Press Release
BOSTON, May 16, 2016 – Catastrophe modeling firm AIR Worldwide estimates that industry insured losses from the Fort McMurray, Alberta, Canada, wildfire that started on May 1 will be between CAD 4.4 billion (USD 3.4 billion) and CAD 9.0 billion (USD 6.9 billion). Officials are still in the early stages of assessing the damage in Fort McMurray caused by the wildfire that began on May 1 and spread rapidly through forest to elevated neighborhoods, quickly outpacing local firefighters' capacity to contain it. According to AIR’s loss estimates, the Fort McMurray wildfire is the costliest natural disaster in Canada’s history.

As of Saturday, May 14, the fire was uncontained and covered nearly 600,000 acres, mainly in wildland and away from population centers. Winds have eased and temperatures have cooled, with the expectation that they will cool further still midweek and that there will be considerable cloud cover and a possible shower, which should help firefighting efforts. Firefighting crews are still trying to put out fires in the northern part of the city.

The evacuation orders for Fort McMurray, Anzac, and Fort McMurray First Nation remain in effect, and it will be at least a week or two before officials can say when residents will be able to return. A mandatory evacuation notice and State of Local Emergency were issued on the night of May 15 for the Municipal District of Greenview. This alert applies to Little Smoky area residents. Highways in the area are closed, down to one alternating lane, or restricted to essential travel only. A Boil Water Advisory is in effect for all areas receiving water from the Fort McMurray water system. An open fire ban throughout Alberta is in place, and a fire ban is in effect in the northwest forest of Saskatchewan, as the Fort McMurray fire had spread to within 13 kilometers of Saskatchewan’s border.

The airport, water treatment plant, municipal building, hospital, and all functioning schools were safeguarded. The airport continues to be used only for wildfire aircraft operations, however, and is closed to commercial and private aircraft until further notice. Current information suggests that a total of more than 2,400 structures have been lost—roughly 10% of the total.

Downtown Fort McMurray apparently experienced little damage, and Gregoire and Saline Creek to the south appear to be unscathed. The western side of Wood Buffalo and the neighborhoods of Beacon Hill, Abasand Heights, and Waterways south of the downtown area, however, have suffered catastrophic losses.

AIR’s loss estimates explicitly capture residential, commercial, and automobile losses, as well as business interruption losses, except those related to the oil industry. AIR derived these loss estimates based on its high-resolution Industry Exposure Database (IED) for Canada and damage ratios estimated from satellite imagery and experience from claims adjustments for historical U.S. wildfires. IED exposure values included in loss estimates have been trended to January 1, 2016.

AIR’s analysis shows that losses will be dominated by residential losses, with several neighborhoods experiencing catastrophic loss. Note that AIR’s estimates of insured losses are based on assumptions of nearly 100% take-up rates in Alberta. Please note that total economic losses are expected to be higher than industry insured loss estimates. The range in AIR’s loss estimates reflects uncertainty in the payment of additional living expenses resulting from mandatory evacuation of the city’s population, loss of some individual structures outside of the most affected neighborhoods, as well as widespread but lower levels of loss due to smoke, loss of electricity, and damage from suppression efforts.

AIR’s insured losses estimates reflect:
• Insured physical damage to property (residential, commercial), both structures and their contents, and auto
• Direct business interruption losses (except for those related to the oil industry)

The loss estimates do not reflect:
• Losses to uninsured properties
• Losses to land
• Losses to the energy and timber industries
• Losses to infrastructure
• Losses to CAR/EAR, Marine Hull, or Marine Cargo lines of business
• Indirect business interruption losses
• Loss adjustment expenses
• Demand surge—the increase in costs of materials, services, and labor due to increased demand following a catastrophic event.

AIR will monitor the situation and will provide updates as warranted.

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