Not a Fairy Tale Yearfor State Risk Managers

Too hot, Too cold…Too little, Too much

Lessons Learned from Water Disasters

Session Agenda and Speakers

Ice and Winter Storms An introduction to the sessionPatti Hayden  ‐ State of Maine

Tainted WaterChuck Jones – State of West Virginia

Colorado Floods Nick Witkowski – State of Colorado

The Never Ending Winter Season

Dateline: December 1 – 10, 2013

A prolonged stretch of winter storms across the southern plains and New England brought heavy snow, accumulating ice, rain and gusty winds killing 18 people, damaging thousands of structures and resulting in 100s of millions in economic damages.

Is Santa Grounded?!

Dateline: December 19 ‐ 22, 2013

A strong winter storm hits ‐ bringing with it heavy snow, freezing rain and ice causing tree branches and power lines to snap under the excess weight. This storm killed 19 people, damaged thousands of structures and resulted in hundreds  of millions in economic damages in the Midwest, Ohio Valley and northern New England.

My Road

Happy !!??%% New Year!

Dateline: January 2014

And it continued into January… A Nor’easter followed  by additional stretches of severe winter weather brought snow, ice and bitter cold to Central and Eastern US. Direct economic losses stemming from property damage and travel delays was estimated at $1.4 billion. Business interruption losses were elevated due to severely delayed transportation and /or closed commerce. 

Happy !!??%% New Year!

Dateline: January 2014

There was just one week in January when the US was not under a winter siege ‐ somewhere. 

Several Southeastern states were paralyzed for days, unaccustomed to severe ice and heavy snow.

There were 56 deaths due to January winter weather.

Atlanta

Risk Managers Were Busy• Locating and mobilizing generators• Working to re‐establish communications with employees and Insureds

• Facilitating snow load removal from roofs• Receiving, adjusting and paying claims• Arranging for aerial damage surveys• Working with emergency management agencies (document, document, document).

• Analyzing subrogation potential

Lessons Learned• Re‐establishing communications with employees and insured agencies is crucial.

• Loss prevention and mitigation is key.• Normally self‐sufficient and independent employees can get overwhelmed.

• Yes, weather is an “Act of God” BUT some subrogation possibilities do exist.

See “Deep Freeze” article in the May 2014 Claims magazine

For Maine and several other states, it was a horrible winter season, with misery and losses compounded by storm after storm after storm. 

It was definitely a case of “too cold”.

Let’s now hear about “too little water”.

Once Upon a Time

Approximately 300,000 citizens in the Charleston West Virginia metropolitan area consisting of about nine counties went about their business taking for granted the clean water sourced from the nearby Elk River.

Until this story began to unfold….

TAINTED WATER

The Charleston area at one time was a chemical manufacturing leader with chemical plants owned by Dupont, Union Carbide, FMC and Monsanto.

There are many storage tanks situated in and around Charleston as a result of previous chemical industries and the coal industry.

Question: If you were going to build a clean water filtration system, would you build it upstream or downstream from storage tanks?

Freedom Industries is located approximately 1.5 miles upstream for the WV American Water Company intake valves.

On January 9, 2014 a chemical spill on approximately 7,500 gallons, later determined to be crude 4-methylcyclohexanemethanol (MCHM), was discovered at the site of Freedom Industries.

Crude MCHM is chemical foam used to wash coal and remove impurities that contribute to pollution during combustion.

Freedom Industries employees noticed the leak about 10:30 a.m.

Affected Counties

DEP inspectors arrived on the scene about 11:10 a.m. not as a result of notification from Freedom Industries, but tracing the odor from residents’ complaint.

WV American Water was aware of the chemical spill at about 12 noon, but assumed their filtration system could handle it.

By 4:00 p.m. when its carbon filtration system could no longer handle the large amount of contamination in the water and the chemical began flowing through the carbon filter, they decided to report the problem.

WV American Water reported the problem at 5:09 p.m.

WV American Water concluded its water was unsafe for use and notified its customers to cease using its tap water at 5:45 p.m.

Freedom Industries failed to notify WV American Water after the spill. WV American Water was instead notified by the WV DEP.

On January 9th, WV Governor Earl Ray Tomblin declared a state of emergency, and activated the WV National Guard. Governor Tomblin ordered residents within the spills’ affected area to refrain from using the water for drinking, cooking, cleaning, bathing and washing.

The evening of the 9th, there was a mad dash by residents to grab all the bottled water they could locate. Some even resorted to going in to stores and simply taking the water and walking out.

By the time I got home from work, saw the news and ventured out to find water, there was none to be had.

Suddenly, I became very thirsty and had to resort creative methods of obtain the necessary water my body required.

FEMA and the WV National Guard distributed bottled water to residents of the affected counties;◦ On January 10, FEMA had sent 75 trucks each

containing 4,900 gallons

How has the “tainted water” affected us personally?◦ Consumption produced the following

symptoms: Headaches Nausea Eye and skin irritation Diarrhea Reddened/burning skin and/or eyes Itching Rashes

◦ Since January 9, 2014, have only used bottled water for cooking and consumption◦ Individual 16.9 oz. bottles cost $3.99-$4.99

per 24 count package◦ Altercations erupted◦ Price gouging◦ Use bagged ice instead of from the

refrigerator

oSchools closed temporarilyoRestaurants closed temporarilyoHotels saw sharp decline in occupancyoConventions were cancelled oThe State estimated an approximate $61 million economic hit

On January 10, eight lawsuits had been filed on behalf of businesses that had to close

On January 17, Freedom Industries filed for bankruptcy

Interestingly two months after Freedom filed bankruptcy, another corporation Lexycon LLC registered as a business with the same address, phone numbers and founded by former Freedom Executive.

Let’s now hear about “too much water”.

Colorado Floodsof 2013

Affected Counties• Adams

• Arapahoe

• Broomfield

• Boulder

• Denver

• Clear Creek

• El Paso

• Fremont

• Jefferson

• Larimer

• Logan

• Morgan

• Pueblo

• Washington

• Weld

Flood Statistics• 8 fatalities (4-Boulder, 2-El

Paso, 1-Clear Creek, 1-Larimer)

• 1,882 homes destroyed

• 19,000 homes damaged

• 203 business destroyed

• 765 business damaged

• 30 state bridges destroyed

• 20 state bridges damaged

• 200 miles of road damaged

• 4,500 square miles affected

Affected State Agencies• Department of Transportation

• Department of Public Safety

• Department of Natural Resources

• Department of Personnel and Administration

• Department of Corrections

• Department of Higher Education

• Department of Education

Accomplishments• Processed 77 property loss claims

• Paid over $1 million in damages to date

• Plan to pay out another $9 million in FY14-15

• Building location data accuracy .

Challenges• Insurance proceeds vs. FEMA payouts

• Access to affected areas

• Accuracy of reporting for damaged locations

• Reporting losses for locations not listed under insurance

Opportunities• Updating properties not covered by insurance

• Updating the claims reporting process

• Accurate reporting of locations in flood zones

• Updating building and contents information

During a flood…Only save the Essentials

Nick Witkowski

State Office of Risk Management

P 303.866.4971 | C 303.718.1577

1525 Sherman St., Denver, CO 80203

nicholas.witkowski@state.co.us | www.colorado.gov