March 12, 2013 by Regan Reid
Last year began quietly, with few significant weather events causing much concern in Canada—a good thing after 2011, one of the costliest CAT years in history. Despite the slow start, the Insurance Bureau of Canada (IBC) estimates that, for the third time in four years, severe weather in Canada caused more than $1 billion in insured damage. Here’s a look back on the biggest CATS of 2012 *.
*Data on loss estimates provided by PCS-Canada as of November 29, 2012. Estimates are in Canadian dollars and reflect payouts or reserves allocated for claim payouts for all lines of business, and exclude loss adjustment expenses. PCS-Canada estimates are resurveyed in 60-day intervals until fully developed.
#5) What: Windstorm
When: July 22-23
Where: Hamilton – Ottawa corridor
Insured Losses: $85 million
The storm that blew throughout the Hamilton and Ottawa regions from July 22 to 23 carried strong winds in Eastern Ontario that had widespread impact in the area, uprooting thousands of trees. Environment Canada’s storm damage survey team estimated the winds reached 120 to 170 km/hour, says Geoff Coulson, warning preparedness meteorologist at Environment Canada.
Warren Tom, senior vice-president and managing director, central region, for FirstOnSite Restoration, says his team saw roughly 150 claims in the Hamilton/Niagara region as a result of the storm, mostly due to roof damage. But in 2011, the same region experienced a large windstorm that resulted in more than 800 claims. “That’s still fresh in everybody’s minds,” he says. “This one was, quite frankly, fairly smooth for us.” Tom says windstorms are common in the region because of its proximity to the lake. He adds that homes in the Hamilton/Niagara area are also older than most communities. “As a result, when you get significant wind, the roofs just aren’t going to hold up as well,” he says.
#4) What: Thunderstorm
When: July 11–12
Where: Edmonton, Alta.
Insured Losses: $100 million
The Edmonton thunderstorm that caused $100 million in insured losses was “one heck of a storm,” says Spencer Bailey, director of the technical services division at Granite Claims Solutions. The storm flooded many streets and homes, and even caused the closure of parts of Whitemud Drive, one of Edmonton’s main freeways. In events such as this, when homes are flooded and in need of quick repair, Bailey says there is one big issue that adjusters often come across: insureds who are unaware of their limits. “When we go to an insured’s home and a contractor has already gone out and done the emergency work for $9,000, and they have a $10,000 limit, they freak out. They say, ‘I was never told this by my broker,’ ” says Bailey. He strongly recommends that brokers make sure their clients understand their limits and that any contract repair work will be subtracted from those limits. At the very least, brokers will avoid an ugly situation. “It’s worth repeating,” says Bailey.
Hoarder CAT Horror
When Christopher Stewart, ClaimsPro’s Hinton office branch manager, walked into the home of an elderly client following the Edmonton thunderstorm, he immediately knew this claim would be unlike any other. The split-level residence had “contents piled floor to ceiling from wall to wall,” says Stewart. On the fourth level of the house, the 1,400 sq ft of floor space was covered with hoarded goods, but there were also wall passages and crawlspaces, which were all completely filled. “Effluent came through toilets and drains and spread into the wall passages, crawlspaces and floor area. It was a mess,” says Stewart. The insurance company ultimately handled the loss directly, but Stewart speculates the total loss would have exceeded $300,000.
#3) What: Remnants of Superstorm Sandy
When: Oct 29–31
Where: Ontario and Quebec
Insured Losses: $100 million (subject to resurvey)
When “Storm Sandy,” as it has awkwardly come to be known in the industry, tore through the northeastern US on October 29, public transit, homes and businesses were flooded, damaged or utterly destroyed by the fierce winds, rain and ocean storm swell. Though the effects of the storm were not as extreme in Canada, insurers and restoration companies did see an increase in claims during that period. Though many of the claims that RSA responded to were the typical wind and water claims one would expect from a storm like Sandy, there were some claims that stood out. “We actually had some wind damage at a cemetery where trees came down, fences were destroyed and some tombstones or monuments were damaged as well,” says Alex Walker, claims relationship manager at RSA. “You don’t usually get claims like that reported unless they are fairly significant.” He adds that cemetery claims are often very emotional for all involved, making them more difficult to deal with. “Usually people who work in a cemetery, they’ve worked there a long time, the cemetery managers are very committed to making sure the grounds are beautiful, and the monuments are well kept.”
#2) What: Series of Heavy Rainstorms
When: May 26-29
Where: Ontario and Quebec
Insured Losses: $245 million
Michel Lacelle, Montreal district manager for SCM Insurance Services, says his team took 1,800 claims during this May storm—the third May 29 catastrophe Quebec has seen, he notes—but had to say no to at least another 1,000. The rain flooded large parts of Montreal’s underground city and compounding the problem was the fact that the storm was one week before the Formula 1 Grand Prix du Canada and all the stores in the downtown core were stocked full for the race.
When, James Madon, president and CEO of Montreal-based brokerage Fort Insurance, saw three times more claims come pouring in than he normally gets, including several for more than $25,000. What is more impressive, however, is the fact that Madon picked up 15 new clients during the storm. “We would go down to a street and people would be looking at our truck outside a client’s house and say, ‘Who are you dealing with? Because my guy said it was going to be four days until they get here,’ ” says Madon, who stresses the importance of responding to clients quickly and effectively. “The interesting thing was, half those people that we picked up stayed with the same company. It was just that their broker was really asleep at the wheel.” Madon has a simple tip for brokers looking to shine during catastrophes: “If it’s raining really heavily, make sure you’ve got lots of people in the office to answer the telephone.”
Beating the Directs
Another area affected by the May storm was Montreal’s south shore. Lacelle estimated that damage caused by flooding cost insureds roughly $20,000 to $40,000, but their endorsements only covered $10,000 to $20,000. “There were a lot of people with not enough insurance,” he says. Lacelle’s advice to brokers is to “go back to basics” and “do more underwriting than sales.” He says one good way brokers can compete with the direct market’s grip on Quebec is to increase contact with clients and better place their risks. Alex Walker, claims relationship manager at RSA, adds that brokers must know their markets’ claims guarantees. A lot of companies, he says, turn off their claims guarantees during large weather events or CATS—something that won’t sit well with clients.
#1) What: Hailstorm
When: August 12
Where: Calgary, Alta.
Insured Losses: $520 million
The massive hailstorm that assaulted Calgary in August wasn’t just one storm that affected one community, says Aaron Suggett, Calgary branch manager for Canadian Claims Service (CCS). In fact, it was many storms affecting a wide area—and it caused a significant amount of damage. His team alone handled more than 2,500 claims during the storm. “We saw hailstones that went through people’s roof structures,” he says. Suggett even had a client who ran outside during the storm to move his rare vehicle to safety and was knocked unconscious from the hailstones. Needless to say, he was unsuccessful in his rescue attempt. To make matters worse for the client, he didn’t have insurance on the vehicle because he was restoring it.
Michael Morris, vice-president, national operations at Cunningham Lindsey, says it was the size of the hail that was unique during this storm. Baseball-sized hail fell from the sky in many areas. “There’s some amazing footage on YouTube,” he comments. Because of the size of the hailstones, entire exteriors of buildings were damaged. In a typical hailstorm a roof may be dented, but this storm also caused damage to siding, windows and fascia—not to mention cars and clients.
Copyright 2013 Rogers Publishing Ltd. This article first appeared in the January 2013 edition of Canadian Insurance Top Broker magazine.
This story was originally published by Canadian Insurance Top Broker.