June 5, 2020 by Greg Meckbach
Natural disasters like the recent Fort McMurray flooding will likely continue driving home insurance rates up, suggests Intact Financial Corp. CEO Charles Brindamour.
“Personal property is in a relatively hard market environment with mid to upper single digit rates increases. That is likely to continue and a big portion of the driver for that is natural disasters,” Brindamour, said during a recent fireside chat with Barclays’ Financial Services Analyst John Aiken.
Aiken asked Brindamour where Intact sits with rising catastrophe losses in Canada, especially with the evacuation earlier this spring in Fort McMurray, Alta.
“We have been on this many years. We realized 10 years ago there was a structural problem because of natural disasters,” Brindamour said last month during the fireside chat, which took place a couple of weeks after 13,000 had to be evacuated in Fort McMurray due to flooding.
The Fort Mac disaster caused more than $228 million insured damage, the Insurance Bureau of Canada announced June 1, citing claims figures complied by Catastrophe Indices and Quantification Inc. (CatIQ). The flood was attributed to rising waters on the Athabasca and Clearwater rivers, due in part to an ice jam.
Intact reported May 5 that its combined ratio in personal property improved 18 points, from 99.8% in 2019 Q1 to 81.8% in the most recent quarter.
The higher figure in 2019 Q1 was due in large part to heavy snowfall, freezing rain, and rain while snow and ice were on the ground, Intact said in its management discussion and analysis of its 2020 Q1 results. The rough weather in 2019 Q1 led to elevated property damage from water infiltration and a record number of roof collapses, mostly in eastern Canada.
But Intact’s home insurance coverage is “priced to have sustainable performance, even though natural disasters are increasing,” Brindamour said May 13 during the Barclays fireside chat.
“I am personally quite keen to de-risk Canada on natural disasters,” said Brindamour, citing his firm’s support of the Intact Centre on Climate Adaption, a University of Waterloo think tank, as an example.
“The objective there to is to help cities, provinces and the federal government to find ways to better adapt infrastructure or otherwise adapt to natural disasters, because economic resilience really requires climate resiliency as far as we are concerned.”
The Intact Centre’s activities include the Home Flood Risk Assessment Training Course, launched in 2018. One aim of the course is to help home inspectors give home buyers advice on basement flood risk reduction. Another initiative is the Toronto Home Resilience Pilot Program, which subsidizes most of the cost of having an expert go into a home and compile for the homeowner a report identifying major factors affecting flood risk.
Feature Image: IStock/JasonRWarren