According to recent reports, Toronto’s downtown flooding was Canada’s second billion-dollar loss this year, and like southern Alberta, sewer backup coverage bore the brunt of the cost.
A cost that may mean limitations on future sewer backup policies, says IBAO president Debbie Thompson.
“A few years ago we said water was the new fire, and we’re looking at this once again,” Thompson told Insurance Business. “We already know of one insurer in Toronto where there has been a reduction in coverage. A limitation may come for sewer back up, say up to $25,000. That will be the challenge for brokers.”
The numbers come from the latest edition of the monthly global Catastrophe Recap report, which reviews the natural disaster periods that occurred worldwide during July of this year. Issued from the catastrophe model development center of excellence at Aon Benfield, the report reveals that record rainfall in the greater Toronto metropolitan region resulted in Canada’s second bill-dollar natural disaster event of the year – following the extensive flooding that inundated the southern part of Alberta in June.
Total economic losses were estimated at $1.5 billion for Alberta, with roughly half of that cost covered by insurance ($750 million).
Although the numbers are daunting, Thompson doesn’t expect a hard market to result from the large insurance payouts.
“I don’t think the flooding will spur a hard market, not in the sense of rate,” she says. “There will be an alteration of the cost of sewer back up for certain. That will be at the forefront again.”
The U.S. was hit by three stretches of severe weather in July, which caused economic and insured losses expected to reach in the hundreds of millions of dollars. And now the United States is switching from tornadoes to hurricanes.
“With the calendar turning into August, the focus in the United States begins to shift from tornadoes to hurricanes as we begin to enter the peak of the Atlantic Hurricane season,” notes Steve Jakubowski, president of Impact Forecasting.
“The U.S. remains in a record stretch without a major hurricane landfall (Category 3+), though recent history with Superstorm Sandy (2012), Hurricane Irene (2011) and Hurricane Ike (2008) shows that storms with weaker intensities can still cause catastrophic damage,” he adds. “Historical averages suggest that the U.S. is overdue for a major hurricane landfall, and we'll watch to see what the rest of the 2013 season brings.”
