By: Luke Jones, Published on May 9, 2016 01:59 PM, Last Update on May 25, 2016 03:00 PM
The Fort McMurray wildfire has been devastating for many property owners, but the effects could be more long lasting and could impact homeowners long after the flames have been doused. Jason Thistlethwaite, director of the Climate Change Adaptation Project at the University of Waterloo, suggests that home insurance premiums will increase.
Albertans and other people living in areas prone to wildfires could see increases in the home insurance and providers become worried about incurring major losses.
“I think it’s safe to assume that the fire will become the largest insured loss in Canadian history,” said Jason Thistlethwaite, director of the Climate Change Adaptation Project at the University of Waterloo, speaking to Global News.
The assessment seems accurate as the Fort McMurray event is progressing to be the costliest event in Canadian insurance history, even surpassing the 2011 fire in Slave Lake, Alberta. That event took 374 properties and damaged 32 more according to data from the Insurance Bureau of Canada (IBC). The $700 million losses from Slave Lake will be dwarfed by the Fort McMurray wildfire where 2,400 homes have already been confirmed lost.
Insurance companies are starting to estimate their losses and in total the bill is expected to total billions of dollars, potentially as much as $9 billion.
Alberta has witnessed the two largest fire events in Canadian history in the last five years and insurance companies will be aware of the risks. Home insurance covers fire damage, so homeowners will win their claims and insurance companies will take the hit. However, in the longer term companies are likely to respond with higher premiums to offset the risk and potential damage.
“Insurance is a business and when the industry suffers a significant loss, it tries to recoup those losses. The insurance industry recoups those losses by assessing for risk,” Thistlethwaite said.
“Everyone in Canada contributes to property insurance, so we’re all contributing to offset some of the losses associated with the damage in Fort McMurray.”