The insured loss estimates from four consecutive catastrophic events this summer are beginning to be released, and the numbers are staggering.
The July flash flood in the Greater Toronto Area caused over $940 million in insured damage. The devastating Jasper Wildfire Complex in late July, which damaged or destroyed a third of the community, resulted in $880 million in insured losses.
In early August, a hailstorm in Calgary caused widespread damage to thousands of vehicles. Just a few days later, the remnants of Hurricane Debby pummelled Quebec, affecting thousands of homes. Insured losses from these event will be released in the coming weeks.
The troubling fact is that the number and severity of damaging weather events and natural disasters is surging. Floods, wildfires, hailstorms, windstorms and heat waves are an escalating threat across Canada. More homes and communities are being affected. The lives of more Canadians are at risk. Decisive action is needed to better protect lives and property.
While the insured losses from these catastrophic events are startling it’s the sheer volume of impacted homes and businesses that is concerning.
Canada’s insurers have been there – and will continue to be there – for customers in need. But pressures on the industry are growing. Severe weather events in 2023 caused $3.2 billion in insured losses, one of the highest annual totals on record. The confluence of multiple disasters this summer has resulted in billions more in losses. There will be recovery delays stemming from the shortage of insurance adjusters and skilled labour, and pressures on the domestic and global reconstruction supply chain.
In an effort to prepare for future catastrophic weather events, a coalition of property and casualty (P&C) insurance industry associations recently sent an open letter to Canada’s two main regulatory agencies – the Canadian Insurance Services Regulatory Organizations (CISRO) and Canadian Council of Insurance Regulators (CCIR).
The coalition includes Insurance Bureau of Canada, the Canadian Association of Mutual Insurance Companies, the Canadian Insurance Claims Managers Association, the Canadian Independent Adjusters’ Association, the Insurance Brokers Association of Canada, the Canadian Association of Direct Relationship Insurers and the Omnia Adjusters Cooperative.
In the letter, the P&C insurance industry coalition applauds the regulators’ recent efforts to expedite the claims administration process and points to the need for regulators and governments to continue to take action to enhance Canada’s disaster readiness.
The open letter states that the number of claims resulting from Canada’s summer of storms is well over 200,000. Insurers have received more claims from catastrophic weather in two months this summer than they have received in any full year before 2024.
“While the P&C industry has taken a number of steps to adapt to ‘the new normal’ of higher frequency and severity of catastrophes (e.g., establishing expedited claims handling processes, creating specialized field teams for complex losses, improving their communication processes with claimants), the ‘new normal’ is increasingly a moving target,” notes the coalition in the letter. “We are entering truly unchartered waters, and patience will be needed as the P&C industry undertakes in earnest its efforts to help its home, auto and businesses customers recover.
“The ability to rapidly deploy adjusters is an increasingly vital component of insurers’ claims response,” the letter continues. “While the recent post-CAT (catastrophic event) allowances made by regulators are welcome, they are an imperfect solution. These measures are characterized by limited entry periods and at times onerous application and reporting requirements, and of course, a reliance on regulators to introduce measures in times of need – and to introduce those measures in a timely fashion. Even with an expedited process, hundreds of applications can still take weeks to process, delaying the claims progression and frustrating disaster victims.
“That’s why our coalition has been calling on Canada’s regulators to work together to establish a licensing reciprocity regime – meaning if an adjuster is licensed in one province, their licence is recognized across the country. As it stands, each Canadian jurisdiction has its own rules and requirements for adjusters. There is simply no reasonable public policy rationale justifying this type of fragmented approach to licensing.”
Lastly, the coalition asked CISRO and CCIR to play a role in working with the industry and government to enhance Canada’s disaster readiness.
“Ultimately, the solutions to the claims pressures associated with these catastrophic events lies in creating a more resilient country – one that is better able to adapt to extreme weather events,” wrote the coalition.
“For decades, our industry has been highlighting to governments the critical importance of disaster readiness, and the policy solutions required to limit the impacts of natural catastrophes. These include investments in public infrastructure, land use planning that ensures homes are not built on flood plains and in high-risk wildfire zones, and building codes that better protect homes and lives. And of course, any suite of policy solutions must include the implementation of the promised National Flood Insurance Program alongside new flood hazard maps.”
