there is no guarantee that people reporting the hail will be able to a) identify the largest hail, or b) make accurate measurements of the hail. Someone may, for example, estimate the size of hail on their lawn by looking out their kitchen window, or measure the hail after it has been on the ground for a while, or, after showing it to others.

A recent study in the U.S. found that the mean hail diameter of reports in the U.S. Storm Database was over 1 cm smaller (about 30%) than that measured by teams of students who measured hail along several traverses across hail swaths. This negative bias represents a significant barrier for developing reliable forecast tools, especially empirically derived ones. The lack of skillful guidance undermines the forecasters’ confidence, makes them wary of issuing warnings and may prevent them from including important information in warnings about hail.

The best tool for objectively measuring hail remains the hail pad. A hail pad is typically a 30-cm square pad of painted styrofoam that records the indentations made by hailstones. These data are then used to estimate the size and number of hailstones and the kinetic energy. Unfortunately, hail pads are of no use to forecasters because they do not provide real-time information. Additionally, maintaining a sufficiently dense network of hail pads (i.e., spaced about 3 km apart) is time-consuming and labour-intensive. Some might argue, in jest, that cars are plentiful and make convenient hail pads, but using a car as a hail pad would be exactly what we are hoping to avoid.

This all seems rather hopeless doesn’t it? Fortunately, this is where a small blue bird enters the equation. I am referring to Twitter! In recent years, Twitter has exploded onto the severe weather scene, with eager citizens tweeting about all sorts of severe weather phenomena, real or perceived.

Notifying forecasters of hail has never been easier or quicker, and “quicker” is critical for increasing the lead time of warnings. Also, information from the hail swath (e.g., the maximum hail diameter, typical hail size, depth of hail and damage) allows forecasters to include important information in the warnings. People are more likely to be proactive in heeding a warning and taking preventative action if they hear that a storm producing baseball-sized hail is on its way.

There is a downside to legions of people tweeting reports of hail. First and foremost, they will likely not be trained storm-spotters. There is a danger of there being a deluge of well-intentioned but unhelpful tweets that researchers and, more importantly, forecasters have to sift through. Tweeting “Huge hailstorm west of Moose Jaw!” is not particularly helpful. Why? There could be more than one storm in the vicinity. It is also unclear if “huge” refers to hail size or storm size. Also, no details on the hail size or time of the event (the time of the tweet does not always correspond to the time the hail was falling) are provided. That is why I carefully worded the title of this post “How a small blue bird could help protect us from hail”. Make no mistake, the potential for Twitter to improve warnings and to modernize hail research is real, but like any tool, we have to use it properly in order to maximize its usefulness.

Part of my job at Environment and Climate Change Canada is to develop (and test) hail forecast products, including products from Canada’s radar network. A critical component of this research is to verify the hail products against observations. During the summer of 2014, I collected hundreds of tweets with embedded photos reporting hail over the Canadian prairie provinces. After carefully examination, however, I could use only about a quarter of them for research.

The most common problem was that the photos did not include an object that could be used to estimate the size of the hail. A photo of someone holding a large stone in their hand looks neat and can serve as confirmation that hail fell, but that is pretty much where its use for research ends. Estimating the size of hail by sight alone is unreliable because people tend to be biased towards reporting certain size classes of hail.

A colleague and I dealt with this bias when using the U.S. Storm Database for a journal paper—specifically, we found that there were a significantly disproportionate number of reports of golf ball-sized hail compared to the adjoining size categories. Apparently people are predisposed to “seeing” golf ball-sized hail; perhaps this phenomenon has something to do with the popularity of golf.

What we need is a standardized tool that allows people to objectively and accurately report hail, while not introducing disincentives or delays. If people had access to a universal application (app), this would go a long way in avoiding some of the pitfalls currently associated with tweeting hail reports. All the required features for such an app have been developed—they just need to be combined into a single app by someone with the required skills.

Rather than estimating the diameter, the most accurate way to determine the size and kinetic energy of a hailstone is to measure its mass. Given that hail (at least hard hail that we are interested in) has a fairly consistent density, if we know the mass then we can get a really good estimate of its equivalent diameter, without having to worry about which of the hailstone’s axes to measure and all that fiddly stuff. So, ideally, the app would convert the smart phone into a scale that can be used to measure the mass of hailstones. Yes, there really is an app for that, more than one in fact!  

