Wildfires in Canada: How the Insurance Industry Reacts to Mass Casualties

Over a year ago, a wildfire devastated Municipality of Jasper. The widespread destruction of a picturesque outdoor wonderland has been life changing for local residents and businesses, and we have been working alongside community members to recover and move forward.

On the one year anniversary, we find ourselves reflecting on how some of the recovery procedures in mass casualty losses differ from procedures for single home housefires.

By its very nature, a mass-casualty event has a larger impact. While single home losses can bring out the best in our neighbours, mass casualty events create a profound community of support and shared grief aimed at moving together towards the unifying goal of recovery. This community system creates accountability for those who might otherwise be “left behind” and moves insurers, builders, and other essential services towards community-wide resolution. However, the increased volume of need can result in resource scarcity, longer recovery times, and a sense of competition.

Standard Community Rebuilding

The fact that Jasper homes are built on National Park land adds complexity because Parks Canada brings a much more widespread (yet singular) interest in community recovery. This interest may contribute to the drive towards systematic approaches to recovery that have left some victims feeling like they lack control or individual attention for their unique loss. When whole streets are scheduled for demolition by one vendor in one go, homeowners might feel like they’re simply being swept along in a process they haven’t had time to consider. Not to mention the complications some homeowners faced when they found that their insurers refused approval and disputed some or all of the costs for that vendor, or over-spent a limited coverage budget to prioritize that vendor over an option that left more in the bank for rebuilding.

As demolition permits close and rebuild permits are being processed: how will this systemic approach affect rebuild expectations? The Municipality pushes for permitting deadlines to keep the process moving forward, and as the available vendors are committing to job after job. It begs the question: how much attention is being paid to traditional insurance recovery and rebuild steps? It’s important that homeowners review the scopes of work (the “recipe” used to rebuild their homes), identify concerns early, and advocate for themselves when they see issues arising with scope, vendor, or timeline.

Valuing Victims’ Personal Content

Differences in process for personal property recovery are also on the rise in Jasper. Traditionally, an Insurer arranges an indexing company to index and value all damaged or destroyed personal property (the unaffixed items, furnishing, and décor in a home) into a Schedule of Loss (“SOL”). This SOL is then used to calculate and guide resolution under the Policy.  Volume of need, resource scarcity (indexing personnel), and timeliness concerns have complicated this process for the Jasper community.

We have seen two major variations to the traditional process emerge: home-owner made lists are on the rise, and a new settlement process is being tested.

Many homeowners have opted or been asked to index and value the SOL themselves. While this does occur in single home losses from time to time, it is not the normal process as it adds a tremendous burden to victims already struggling to manage day-to-day life after a devastating home loss. Being solely responsible (without much guidance or training) for generating and valuing an SOL presents risks of under-inclusion (leaving things off), over-valuation (thinking that your items were worth more than they were), and fatigue (simply giving up). These risks threaten the integrity of the claim and can have serious repercussions on recovery.

Additionally, some insurers have launched a new process that is meant to avoid the tedious SOL procedure all together: Standard Room Settlements. Bourne of timeliness and resource management, this option offers compensation based on the value of “standard” items normally found in various room-types. This option offers speedier recovery with minimal stress or emotional burden. However, the cost of that speed is a lack of personal attention or consideration. Homeowners in Jasper may be forced to choose between speedy payment and accuracy at the cost of effort. For some this decision is simple, for others it can be agonizing knowing that honouring their “above average” personal possessions comes at a cost.

The Cost of Living “Outside” the Community

Destruction of a community comes with widespread displacement, deregulation, and mounting costs simply to stay afloat. When a single home is lost by fire, that family will be moved to a suitable accommodation, ideally in the same community, to maintain the lifestyle they enjoyed before the loss. Wildfire losses like Jasper put heavy strain on limited accommodations in the vicinity of the loss. Community members who are essential to stay in the community have struggled to find suitable lodging, and others have committed to long-haul commutes. Costs increase, and Insurers struggle to justify the raised rents. This situation is only magnified in the community of Jasper, because temporary accommodation cannot be built freely as it might on private land.

In this unprecedented scarcity, new standardized processes are emerging to offer relief to some victims. We have noticed the emergence of more widespread budget calculation options from insurers, aimed at giving families standardized monthly budgets to “figure it out” on their own. This cuts out the process of pre-approving accommodation leases and can provide freedom to those who need it. As with the other emerging “standardized” processes: this is aimed to combat timeline back-ups, but lacks individualized consideration.

Overall, the traditional manner of navigating a household insurance claim is shifted in mass casualty events: both by necessity, and a desire to raise the community together as one. To some extent, stubbornly adhering to the single home process would harm not only the community as a whole, but many individual community members who might get left behind in a resource pool that favours larger-scale commitments. However, each home lost or damaged in a mass casualty had a community member, family, or families that need to be honoured for the individual losses they are grieving: voices need to be heard to ensure that recovery is effective and holistic.

What holds a mass casualty back from a more individualized process? Simply speaking: a lack of resources. In response, mass casualty loss response seem to be moving towards a standardization that helps and harms indiscriminately. As “standardization” emerges, we stand with community members to test reasonableness and advocate for improvements that will apply standard processes equitably and judiciously. We continue to recommend that homeowners get someone in their corner who has the resources to navigate the standardization in a way that helps them the most and harms them the least.

Be a great neighbour, but protect your peace. The community must be rebuilt, and that requires everyone moving towards that shared goal, but you and your family need to recover too: in whatever way fits your specific needs and goals.

Author:

Jess Stewart | Partner