September 11, 1998

Brunt of January Ice Storm
Borne by Reinsurers

TORONTO, Sept. 11 /CNW/ - The Quebec/Ontario ice storm of January this year was by far the largest catastrophe ever for the Canadian insurance market. With insured property and automobile physical damage (excluding collision and upset) losses now estimated at more than $1,444,000,000(x) it is about three and one half times the cost of the Calgary hailstorm of 1991 and equals 22 per cent of the total property insurance premiums in Canada.

A study of Canadian insurance companies conducted for the Reinsurance Research Council shows that the brunt of the January ice storm is ultimately borne by reinsurance companies both in Canada and internationally. Reinsurance is insurance for insurance companies and many products are designed specifically to protect against an accumulation of losses arising out of a single catastrophic event, such as the January ice storm.

Of the total loss of $1.444 billion currently paid or reserved by primary companies, some $965 million, or 66 per cent, is placed into the reinsurance market through catastrophe, risk excess or proportional treaties and facultative placements. This is a similar percentage to the Calgary hailstorm. It is expected that loss numbers will continue to rise somewhat as remaining claims are finally settled, with reinsurers picking up almost all of any increased amounts.

The Reinsurance Research Council is the association of professional
reinsurers licenced to transact property and casualty reinsurance in Canada.

(x) Figures as at September 9th, 1998