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For McMurray Wildfire Wasn’t An “Act Of God”

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Insurance Bureau of Canada executives held a conference call with journalists Thursday to clear up what they called misconceptions about insurance in the aftermath of the Fort McMurray disaster.

Here are answers to some questions compiled from their remarks. Answers were edited for length:

Q: Are any claims adjusters in Fort McMurray?

A: Bill Adams, vice-president, western and Pacific: “There have been stories on social media and elsewhere about claims adjusters on the ground. I can assure that is not the case. There are people from our industry on the ground in Fort McMurray who have been contracted by the province or the municipality to come in and prepare the critical community assets — the hospital, grocery stores, pharmacies, hotels. We have a number of contractors … cleaning those assets. There are no industry representatives at people’s homes or businesses assessing damages.

Q: What about reports from BMO and others that industry-wide insured losses could reach $9 billion?

A: Adams: “They’ve used technology. A lot of the map applications, satellite imagery, etc., have been used by our industry to get some sense of the scope of the loss by their particular company.”

Q: Will damage from the wildfire be considered an “act of God,” and therefore not covered?

A: Heather Mack, director, government relations: “That issue of ‘act of God’ is a common insurance myth that comes up no matter what the disaster. Insurers pay for fire damage. It’s got nothing to do with this act of God term, which is actually not a term that’s used at all in property insurance. It’s not in there, full stop. It’s not an issue.”

Q: Are living expenses after the evacuation covered?

A: Mack: “Most home and tenant policies will include coverage for your additional living expenses if you can’t get home due to mass evacuation. Some evacuees thought that you would only receive money from the date that you called your insurer. In actuality, the coverage starts from the date of evacuation and you wouldn’t be denied coverage just because you didn’t call your insurer right away. We know the stress that everybody’s under and we have no interest in adding to that stress.”

Q: How do people file a claim?

A: Steve Kee, director, media and digital communications: If you know who your broker is, contact them. Otherwise, call your insurance company. Make sure to keep receipts for all of your living expenses since the evacuation notice. You can claim reimbursement for these. When you speak to your insurance representative, ask them what living expenses you’re entitled to reimbursement for, and for what period of time.
If possible, assemble any documentation related to your property and belongings (proofs of purchase, photos, receipts and warranties) to share with your insurer.
Once you have reported a loss, you will be assigned a claims adjuster. This could take some time, given the sheer number of claims.

Q: What effect will the fire have on the insurance industry?

A: Kee: “Our industry is well-capitalized for these types of events. This is what we plan for and it’s what we’re here for. It’s too early to tell the exact level of damage on the ground, but we can say that no one event will lead to an automatic increase in premiums. There are many factors. We have a competitive market so insurers will have different exposures during different events. Consumers may be in a position where they also want to shop around.”

Q: This is the third major disaster in Alberta over the last several years. What will be the impact on premiums?

A: Adams: “The single largest expense faced by every single insurer is claims. They really are the predictor of what future trends in cost for the premiums that people pay will be. While we can’t predict what’s going to happen in the future, we can look at what’s happened in the past. In the past, traditionally, when you see long-term trends in claims, premiums lag behind those long-term trends. If you see claims going up year over year, it’s likely that premiums will follow. As claims start to subside, there’s a lag before you see insurance rates come down in response. Globally, these type of events are happening with greater frequency and severity. Any Albertan who owns a home or has a tenant’s policy will have likely seen an increase in their insurance rates over the last two or three years.”

Q: So homeowners should expect rates to go up after this?

A: Adams: “The short answer is we don’t know. Individually, insurers are going to make those decisions. You could have a company who has seen because of the claims collectively they have had over the last number of years, you will some companies potentially look for premium increases in response to that. You’ll also have companies for whatever reason their customer base not as affected by the overall trend that we’re seeing, so there wouldn’t be the cost pressures.”
EJ

 

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