Canadian Underwriter

Severe weather, nat-cats cause record insurable damage in Canada: IBC/CatIQ

January 6, 2017   by Canadian Underwriter

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Severe weather last year exacted a heavy toll in terms of insured losses, with the $4.9 billion hit dwarfing the previous annual record of $3.2 billion in 2013, Insurance Bureau of Canada (IBC) reports.

Stormy Weather Ahead Road Sign Flooding in southern Alberta and the Greater Toronto Area contributed greatly to 2013’s then-record insurable damage, while 2016 was highlighted by the massive wildfires in and around Fort McMurray.

The latest estimate from Catastrophe Indices and Quantification (CatIQ) indicates insured losses related to the wildfire amount to just shy of $3.6 billion.

This is more than twice the amount of the previous costliest natural disaster on record, IBC noted in a statement Friday.

Related: Nearly $3.6 billion in insured losses from Fort McMurray wildfire: CatIQ

Country-wide, Canada witnessed more of what seems to be increasingly frequent severe weather and natural disasters in 2016 than just wildfires. Among the most notable events, including some insured loss estimates, are the following:

  • the southern Ontario ice storm in late March that affected, among others, the communities of Fergus, Orangeville, Barrie and Newmarket;
  • late-June storms in northern Ontario and the Prairies that resulted in damage in, among other places, Saskatoon, West Hawk Lake, Killarney and Thunder Bay (CatIQ has reported an insured loss estimate of approximately $34 million);
  • Prairie storms in late June that affected Calgary, Edmonton, Okotoks, southern Saskatchewan and Manitoba (CatIQ has reported an insured loss estimate of about $50 million);
  • storms in southern Ontario in early July that caused damage in communities, including Bradford, Markdale and London (CatIQ has reported an insured loss estimate of more than $30 million);
  • July storms in western Canada that caused damage in the Alberta communities of Edmonton, Calgary and Estevan, as well as southwestern Manitoba;
  • Prairie storms in mid-July that resulted in damage in Calgary and Swift Current (CatIQ has reported an insured loss estimate of almost $65 million);
  • southern Prairie storms in July that affected Medicine Hat, Outlook and Winnipeg (CatIQ has reported an insured loss estimate topping $66 million);
  • hail in Moose Jaw in late July (CatIQ has reported an insured loss estimate of approximately $71 million);
  • storms in both Ontario and Quebec in late July that resulted in damage in areas, including Toronto and Saguenay;
  • Prairie storms on July 30 to Aug. 1 that led to insured losses in Calgary, Airdrie, Fort McMurray, Yorkton, Melville and Winnipeg;
  • late-September flooding near Windsor, Ontario that caused damage in the communities of Windsor, LaSalle and Tecumseh (CatIQ has reported an insured loss estimate of almost $108 million); and
  • flooding in Atlantic Canada over the Thanksgiving weekend that spurred losses in Cape Breton Regional Municipality, the Connaigre Peninsula and the central region and south coast of the island portion of Newfoundland and Labrador (CatIQ has reported an insured loss estimate of more than $100 million).
Don Forgeron, President and CEO of Insurance Bureau of Canada

Don Forgeron, President and CEO of Insurance Bureau of Canada

“The record damage reported in 2016 is part of an upward trend that shows no signs of stopping,” Don Forgeron, president and CEO of IBC (pictured left), says in the statement.

“That is why Canada’s property and casualty insurance industry is calling on governments across the country to come together and implement expansive climate policies that will better prepare Canadians and their communities for when disasters strike,” Forgeron continues.

Related: Preparing Canada for inevitable earthquake recognized as a national social and economic threat: IBC’s Forgeron

“Canadians must be prepared both physically and economically for when these disasters inevitably strike,” he advises.

“Addressing current gaps in public policy and consumer protection can only be possible if industry and government work together in the areas of mitigation, adaptation and emergency management – all of which form the basis of a comprehensive climate strategy,” Forgeron points out.

“Our industry will continue to press for a National Flood Program to make our communities stronger, safer, and more resilient when severe weather happens,” he says.

Rocco Neglia, vice president of claims at Economical Insurance, told Canadian Underwriter that “given the trend of more frequent severe weather and natural disasters, it is imperative that as an industry our claims teams must continue to be ready and able to mobilize and respond effectively to large scale catastrophes just as much as smaller localized events. Our recent experiences have also taught the P&C industry that we need to manage accumulation of risk more effectively and re-examine how to properly rate and underwrite for future potential catastrophes of this nature.”

Related: Flood insurance ‘must be affordable:’ IBAC

IBC reports that federal disaster relief spending in Canada increased from an average of $40 million annually in the 1970s to an average of $100 million a year in the 1990s.

“In the first six years of this decade, federal disaster relief spending rose even more to an average of over $600 million a year. In 2013, federal spending hit a record $1.4 billion largely because of the flooding disasters in Ontario and Alberta,” it adds.

Related: IBC commends federal government’s focus on infrastructure and flood mitigation in 2016 fall economic statement

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