building resilience: an update from alberta’s home, car ...assets.ibc.ca/documents/facts...

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Building Resilience: An update from Alberta’s home,

car and business insurers

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Bill Adams Vice-President,

Western and Pacific

Lives lost, homes and businesses damaged or destroyed, communities torn apart: such was the tragic legacy of the June flooding in Alberta. The floods tested individuals, families, communities and the province as they faced the costliest insured natural disaster in Canadian history.

Alberta’s home, car and business insurers were there.

Thousands of staff advised residents on making claims. They helped people who had lost everything. Insurance Bureau of Canada (IBC) staff answered hundreds of calls and worked on the front lines with residents, government officials and emergency personnel.

The events of 2013 highlight a troubling trend. Severe weather – from flooding and hail to drought and wildfire – has been on the rise in Alberta. In response, IBC is working closely with Alberta’s government, with consumers, with individuals, communities and organizations. The goal: to build greater resilience to the coming storms.

Along with helping to manage the increasing risks from severe weather, property and casualty (P&C) insurers help Albertans and Canadians manage the everyday risks of home, business and car ownership, providing essential peace of mind. In addition, the P&C insurance industry employs more than 11,000 Albertans, promotes economic development, and invests in strong and safe communities.

It is our privilege to serve Albertans and all Canadians.

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Car insurance costs in Alberta are relatively stable compared to other provinces. That stability matters to customers, especially in a world of increases to the cost of living and everyday needs such as food and housing.

A competitive insurance market benefits all insurance consumers and, in Alberta, car insurers work closely with the government to keep rates affordable and available.

This collaboration has delivered important reforms, such as those that harness modern science to achieve fairer minor injury awards, ensuring fair treatment for those with minor injuries (most are sprains and strains) and for those with serious injuries.

To enhance competition, IBC recently supported the government’s drive to modernize rate regulation and provide additional consumer protection through Bill 39.

There are, however, signs of turmoil ahead. Claims drive premium costs, and bodily injury claims have been rising. This threatens premium affordability. Insurers are working with the government to address this risk.

THE IMPORTANCE OF

Competition

2007 2008 2009 2010 2011 2012

$40,710

$46,124

$44,711$44,538

$46,382

$50,020

40000

42000

44000

46000

48000

50000

THE AVERAGE COST OF BODILY INJURY CLAIMS HAS RISEN SIGNIFICANTLY IN ALBERTA

Sources: IBC with data from GISA

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In the 25 years between 1983 and 2008, Alberta averaged around $100 million a year in catastrophic weather losses. Between 2009 through 2012, that skyrocketed to an annual average of $679 million. And then 2013 hit, with $1.72 billion in insured losses from the floods alone. Clearly Albertans are in the midst of a dangerous and alarming trend.

Research undertaken for IBC shows that windstorms, hailstorms, flooding, drought and wildfires are expected to continue to plague Alberta in the years and decades to come. Adaptation is not only a clear economic imperative, but vital to the province’s ongoing quality of life.

IBC worked on several initiatives in 2013 to promote resilience, including:

• Areportforgovernmentonbestpractices for recovery and rebuilding after the June floods.

• ApartnershipwiththeCityofCalgarythat brought Mike Holmes to the city to give tips to Alberta residents on how to make their homes more resilient to severe weather.

ADAPTING TO

Severe Weather

Collaboration, communication and innovation are key to building Alberta’s resilience to stormy weather.

1983-2008 2009-12 2013

$100 million

$679 million

$1.72 billion

0

500

1000

1500

2000

CATASTROPHIC LOSSES IN ALBERTA SINCE 1983

Note: numbers for 1983-2008 and 2009-2012 are annual averages Sources: IBC, PCS-Canada

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Surreal images became common.

PREMIER REDFORD: touring the front lines.

We’re in this together.

THE FACE OF TRAGEDY: THE FLOODS IN PHOTOS

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Consumer Empowerment

We live in dangerous times. Risks are rising. Insurance is about managing risk, and informed, educated consumers are key to good risk management.

With that in mind, insurers aim to do a better job of educating Albertans. Below are some initiatives the industry undertook in 2013:

• OfferedadvicetoAlbertansthroughtraditional and social media to help make filing and managing an insurance claim as straightforward as possible.

• Promotedbroad-basedfinancialliteracy to help Albertans learn about home, business and car insurance.

• Usedbothtraditionalandsocialmediato promote timely reminders about severe weather preparedness, water damage prevention, winter driving, how to fight fraud and more.

IBC JOINED THE CITY OF CALGARY IN SPONSORING A PRESENTATION BY MIKE HOLMES. The goal: build consumer resilience to the storms ahead.

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Giving Back

“Many insurance companies are going above and beyond.”Premier Alison Redford on the industry’s response to the June floods

Response must be swift when a disaster such as the floods of 2013 strikes. IBC and its member companies went into high gear even as the waters were rising. More than 5,000 claims adjusters and staff were deployed. They worked in Calgary, High River and many other communities, meeting people in dire straits, giving them the facts they needed about coverage, and telling them about other sources of financial help (e.g. disaster relief).

