Insurance claims from fires in Fort McMurray hit $3.58B
The devastating wildfires that forced Fort McMurray residents to flee their homes and caused oilsands companies to shut down their plants will cost insurance companies $3.58 billion, making it the most expensive disaster for insurers in Canadian history by a wide margin.
“There is little doubt that the Fort McMurray wildfire is one of the most horrific and damaging natural disasters in Canadian history,” Bill Adams, Insurance Bureau of Canada vice-president western and Pacific, said on a conference call Thursday.
The $3.58 billion is roughly twice the $1.8 billion in insurable claims that followed the 2013 flooding in southern Alberta and much more than the $742 million in claims from the fire that burned much of Slave Lake, Alta., in 2011.
“It’s a huge number, but it isn’t that surprising when you have a look at the neighbourhoods that have had such a dramatic impact,” said Melissa Blake, mayor of the Regional Municipality of Wood Buffalo, which includes Fort McMurray.
Blake said there are still three neighbourhoods where residents have not been allowed to return home because there is so much debris from burned-down houses.
Adams said the IBC is working to tabulate the total cost of the fire, including the cost of uninsured damages, but did not have an estimate of the total cost on Thursday.
“The vast majority of the overall costs of the fire will be borne by insurance policies,” Adams said.
The total cost of the flooding disaster in 2013 was close to $6 billion, but most of those costs were paid by various levels of government, while the majority of the damage from the Fort McMurray fire was insured and will be covered by policy claims.
Previously, the costliest insured disaster in Canada was the Quebec ice storm of 1998, which forced insurers to pay out $1.9 billion in constant 2014 dollars, according to a 2015 annual report from the bureau.
Given the number of catastrophic disasters in Alberta in recent years, it is likely the fire, which destroyed more than 1,800 stand-alone homes and 600 condos, apartments and duplex units around Fort McMurray, will cause insurance premiums around the province to rise.
“Unfortunately, this wildfire is — yes — the largest, but it’s one in a series of claims events that have taken place in Alberta over the last number of years,” Adams said. Seven of the 10 most expensive catastrophes in Canadian history occurred in Alberta.
“What impact this will have (on policy costs) will be determined at a later date by individual insurers,” he said.
The majority, 62 per cent, of the insured damages covered personal property, said Carolyn Rennie, managing director of Torontobased Catastrophe Indices and Quantification Inc., which compiled the estimate. A further 33 per cent of insured damages was for commercial property, and five per cent of the claims was for cars and trucks.
Rennie said there were more than 27,000 personal insurance claims with an average claims value of $81,000 each. There were roughly 5,000 commercial claims averaging $250,000 each.
She said that the figure released Thursday also included business-interruption insurance claims, which would have covered oilsands companies forced to shut down mining and steaming operations as the fire raged out of control for the month of May.
Rennie did not say how many oilsands companies were relying on business-interruption insurance to offset losses as a result of the fire.
RBC Capital Markets analyst Greg Pardy said in a research note at the time that Suncor Energy Inc., the largest oilsands operator, was not expecting to mitigate its losses with insurance claims and that the fire would erase $982 million from its cash flow for the year.
For a period of more than two weeks, major oilsands companies had shut down a cumulative total of around one million barrels of oil production per day, and analysts projected forgone revenues of $70 million per day as a result.
Kris Smith, Suncor executive vice-president, refining and marketing, said at a conference Wednesday that his company is on track to bring the last of its affected oilsands facilities back up to pre-fire production levels by the middle of July.