Canada’s insurance industry is facing a deluge of climate-related catastrophe claims

Canada’s warmer summers, which have sparked wildfires in tourist areas, intense hail storms and severe flooding storms in major cities, all likely linked to climate change, are leading to understaffing and potentially delays in adjusting requests, according to people in the insurance sector.

The industry depends on teams of insurance adjusters to analyze claims and determine the amount of loss or damage covered by insurance policies. They are an essential cog in a business that is stretched by increasing demands from homeowners and businesses.

Insurance claims are rising globally as climate change causes more severe weather, but Canada is particularly at risk as one of the world’s most vast and forested lands. Many adjusters are retiring and certifications are different in each province, making it difficult for Canada to handle increased demand, companies, consumers and industry groups told Reuters.

Extreme weather sends insured losses 70% above historical norms

“These events have put immense pressure on insurance adjusters, who are critical in the wake of natural disasters because they ensure the industry can support consumers as quickly as possible,” said the Insurance Bureau of Canada, an industry group.

In August, insurance agents toured Jasper by bus after firefighters battled a blaze that damaged or destroyed a third of the mountain community, making it the second costliest fire in Alberta’s history in terms of losses insured.

The fire exceeded C$880 million ($653.55 million) in insured losses, according to initial estimates from the Catastrophe Quantification and Indices, the Insurance Bureau of Canada (IBC) said.

Globally, many insurers have dealt with unexpected claims in recent years, mainly by raising premiums and shedding some business.

But Intact Financial, Canada’s largest property and casualty insurer, estimates about 250 policyholders have suffered damage in Jasper and expects losses in its $900 million annual range for all catastrophic events. The company insures approximately 700 families and businesses in the Jasper area.

The insurance division of TD, Canada’s second-largest bank, said August weather events, including hail storms in Calgary and flooding in Montreal, will lead to more than $300 million in claims and related costs in the quarter fourth, after incurring $186 in damage costs. million from flooding in Toronto and Alberta fires in July.

Last year, wildfires burned 18.5 million hectares (45.7 million acres) of land, more than double the previous record set two decades ago, turning European and American skies orange and the air gray.

Over the past 10 years, the number of Canadian claims related to extreme weather events has grown to more than 1.3 million, up 93 percent from a decade ago, according to the IBC.

“I remember when we used to have 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, an independent claims management firm.

Paulic, whose firm serves insurers by sending teams of claims adjusters, said it has had to redeploy staff in recent weeks to handle flood claims in Toronto, hail claims in Calgary and those related to the wildfire vegetation.

Insured losses from natural disasters averaged $2.2 billion ($1.63 billion) a year over the past decade, well above the $632 million average in the previous decade, according to the IBC, which expect mounting losses to continue.

Adjusters often play arbiter between the consumer and insurers, and the increase in volume has slowed claims settlement, especially as access to certain areas following catastrophes is restricted.

Kyler Hart-Moore, general manager of adjustment at Laurin Adjusters in Alberta, said file uploads have doubled during catastrophic seasons for some in the industry.

“You’re just catching one event and keeping those files under control, and the other event comes right through,” he said.

He called the work a “fork service.”

“No matter what part of the dinner you’re in, if someone calls you you get up and leave.”

Peak claims season

In Jasper, industry experts say fixes could take anywhere from four weeks to six months, depending on the damage, while adjusters deal with other weather-related disasters.

Insured losses from the Wild Jasper fire in Canada exceed C$880 million

There have been more than 4,800 fires in Canada this year, the world’s third-most forested nation. The fires forced thousands of people to evacuate their homes and also disrupted oil and mining operations in remote regions.

For insurance adjusters, this means work during the June-August peak period has increased dramatically.

The increase comes as many Canadian claims adjusters are retiring, industry sources said. Independent adjusters are provincially licensed, an added challenge when they have to move to assess damage in different parts of the country.

Many companies are already looking to the next generation of adjusters, as increased workflow and claims will require at least 10 percent to 20 percent more adjusters over the next five years, industry experts say.

Some companies, including ClaimsPro, look to college job fairs to recruit younger, more travel-minded professionals.

But the job, which requires working with people still reeling from the loss of a home and prized possessions or seeing their livelihood destroyed, isn’t for everyone.

“The degree of empathy without slipping into sympathy, that’s very key and it’s difficult,” Hart-Moore said.

($1 = 1.3465 Canadian dollars)

(Reporting by Nivedita Balu in Toronto and Nia Williams in British Columbia; Editing by Caroline Stauffer and Bill Berkrot)

Photo: A worker walks through a devastated neighborhood in western Jasper, Alberta, Monday, Aug. 19, 2024, after a fire caused evacuations and widespread damage in the National Park and the town of Jasper. (Amber Bracken/The Canadian Press via AP)

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Catastrophe Trends Claims Canada