It’s a story that could almost be included as a plot in a Cheech & Chong movie. At the very least, it’s one of those crazy insurance claim stories.

An insurance company, Nationwide Mutual Fire Insurance of Columbus, Ohio, has filed a federal lawsuit to recover $160,200 from a fire that took place at a home in Bay City, Michigan, says an article by the Associated Press. “The insurer claims the fire was caused by a man who was extracting oil from marijuana for sale,” says the article. (Insert multiple Cheech & Chong jokes here.)

The insurance company is arguing that homeowner Kasey McDermott had an obligation to disclose what was happening in her home. The press attempted to contact McDermott to get commentary from her for the story, but her phone number was not in service and she could not be reached.

The article goes on to say that most of the money paid by the insurer went to McDermott’s mortgage provider.

Sorry about the dramatic headline, but it seemed rather appropriate for this week’s post. The annual general meeting of the Insurance Brokers Association of B.C. was on May 9 and the president of the equivalent Nova Scotia group was there and he had some feisty words to share, according to a newsletter we receive from the Chartered Insurance Professionals’ (CIP) Society.

People’s oil tanks are a big home insurance concern. They have a lifespan and often have to be replaced due to age. Richard Bishop, the president of the Insurance Brokers Association of Nova Scotia (IBANS), wants oil companies to assume responsibility for maintaining the tanks.

“We seem to be the regulator,” said Bishop. “We tell policyholders you’ve got to move it out, it’s too old, and so on.”

Bishop said the oil companies should be the ones responsible for advising customers about the proper maintenance and replacement of their oil tanks, not the brokers.

One suggestion was that under a leasing agreement, oil companies would be responsible for installing, maintaining and repairing the tank.

“Put the onus on the oil companies that supply the tanks,” said Bishop. “Make them lease, and not own. Those are one of the things we are looking at in Nova Scotia.”

We at OTC Insurance will keep you posted about what comes of this idea.

It’s a bylaw that would mean big business for marine insurance providers.

The mayor of Vancouver, Gregor Robertson, has put forward a proposal that companies who ship oil by tanker be required to have enough marine insurance to cover the full clean-up costs of any spills.

The proposal would cover pipeline operators and oil tankers which operate in the Burrard Inlet, Vancouver Harbour and Fraser River to “indemnify the City of Vancouver and existing local industries through appropriate liability insurance at a level equal to the projected amount of clean-up operation costs, and loss of business compensation for a worst-case scenario oil spill.”

What fuelled this recent idea was that an energy company announced it would double the capacity of a pipeline it owns that transports crude oil from the Alberta oil sands to a terminal in Burrard Inlet.

According to a Global news article, the expansion could lead to five times more oil tanker traffic, which would also increase the fears of there being a major spill.

What is probably most interesting about this project is that the mayor of Vancouver has come out as being deadset against the expansion, despite the billions in taxes the project is expected to generate. It takes a lot of political courage to take a stance like that.

On the OTC Insurance blog, we’ve talked frequently about the effects severe weather occurrences are having on the insurance market. It seems like every week, a new report or statistic comes out discussing how much the latest losses are adding up to.

One thing that doesn’t get too much attention is the role technology could play to help with risk and damage assessment for these occurences. In a fascinating post, the European Space Agency (ESA) talks about the role earth-observing satellites could play on this front. According to the post, these are some of the ways the satellites could help:

• To evaluate flood potential, satellite data can create elevation models and map an area’s proximity to rivers and other water bodies.
• Satellites can help to assess the potential risk of forest fires through instruments that monitor forest cover, precipitation and temperature development.
• Weather-monitoring satellites can be used to evaluate damage from heavy rain or hail in agricultural areas.

The post says that the use of satellite data is still in the early stages of being adopted by the insurance industry.

The OTC Insurance blog will keep you posted as these developments make their way to Canada and Nova Scotia.

Picking up on our last post where we talked about preparing for severe weather occurrences, the timing couldn’t be better for some predictions that recently came out. The Tropical Metorological Project out of Colorado State University came out with its 2012 predictions for the Atlantic hurricane season. Their predictions might surprise you.

The researchers are predicting that there will be less hurricane activity than compared to the climatology for the years between 1981 and 2010.

“The tropical Atlantic has anamalously cooled over the past several months, and it appears that the chances of an El Niño event this summer and fall are relatively high,” says the introduction to the 42-page report. ”We anticipate a below-average probability for major hurricanes making landfall along the United States coastline and in the Caribbean.”

According to a CBC news article, hurricane season is considered to run from June 1 until the end of November.

Whether this year turns out to have a below or above-average number of hurricanes, people should ensure they take the necessary steps to prepare for severe weather occurences, such as hurricanes. Environment Canada offers some great tips on how to prepare for hurricanes.

As more specific projections are released that pertain to Halifax Nova Scotia, OTC Insurance will update you on the latest news.

As part of its efforts to highlight the fact Earth Month is taking in April, the Insurance Bureau of Canada (IBC) is drawing attention to severe weather and it’s increasing frequency, which is something we’ve frequently looked at on the OTC Insurance blog.

“It’s important to take preventative action against severe weather because it is here to stay, disrupts lives and costs everyone,” says Ralph Palumbo, Vice President, Ontario with IBC, in a news release on IBC’s website.

