January deep freeze cost $180M in insured damages across Western Canada

March 12, 2024 Canuck

It may be warming up this week, but it’s tough to forget the extreme cold that swept across Western Canada in mid-January.

In Alberta, it led to hundreds of emergency room visits for frostbite and long wait times for those who needed furnace and pipe repairs. It even put Alberta’s electricity grid at high risk of rolling power outages as people cranked up the heat.

It turns out that deep freeze also cost about $180 million in insured damages across Western Canada, according to the Insurance Bureau of Canada, which pulled the data from Catastrophe Indices and Quantification Inc.

Alberta alone wracked up about $30 million in damages.

It was Canada’s first catastrophic loss of 2024, said Rob de Pruis, national director of consumer and industry relations with the bureau.

“This is a bit unusual for the amount of damage that it caused,” said de Pruis.

“Last year across Canada, we had over $3 billion in damage from severe weather, but this damage was different. We saw wildfire damage. We saw hail, tornadoes and many other storms across the country.”

What’s also concerning, he said, is how severe weather events have become more costly through the years.

Exhaust from tailpipes of vehicles as they wait at an intersection, with housing up a hill in the background covered in snow. — The mid-January cold snap that saw wind chills dip to –50 C caused about $30 million in insured damages in Alberta, according to the Insurance Bureau of Canada. (Jeff McIntosh/The Canadian Press)

For example, over a decade ago, the insurance industry was paying out an average of $675 million each year for severe weather.

“We do know that these events are happening more often, and they’re also more damaging,” he said.

“At this point, no single event automatically increases everyone’s premiums. There’s a whole bunch of factors that go into that. And the insurance industry is well capitalized for these events.”

Preparing ahead of time, every year

Albertans are no strangers to the cold.

But Anne Kleffner, a professor of risk management and insurance at the University of Calgary, said given that Albertans are seeing more extremes, it’s becoming increasingly important to be prepared ahead of time.

“It’s important that property owners are well informed and they seek out the information to see what they can do to reduce their risk of these extreme events,” said Kleffner.

When it comes to the cold, she said it’s critical people are appropriately winterizing their homes and businesses to withstand extreme temperatures.

They could start by ensuring their furnaces are inspected and maintained every year, insulating what they can and making sure to leave the heat on to prevent pipes from freezing.

“It’s all things that people do, I think to some extent, but it’s just maybe being more careful that it’s done annually and ahead of time.”

She said Albertans should also get in touch with their insurance brokers to make sure they’re covered for all potential risks — including flood risk, for which she said people are generally not automatically covered.

Back at the Insurance Bureau of Canada, de Pruis also said people should prepare all essentials in case they need to evacuate their homes. Those essentials should include the contact information of their insurance representative to start an insurance claim right away.

Meanwhile, as the weather starts to turn (for now), many are concerned about what’s to come. The province has declared an early start to the wildfire season, with 54 wildfires actively burning as of Monday evening.

Both de Pruis and Kleffner said the $2 billion the province has set aside for its contingency fund likely won’t be enough with extreme drought conditions expected this summer.

“We need to work together with the insurance industry, with stakeholders, residents and governments to try to identify ways to improve resiliency and create a culture of preparedness in this country,” said de Pruis.

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