Ice Storm Lessons learnt

January 31, 1999 | Last updated on October 1, 2024
7 min read
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At the time, it captivated Canadians across the country and even today is at the top of book best seller lists. The raw power of nature displayed by the ice storm which paralyzed south eastern Ontario, Quebec and parts of the northern U.S. in January last year continues to attract public attention. However, the experience of the ice storm offers more than just a fascination value, it provides the insurance industry and emergency support services the ability to learn from the past to ensure against future destruction.

What has been dubbed “Ice Storm ’98” was truly a remarkable event. At its peak more than five million people were without power in the middle of winter, some suffering for more than four weeks. Twenty-eight people died. And, insurers continue to work in partnership with many others to accelerate the recovery from the worst storm ever to strike Canada, northern New York and Maine.

There are several lessons to be learnt from this storm and the important role of mitigation as a tool to better manage risk. These include:

Ice storms are common in Canada and the U.S., yet many people believe they will never be victims of a severe storm. Ice Storm 98 crippled homeowners and businesses in Montreal and the surrounding area, and a similar storm could strike other cities such as Minneapolis, Winnipeg, Chicago, Toronto or even New York City.

We now know that a massive power failure in the middle of the winter can lead to a tremendous loss. Despite the magnitude of the challenge, insurers continued to provide the quality service that consumers appreciate during difficult times. There was never any concern about an insurance company failing, all legitimate claims continue to be paid and during and following the storm, the image of the industry continued to improve.

The response-and-recover effort due to the storm was very effective, but there remains tremendous opportunity for mitigation investment needs to anticipate and reduce future losses. Continued on page 26.

Coming in from the freezing rain

Freezing rain started to fall in the evening of January 4 and continued for almost a week. The storm struck a wide area including Ontario, New York, Quebec, Vermont, New Hampshire, Maine, New Brunswick and Nova Scotia. At its peak more than five million people were without power, some for weeks. Many died. The damage was extensive.

Large ice storms are unusual. They can happen in the winter when a layer of warm moist air becomes wedged between cold air. Snowflakes fall through the warm air, melt into raindrops, and then fall through the cold air to freeze on contact with cold objects like trees, power lines and buildings.

Warm moist air from the Gulf of Mexico travels north and east in the winter at higher altitudes, while cold air travels south and east from the Hudson Bay at lower altitudes. If both of these systems are blocked from their normal migration across the continent, an ice storm can form. This year the Bermuda High was particularly strong in early January, so the warm and cold systems remained locked together.

Some experts speculate that El Nino caused this blockage, but others strongly disagree. The scientific debate continues about the role El Nino played with respect to Ice Storm 98 and with previous ice storms across Canada and the U.S.

The center of the storm was located near Montreal, one of the largest urban centres in North America. In some areas 80 millimeters of ice accumulated, more than twice the previous record high. The build up of ice led to a power failure over a large area. Trees fell on power lines, hydro poles were pulled down and transmission pylons were crushed. In the middle of winter the lights went out.

Ice storms have been experienced across much of North America from the mid-west through to the Atlantic. Some large communities in this area include Minneapolis, Winnipeg, Chicago, Detroit, Toronto, Buffalo, Ottawa, Montreal, Boston and New York City. The first lesson of Ice Storm 98 is that all of these communities are vulnerable to a large ice storm and power failure in the middle of winter.

The Lessons

Many people experience a loss when the power goes out in the middle of the winter. This is an important lesson about the damage that an ice accumulation can cause.

A useful point of comparison is Hurricane Andrew, which triggered the largest loss ever experienced by the insurance industry. The value of claims incurred due to Andrew was US$15.5 billion, a total more than 10 times that of Ice Storm 98. There were 700,000 claims filed because of Andrew. More than 840,000 claims were filed from Ice Storm 98 – 20% higher than that of Andrew.

