Canadian Underwriter

2015 the quietest Canadian catastrophe year in five years, with $510 million in insured losses: PCS

February 10, 2016   by Canadian Underwriter

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2015 was the quietest Canadian catastrophe year since PCS Canada launched in 2010, with insured losses from three cat events reaching about $510 million, according to Property Claims Services’ (PCS) full-year cat review, released on Wednesday.

PCS, a division of Verisk Analytics, designated three cat events in Canada in 2015, down from five in 2014. None of the events last year occurred in the fourth quarter. Cat losses fell 41% year-over-year from $860 million in 2014, just up from the previous annual low of $800 million in 2010. [click image below to enlarge]

Alberta and Saskatchewan were the only provinces affected by cat events in 2015

Over the past five years, the average insured loss from a PCS-designated event was $280 million, largely because of 2013’s $3.2 billion annual total, the review noted. 2011 was also quite active, the report said, with $1.6 billion in cat losses. Frequency was down slightly from Canada’s five-year average of 5.8 events, with 2011 the most active year at seven.

Alberta and Saskatchewan were the only provinces affected by cat events in 2015, whereas PCS-designated cat events struck five provinces in 2014: Alberta, Saskatchewan, Manitoba, Ontario and Quebec. “Despite being untouched last year, Alberta remains the province with the highest insured catastrophe losses since the inception of PCS Canada – $5.4 billion from 13 events,” the report said.

Overall, 2015 showed the highest cat event frequency since 1996. The review said that 2015 saw 40 cat events in the United States, up 25% from the year before. Each event cost an average of nearly US$360 million in insured losses. While that’s down 26% year-over-year, the report said, it’s still above the US$250 million PCS resurvey threshold – a level that 18 events exceeded. In 1996, there were 41 events.

“Last year was the most active by frequency since PCS lifted the catastrophe event designation to US$25 million in 1998 (in 1996, the threshold was only US$5 million),” the report said. “Over the past two decades, only three years have had at least 35 PCS-designated catastrophe events in the United States: 1998, 2008 and 2015.”

In the U.S., insured losses for cats reached US$14.3 billion in 2015, down 8% from US$15.5 billion in 2014.

Last year, cat activity affected 43 states, up 12% from 38 in 2014. Texas remained the most affected at US$2.9 billion – up 24% from US$2.2 billion in 2014. California was a distant second, at US$1.2 billion, followed by Massachusetts (US$1.1 billion), Oklahoma (US$900 million) and Illinois (US$900 million).

Personal losses accounted for 68% of cat losses in the U.S. last year, up 60% from 2014. Commercial losses fell slightly from 21% to 18%, with auto down significantly from 19% to 14%.

In Q4 2015, PCS designated 10 events in the U.S., nearly doubling 2014’s six fourth-quarter events. The insured loss estimate doubled as well, jumping from US$700 million to nearly US$1.3 billion year-over-year. “With the exception of one winter storm,” the report concluded, “all fourth-quarter events were from the ‘wind and thunderstorm’ storm family.”