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CANADIAN MARKET

Alberta flooding most costly natural disaster in Canadian history: IBC

The Insurance Bureau of Canada (IBC) reported in late September that insured property damage from the Alberta flooding this past June is estimated to now exceed $1.7 billion, making it the costliest insured natural disaster ever in Canada.

“It’s a staggering number we expect will go even higher,” says Bill Adams, IBC’s vice president, Western and Pacific.

For more than a decade, the 1998 ice storm held the record as the country’s most expensive natural catastrophe.

The preliminary figures for the Alberta floods reflect the latest estimate of Property Claim Services Canada.

Insurers spilt on overland flood

Canada’s major insurers have voiced concerns about the lack of overland flood insurance in the country, but still cannot agree on whether or not such a product is viable, suggests new research commissioned by The Co-operators.

The study is based on interviews with CEOs and other executives at insurance companies that account for 57% of the property insurance business in Canada.

To be viable, insurers reported premiums should be affordable and sufficient to cover losses, associated risks and losses must be able to be predicted, and premiums must be “sufficient to incentivize investment in risk mitigation by policyholders.”

CLAIMS

Tentative settlement in ice storm lawsuit

A consumer advocacy group has come to an agreement with 15 insurance carriers to settle a class action lawsuit over homeowners’ coverage of additional living expenses related to the 1998 ice storm.

The insurers reached an agreement in principle for an out-of-court settlement, notes a September 11 statement from Option consommateurs. The tentative agreement, valued at about $40 million, is subject to approval by Quebec’s Superior Court.

The lawsuit sought compensation for policyholders whose homes became uninhabitable during the storm and whose coverage included additional living expenses.

Last year, the group settled with four other companies in a $12.5-million deal applying to 200,000 policyholders.

No carriers in either settlement have admitted liability.

REGULATION

High court denies Zefferino appplication for leave to appeal

The Supreme Court of Canada has denied an application by Nicola Zefferino, who lost a lawsuit two years ago against Meloche Monnex Insurance Company, to appeal a ruling by Ontario’s appeal court.

In March, the Ontario court upheld an earlier ruling that found Meloche Monnex had breached its duty of care in 2003 by “failing to properly offer optional income replacement” coverage to Zefferino under his auto policy.

But the judge dismissed Zefferino’s lawsuit because he was not convinced, based on past insurance-buying choices that never went beyond basic coverage, that optional benefits would have been bought even if Meloche Monnex had fully explained them to him. 

Ontario brokers back bill seeking lower auto rates for new drivers

Ontario Liberal MPP Mike Colle has introduced a private member’s bill that could allow new drivers with clean driving records to have lower auto insurance premiums.

The Insurance Amendment Act (Minor Accidents and New Drivers) 2013 was tabled in September and the first reading was carried. If passed, new drivers could pay less, but would have premiums increase in the event of an at-fault accident, or revert to a poor rating if, for example, convicted of a traffic offence.

“We hope that these ideas will find support in the legislature and within the government to make the system more fair and affordable for our customers,” says Randy Carroll, CEO of the Insurance Brokers Association of Ontario. 

RISK 

Curtailing of B.C. quake coverage presents opportunity: Aon 

Earthquake risk in British Columbia is a “pocket of opportunity” for global insurers, Aon Benfield reports.

Its 2013 Insurance Risk Study looks at six countries, including Canada, in a bid to “identify potential growth opportunities.” There are pockets of opportunity, the report notes, including B.C., which has significant earthquake exposure and increasing insured values. Pricing, deductibles and terms and conditions for the business are improving and insurers are applying more granular pricing of earthquake risks in B.C., Aon Benfield notes.

Global warming to hike wildfires, coastal flooding, drought

Guy Carpenter & Company LLC suggests coastal flooding, wildfire and drought are all risks of concern as a result of global warming.

In a report, Guy Carpenter warns the “most significant threat for coastal areas” is a rise in sea levels caused by melting glaciers and thermal expansion of ocean waters. “Changing weather patterns will impose drought and inland flood threats for many areas,” notes the report.

“Tropical cyclone, extratropical cyclone and tsunami coastal impacts will all come with greater frequency and severity under the projected sea-level rise,” it states.

“This poses a significant human and economic concern for these areas, and is a significant concern to the (re)insurance industry.”

Wildfire risk is also a concern because of diminished snowpacks and precipitation.

TECHNOLOGY 

SGI, Kanetic offer online quotes to Alberta commercial customers 

SGI Canada Insurance Services Ltd., the property and casualty insurance division of Saskatchewan Government Insurance, and Kanetix Ltd. have launched two online quoting tools for commercial customers in Alberta.

Toolbox Pakfor is aimed at independent contractors, while Energy Pak is aimed at small business operations in the oil and gas sector.

The tools are designed to offer quotes on smartphones, as well as desktop and tablet computers. Prospective customers can get quotes both from brokers and from SGI Canada’s website.

 REINSURANCE

Analytics, new risk types key to reinsurer competitiveness: Report

PwC reports that reinsurance firms using advanced capital and risk modelling, having access to capital markets and using client data for pricing and risk management will be among the most competitive as the industry faces challenges in the next few years.

Low interest rates and the “fresh surge of capital” in the insurance-linked security (ILS) market are key ongoing challenges for the reinsurance sector, PwC suggests in a recent report.

As the ILS market grows, “the key question for sponsors is how to develop untapped markets rather than cannibalizing existing reinsurance demand,” PwC notes. “As more capital moves into the market, investors may need to accept new risks or more extreme risks to maintain their target yields.”