Canadian Underwriter

Paid Preparing for the inevitable: A new way to talk to your clients about CAT risk

November 7, 2022   by CNA Canada

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Natural catastrophes are no longer a case of if- but when. Can your clients’ risk management strategies keep up?


With insured natural catastrophe (CAT) losses in Canada reaching over $2billion annually, the industry and consumers alike are grappling with the increased frequency and ferocity of severe weather events as a result of climate change.

“There is increasing evidence of climate change related to the impact of greenhouse gases from industrialization, deforestation, and urbanization and the links to the rising rate of severe weather,” says Markham Sandulak, Senior Risk Control Consultant at CNA Canada.

“As the intensity of wind and hail storms, wildfires and floods continues to grow, the predictability of CAT-related damage decreases,” notes Sandulak. “This makes it all the more important to be prepared for when something happens – not “if” it will happen.”


Of Canada’s Top 10 costliest natural disasters for insurance payouts, eight have occurred since 2013.

Two of these happened just this year:

In May, Central Canada’s devastating derecho windstorm caused more than $875 million in insured damage, making it the sixth-largest natural catastrophe loss in Canadian history.

In September, Hurricane Fiona wreaked $660 million in insured damage in Atlantic Canada, making it the tenth-largest CAT loss in Canada – and costliest in Atlantic Canada.

Sandulak notes how weather is increasingly impacting Canadian infrastructure and businesses from coast to coast.

“Last year British Columbians were dealing with wildfires, landslides and floods. Changing rainfall patterns are overloading aged water infrastructure in cities across the country; rising ocean levels impact storm surges inland; with the number of storms and resultant wind and hail damage impacting a much larger portion of the Canadian environment. Building codes need to be updated due to higher than average sustained winds; faster snowmelt releases in Western Canada are resulting in higher levels and ferocity of flooding; while losses in permafrost continue to affect several industries including oil and gas, transportation, and construction which rely on ice roads to access and support northern communities and territories.”

What’s important to note, is your clients’ businesses don’t have to be at the epicenter of a CAT to feel the impact, Sandulak warns. “We’ve seen how CATS halfway around the world have impacted the supply chain for businesses here in Canada,” he adds. “The rate of change  going forward will continue to determine how we react.”


Sandulak notes how many business still believe a CAT event won’t happen to them. “But, brokers should advise their clients that, not only is it a case of if but when, a business may feel the impact of a CAT event happening locally or elsewhere – whether it is in cost of materials or transportation, personnel movement, supply chain or other issues,” Sandulak explains.

“With this in mind, from a business continuity and resiliency perspective, disaster preparedness and robust risk management become absolutely critical,” he adds.

“Preparation and preplanning are key for your clients, not just for contingency planning, but it’s important to advise them to uncover their exposures in a holistic way and to review the measures they can take to avoid, manage or mitigate the potential impacts.”

Beyond CATs, with winter fast approaching Sandulak advises brokers to help their clients revisit their exposures and risk management plans. “Businesses need to consider the impacts of annual winter storms that may disrupt transportation routes, down power lines and pose accident risks,” he says.

CNA has a variety of online resources that help brokers assist their clients’ risk management initiatives, Sandulak says. “For example, we have excellent weather preparedness checklists, disaster recovery resources and self-assessment tools. We also have dedicated Risk Control Consultants available for site visits nationally, and offer brokers customizable learning and education programs through CNA’s School of Risk Control Excellence (SORCE).”


Sandulak offers the following CAT risk management tips to help brokers talk to their clients:


  • Know your vulnerabilities: Conduct periodic self-assessments that stress test your business so you know your local and international exposures;
  • Risk transfer: Once you’ve identified your risks, determine what steps to take to help avoid, manage or mitigate these, to ensure you are covered beyond physical protection.
  • Emergency protection: Prepare for the inevitable. Ensure you have robust procedures in place and have identified who will do what when an emergency occurs. Plan for disruptions and recovery. Regularly review, test and adjust plans and procedures.
  • Inspection, testing and maintenance: Ensure you’re proactively taking steps to maintain your buildings, assets, infrastructure and security. CNA’s Risk Control Consultants and online resources are there to help businesses comprehensively risk manage their exposures.
  • Learn from the misfortune of others: Perhaps the most important tip is to learn from previous events, even if they didn’t directly affect you.

Visit CNA Canada for more information.