The insured losses from the wildfires that ravaged Alberta, particularly the Municipality of Jasper, are expected to exceed $880 million.
This initial estimate, provided by Catastrophe Indices and Quantification (CatIQ), was released by the Insurance Bureau of Canada (IBC) on August 27. The event has now become the second most expensive wildfire event in Alberta's history in terms of insured losses (the Fort McMurray wildfire of 2016 is first).
About one-third of the Jasper community was damaged or destroyed by the fire, which escalated on July 22 and forced widespread evacuations.
In its statement, the IBC highlighted the unique jurisdictional challenges in Jasper, which is located within a federal park. Multiple levels of government departments are overseeing recovery efforts. IBC called on them “to adopt an expedited and coordinated approach to decision-making to ensure reconstruction efforts can begin as quickly as possible.”
"Governments must invest in disaster mitigation, including rolling out similar programs to help communities fire- and flood-proof homes,” stated Craig Stewart, Vice-President, Climate Change and Federal Issues, IBC.
“These investments are critical in helping Canadians prepare for and recover from the impacts of wildfires and other natural catastrophes. As Canada embarks on one of the most ambitious housing plans in Canadian history, we must remember that the most expensive house is the one you have to build twice," he added.
A challenging summer
July and August have been particularly challenging for insurers, with multiple major losses driven by extreme weather events.
The IBC cited four major events: torrential rains in Southern Ontario, the Jasper wildfires, the August 5 hailstorm in Calgary, and the flooding in Quebec caused by Tropical Storm Debby on August 9.
“These events have placed immense pressure on insurance adjusters, who are critical following natural catastrophes, as they ensure the industry can support consumers as quickly as possible,” the IBC noted.
In their financial results for the quarter ending June 30, 2024, several property and casualty insurers reported an improvement in loss ratios for the first six months of 2024 compared to the same period last year.
This was the case for Intact Financial Corporation. However, since releasing these latest quarterly results, the company has provided a preliminary estimate of the major loss costs for the four above-mentioned events.
On August 21, Intact estimated that catastrophic losses for the third quarter alone would reach $1.1 billion before tax and after reinsurance.
During a discussion with financial analysts on July 31, the company stated that it had set a target of $900 million for catastrophic losses for the entire year of 2024.
On August 26, Definity Financial Corporation also published its estimate of claims costs for natural catastrophes occurring in the third quarter of 2024.
“Definity estimates a negative impact on operating income of approximately $150 million net of reinsurance recoveries, or approximately $0.97 per common share, net of taxes and reinsurance. Reinsurance recoveries include the full utilization of the $25 million available under the company's catastrophe aggregate treaty.”
For the mid-July floods in the Greater Toronto Area, insured damages were estimated at over $940 million, according to another CatIQ estimate released by the IBC on August 19.
As for the torrential rains and flooding that affected several regions of Quebec on August 9, more than 70,000 claims had been filed for this event alone, according to an estimate published by the IBC on August 20. An estimate of the insured damages for this event is still pending. Most claims are typically filed within 45 days following a disaster.
More torrential rains
From August 17 to 19, further torrential rains hit Southern Ontario, particularly in Mississauga. According to Aon's weekly natural disaster report, the 168 mm of rain that fell on the municipality caused several rivers to overflow, leading to more flooding.
On August 17 alone, 128 mm of rain was recorded at Toronto Pearson Airport, exceeding the average monthly rainfall for that location. From June 1 to August 21, a total of 498 mm of precipitation was recorded at the same airport, according to Aon.
