Wildfires raging out of control in Western Canada have devastated lives and businesses and damaged property, including hotels and other real estate in Jasper, Alberta, as part of a natural disaster that threatens to once again nudge insurance rates higher across the country.
The property damage has been centred on Jasper, a town of about 5,000 on the border of British Columbia west of Edmonton. It is a major tourism hub in Canada at the heart of a national park that attracts 2.5 million visitors per year.
The fires are among large blazes burning across the western portion of North America, with fires in California also causing damage and spurring calls for changes as weather analysts say climate change is affecting the continent by making areas hotter and drier.
Authorities in Western Canada evacuated approximately 25,000 people from the region at the onset of 200 wildfires that started July 22. Up to half of the structures in the town are believed to have been destroyed by the blazes, according to Alberta government officials, though no detailed assessment of the damage has yet emerged.
Management at the federally run Jasper National Park said in a statement days ago that the wildfire “remains out of control." However crews have begun removing debris and restoring power to parts of the area.
The situation is the “worst nightmare” for local hoteliers, according to Laura Baxter, CoStar's director of hospitality analytics for Canada. “Jasper is one of Canada’s crown jewels for leisure tourism, and this is a devastating loss for its local community and for Alberta’s tourism sector," she said in an email.
Jasper is home to almost 100 hotels that will have reduced business, including Tekarra Lodge , the 41-room Whistlers Inn, Athabasca Hotel, the 99-room Crimson Jasper, and the 146-room Jasper Inn & Suites by INNHotels. The worst hit areas lie in the western section of the city, home to hotels including the 98-room Maligne Lodge and Mount Robson Inn, according to a map issued by the Municipality of Jasper in the past week.
This year's wildfires, named the Jasper Wildfire Complex, come after a challenging 2023, when 16.5 million hectares of forest were destroyed by conflagration, well above the annual average of 2.1 million hectares. The toll for 2024 now stands at 2.4 million hectares of damage in Western Canada, according to an analysis by Morningstar DBRS, the world's fourth largest credit ratings agency.
The 2023 fires caused $3.1 billion in insurable damages in Canada in 2023, the fourth-most expensive year in record.
The Morningstar report estimated the damage from the Jasper Wildfire Complex as comparable to the Slave Lake wildfire of 2011 that resulted in about $700 million in claims adjusted for inflation. It concluded that the wildfire losses will “add volatility to Canadian insurers’ results,” yet it also suggested the fires would be “manageable for Canadian insurers.”
In May a series of fires near Fort McMurray led authorities to evacuate areas of Alberta and British Columbia.
The 2023 fires prompted the Insurance Bureau of Canada to urge the federal government to introduce a national flood insurance program and also played a role in raising the cost of insurance in Canada by 7.6% in January compared to one year earlier.
Last year the natural disasters were not confined to Western Canada, as wildfires and flooding in Nova Scotia cost insurers $490 million, according to an Insurance Bureau of Canada report issued last week. The group also took the occasion to renew its plea to create federal legislation to deal with the insurance issue.