Record $3.2 billion paid out during 2013 - Tough Year for the Insurance Industry

by IBO | 20 Jan 2014

The December 2013 ice storm that smashed through southern Ontario and the Maritimes heaped another $200 million in insured losses onto an already record-breaking year for natural disaster losses.

The year-end severe weather insured loss total of $3.2 billion is the highest in Canadian history, according to the Insurance Bureau of Canada, and more than triple the recent annual average.

"In 2013, the terrible effects of the new weather extremes hit Canadians hard,” says Don Forgeron, President and CEO, IBC. “From the Alberta floods last summer to the ice storms in Ontario and Atlantic Canada over the holidays, frankly, bad weather hit insurers hard, too.”

The losses of 2013 came after four years in a row of natural disaster losses for the insurance industry that hit the $1 billion mark.

In the December ice storms that hit southern Ontario and eastern Canada, most of the $200 million in claims were for homes damaged by trees that fell as a result of ice buildup. Ontario-based insurers also paid more than $25 million in claims for vehicles damaged in the storm.

"I'm very proud of how the home, car and business insurance industry performed during these difficult times. We responded quickly to disasters when Canadians needed us most,” says Forgeron. “Despite unprecedented losses, we were there for Canadians through each and every high-cost disaster. And we are contributing new ideas and leadership for adapting to severe weather in the future.”

The largest insured disaster – and Canada's costliest natural disaster ever – was the torrential rainfall that flooded towns in southern Alberta last June.

Insured damage for that storm was more than $1.74 billion, with rebuilding efforts expected to continue for many months to come.

“These unprecedented losses have been very difficult for Albertans. Many homes and businesses were destroyed,” says Bill Adams, vice president of the western and pacific region for IBC. “Rebuilding will go on for some time to come, and our industry will continue to be there to fulfill its important role.”

Ontario’s most expensive insured natural disaster in history occurred in July, when record rainfall soaked Toronto resulting in $940 million in damages.

Other natural disasters in 2013 included the severe thunderstorm that hit central and southern Ontario and southwest Quebec in July causing around $200 million in damage and the band of powerful thunderstorms that hit Quebec and Ontario in June with damage amounting to over $50 million.

“Canadian communities are seeing more severe weather, especially more intense rainfall. This overburdens our sewer and stormwater infrastructure, resulting in more sewer backups in homes and businesses,” says Forgeron. “Property and casualty insurers are collaborating with all three levels of government to help Canadians adapt to these new weather realities.”

For more data from PCS-Canada on insured losses in Canada, click here.

Most U.S. consumers who chose direct insurance option later returned to independent agents: poll

Value was cited as the reason that almost 60% of surveyed consumers in the United States who purchased insurance through a direct channel 10 or more years ago reported switching back to an independent agent.

A study commissioned by The Hanover Insurance Group Inc., a property and casualty insurer based in Worcester, Mass., shows that most respondents who switched to direct insurers – promises of lower prices was a key motivator – later returned to an independent agent.

Conducted by InsightExpress, the study included input from 1,000 consumers who purchased insurance through direct channels 10 or more years ago.

Most consumers who switched back to independent agents cited expertise and convenience as drivers in their decision, notes a statement from The Hanover. Among other things, respondents also cited the benefits of having one point of contact to handle insurance needs and questions, the statement adds.

“The majority of respondents said their number one reason for switching from a direct insurance provider was to have someone to guide them through their insurance-buying decisions,” says Mark Desrochers, president of personal lines insurance at The Hanover.

“The study shows that consumers realize the value that independent agents bring. That’s why we deliver our products exclusively through agents,” adds Dick Lavey, president of field operations and chief marketing officer at The Hanover.

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DAILY NEWS Aug 8, 2013 10:59 AM

The top 10 costliest tornado's in history

The cost of a massive tornado that battered an Oklahoma City suburb could be more than $2 billion, according to a preliminary estimate announced Wednesday by state officials.

We continue to see increased natural disasters across North America. Although we generally see tornadoes in the Southern states we have seen some turbulent weather even in Ontario. Last Wednesday there was a confirmed F2 tornado that touched down outside of Lindsay, Ontario.

Thankfully we haven't had to deal with a disaster of this magnitude in Ontario and hope we never have to. I found a list outlining the most expensive tornado's in history. This recent Oklahoma tornado if estimates are accurate would put it in the top 3!

Rank      Date                           Location                          Cost (2013 USD)

1              May 22, 2011          Joplin, MO                       2.9 billion

2              April 27, 2011         Tuscaloosa, AL                2.3 billion

3              June 8, 1966            Topeka, KS                      1.8 billion

4              May 11, 1970           Lubbock, TX                   1.5 billion

5              May 3, 1999             Oklahoma City, OK        1.4 billion

6              April 3, 1974             Xenia, OH                      1.2 billion

7              May 6, 1975              Omaha, NE                     1.1 billion

8              April 10, 1979           Wichita Falls, TX           890 million

9              June 3, 1980              Grand Island, NE            805 million

10            October 3, 1979        Windsor Locks, CT         800 million

3 home renovations misconceptions

Three Common Reno Myths:

1) “My home will be covered under my original insurance policy during renovations”

48% of Ontario homeowners incorrectly believe they will always be covered by their original home insurance policy while their home is being renovated, and 27% are unaware that moving out for more than 30 days during renovations requires a policy update.

