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Unprecedented Wildfires Devastate Canada, Leave Eastern U.S. Blanketed in Smoke

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Wildfire season has started two months early in Canada, and the devastating scale of the blazes is already unprecedented. Over 400 fires have caused roughly 10 million acres of burn damage so far, and have blanketed a wide swath of North America in smoke, creating orange skies and toxic levels of air pollution for communities all the way from Canada to the Southeastern United States. During the first week of June, New York had the worst air quality on Earth, and the air quality reached hazardous levels in Philadelphia and Washington, D.C. While it has begun to clear in the Northeast, the fires are ongoing and the air quality may continue to change in the days and weeks to come.

Find more answers to common questions about the wildfires below:

Where is all the smoke coming from?

Unfortunately, there is not just one answer for that, as there are multiple regional fires breaking out seemingly all over Canada and even the United States. However, the current air quality issues are coming from out-of-control wildfires in Quebec and Ottawa, Canada. There are also wildfires breaking out in at least six U.S. states, including Missouri, Kansas and New Mexico, but these do not appear to be involved in the air quality crisis.

According to the Associated Press and Canadian officials, the fires in Canada mark the start of what is expected to be Canada’s worst wildfire season ever due to drier ground than usual, which led the fires to accelerate very quickly.

“Right now, with the manpower we have, we can fight about 40 fires at the same time,” said Francois Legault, premier of Quebec, in an interview with Reuters. “But we have 150 fires, so we have to make sure that we focus where the problems are more urgent.”

In total, there are 425 active fires throughout Canada, according to Canadian Interagency Forest Fire Centre, and 232 are considered out of control. About 120,000 Canadians have been displaced from their homes due to emergency evacuations, with the most recent being from remote parts of Northern Quebec, according to Reuters. There are fires in nearly all of Canada’s provinces. The current wildfires in the U.S. have led to no evacuations thus far.

Why is the U.S. experiencing poor air quality?

To put it simply, the Northeastern region of the U.S. and the rest of the Eastern seaboard as far down as South Carolina are stuck in a slow-moving weather pattern that is carrying the smoke and smell from the Canadian fires southward. According to Politico, 13 U.S. states are under air quality alerts, impacting over 55 million people.

The AP noted that smoke from various Canadian fires has actually been showing up in parts of the U.S. since May, but with new fires recently breaking out in Quebec, the air quality has increasingly gotten worse in both Canada and the U.S. The hazy, orange-tinted skies and smoke smell along the eastern U.S. are expected to dissipate soon but may still be present through the weekend.

How do the fires impact businesses?

The fires affect certain industries more than others. Outdoor work like construction, sporting events, primary schools, park services and zoos are continuing to pay close attention to the air quality and have suspended outdoor operations accordingly while air quality is at such dangerous levels. Many professional sporting events have been cancelled. The New York Yankees, Chicago White Sox, Philadelphia Phillies and Detroit Tigers have postponed baseball games throughout the week, with minor league baseball teams, soccer teams and WNBA teams following their lead.

During the course of the week, airports have been taking various precautions, with JFK, LaGuardia and Newark Liberty International Airport grounding flights, shutting down inbound flights and changing flight schedules. Similar precautions were taken at Philadelphia International Airport. Because this is an ongoing situation, these measures and flight operations remain in flux.

How do we manage the risk?

In terms of immediate action, experts recommend staying indoors, wearing a mask if going outside and keeping windows and doors closed until the air quality alerts are lifted. By the end of the week, New York City’s air quality is expected to be upgraded from “unhealthy” to “unhealthy for sensitive groups.” To find out about your specific area, visit AirNow.gov.

Looking longer-term, the current fires are a good reminder that natural disasters stretch far beyond hurricanes, flooding and tornadoes, especially as the climate continues to change. A recent study found that increases in burned forest area across the western U.S. and southwestern Canada over the last several decades can be linked to significant human-caused climate change.

