Alberta: Canada’s poster child for climate risk

Once considered a relatively safe place to park cap­ital in a world beset with large-scale catastrophes, Canada is now under scrutiny by the reinsurance community as a place fraught with its own share of natural catastrophe risk.

Reinsurers are particularly concerned about Alberta, where weather storms have been fiercer and less predictable than a bucking bronco.

The province is quickly becoming Canada’s poster child for climate risk. Eight out of the 11 most expensive natural catastrophes to hit Canada since 1983 swept through some portion of Al­berta; those eight catastrophes accounted for $9.1 billion in claims damage. They included floods, fires, hail and windstorms; excluding wildfires, a significant chunk of the storm loss activity clus­ters in the geographic corridor between the ma­jor urban centres of Calgary and Edmonton.

And those are only the biggest catastrophes. Of the approximately $9 billion that the prop­erty and casualty insurance industry paid out in catastrophe claims over the past nine years, 63% of those losses have happened in Alberta, Sean Russell, managing director of reinsurance broker Guy Carpenter, told a panel discussion held at the C4 2018 conference held in Ottawa.

Reinsurers have taken note that the so-called “spread of risk” in Canada has in fact become quite concentrated in one area.

“If I bring it back to the basics, the basics of in­surance is that the premium of the many pay for the losses of the few,” Joseph El-Sayegh, president and CEO of SCOR Canada Reinsurance, said at the C4 conference. “So, for the time being, it’s a fact that the premium of all Canadians is paying for the losses of Albertans. That’s what’s happening on the reinsurance front.”

Read the full article in the Digital Edition of the March 2018 Canadian Underwriter.

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