Additionally, the app could automatically include a scale on the photo or have a feature that changes your screen into a ruler to permit the user to accurately measure the hailstone’s dimensions. The app would geo tag the phone’s current location. There would be no need to manually enter the latitude and longitude, and there is no danger of typos. The app could also include a time stamp of when the app was activated (this could be overridden to reflect the time the hail started). Lastly, the user could have the option of entering more details about the event. Hit send and voilà, the report with an image and all the critical information is tweeted to Environment and Climate Change Canada. Such an easy to use, nifty tool would improve the usefulness of hail reports and increase the number of citizen reports.

A final observation—I am often surprised during the summer when someone casually notes that it is hailing and doesn’t think about reporting it. First off, “Hello, it is hailing! Where is my scale?” Seriously though, I asked someone why this was. They said that there had been watches for severe thunderstorms, so of course the meteorologists were aware of the hail. I’m flattered by their confidence in us, but no! Another reason why people don’t think of reporting hail is that it’s “only small”. That may be, but knowing where there is small hail is still very useful for developing and verifying forecast tools, not to mention that sufficient amounts of small hail can also be very damaging.

So, only if it is safe, please do send along your hail information! Your participation would be greatly appreciated.

Acknowledgements: I’m very grateful to Gabrielle Gascon (ECCC), Neil Taylor (ECCC) and Nyree Sharp for their valuable feedback on earlier versions of this post.

Julian Brimelow, PhD., Physical Sciences Specialist, Applied Environmental Predictions Science Meteorological Service of Canada (MSC), Prairie and Northern Region, Environment & Climate Change Canada (ECCC).

Email: julian.brimelow@canada.ca

This blog post has been written by Julian Brimelow, Environment Canada, who will be presenting on February 1, 2016 at CatIQ's Canadian Catastrophe Conference during the "Dealing with Hail Risk" session at 3:00 pm.

@CatIQ_Inc
#C42016
Environment Canada Twitter: @environmentca

The Diligent CAT Adjuster - Being Prepared for Deployment

Mike Koch (Kitchener, ON)

When catastrophic events occur there is an immediate need for response. Both natural and man-made catastrophic events often cause devastating and long-ranging effects to the individuals, communities and natural environments impacted. Claims adjusters play a critical role during such events as they serve as the eye and ears of policyholders that have vacated the affected area and the carriers that underwrite these policies. After an event has occurred, and the impacted area is deemed secure enough for emergency/first response personnel and associated professionals to enter, claims adjusters are placed onsite to conduct their investigation on the impact and severity of damages sustained on insured properties, and to manage and expedite the claims process. The services of these individuals come into play during the thick of it, entering environments that have been crippled by the very destructive force that swept through it. Preparation is key for claims adjusters ensuring that they have the resources, supplies and equipment to effectively navigate through the impacted environment and execute their functions accordingly. To that effect, adjusters need to be aware of the following things and prepare as needed.

Items that should accompany any claims professional being deployed to a CAT site consist of:

• The limited available power sources within the effect area will hinder one’s ability to use debit or credit cards to make purchases or to withdraw money from an ATM. It is recommended that adjusters bring with them a fair sum of money either in U.S. or local currency to purchase essentials such as meals, gas, water, etc.

• The potential lack of power will have an impact on the operability of local infrastructure and certain accommodations that we have grown accustomed to such as running water, heating, cooling and refrigeration.  It is wise for adjusters to bring a small cooler to house water and refreshments. Also, in the absence of lighting a handheld flashlight should be packed.  

• Small first-aid kits can be useful in treating minor scrapes that an adjuster may sustain.

• A small cache of business supplies consisting of a stapler, paper clips, pencil, paper, ruler, measuring tape, etc. should be packed to assist adjusters with the documentation of their activities.

• The attire that an adjuster packs should be versatile enough to accommodate the climate that they are about to enter and be suitable for walking through rummage while conducting an onsite investigation, and to meet with superiors, clients and other business professionals. Safety and practicability come first making safety shoes and a hard hat are a must. Other essential items that an adjuster should pack include a lap top along with a spare battery and car charger, a camera and an updated passport.

• Adjusters should always be mindful and respectful of local customs and traditions and act accordingly

• As language may be a barrier, adjusters should come prepared with language conversation books or translation resources that they can call on for assistance.

• As navigation may sometimes be a challenge, coming prepared with maps of the local area and a GPS device can prove to be most useful.

