Editorial: Wildfire math for dim reporters

There are times when I understand why folks consider reporters idiotic vultures. I mean, hey, we’re not quite as low on the evolutionary scale as people who phone-cam while they drag-race, who chatter in libraries or who enjoy the songs of Hall & Oates, but I grant you, the journalistic profession is way down there.

And I can’t say it’s doing a stellar job of the way it’s covering the insurance angle on the Fort McMurray wildfire.

You will not find anywhere on our website—except this column here, of course—of that asinine report that went around the world from a BMO economist who projected the ultimate cost of the wildfire to likely fall between $2.6 and $9 billion.

Because it’s an incredibly stupid, irresponsible thing to predict that early in the crisis. Now I am sure the analyst is a smart guy, but he has essentially made up his own parameters and assumptions, plugged in some old stats and then pulled a number out of his ass. Before the evacuation order is lifted. Before anyone’s even had a chance to make an on-the-spot assessment.

And while my numeracy skills are appalling (I really can’t do the simplest arithmetic in my head, it’s quite embarrassing), I do know there is a big difference between 2 and 9.

Yes, we’re running stories and will continue to run stories on what the industry has to say in terms of estimates—Intact Financial has come out with a figure, and just today, Economical is offering an initial estimate. But theirs are informed assessments.

The CBC is running a story online headlined, “Fort McMurray wildfire could trigger spike in insurance rates.” The article begins with consulting an expert over at Moody’s, who is clearly speculating and says “it’s quite possible” we could see some rate increases, like for those who live near dry forests. I’m not blaming the expert at all here—he was asked a question, and he answered it in a straightforward fashion. To his credit, he pointed out, “And that naturally occurs after a large loss in insurance, there’s sort of a period of time where rates go up and then competition sort of brings it back down.”

Which, therefore, makes this whole point of inquiry useless. Because the man has just told you in essence, Gee, rates could go up, but regular economics will bring them down again. When? Well, we don’t have that in the story. So your more accurate headline should be: “Wildfire could cause brief spike in rates before industry settles and recovers.”

Instead, the article goes on to repeat and link to the same misleading BMO prediction. It takes until the seventh paragraph for the article to get to Intact’s Stephanie Sorenson, who told the reporter that “it’s still too early to say whether rates will go up because insurers have been more focused on what’s happening on the ground and don’t have a clear picture yet of all the damage.”

That’s kind of crucial, don’t you think? Shouldn’t that be further up the page?

So yes, rates could go up. And you know, I could win the Nobel Prize for Literature in 2018. I could be bitten by a radioactive spider, fight crime and disappoint audiences in IMAX and 3D until my backstory is rebooted a second time. Many things could happen.

Here’s what we do know, those of us who follow the biz and those of you who are in the biz. When an inferno gorged itself on trees and homes and the precious belongings of people in Alberta, the insurance industry stepped up. Teams of insurers and brokers raced out to help—answering questions, cutting cheques as quickly as they could, volunteering, helping out.

I suspect the only people—the only people—who have been so mean-spirited or worse, oblivious, to think about rate increases this early, at least in public, have been a small bunch of Frinks with their calculators on Bay Street and a tribe of cynical jerks in media who assume the worst and who poked and nudged and badgered for a figure because the insurance industry makes for a nice soft target.

But from what I can tell and from what I hear, people are trying to help out there. They are helping. I wonder when the mainstream media will give ‘em wider attention and proper credit for that?

This story was originally published by Canadian Insurance Top Broker.