On Sunday, April 26th, the rapidly thawing Athabasca River near the Regional Municipality of Wood Buffalo saw rising river levels escalate to full-fledged flooding in downtown Fort McMurray. By Monday, April 27th, close to 13,000 people had been evacuated from their homes. As of May 1st, it is expected that more than 1200 building were impacted by the Fort McMurray flooding and that a boil water advisory could be in place until as late as September 2020. All of this comes after the 2016 wildfires devastated the community and amidst a global pandemic already impacting many businesses and residents.
Living On A Flood Plain
Much of Fort McMurray is built in a floodplain and while a flood of this measure hasn’t been recorded in 100 years, there have been 15 notable floods since the 1830’s. In 2019, plans were finally underway to improve flood defences in the area. The Regional Municipality of Wood Buffalo had started work on raising a road adjacent to the Clearwater River; it’s purpose to act as both a dike and a major arterial road. To date, $6.5 million of a planned $136.5 million had already been spent on flood mitigation, including building flood walls and berms. Intentions to make Fort McMurray a walled city have now been thwarted.
This begs the question, why would perfectly rational people continue to build in an at-risk area. Based on extensive research conducted by the Globe and Mail, approximately 40% of the structures in the Lower Townsite and Waterways are directly in harm’s way.
Merwarn Saher, Alberta’s former Auditor General claims that politics are too blame. Despite Alberta Environment mapping out 48 flood hazard areas, including the low lying Downtown in Fort McMurray, the province leaves floodplain regulation to municipalities. The hazard areas remain undesignated as off-limits to development due to a lack of community support. The problem is compounded by local officials who wish to revitalize the communities and can’t resist the income incentives generated by property development fees and annual property taxes. This is a common problem which can be seen in other parts of Canada, including Fredericton and Ottawa. “Meanwhile, it’s the provinces and the feds who get stuck with most of the tab for helping flooded communities recover.”
The Mayor of the Regional Municipality of Wood Buffalo, Don Scott, says, “More work needs to be done to keep the lower townsite as protected as we can make it. Council is going to have some pretty serious decisions to make about what steps we’re going to be taking.”
Most Uninsured For Floods
Mayor Scott claims that most of the community does not have any flood coverage or were vastly underinsured. The Insurance Bureau of Canada explains that overland flood coverage is not included in standard policies and typically not available to those in flood hazard areas at all. This means that not only will funds for repairs to buildings be unavailable, but there will be no payouts for any additional living costs associated with displacement, unemployment, or other consequences of the flood.
Monica Ningen, Swiss Re’s president and CEO of Canada & English Caribbean, told Canadian Underwriter, “If flood insurance is available to these properties, it is prohibitively expensive, reflecting the high probability for damage. For these high-risk properties, a mechanism to subsidize part of the premium would be required to make it affordable. This could be achieved through a partnership between the industry and the government.”
Mayor Scott is quoted in the Fort McMurray Today, “There’s a lot of damage and not a lot of coverage…Without federal and provincial help in this situation, there are going to be people facing financial ruin.” The Alberta Premier, Jason Kennedy, believes that the Northern Alberta flooding disaster will meet eligibility criteria for a Disaster Recovery Program, as a one-in-100-year flood event. Mayor Scott estimated on May 4th, that there was more than $100 million in damage.
Insurance Repercussions of 2016 Fires
The evacuation order from the floods ended on May 3rd, the four-year anniversary of the evacuation caused by the 2016 wildfires. 80,000 people were ordered to leave Fort McMurray as flames engulfed almost 2400 structures. The 2016 Fort McMurray wildfires are the largest insured catastrophe in Canadian history, estimated at nearly $4 billion.
Despite the fact that many were able to rebuild after the fires, there are others who are still in ongoing battles with insurance providers. For the condominium community, difficulty to obtain coverage has been exasperated by a nationwide hard insurance market. While condominium corporations are required to insure all units and common property to replacement cost value, according the Alberta Condominium Property Act, this hasn’t been possible for all condo boards and people are losing their homes because of it.
The Cedarwoods condo corporation saw their insurance premiums increase in 2019 by 650% following claims related to the 2016 wildfires. The policy they secured cost $925,000 and only covered one sixth of the total appraised value. The Winchester Greens condo corporation is in a similar situation where 2019 quotes jumped 800% over their 2018 premiums and for only one third of the coverage. Kathy Bowers, owner of property management firm, Fort Management, claims that in light of insurance premium increases and declining property values, many owners have no other choice but to hand over their homes to the banks.
A Perfect Storm
Between the 2016 wildfires, record low oil prices, COVID-19, and now the flooding, the devastation for this community is unfathomable. In neighbourhoods like Waterway, residents are looking at a second or third rebuild after the 2016 fires and summer floods of 2013. “Few have had the misfortune of being hit more than once by natural catastrophes, but that’s the case for many of the residents in Fort McMurray,” Ningen told Canadian Underwriter.
The road to recovery for the Fort McMurray community is long and uncertain. There is no simple solution given the risks of living in the boreal forest and a flood zone. Rob de Pruis of the Insurance Bureau of Canada explains, “There’s some really big global economic factors that are also coming into play here as well that we may not have as much control over.” The municipal government of Wood Buffalo is calling on Provincial and Federal governments to step in and find a solution. Alberta Finance Minister, Travis Toews, confirms that the government is working with insurance providers and has requested that they “work to find solutions for condominium owners in the region.”
Cover image from Fort McMurray Today, Volunteer efforts save Heritage Village from flooding, Heritage Shipyard sees significant damage:
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