TORONTO (Bloomberg) — The wildfires spreading around Canada’s oil-sands hub of Fort McMurray may become the costliest catastrophe in the country’s history with losses potentially reaching C$9.4 billion ($7.3 billion).

Insurance losses could reach that high if nearly all homes, cars, and businesses in the Fort McMurray area were destroyed and owners filed a claim to insurers, according to a research note to clients from Bank of Montreal analyst Tom MacKinnon. He said it’s more likely that one-quarter to half of assets would be damaged, leading to total insurance industry losses of C$2.6 billion to C$4.7 billion, as much as quadruple the costliest Canadian natural disaster.

The fires have forced the evacuation of a 88,000 people in northern Alberta, the largest in the province’s history, and scorched at least 40 square miles in the region, home to oil and gas producers including Suncor Energy and Cnooc’s Nexen. At least 1,600 homes and structures were damaged as of Wednesday, more than triple the number from the Slave Lake Fire in Alberta in 2011, previously the country’s most costly fire and third-most expensive catastrophe overall, according to Aon.

“Preliminary assessments indicated that entire neighbourhoods were completely destroyed as well as pockets of the downtown area,” according to a May 4 research note from a unit of the London-based risk consultant and insurance broker. Numerous businesses have also burnt, although it is too early to calculate economic impact of insured losses given the fire is ongoing. “Once the fire was ignited and strong wind gusts arrived that tracked it into Fort McMurray, it set the stage for a major and devastating event.”

The most costly disaster in Canada’s history was the flooding in Alberta three years ago, which caused C$1.7 billion in losses as 75,000 people were evacuated, according to Aon. The second most-costly was the ice storm of 1998 in the provinces of Ontario and Quebec, which caused about C$1.6 billion in insured losses, the company said. The Slave Lake Fire caused about C$700 million in losses to insurers.

Intact Financial, the country’s largest property and casualty insurer with about 19 per cent of its premiums from Alberta as of last quarter, is already being affected by the fire. The Toronto-based company said 40 losses were reported to the company so far, executives said yesterday. The company insures about 2,800 homes and rental units, 300 businesses, and an undisclosed number of cars in the greater Fort McMurray area.

Aviva, the No 2 largest property and casualty insurer by written premiums operating in Canada, has mobilised response teams on the ground in Alberta, focusing on directing claims and issuing cheques for living expenses, according to a statement from the London-based company. RSA Insurance Group, the third-largest, is reaching out to policy holders. Company representatives were either unavailable or didn’t immediately respond to requests seeking comment. Insurers reinsure for claims above certain thresholds, seeking to diversify their exposure and risk to just such events.

“We’ve been monitoring the situation since last weekend and activated our catastrophic response plan yesterday,” Intact chief executive officer Charles Brindamour said on a conference call on Wednesday. He also said the company’s exposure in the current fires is lower than the Slave Lake disaster.

The majority of losses will likely be related to homes and businesses, according to BMO’s figures. Certain neighbourhoods of Fort McMurray have lost more than half of their homes, including Waterways, where 90 per cent of homes were destroyed, and Abasand, where half of the homes were destroyed and YouTube videos show walls of flame roaring near roofs.

There’s still no official estimates yet on the number of homes and businesses affected, but it will be a significant amount for insurers, according to Bill Adams, Insurance Bureau of Canada vice-president for the western and pacific region. Most home and business insurance will cover fire damage and the cost of additional living expenses during an evacuation, according to the organisation.