July 16, 2020 by Greg Meckbach
The industry is dealing with more than 70,000 claims arising from last month’s hail storm in Alberta, but it’s not clear yet how much of the bill will get picked up by reinsurers, the Insurance Bureau of Canada reports.
The June 13 storm cost the industry nearly $1.2 billion, IBC reported July 8, quoting Catastrophe Indices and Quantification Inc. (CatIQ).
As of this week, more than 70,000 claims have been reported to insurers, said Rob De Pruis, IBC’s director of consumer and industry relations, western, in an interview Wednesday with Canadian Underwriter.
“At the epicentre of the damage area, in northeast Calgary, we are hearing reports of damage to roofs, siding, eavestroughs and broken windows with repairs costing tens of thousands of dollars per home.”
Hail the size of tennis balls was observed the evening of June 13, the Canadian Press reported earlier.
As a result, there is widespread damage to roofs, siding and anything else that is exposed, Walter Waugh, vice president of operations for Western Canada at Crawford & Company (Canada) Inc., told Canadian Underwriter earlier.
It was one of the most severe storms that Coralee Harder, regional vice president of the western region for Sedgwick Canada, has seen in more than 20 years of adjusting claims.
The $1.2-billion insured loss estimate makes the June 13 storm the fourth most expensive severe weather event, in Canada, on record, De Pruis said Wednesday.
Right now, it is difficult to tell how much of this will fall within the Canadian primary insurers’ retention and how much will be covered by reinsurance. Reinsurance contracts vary by insurance company and an individual insurer’s exposure would determine if reinsurance is triggered, said De Pruis.
The costliest natural disaster to the Canadian industry, at roughly $4-billion, was the 2016 Alberta wildfire that necessitating the evacuation of the entire city of Fort McMurray. About 80% of that loss was borne by European reinsurers, A.M. Best Company Inc. reported earlier.
In 2016, the Canadian P&C industry was profitable but the combined ratio in 2018 was 101.4%, the first industry-wide underwriting loss in 10 years, A.M. Best noted this past September at its annual Canada briefing in Toronto. So the industry made an underwriting profit both in 2016 (despite the Fort McMurray wildfire) and in 2013, despite two major flood events which together cost the industry nearly $3 billion.
Unlike in 2016 and 2013, many of the severe weather events in 2018 came within the primary insurers’ net retention, A.M. Best senior director Greg Williams said at his firm’s Canadian briefing in 2019.
Canada’s second most expensive natural disaster by insured losses is the 1998 ice storm affecting Eastern Ontario and Quebec. In 2019, A.M. Best reported the ice storm cost the industry $2.3 billion, while ranking third were the 2013 southern Alberta floods at $1.7 billion. A.M. Best adjusted those numbers for inflation.
With the 2020 Alberta hail storm taking fourth place, a 2013 Toronto area rain storm – which cost the industry about $1 billion – is now in fifth place. During the late afternoon of July 8, 2013, the western greater Toronto area got more rain in an hour than the city normally gets in an entire month of July. Several areas lost power and the rising Don River nearly engulfed a commuter train, stranding passengers for more than six hours. Much of the $1-billion cost came from sewer backup.
Other major natural disasters since 1991, as reported by A.M. Best, include: the August, 2005 Toronto thunderstorm that washed out the Finch Avenue bridge over Black Creek, at $784 million; the May 4, 2018 southern Ontario wind storm at $680 million; the 2011 Slave Lake wildfire at $591 million; and the 2014 Airdrie, Alta. hail storm at $583 million.
The June 13, 2020 storm is now the most expensive hail storm in Canadian history, De Pruis said Wednesday.
Feature Image: The Canadian Press/Jeff McIntosh