What claims may come from the Alberta wildfires

While it’s too early to estimate losses, Canada’s P&C industry is anticipating incoming property damage claims due to Alberta wildfires and insurers may have already begun to see claims from non-physical aspects of the policies, experts tell Canadian Underwriter.

As of Monday, about 100 active wildfires are burning in Alberta. Twenty-seven are currently classified as out of control. 

Alberta Premier Danielle Smith declared a provincial state of emergency for the wildfires Saturday. As of Sunday, the number of evacuees had grown to about 29,000, up from approximately 24,000 the day before, the province reported. About 25 communities are still under evacuation orders.

“Unfortunately, the wildfires across Alberta over the past week have resulted in the loss of multiple properties,” Rob de Pruis, national director of consumer and industry relations for Insurance Bureau of Canada, reported in a press release. 

But property damage has yet to be widely recorded, mostly due to the fact that many Albertans have been urged to evacuate their homes and have yet to assess their damage.  

“Since there hasn’t been too much property damaged noted at this time, most of the claims would be coming from the non-physical parts of the policies, such as additional living expenses and business interruption for the homeowners and business employees on evacuation orders,” Laura Twidle, CEO of Catastrophe Indices and Quantification Inc., told Canadian Underwriter in an email Monday.

“With past fires, depending how close the fire is to the energy/power infrastructure, the power has been cut to evacuated regions which then results in … goods damage, such as refrigerators (and food spoilage),” Twidle added. 

Plus, the fires have curtailed energy production for the country’s main oil producer. The state of emergency in Alberta has shut in about 145,000 barrels of oil equivalent per day (boepd), Reuters reports. 

Vermilion Energy Inc. says it has temporarily stopped production of the equivalent of about 30,000 barrels of oil per day, as it assesses the risk to its operations due to the wildfires in Alberta. The company says it’s assessed minimal damage to its key infrastructure, the Canadian Press reports. 

Similarly, Paramount Resources Ltd. said it has curtailed production of about 50,000 barrels of oil per day, and its operations in the Grande Prairie and Kaybob regions in Alberta are being affected.  

Other oil and gas companies operating in the western and northwestern parts of the province have also evacuated workers and halted operations. 

Wildfire season, which began Mar. 1, has begun in earnest with unseasonably warm temperatures.

“The West has been unseasonably warm with record-breaking maximum temperatures; so hot that Environment and Climate Change Canada issued heat warnings last week” Twidle observed. “On top of that, there has been little to no precipitation in the short-term weather and gusty winds at the end of last week made the situation worse.”

The cause for the majority of the wildfires is under investigation, however, a handful have been deemed to have been caused by either human interference or lightning. A fire ban is underway in the province. 

The wildfires have also caused court sittings disruptions, and some hospitals have been evacuated, the province notes. Ranchers and farmers have had to evacuate their livestock. Plus, there are multiple road closures and advisories for north and central Alberta. 

So far this year, wildfires have burned about 390,000 hectares across Alberta. 

Comparatively, the previous year saw a total of 417,000 hectares burnt.  

Alberta’s neighbouring provinces have also been experiencing wildfires growing in concern. 

 

Police block the road into the wildfires near Entwhistle Alberta on Sunday May 7, 2023. THE CANADIAN PRESS/Jason Franson.