Canadian Underwriter

Hurricane Larry will probably cost the industry this much

October 27, 2021   by Greg Meckbach

The roof of Mary Queen of Peace elementary school was torn off after Hurricane Larry crossed over Newfoundland's Avalon Peninsula in the early morning hours, in St. John's, Saturday, Sept. 11, 2021. THE CANADIAN PRESS/Paul Daly

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Insurers will probably pay out $25 million towards claims from Hurricane Larry.

That is the initial estimate from Catastrophe Indices and Quantification Inc. (CatIQ), the Insurance Bureau of Canada said Wednesday in a press release.

Hurricane Larry made landfall on the west side of Placentia Bay, Newfoundland shortly after midnight Sept. 11.

It “brought intense winds to the eastern half of the island” and reached Category 3 at its peak, IBC said Oct. 27.

If the final bill turns out to be $25 million, Hurricane Larry would just meet the threshold of what insurers and loss modelers consider a natural catastrophe.

The costliest North Atlantic hurricane ever is Katrina, which made landfall in 2005 near New Orleans, according to an earlier Swiss Re Sigma report. Katrina cost the global industry about US$80 billion.

Though the price of Larry is much smaller, it was still significant for the area it hit.

“It was probably some of the worst winds I have experienced in my life,” Kent Rowe, St. John’s-based president of the Insurance Brokers Association of Canada, said in an interview with Canadian Underwriter Sept. 12. “It was quite nasty here for a bit,” he said of Hurricane Larry.

Where Larry made landfall is about 100 kilometres (as the crow flies) west of the provincial capital. On Friday night of Sept. 10-11, hurricane-force winds were extending 165 kilometers from the centre, while tropical-storm winds extend 400 kilometers from the centre, the United States National Hurricane Center said at the time.

Tropical storm means the maximum sustain wind speed is between 63 and 118 kilometers per hour. A storm with faster winds is considered a hurricane.

As a result, Larry did a “significant amount of damage around St. John’s, knocking down trees and power lines, damaging structures and leaving roughly 60,000 customers without power,” IBC said Oct. 27.

“Canada must develop a comprehensive plan to close governance gaps and improve climate defence overall, including enhancements to the current building code to protect against severe wind events. IBC is committed to working closely with the private sector and governments to improve Canada’s preparedness for, and resilience to, severe weather events.”

In September of 2019, Hurricane Dorian made landfall on the south shore of Nova Scotia, near Halifax. Dorian had killed dozens in the Bahamas before moving north. The insured loss from Dorian was estimated at more than $105 million, with $62.2 million covering Nova Scotia clients and $22.5 million covering New Brunswick clients. There were also Dorian-related claims in Quebec, Prince Edward Island and Newfoundland and Labrador.

At one point in September, 2019, the majority of homes and businesses (80% and 75% respectively) in Nova Scotia and PEI had lost power as a result of Hurricane Dorian.

The Canadian P&C industry-wide loss was similar in 2016 when Hurricane Matthew affected Canada. At that time, Sydney, N.S. was among the most impacted communities.

Feature image: THE CANADIAN PRESS/Paul Daly