By: Luke Jones, Published on July 15, 2016 11:16 AM, Last Update on July 15, 2016 09:46 AM
The insurance industry in Canada took a major hit during the first and second quarters of 2016. Along with the industry throughout North America, catastrophic losses through the six month period totaled $15 billion.
Such a huge loss was created by major catastrophe events. PCS says there were 27 in total, meaning an average loss of $555 million. A catastrophic loss is designated if an insurance event costs more than $25 million, according to PCS. Of the 27 events, reinsurance is still active on 11, something PCS says means insurance companies need to be better prepared:
“The nature of North American catastrophe losses this year speaks to the importance of preparedness and structural discipline,” said Tom Johansmeyer, PCS assistant vice president for strategy and development. “As to the former, we’re watching the largest Canadian catastrophe event in market history unfold – as well as the largest wildfire event in North America. It’s likely to shape discussions about Canadian risk and wildfire risk for years to come.”
Of the $15 billion lost to the insurance industry, the wildfires in the Albertan town of Fort McMurray contributed significantly. The event caused devastation and became the biggest single insurance loss in Canadian history, totally $4.6 billion in total. This is nearly a third of overall losses through the first half of 2016.
“While the fire represents roughly a third of the North American insured catastrophe loss total year-to-date and was the single largest event of the year, it was still smaller than the aggregate losses sustained in Texas,” said Ted Gregory, PCS director of operations.
“When it comes to structural discipline, the activity in Texas could make the market see hail risk in a new way,” Johansmeyer said. “The aggregate loss is substantial, and the underlying events are large within the context of hail. This shows the importance of clear, independent catastrophe event definition in the ILS space.”