High volume of closed claims shows industry’s ongoing commitment to help policyholders rebuild their lives
Severe weather can come in many forms and typically arrives with little warning. In a matter of moments, the devastation it causes disrupts lives and destroys properties.
Across Canada, severe weather events are more frequent and exacting a bigger toll on Canadians. A recent poll commissioned by Insurance Bureau of Canada (IBC) reveals that Canadians are deeply concerned with the country’s disaster preparedness.
Last year was the worst year for insured losses caused by severe weather in the country’s history, with thousands of people directly impacted. A five-week stretch over the summer months was especially devastating, with floods, wildfires, and hailstorms resulting in approximately 250,000 insurance claims and over $8 billion in insured losses.
In the aftermath of these severe weather events, insurers provide crucial support for recovery and rebuilding. They help policyholders navigate the claims process, offer guidance and support with additional living expenses, and provide the financial resources needed to repair or rebuild.
The sheer volume of claims resulting from the 2024 events is staggering, representing a 443% increase compared to the 20-year average. This placed significant strain on the capacity of claims departments at many of Canada’s property and casualty (P&C) insurers.
Insurers aim to resolve claims as quickly as possible so customers can return to their everyday lives, not just financially, but also emotionally. Last year saw record-breaking insured losses, as charted in IBC’s new In Brief report, “2024 Summer of Catastrophe across Canada.” It shows that a large majority of claims have already been closed one year after the events.
Using the most recent insured loss figures from Catastrophe Indices and Quantification Inc. (CatIQ) and empirical data on the industry’s claims response, the report finds that after one year:
92% of claims resulting from the July 16, 2024 flash flooding in Toronto and southern Ontario have been closed. This storm resulted in almost $900 million in insured damage.
86% of claims resulting from the August 5, 2024 hailstorm in Calgary have been closed. The storm caused $3.2 billion in insured losses, making it the costliest hail event in Canadian history.
96% of all claims resulting from the remnants of Hurricane Debby in August 2024 have been closed. By the time the hurricane reached Canada, it was an extratropical cyclone strong enough to cause massive flooding in Eastern Canada and southern Quebec. In its wake, it left $2.8 billion in insured damage and ranked as the costliest insured event in Quebec’s history, surpassing the 1998 ice storm.
Following a July 2024 wildfire, the rebuilding of Jasper is under way, though it will take additional time due to Jasper’s remote location and unique environmental considerations within a national park. Many Jasper residents continue working through the process of securing permits to begin the reconstruction of their properties. At the time of this report, 106 (30%) of the 358 properties that were destroyed have a rebuilding permit, and most of these property owners have started construction. The claims closure rate stands at 56%, which is comparable to other large wildfire events in Canada at the one-year mark.
The success of the P&C insurance industry in settling the large volume of claims resulting from last year’s devastating summer is a testament to its ongoing commitment to help policyholders rebuild their lives. It’s also proof of how the industry is adapting to a new normal of catastrophic losses in Canada, despite the unprecedented challenges posed by the scale and complexity of 2024’s catastrophic events.
IBC’s In Brief report offers a transparent look into the data behind these events and outlines the specific hurdles faced during the claims process. As claims from the 2024 events continue towards resolution, the report offers insight into factors that may impact the final closure for home, business and auto claims.
IBC released a similar report in 2024, focusing on the 2023 Nova Scotia wildfires and flooding.
Severe weather is causing financial turmoil and stress for Canadians from coast to coast. As these events become more frequent and more destructive, pressure on the property insurance market is building. IBC recently published a report titled State of the Home Insurance Market: Healthy but Pressure Is Building.
With Canadians facing escalating threats from natural disasters, IBC is renewing its call for the federal government to establish a national emergency management agency that would improve disaster preparedness and recovery efforts across Canada. This recommendation is part of IBC’s Three-Point Resilience Plan, a comprehensive strategy to protect vulnerable communities, ensure the continued sustainability of the home insurance market, and reduce the financial and emotional tolls of natural disasters.
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