Alberta wildfires look to be Canada's worst disaster, among top 10 worldwideReprints
Wildfires that ravaged the area of Fort McMurray, Alberta, could be one of the costliest natural disasters in Canada's history, with insured losses of at least $7 billion being likely, analysts said Friday.
The fires forced the evacuation of 88,000 people in northern Alberta, and at least 1,600 homes and structures were damaged or destroyed.
The area is home to oil and gas producers that Suncor Energy Inc. and CNOOC Ltd.'s Nexen, and the fires reportedly led to production shutdowns at multiple oil facilities north of Fort McMurray.
Tom MacKinnon, a Bank of Montreal analyst, said in a note that the fires are likely to result in $7 billion in insured losses.
While the Slave Lake, Alberta, fire in 2011 destroyed much of that town and had been the most expensive fire-related disaster in Canadian history with $680 million in insured losses, according to Aon Benfield Group Ltd.
Mr. MacKinnon said the Fort McMurray fire is nearly 10 times as large as the Slave Lake Fire.
In a media advisory, catastrophe modeler AIR Worldwide said it expects insured losses arising from the Alberta wildfires that broke out Sunday are likely to far exceed the Slave Lake fire.
AIR Worldwide noted that because of the oil industry, housing in the area is more expensive than its remoteness would suggest; in 2006, Fort McMurray had the highest real estate prices in Alberta.
“The local economy relies on natural gas and oil pipelines, forestry and tourism, all of which will undoubtedly be impacted by this event,” AIR Worldwide said in the advisory. “The major oil sands facilities in the area are not currently threatened by the fire, but several of the oil companies active in the area have shut down pipelines so that they could evacuate nonessential personnel.”
That has resulted in a reduction in energy production, AIR Worldwide said.
Intact Financial Corp. and Aviva P.L.C., which are major insurers in Canada, reportedly were mobilizing claims teams.
“While many parts of Fort McMurray were not impacted, it still appears quite likely that this will end as one of the costliest natural disasters in Canada's history,” Steve Bowen, Chicago-based director and meteorologist at Aon Benfield, said in an email. “It will almost certainly be a top 10 costliest wildfire event on record for the globe when final tallies are made in the coming weeks and months, and likely even higher.”
Mr. Bowen said the damage assessment does not count the number of vehicles that have been destroyed.
“Beyond that,” he said “there has been widespread business interruption for several sectors, which often covered by insurance, too.”
Aon Benfield said the most costly disaster in Canada's history was flooding in Alberta three years ago, which caused roughly $1.65 billion in losses as 75,000 people were evacuated.
Mr. MacKinnon said in his note that Intact's “good fundamentals were overshadowed by the overhang of potential losses associated with the fires.”