The wildfire that devastated Jasper National Park this summer significantly impacted the local community, with the Insurance Bureau of Canada considering it the country’s second most expensive wildfire disaster for insurance payouts. While officials have since coordinated and begun re-entry, insurers are still busy going through claims and working with the local government to assess the damage.
The Impact of Jasper Wildfires on Canadian Insurers at a Glance
- The Jasper wildfires in the summer of 2024 may cause nationwide premium increases, as regions that have a similar increase in wildfire activity may see changes in underwriting criteria and higher rates.
- All standard homeowner and tenant insurance policies cover wildfire damage, as well as associated costs with evacuation like temporary lodging. The IBC has advised affected Jasper residents to contact their insurers to have these costs covered upfront.
- Jasper homeowners may experience delays in having their claims settled. Apart from waiting for clearing and giving adjusters full re-entry, there have been several recent disasters like the Ontario flash floods and Calgary hailstorm which are straining insurers’ resources and manpower nationwide.
What is the expected impact of the Jasper wildfires on the home insurance industry? Read on to learn more about the recent fires’ effects on local homeowners and how this may affect the affordability of coverage for Canadian consumers.
How Did the Wildfires Impact Jasper Homeowners?
This summer, The Jasper wildfires caused highway closures, the destruction of critical infrastructure, and the evacuation of residents and tourists. Local homeowners now face the challenge of assessing damage and rebuilding – here’s a closer look at the aftermath of the summer fires:
- Over 25,000 residents were forced to evacuate, causing families and individuals to be temporarily displaced. Clearing the debris is expected to take until December this year, with rebuilding taking several years more.
- Around 2,500 home insurance claims related to the wildfires have been made in Jasper so far.
- The IBC estimates insured damages to be $880 million, making it the costliest insurance event in Canada’s national park history to date.
- The Alberta government provided a one-time payment of every $1,250 per adult evacuee and $500 per child evacuee under 18 to help residents cover expenses.
- 358 out of Jasper’s 1,113 buildings were damaged by the wildfire. This represents approximately 30% of the town’s structures, and assessing the full extent of the damage is estimated to take six months.
Estimated Impact of the Jasper Wildfires on the Insurance Industry
The Jasper wildfires have raised significant concerns about implications for home insurance rates – not just locally, but for the rest of Canada. Here’s a breakdown of some of the most significant effects that the recent disaster is predicted to have on the home insurance industry:
Increased claims and insurance rates:
With a substantial number of homes in Jasper damaged or destroyed, local home insurers have faced a surge in claims. An increase in claims will likely lead to higher home insurance premiums in the area.
Reassessment of underwriting processes and coverage strategies:
Insurers may start to reassess the risk associated with properties in wildfire-prone areas or areas at the highest risk of floods and consider them high-risk. Those in lower-risk areas will likely see only moderate adjustments in home insurance premiums, while those in high-risk areas will be expected to bear the brunt of the changes.
Potential coverage denials:
Home insurers may start to account for the trend of increasing wildfire frequency in Canada and consider if they should limit or even deny coverage in high-risk places, just as insurers did in California. Homeowners may need help securing home insurance policies if their houses are deemed too risky.
Tighter reinsurance market:
Because of Canada’s robust reinsurance market, insurers are able to share the risk associated with large claims from events like wildfires or flash floods. While reinsurance is expected to help stabilize issues for insurers in Jasper, the reinsurance market may respond to the increased risks and claims by tightening. This may lead to further increases in insurance premiums as insurers try to protect their bottom line.
Key Advice from MyChoice
- Given the increasing risk of wildfires, homeowners should take fireproofing measures to protect their homes. Consider strategies like keeping accessible fire extinguishers and using fire-resistant roofing to prevent a blaze from spreading and damaging your property.
- Fireproofing measures don’t just protect your home – they may also help you qualify for home insurance discounts. You can also get discounts by bundling your home insurance with other policies like life or auto insurance, so you can better manage insurance expenses.
- As extreme weather events and wildfires increase in frequency and impact, Canadian homeowners may struggle to find affordable home insurance, especially when insurance companies take severe financial losses. Compare rates from different providers using MyChoice to find the best deals for your desired coverage.