Today’s cat losses ‘unimaginable’ even 10 years ago: mutual CEO

The increase in cat losses over the past 10 years alone is high on the radar for Canada’s mutual insurers and has the industry calling for measures to help adapt properties to severe weather.

“We have seen weather and wildfire catastrophes continue to ramp up significantly to levels that were really unimaginable even 10 years ago,” said Irene Bianchi, CEO of Peel Mutual Insurance, on Nov. 4 during the Future of Insurance Canada conference.

Bianchi was commenting in general on the global property and casualty industry. She alluded to Swiss Re figures showing that worldwide, most catastrophe losses are not insured. Future of Insurance Canada was produced by Reuters Events.

In Canada, severe weather losses averaged about $1.9 billion a year from 2009 through 2019, the Insurance Bureau of Canada reports. This compares to $422 million a year from 1983 through 2008.

“Globally, as in Canada, what we are seeing is an increase in the severity and frequency of events and that is the primary driver to an increase in losses by the insurance industry,” said Craig Stewart, IBC’s vice president of federal affairs, in an interview this week with Canadian Underwriter.

Stewart was commenting on data compiled by IBC on “Natural disasters — major multiple-payment occurrences” for every year, from 1983 through 2019. The figures since 2008 are from CatIQ.

IBC recently provided the raw data to Canadian Underwriter, which then obtained data on population, gross domestic product and inflation from Statistics Canada.

Canadian Underwriter has adjusted the annual “Natural disasters — major multiple-payment occurrences” each year for inflation and then expressed it per capita. That figure is $3.70 in 1983 and $39.03 in 2019.

Some years are relatively low. For example, it was $6.22 in 2006 and $6.02 in 2007. The industry-wide loss numbers (for Natural disasters — major multiple-payment occurrences) are $157.7 million ($196.6 million adjusted for inflation) in 2006 and $155.9 million ($190.1 million adjusted for inflation) in 2007.

Some years are much higher than average. The inflation-adjusted per capita loss, as calculated by Canadian Underwriter, was $35.21 in 1996 (with severe flooding in Quebec) $83.55 in 1998 (the year of the ice storm in Eastern Canada), $42.66 in 2005 (when an August rainstorm washed out a bridge on a major Toronto road), $100.22 in 2013 (the year of two major flood events) and $148.10 in 2016 (the year of the Fort McMurray wildfire).

Those figures show that even if you account for inflation, there is a large increase in losses, Stewart told Canadian Underwriter.

The per capita numbers were $30.78 in 2014, $19.54 in 2015, $35.34 in 2017 and $59.57 in 2018. Three decades earlier, the numbers were $17.10 in 1987 (the year of an Edmonton tornado), $8.20 in 1988, 99 cents in 1989 and $1.12 in 1990.

A report released this past September by the Task Force For A Resilient Recovery contains 22 recommendations. Among them are more public funding to retrofit existing home and building stocks across Canada, improving energy efficiency and resiliency (including floodproofing).

Task Force For A Resilient Recovery is an independent group of Canadian finance, policy and sustainability leaders, including IBC CEO Don Forgeron.

Feature image via iStock.com/Edruba