Just like the smoke engulfing Metro Vancouver’s skies, the impact of the B.C. wildfires have cast a haze of confusion over the fallout for the insurance sector.
“There are always the people that say, ‘I don’t believe in global warming,’ but now you really see it, the smoke is literally in the air,” said Gordon Li, division leader at CMW Insurance Services Ltd.
“For the Interior … their issue is that any new business, from the insurance company point of view, is that you can’t buy coverage. If someone says they are going to move their insurance or if they didn’t have insurance before, unfortunately we won’t be able to do that for them.”
The halt of insurance sales in the wildfire region is an issue felt throughout B.C.’s southwest.
“What we see is the geographical moratorium on insurers issuing new insurance policies,” said Garrett Jones, regional sales leader at Valley First, a division of First West Credit Union in the Okanagan.
“Some of our major domestic insurance companies that we deal with have completely stopped doing coverage in the Interior … they are at capacity with claims.”
According to the Government of Canada website there are roughly 128 wildfires larger than 0.01 hectares in B.C., and the summer is far from over.
“We have had upward of 50,000 people forced outside their home across a very wide geography of this province, which created a whole host of unique challenges in terms of reaching those individuals to make sure they were getting the assistance they needed,” said Aaron Sutherland with the Insurance Bureau of Canada (IBC).
IBC has deployed staff to provide information and assistance to those affected by the fire in Kamloops, Prince George and other areas.
“A standard insurance claim can often be mailed to you [but] during an evacuation order you can’t mail anyone their support or additional living expenses while outside their home,” he explained.
Metro Vancouver insurance companies are still without substantial data on the financial impacts of the wildfires.
“We have seen insured claims and insured payouts due to extreme weather increase dramatically as well, from a few hundred-million dollars annually to being at or above a billion dollars every year,” Sutherland said. “Last year set a new record in that regard, driven by Fort McMurray.”
Catastrophe Indices and Quantification Inc. estimated that the 2016 wildfires in Fort McMurray, Alberta, cost insurance companies $3.58 billion.
“Fort McMurray certainly was a game changer for the insurance industry and the largest insured loss in Canadian history,” Sutherland said.
There are currently 606,057 hectares of total burned area in the province, according to the Government of British Columbia website and, Li says, the increase in climatic events in B.C. and worldwide will soon have direct implications for insurance rates.
“I think in the long run it’s not just the wildfires but all the losses from floods, the hail storms that you have seen across Canada, that will catch up and will have impact on premium coverage and maybe coverage restriction. That would probably be seen in the world in the next two years.” •