Specifically, IBC supported flood victims by:

• Workingwithgovernmentofficialsto plan for rebuilding and enhanced resilience.

• ExtendingthehoursofIBC’sConsumerInformation Centre to answer questions about insurance.

• Creatingadedicatedemailaddressflood victims could use to ask questions and get information about insurance.

• UsingsocialmediasuchasFacebookand Twitter to help direct insurance inquiries about flood damage to the right places.

• Attendingmultiplecommunitymeetings and town halls to provide timely answers to those affected.

AN IBC STAFFER ON THE FRONT LINES: getting key information to residents.

PREMIER REDFORD gives an update on flood recovery.IBCworkedcloselywiththePremier,otherprovincialoffices,affectedmunicipalities,and the federal government.

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Community Safety

The insurance industry is dedicated to protecting Alberta’s communities and Albertans’ most valuable investments – their homes, cars and businesses – by helping to identify and manage new risks. Some recent initiatives include:

• Compilingapubliclyaccessibledatabase of vehicles reported and brandedasnon-repairableduetoflooding.

• PromotingfireandwildfiresafetyandpreventionduringFirePreventionWeek.

• Promotingemergencypreparednesswith tips and information in online and print media.

• Workingwithauthoritiestocombatcargo and heavy equipment theft.FLOODED?

Here’s What You Need to Know

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Insurance Bureau of Canada is the national trade association for Canada’s private home, car and business insurers.

© 2013 Insurance Bureau of Canada. All rights reserved.The information provided in this brochure is intended for educational and informational purposes only. Please consult the appropriate qualifi ed professional to determine if this information is applicable to your circumstances.

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Questions about insurance?

Call us.

British Columbia, Saskatchewan and ManitobaToll-free: 1-877-772-3777 ext. 222 Hours: M-F 9:00 a.m. – 4:00 p.m.

AlbertaToll-free: 1-800-377-6378 Hours: M-F 8:00 a.m. – 4:00 p.m.

Ontario Toll-free: 1-800-387-2880Hours: M-F 8:00 a.m. – 5:00 p.m.

Quebec Toll-free: 1-877-288-4321Hours: M-F 8:30 a.m. – 4:30 p.m.

Atlantic Toll-free: 1-800-565-7189 ext. 227 Hours: M-F 8:30 a.m. – 4:30 p.m.

www.ibc.cawww.getintheknow.ibc.ca

@InsuranceBureau

youtube.com/insurancebureau

How to protect yourself and your propertyWater damage can happen at any time in any place so it’s important to familiarize yourself with the area in which you live. If you live in a fl ood-prone area, contact your municipality for a fl ood plain map (if available) and fl ood reduction tips. Review your current home insurance policy and speak with your insurance representative about any questions you have.

Key Facts A 2004 Pollara survey conducted for

IBC found that nearly two-thirds of Canadians (61%) mistakenly believe that their home insurance provides coverage for overland fl ooding.

Water damage to cars is usually covered if comprehensive or all-perils car insurance coverage has been purchased. This coverage isn’t mandatory so check your policy.

Sewer backup coverage may be available for purchase as an add-on to your existing home insurance policy but as with any optional coverage, it is subject to the underwriting guidelines set out by individual insurers.

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ARE YOU PROTECTED?

WATER DAMAGE IS ON THE RISE:More tips

Going away? If it is for more than three days, have someone check your property. In the winter, drain the plumbing or have someone check daily that the heat is still on in your home.

Store important documents and irreplaceable personal items away from fl ood-prone areas.

Keep hazardous materials like paint, oil and cleaning supplies out of the basement.

Create an emergency plan for your family, including where you would go if your home was fl ooded.

Plan for your pets! Th ey aren’t allowed in shelters due to health regulations, and if left behind, stressed pets may damage your house and endanger themselves.

Have an emergency preparedness kit for each person in your household to help you get through the fi rst 72 hours of a disaster.

To learn how to put together your own emergency kit, visit www.ibc.ca.

Damage from sewer backups is costly for homeowners, municipalities and insurance companies. Based on recent estimates, the Canadian insurance industry pays $1.7 billion each year in claims due to water damage.Water damage can result in expensive repair bills. It can also ruin carpeting, furniture and electronic equipment, and destroy priceless family photos and treasures.Fortunately, there are steps you can take to protect your home and your property.

Learn more and take action today!

fyiCanada’s increasingly

severe weather means

that basement fl ooding

and water damage are

becoming more common.



03/12


Call us.


Alberta Toll-free: 1-800-377-6378 Hours: M-F 8:00 a.m. – 4:00 p.m.





@InsuranceBureau


They are fast, change direction

quickly and are hard to contain. And thousands

burn across Canada each year, threatening lives

and properties.

WILDFIRE SAFETY: What You Need To Know

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Call us.


Alberta Toll-free: 1-800-377-6378 Hours: M-F 8:00 a.m. – 4:00 p.m.





