Economical Insurance reports $45 million in losses following Alberta forest fire

Economical Insurance reports $45 million in losses following Alberta forest fire

Economical Insurance reports $45 million in losses following Alberta forest fire An evacuation order still looms over the fire-ravaged city of Fort McMurray, but some insurers are venturing a guess as to what the resulting losses will be. Economical Insurance has released their initial catastrophe loss estimate from the forest fires, determining pre-tax losses to be between $35- to $45 million. This includes net of reinsurance recoveries as well as reinstatement premiums.

As physical damage can’t yet be directly assessed, the estimate is based on claims reported to date, known exposures in the area, as well as the reported percentage of loss in various areas throughout the city.

Economical’s use of reinsurance chimes in once losses reach $30 million for an individual loss event. The carrier anticipates the catastrophe will impact second quarter results.

"The damage resulting from this catastrophic fire underscores the importance of our promise to our customers to be there when they need us most," said Karen Gavan, president and CEO of Economical in a release. "Our first priority is to our policyholders. We quickly mobilized our catastrophe response team and are providing emergency funding to our policyholders to help them with their immediate needs. We will continue to take care of our policyholders as they deal with the significant suffering this catastrophe has caused and move forward with rebuilding their lives."

The cost of the wildfires is anticipated to be the costliest ever for Canadian insurers, and will pose a financial hit for global reinsurers. Previously, Intact Financial Corporation, Canada’s largest property and casualty insurer, reported anticipated losses of $170 million after taxes and reinsurance – about $1 - $1.20 per share.  To assess the extent of the damage, Intact used satellite imagery and exposure geocoding technology to match before and after images of the area.

Total losses resulting from the fire are pegged between $5 billion to $9 billion, according to an estimate from Bank of Montreal. Over 2,600 buildings have been reported destroyed, though increasingly optimistic accounts say 80% of the city may have been spared. However, costs associated with smoke damage, emergency supplies and accommodation, as well as business interruption, will continue to hit insurer pocketbooks long after the embers have been assessed.