The Canadian insurance industry is struggling to deal with the increasing occurrence of natural disasters, the Insurance Bureau has said, and the result may be rising premiums for consumers.
As the bill for the Fort McMurray wildfire continues to add up, those within the industry are contemplating its future outlook – with many believing weather changes herald more disasters to come.
Craig Stewart, vice-president of federal affairs at the
Insurance Bureau of Canada, said that the industry now sees severe weather as a top priority nationally,
CBC News reported.
“There are clear trends towards a warming atmosphere that have resulted in more significant losses from flooding... and, as we’ve seen recently, wildfire,” he said.
Ulrich Kadow, head of Canadian operations at insurer
Allianz Global Corporate & Specialty, agreed that the significance of fires as a result of climate change is huge, adding: “We need to make sure that we are on top of all these trends that evolve and develop.”
Stewart said the industry is well equipped to handle events such as Fort McMurray, but longer-term there are concerns.
“It’s the cumulative effect of these events that can take a toll, year after year after year,” he said.
With a clear trend emerging, how does this affect the future outlook for insurers?
“Insurers are in the business to provide protection coverage to our [clients],” Tia F. Becker, CIP, manager, personal lines, Burns & Wilcox Canada, told
Insurance Business.
“As these disasters increase, so does the amount paid out for these unfortunate losses.”
With this in mind, insurers will want to make sure they are rating for the true exposure, Becker said, and that they can increase premiums if a property is located in a high risk zone.
Kadow too told
CBC that the industry is responding by looking at adjusting pricing, but said hyper competition in the industry means companies have been limited in how much they can increase rates.
Ultimately though, Becker said, consumers need insurance, and as coverage becomes trickier to find, brokers are coming to specialty markets for coverage solutions.
And as homeowners face the prospect of rising premiums in the face of weather changes, insurers should take responsibility for education and promoting preventive measures, according to Becker.
“Educating the public on the effects of environmental disasters and how to protect themselves and their property is key,” she said.
And it seems the Insurance Bureau agrees.
Homeowners, who are likely to take a hit to their pockets, should know their risks and empower themselves, Stewart said, as the impact of climate change “become[s] less of a future and more of a present danger.”
Related stories:
Bureau says Fort McMurray insurers don’t always get it right
Fort McMurray residents: Dealing with insurers a nightmare
