When industry leaders discuss the Jasper wildfire, the conversation usually stops at the numbers. But according to Chris Van Kooten (pictured right), chief underwriting officer at Gore Mutual, the event deserves deeper scrutiny – and not just for its record-setting insured losses.
“I think everybody’s probably familiar with the high-level statistics,” Van Kooten said during a panel at the National Insurance Conference of Canada (NICC). “But there are a few things about Jasper that are a little bit unique and worth reflecting on.”
The wildfire caused an estimated $1.3 billion in insured damage – the second-largest wildfire loss in Canadian history after Fort McMurray. Yet Van Kooten argued that several less-discussed aspects of the disaster could shape how the industry approaches catastrophe risk in the years ahead.
The damage ratio was significantly higher than what you would typically see, he said.
“About a third of the structures in Jasper were destroyed – 30 to 35% damage ratio is quite significant."
Van Kooten noted that such devastation, once virtually unheard of, is becoming more common.
“If you look back 20-25 years, damage ratios that are that significant almost didn’t happen. Anything north of 10% was almost unheard of. Now we’re starting to see these events happen more frequently.”
That trend, he warned, isn’t confined to small or remote towns. Large geographic areas are now experiencing catastrophic-scale loss patterns that used to be rare.
Another factor that made Jasper unique was its setting inside a national park. That, Van Kooten said, gives a couple of problems.
“You’ve got more parties involved – you’ve got federal government involvement – and there’s just a much longer lead time to actually get work done and get permits in place,” he said.
To their credit, he added, officials are trying to use the tragedy as an opportunity to rebuild more resiliently. He said that there is an effort underway to rethink how the community is structured, and to reconsider the types of materials that are being used to mitigate losses and prevent them from happening in the future, he said.
“That’s good – but of course, in the short term, it just means increased costs for us, and we’re all sharing that.”
Van Kooten also highlighted an under-examined side of the catastrophe: tourism-driven business interruption losses.
Most of the structures that were burned in Jasper were commercial risks, he said.
“They had business interruption coverage, but generally with sublimits. What we’re going to see as the rebuild goes on is those business interruption losses grow – they hit up against policy limits, and the total economic loss is actually outpacing even the insured loss.”
He argued that focusing only on insured losses obscures the true impact. The industry, he said, always likes to talk about the insured losses because it’s easy to calculate. “But if we want people to actually care about mitigating exposure, we need to talk about the stuff that isn’t covered – the part we don’t get involved in.”
Van Kooten said that while wildfire frequency hasn’t increased dramatically, the duration and intensity of events have. The season is longer, and it’s starting earlier so everything is more likely to be dry, he said.
Severe winds then come through, and they spread the fires around, he said.
“In a lot of cases, the fires get really big, they get really hot, they go dormant through the winter, and then they prop up again in the spring.”
That reality, he added, heightens the risk of a catastrophic scenario where a major fire meets a critical infrastructure hub.
“I don’t think it takes too much imagination to think about what happens when one of these large, fierce fires runs into something that we really don’t want to burn.”
Van Kooten urged the industry to think beyond individual property protection.
Individuals and individual structures can be protected, he said, but those structures are still fairly useless if the area around them is completely damaged.
The ecosystems are destroyed, you don’t have access to water, there are chemicals, and there are pests that are now looking for somewhere to go, he added.
“We have to think about community solutions,” he said. “How we actually get communities involved in trying to mitigate these losses – not just at the individual level.”
