The BetaKit Guide: Wildfire
In spring 2016, Don Iveson became familiar with the smell of catastrophe.
He was Mayor of Edmonton at the time, and watched more than 20,000 people stream into his city after a wildfire forced the evacuation of Fort McMurray.
“We can’t insure our way out of these challenges.”
Don Iveson, Co-operators
Inside a Red Cross shelter, he met a man who had escaped with only the clothes on his back, and who carried a sharp, acrid scent—the chemical stench of melted plastic, scorched paint, and vinyl siding from the burning city he’d just left behind.
“I don’t ever want to smell that again,” Iveson said. “Smelling that smell on this man and watching him crumble, that sticks with you.”
Today, Iveson is Executive Advisor for Climate Investing and Community Resilience at Co-operators, part of the insurance industry that has been massively destabilized by climate disasters.
The insured losses of Canada’s 2023 wildfire season totalled $3.1 billion, and by 2030, more than 220,000 homes could be occupied in Canadian regions with high wildfire hazards.
The systems built to handle risk weren’t designed for a world burning at this pace. And with billions on the line, the insurance industry has become some of the most driven players working to innovate against wildfire risk.
“But we can’t insure our way out of these challenges. The whole model breaks down unless we figure out how to control these losses through prevention.”
A new kind of risk
During active wildfires, insurers sometimes pause the issuance of new policies or modify existing ones for properties within a certain proximity of the fire. Other insurers are raising premiums or refusing to cover certain materials, such as cedar shake roofs that have been shown to ignite whole neighbourhoods.
But claims from wildfires, floods, and convective storms are accelerating non-linearly. Last year alone, insured, weather-related losses reached $8.5 billion for the first time in Canadian history.
Faced with an increasingly uninsurable landscape, insurers like Co-operators are shifting focus from payouts to prevention and putting community resilience at the core of their business strategy.
Co-operators launched a Resilience Accelerator Lab and created a Climate Hazard Advanced Risk Modeling team, which uses predictive modelling to help communities, governments, and credit unions understand where wildfire and climate risks are growing fastest.
Iveson also described a growing focus on building materials and landscape-level changes that can buy communities more time during a wildfire. In high-risk zones, Co-operators now offers insurance incentives for clients who remove flammable brush, install metal roofing, or swap out cedar shake shingles.
Iveson believes measures like these are no longer optional.
“If folks can’t get insurance, not only can they not manage that risk, but they can’t get mortgage financing. And if you can’t get mortgage financing on a property because the risk is too high, then it’s trading for cash, and that’s a salvage market.”
In the American Gulf states where hurricanes are growing more frequent, insurers have already begun retreating from high-risk areas, leaving homeowners without coverage and driving entire communities into uninsurable territory.
Iveson warns the same could happen in Canada if the country doesn’t move fast to reduce losses. That means rethinking not just buildings and policies, but the entire insurance landscape.
Feature image courtesy of Unsplash. Photo by Marcus Kauffman.