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Albertans expect higher insurance costs due to natural disasters

By: Gary Parkinson on May 11, 2013

Albertans should prepare for more expensive deductibles on their home and auto insurance, according to the Insurance Bureau of Canada.  The organization says 62 percent of Canada’s natural disaster insurance claims were made in Alberta alone during 2012, which insurance companies are using to justify more expensive deductibles, and potentially higher insurance rates.

The IBC says major storms brought heavy rain, hail, and gusty winds across lower Alberta last year, resulting in $730 million worth of insurance claims.  The trend is prompting insurers to consider doubling current deductibles of $1,500 to an average of $3,000.  According to the IBC, Alberta deductibles in the early 1990s were approximately $200.

IBC spokesperson Heather Mack states that the industry expects natural disaster claims to be higher in Alberta than the rest of Canada, given the severity of storms that blow across the Prairies.  However, severe weather events that once occurred every 40 years are now common every 6 years, and Mack says the province never witnessed as many disasters as in 2012.

Nobody is making money off of property insurance in Alberta.  They are all losing money.”

One of the reasons for the increased damages is that more people are living in Alberta today than even a few years ago, which exposes more property to potential damage.  Thousands of homes are built with materials that are unable to withstand extreme weather, which Mack expects will result in stricter building codes for new home development.

Mack notes that the IBC is sending CEO Don Forgeron to Calgary later this month, who will discuss how the severe weather will affect future policies in Alberta.  But for now, the IBC advises Albertans, and all Canadians, to review their home and auto insurance plans.  Mack advises all policyholders to validate that they have the lowest insurance rates for adequate coverage for environmental damages.