For businesses, take this as a reminder to examine how your organization will handle fallout from wildfires, for example, reviewing your property insurance, business interruption coverage, disaster recovery plans or emergency communications procedures. The following resources from Risk Management can help organizations consider the many risks wildfires and other climate change-related extreme weather events pose to businesses and communities, and can help boost disaster preparedness for these devastating events.

More resources:

Recovery Tips in the Wake of Hurricane Ian and Hurricane Fiona

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Across the Caribbean, Florida, and up the Eastern seaboard to Atlantic Canada, communities are facing devastation from a recent—and ongoing—spate of mid-season hurricanes.

Ian follows right on the heels of catastrophic damage from Hurricane Fiona. In the Caribbean, 20% of residents in Puerto Rico are still without power after Hurricane Fiona, and the island took another pummeling from Hurricane Ian while it was a Category 4 storm. To the north, post-tropical storm Fiona inflicted catastrophic damage across parts of eastern Canada last week, causing devastating property damage and leaving hundreds of thousands of Canadians without power. While it is too early for complete estimates, ratings agency DBRS Morningstar projected the insured losses may fall in the range of $300 million to $700 million. According to Patrick Douville, DBRS’s vice president of insurance, “Fiona will likely be one of the largest catastrophic events in history for Atlantic Canada.”

Once it is safe to do so, risk managers will have considerable work to do to help their organizations and communities recover.

Dalton advised, “Additional steps businesses should take include engaging a professional claims preparation firm to help document the claim, preparing a daily timeline of impact and changes to operational activities, asking for a cash advance, and setting up a cost tracking code and/or general ledger account to capture incident-related expenses. If it’s a contingent loss, meaning operations are down because of physical damage to a customer or supplier, ask that customer or supplier send you documentation of their physical damage and ask them to communicate with you as much as possible.”

In the July/August cover story from Risk Management Magazine, “Hurricane Claims: Key Tips to Minimize Losses and Maximize Recovery,”attorneys Andrea DeField and Alice Weeks offered guidance on steps for risk and insurance professionals to take before, during and after hurricanes, including hurricane preparation and response checklists.

For organizations impacted by this season’s storms, the following post-storm tips can help risk professionals navigate disaster recovery and the claims management process:

Post-Storm Checklist

  1. Gather insurance policies and related insurance records. If your policy was destroyed or is lost, contact your insurance company or agent/broker to request a copy.
  2. Contact other business partners who may have copies of your insurance policies and records, such as attorneys and accountants.
  3. Give written notice to your broker and insurer immediately. Notice should provide the following basic information:
    1. Name and address of insured
    1. Location of loss
    1. Date and time of loss
    1. Contact name, phone and fax number
    1. Brief description of the loss
  4. Acquire copies of police or fire reports from your local police or fire department, if applicable. If individuals caused damage to the premises or stole anything in the wake of the disaster, obtain a separate police report about the damage or losses or request that additional information be added to the initial report.
  5. Secure vital records and ledgers. Ensure that your accounting department opens a separate general ledger for hurricane-related expenses.
  6. Collect photos or videos as proof of damage. Ensure these are taken before any mitigations are implemented so that they accurately capture the aftermath and losses.
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  7. To the extent possible, take steps to mitigate any further damage once the storm has passed.
  8. If you have not already, retain a forensic accountant to begin preparing your business income and extra expense loss calculations.
  9. Prepare a proof of loss. A proof of loss provides details identifying the property destroyed or damaged, and documents the amount of loss incurred. Generally, any information substantiating the claim can become part of your proof of claim, including photos, videos, receipts and records. Check with your insurer for the specific information required as some companies may ask for a detailed list of documents or require you to fill out a specific proof of loss form.
  10. Submit proof of loss, photos, and reports to your insurer. Be sure to check any time limitations on the submission of a proof of loss and request an extension, if needed.
  11. Assist with the insurance company’s investigation. Property policies typically allow the insurer to conduct a reasonable investigation of the claim and require the insured’s cooperation. This may be in a provision titled “Duties in the Event of Loss” that allows the insurer to interview the policyholder claimants in a process called an “examination under oath.” The policy may also require the insured to exhibit the property, take reasonable steps to protect it, and generally cooperate with the insurer’s investigation. The insurer’s requests for information must typically be considered reasonable, however. A policyholder’s failure to reasonably cooperate could be used by the insurer as a defense to coverage.