This blog post has been written by Mike Koch, National Property & Catastrophe Manager, Crawford & Company (Canada) Inc.

Pat Van Bakel, President & CEO, Crawford & Company (Canada) Inc. is on CatIQ's Canadian Catastrophe Conference's 2016 Advisory Committee and will be a panelist on the Claims Executives panel during the conference.

Pat Van Bakel - @pjvb71
Crawford Catastrophe - @CrawCAT
Crawford & Company - @Crawford_News

'The Appraisal Process' - An ADR Solution for CAT Events

(Glenn Gibson, Hamilton, ON)

2013 resulted in payments of over $3.2 billion in property claims.  For the 25-years leading up to 2008, the industry averaged payments from natural catastrophe losses around $400 million.  Like it or not we must all face the reality that we are going to face an increased frequency of catastrophic events and we must prepare for the impact.

The insurance claims industry does a terrific job handling the volume of claims that appear with no warning.  And they successfully conclude those claims with a high degree of customer satisfaction.  But the reality is that fulfilling the “insurance promise” can end up down a bumpy road where there are significant disagreements on the “amount of loss”.  Where these situations occur one might think the solution will involve costly, time-consumming litigation.  The reality is that we have a built in, mandatory Appraisal or Dispute Resolution process that is part of the Statutory Conditions of all property insurance policies in Canada. 

In spite of this ADR process being part of our insurance contract for decades the process is not widely known and understood.

PROVINCIAL INSURANCE ACTS

When someone elects to purchase an insurance policy they create a contract between both parties. 

Each common law Province in Canada has an Insurance Act which governs activities of the insurers who are licensed to do business in their province.

All insurance contracts contain Statutory Conditions.  Until recently, all referred to a dispute process known as “Appraisal”.  Much of this article will refer to this mechanism as it has only been in recent years that several Provinces have ammended their Statutory Conditions to rename it as “Dispute Resolution”.  What has not changed has been the foundation that this mandatory section of the contract allows this process to determine:

1.    The value of the property insured.

2.    The value of the property saved.

3.    The amount of the loss.

Beyond this, the wordings within each Act defines the process to be followed.  And for the most part it follows the historical language that has been in place for decades.  Each Act should be reviewed for its own ideosynchracies.  Some differences include:

1.    In B.C. and Alberta they renamed the Statutory Condition to-- “Dispute Resolution”. Appraisers are now called “Dispute Resolution Representatives”.  Additionally, the representative cannot be the insured or insurer. 

2.    B.C. has also built in a mandatory requirement that where there is a disagreement as to the value of the loss they must give notice to the insured within 21 days of the dispute resolution process.

3.    Manitoba, Newfoundland, PEI and Nova Scotia have all made changes where they are demanding impartiality of the appraisers and umpire.  Their wording requires them to be “disinterested” parties.   Several of them also go on to say the umpire must not only be “disinterested” but “competent”. 

4.    Manitoba also has a curious inclusion at S. 123(3) of their Act, which seems to open the door for any party not happy with the appraisal process to seek a rehearing. Manitoba courts have not yet had to deal with this issue.

5.    Statutes in Saskatchewan, Alberta and Manitoba specifically exclude hail insurance contracts from this process.

One can see that the legislators in some of the Provinces are attempting to get fresh faces to have a new look at the matters in dispute.  It will be interesting to see if Ontario follows suit with any changes in the future. 

While these changes are important to take note it can be argued that the changes have not had a substantive impact on the overall process that has been in place for decades.

HOW DOES ‘APPRAISAL’ WORK? 

A proof of loss form must be filed before the process can be initiated.  This submission should comply with the provisions laid out in Statutory Condition #6 (Requirements of the Insured Following a Loss).

A letter (notice) by either the policyholder or the insurer is all that is required to start the ‘Appraisal’ process.  In this letter, the party making the demand would formally identify who will be acting as their appraiser in this process.  The other party then has 7 clear working days to appoint their chosen appraiser.

With both appraisers picked, they have 15 days to agree on their choice of an umpire.  This time period can be extended by consent of both appraisers as there may be additional time required for them to meet and identify the issues in dispute.  The meeting of the appraisers may also result in some negotiations which could result in the resolution of some or all of the issues.  There is no need for an umpire if the two appraisers reach an agreement. These initial meetings can be held on a “Without Prejudice” basis.

If the two appraisers cannot agree on an umpire they will go before a motion court judge to have someone selected. 

