Insurance companies faced over C$940 mn ($688 mn) in losses after mid-July storms triggered flash floods in southern Ontario, according to Catastrophe Indices and Quantification (CatIQ). The region, including Toronto, experienced heavy rain, hail, and strong winds.
Craig Stewart, Vice President of Climate Change and Federal Issues at the Insurance Bureau of Canada (IBC), urged patience, citing recent natural disasters, labor shortages, and supply chain challenges (see Insurance Industry Faces Challenges as Atlantic Hurricane Season Begins).
With several large natural disasters in the span of one month… coupled with skilled labor shortages and supply chain issues, we are urging affected customers to be patient. Rebuilding will take time
Craig Stewart, Vice President of Climate Change and Federal Issues at the IBC
The Financial Services Regulatory Authority of Ontario allowed insurers to use employees from affiliated companies and adjusters licensed outside the province due to the surge in claims following the storms and flooding.
- July 2023: A severe storm led to flash flooding in southern Ontario, including Toronto. This event alone resulted in more than C$940 mn in losses for insurers, driven by torrential rains, hail, and strong winds. The flooding caused damage to homes, infrastructure, and vehicles, leading to a high volume of insurance claims.
- Previous Incidents: Other flash floods in Ontario, like those in 2013 and 2018, have caused hundreds of millions in damages as well. These incidents are becoming more frequent, exacerbated by urbanization and inadequate infrastructure to handle such volumes of water.
- Insurance Payouts: Insurance companies face significant payouts after flash flood events. The claims often involve property damage, vehicle losses, and business interruptions. These payouts put pressure on insurers and may lead to higher premiums in flood-prone areas.
- Infrastructure Damage: Flash floods can cause widespread damage to roads, bridges, and public transportation systems. In cities like Toronto, disruptions from flooding often result in extended power outages, road closures, and delayed public services, contributing to overall economic losses.
“The insurance industry has long warned that severe weather events are becoming more frequent and intense. This summer is, unfortunately, proving that statement is correct,” said Amanda Dean, Vice-President, Ontario and Atlantic, Insurance Bureau of Canada (IBC) (see Major Natural Disasters in H1 2024).
“This summer, Canada’s insurers have been simultaneously supporting customers impacted by the Toronto floods, the Calgary hailstorm, the Jasper wildfire and flooding across Quebec. The insurance industry is on the ground in Ontario, Alberta and Quebec, assisting customers as they put their lives back together. The emotional distress that these events have caused thousands of Canadians cannot be overlooked.”
Ontario flood map
The insurance industry is also in the early stages of responding to flooding that occurred in Toronto and Montreal just this past weekend. Insurers will also be there for the customers impacted by the tornado that touched down in Ayr, Ontario, on the weekend.
These simultaneous events have placed immense pressure on insurance adjuster resources for many insurers. IBC is working with governments and regulators across the country to address adjuster capacity across Canada. Adjuster access is critical following natural catastrophes, as they ensure the industry can support consumers as quickly as possible.
Canada faced multiple natural disasters this summer. The IBC is collaborating with governments and regulators nationwide to address the shortage of adjusters. Insurers received claims related to floods in Montreal and Toronto, along with wildfires and hailstorms in Alberta.
Without federal commitment this fall to the National Flood Insurance Program, and provincial efforts to reduce flood risk, insurers may not support the program before the next election.
The Canadian federal budget allocated C$15 mn to the Canada Mortgage and Housing Corp. to implement a flood insurance program next year, including support for high-risk households.
Severe storms caused more flooding in Toronto on Aug. 17, disrupting power, flights, and roads. A week earlier, intense thunderstorms hit areas near Quebec’s border with New York after Hurricane Debby transitioned into an extratropical cyclone, according to Aon. Montreal saw record-breaking rainfall, leading to more flooding.
Flash floods in Ontario have increasingly become a concern due to climate change, leading to significant economic losses. These rapid and intense floods typically occur after heavy rainfall, overwhelming drainage systems and causing extensive damage in urban and rural areas alike. Southern Ontario, particularly Toronto, has been notably affected in recent years.
As reported by IBC earlier this year, severe weather in 2023 caused over $3.1 bn in insured damage across Canada. IBC is continuing to engage with the federal and provincial governments on ways to improve the climate resilience of communities across the country.
Insured losses related to severe weather in Canada now routinely exceed $2 bn annually. By comparison, between 2001 and 2010, Canadian insurers averaged $675 mn a year in losses related to severe weather.
The Canadian government has recognized the need for better flood protection and insurance programs. The federal budget has included funding for initiatives like the National Flood Insurance Program, aimed at protecting high-risk areas and assisting households prone to flooding.
by Yana Keller
