BCBusiness

JULY/AUGUST 2019 BCBUSINESS 27 ISTOCK T he climate has changed. In some corners, those may still be ghting words, but even if you're not among the British Columbians who have endured extraordi- nary oods or res lately, when you get your next quote on home insurance, you're likely to nd that years of stormy weather have combined into what is becoming an extremely costly trend. The immediate evidence comes in a note that Canada's largest real estate insur- ance broker, Chicago-based HUB•International, circulated recently to its•Metro Vancou- ver•strata corporation clients, warning that "you should budget for a 25%+ increase in insurance costs for 2019, pos- sibly higher if your property has suŠered losses." Part of that increase can be blamed on the same problem attached to every pricy real estate story: mostly,•it's•Van- couver. And even if the govern- ment has been successful in taxing real estate prices into retreat, construction costs in the big, expensive city have still risen between 7 and 15 percent in the past year. So,• HUB•says, rates will go up 10 percent to cover that risk. But the HUB memo blames the bigger increase on "cata- strophic losses from weather related incidents." As reported by the world's largest reinsur- ance company, Munich Re, 2018 was the fourth-costliest year since 1980 for insured losses. And 2017, with hurri- canes Harvey, Irma and Maria, was the costliest. As a result, says Sarah Thompson, HUB's B.C. vice- president, marketing and real estate practice, "Many insurers have been paying out more than they were taking in." Of course, insurers expect that to happen once in a while; they're in the business of spreading out risk, and they recognize there will be bad years. But Thompson says, "When weather-related payouts are high three, four, ve years in a row, it's not just a shock loss, it's a trend." So, she adds, "Companies are incorporating that risk into pricing because this is now the new norm." Vancouver condo dwellers also have no protection from increased climate risk just because the storms, oods and res have so far occurred somewhere else. Insurance companies bundle their poli- cies together and sell them in blocks to reinsurers. (Munich Re and Swiss Re are No. 1 and 2 in the world; Lloyd's of London is No. 6.) This, too, is a way of spreading out risk, which is a good thing. It means that a disaster like the Camp re of 2018, which destroyed Para- dise, California, and inicted US$16.5 billion in damages didn't bankrupt the local carriers, even though US$12.5 billion of that loss was insured. The good news, then, is that global reinsurers back up local companies in the event of concentrated disasters. The bad news is that a disaster anywhere in the world can Climate of Risk Facing an insurance hike that could be north of 25 percent, Vancouver condo owners are learning that they can't escape the threat of catastrophic weather in a warming world by Richard Littlemore ( the informer ) INSURANCE UNDER WATER Events like the May 2017 Kelowna flood increase everyone's insurance premiums

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