January cold snap resulted in Albertans claiming $30M; insurers bracing for unpredictable summer weather

The deep freeze was the first major weather event to hit Canada this year, and the Insurance Bureau of Canada expects several more in the approaching months

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After one extreme weather event in Alberta in the first weeks of 2024, Canadian insurers are expecting “extremely concerning” weather conditions this summer as the province braces for worsening drought and a potentially severe wildfire season.

The Insurance Bureau of Canada already estimates about $180 million in damages were incurred during the mid-January cold snap that hit swaths of Western Canada. The majority of insurable damages came from British Columbians, with Albertans claiming about $30 million between Jan. 12 to 15.

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The bulk of those claims were for property damage, specifically burst pipes, during the stretch that saw temperatures near -40 C in Calgary and -50 C in Edmonton.

Alberta homes are built to withstand extreme lows better than its westerly neighbours due to different building codes, said Rob de Pruis, IBC’s national director of consumer and industry relations. B.C. homes may not have the same insulation and heating equipment, he said, making pipes more susceptible to bursting during cold snaps.

The deep freeze was the first major weather event to hit Canada this year, and the IBC expects several more in the approaching months.

Albertans alone claimed $330 million in 2023 due to severe weather, contributing to Canada’s $3.1 billion in weather-related claims — the fourth highest since IBC began collecting data in 1982.

“Last year across Canada, we had more catastrophic insurance events in one particular year than we’ve had any other year in our nation’s history,” de Pruis said.

Insurable claims have been tracking higher for decades, de Pruis said.

Hailstorms, tornados pose high risks in summer

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According to IBC, Canada’s insurance industry was paying out an average of $450 million each year in the 1980s and 1990s. That number rose to about $675 million in the 2000s and has averaged about $2 billion over the past decade, de Pruis said, which he called “extremely concerning.” (All figures are adjusted for inflation.)

“We’re not climate scientists, but we do know that the frequency and severity of these types of events has been increasing,” de Pruis said.

Hailstorms and tornadoes pose high risks to Albertans during the summer months. While wildfires also pose a risk, they historically make up a small portion of all severe-weather claims every year, with the exception of extreme cases. (The 2016 Fort McMurray wildfire resulted in upwards of $5 billion in claims, according to IBC.)

The July 18, 2023, hailstorm and tornado that tore through Medicine Hat resulted in more than $100 million in damages — nearly a third of all severe-weather claims in Alberta for the year.

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Meanwhile, Alberta has the second-highest auto insurance premiums in the country, according to the Alberta Automobile Insurance Rate Board’s 2023 mid-year report.

Alberta Finance Minister Nate Horner, speaking last week to Calgary’s business community, said the province has commissioned a report on its auto insurance industry. He said the province expects to receive that report sometime this week and that consultation on future changes will likely begin in the spring.

“There was a study done earlier in our term, but Premier (Danielle) Smith felt it was too narrow in focus and didn’t consider absolutely everything,” Horner said. “This study does.”

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