@InsuranceBureau


Wildfi res are a real and present danger, especially if you live in a grasslands region or a heavily forested area. However, you can take measures to protect your family, your home or your business. Let’s look at these measures step by step. PROMOTING SAFETY THROUGH CONSUMER BROCHURES

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Demystifying Insurance

Despite the importance of insurance to their financial security, consumers are often unsure about what a premium represents and how it is calculated. An individual’s premiums are not kept in a personal account in case of a loss but are pooled with those of many policyholders to cover the losses claimed by the few in any given year.

Here are some factors that help insurers set premiums:

SOME FACTORS AFFECTING CAR INSURANCE PREMIUMS:

• Claimshistoryofpolicyholder• Drivingrecordofpolicyholderandotherhouseholddrivers(at-faultcollisions, moving violations, etc.)

• Vehicletype(make,model,year,etc.)• Vehiclerepaircostand/or

replacement value• Collisionandcrimerateswherevehicle

is usually parked• Drivingdistanceandfrequency• Additionalcoverage,deductibleand

discounts

SOME FACTORS AFFECTING HOME INSURANCE PREMIUMS:

• Age,sizeandlocationofresidence• Typesandqualityoffinishesand

materials• Residencetype(single-family

dwelling, apartment, etc.)• Residenceconstructionmaterial

used (brick, cement, etc.)• Distancefromfirehydrantand

fire station• Claimshistoryofpolicyholder• Crimerateofresidencelocation• Additionalcoverage,deductible

and discounts

DISCOUNTS MAY BE OFFERED FOR:

• Carswithlosspreventiondevices• Driverswhohavegraduatedfrom

approved driving training courses• Insuringtwoormoreprivatepassenger

vehicles in the same household• Combinedcoverageforexistinginsured

clients (for example, car and home insurance)

• Policyholderswhohaveneverfiled an insurance claim

• Driversovertheageof55• Carnotbeingusedinwinter• “Loyalty”forpolicyrenewalsby

existing insured clients, subject to insurer’s criteria

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Contributing to the EconomyThe P&C insurance industry plays a vital role in Canada’s economic health. By absorbing financial risk, particularly in a world of emerging new risks and changing needs, and investing in Canadian bonds and securities, insurers help to create and promote growth, development and employment.

Here are highlights from 2012, the year for which the most recent data is available:

The P&C insurance industry employed 118,600 people across Canada in 2012.

Paid out $4.9 billion in claims to help people recover from losses

Provided 11,600 jobs

Generated more than $260 million in provincial taxes, monies that are key to helping fund Alberta hospitals, municipal infrastructure and vital social services

Annual GDP impact $2.16 billion

In Alberta, there are 130 home, car and business insurers serving consumers. Here are some numbers to show how the entire P&C insurance industry supported Alberta’s economy in 2012:

The P&C insurance industry had $104 billion in invested assets, to support economic growth and stability.

Insurers paid out $27.8 billion in claims to victims of collisions, disasters and other losses.

Canadian insurers paid more than $7.5 billion in taxes and levies to federal and provincial governments.

IBC with data from MSA, SCOR, AMF.

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Investing WiselyTheP&Cinsuranceindustryoffersthekeyserviceofriskmanagementandiscommittedtocoveringlosseswhentheyoccur.Providingtheseservicesnecessitatesthecarefulandsafe investment of insurers’ resources, to ensure that funds are available when needed. With the bulk of its investment portfolio in secure bonds, the insurance industry is farlessvulnerabletostockmarketfluctuationsthanotherindustries.ThisiswhyP&Cinsurers weather an economic crisis better than others in the financial service sector.

n 54.0¢ Claims paid out to policyholders

n 20.5¢ Operating costs

n 16.1¢ Taxes and levies

n 9.4¢ Profit margin

n 80.7%* Bonds

n 12.7% Shares

n 3.8% Term deposits

n 2.1% Other investments

n 0.7% Mortgage loans

*Mostly federal, provincial and municipal bondsSource: IBC, MSA, SCOR, AMF

Source: IBC, MSA

The Insurance Dollar pie chart shows how insurers spent each dollar of revenue averaged over the seven years from 2006 to 2012.

WHERE DOES EACH DOLLAR RECEIVED BY INSURERS GO?

BREAKDOWN OF NATIONAL P&C INSURANCE INDUSTRY INVESTMENTS

Questions? We’re here.Insurance Bureau of Canada’s Consumer Information CentreTel: 780-423-2212Toll-free: 1-800-377-6378Hours: M–F 8 a.m. – 4 p.m.or visit ibc.ca

For additional copies of this booklet, please contact:Insurance Bureau of Canada’s Member [email protected]

Insurance Bureau of Canada is the national industry association representing Canada’s private home, car and business insurers. Its member companies represent90%ofthepropertyandcasualty(P&C)insurancemarketinCanada.

02/2014

Data in 2014 State of the Industry have been gathered from several national and international sources, including IBC. Data are from 2011, 2012 or 2013 depending on when sources release their information. In some instances, figures may not add up to 100% as a result of rounding. Also because sources collect data in different ways, there may be small differences among similar data.

building resilience: an update from alberta’s home, car ...assets.ibc.ca/documents/facts...

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