Property insurer to take hit from recent disasters

Canadians could be paying more for home insurance as the toll of severe weather on personal property continues to climb, one of the country’s largest insurance companies said Monday.

Canadians could be paying more for home insurance as the toll of severe weather on personal property continues to climb, one of the country’s largest insurance companies said Monday.

Intact Financial Corp. (TSX:IFC) said it expects to book about $257 million in expenses stemming from the flooding in Alberta and Toronto and the deadly Lac-Megantic train derailment in Quebec.

“The devastation brought on by recent flooding and torrential rain is unprecedented,” Intact chief executive Charles Brindamour said in a statement.

“The scope of the damage and destruction that we have witnessed in recent weeks is a stark reminder that we must adapt the protection offered to Canadians to ensure it remains sustainable in light of the greater prevalence and severity of weather events.”

Intact spokesman Gilles Gratton said the price of home insurance has increased over the past few years to reflect the impact of climate change. “The costs of the weather-related damages are increasing steadfastly in Canada,” Gratton said.

“The home insurance product was designed, historically, to protect people against fire and theft, and essentially over the last 10 to 15 years what you’ve seen is the main use of the product is for water-related damages.”

Gratton said Intact is considering further price increases, higher deductibles or adding sublimits as possible ways to maintain the profitability of home insurance products.

“We’ll have to look at how we can keep offering the protection and make it affordable for consumers,” he said.

“So it may mean some continued pricing increase, like we’ve seen over the last few years.”

Glenn McGillivray, managing director of the Institute for Catastrophic Loss Reduction, said increasingly dense cities, crumbling infrastructure and the changing climate are likely to increase weather-related losses over the coming years.

“We’re building more and more and putting more and more into our cities, so when you get something like a heavy rainstorm — it’s going to hurt a little bit more,” he said.

Anayst Jeff Fenwick at Cormark Securities Inc. said Intact has been focused recently on repricing home insurance products and providing more specifics around what’s covered and what isn’t.

“About 20 years ago, there weren’t nearly as many people who had finished their basement and put expensive audio visual equipment, and that type of thing, down there,” Fenwick said.

“So now the magnitude of the losses when your basement floods tends to be quite a bit larger.”

That means insurance costs are likely to go up for Canadians, as severe weather events become increasingly prevalent, said Fenwick.

“We’ll probably start to see some rising costs as well if these things continue to become more common over time,” he said.

Toronto-based Intact estimates it will record about $123 million or 92 cents per share in after-tax catastrophe losses in its second quarter.

That will be mainly due to about $300 million of costs for Intact customers in Alberta following storms and flooding that swept through several communities.

The blow to Intact will be softened by reinsurance — essentially insurance for insurance companies.

The Alberta disaster will result in $105 million or 79 cents per share net of reinsurance in the second quarter ended June 30.

In the third quarter, which began July 1, Intact estimates it will record an additional $134 million, or $1.01 per share, in after-tax catastrophe losses.

That will include a $25 million cost associated with the Lac-Megantic train derailment that killed an estimated 47 people and devastated the small Quebec town.

The severe rain storm that impacted thousands of Intact customers in the Toronto area earlier this month resulted in an estimated $170 million of insurable damages, the company said.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Samantha Sharpe, 25, was stabbed to death at Sunchild First Nation on Dec. 12, 2018. Chelsey Lagrelle was sentenced to 4.5 years in prison for manslaughter in a Red Deer courtroom on Tuesday. (Contributed photo)
Central Alberta woman sentenced to 4 1/2 years for stabbing friend to death in 2018

Chelsey Lagrelle earlier pleaded guilty to stabbing Samantha Sharpe during argument

Alberta's chief medical officer of health Dr. Deena Hinshaw says Albertans need to keep making safe choices to start bending the curve back down. (Photo by Chris Schwarz/Government of Alberta)
One new COVID-19 death in Red Deer, 257 additional cases province-wide

