Catastrophic events: climate change
In 2017 the insurance industry paid out $1.33 billion following a catastrophic event relating to climate change. This is the fifth time in seven years that the industry has paid over $1 billion annually for climate related losses. There are so many factors that contribute to these increasing losses that it’s hard to pinpoint one issue. For water, people are finishing their basements more often, and weather events are becoming more frequent, resulting in catastrophic water losses. Thunderstorms with hail is another catastrophic event that can quickly add up, especially when gold ball sized hail is pouring down on a large city center.
|Top Ten Events Since 1993||Event Type||Total Expenses (million)|
|2016, May 3-19; Alberta, Fort McMurray||Fire||$3,772.3|
|1998 Jan. Quebec, Ontario, New Brunswick||Ice storm||$2,213.7
|2013 June 19-24, Alberta, Southen||Flooding, hail, wind||$1,910.3
|2011 May 14-17, Alberta, Slave Lake||Fire||$794.6|
|2005 Aug 19, Ontario||Hail, tornadoes, wind||$750.5|
|2012 Aug 12, Alberta, Calgary||Hail, wind||$592.9|
|2010 July 12-13, Alberta, Calgary and South||Hail, wind||$584.1|
|2014 Aug. 7-8, Alberta||Flooding, hail, wind||$583.5|
|1991 Sept 7, Alberta, Calgary||Hail||$531.5|
 Auto repair: safety tech inflates costs
More safety technology has been introduced in newer vehicles such as, automatic emergency braking, lane keeping assist, lane departure warning, and back-up cameras. These technologies might provide a lesser frequency of claims, but the cost of the claims are rising. The repairs for vehicles are becoming more complex, requiring new methods, tools, training, and technology for the mechanics. “For instance, in 2010, the assembly of a bumper on a common SUV required 19 parts, while in 2017 the same vehicle has 49 parts in the bumper” RSA told the Canadian Underwriter. With these more complex repairs it’ll take longer for the vehicle to be returned to its owner, resulting in higher rental car charges.
With these additional safety technologies in place, there also comes other distracting technologies in the vehicle, including video screens and other multi-media outlets. “More technological advances, in-car gadgets and cell phone use could mean more distracted driving,” Aviva says. “The RCMP says that in 4 out of 5 collisions, drivers have their eyes off the road for just three seconds prior to crashing,” and windshields and bumpers are the first to get damaged.
 Wildfires: more homes in forested areas
Living near a forest will make you happier, says a new long term study by the Max Planck Institute for Human Development, and who wouldn’t want to be more happier? The only issue, of course, is naturally occurring wildfires in these developed areas. Just in 2017 alone the wildfires blazed through 1.2 million hectares of land, forcing evacuations in Williams Lake and Prince George, among other places, and led to a provincial state of emergency between July and September. Insurance claims in these areas amounted to roughly $100 million for damage to homes, vehicles and businesses.
“The occurrence of forest fire activity is projected to increase by 25% by 2030” says the Insurance Bureau of Canada (IBC)
Indirect, non-physical damage losses also play a large role in increasing cost claims. This is something that is commonly overlooked be people, but where are you supposed to live if your home has become unlivable or completely destroyed by a fire? Insurance pays for temporary living arrangements, also known as additional living expenses. These costs can add up quickly if you’re renting a home or staying at a hotel for long periods of time.
 Adjuster mobility: being more flexible
Every insurance company has their own team of claims adjusters, but often they will also have access to independent adjusters as well. These independent adjusters are not employed by the insurance company directly, but are employed as sub-contractors when claims get complex or there are a large number of claims. However, these adjusters are geographically limited within the province that they are licensed, and that creates a problem when catastrophic claims occur. “The thought of an adjuster in Newfoundland, who is professionally qualified by experience and knowledge, being unable to come quickly to Ontario and respond to an event is not in the best interests of this industry” president of CIAA told Canadian Underwriter.
 Marijuana legalization: host liability
It’s hard to say at this point how marijuana legalization will impact the insurance industry, but Canada’s claims community anticipates social host liability becoming an even larger issue with the Cannabis Act. Social liability has always been an issue with alcohol, but soon it will extend to marijuana as well. If a stoned person leaves a house party, for example, and gets involved in a car accident, what is the host’s responsibility for getting them stoned in the first place?
What the Cannabis Act Allows
Upon coming into force of the Cannabis Act, adults in Canada will be allowed to legally engage in the following actives:
- Purchase fresh or dried cannabis, cannabis oil, plants and seeds for cultivation.
- Possess up to 30 grams of dried legal cannabis or equivalent in public.
- Share up to 30 grams or equivalent of legal cannabis and legal cannabis products with other adults.
- Cultivate up to four plants in their own residence.
- Alter cannabis at home in order to prepare varying types of cannabis products (i.e. edibles)
With auto insurance policies, legalization could create an issue for young or novice drivers, who currently are not allowed to have any alcohol in their system when they drive. It could also create issues for insurers seeking to keep costs down with home insurance policies as well.