Fort McMurray: Wildfire in Canada’s forests

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Fort McMurray: Wildfire in Canada’s forests

The two-month-long wildfire near the town of Fort McMurray close to the great oil-sand mines in the province of Alberta resulted in the costliest insured loss ever in the Canadian market.

The devastating forest fire was probably started by human activity, but was aided by a dry, mild winter and an exceptionally warm spring. The fire started on 1 May 2016 in Canada’s northern coniferous forests, where the vegetation had become highly flammable as a result of the extremely dry conditions. Helped by strong winds and above-average daytime temperatures of more than 30°C, the fire quickly spread out of control until it finally reached Fort McMurray. All of the town’s 80,000 inhabitants had to be evacuated. Approximately 2,400 buildings, or roughly 10% of the town, were destroyed. And as if that wasn’t enough: Fort McMurray lies at the centre of the largest oil-sand deposits in Alberta. Because of the fire risk, oil production in the region had to be halted for several weeks.

An area of 590,000 hectares, equivalent to twice the size of Luxembourg, was affected by the fire. The fire was only brought under control at the start of July. All in all, the costliest wildfire worldwide, and the most expensive natural catastrophe ever for the Canadian insurance market.

The enormous loss illustrates how the wildfire risk has increased in the region. Because of the increase in the production of oil sand, the isolated town of Fort McMurray has expanded dramatically since the 1970s. This has resulted in an accumulation of assets in the exposed regions in the immediate vicinity of the forest. For risk management at insurance companies, wildfires as a natural catastrophe are sure to play a much more significant role in the future.

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