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News Extra: Alberta wildfires were costliest insured natural disaster in Canada’s history

08 August 2016

On July 7, Insurance Bureau of Canada (IBC) said that the May 2016 northern Alberta wildfires were by far the costliest insured natural disaster in Canadian history. Catastrophe Indices and Quantification Inc. (CatIQ) estimates the insured property damage at $3.58 billion. This is more than twice the amount of the previous costliest natural disaster on record – the 2013 southern Alberta flood, which cost $1.7 billion in insurance claims. 

Stock image
Stock image

More than 80,000 people left their homes as the fire fronts advanced, and significant sections of the town of Fort McMurray and surrounding communities were destroyed. In all, about 2,400 homes and buildings burned in the fire, which breached the city limits on May 3, and many more were left heavily damaged or even uninhabitable from smoke damage.

Limited damage was also caused to some of the oilsands facilities north of the town.
"This wildfire, and the damage it caused, is more alarming evidence that extreme weather events have increased in both frequency and severity in Canada," said Don Forgeron, President and CEO, Insurance Bureau of Canada (IBC).

"In recent times, wildfires and flooding have turned extreme and at times tragic," said Forgeron. "As a country, we need to take a more disciplined and sustained approach to helping prepare Canadians for fires and floods. We must build a more resilient country to better protect those affected by the very real impacts of our changing climate. By taking action now, we can minimise costs to taxpayers and better equip homeowners for the risks and challenges that lie ahead."

In a further breakdown of the insured damage data, CatIQ reported that there were more than 27,000 personal property claims (average $81,000); more than 12,000 auto insurance claims (average $15,000); and more than 5,000 commercial insurance claims (average over $227,000 per claim). On top of this insured damage, IBC acknowledges the community, its residents and businesses have suffered incalculable losses not covered by insurers and that it would continue to work to help the community rebuild. 

“IBC and its members continue to process claim requests as quickly as possible to ensure that policyholders can return to normal life. The $3.58 billion in claims payments from the insurance industry will go a long way toward reaching this goal,” the bureau said.

“Canada's property and casualty insurance industry was on the ground within a day of the evacuation and has been working tirelessly alongside thousands of dedicated Albertans and people from across Canada and beyond to help residents of Fort McMurray and the Regional Municipality of Wood Buffalo respond, recover and rebuild. Insurers and IBC are fully committed to working with all levels of government, the community and other stakeholders for as long as it takes to rebuild.”

"This event is largely an insured one, but these numbers fall well short of measuring the real tragedy of this wildfire, one that has taken an immense toll on thousands of individuals and families," said Bill Adams, vice-president, Western and Pacific Region with the insurance bureau, told CBC News that only a portion of total losses were covered.

"The vast majority of the ultimate cost of this event will be borne by insurance policies of one variety or another. That was not the circumstance in the 2013 southern Alberta flooding," Adams said.

Adams said the flood caused $6 billion in damages, but due to a lack of coverage, insurance providers were only forced to pay out $1.7 billion, leaving government agencies to cover some of the remaining costs.

A 2011 wildfire in Slave Lake, Alberta, which destroyed much of the town, came with an insurance price tag of almost $750 million, while the 1998 ice storms in Quebec cost insurers $1.9 billion in today's dollars.

CatIQ said its estimates were subject to change.

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