Thursday, December 26, 2013

After bad year, insurers face potential ice-storm hit

Tim Kiladze in the Globe and Mail (Toronto): Canadian insurers are grappling with the prospect of financial damage from yet another severe storm, capping off a brutal year that raised serious questions about how the industry will deal with the costs of climate change.

After suffering a $3-billion hit from natural disasters such as the summer floods in Alberta and the Greater Toronto Area, property and casualty insurers are now racking up claims from the ice storm that hit Ontario, Quebec and Atlantic Canada. It is still too early to determine the costs, but insurers are bracing for a bruising.

 “The ice storm that hit Central Canada this weekend has caused significant physical damage and emotional trauma for many households, and will likely be a significant insured event for the industry,” André-Philippe Hardy, a financial services analyst at RBC Dominion Securities, wrote in a note to clients. Insurer RSA Canada said the storm was “one of the worst we’ve seen in Toronto in quite some time.”

Insurers aren’t the only ones on the hook – they share the burden with reinsurance companies that take on a portion of the risk – but the latest storm reopens a deep wound. The property insurance industry is coming to grips with evidence that severe weather events are becoming more frequent. That has potentially significant implications for consumers and businesses, who may be forced to pay higher premiums as insurers try to recover from the losses.

“As severe weather events become more extreme and frequent, we will continue to pursue our efforts to ensure that the protection we offer reflects our country’s new climate reality and that governments, consumers, businesses and all stakeholders pursue their efforts to better adapt to climate change,” Charles Brindamour, chief executive officer of insurer Intact Financial Corp., said in November after the company reported its first underwriting loss in a decade....

Generic NOAA image of ice storm damage

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