Canadian Underwriter

New Year’s weather hit

March 1, 1999   by Canadian Underwriter

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The snowstorm which almost buried Toronto for the first two weeks of the new year is expected to cost insurers roughly $50 million, the Insurance Bureau of Canada (IBC) estimates.

Around 115cm of snow fell on Toronto with heavy accumulations in other areas of southwestern Ontario in what was the first major storm of 1999. The City of Toronto was forced to call in emergency assistance from the military and employ outside snow clearing contractors in a losing battle to keep the city open. Early returns from insurers suggest that the snowstorm will produce a $50 million insured loss, with about 15,000 claims already reported. The bulk of the claims relate to roof damage, says Stan Griffin, vice president Ontario region of the IBC.

Griffin says this is the first occasion where losses arising from a snowstorm have been monitored by the IBC. The storm was tracked as a result of the IBC’s “Claims Emergency Response Plan” initiative which was created to enhance the effective response of the industry in clearing claims related to large weather loss events, such as the ice storm of 1998. “In this instance [the snow storm], we didn’t see any need to put in place a claims emergency response plan. However, due to the urban concentration in the areas affected by the storm, it was significant enough to trigger reporting from companies.”

Griffin points out that the final insured loss from the snowstorm could be higher than the preliminary estimate as not many companies have submitted figures yet. “A large segment of the market hasn’t reported yet. We will have final figures shortly.”

U.S. hurricane tally

The Insurance Services Office (ISO) released its fourth quarter catastrophe loss figures showing 1998 to be the third worst year for U.S insurers out of the last ten years.

The total insured loss for 1998 amounted to US$10.07 billion with the last quarter accounting for $480 million (nearly double the value of insured losses recorded in the same period for 1997).

The ISO points out that total insured losses for 1998 were nearly four times higher than the $2.6 billion in insured losses reported by the industry for 1997. Hurricane Georges, which struck in the third quarter of 1998, racked up insured losses of more than $2.9 billion.

And, the hurricane and tropical storm weather outlook for 1999 does not look promising for U.S. insurers, according to a new tracking and event prediction study compiled by researchers at University College London in the U.K. The storm forecast model was sponsored by the U.K. Meteorological Office and a consortium of insurers and brokers who have formed a weather research program under the banner of “TSUNAMI” — the Japanese word for “tidal wave”. The TSUNAMI forecast suggests that four tropical cyclones will strike the U.S. mainland in 1999, which compares with an average incidence of three storms over the past 20 years. The forecast indicates a 70% chance of a higher than average incidence hitting the U.S. East Coast and a 35% higher chance on the Gulf Coast.

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