Red Deer sits at 459 active cases of the virus

Olds College logo
Olds College to host free, online agriculture celebration next month

Olds College will host a free live-streamed agriculture event next month. The… Continue reading

Alberta Health Services Logo
AHS upgrading online immunization booking tool

Alberta Health Services’ online booking tool for COVID-19 immunizations will be temporarily… Continue reading

Eric Rajah and Brian Leavitt were awarded with Meritorious Service Medals by the Governor General for co-founding the Lacombe-based charity A Better World. The agency’s goal is to reduce poverty and boost education in Africa and Afghanistan. (Contributed photo)
Co-founders of Lacombe-based charity receive one of Canada’s highest honours

Eric Rajah, Brian Leavitt of A Better World are honoured by the Governor General

Red Deer dogs Bunsen and Beaker helped save a missing pet recently. The two dogs have more than 80,000 followers on Twitter. (Contributed photo)
WATCH: Red Deer science dogs help save lost pet

Red Deer science-communicating dogs Bunsen and Beaker helped rescue a missing pet… Continue reading

Dallas Stars' Mark Pysyk (13) and Tampa Bay Lightning's Ondrej Palat (18) compete for control of a loose puck in the first period of an NHL hockey game in Dallas, Tuesday, March 2, 2021. (AP Photo/Tony Gutierrez)
Vasilevskiy 3rd straight shutout as Lightning top Stars 2-0

Vasilevskiy 3rd straight shutout as Lightning top Stars 2-0

Montreal Canadiens goaltender Carey Price (31) grabs a loose puck as Canadiens defenceman Ben Chiarot (8) and Ottawa Senators left wing Brady Tkachuk (7) battle for the rebound during first-period NHL hockey action Tuesday, March 2, 2021 in Montreal. THE CANADIAN PRESS/Ryan Remiorz
Hab down Sens 3-1 to snap 5-game winless streak; Ducharme earns 1st NHL coaching win

Hab down Sens 3-1 to snap 5-game winless streak; Ducharme earns 1st NHL coaching win

FILE - In this Jan. 16, 2021, file photo, Creighton coach Greg McDermott watches the team during the second half of an NCAA college basketball game against Butler in Indianapolis. McDermott apologized publicly Tuesday, March 2, for using insensitive language in his postgame locker room talk with players and staff following a loss over the weekend. In a tweet, McDermott said he used a “terribly inappropriate analogy in making a point about staying together as a team despite the loss.” (AP Photo/Darron Cummings, File)
Creighton coach McDermott apologizes for ‘plantation’ remark

Creighton coach McDermott apologizes for ‘plantation’ remark

WHL’s B.C. Division clubs cleared to play in Kamloops and Kelowna bubble environments

WHL’s B.C. Division clubs cleared to play in Kamloops and Kelowna bubble environments

World Rugby recommends postponing 2021 women’s World Cup to next year

World Rugby recommends postponing 2021 women’s World Cup to next year

Sean Burke speaks at a news conference in Calgary, Alta., Tuesday, July 25, 2017. The Montreal Canadiens have made another change to their coaching staff, appointing Burke to take over as the director of goaltending. THE CANADIAN PRESS/Jeff McIntosh
Montreal Canadiens appoint Sean Burke as director of goaltending

Montreal Canadiens appoint Sean Burke as director of goaltending

The Toronto Arrows line up ahead of their Major League Rugby game in Toronto on April 7, 2019. THE CANADIAN PRESS/Neil Davidson
Toronto Arrows train under the bubble before heading south of the border

Toronto Arrows train under the bubble before heading south of the border

Team Canada skip Kerri Einarson watches her shot against Team Ontario in the final at the Scotties Tournament of Hearts in Calgary, Alta., on February 28, 2021.THE CANADIAN PRESS/Jeff McIntosh
Kerri Einarson, Brad Gushue team up for national mixed doubles championship

Kerri Einarson, Brad Gushue team up for national mixed doubles championship

Most Read