Fiona Insurance Claims Could Reach $700 Million, Says Financial Agency

Buildings sit in the water along the shore following hurricane Fiona in Rose Blanche-Harbour Le Cou, Newfoundland, on Sept. 27, 2022. Frank Gunn/The Canadian Press

Although estimations for property damage from Hurricane Fiona are just emerging, Maritime residents are looking ahead to determine how they will afford to pay for their losses, and many insurance companies do not cover storm surges.

DBRS Morningstar, a financial services company, said that Hurricane Fiona would cost an estimated $300 million to $700 million due to insured losses.

“This would be significant but not large enough to affect the financial strength of the large, nationally diversified insurance groups which are the top participants in the property insurance market in Atlantic Canada,” DBRS Morningstar said in a Sept. 27 report.

Amanda Dean, vice president of the Atlantic region for the Insurance Bureau of Canada, said home insurance usually only covers certain types of water damage and typically requires an add-on policy for floods. And even with add-on policies, they do not usually cover storm surges because it is difficult to measure the risk with sea levels rising and coastlines eroding, she said.

The Co-operators Group Limited is one insurance company that has offered storm surge coverage to residents in Atlantic Canada and B.C.

“To our knowledge, Co-operators is the only Canadian insurer that offers storm surge protection,” said the company’s vice-president George Hardy in a statement.

According to DBRS Morningstar, storm damage in Atlantic Canada is not usually a significant source of insured losses because of its lack of large population centres, lower property values, and relatively stable weather patterns. All four Atlantic provinces combined account for only 5.9 percent of the entire Canadian property insurance market.

“Insurance Bureau of Canada (IBC) data show storms in Eastern Canada have contributed $152 million and $50 million to catastrophe losses in two separate loss events in 2021. This remains low compared with, for instance, the Alberta hailstorm ($500 million insured losses) or the British Columbia floods ($515 million insured losses). Going back to 1983, no Atlantic Canada severe weather event ever made a notable contribution to any of the top 10 highest loss years on record,” DBS Morningstar reported.

Dean said the insurance industry wants to “create a national public-private insurance program for overland flooding that offers protection to all Canadians.”

A recent IBC report released on Aug. 30 says, “If established, this [public-private] model could help close the insurance protection gap for the approximately 800,000 homeowners in Canada whose homes are at such high risk of flooding that private insurance is either unavailable or unaffordable.”

“Over the past 15 years, insurance claims from severe weather have more than quadrupled. The new normal for insured catastrophic losses in Canada has reached $2 billion annually, with water-related damage responsible for most of the losses,” the report stated.

Government Assistance Programs

The Disaster Financial Assistance Arrangements is a federal program that provides financial assistance to provinces to help pay for expenditures due to natural disasters, including individual property loss. The program provides financial aid to provincial governments, not the individual residents themselves.

Residents of Prince Edward Island have an online self-assessment tool to determine their eligibility for the Provincial Disaster Financial Assistance Program (PDFAP).

“The scope of damage Fiona caused has been devasting and some things are not covered by our insurance policies,” said Minister of Justice and Public Safety Darlene Compton. “This is why we have the PDFAP. Based on our previous experiences and those of our sister Atlantic provinces, we know that this program can help cover some of the repair costs of uninsurable assets for our residents.”

The Nova Scotia government said in a Sept. 26 news release that for every household, business, or not-for-profit, they would cover up to $200,000 in uninsured losses.

“The Disaster Financial Assistance program provides assistance for eligible damage and losses that threaten the health and safety of individuals, municipalities, and small businesses,” the release said. “The program is not a replacement for insurance. It will assist in covering only the basic costs of essential items.”

The Newfoundland and Labrador government said costs for damage might be covered through their provincial assistance program with help from the federal government.

“The province will need to provide the dates and estimated expenditures to the Federal Government, as well as meet the $1.7 million threshold. Coordination with residents and communities in respect to disaster financial assistance is ongoing as we assess the impacts,” they said in a press release.

In addition to helping with property damage, federal government announced that for the next 30 days, it would match donations made to the Red Cross to help those who need interim housing, clothing, food, and other essential supplies.

The Canadian Press contributed to this report.