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Cat trends: How 2021 deviated from the norm


February 22, 2022   by Jason Contant

BC flooding

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Last year saw a shift from “normal” catastrophic losses by quarter and even geographical location, data from Catastrophe Indices and Quantification Inc. (CatIQ) show.

Both the third and fourth quarters of 2021 had “well above average” average catastrophes in terms of number of events and total losses, CatIQ managing director Laura Twidle said during CatIQ Connect earlier this month. And while Alberta still saw the lion’s share of losses, British Columbia, Saskatchewan and Ontario also had major losses.

“Now, while our average losses are typically highest in Q2 compared to Q3, we do usually have more events in Q3,” Twidle says. “Q3 was well above average. We had eight events compared to the usual four, and [there was] an anomalous number that occurred in September. Usually, they tend to cluster into July.”

2021 Q4 also saw two “quite impactful” events, including flooding in British Columbia that was the costliest catastrophic event of last year. The severe flooding began Nov. 13 with a series of atmospheric rivers that brought unprecedented rain to southwestern B.C. for two weeks, causing severe flood damage in several communities.

As of mid-January, insured losses from the November 2021 flooding were estimated at $515 million, and that number is expected to be updated soon. “And given the insurance gap for overland flood, that economic total loss number would be much higher,” Twidle says.

The first quarter of 2021 also started off strong with three Cats, compared to the norm of one, while the second quarter was well below average. “We had one event that just squeaked in and that was the Lytton Creek wildfire,” Twidle says. “Now, keep in mind some of Canada’s most impactful events have occurred in Q2, such as the Fort McMurray wildfire, the 2020 Fort McMurray flooding, 2020 Calgary hailstorm, 2013 Alberta floods, May 2018 Ontario quick windstorms, [and the] Slave Lake wildfire of 2011.”

2021 was an anomalous year geographically as well. While Alberta usually has the lion’s share of Cats (apart from 2017 and 2019, where Ontario and Quebec took over with spring floods and windstorms), last year saw a little more of a spread. “Alberta still had the largest slice, but B.C., Ontario and Saskatchewan also made up significant portions of the annual loss,” Twidle says.

Insured losses from severe weather events totalled $2.1 billion last year, the second year of more than $2 billion in losses (2020’s estimated insured losses were $2.3 billion).

“And that’s just insured loss. No doubt a much, much higher number of total losses, given the uninsured impacts of the B.C. floods,” Twidle says. “There were 14 catastrophes [in 2021], which ties with 2011 for second place. 2017 has the most, so we can see number of events doesn’t always reflect the size and magnitude of the loss. The last three to four years have been over $2 billion annual catastrophic loss, and this trend doesn’t seem to be changing.”

Notable events — those estimated to cost insurers between $10 million and $25 million — also differed from the norm last year. “We didn’t have our first notable event until June, and then we had five notable events in June,” Twidle says, adding that there were 10 such events in 2021. “And just like the 2021 catastrophes, the notable events ranged from severe thunderstorms to wildfire to flooding to windstorms. These events can be quite impactful on a primary insurer, since they may not trigger their reinsurance thresholds.”

 

Feature image: A damaged bridge is seen following flood damage in Merritt, B.C. Thursday, December 9, 2021. THE CANADIAN PRESS/Jonathan Hayward