With an umpire in place, the process will start and that will be driven by the umpire’s “style” of conducting the session.  There are no formal rules of conduct. It is up to the umpire’s descretion.

Many umpires will begin the process by requesting that each appraiser submit a document brief that could include:

§  A narrative setting out the issues in dispute and the appraiser’s opinions.

§  Insurance policy details.  Underwriting file if applicable.

§  Repair estimates, drawings or opinions.

§  Analytical charts comparing pricing.

§  Proofs of loss/ payment list.

§  Photographs / videotape.

§  Engineering reports, if applicable.

§  Key correspondence, if applicable.

§  Any expert reports or opinions to support a point of view.

§  Relevant case law, articles, or other material that might support a point of view.

No one should underestimate the importance of this brief of documents.  You are providing the umpire with a first impression of your point of view.  The appraisers should make an effort to agree beforehand on the submission of common documents to avoid duplications that might lead to an increase in costs..

The submissions should be made in duplicate to the umpire.  To even the playing field, the umpire will ensure each side gets the other side’s brief upon receiving them.  In addition, any requests of the umpire should be made in writing, with a copy sent to the opposing appraiser.  No one should communicate one-on-one with the umpire; to eliminate surprises, both appraisers and the umpire should be dealing with the same information flow.  

Disputes over the amount of loss might require the umpire to consider requests that might not be seen in other ADR mechanisms, including: 

§  Completing a site inspection.

§  Attending a storage warehouse to inspect equipment, fixtures or other building contents.

§  Engaging additional experts to determine the extent of damage.

In advance of the Appraisal session, appraisers should consider whether or not they wish to bring witnesses to the session.  By consent of the umpire, others can be allowed into the session to provide information not evidence.  This has included:

§  A contractor to discuss his scope of damage or clarify pricing issues.

§  An engineer to elaborate on their report or to clarify a specific point.

§  The initial loss adjuster who might assist the insurer’s appraiser in presenting a myriad of documents.

§  A lawyer representing the policyholder who wished to be present to assist in the choice of appraiser.

§  The policyholder to provide information on the claim that has been submitted.  On these occasions the policyholder has been allowed to speak and the umpire addressed questions on specific points.  Allowing the insured his ‘day in court’ can be helpful to achieving a successful outcome for this process.

The umpire must strictly control who is allowed into the session and what input they have into the process.  The only people with official status in this process are the two appraisers and the umpire.  Each appraiser must feel comfortable that the process is being handled in a fair and even-handed fashion.

In assessing the role and actions of the umpire, consideration might be given to the often quoted wording in Regina V. Sussex Justice; Ex Parte McCarthy, 1924, 1 Kings Bench:

“It is of fundamental importance that justice should not only be done, but should manifestly and undoubtedly be seen to be done.”

This concept is reinforced in Kane V. Board of Governors for UBC, Supreme Court of Canada, 1980 where our top court analyzed the fairness of a tribunal and set out some guiding principles.

At the start of a session the umpire will review how the session will be conducted.  These opening remarks set the ground rules for everyone including witnesses who may be in the room.

After opening remarks, many umpires take a mediation approach to resolving the issues.  Both sides are given appropriate, uninterrupted time to present their arguments.  The umpire will then control a debate between both appraisers.  For those familiar with mediation procedures, this is an interest-based approach.  As the discussion unwinds, most umpires will then gradually move to a “rights-based” approach in which the umpire will provide an opinion on an issue.  The umpire’s opinions may stimulate further discussion to see if some common ground can be developed with everyone or with one of the two appraisers.

The umpire must ensure the process stays within the limits of his or her authority and does not drift into areas that should properly be addressed in a court of law.  For example,  an appraiser for the insured might ask the umpire to agree with them that some goods were destroyed in a fire.  The appraiser for the insurer argues the goods were not in the premises destroyed.  An umpire can drive the process to reach a conclusion as to the value of the loss but cannot reach a conclusion as to whether the property was on the site or not when the fire happened.  Any conclusion on that type of thing has to be left to a court of law.

Usually, an Appraisal session is concluded in one meeting.  Sometimes, more than one meeting is required, and the umpire also can adjourn the session while an appraiser develops and submits further documentation.

Most Appraisals cover many separate issues in dispute.  The umpire might choose to try and settle the issues one-by-one.  As each item is debated, situations may occur where:

§  Both appraisers and the umpire reach unanimous agreement.

