×

Devastating Canadian wildfire losses near $1 billion, could set records

Losses from the devastating wild fire blazing in western Canada are nearing $1 billion, and will likely set records for the country, insurance industry experts said.

Record-breaking heat, high winds, and dry soil combined to fuel an inferno that forced the evacuation of the Alberta city of Fort McMurray and its population of more than 80,000. The CBC reported Thursday that evacuations were spreading as the fire moved south.

More than 1,600 structures have been destroyed by the fire, mostly homes and office buildings, disaster forecasting experts at Aon Benfield said in a report late Wednesday.

"Fires have been growing," Thom Porter told CNBC's "Power Lunch" Thursday. He heads the California Department of Fire in the state's southern region.

"We're seeing the effects of a changing climate. We're seeing fire seasons growing in length, starting earlier and ending later. These are conditions that our generation and probably several generations prior to us have never seen."

The average cost of a single-family home in the community was recently around CAD$627,000 ($487,000), Aon said, citing data from the local real estate industry.

That would suggest losses of CAD$1 billion ($779 million), with more to come as the fire continues to blaze out of control.


Such damages would already make the fire the third-costliest insured loss event in Canadian history, Aon said. Many in the industry speculate the losses could eventually double or more, making it the country's costliest insured disaster ever.

Shares in Intact Financial Corp, Canada's largest property and casualty insurer, fell 1.3 percent Thursday and are down 7 percent this week amid the mounting claims.

The evacuations themselves may also increase cost. The Insurance Bureau of Canada, which represents the industry in the country, said most policies will cover living expenses for policyholders who are forced by government to evacuate.

"What we'd like people to do is be ready, and then be set and then go" said Porter. By readiness, he means have a plan, make sure you gather your important possessions like papers, medications and even pets.

Thankfully, evacuation times are shortening. The main goal of firefighters is to "get ahead of the fire," he said.

--CNBC.com's Josh Weiss contributed to this report.