Although the value of claims from Andrew was greater, the claims volume resulting from the ice storm was much higher – the highest ever experienced by the insurance industry for one event. The ice storm was the largest loss ever to hit Canada. By value, it is one of the 30 largest losses recorded by the insurance industry.

Less than 10% of the ice storm damage involved vehicles. Some trees fell on cars and trucks. Since the average claim was around $1,400, few vehicles were severely damaged. Nevertheless, there were more than 75,000 vehicle claims. In addition, almost 30% of the claims were paid on commercial coverage, of which the average claim was over $8,000 – this, however, is a much lower average than what is found in most other severe events.

Two thirds of the total claims were paid to homeowners. Almost 700,000 claims were filed, the highest total ever. The average claim was $1,400. The most common loss was due to food spoilage resulting from power failure.

There were, however, some large personal losses as families desperate to keep warm were forced to light fires that destroyed their homes – fortunately these losses were few in number.

We have learned that sustained power failures during the winter over a large geographic area cause a lot of people to experience losses. Homeowners are the most vulnerable, yet the value of the losses generally can remain low. Efforts to educate homeowners about safety during the storm were effective in managing the risk of severe loss.

About 80% of the storm’s losses were recorded in Canada. This reflects the higher concentration of people and property in the Canadian areas affected by the storm. Canadian insurers made payments of $1.44 billion, more than three times higher than for the 1991 Calgary hailstorm, the previous record high catastrophic loss in Canada.

While Hurricane Andrew was about 10 times larger in terms of its impact on the US insurance industry, the U.S. is also about 10 times larger than Canada in terms of population and economic resources.

Clearly the ice storm was a major challenge for Canada and our insurance industry. At no point has there been any discussion in Canada about the risk of an insurance company failing as a result of the storm. The industry is in excellent financial health, and the prudent use of reinsurance is an important tool to manage this risk. Indeed, about two thirds of the cost of the storm was covered by reinsurance. All legitimate claims continue to be paid in full and no companies were at risk because of the event.

Public response

Public opinion polling confirms that the community appreciated the active role of the insurers. Measures of public trust and respect for the industry increased during the storm, and are now highest in the regions hardest hit. Montreal is an important centre for the insurance industry, and many companies and insurance professionals were directly affected by the storm. Most were without power. Working conditions were difficult. It was critical throughout to ensure that families were safe and warm. The storm highlighted our growing dependence on electricity to heat homes, operate computers, prepare meals and perform so many other essential activities of every day life.

The payments by insurers accelerated the recovery process, stimulating economic growth and job creation through the regions that suffered the most during the storm. Many areas now appear to have fully recovered, and a ll areas show progress toward recovery. Some challenges take longer – for example the damage to the forests in the region will take decades to heal, but we are on the road to recovery, and insurers have helped along the way.

Mitigation investments

Ice Storm 98 demonstrated the strength of several elements of the disaster management systems in North America. In particular, the response and recovery efforts were effective. Millions of people were affected over a large area in several jurisdictions, yet most losses were small, perhaps much smaller than they could have been.

There was an immediate effort, for example, to restore power through the involvement of specialists and repair crews called in from across North America. Power generators were brought and assigned to the most deserving including hospitals and emergency shelters. And there were many remarkable stories where volunteers worked to reduce suffering and loss.

An effective disaster management process should also include a strong commitment to mitigation. Often small investments before a storm can significantly reduce suffering and damage during a storm. The communities affected by Ice Storm 98 were poorly prepared for a major ice storm and the loss of power in the middle of the winter.

Public awareness of the threat was low despite regular minor ice storms in the area. Building codes do anticipate many risks but do not specifically account for the threat of ice accumulations, including the threat to the hospitals and schools used as shelters during the storm. There was little information about the availability of large generators. Since the utilities’ actions to anticipate the risk were not effective, the vulnerability of electrical power distribution will now be subject to extensive public review.

The area was not prepared for a significant loss of power in the middle of the winter, and other vulnerable communities are unlikely to be as prepared as they should be.