Property Claim Services (PCS) has increased its estimate for the insurance industry loss from the Fort McMurray, Alberta Canada wildfires, slightly from C$4.63 billion to C$4.67 billion, which is approximately US$3.63 billion.
The slight increase will be due to increased number of claims being filed and greater visibility of the loss data and metrics now that we’re a number of weeks past the wildfire event.
The wildfire has been one of the largest single catastrophe events to hit reinsurance and ILS capital of recent years, resulting in a hit to some reinsurance firms second-quarter results, and negative figures from some ILS funds during the month they accounted for the loss.
The estimate from PCS includes both residential and commercial property losses, auto physical damage claims and also business interruption losses that have been reported to PCS. The estimate also includes both property and business interruption losses suffered by the local oil sands industry as well.
The average claim payment made for the event was C$120,159, which gives 38,900 claims in total from the wildfire loss event.
Following this latest resurvey from PCS Canada another will be undertaken in 60 days time, as the organisation looks for the industry loss to settle after which resurveys will stop.
PCS’ insurance industry loss estimate data is used widely in the insurance, reinsurance and insurance-linked securities (ILS) sectors for insight and also as triggers for industry loss based risk transfer transactions, such as catastrophe bonds and industry loss warranties (ILW’s).
A number of ILS funds, retrocessionaires and collateralised reinsurance sidecars were hit by losses from the Fort McMurray wildfire event, with a number of ILW contracts also reported to be exposed to the event. At this stage we’re unsure whether these ILW’s have been settled based on loss data already available, or whether they need to wait for a final survey (if using a PCS trigger). However, any fund exposed to such contracts will likely already have reserved for an impact if the trigger was a number in the low billions of dollars.