The IBC site has a wealth of information for how people can prepare for various severe weather occurrences. One of the things that is interesting about what IBC has done is that it lists the risk factor of different occurrences. For the following occurences, residents of Atlantic Canada face a higher risk:

• Hurricanes.
• Tornadoes (The risk is also elevated for jurisdictions like southern Ontario, southern Quebec or the Prairies.)

According to IBC, for occcurrences such as severe storms and winter storms, as well as water-related damage, “communities across the country are vulnerable.”

IBC has information on what steps you can take to protect yourself from the risks mentioned above. It is well worth checking out and now is the ideal time to get a head start on taking care of those preparations.

These are just too good to resist posting. Periodically, different insurers and organizations post stories about fraudulent claims that people (try to) make. Just a few days ago, the Insurance Bureau of Canada posted some doozies. Here are a couple of the claims.

In one instance, a family lost everything in a fire. The husband, wife and daughter all said they had no idea how the fire started. However, a neighbour said he spotted the wife’s car pull away just before the fire started. While this detail may have just been a coincidence, it turns out that two weeks earlier, she had stopped by her insurance agent’s office to make sure the policy was up to date and paid for. The claim was denied and charges are pending.

In another instance, the traffic was stop and go on a busy highway and a man claimed he was rear ended by the vehicle behind him. He filed a claim, but he probably wasn’t expecting that the vehicle behind him had a camera mounted on the dashboard. The recording clearly showed the claimant put his car in reverse and hit the car behind him. Not surprisingly, the claim was denied and charges are pending.

Unfortunately, the original posting does not indicate where these incidents took place, but it would be neat to read some examples which referred specificially to Nova Scotia auto insurance or Nova Scotia home insurance claims. In any case, to read the original posting (which has a few more examples than we posted), head to IBC’s site.

Recently, I received an email titled “13 things your burglar won’t tell you.” It was a forwarded email that gets passed around from friend to friend, colleague to colleague, etc. The source appears to be a security consultant who runs the website, crimedoctor.com. Anyway, it had some non-traditional observations about protecting your home, so I’d like to share a few of the better ones with you.

1. Hey, thanks for letting me use the bathroom when I was working in your yard last week. While I was in there, I unlatched the back window to make my return a little easier.
2. Yes, I really do look for newspapers piled up on the drivey. And I might leave a pizza flyer in your front door to see how long it takes you remove it.
3. If decorative glass is part of your front entrance, don’t let your alarm company install the constrol pad where I can see if it’s set. That makes it too easy.
4. If it snows while you’re out of town, get a neighbour to create car and foot tracks into the house. Virgin drifts in the driveway are a dead giveaway.
5. Avoid announcing your vacation on your Facebook page. It’s easier than you think to look up your address. (The same goes for Twitter, MySpace or any other form of social media.)

With the weather having warmed up in Halifax and Nova Scotia, now is especially the time for people to be more vigilant with their home security.

In today’s global economy, outsourced manufacturing is a big part of that. Countries like China and Thailand are both well known for the outsourced manufacturing that takes place inside those countries. In an interesting article that appeared on www.mondaq.com, it talks about some of the insurance implications that may come out of the devastating floods that took place last year and some of the possible questions that may arise.

The article doesn’t have the answers, but the questions are good food for thought. It is an article well worth checking out.

According to the article, there have been US $3.3 billion in insurance claims to date and 15,000 industrial and manufacturing plants have been damaged as a result of the flooding.

One question the article raises is whether claimants can take the money and run. A comment like this requires a little bit of a backstory. There is something called a reinstatement value clause and this allows the insured to make a claim “for the replacement of destroyed property with new property.” In the case of firms that decide to relocate their operations to another country in the wake of the flooding, what will this mean for their insurance claim?

“In this case, the insurer will need to consider whether the insured can claim the full reinstatement cost and whether in any event the reinstatement clause allows the insured to relocated to a new location and specifically whether this must be in Thailand,” says the article.

This is just one of the many issues the article looks at. Check it out.

In a recent presentation in Saint John, the head of the Insurance Bureau of Canada talked about the effect severe weather is having. While he was talking specifically about what was happening in New Brunswick, he could have just as easily been talking about Nova Scotia.

Some of the examples he gave of the effects severe weather is having included:

• Water losses in New Brunswick rose almost 230 per cent from 2005 to 2009 ($7 million to $23 million).
• Munich Re. a global reinsurance company recently said that worldwide economic losses from natural catastrophes hit a record $378 billion in 2011.

The issue of severe weather is something we’ve been talking about on the OTC Insurance blog for a while. In a June 2, 2011 posting, we talked about how hurricane season was expected to be “above normal” for the Atlantic region. In a May 19, 2011 posting, we talked about how 2010 was the first year three disaster assistance programs were announced in a single year to help cover uninsured storm damage in Nova Scotia.

Severe weather has many implications, including damaging the environment, our properties and society’s infrastructure. It can also lead to loss of life in extreme cases. When severe weather occurs, everybody loses, from society at large to the individual policyholder who pays more in premiums to deal with the ever increasing cost of severe weather occurences.