TORONTO – Insurance providers are already preparing to assess the damage from a massive fire still burning in Fort McMurray, Alta., that has charred homes, cars and other treasured possessions.
The Insurance Bureau of Canada is urging the more than 80,000 residents who have been forced to evacuate the city to contact their insurance providers and keep track of all their expenses.
“Insurers are mobilized and will answer questions,” said IBC spokesman Steve Kee.
Home insurance typically provides coverage for the property, the possessions inside and living expenses incurred while unable to stay in the residence, said Rocco Neglia, vice-president of claims at Economical Insurance. Businesses can also purchase insurance that will protect them from any sales or earnings lost if operations are interrupted due to an event like a fire, he said.
Most home insurance coverage should provide people some money for daily living costs until the evacuation order is lifted, even if their residences have not sustained any damage.
Over the past several years, the insurance industry has increasingly had to assess claims from natural disasters like the one tearing through northern Alberta.
In 2011, a wildfire that ravaged Slave Lake, Alta., caused more than $700 million in damage, the IBC said. At the time, the group calculated it to be the second-costliest insured disaster in Canada after the 1998 ice storms in Ontario and Quebec that saw $1.6 billion in payouts.
The Alberta floods of 2013 were even more costly, as insurers doled out $1.8 billion, according to the IBC’s 2015 report on Canada’s property and casualty insurance industry.
Some changes to insurance offerings can come from such disasters, said Neglia.
Following the Alberta floods, for example, many insurance carriers expanded overland flooding coverage to personal property, he said. Previously, that type of coverage was typically only offered to businesses.
Sometimes, natural disasters can lead to increased premiums for customers to help insurers cover expenses after major disasters.
Intact Financial Corp. (TSX:IFC) reported it paid out about $300 million to customers in Alberta due to storms and the floods in 2013, and analysts have speculated insurance costs are likely to rise as weather-related catastrophes occur more frequently.
The leading cause of insurance claims comes from severe weather damaging properties, and payouts for catastrophic losses have hovered around $1 billion annually for the six years up to and including 2014, the IBC said.
Premiums are based on a number of factors, said Mike Van Elsberg, senior vice-president of claims in Intact’s Western division.
“Claims do affect premiums. That’s how claims are paid,” he said.
“The impact of this situation, what that will do to premiums, it’s very early on at this point.”
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