With over C$880 million in insured damages, the Jasper wildfire has heightened the pressure on Canada’s insurance sector, which is already struggling with surging claims. But global reinsurers are resting easy after reducing their exposure to “secondary peril” losses from smaller but frequent weather events.
The wildfire that ravaged Jasper National Park in July and destroyed nearly a third of the townsite is Canada’s ninth most costly disaster for insurance payouts, reports CBC News. It may end up ceding that position to Calgary’s early-August hailstorm, or Toronto’s disastrous encounter with torrential rain just days before Jasper went up in flames. Insured losses in each of those summer catastrophes are estimated at $1 billion.
Whatever the final rankings, climate-related insurance payouts are ballooning across the country.
“Back in the 1980s, ’90s and early 2000s, my industry was paying out on average annually hundreds of millions of dollars in severe weather,” Insurance Bureau of Canada (IBC) National Director Rob de Pruis told Jasper officials in August. “Over this past decade, that number is well over $2 billion.”
That calculation far exceeds the previous decade’s average of $632 million, reports Reuters.
The Jasper wildfire, Calgary hailstorm, and Toronto flooding are just three of the large climate disasters Canadians faced this summer, part of a global pattern affecting insurance adjusters everywhere as they struggle to keep up with the spike in climate claims.
“I remember when I would only get one catastrophic event a year…now we’re looking at a dozen of them a year,” said Anita Paulic, director of operations and catastrophe response at ClaimsPro, a Prince George, British Columbia-based claims management firm.
Insurance adjusters are “a vital cog in a business being stretched thin by mounting claims from homeowners and businesses,” writes Reuters. Many of them are retiring, and differences in certifications across provinces have contributed to a shortage of adjusters at a critical time for consumers. A relentless slew of natural disasters has placed “immense pressure” on adjusters, the IBC says.
“File loads have doubled during the catastrophic seasons for some in the industry,” said Kyler Hart-Moore, executive general adjuster at Alberta-based Laurin Adjusters. “You’re just getting a grip on one event and getting those files under control, and the other event hits right on its tail.”
A substantial number of job opportunities are open and more are coming, with as many as 20% more adjusters needed in Canada in the next five years, industry experts say.
News of Canada’s struggling insurance sector comes as the global reinsurance industry finds itself sitting pretty after reducing its exposure to “secondary perils”, a category of smaller but more frequent extreme weather events that includes thunderstorms, fires, and floods, reports Bloomberg. “That means primary insurers are left holding the bag.”
“Even if a once-in-100-year natural catastrophe were to occur, causing more than $250 billion in annual industry losses, most reinsurers would still be shielded,” said Charles-Marie Delpuech, an insurance credit analyst at S&P Ratings.
First-order perils cover catastrophes like hurricanes and earthquakes. Secondary perils are harder for the insurance industry to model and manage, partly because they’re driven by climate change, writes Bloomberg, and the reinsurance sector has been growing increasingly “adverse” to covering such events. Reinsurers lost big on secondary-peril losses in 2021 and 2022, but “have since trimmed their exposure.”
