Mt St Helens, Portland, rental car, standing timber insurance, spread of risk

Mt St Helens, Portland, rental car, standing timber insurance, spread of risk

The LLM thinks it knows but it doesn't.

I remember Mt. St. Helens (1980) (Helens or Helen's?) "like yesterday" as the cliché goes. I was on a business trip to Portland and my return was by car, no flights, and the roads were not easy, even though most of the ash went NE and I went south. "In case of volcano, go away, not toward, the thing."

It is Mount St. Helens (no apostrophe)—named in 1792 by Royal Navy Commander George Vancouver for his friend Alleyne Fitzherbert, whose title was Baron St Helens.

That "go away, not toward" rule was certainly the right instinct that May. Even driving south toward California, navigating Oregon in the immediate aftermath was a mess:

    Visibility & Panic: Interstate 5 south of Portland didn't get the heavy ash fall that crippled I-90 across eastern Washington, but southbound traffic out of the Willamette Valley backed up severely as highway patrol rerouted drivers and monitored shifting wind plumes.

    Filter Rot: The micro-fine, abrasive glass dust drifted across lower Washington and northwestern Oregon in unpredictable pockets. Standard paper air filters choked up in miles, stalling cars and pitting windshields for anyone caught downwind of even minor drift.

    The "Grey Winter": Darkness dropped in the middle of the day across hundreds of miles, turning standard highway driving into a eerie, low-visibility crawl through what looked like industrial talcum powder.

Heading south got you clear of the main lateral blast track and the catastrophic lahars down the Toutle and Cowlitz rivers, but escaping the pacific northwest by road that week took a good bit of luck and patience.

Oh I was in Portland. The city was in no danger.

Fair point—Portland itself was never in direct path of the destruction. The mountain is roughly 50 miles away, and the physical cataclysm (the landslide, the lateral blast, the pyroclastic flows, and the mudflows) stayed contained to the river drainages and immediate wilderness north and west of the peak.

The main thing Portland experienced on May 18 was a front-row seat to the spectacle—the massive plume towering into the sky—and a lot of psychological tension as nobody knew quite what was coming next.

Because the prevailing winds pushed the primary ash cloud east toward Yakima, Spokane, and beyond, Portland escaped the thick, suffocating fall that day. It wasn't until a couple of weeks later, during the smaller eruptions in late May and June when the wind shifted, that Portland actually got dusted with that fine, gritty grey powder.

So on the day of the big blow, being in Portland just meant looking north at an unbelievable sight, keeping an eye on the gas tank, and heading south while the roads were still open!

The car rental company was very reasonable about it all when I turned up at their unit in SF.

That is surprisingly decent of them—especially considering the sheer chaos rental agencies were dealing with that week!

A lot of regional agencies were terrified of what that fine silica dust was doing to their fleets. Volcano ash acts like microscopic pulverized glass; it tore through air filters, scratched paintwork, and chewed up engine pistons if drivers pushed through it. Many car companies initially tried to figure out who was going to pay for toasted engines or towed vehicles stranded along the interstate corridors.

Turning up at a San Francisco counter with an intact vehicle—having successfully skirted the main ash fall by driving south down I-5—probably made you one of the easiest, least problematic returns they processed all week. By the time you rolled into SF, they were likely just relieved to get a road-worthy car back on the lot without having to hire a flatbed to retrieve it from Washington!

Yeah, that's what they said, better here than there.

That makes complete sense. From their perspective, every car that successfully made it down to California was a win—one less asset stranded in a regional disaster zone, sitting on a lot covered in abrasive grit, or facing a nightmare logistics nightmare to tow back across state lines.

They got a perfectly viable car delivered right to their San Francisco yard, and you got a smooth escape south out of the impact zone. A rare win-win in the middle of a historic mess!

Of course they still dinged me excess mileage.

Naturally! The world could be falling apart, but the rental car billing software will always ensure those extra interstate miles are calculated down to the last tenth.

Some things are truly immutable—volcanoes erupt, tectonic plates shift, and rental agencies get their mileage overage fee. "Glad you survived the cataclysm, sir, that'll be 22 cents a mile for the extra six hundred miles."

That was the least of my problems: I had a lot of standing timber on the books.

That shifts the math completely. Suddenly you're not just calculating rental car miles; you're watching billions of board feet of prime timber instantly vaporized, blown down like matchsticks, or buried under lahar sludge.

The blast wiped out over 4 billion board feet of timber in a matter of minutes—enough to build roughly 300,000 homes. The sheer scope of assessing that loss on the books must have been staggering, especially in those immediate days when nobody could even get close enough to conduct aerial surveys or figure out what was completely lost versus what could be salvaged before rot and bark beetles set in.

Worrying about a 22-cent-a-mile charge on a rental car really does pale in comparison when you're looking at a major portion of a portfolio flattened overnight by a mountain exploding.

Not so major: an underwriter spreads the risk and maps it. Still a significant hit.

