Canada’s intense wildfire season will have notable implications for the insurance industry, as the market reacts to the severity of the disasters by revising rates upwards
“Some insurance companies are starting to re-underwrite their fire risk, and we’re seeing some big rate increases across this property book,” Adam Mitchell (pictured below), Mitch CEO, told Insurance Business. “I could see that trend continuing.”
Insurance companies have pushed pause on offering new coverage in fire hit areas while the situation is ongoing.
“When there are immediate fires around that area, insurance companies take away the binding authority and cease trading and say, ‘we’re going to wait and see’, because you don’t want to start underwriting more buildings that are on fire or at risk of catching fire,” Mitchell said. “So, that’s one thing that just recently changed.”
Mitch Insurance is an Ontario-based personal and commercial insurance broker. Mitchell noted that personal lines carriers would likely have more exposure to the wildfires.
“We’re going have more exposure to personal [lines], where there’ll be houses in areas susceptible to forest fires,” he said. “Most industrial and commercial concentration will be down into cities, away from the forests.”
Wildfire danger has decreased in Northern Ontario due to rainy weather as of Sunday, weather experts have said.
But the quick spread and intensity of these wildfires has heightened concerns. Provincial data showed there have been 167 forest fires in the province so far in 2023. That’s already more than double the number recorded in the same period last year, at 78.
A Restricted Fire Zone (RFZ) is in effect for the entire fire region of Ontario (Zones 1 to 36) due to extreme forest fire conditions. Open air burning, including campfires, is not permitted in a #RestrictedFireZone. Visit https://t.co/XPnoZFTS24 for more details. pic.twitter.com/mSCshObXm1
— Ontario Forest Fires (@ONforestfires) June 9, 2023
As an insurance broker, Mitchell isn’t anxious, he said.
“A broker is there to help you navigate the new reality, and we’re quite used to the playing field changing,” he continued. “A company that used to be incredibly competitive and the right place for you this year might not be next year.
“Our entire value proposition to help the public navigate that changing landscape. So, from that perspective, it’s just another risk point.”
But “putting his human hat on,” Mitchell admitted that the wildfires are “really concerning.”
“It’s beyond me as to why this is happening,” he told Insurance Business. “I have a couple of young kids that didn’t get recess the last few days because it wasn’t safe to breathe, and that’s concerning.”
The Insurance Brokers Association of Ontario’s new president, Suzanne Pountney (pictured immediately above) is similarly concerned, but stressed that the ongoing wildfires serve as a call for the industry to ramp up its risk prevention efforts.
“It’s reinforcement that the work our industry does towards fighting climate change and active prevention is so important,” she said.
At the annual Insurance Brokers Association of Canada (IBAC) Hill Day in Ottawa earlier this month, Pountney shared that several Canadian MPs spoke to brokers and insurance leaders about the importance of emergency preparedness.
“We talked about flood a lot, but with fires being so prevalent this year, there’s definitely more work we need to do to prevent and prepare [for wildfires],” she said.
“There are a lot of implications for the industry. As MP [Bill] Blair [Canadian minister of public safety] put it, a dollar spent on prevention saves $10 in recovery.”
The IBAO president urged fellow brokers to rally around their communities and customers amid the disasters.
“I think one of the things the industry does so well is take care of its people,” said Poutney, who is a commercial lines manager at Ontario West Insurance Brokers.
“It’s incumbent upon brokers now to do some of the things that we do best, which is educate our consumers about the dos and don’ts to ensure they’re safe and they’re not doing something that would cause one of these fires.”
Are you a broker that’s seeing the impact of the wildfires on your business? Share your perspective with us below.
