IBC: Canadian Insurers Pay Out All-time Record High in Claim Settlements Last Year

Monday, February 24, 2014

Flooded HouseWhile homeowners in the U.S. filed a relatively limited number of home insurance claims due to the effects of Mother Nature in 2013 - losses being well below the average from 2000 to 2012, according to Munich Re - that wasn't the case for Canadians this past year.

According to new numbers released by the Insurance Bureau of Canada, insurers paid out approximately $3.2 billion to policyholders, resulting in insured losses of $200 million. That's an all-time record high.

Bill Adams, vice-president president of the Western division of IBC, noted that no natural disaster was more severe than the massive flood that affected Alberta in June.

"These unprecedented losses have been very difficult for Albertans," said Adams. "Many homes and businesses were destroyed. Rebuilding will go on for some time to come, and our industry will continue to be there to fulfill its important role."

Alberta wasn't the only province that was dealt a blow. Don Forgeron, president and CEO of IBC, indicated that Ontario felt the effects as well, including all of Atlantic Canada during the holidays when a severe ice storm hit.

"Frankly, bad weather hit insurers hard, too," said Forgeron.

He added that even though the experiences were hard both for carriers as well as those who had to endure the environmental disaster - the one good thing to take away from it all is insurers' ability to learn and adapt so that services can be made available even more quickly in the future when other inclement weather events transpire.

"Canadian communities are seeing more severe weather, especially more intense rainfall," said Forgeron. "This overburdens our sewer and storm water infrastructure, resulting in more sewer backups in homes and businesses."

He also stated that with the help of the Canadian government, insurers are acclimating to this new normal so that homeowners and renters can be compensated effectively.

Predictive assessment tool unveiled

One of the ways insurers are going about this is through the development of the industry's municipal risk assessment tool, more colloquially known as MRAT. IBC noted that this program, which analyzes where infrastructure may be in need of reinforcement due to being structurally deficient, was launched in British Columbia, New Brunswick and Ontario in November, but the aim to have it available in all 10 provinces in the future. The hope is that it will enable lawmakers and local leaders to address where there are vulnerabilities, particularly as they relate to sewer systems, so home basements can be kept dry.

As insurers reflect on the past year, the IBC said that homeowners themselves should do the same. It also recommended doing a home insurance review to effectively prepare for what 2014 has in store.

Perhaps the most effective way of going about this is by performing a home inventory.

"Maintaining a home inventory protects you in the event of theft or damage to your home's contents," said Ralph Palumbo, vice president of the Ontario division of IBC. "Having an inventory helps ensure you have the right amount of coverage and may help speed up the claims settlement process faster after a loss."

Depending on whether a home inventory has ever been performed, it can take some time to develop one that's comprehensive, detailing all of the necessary descriptions that are necessary, such as jotting down serial numbers for electronic belongings, tracking down receipts and credit card statements. Instead of doing it all at once, it's a good idea to keep a rolling inventory, making note of what things are purchased as soon as they're brought home. This helps save time and avoids frustration.