Cities in the crosshairsThe trend to more and larger catastrophic losses in Canada

Glenn McGillivrayManaging Director

Institute for Catastrophic Loss ReductionOctober 2, 2014

Number of cat. events 1970-2013

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20

40

60

80

100

120

140

160

180

200

1970 1975 1980 1985 1990 1995 2000 2005 2010

Source: Swiss Re, sigma

Insured losses 1970-2014(1H)

0

10

20

30

40

50

60

70

80

90

100

110

120

1970 1975 1980 1985 1990 1995 2000 2005 2010

Source: Swiss Re, sigma

USD billion at 2005 pricesUSD billion at 2005 prices

Insured losses by peril

CLIMATE RELATED

EARTHQUAKES VOLCANOES

GEOPHYSICALEarthquake, volcanic eruption

METEOROLOGICALSevere weather, winter & tropical storms, hail, tornado

HYDROLOGICALRiver & flash flood, storm surge, landslide

CLIMATOLOGICALHeatwave, freeze, wildland fire, drought

TREND

Global disaster damage

Annual insurance disaster claims, billions, adjusted for inflation

20 fold increase since 1970s!

Canadian disaster damage

Number of events

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20

40

60

80

100

120

140

160

180

1960s 1970s 1980s 1990s 2000s

Meteorological - Hydrological Geological

0 100 200 300

other

winter storm

tornado/hurricane

wildfire

thunderstorm

flood

Canadian disaster data base, number of events in Canada, 1950-2011

Canadian catastrophes

Canadian cats 2009

Winter storms in eastern Canada (Feb. 2)

$25 million

Hamilton rain (July 26)

$100- to $150 million

Alberta wind etc. (August 2-3)

$500 million

Mont Laurier tornado (August 4)

$6 million

Manitoba hail etc. (August 13-15)

$50- to $75 million

Ontario tornadoes (August 20)

$50- to $100 million

Tropical storms Bill & Danny (August 23 & 29)

$10 & 25 million

Source: Aon Benfield (Canada)

Canadian cats 2010

Saskatchewan storms (Spring)

Leamington & Harrow tornadoes (June 6)

Midland tornado (June 23)

Calgary hailstorm (July 12)

>$400 million

Hurricane Igor (September 21)

Canadian cats 2011

Storms in Ontario & Quebec (March)

Storms in Ontario & Quebec (April)

Wildfire in Slave Lake, Alberta (May 15)

$700 million

Flooding in Saskatchewan, Manitoba, Quebec (Spring)

Hail, tornadoes and wind in Alberta, Man. & Sask. (July

18/19)

Tornado in Goderich (August 21)

Hurricane Irene (August 28 to 30)

Alberta windstorm (November 27)

Canadian cats 2012

Flooding and wind in Ontario and Quebec (May 26 to 29)

Flooding, wind and hail in Alberta (July 12)

Flooding, wind and hail in Ontario (July 23)

Hail and wind in Alberta (July 26)

Flooding, wind and hail in Alberta (August 12)

Canadian cats 2013

Two small events early in the year

Southern Alberta flood (June 19-21)

$1.7 billion (preliminary)

GTA flood (July 8-9)

>$850 million (preliminary)

Ontario/Quebec storm (July 19)

2013 high water marks

Canada’s costliest and third costliest insured

loss events within two weeks of each other

Ice storm now the second costliest – took 15

years!

Two billion dollar natural catastrophes in

one year – a first!

Second place event (Slave Lake) fell not

one, but two notches to fourth place

5th consecutive year of billion-dollar events

High River, Alberta, Canada

© 2013 Reuters

June 23, 2013

© 2013 Reuters/Andy Clark

© 2013 AP Photo/The Canadian Press, Jonathan Hayward

Calgary, Alberta, Canada

© 2013 AP Photo/The Canadian Press, Jonathan Hayward

>$1.7 billion insured damage

Toronto, Ontario

© 2013 AP Photo/The Canadian Press, Winston Neutel

© 2013 AP Photo/The Canadian Press, Frank Gunn

© 2013 Reuters/Mark Blinch

© 2013 Reuters/Mark Blinch

>$850 million insured damage

Toronto, Ontario

$225 million insured damage

Burlington, Ontario

August 4, 2014

© 2013 Reuters/Mark Blinch

$200 million insured damage

Billion-dollar years

1998 – due solely to the ice storm

2005 – due greatly to the August 19 GTA rainstorm

2009 – due greatly to back-to-back windstorms in Alberta

2010 – due greatly to large hailstorm in Alberta

2011 – due greatly to Slave Lake wildfire

2012 – due greatly to one large and two smaller hailstorms

in Alberta

2013 – due to the Southern Alberta flood and GTA flood

First time ever for two billion-dollar events

2014 - $600- to $700 million so far

Why are losses rising?

More people and property at risk

Aging infrastructure

The climate is changing

New normal

“The Institute for Catastrophic Loss

Reduction (ICLR) reports that large

insured losses from extreme weather

appear to be ‘the new normal’ for the

Canadian insurance industry, expecting

that large-loss years will no longer be

rarities.”

Canadian Underwriter (November 6, 2012)

New normal

Increasing liability concerns

Corporate/professional

Directors and officers

Errors and omissions

Public

Municipal

What can be done?

Loss prevention

Risk transfer

Loss prevention

Structural measures

Non-structural measures

Public awareness

Structural measures

Structural measures - hard

Structural measures - hard

Structural measures - hard

Structural measures - hard

Structural measures - hard

Structural measures - hard

Structural measures - soft

Structural measures - soft

Risk transfer

Private (re)insurance sector

Public sector

Public/private partnerships

Capital markets

Massive gap between total and insured losses shows insurance

potential Natural and man-made catastrophe losses 1980-2012, in USD billion (2012 prices)

0

50

100

150

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1980 1985 1990 1995 2000 2005 2010

Insured losses Uninsured losses

Risk transfer

Insurance considerations

Rising cost

Homeowners

Businesses

Governments

Availability

Restrictions

Sewer backup

Commercial flood insurance in Alberta

When the feds say we have a problem…

”The rising cost of natural disasters and

the financial burden on Ottawa is the

country’s biggest public safety risk”…

Public Safety Canada, 2013/14, Report on Plans and Priorities

Thank you!

gmcgillivray@iclr.org

www.iclr.org

www.basementfloodreduction.com

Twitter: @iclrcanada