8 Steps to Create Strong Disaster Management Plans

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A core responsibility of any risk professional is planning for any possible disasters your business might face. These could be man-made, such as a data breach or accidents involving machinery, or natural, like a tornado or flood.

Disasters and crises affect different organizations in different ways—one company might consider something a catastrophe, while another may not even notice a change in its workflow. It is important to look at your own business operations and evaluate what you would consider a crisis. Generally, business crises fall into one of three categories:

  1. A danger to the physical safety of employees or customers
  2. Loss of income or means of making income
  3. Events or people negatively affecting your business reputation

In many cases, the crisis may fall into more than one of these categories. An accident in the workplace that is hazardous to employees can impact the company’s income because the factory has to shut down. This can also negatively affect the company’s reputation if it turns out that the company did not provide a safe working environment.

With even the best risk management programs, no organization can avoid all disasters completely. Risk mitigation often comes down to crafting the best plans possible for the moment disaster inevitably strikes. These eight steps can help risk professionals develop strong crisis and disaster response plans:

1. Define The Types of Crises You Could Face: There is not a one-size-fits-all approach to a crisis management plan. Working out what is likely to affect your business specifically can relate to your geography—areas that get hit by severe storms or earthquakes must include those potential disasters, and what knock-on effects they may cause. For example, storms may cause flooding, loss of power, or blocked roads that make it difficult to reach your premises. The type of crisis can also be specific to your industry. Employees in a manufacturing facility are likely at greater risk in a physical disaster than those working in a tax consultancy, for example. Security should also be a consideration. Is your business likely to get robbed of cash or equipment? Do you have high-profile proprietary information that makes you more likely to be the victims of cybercrime?

2. Triggering the Plan: Including levels of urgency in your plan will help people responding to the crisis pinpoint how significant the event is, and how much of the plan must be put into action. A step-by-step approach for specific scenarios can be helpful and cover dealing with man-made and natural disasters in different ways. The risk for each will be unique to the situation and knowing when and how to trigger a response is key. The plan should include how and when to escalate the response should the crisis worsen, as well as how to identify when the crisis has passed. It can be helpful to use red, yellow and green system to indicate severity and urgency, and this classification approach is easy to adapt to any scenario.

3. The Base of Operations Location: Accidents or natural disasters may cause your usual place of business to close temporarily or permanently. In your plan, designate a backup command center in an alternate location for dealing with the crisis until you can get back to work. This location can be your company’s operations hub, a point for gathering after a crisis, or where you know your sensitive and important data backs up. If a natural disaster has made travel dangerous or roads impossible to navigate, you will also need a virtual base of operations—some possibilities include message boards, chat apps or email. With so many employees working remotely because of COVID-19, this may be easier to implement now.

4. The Chain of Command: Ensuring a clear chain of command so that there is no arguing or confusion when people and the business are at risk. Wherever possible, appoint a back-up for each person in charge so if someone cannot perform their duty, it falls to the next in line.

5. Internal and External Communication: When a crisis compromises an office or business, communication can become tricky. Have a clear set of rules for how you get information to and from your employees, what information you must and must not share with those outside of the company, and how to achieve that. This part of your crisis management plan can save lives and stop rumors from spreading.

6. Necessary Resources: Though this will depend on the nature of the business, consider first aid and safety equipment if you are likely to have injuries or get cut off because of poor weather. Also, think about alternate communication methods if mobile phone towers go down or the electricity gets cut, as well as access to your sensitive data, such as employee contracts and supplier agreements.Include all necessary resources you would need to operate and highlight any alternate replacements. For example, if a storm knocks out your power, you may have a generator.

