Big storm batters eastern port / rustycanuck

This article appears in the December 2022 issue of Investment Executive. Subscribe to the print edition, read the digital edition or read the articles online.

Atlantic Canadians welcomed the arrival of autumn 2022 with the unwelcome arrival of Hurricane Fiona, which brought winds reaching upwards of 170 kilometres an hour. As winter dawns, Fiona’s wrath is still resonating throughout Nova Scotia, New Brunswick, Prince Edward Island, and Newfoundland and Labrador.

Just after the storm made landfall in September, Joel Myers, CEO of AccuWeather Inc., estimated the economic cost of Fiona in Atlantic Canada could reach $4 billion. That figure included evacuations, cleanup and business logistics.

In October, Catastrophe Indices and Quantification Inc. estimated Fiona would cost $660 million in insured damage alone, making it the 10th-costliest insured natural disaster in Canadian history and the costliest disaster to ever hit Atlantic Canada.

But most losses caused by the hurricane — actually an extratropical cyclone when it made landfall in Nova Scotia — are not covered by insurance. Sea surge, for example, which is an abnormal rise in water level, is not generally included in policies.

Hardest hit are the residents directly affected by Fiona’s rampage, including approximately 500,000 who were literally left in the dark. Their insurance will probably not cover all, if any, of the damage they suffered. In the case of Port aux Basques, N.L., the damage included entire homes being swept out to sea.

Businesses are expected to fare somewhat better financially, at least with respect to insurance coverage. As well, business-interruption losses will be covered for a limited period. Finding labour to help repair and rebuild will be a challenge, however. This, in turn, will raise the cost of claims.

Key industries also will suffer in the short term and potentially beyond. Fiona made landfall in P.E.I. just as potato crops were about to be harvested. Power outages across the province also meant crops that were already harvested could not be stored properly. In Cape Breton, at least a dozen cruise ships cancelled their arrivals in the wake of Fiona, amounting to a loss of more than $1 million to the port and local businesses.

Governments have offered help.

On Sept. 26, Nova Scotia announced $40 million in provincial aid, including small amounts paid out to help offset some of the damage. For example, the provincial government is giving $100 to every household that lost power for at least 48 hours to help cover the cost of spoiled food, and up to $250 for every person who has to pay for tree removal from their property.

The federal government announced a $300-million recovery fund on Oct. 4 and earmarked another $1 billion for “Hurricane Fiona-related requests from the provinces” in its fall economic statement. The government also pledged to match all Fiona-related funds raised by the Canadian Red Cross until Oct. 31.

As of mid-November, the Red Cross had collected almost $31 million and had distributed about $27 million, mostly to residents of Nova Scotia and P.E.I. When Nova Scotia Premier Tim Houston announced provincial aid, he was among the many officials trying to manage expectations. “Disaster relief funding will be helpful for uninsured losses, but we know this may take time and there will be gaps,” he said.

Hurricane Fiona is not an anomaly. Experts believe that while the region may not experience more hurricanes, those that arrive will be much more intense than in the past.