Estimates of flood damage, crop losses mount in rain-soaked Manitoba

Damage from flooding across southern Manitoba may result in insured claims of approximately $225 million, with about 10% of this figure resulting from damage incurred to commercial property, according to Jim Rivait, vice president Insurance Bureau of Canada (IBC) prairies, Northwest Territories and Nunavut region’s. To date, Rivait says insurers covering 65% of the marketplace have fielded 17,400 claims with a reserve of $145 million. Last year, Rivait says the Alberta floods resulted in insured claims of $180 million and an additional $80 million of uninsured damages paid by the government.

The provincial government will take responsibility for a portion of these claims through its disaster recovery program – Alberta’s Sustainability Fund, used for disaster assistance, is funding the relief program. The funds will aid residents of 17 Alberta municipalities and three First Nations, compensating for uninsurable severe weather-related damages. Most flood-related damage is not readily covered and reasonably available by insurance because policies traditionally will only cover damage from causes such as sewer backup, not flooding where water enters the insured property through basement windows.

Damage to municipal infrastructure and extraordinary operating costs, such as flood control and additional maintenance crews, will also be compensated through funds from the disaster recovery program.

To date, only $55 million has been allocated to the government sponsored recovery program but Rivait says this is under review and the government will likely revisit the monetary issue, potentially offering more. In addition, Rivait says the government will also revisit maximum insurable guidelines, which was originally $100,000 but is now under review due to the fact that recent floods resulted in total loss of homes resulting in uninsured damages far surpassing the $100,000 mark.

A majority of the damage affected farmland, resulting in fields that cannot be seeded due to wet conditions as well as flooded crops. The provincial government estimated that over 20% of the province’s 3.8 million hectares of cropland will not provide a yield this year.

Over 100 rural municipal roads were washed out as a result of floods in addition to the more than 30 provincial roads that were un-navigable.

In addition to the initial flash flooding Alberta was also hit by at least three tornadoes, hail stones and damaging winds. Damages incurred from these weather conditions left Canadian insurers with significant claims due to wind and other storm damage. Unlike flood damage – which is only covered if the damage is incurred due to sewer backup not if it is caused from water entering through basement windows – most policies do cover water damage from storms including tornadoes, wind and hail when the damage is caused by water coming in through storm-damaged roofs and windows.

In response to the flood damages, Cunningham Lindsey Canada sent over 30 catastrophe adjusters to southern Alberta.

“We responded immediately to the request made by one of our major clients for a CAT team and we were able to pull together a team almost overnight,” Bill Hornick, CEO and president, Cunningham Lindsey Canada, says. “Fortunately, we were able to utilize the resources of our sister company in the U.S. so there has been was no impact on our other clients.”

ING’s insurance subsidiaries were also sent an emergency response team boasting 80 insurance specialists, to assist the more than 5,000 customers who required clean up and repair as a result of water and hail damage. Jetse de Vries, chief operating officer for ING Canada, Western Region, says the Company’s brokers and response team have been assembled since the first storms hit, enabling the Company to be in a position to provide immediate emergency services and support to its customers. In a number of cases, the insurer issued preliminary payments on the basis of drive-through appraisals to facilitate the recovery process for its clients.

To date, ING Canada estimates that it will incur gross claims expenses amounting to between $75 million and $100 million as a result of the June storms in Alberta, for a pre-tax cost of between $40 million and $50 million net of reinsurance recoveries.