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Insurer relieved as fire threat wanes

Illinois Valley residents aren't alone in breathing easier now that the Biscuit fire appears unlikely to reduce the Cave Junction and Selma areas to scorched ruins.

The state and region's largest property insurer can expel a sigh of relief as well.

State Farm insures about one in four homes in Oregon, making its economic exposure far greater during times of disaster.

We have upwards of 300 houses insured in the Illinois Valley area, says Steve Snowden, State Farm agency field executive for Southern Oregon. At somewhere between &

36;300,000 to &

36;350,000 (structure and possessions) per risk, that could be a huge loss in just the Illinois Valley. At 300 homes, we'd be looking at somewhere in the neighborhood of &

36;10 million in potential loss.

We're concerned any time there's a significant threat from a natural disaster like a wildfire, says State Farm spokesman Jeff Aeschliman. He says structural damage is likely to remain minimal.

According to figures compiled by Weiss Ratings Inc. of Palm Beach Gardens, Fla., State Farm is the leading home insurer in seven Western states prone to forest and wildfires. The Bloomington, Ill.-based company has a 23 percent share in those states, compared to a 21.8 percent national market share. It also owns a 25.8 percent share in the five most-hurricane-prone states.

Because of its dominant position, the slumping economy in 2001, the stock market decline and losses stemming from the Sept. 11 attacks on New York and Washington, State Farm found itself paying out &

36;1.25 for every dollar taken in during 2001.

State Farm ceased writing new homeowners policies in six Northwest states in July, Snowden says, because the company had already reached established growth limits for all of 2002 by the end of May.

Nonetheless, agents were allowed to accommodate current customers who moved into the area or changed houses.

Our production in July, even with restrictions, actually exceeded what we do for an average month. Snowden says.

State Farm has 404,422 fire policies in Oregon and paid &

36;70.5 million on 15,455 fire and casualty claims in 2001.

Its last big hit came during the winter of 1995-96 when floods inundated the northern Willamette Valley.

That was a big year for us, Snowden says. We had quite a bit of storm duty that year. Then 1997 was bad year for us with the New Year's flood.

A single house can provide an enormous financial dent all by itself. When actress Kim Novak's home along the upper Rogue River burned in 2000, State Farm picked up the tab for damages.

That was a half-million dollar loss right there, Snowden says. One loss like that can impact you for a while.

Back in August of 1996, a fire at Coronado Village condominiums on Crater Lake Avenue resulted in several million dollars in losses to State Farm--insured property.

Insurance rates are retrospective in nature, Aeschliman says. Companies project future costs based on several years of claims.

We rely on our own local experience from all types of insured losses, including fire, he says. Premiums reflect the expected costs for insured losses like theft, water damage, wind, hail and liability, as well as fire.

Reach reporter Greg Stiles at 776-4463 or e-mail .