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Chris Miles, right, chief operating officer of the Calgary Airport, leads a tour of a closed concourse as repairs are underway at the Calgary International Airport after parts of its domestic terminal building were closed due to damage caused by hail and heavy rainfall on Aug. 6.Jeff McIntosh/The Canadian Press
A storm that hit Calgary in August with egg-sized hail was the second most expensive severe-weather incident in history for the Canadian insurance industry, with an estimated $2.8-billion in payouts that could lead to premiums increasing across the country.
Craig Stewart, a spokesperson with the Insurance Bureau of Canada, said the storm’s price tag is second only to the Fort McMurray fires in 2016, which cost insurers roughly $3.6-billion. The financial hit of the hailstorm dwarfs the massive Jasper wildfire earlier this summer, which is only expected to cost $880-million in comparison.
The Aug. 5 storm reportedly shattered skylights, dented siding and smashed windshields. Portions of the city’s airport were closed and WestJet was forced to ground 16 planes because of damage.
Hailstorms are a particularly expensive weather event because they affect a large area, and it is difficult to protect homes and cars from large objects falling from the sky. An estimated 130,000 claims are currently being processed for the August storm, and the IBC said an estimated one in five Calgary homes were damaged.
The dense area in which homes were affected is also a factor in how expensive the storm was, said Caleb Maksymchuk, president of the Insurance Brokers Association of Alberta.
While Mr. Stewart said it’s difficult to peg climate change as the reason for a single weather event, there is a clear trend in more severe hailstorms hitting Calgary and other Prairie communities in the past decade.
The Calgary storm will likely have a localized impact on increasing home and auto premiums for residents in the city, but Mr. Stewart said that 2024 is looking to become the most expensive year for insurance companies across the country, and it could lead to an increase in home- and auto-insurance premiums for all Canadians.
That’s partly because the cost of reinsurance – an insurance product that insurance companies themselves purchase to cover their losses during large-scale disasters – is expected to rise and put more pricing pressure on providers.
“Not much more than a month ago, things were looking pretty okay in Alberta as it related to loss ratios,” Mr. Maksymchuk said.
“But you throw in the Jasper fire and this storm … as well as across Canada with floods in Ontario, there’s going to be huge pressure on insurance companies.”
Mr. Maksymchuk said he’s concerned that insurance against hail damage could eventually become unavailable for homes in at-risk areas in the long term, or that deductibles could rise to exorbitant levels because insurance companies have no other way of offering coverage. Some homes in flood-prone areas across Canada have faced similar issues where insurers refuse to offer coverage because the homes are at too much risk of damage.
The insurance industry is calling on governments to take steps to mitigate the cost of natural disasters by enforcing and funding building regulations that retrofit old homes and build new homes with hail-resistant materials.
“We need to get homes built back into a better position,” Mr. Maksymchuk said. “Now that we know these areas are getting hit often, you can’t put the same vinyl siding up again that’s going to get hammered by hail, just to have it replaced three years later.”
Mr. Stewart said the federal government has invested less than $2-billion in programs that help make homes resilient to climate change in the past decade, while it invested $40-billion in promoting energy efficiency in homes.
“People want homes that aren’t going to flood or burn. That’s more important to people in high-risk areas than energy efficiency, and so a shift of thinking where we’re focused on both issues has to happen,” Mr. Stewart said.
He also wants better advance warning systems so people can take measures to protect their property before storms, even if that means parking their cars in a public garage. Many cars were totalled in August’s storm.
August’s hailstorm means that the total cost of insuring weather-related events in Alberta this summer will reach $3.6-billion. That number eclipses the $3.1-billion cost of insuring such events across all of Canada for the entirety of 2023.
In comparison, in the period between 2001 and 2010, IBC reported that the average cost of insuring weather-related events was just $701-million.