February 1, 2008 by Canadian Underwriter
Today, a recurrence of the 1998 Ice Storm in eastern Ontario and Quebec would result in total insured losses of between US$1 billion and US$3 billion — potentially twice the US$1.3-billion cost incurred in 1998, according to a retrospective report by Risk Management Solutions (RMS).
RMS released the report on the 10th anniversary of the storm that devastated portions of Ontario, Quebec and parts of northeastern United States.
Potential damages from a 2008 recurrence of the storm fall into three categories, a RMS statement says:
• direct physical damage to automobile and property;
• additional living expenses; and
• refrigerator and freezer contents that may be lost as a result of prolonged power outages.
Although major improvements have been made to the Hydro-Quebec electrical power grid, an ice storm of this magnitude would still cause significant and lengthy power outages, the release adds.
“This storm demonstrates that direct physical damage from a catastrophic event may comprise only a minor percentage of the total insured losses,” said Robert Muir-Wood, chief research officer of RMS.
“Infrastructure disruptions such as power outages lead to costly business interruption losses for commercial and industrial properties, as well as additional living expenses for homeowners forced to evacuate their properties.”