Canadian severe weather drives $1.9bn of insured losses in 2018

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Outbreaks of severe weather in Canada drove around $1.9 billion of losses to the insurance and reinsurance industry in 2018, with a windstorm in Ontario and Quebec in May driving the largest share.

The Insurance Bureau of Canada says that the severe weather losses highlight the financial costs that insurance, reinsurance and taxpayers have to bear as a result of climate change.

In 2018 the C$1.9 billion of industry losses (data from Catastrophe Indices and Quantification Inc.) came from ice storms, floods, windstorms and tornadoes, causing damage to residential homes, vehicles and commercial properties across Canada.

2018 has the fourth-highest amount of insured weather losses on record, the Insurance Bureau explained, but unlike years that featured major events, such as the Quebec ice storm in 1998, the Calgary floods in 2013 or the Fort McMurray wildfire in 2016, no single loss event caused a particularly large payout in 2018.

Instead the severe weather experienced in Canada was another example of frequency or smaller weather events aggregating up to impact insurance and reinsurance interests.

While the impacts to re/insurers are significant, the amount of risk that is uninsured is also clear in Canadian data, as the IBC believes that for ever $1 paid out by the insurance industry, the government pays out roughly $3 to recover public infrastructure damaged by severe weather.

This is another example of a protection gap that the insurance, reinsurance and ILS market could assist in closing, if regional, municipal and national governments embraced buying risk transfer to pay for infrastructure recovery after weather and natural disasters.

“Climate change is costing Canadian taxpayers, governments and businesses billions of dollars each and every year,” commented Craig Stewart, Vice-President of Federal Affairs for IBC. “We must take the necessary steps to limit these losses in the future. The cost of inaction is too high.”

The major Canadian severe weather events of 2018 are detailed below:

  • January storms and floods that caused more than $54 million in insured damage across Eastern Canada
  • February storms and floods that caused more than $57 million in insured damage across southern Ontario and Quebec
  • An early-April storm that caused more than $85 million in insured damage across Ontario and Quebec
  • A mid-April ice storm that affected southern Ontario and resulted in more than $190 million in insured damage
  • An early-May windstorm that affected Ontario and parts of Quebec and topped $410 million – with $380 million of this damage being in Ontario
  • Summer storms across the Prairies that caused more than $240 million in insured damage
  • A flood in Toronto on August 7 that caused over $80 million in insured damage
  • Ottawa-Gatineau tornadoes and windstorms on September 21 caused $295 million in insured damage
  • December storms in British Columbia that caused $37 million in insured damage
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