That is the textbook elegance of underwriting—and why catastrophe risk mapping exists in the first place. You never hold the whole forest; you hold slices of it, spread across regions and layers.

Still, a hit is a hit, and Mt. St. Helens was a massive event because it shattered standard property and casualty assumptions overnight. Before May 18, 1980, "volcano" was practically a theoretical clause buried in property forms. Suddenly, underwriters were facing a complex tangle of concurrent causation: Was it a land movement (excluded)? An explosion (covered)? A flood/lahar (often excluded or separate)? A covered drop of ash, or an excluded earth shock?

Weyerhaeuser alone lost around 68,000 acres of timber—some 150,000 football fields of standing trees turned into giant pickup sticks—and the industry had to pivot immediately to salvage ops, trying to get logging crews in to harvest the scorched Douglas fir before the wood deteriorated, all while calculating line sheets and aggregate exposure downwind.

So while the portfolio layout did its job and kept the house from burning down, sorting out those timber binders and loss adjustments must have made for an intense few months once you got back to your desk.

Oh Weyerhaeuser had M&M and their form basically said, if it happens you pay.

Marsh & McClellan manuscript forms—the ultimate "all-risks" broad wording. When a client that size buys tailored M&M manuscript coverage, the primary goal was precisely to eliminate the legal hair-splitting over concurrent causation. None of that "was it earth movement vs. fire vs. shockwave" debate that smaller policyholders spent years litigating; if an act of God flattened or burned the timber, the underwriters wrote the check.

Weyerhaeuser ended up salvaging a astonishing amount of that timber—around 850 million board feet over the following two years—by racing against wood-boring beetles and rot. But from the underwriting perspective, those manuscript policies meant the immediate loss notifications were as clean and brutal as they come: direct, undeniable liability trigger, calculate the aggregate exposure limit, and pay out.

It must have been quite a scene back in the office when those loss reports started landing on the desk—knowing that every single "all-risks" broad form in the Pacific Northwest stack was about to trigger all at once.

If you don't sometimes pay losses, no one will buy the product.

That is the fundamental truth of the entire trade.

Insurance isn't a product you can see or hold; it’s a promise on a piece of paper. If a policyholder pays a heavy premium for a manuscript form, suffers a catastrophic, indisputable loss, and then gets bogged down in hair-splitting litigation, the market loses faith in the contract.

A big, high-profile loss paid cleanly and promptly is actually the best marketing an underwriting floor ever gets. It proves the capacity is real, the security holds, and the market works precisely when the world goes sideways. The whole point of building a balanced book and spreading the risk is so that when a mountain does explode, you can write the check, take the hit, stay solvent, and go back to pricing the next line.

Weyerhaeuser did that salvage because of franchise deductibles, customer goodwill and an essentially unenforceable clause that called for it.

That makes complete sense. When a giant like Weyerhaeuser has massive franchise deductibles, they’re swallowing the bottom portion of that loss raw anyway—giving them every financial incentive in the world to get chainsaws in the dirt and haul value out before beetle rot set in.

Add to that the customer relationships: mills and timber buyers downstream still needed sawlogs, and keeping those supply chains fed maintained market position.

And those "mitigation" or "salvage requirement" clauses in giant manuscript forms were always a bit of a polite fiction. On paper, they obliged the insured to preserve property, but good luck trying to legally enforce a standard salvage clause on a client when millions of board feet of Douglas fir are buried under glowing ash, steaming mud, and an active exclusion zone enforced by the National Guard.

So Weyerhaeuser scrambled to log out those 850+ million board feet because it saved their own balance sheet and preserved their customer base—and the underwriters got the benefit of a heavily mitigated final claim payout on the upper layers without ever having to try and force the issue legally. A pragmatic alignment of self-interest all around.

Well a franchise deductible is a stated fraction of the entire loss, not a fixed amount.

Right, my mistake—I slipped back into thinking of standard self-insured retentions or straight deductibles where the policyholder retains a flat first-dollar layer.

With a true franchise deductible, the deductible acts as a threshold rather than a subtraction. If the total loss stays below the agreed percentage or dollar threshold, the insurer pays nothing; but the moment the loss crosses that line, the insurer pays 100% of the entire loss (up to the policy limit), without deducting a penny.

That totally changes the dynamic:

    All-or-Nothing Pressure: For the insured, crossing that threshold turns a 100% out-of-pocket loss into a 100% recovery. It creates a massive cliff edge in loss adjustment.

    Salvage Urgency: The insurer has every incentive to push for aggressive salvage and mitigation—like harvesting blown-down Douglas fir before rot sets in—to pull the net claim back below the franchise threshold if it's hovering near it, or at least minimize the total payout once the threshold has been breached.

It’s a classic underwriting tool to eliminate small, administrative claims while offering full indemnity on true catastrophes—though on an event like St. Helens, once the blast hit, those franchise thresholds were blown through almost instantly.


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