Getting ready together: CatIQ Connect catastrophe conference returns to Toronto

Last week, Catastrophe Indices and Quantifications presented their annual CatIQ Connect conference in collaboration with industry experts discussing resilience, preparedness, and available tools as it relates to national catastrophes.

The conference began with an overview of the 2022 disasters, defined as any event that surpasses $30 million in insured loss. From the severe storms of late summer that ripped across the prairies with record-breaking hail the size of softballs, to Hurricane Fiona, one of the strongest hurricanes on record in Canada, that left some residents without power into October, and the Eastern bomb cyclone over the holidays that kept many in the dark or stranded.

Still the most disastrous event of last year was the fast-moving line of thunderstorms, a derecho, on June 16-17 that pummelled Ontario and Quebec and caused $1.1 billion in insured losses.

From there, speakers and panelists covered the 2021 West Coast disasters, CAT claims in the new inflated economy, insurance struggles in Indigenous communities, and collective recovery post fires and floods, where for some, pre-catastrophe housing will never be restored, recounted Linda Brown, the former mayor of Merritt, B.C.

Modelling risk in the future climate

A new generation of climate models, with new stats and emission scenarios, is the best tool available to track global trends, and yet, “the uncertainty is off the charts,” said Steve Bowen, chief science officer of Gallagher Re.

Panelists addressed the potential output biases of the general circulation model (GCM), which appear to be presenting with warm biases in the pacific region – the area that determines much of the global weather. Bowen touched on the realities of La Niña despite El Niño predictions, using the ice storms in Austin, Texas, as example.

CAT models that simulate events and exposures, coupled with policy and liabilities, are made into equations designed to account for the uncertainty. But as conclusive as recent past events, the only real certainty is that “normal is changing,” affirms Bowen.

Other important aspects of modelling include the non-physical risk component, that is the secondary and tertiary domino effects of disaster aftermath, such as inflation, glitches in the supply chain, and socioeconomic implications. Bowen touched on the potential need for price protection built into business underwriting and overall company stress testing.

As the living models are constantly readjusted, GCM is “only so good as the science and engineering knowledge supporting it,” said moderator James Waller, research meteorologist for Guy Carpenter, who called for enhanced credibility and peer-reviewed models.

Catastrophic claims in the new economy

The state of inflation is currently in a more favourable position than at the end of last year, however, insurance companies are still grappling with the influx of claims and the high vacancy rates among restoration contractors, despite the drop in overall unemployment rates.

The common themes of efficiency and sustainability shone through this panel, which saw the silver lining of the pandemic as tech interconnectivity that helps streamline the claims process. The collection of real-time and remote data can help keep policy holders informed, engaged, and feeling more in control, while keeping contractors up to speed, said Core Logic executive James Swayze.

Swayze also addressed the cost spike in materials such as lumber, dry wall, copper piping, and steel studs, year-over-year, in addition to fuel prices, underlining the problems of budget and labour shortages regardless of whether it’s a claim or home improvement project.

During the Lytton, B.C., wildfire and the devastating floods later that year, AVP of Aviva Canada Jennifer Delorey said during the cleanup they were able to divert 22 tonnes of material destined for landfill to be recycled or repurposed instead. “How do we normalize that,” Delorey asked, “when waste management is overseen by municipalities?”

The panelists agreed that insuring to value, coupled with building code enforcement that accounts for the shifting climate, might provide some buffer against lack of resources, in conjunction with increased business ESG models and horizontal connectivity to help weather the economic headwinds.

Knowns and unknowns of the West Coast Earthquake

Moderator Alister Campbell, president and CEO of PACICC, prefaced the session by saying: “When it happens, it will be catastrophic for Canada.” Campbell stated the tipping point for insurance loss is $35 billion. Around that figure, multiple companies fail and there’s a systemic collapse of the insurance industry. “And it will happen,” he said.

Tiegan Hobbs, research scientist for Natural Resources Canada, works with geological surveys of Canada’s national seismic risk assessment on a granular, or neighbourhood scale.

Hobbs cited Canada’s unique social vulnerability model and the cities in Canada that fall under the “top five absolute risk category.” This includes Montreal, Vancouver, Surrey, B.C., Burnaby, B.C., and Victoria, where a fault line runs directly beneath the south island city’s downtown core.

Rather than evaluate risk-assessment models, Dennis Shua, head of Canadian and Caribbean catastrophe management for AON tries to “validate it based on the past, and to look to other places in the world for guidance.”

At the top of that list is Christchurch, New Zealand, where research social scientist for U.S. Geological Survey Sara McBride lived and worked for a decade. There, it is mandatory that residents buy some form of insurance for coverage in the event a of tsunami or earthquake.

McBride discussed the knowledge-behaviour gap, where people might be aware of the risk, but their behaviour does not reflect that knowledge.

The need for diligent discourse between scientists and communities is integral to moving that gap forward, without pushing folks into fatalism, McBride said.

Storytelling is one way to engage the public to influence consumer choice surrounding insurance and quake risk, she said. While Vancouver residents sometimes purchase insurance, Montreal residents seldom do.

Hobbs also pointed to liquefaction risk in the lower mainland of B.C., noting the metropolis is located in a basin – areas in which more shaking will occur. She believes the severity of impact, when it does eventually happen, is likely currently understated.

‘Get ready together’

In response to the B.C. floods, Tyrone McNeil, president and tribal chief of Stó:lo Tribal Council, shared an Indigenous word meaning “get ready together,” which accounts for seven generations in each director; before and behind us. He quoted the Sendai framework based on the U.N. declaration for Indigenous peoples.

Often the first pillar in emergency management is mitigation. McNeil said instead, “the first pillar of Sendai is understanding the risk.” Rather than being fragmented – underfunded and only responding to the next event – communities must prepare for it together.

McNeil mentioned relationship building between government and First Nations by bringing them to the table, developing regional strategies, prioritizing critical infrastructure and EOC, and addressing corporate insurance evasion of Indigenous communities.

Using new methodologies, technologies, and a cohesive strategy to increase response time and tactics, Canadian communities might better assess risk and prepare for events whose increasing severity has become part of our new normal.