Insurers facing huge Canada fire claims

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  • High cost: wildfires that devastated a large region near Fort McMurray, Alberta, during May caused insured losses of about $3 billion (Photograph by Jason Franson/Canadian Press)

    High cost: wildfires that devastated a large region near Fort McMurray, Alberta, during May caused insured losses of about $3 billion (Photograph by Jason Franson/Canadian Press)

Insured losses from the wildfires that caused catastrophic damage to the city of Fort McMurray and disrupted oil sands operations in the region, are the highest in Canada’s history.

The most up to date report from Aon Benfield anticipates insurers will fork out more than C$4 billion ($3.1 billion), while a lower estimate of $2.8 billion in claims has been put forward by industry group Catastrophe Indices and Quantification.

Both figures easily dwarf the $1.9 billion of insured losses caused by ice storms in Quebec in 1998.

The fires led to 27,000 personal-property claims and 12,000 auto claims, the Insurance Bureau of Canada said yesterday in a statement. While there have been more than than 5,000 commercial claims averaged over $192,000, including costs from work stoppages.

About 2,400 homes and other buildings were destroyed by the wildfires, which started on May 3 and continued to burn for most of the month, covering an area of more than 3,500 square kilometres.

Economic losses caused as a result of the catastrophe will be far higher than the insured losses. It is estimated that damage and business interruption to oil sand drillers in the region of Alberta affected by the fires could be as high as $1 billion.

The Horse Creek Fire, as it has been named, has caused more extensive insured losses than the costliest wildfire in the US, the 1991 Oakland Hills Fire, which resulted in insured losses of $1.7 billion or, according to the Insurance Information Institute, the equivalent of $2.7 billion today.

For further perspective, it has been calculated that the Alberta wildfires could end up having as big an impact on Canada’s gross domestic product as Hurricane Katrina had on the US economy in 2005, based on estimates from Imperial Capital.

Although the Horse Creek Fire was by far the costliest natural catastrophe in North America during May, the month’s greatest insured losses were seen in Europe, caused by severe weather and flooding. Amid the sidespread flooding, near-record flood waters inundated central parts of Paris, causing the river Seine to burst its banks.

The weather was associated with a storm, dubbed ‘Elvira’, that also impacted Germany, Austria, Poland and Belgium. Tentative overall economic damage has been estimated at $4.6 billion, while in France alone there were 150,000 insurance claims.

Meanwhile, in the US severe weather, including flooding, hail and tornadoes, caused total insured losses estimated at more than $1 billion.

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Published Jul 8, 2016 at 8:00 am (Updated Jul 7, 2016 at 7:46 pm)

Insurers facing huge Canada fire claims

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