Since the beginning of the year in Quebec, “weather events” have resulted in the payment of almost $600 million in compensation from insurance companies for damages. The figure, six times higher than the annual average observed by the Insurance Bureau of Canada (IBC) 10 years ago, already shatters the record established for the whole of 2022.
“The number of claims, to date, stands at 40,736, and the total compensation is $598,790,000,” underlines the BAC. This amount exceeds the record of $585 million seen in 2022 and the year is not over. »
On average, each claim will therefore have led to the payment of compensation of $14,700. Note that neither the forest fires which ravaged the Quebec forest this summer nor the floods which hit the town of Baie-Saint-Paul in early May are included in the calculation of the total for 2023.
The exclusion of these two disasters which have largely made the headlines can be explained simply, explains Anne Morin, of the BAC. Despite their historic scale, the blazes caused virtually no damage to infrastructure. As for the city center of Baie-Saint-Paul, ravaged by the Gouffre and Mares rivers, the majority of properties were located in flood zones and therefore became uninsurable. It is the government of Quebec which assumed, to a large extent, the compensation of the victims.
The ice and the flood
Two events alone represent two-thirds of the amount paid so far. The ice storm that hit Quebec in April alone cost $209 million in compensation. The torrential rains of July 13, when Montreal received in two hours the precipitation that normally falls on the metropolis in a month, led to the payment of 205 million dollars.
Among the other “weather events” which cost the most was the polar cold which froze Quebec in the first days of February and which resulted in compensation totaling $66 million. The flood that fell on the south of the province on July 20 and 21 resulted in the payment of nearly 52 million dollars. The towns of Joliette and Saint-Jean-sur-Richelieu particularly suffered during this episode, with flooding and cascading sewer backups.
New BAC data confirms that climate hazards are increasingly costing societies more and more. Between 2011 and 2015, the average annual compensation paid due to weather was $97 million. From 2016 to 2020, the average sum already climbed to $222 million while for the years 2021, 2022 and 2023 alone, the compensation paid annually jumped to $416 million on average — a bill that the first nine months of year have already been enough to eclipse.
A higher real cost
These figures translate into concrete results on the ground. “We are experiencing more and more periods where weather conditions become extreme and cause more or less significant damage to buildings,” underlines Hélène Racine, deputy director of the company Toiture Québec. “As a first responder for insurance companies and claims adjusters, these calls number in the thousands during each extreme episode. The high number of calls quickly fills the execution schedule, deadlines lengthen and we even have to refuse certain contracts due to lack of space in the schedule. »
In addition to the lack of labor which afflicts the construction sector, several reasons explain the explosion in the cost of claims, analyzes Michaël Bourdeau-Brien, associate professor in the department of finance, insurance and real estate at Laval University.
“First, there is inflation: insured assets increase in value, so reconstruction and repair costs also fluctuate upwards. A second reason, continues the professor, is urbanization: given that there are more real estate assets and that the number of housing units increases, this increases exposure to disasters. Third, there is also climate change. All experts agree that they are likely to increase the frequency and severity of disasters. »
The total compensation recorded by the BAC only partially reflects the real cost of climatic events, specifies Michaël Bourdeau-Brien. “In addition to damage insurance, other types of insurance are also hit hard by the vagaries of the climate. We only have to think of agricultural insurance, for example: climatic events represent a huge cost for farmers and their insurers. »
The explosion of weather-related compensation is a global phenomenon, explains the professor from Laval University. In some areas, for example Florida, natural disasters are becoming so frequent and repeated that insurance companies no longer even consider them exceptional events. “There, it sometimes becomes extremely difficult to take out insurance,” insists Michaël Bourdeau-Brien.
” I’m not surprised “
Yannick Hémond is sad to see 2023 set a sad record – even if he doesn’t fall off his chair. “I’m not surprised,” sighs the professor in the Department of Geography at UQAM. I think, moreover, that this is only the beginning: it will get worse, we are sure of it. »
These data reinforce the call for action launched by the scientific community and repeated many times by the Secretary-General of the United Nations, António Guterres. “We will have to get to the root of the problem,” believes the professor. Fighting climate change does not mean buying a bag of sand, building dikes or waterproofing our foundations. It’s not about always reacting: it’s above all thinking about ways to reinvent our way of inhabiting the territory. We see that with floods, forest fires, tornadoes, landslides, bank erosion, it’s happening everywhere right now. »
According to him, the explosion in the costs of natural disasters, for insurers and for all societies, could force governments to take more muscular action. “That’s what will put pressure on them to react. The more expensive it is, the less insurers will be inclined to reimburse or the more their prices will increase, says Yannick Hémond. Ultimately, this will become another factor which will, once again, increase people’s precariousness. »