Fort McMurray fire latest in Alberta's string of expensive disasters
Early estimates pegging insurance cost of Fort McMurray fire from $2B to $9B
The fire that has destroyed sections of Fort McMurray is the latest in a string of costly natural disasters in Alberta, which has seen devastating fires, floods and storms in recent years.
The record is currently held by an earlier Alberta disaster, the floods of 2013 that cost the insurance industry $1.9 billion.
Other recent natural disasters that left insurance companies paying out huge sums in recent years include the $1-billion flooding emergency in southern Ontario in 2013, and the forest fires that ravaged British Columbia's interior in 2003, costing insurers more than $243 million.
With the fire in Fort McMurray still stretching over 85,000 hectares, an analyst at BMO is already predicting it could cost as much as $9 billion in insurance claims.
The fire has so far levelled some sections of the city, and is believed to have destroyed 1,600 buildings. Another 19,000 structures are under threat, officials believe.
In the last decade, Albertans — and insurance companies operating in the province — have been hit hard by natural disasters.
2013: Flooding in southern Alberta
The floodwaters that inundated Calgary, High River, Canmore and more than two dozen other communities at the end of June in 2013 left in its wake an unprecedented swath of destruction.
The Insurance Bureau of Canada (IBC) pegged the final cost in insurance claims at $1.9 billion. Those losses were limited by the fact that many policies did not cover the type of flooding that many customers experienced.
2012: Hailstorms in Calgary and southern Alberta
On Aug. 13, 2012, hailstorms across Alberta caused almost $580 million in damage. Hail as big as baseballs pummelled the town of Cardston, Alta., 230 kilometres south of Calgary.
A storm about two weeks earlier in Cardston cost insurers another $74 million in damage claims.
2011: Slave Lake fire
The fire that swept through the town 250 kilometres northwest of Edmonton in May, 2011, cost the insurance industry almost $775 million in claims, according to the IBC.
It was the most expensive fire-related disaster in Canadian history.
The blaze destroyed 374 homes — less than a quarter of the number of structures already destroyed at Fort McMurray.
"If you're looking at four times that of Slave Lake you're getting to well over $2 billion so there is a possibility that this may become the biggest catastrophic claim in Canada," said DBRS analyst Stewart McIlwraith.
Insurers face huge losses
The Insurance Bureau of Canada, which represents Canadian home, cars and business insurers, said it was too early to speculate on the cost of claims.
The average price of homes in Slave Lake is much lower than that of homes in Fort McMurray, where the decade long oil boom sent housing prices soaring.
Shares in Intact, Canada's largest property and casualty insurer, closed nearly four per cent lower on Wednesday as the Fort McMurray wildfire burned out of control.
The company said it has the biggest exposure of any insurer to the region.
"It could be quite significant in terms of a loss for them," said Edward Jones analyst Jim Shanahan.
Intact declined to comment on the likely scale of its losses, but CEO Charles Brindamour told analysts that "there are lots of similarities between Fort McMurray and Slave Lake."
Analysts said other insurance providers with exposure to the region include Toronto-Dominion Bank, international insurers Aviva and RSA.
With files from Reuters