Excerpted article written by JACQUELINE NELSON
As wildfire continues to rage through Fort McMurray, insurance companies are readying for claims to hit, comparing the devastation to one of the country’s costliest natural disasters.
Intact Financial Corp., Canada’s largest property and casualty insurer, has sent staff to the region and increased the capacity of its phone lines. The company said Wednesday morning that losses are already piling up.
“So far, in terms of losses reported since last night, we have about 40 losses reported. Some are evacuations, some are total losses … probably about 25 fires at this point,” Mathieu Lamy, senior vice-president of claims at Intact, told analysts on an earnings conference call, adding that it’s “very early to assess where it’s going to end up.”
The damage in Fort McMurray is drawing comparisons to losses taken by insurers in the spring of 2011 when flames engulfed the town of Slave Lake, Alta. – the most expensive catastrophic loss caused by fire that has ever been recorded in Canada.
Slave Lake caused about $742-million in insured losses and destroyed about one-third of the town, according to the Insurance Bureau of Canada (IBC), an industry group. That puts it in the top five costliest disasters in Canadian history, in a list topped by the 2013 floods in Alberta that caused $1.8-billion in insured damages.
“I would say there are lots of similarities between Fort McMurray and Slave Lake,” said Intact chief executive officer Charles Brindamour on the call, stressing that it was too early to provide comment on the extent of the damages and that customer safety was the paramount concern. Intact had a larger exposure to the Slave Lake disaster because of its market share in the region, and the company’s losses climbed to between $45-million and $55-million after tax as a result of those fires.
Alberta has been grappling with an above-average number of fires of late. In 2015, there were 1,786 wildfires, according to government figures – the third-highest number in the past 25 years. Air tankers dumped enough flame retardant to fill four Olympic-sized swimming pools to manage the fires in 2015.
In 2016, the wildfire season began a month early on March 1, after low levels of snow and rain were recorded.
Mr. Brindamour said Intact had been watching Fort McMurray since the weekend for signals that fire damages could become catastrophic. Yesterday, Intact began sending extra people to Alberta to prepare its response efforts for as soon as access to the sites becomes available.
Other insurers are also mobilized and ready to handle increased call volumes, said Steve Kee, spokesman for the IBC. The IBC has set up its own emergency response line to take calls from residents with questions or concerns. The number is 1-844-227-5422.
Homes and businesses in the area may have different levels of coverage, but policies typically cover fire damage as well as additional living expenses during the time people were forced to leave their homes following the evacuation order.
As Intact waits for more information, the company has tallied its policies in the area. “We know we insure about 1,500 houses, 1,300 tenants in condos,” said Intact’s Mr. Lamy, adding that the company would also be exposed to automotive risk with potential damage to an unknown number of vehicles.
Losses reported on commercial insurance policies can also add up quickly and Intact said it has about 350 clients with insurance for their property, building contents and losses from business interruption. These policies offer a range of coverage from about $20,000 to $12-million, Mr. Lamy said.