DBRS says major insurers well placed to handle Fort Mac Disaster

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DBRS says major insurers well placed to handle Fort Mac Disaster

Puts claims at $2 to $6 billion

Jeff Pearce on May 13, 2016

Photograph by Chris Bolin

DBRS says major Canadian insurers are well prepared to handle the Fort McMurray wildfire catastrophe. In a great departure from the $9 billion guess that Bank of Montreal suggested and was widely reported, the ratings agency has offered a damage estimate of between $2 to $6 billion.

“No credit impact is expected for the major insurers operating in Canada as a consequence of the Fort McMurray event due to the general practice by the direct insurance writers of establishing reinsurance programs for such events,” says DBRS. In its commentary paper, it goes on to point out, “Hardening of reinsurance rates from this event is not expected to be material. As this event is not overly large on the global scale of catastrophic events, it is not expected to have a substantial impact on reinsurance rates.”

DBRS concedes it’s still premature to obtain accurate estimates because the Fort McMurray area remains restricted, but working with census data and the Slave Lake fire benchmark, it says the range of claim costs is 20 percent to 60 percent of total annual 2015 property claims of $9.7 billion in Canada.

 

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DBRS says major insurers well placed to handle Fort Mac Disaster