“Upgrades requiring extensive work, such as adding an extension to your home, may require you to change your entire policy to a building under construction,” said Minor. “And, if you’re not living in your home during renovations, it becomes an easier target for thieves and undetected water damage, which is why your insurer may require you to secure a vacancy permit if you move out for more than a month.”

2) “If my contractor is injured on my property while working, his insurance will cover it”

Contractors are trained professionals, but accidents can and do happen. However, 39% of Alberta homeowners incorrectly believe that if a contractor is hurt on their property while working, they will not be liable.

“If a contractor or their employees are injured on your property, you could be liable for their medical bills, lost wages, or damages for pain and suffering – all out of your own pocket,” said Minor. “When choosing a builder, ask to see their public liability insurance certificate. The amount of insurance coverage they have would depend on the type of renovation, the number of employees and cost of the renovation. The higher the limits of coverage, the more protection you would have.”

3): “Renovations don’t affect my insurance coverage”

Many B.C. homeowners don’t know which renovations can decrease their premiums, but are willing to find savings: 78% said they would be likely to make certain upgrades to their home if they could save money on insurance premiums in the longer term.

“Simple renovations like installing security devices, such as alarm systems and deadbolts, or fixing your weathered roof may decrease your premiums,” said Minor.

On the other hand, many B.C. homeowners don’t know the types of renovations that can impact their premiums: 20% are unaware that upgrading their electrical system or replacing a weathered roof could lower their premiums, and 54% did not know that installing granite countertops or expensive appliances could increase their premiums.

“Anything that may impact the value of your home or probability of a claim will also affect what and how much insurance coverage you need,” said Minor. “Although water proofing your basement may not be as exciting as new stainless steel kitchen appliances, these types of renovations can help protect your home and belongings. It’s always a good idea to talk to your insurance provider to understand more about your coverage.”

Follow us on Twitter at @CITopBroker for more insurance tips and advice.
Content taken from:http://www.citopbroker.com/news/mythbusters-home-renovations-5047

If a meteor explodes in the sky and damages your building, are you covered?

All-Risk policy would offer protection for this rarest of occurrences, say insurers
February 15, 2013

Meteors enter the Earth’s atmosphere as often as five to ten times a year, but few do so as spectacularly as the one that exploded in the sky over Central Russia on Friday.

According to Space.com, it was the largest event of its kind since the Tanguska event of 1908. The meteor entered the atmosphere at a speed over 54,000 kph and according to preliminary estimates exploded with the force of at least 100 kilotons of TNT.

The force of the explosion caused injuries to as many as 1,000 people. Many of the injuries were caused by flying glass from shattered windows. It also damaged approximately 3,000 buildings, including collapsing the roof of a local factory and damaging the walls of the Arena Traktor, home of the local Kontinental Hockey League team.

Property damage caused by a meteor is, however, an insurable risk.

“A commercial property policy provides all-risk coverage that covers property damage and resulting time element loss if there is direct physical loss or damage to insured property unless specifically excluded,” says Timon Mueller, head of property underwriting for the Americas for Allianz Global Corporate & Specialty. “In general, all-risk policies do not have a meteoroid exclusion, therefore direct physical loss or damage to insured property is covered including the resulting time element loss.

Commercial property policyholders in North America would likely be covered in the event of an incident like the one that occurred in Russia. “In the US in general the policies are written on an all risk basis compared to a named perils policy. Named peril policies are more common in Europe,” say Mueller.

Claims from meteor damage are very rare. “This has translated to a low loss history historically for the insurance industry for this peril,” says Joe McKeown, assistant vice president, property, large commercial & specialty at RSA. However there is the potential for large losses from meteorite damage. “We hope the claim experience continues to allow us to provide this coverage to our customers,” he says.

Home insurance clients advised to check coverage before renovating

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DAILY NEWS Feb 1, 2013 12:36 PM

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Square One Insurance has issued a cautionary note to home and condo owners undertaking renovations, warning them to verify the liability and workers’ compensation coverage of contractors.

In a press release Friday, Vancouver-based Square One noted even small renovations could affect home insurance coverage. It also gives advice in cases where a contractor’s faulty work causes water damage to the policyholder’s home.

“While your policy won't cover costs to correct faulty design, material or workmanship, it may cover the water damage caused by the contractor,” Square One stated. “To be as protected as possible, make sure the contractor has proper licenses, solid references and both workers' compensation and commercial general liability insurance coverage.”

The company also advises comprehensive home policyholders who do their own renovation work to ensure their policies cover damage they accidentally cause to their own homes, belongings or neighbours’ homes.

“For example, if you live in a condo and you're the one who accidentally puts a screw in a pipe that causes damage to the units beneath you, your personal liability coverage should pay for any resulting damage to your neighbours' property,” Square One says.

Square One added that most policies require owners to notify their insurance providers of any renovation costing more than $5,000.

“If you fail to do so, you will no longer qualify for the ‘guaranteed building replacement cost’ coverage included in most policies.”