Alberta floods to rank amongst Canada’s costliest catastrophes

But industry well positioned to absorb insured losses: A.M. Best

Despite ranking amongst Canada’s largest catastrophe losses, the insurance industry is well positioned to absorb the insured losses of the southern Alberta floods, according to A.M. Best.

According to an A.M. Best release, early estimates of total economic losses are projected to be as high as $5 billion. However, the relative scarcity of property coverage for flooding in Canada is likely to keep claims well below the total economic loss, in the range of $1 billion to $3.75 billion. While it is too early to determine any ratings impact, A.M. Best does not expect a significant number of rating actions as a result of this event. A.M. Best believes that the industry currently is well positioned from a risk-adjusted capital perspective to absorb the estimated insured losses, and underlying performance trends remain favorable.

Read: Insured losses from Alberta floods could reach 3.75B

In historical terms, only a handful of catastrophe losses in Canada match or exceed the expected insurance payout from the Alberta floods. The January 1998 ice storm that affected portions of eastern Canada caused insured losses of about $1.5 billion in inflation-adjusted dollars. Flash flooding in Quebec in July 1996 took a similar toll, while the 2011 Slave Lake wildfire in Alberta caused $700 million of claims. Flooding in 1997 along the Red River in Manitoba cost insurers about $500 million.

Insured losses from this event likely will be driven primarily from commercial lines. Commercial insurers may face business interruption claims from enterprises that carry this coverage. The amount of commercial flood coverage available also will be influenced largely by the percentage of accounts that purchased this optional coverage, states the A.M. Best release. This penetration, which has been estimated in some published reports at 50% on an industry wide basis, will vary from company to company.

Read: Alberta floods break records

In personal lines, automobile insurers likely face exposure from claims on comprehensive policies. For the most part, homeowners’ policies exclude coverage for overland water. However, there may be some payouts for damage resulting from water backing up into basements, for those who purchased such an endorsement. A.M. Best currently is seeking information on take-up rates for these endorsements.

Canada Property/Casualty – Leading Writers, Alberta (2012)

Ranked by direct premiums written (CAD Thousands)

Total Personal and Commercial Property

Rank

Company/Group

Consolidated DPW

Market Share (%)

1

Intact Insurance Group

335,002

16.7

2

Wawanesa Mutual Insurance Co.

282,979

14.1

3

Toronto-Dominion Bank Group

248,725

12.4

4

Co-operators General Insurance Co.

221,392

11.0

5

RSA Group

142,086

7.1

Total Automobile 

Rank

Company/Group

Consolidated DPW

Market Share (%)

1

Intact Insurance Group

700,207

20.5

2

Toronto-Dominion Bank Group

594,825

17.4

3

Wawanesa Mutual Insurance Co.

500,474

14.7

4

Co-operators General Insurance Co.

279,378

8.2

5

RSA Group

220,877

6.5

 

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