How Canada’s P&C insurers are responding to catastrophes

How Canada’s P&C insurers are responding to catastrophes | Insurance Business Canada

Catastrophe & Flood

How Canada’s P&C insurers are responding to catastrophes

The active cat season has tested the industry’s resilience

Catastrophe & Flood

By
Gia Snape

Canada has faced a notable uptick in natural catastrophes in recent months, ranging from severe wildfires in British Columbia and Alberta to unprecedented flooding in Ontario and Quebec.

The rising cost of disasters has tested the resilience of Canada’s property and casualty (P&C) insurance industry. According to the Insurance Bureau of Canada (IBC), the total insured losses due to natural catastrophes in 2024 have surpassed previous records, reaching over $5 billion.

As extreme weather events become more frequent and severe, the country’s top insurers are deploying a range of strategies to manage risks and mitigate losses. At the same time, they have mobilized to support affected individuals and communities across Canada and created long-term initiatives to boost resilience.

Here are some of the latest actions by insurers:

Speaking to Insurance Business last month, Aviva Canada CEO Tracy Garrad remarked on “multiple catastrophic events” striking different regions in a matter of weeks, which presented “significant operational challenges.”

“Our focus remains on minimizing disruption for our customers, providing clear guidance, and responding as quickly as possible,” Garrad said.

Some severe weather events that started in July and continued into August were not reflected in Aviva Canada’s latest financial figures, but Garrad expected catastrophe claims to impact the insurer’s earnings results in future quarters.

“Looking ahead, we recognize that catastrophic events in Canada are becoming more frequent,” she said.

“Our response strategy involves two key actions: first, ensuring a swift response by securing supply chains, and second, influencing public policy and encouraging consumer behavior that enhances resilience, such as measures to prevent or reduce the impact of floods and wildfires.

“We must tackle this issue from all angles, as the frequency of such events is increasing due to changing climatic conditions, and we must be prepared to respond accordingly.”

Intact Financial Corporation

Intact highlighted that its teams were working 24/7 to support customers through the claims process and with the assessment of damages following extreme weather events this summer. It said it had deployed adjusters and appraisers across impacted areas, including Quebec, Ontario and Alberta, to assist homeowners and businesses.

In a statement, Intact estimated its catastrophe losses for the quarter-to-date stand at around $1.1 billion on a pre-tax basis, net of reinsurance. The figure is significantly above the expected levels for the third quarter of the year.

CEO Charles Brindamour acknowledged it was an “exceptionally challenging and stressful time” for Canadians and said the company was prioritizing getting thousands of customers back on their feet as quickly as possible.

“Our organization continues to show operational and financial resiliency in the face of these unusually severe weather events, with strong underlying performance, a robust balance sheet and mid-teens operating ROE,” he said. “We expect these extreme weather events to add further pressure to current market conditions.”

Definity Financial Corporation

Definity said it anticipates catastrophic events in July and August to cause around $150 million in financial losses. The preliminary estimate is derived from the data currently available from affected customers and an assessment of exposure levels.

The company in a statement: “Given that the Q3 2024 catastrophe losses will be materially above our original expectation, we expect to provide an update for the full quarter during the first half of October.”

Definity’s president and CEO Rowan Saunders acknowledged that the summer’s severe weather and wildfire activity had been devastating to several communities across Canada.

“The immediate work of our catastrophe response teams to help our customers recover truly underscores our purpose at Definity: to help our clients and communities adapt and thrive,” he said.

Desjardins Group, North America’s largest financial cooperative group, recorded surplus earnings before member dividends of $918 million, up $365 million from the same quarter of 2023. This increase was mainly due to the results of the property and casualty insurance segment, which saw fewer claims combined with higher revenues from automobile and property insurance.

Desjardins has also reiterated its climate goals to achieve net zero emissions in its operations, its supply chain, its lending activities and investments in three key carbon-intensive sectors – energy, transportation and real estate – by 2040.

In an interview with Insurance Business last year, Desjardins General Insurance CEO Valerie Lavoie said increasing natural catastrophes have prompted the cooperative to “rethink its approach to insurance” and innovate in the claims space.

The Wawanesa Mutual Insurance Company

The Wawanesa Mutual Insurance Company is investing significantly in resilience against climate impacts. In June, it introduced a $250,000 grant initiative to bolster Canadian communities, offering community organizations the chance to receive up to $25,000 in funding for local climate resilience projects. 

In April, Wawanesa announced plans to open a new climate resilience centre in Winnipeg in partnership with the Institute for Catastrophic Loss Reduction (ICLR). ICLR is a national not-for-profit focused on helping Canadian property owners, businesses and communities prepare for and adapt to the accelerating impacts of severe weather events.

The new centre will serve as “a destination for various stakeholders, such as insurers, reinsurers, brokers, home builders, building code officials and others to come together and learn about best practices and the issues involved in becoming more climate resilient,” Wawanesa said in a release.

The Co-operators Group

The Co-operators Group is another carrier focused on community resilience and sustainable investment. Rob Wesseling, president and chief executive of Co-operators, has called for industry action as Canadians face the impacts of climate change – “impacts that will worsen unless we move to better protect our communities.”

In June, the insurance and financial services cooperative earned the highest ranking among insurers in Corporate Knights’ Best 50 Corporate Citizens ranking for the 15th year. The national recognition underscores the company’s leadership across environmental, social, and governance-related sustainability performance indicators.

Reacting to the accolade, Wesseling stressed the organization’s commitment to sustainability: “The pursuit of sustainability is also critical to our long-term financial strength and stability, ensuring we can meet our purpose of financial security for Canadians and our communities for generations to come.”

What are your thoughts on insurers’ responses to natural catastrophes this summer? Please share your thoughts below.

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