It is likely that 2016 will be a huge year in terms of insurance payments due to the Fort McMurray wildfire, said the Insurance Bureau of Canada (IBC).
The IBC reported that severe weather insurance claims have been rising for a few decades and have climbed exponentially since 2009. According to Steve Kee, director of media and digital communications at IBC, payouts are expected to reach C$1bn annually, up from C$40m in the 1970s.
“Prior to 2009, the insurance payouts to the policy holders as a result of severe weather, they really weren’t big notable events,” said Kee. “And today annual claim payouts of a billion dollars or more have become the new norm. And if you go back to 2013, and you include the Alberta and Toronto floods, insurance paid out $3.4 billion to policy holders that year, which was a record breaking year.”
In 2013, flooding in southern Alberta set the record for most expensive natural disaster ever for the ICB. Over C$1.72bn in insured losses were recorded. Insured damages for the Fort McMurray wildfire are still unknown, but the Bank of Montreal forecast it to hit C$9bn.
“We have no idea what the Fort McMurray numbers are going to be but I think it will be a significant number,” Kee said.
Insurance payouts for severe weather have doubled every five to ten years since the 1980s. Since 20098, around C$1bn was lost yearly, compared to an average of C$400m from 1983 to 2008.
Given that the insurance industry aims to predict the likelihood of future events, Kee compared the industry to a barometer. With how it’s going, it seems that we should brace for more losses due to extreme weather in the future.