Costs for insured damages due to severe weather events reached a whopping $3.1 billion in 2022, making it the third-worst year on the record books for Canada according to research by Catastrophe Indices and Quantification Inc. submitted to the Insurance Bureau of Canada (IBC). In 2021, severe weather in Canada caused a total of $2.1 billion in insured damages.
Interestingly, there was not one particular event or any specific region responsible for the majority of the losses. In 2016, the worst year on record, insured losses from the Fort McMurray wildfires made up 75% of the total costs for damages. Topping the list of Canada’s most expensive natural disasters, the entire population of Fort McMurray – 90,000 people – were forced to evacuate at a moment’s notice and 10% of the city’s buildings were completely destroyed. The price tag topped $3.5 billion for the single incident, which led to rising home insurance rates for a large number of Albertans. There was a total loss of $5.621 billion for the year.
Among the severe weather incidents of note from 2022 are Hurricane Fiona, which razed across Atlantic Canada for an estimated $800 million in insured damages. The devastating Ontario and Quebec derecho (a widespread, straight-line windstorm associated with a fast-moving group of severe thunderstorms), caused more than $1 billion in insured damages. The Eastern Canada late-winter storms cost insurers $140 million, the Western Canada summer storms resulted in approximately $300 million in property damages, and the Eastern Canada bomb cyclone ended up with $180 million in paid insurance claims.
Of lesser impact, but still significant, were British Columbia’s winter storm and king tide in December 2022, and Manitoba and Northwestern Ontario’s flooding in April, which ended up costing $80 million and $60 million respectively.
Climate policy in the works
In November 2022, $1.6 billion in funding commitments was announced by the federal government to help improve Canada’s climate resilience. Projects such as improving public infrastructures in municipalities and townships and flood mapping are to be included. The IBC has been holding consultations with federal and provincial governments to find ways to augment the resilience of communities and to better manage the costs of flooding for high-risk residential properties. All levels of government, including Indigenous communities, have participated in working with insurers on the creation of the “Task Force Report on Flood Insurance and Relocation,” which was released in August 2022.
The majority of severe weather incidents in Canada result in water-related damage, causing the federal government to look at the formation of a national residential flood insurance program through a public-private partnership that will provide affordable insurance to residents at high risk of overland flooding.
All residents of the province should familiarize themselves with Alberta’s flood inundation maps, which show areas at risk for different-sized floods. They also show areas that could be flooded if a berm fails and ice-jam floods in some communities.
If you live in an area commonly affected by floods, approach your insurance broker or provider to ensure you are covered. Flood insurance is more available and affordable than ever, even in the absence of a national program. Most major providers offer this coverage as part of an enhanced (or extended) water damage endorsement, or as a stand-alone addition to your home insurance policy. The specific language many insurance companies use is “overland flooding,” and the description should clearly stipulate the cause as a rising body of water. As is usual with insurance policies, exclusions will apply.
What Canadians think of climate change action
In November 2022, the IBC revealed the results of a poll commissioned to ask Canadians their opinions pertaining to climate adaptation. Some of the more major findings were:
- 85% of respondents believe governments should prioritize protecting Canadians from natural disasters.
- Only 40% currently believe governments are doing enough to adapt to climate change.
- 76% would like to see immediate targets set for adapting to climate change in the next five years.
- 83% would like governments to invest more in flood-mitigation measures.
- 68% would support government assistance for relocating those who live in high-risk flood zones.
Trust Lane’s for all your Alberta insurance needs
Insurance brokers such as us at Lane’s work for our clients, not for the insurance companies, so you can be sure you’re getting impartial advice that protects your best interests. Contact us at our Calgary, Edmonton, Banff or greater Alberta offices to see how we can help protect your property and provide the peace of mind you deserve.