Impact of Recent Weather Disasters in Kentucky| August 2022
The weather has not been kind to Kentuckians in recent months, with numerous storms, major tornado outbreaks and most recently the devastating floods in Eastern Kentucky spreading misery across the commonwealth. Through all the property damage and dislocation of affected residents, Kentucky’s largest insurer of personal and commercial property has dispatched its own staff and personnel from other state Farm Bureaus to provide assistance, pay claims and help local officials as they deal with the incredible levels of destruction the weather events have caused. John Sparrow is executive vice president and chief executive officer of Kentucky Farm Bureau Insurance, and he shared details of his company’s work with affected clients at a recent Agribusiness Industry Network meeting. Sparrow said the Farm Bureau organization is unique among insurance companies with the resources it can access in the face of disaster-level events. County-level volunteer leaders provide community support while professional insurance agents and adjusters work to adjudicate claims and get money into the hands of FB members in need. That need has been substantial, he said. The Western Kentucky tornadoes have resulted in the payout of some $220 million to Farm Bureau members, including over $30 million in Graves County. The damage in the county seat of Mayfield was extensive, but damage to rural homes and farm property in the county was widespread as well. In Eastern Kentucky, Sparrow said he expects Farm Bureau will process around 5,000 claims from the flood-affected counties, at a cost of some $50 million. The claim totals will be split at a ratio of roughly 20 per cent vehicles and 80 per cent mobile homes. He noted that most mobile home policies include flood coverage, but traditional homeowner policies do not. Those properties are eligible for coverage through separate flood insurance that can be purchased by the owner, but premiums of the government-sponsored policies are so expensive that few property owners choose to do so. Sparrow told the AIN group that while the recent storms have generated large payouts from Farm Bureau Insurance, the company is well positioned to accommodate them and remains in a very strong financial position moving forward. He said large storms are not that uncommon in the state, and listed several weather events in the past 20 years, including hail storms in 2002 and 2012, a hurricane in 2008, an ice storm in 2009 and tornadoes in Eastern Kentucky in 2012 that caused large damage totals and heavy insurance claims payments. On average, Sparrow noted, KFB expects to average some $750 million each year in claims payments, paid for through policy premiums and investment income.