This winter’s extreme weather has been wreaking havoc with the bottom line at insurance companies, according to a story in the National Post. The Insurance Bureau of Canada pegs claims against property and casualty providers related to catastrophic events last year at $3.2-billion nationwide, triple the annual average for the past five years.
While this number is not totally due to the weather, weather-related events account for a large and growing part of the big bills.
In the Toronto area, the main culprit is flooding. This means that many homeowners, both those with dry basements and those with wet ones, will share the burden. Long after pipes have been repaired and soggy TV rooms refurbished, the impact of wild weather will be felt in the form of increased insurance premiums.
Aviva Canada, the country’s second-largest property and casualty underwriter, said its losses were “significant” for 2013. Last summer’s flooding in Toronto was the third-largest insured-loss event in the history of Canada and hit the company hard. This winter’s ice storm, while less costly, will generate $10-million in claims, the company estimates. It expects to see home insurance premiums rise 5% to 10% in the city.
Intact Financial Corp., the country’s largest provider of property and casualty policies, posted its first underwriting loss in years due to the disasters nationwide. The company has said it will see some premiums rise by as much as 20%. Water damage now accounts for more than half of the amount it pays out in claims.
To help customers absorb the bad news, insurance companies are offering “loss mitigation” discounts, which can serve to hold premium costs down.
Tracy Laughlin, vice-president of personal lines for the Ontario and Atlantic Division of Intact Insurance also stresses the importance of knowing exactly what’s covered by a plan. Often people don’t realize that sewer backup protection is not necessarily included in comprehensive or all-risk coverage, which is the kind that most people buy. While typical packages include coverage for in-house water damage, from such issues as leaky pipes or overflowing toilets, sewer backup protection is usually considered an add-on — one that would have been worth having during last summer’s deluge in Toronto.
Excerpted from the National Post
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