7. Training: It is no good putting a crisis management plan together and not giving the relevant people the training they need to execute it. For example, the people you name as first aid providers or unit leaders need to know what is expected of them and undergo the necessary training. If you have safety equipment on your premises, like fire extinguishers or emergency release valves for machinery, you need to educate all stakeholders how these work.

8. Testing the Plan: Finally, test that your plan actually works. Review it with staff and conduct safety drills regularly—every two months at least. Look for any weak points or flaws in the plan before an actual crisis.While it may not be possible to anticipate everything a disaster brings, you can set up several response plans and test each one individually. These plans can tie in with your standard safety drills, or stand alone, depending on the nature of the event anticipated.

A crisis management plan is integral to every business, no matter its size, scope, or sector. By preparing for various potential disasters, you can take action when needed without putting your organization, employees, or yourself at unnecessary risk. 

Reducing Inspector Risks During Catastrophic Response

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The risks associated with disasters extend far beyond the initial destruction. For insurers, disaster damage assessment and claims processing can pose both significant financial risk as well as introduce personal risks for claims inspection teams. The safety of these teams is dependent upon a strong understanding of the situation on the ground. As a result, insurers need to take steps to maintain visibility of the situation, efficiently handle damage claims processing, and, above all, limit the risk exposure of claims and response teams on the ground.

Utilize credible catastrophe information
Having accurate geographic information to pinpoint potential asset damage before deploying inspection teams can aid faster claim resolution and provide more efficient claim processing. Looking to trusted resources that offer key data on approaching catastrophes can help teams better prepare for the situation at hand. The National Oceanic and Atmospheric Administration (NOAA) offers constant information and updates on pending and current weather conditions, storms and other catastrophes to allow organizations to stay up-to-date on the latest conditions. Likewise, the Federal Emergency Management Association (FEMA) can also offer deeper insight into disaster recovery efforts so that adjusters are prepared for the situations they walk into.

Knowledge is power when it comes to efficient claims processing and safe deployment of inspection agents. Data from credible resources allows adjusters to more safely maneuver through potentially hazardous conditions. But even the wealth of knowledge offered by NOAA and FEMA is often not enough to minimize an organization’s post-disaster risk profile.

Emphasize image collection of disaster areas
When disaster hits, roads can become impassable, buildings can become structurally unsound, and areas can become impossible to access. The last thing an insurer wants to do is send its claims adjusters into a hazardous zone unprepared.

Preparation is key to effective claims inspection that minimizes time in the field and the risk of unforeseen, hazardous circumstances. To that end, satellite and drone imagery have become key technologies used by insurance companies to improve processes and protect claims adjusters.

The concept of satellite and drone imagery to assist in claims processes and reduce inspector risks is hardly a new concept. Novarica recently estimated that nearly 20% of P&C carriers are pursuing imaging solutions. In fact, PricewaterhouseCoopers forecasts that drones alone will have a $6.8 billion impact on the insurance industry in the coming years.

Satellite imagery provides wide-area, high-resolution analysis of damaged areas to help organizations understand the breadth of the damage, while drones can be deployed to specific sites to conduct detailed damage evaluations at a micro-level. Combining satellite and drone imagery can give teams a full view of the extent of catastrophic damage so they know exactly what to expect upon on-site inspection.

In some cases, detailed imagery and analytics can often provide enough information to prevent adjusters from ever having to set foot on a property, allowing them to accurately and efficiently process claims from the safety of a desk. In fact, Cognizant estimated that drone usage can make a claim adjuster’s workflow 40% to 50% more efficient, which can be especially important when managing the high number of claims that come in response to a catastrophe. This can also decrease claims management costs, help protect the well-being of employees and significantly reduce adjuster accidents.

The amount and strength of natural disasters in the U.S. will not decrease anytime soon. But the use of credible information resources and thorough imaging technology can help insurers reduce their financial and safety risks, so they can better help others address their own.