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Severe weather across Canada last year cost $3.1B in insured damage

NATHAN GRIFFITHS ngriffiths@postmedia.com twitter: @njgriffiths

The extreme winter storm and king tide that hit southwestern B.C. last December rang up at least $80 million in damages.

It was a small part of the estimated $3.1 billion in insured damage caused by extreme weather events across Canada last year, according to the Insurance Bureau of Canada (IBC), an industry association representing Canadian insurers.

“What we're seeing in Canada is, frankly, worse than but somewhat aligned with global patterns,” said Craig Stewart, vice-president of climate change and federal issues at IBC. “Globally, what we're seeing is that there are more and more of these severe weather events happening.”

Last year ranked as the thirdworst year for insured losses in Canadian history, part of a trend that has seen multibillion-dollar losses every year since at least 2018 — a dramatic jump from previous decades.

Between 1998 and 2008, for example, Canadian insurers averaged $456 million a year in weather-related losses.

At $5.96 billion, 2016 remains the most expensive year for insured losses from extreme weather in Canada, followed by 2013, with losses of $3.87 billion.

“Things definitely cost more than they did 20 years ago,” Stewart said. “But inflation can't explain the speed at which it has risen.”

Stewart said the rising costs can be explained by the fact that extreme storms are happening more often, are more intense when they do occur and impact a much wider area than in previous decades.

“Hurricane Fiona is a great example,” he said. “We've been hit by hurricanes on the Atlantic coast before, but never have all four provinces been hit at once.”

More than half of last year's $3.1-billion price tag came from two storms: hurricane Fiona, which swept across Eastern Canada in September, leaving $800 million in damages in its wake; and the spring derecho that hit Ontario and Quebec. Derechos are fast-moving bands of thunderstorms with winds that can reach tornado or hurricane strength.

Stewart said Canada's relatively small population — meaning a small premium base — and outsized exposure to weather risks makes the country a riskier place to do business for reinsurers, the companies that provide insurance to insurance companies.

This results in higher prices for insurance, if it's available at all, he said.

“What we need are greater investments by governments in risk reduction,” Stewart said, noting the need for investments in flood defences and in retrofits to protect against flood, fire and hail.

“We know how to do all of these things.”

A report from the Public Safety Ministry called flooding “the source of Canada's most common and costly disasters.”

The federal government is now examining options to create a national residential flood insurance program that will offer affordable insurance to all residents at high risk of overland flooding, including storm surges, through a public-private partnership.

Many G7 countries already have such a program in place.

Stewart said there were several steps homeowners living in floodprone areas can take to protect their homes, starting with shopping around for insurance providers. “Just because your existing insurer doesn't insure you, maybe someone else views the risk differently,” he said.

Homeowners should also have a plan in place to protect their home in case of flooding, whether that means sandbagging ahead of a storm, reinforcing the electrical system or installing pumps in the basement. “Make sure that you're aware and have a plan of action,” Stewart said.

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2023-02-02T08:00:00.0000000Z

2023-02-02T08:00:00.0000000Z

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