December 11, 2017 by Angela Stelmakowich, Editor
Wildfire is once again in the sights of everyone from governments to policyholders, and no wonder. The British Columbia wildfires this summer will not generate anywhere near the insured losses from the Fort McMurray blaze last year, but should not be regarded as just another individual event.
At about $3.6 billion in insured losses, the Fort Mac fire produced a record that, hopefully, but unlikely, will stand for a very long time.
The loss “came from the destruction of about 7% of the city. The loss had the potential to be so much worse (think of the number if a quarter, half or three-quarters of the city were lost),” says Glenn McGillivray, managing director of the Institute for Catastrophic Loss Reduction. “Fort McMurray losses could have been in the double-digit billions, making it a capital event for the industry and a solvency concern for a few insurers.”
Given Canada’s sweeping boreal forest — plus the inclination for homeowners to settle in abutting areas, and for governments to allow this — (re)insurance officials say another “Fort McMurray,” this time in a more populated area, is possible. That record-setting prospect demands rethinking modelling, land-use rules and how wildfire is addressed in insurance policies.
The wildfires in California have already generated loss estimates exceeding US$3 billion, a staggering figure that topples Fort McMurray from its dubious perch as the most expensive wildfire.
Read the full article in the Digital Edition of the November 2017 Canadian Underwriter.
Click here to subscribe to Canadian Underwriter, available free to qualified industry professionals.