Strata Life - Repairs, Depreciation and Contigency Reserves

[jollyburger]

Originally Posted by Vin

With more natural disasters (floods and fires), insurance companies are paying off big time to affected properties, especially on woodframe structures in the boonies: many of them SFHs. These high-risk properties are close to rivers, edge of woods, etc. Hence in order to recoup, these insurance companies, many from the US, are targetting condo stratas. Shameful I must say.

Or not.

“About $4-$6 billion a year is paid in Canada in commercial property claims,” April Pittendreigh, vice president of national claims at Gallagher Canada, told Canadian Underwriter recently. “With respect to water, water claims have more than doubled since 2015. But if it’s a large water damage claim — like in a high-rise building in metro areas — those claims cost numbers have tripled since 2013.”

Putting water claims into perspective, the Canadian P&C industry paid out its highest losses due to severe weather in 2016, when it paid more than $5.2 billion (almost three-quarters of that was because of the wildfire in Fort McMurray, Alta.) Severe weather losses have topped more than $3 billion in only one year, according to Insurance Bureau of Canada.

It’s now common to say, ‘Water is the new fire.’ But it might be more accurate to say antiquated water infrastructure — i.e. water claims that arise from overflowing or burst pipes, etc. — drive up claims costs.

Between 2009 and 2017, the Canadian P&C industry spent $1.8 billion on flood claims alone, Pittendreigh points out. In contrast, the industry spent just $400 million on flood claims between 1983 and 2008. That’s a 400% increase in the last eight years compared to the previous 25.

“The point is, it’s not necessarily that we have more floods, it’s that the cost incurred to us and our current expectations in society far exceeded the premiums allotted for them,” Pittendreigh said.

https://www.canadianunderwriter.ca/insur...and-heres-why-that-wont-stop-1004196593/