§  The appraiser for the insurer and umpire agree.

§  The appraiser for the insured and the umpire agree.

When two out of three parties agree on an issue it is deemed to be resolved.  The Award Document that is created can reflect individual items or, by consent, the parties can use the issues they have resolved to arrive at a macro settlement number whereby at least two of the three parties agree on the figures. There is some flexibility as to how the Award Document can be constructed. 

Umpires have different ways to conduct their sessions.  Some umpires listen to the separate points of view and then write out lengthy “Reasons” as to how they arrived at certain numbers.  If one of the appraisers agrees on the umpire’s analysis then the matter is concluded.  Other umpires treat the appraisal session as a mediation and keep the parties involved actively talking and negotiating until the matter reaches a final decision. 

The umpire and appraisers do not have to explain how they came up with final numbers to anyone.  They embark on a process that does not have rules to it. They follow this journey and arrive at a result when two of three parties agree.  Many sessions result in a one page document showing final numbers. That is all that is required.

Costs

Once the ‘Appraisal’ mechanism is triggered, the policyholder and insurer are required to pay 100% of their own appraisers costs.  In addition, each side is required to pay 50% of the umpire’s costs.

It is important that everyone understands early in the process the requirementts for contributing to costs.  Lawyers should also note that once the appraisal process is triggered if they elect to represent their client as the appraiser, their costs are paid 100% by their client regardless of the outcome.

SITUATIONS FOR USE OF ‘APPRAISAL’

The Appraisal process has achieved its goals in many situations.  Here are a few examples:

1.      Water came up through the basement windows of a residence.  The basement was flooded to a depth of 12 inches of water.  The insured felt that 100% of the basement contents should be replaced. The insurer’s experts felt that most of the damaged goods could be cleaned.  There was a huge difference between both of their positions.

2.      A tree crashed through the roof of a commercial building resulting in extensive water damage to office inventory and stock.  The insured’s builder felt the entire roof needed to be replaced.   The insurer felt the roof could be repaired. There was a difference of $400,000 in the structural repairs to the building.

3.      The insured had been evacuated from their home by public authorities.  They lived in a school gymnasium for a week. On returning home they found that water had entered their home through a hole in the roof and a broken window.  They felt this had happened 5 days ago and they found what they thought was “mould” in several parts of their home.  They felt the entire home was contaminated with mould and extensive renovations and content replacement was required.  The insurer’s experts felt the mould was pre-existing and not part of the damage claim.  Additionally, they felt that most of the content items could be cleaned.  They were $200,000 apart in their arguments with the insurer.

4.      A hailstorm hit a large area damaging many homes.  The insured had damage to the west side of his roof but not the east side.  They wanted the entire roof to be replaced. Their insurer felt they should only be repairing the damaged area.  There was a $10,000 gap between both positions.

CONCLUSIONS

The use of Appraisal or Dispute Resolution is gaining a broader use across Canada.  But, it is hard to imagine how this ADR process, that has been part of our Statutory Conditions for so long has not been utilized on a more regular basis earlier in the dispute.  You can observe by reviewing the many legal cases that this process has been triggered well along the journey of the claim. 

Of additional interest is that there are no specific rules on how an Umpire should conduct this process.  Individual umpires have developed their own style on how they get the job done but it always boils down to two of the three parties involved in this process reaching an agreement.  The vast majority of appraisals are concluded in a quick, efficient, cost-effective manner.  The actual results of the process are rarely appealed and even if they were, it is very unlikely a court is going to overturn the result.

There are many legal decisions in Canada that lend guidance to the selection of appraisers and the appointment of umpires.  These cases also provide assistance to determining the authority that the process has to reach a decision.  If anyone wishes more specific information they can contact me for more information.

Glenn Gibson 

ICD.D, CIP, FCLA, FCIAA, CFE, CFEI, CCFI-c

E-  Glenngibsonglenn@gmail.com

This blog post has been written by Glenn Gibson, Vice-Chariman, Hamilton Tiger-Cats and Former EVP & Global Chief Strategy Officer, Crawford & Company (Canada) Inc.

Glenn Gibson is on CatIQ's Canadian Catastrophe Conference's 2016 Advisory Committee and will be moderating the Claims Executives panel during the conference.

Glenn Gibson - @G18Hurricane
Crawford Catastrophe - @CrawCAT
Crawford & Company - @Crawford_News