We can’t let a week of record-setting high temperatures followed by a few days of torrential rainfall causing flash flooding go by without talking about the obvious. Climate change has been causing all kinds of severe weather across Canada for some time now, and the trend is costing a lot of money for both insurers and policyholders.
The insurance industry has been extremely concerned about climate change and its effects for some time now and is on the leading edge of research into the issue. Extreme weather incidents are bad enough, but their ripple effects are extensive as well. Emergency crews were pushed to the limit over the course of the late-June heat wave and ensuing early July storms, with 73 heat-related calls in Calgary from June 29 to July 2. When the first major storm rolled through the evening of July 2, nearly every fire crew in the city (upwards of 70), ended up responding to incidents at the same time, causing what is called a Code Orange. There were two reports of lightning hitting buildings, and several more strikes were sighted around Calgary. Part of a northeast strip mall collapsed, and branches and trees came down on power lines, causing hazards and outages.
Alberta has already had millions of dollars in claims this year. 2021 roared in with a January of storms. Intense winds around Lethbridge, Taber and Calgary from Jan. 12 to 14 ended up causing nearly $30 million in damage. Gusts of up to 86 kilometres an hour marked Jan. 13 down as the windiest winter day in Calgary in seven years. Then snow squalls combined with ferocious winds from Jan. 19 to 20 caused close to $32 million in damage to the southern parts of Alberta.
All of this points to another year of extensive damage to homes, cars, and property, and the high potential for many, many more insurance claims. As insurance experts have been warning, the situation is becoming more and more expensive for homeowners.
Home insurance has been steadily rising for a decade
In February 2020, the Federation of Canadian Municipalities and Insurance Bureau of Canada (IBC) released a report entitled Investing in Canada’s Future: The Cost of Climate Adaptation at the Local Level. “Across the country, Canadians are feeling the devastating impacts of climate change as the financial and emotional costs continue to rise. Governments need to collaborate in funding the resilient infrastructure needed to protect Canadians from flooding, wind and wildfires. Given the size of the estimated investment needed at the local level, government should consider how the private sector and how private finance can help make our communities more resilient,” said Don Forgeron, IBC President and CEO in a release.
A June Canadian Underwriter article states that since 2011 home insurance rates in Alberta have risen nearly two-and-a-half times. The average yearly premium has jumped from $741 to $1,779, and many may have noticed a much higher increase this year than last. Some homeowners experienced a rate hike of more than 30%. Personal property damage claims have gone up 42% over the past ten years, and the entire globe is experiencing the same problem. Climate change has been cited as the reason.
A hail of a problem
Alberta is known for hailstorms, but their incidences have increased substantially. The Cardston area was hit the hardest on July 5. The hail piled up to a height of one metre in some places, causing parts of the downtown area to flood once the stones started to melt.
Nothing has even come close to comparing with the June 13, 2020 storm that pummeled northeast Calgary with hail as large as tennis balls, however. Cars were completely smashed and siding was stripped from the sides of houses. More than 70,000 insurance claims were eventually made. The total cost of the storm was $1.2 billion, making it the year’s most expensive natural catastrophe and the priciest hailstorm in Canadian history. This, combined with the 2020 Fort McMurray flood that resulted in $562 million in insured damages, is the major reason for the last increase in home insurance rates.
Unfortunately, some northeast homeowners who suffered hail damage are still waiting for their claims to be processed, says CTV News. As the delays carry on, the cost of materials (especially wood), has been rising, leaving homeowners worried that their settlements won’t cover the complete costs of the repairs.
Remember that insurance brokers such as us at Lane’s Insurance can be your allies during the claims dispute process. This is another reason why insurance brokers provide many advantages for customers. Because home insurance claims are most often disputed due to discrepancies between what an insurance company thinks your property is worth and what you think your property is worth, we always recommend that holders of home insurance policies be extremely diligent about informing your insurance company of any major renovations or upgrades you have made to your home. Always keep your home inventory up to date as well.
Insurers are fighting back against climate change
In addition to encouraging municipalities to invest in climate change adaption, insurers have been fighting for subsidized building retrofits to reduce catastrophic losses, including climate-resilient and energy-efficient buildings. They continue to do a lot of work investigating the impacts of extreme weather, providing several resources including the IBC’s The Economic Impacts of the Weather Effects of Climate Change on Communities and Intact Insurance’s Intact Centre on Climate adaption.
Trust Lane’s for all of your insurance needs
As an independent insurance brokerage, we at Lane’s are committed to keeping our clients up to date with the insurance news they need to know. We keep a close eye on all developments in the industry to better advocate on our clients’ behalf. We are a customer oriented, matter-of-fact insurance brokerage that believes customer service is still important to people. As proud members of the Independent Insurance Brokers Association of Alberta we work with numerous carriers to meet your insurance needs while maintaining competitive pricing. Contact us at our Calgary, Edmonton, Banff and Alberta offices.
