Weather becoming major concern for Canadian insurers
Published: June 19, 2018
Updated: July 24, 2018
Author: Luke Jones
CATEGORY: Home Insurance
Floods are now as big a threat to Canadian homeowners as fire, but are storms also becoming a chief cat concern? Paul Kovacs, executive director of the Institute for Catastrophic Loss Reduction (ICLR) says he envisions weather will become the cause of the majority of claims over the next 25 years.
“It’s my opinion that in 25 or 30 years, our industry will collect premium and pay more claims for weather-related events, perhaps three times what we’re collecting in auto,” Kovacs said Thursday at Gore Mutual’s Fast Forward event in downtown Toronto. “Remember when we sold fire insurance?”
Kovacs was speaking during a panel discussion at the event and fielded a question from moderator Paul Jackson. He was asked is weather has become the new normal.
“New normal is not quite the right term,” he said that “the science is quite clear: there’s an increase in the frequency and severity of the kind of weather.”
“Weather” would be defined by an event that is not a fire, flooding, or hurricane. A perfect example would be the May 4 windstorm that hit Ontario and Quebec, causing $380 million in insurance damage in the former. While not a catastrophe event caused by natural disaster, it was the most expensive insurance loss in Ontario since Toronto’s 2013 floods, which totalled $1 billion.
The windstorm occurred on May 4 and caused considerable damage through Ontario and parts of Quebec. Roof damage was most commonly reported, while felled trees caused structural damage and blocked roads. Power outages were also frequent, CatIQ points out.
Winds reached hurricane force of up to 150 km/h in Ontario.
“It has been quite a damaging year so far,” said Kim Donaldson, vice president, Ontario, with Insurance Bureau of Canada (IBC). “This year alone insurers have already paid out three-quarters of a billion dollars, just five months into 2018.”