Rebuilding Slave Lake

After wildfires destroyed much of the town of Slave Lake, Alberta in May 2011, adjusters working on the scene have had to overcome a series of challenges to help the community get back on its feet, including site access, locating lost records and demand surge.

Backdrop

The May 15, 2011 wildfires destroyed nearly 40% of the remote town in Northern Alberta. Two wildfires conjoined in the surrounding area; wind gusts of up to 100 km-h fanned caused the flames to jump the fireguard. In just two hours, the flames bore down on the small community of 7,000 residents. The fire destroyed the better part of the southeastern part of the city, where flames consumed half of the area’s homes. The blaze also gutted the local shopping mall, town hall, library, radio station and many downtown businesses. In total, 433 of the town’s buildings were destroyed and another 96 were damaged.

The event would turn out to be Canada’s second costliest event in terms of insured losses, just after the 1998 Ice Storm, which cost more than $1.8 billion (figure adjusted for inflation). According to data from Insurance Bureau of Canada (IBC), citing PCS-Canada data, claims totals have hit the $700 million mark as of July.

Access to the Town

The size and scale of the loss has posed challenges for the adjusters working the front lines. The remoteness of the area, where accommodations are limited – particularly after some of the hotels were gutted by the fire – created a challenge for the insurance industry in trying to get adjusting and reconstruction teams in place and up and running. The scale of the damage is also a new frontier for some of the adjusters on scene. First, a large number of claims must be adjusted all at once. Second, many of the claims are so severe as to be total losses.

But previous catastrophes have taught the Canadian insurance industry some valuable lessons, and these lessons have been applied to Slave Lake, experts say. For example, insurers and adjusters had a catastrophe response plan in place at the time of the event, so that officials would merely have to pull the trigger and spring into action. This allowed adjusters to move in, set up temporary living quarters for staff members and call on trusted contractors to begin the heavy lifting of re-building.

Adjusters working in Slave Lake emphasize the importance of a strong working relationship between the insurance industry and the municipal and provincial levels of government. This helped facilitate a quick response to the Slave Lake losses and slashed red tape that might otherwise hinder re-building efforts.

The industry’s response turned out to be quicker than restrictions to the area allowed. For two weeks following the fire, access to the town was restricted while fire crews worked to ensure there would be no risk of flare-ups from smouldering foundations of homes. This two-week “black out” time left adjusters in the dark as to what it was they were up against.

“With 100% of the town evacuated and the town essentially closed under an emergency order, the actual type and extent of the damage was largely unknown,” said Peter Karges, national manager of branch operations at Crawford & Company (Canada). “Site planning for office space and accommodations was hampered by not having access to the town or the evacuated business operators. It was unknown if some businesses were damaged and when they would return to operation. Emergency, security, municipal and other key personnel had priority over the key accommodations. In some cases, returning residents had priority through block reserving of rooms by government departments.”

In hindsight, this two-week wait to access the site may have been more of a help than a hindrance. Many of the insurance industry responders had a catastrophe plan in place and ready to roll, says Wayne Ross, Aviva Canada’s vice president of national property claims. Still, it all came down to how well the plan was executed. During the two-week period between when the fire occurred and when access to the town was granted, Ross said his team was getting in touch with all of its suppliers, contractors and the local community to arrange accommodations for staff. “So, when we were given the green light to get going, we were there.”

When they did arrive on the scene, some were taken aback by what they saw. Jennifer Jory, a general and multi-line adjuster at Cunningham Lindsey’s Lloydminster, Saskatchewan branch, described arriving on the scene as surreal.

“It looked like what I picture a war zone would look like,” she said. “Everything was grey. All of the vehicles looked like they had been sitting in the junkyard for 20 years. They were all rusted from the fire eating the paint off. It was very strange to be standing in the middle of a neighbourhood and have everything be basically down to knee-height.”

Cunningham Lindsey partnered with a restoration company that established a temporary compound just outside of the town. The site came complete with generators, a kitchen, showers, washrooms, Internet access and sleeping and office quarters.

“It meant we could handle our jobs right on site,” Jory said. “It also meant we were travelling five minutes to and from town when we needed to go and see people, and not one-and-a-half hours each way, with no place to stay. We could work longer hours, spend more time on the front lines and meet people without extra travel time and expense.”

Rebuilding Efforts

Accessing the town may have been the first hurdle, but it wasn’t the last. Karges notes that Slave Lake’s Town Hall, which housed all municipal property records, was destroyed. “These records were not stored off site,” he said. “The homes were 100% destroyed, and thus all personal records including photos, original building plans, surveys, etc. were most often not available.”

To overcome the challenge, adjusters conducted extensive interviews and tracked down documents and other information from other sources such as the original builders, MLS (a property marketing system used by Canada’s real estate boards) and land survey offices.

Various levels of government and the insurance industry, represented by IBC as an intermediary, worked together to move reconstruction along rapidly, Ross says. He points to the fact that the municipal government removed red tape around obtaining building permits. “We provided them with blueprints and our plans, and they moved them through quickly.”

The provincial government is providing 350 rental accommodations on Crown Land at a fixed rate, so that the local population is not taken advantage of. Also, the province is trying to give residents every opportunity to stay in the area rather than having them relocate permanently to a different city, he adds.

And in terms of relocation, the local regulator made it easy for insurance adjusters to help insureds in Slave Lake. Lisa McCabe is Cunningham Lindsey’s Vancouver branch office supervisor and acting cat supervisor for Slave Lake. She noted that the Alberta Insurance Council sped up the licensing process, enabling them to bring in adjusters from other provinces.

With the adjusters in place and permits in hand, the process of re-building got underway. But finding labour and materials to reconstruct the town proved to be a challenge. Finding the people to do the work was one issue, but the escalating costs of materials due to ‘demand surge’ were another.

“We have seen a slight increase in costs due to the remoteness of the area and the added expenses of shipping in people and construction materials from greater distances to Slave Lake,” McCabe says. “While there have been on occasion differences between the replacement costs and the policy limits, in all instances where we have been involved, the replacement costs have been honoured.”