(Bloomberg) -- The wildfires spreading around Canada’soil-sands hub of Fort McMurray may become thecostliest catastrophe in the country’s history with lossespotentially reaching C$9.4 billion ($7.3 billion).

Insurance losses could reach that high if nearly all homes,cars, and businesses in the Fort McMurray area were destroyed andowners filed a claim to insurers, according to a research note toclients from Bank of Montreal analyst Tom MacKinnon. He said it’smore likely that one-quarter to half of assets would be damaged,leading to total insurance industry losses of C$2.6 billion toC$4.7 billion, as much as quadruple the costliest Canadian naturaldisaster.

The fires have forced the evacuation of a 88,000 people innorthern Alberta, the largest in the province’s history, andscorched at least 100 square kilometers (40 square miles) inthe region, home to oil and gas producers including Suncor EnergyInc. and Cnooc Ltd.’s Nexen. At least 1,600 homes and structureswere damaged as of Wednesday, more than triple the number from theSlave Lake Fire in Alberta in 2011, previously the country’s mostcostly fire and third-most expensive catastrophe overall, accordingto Aon Plc.

‘Completely destroyed’

"Preliminary assessments indicated that entire neighborhoods werecompletely destroyed as well as pockets of the downtownarea," according to a May 4 research note from a unit of theLondon-based risk consultant and insurance broker. Numerousbusinesses have also burned, although it is too early to calculateeconomic impact of insured losses given the fire is ongoing. "Oncethe fire was ignited and strong wind gusts arrived that tracked itinto Fort McMurray, it set the stage for a major and devastatingevent."

The most costly disaster in Canada’s history was the flooding inAlberta three years ago, which caused C$1.7 billion in losses as75,000 people were evacuated, according to Aon. The secondmost-costly was the ice storm of 1998 in the provincesof Ontario and Quebec, which caused about C$1.6 billion in insuredlosses, the company said. The Slave Lake Fire caused about C$700million in losses to insurers.

Intact FinancialCorp., the country’s largest property and casualty insurer withabout 19% of its premiums from Alberta as of last quarter, isalready being affected by the fire. The Toronto-based company said40 losses were reported to the company so far, executives saidyesterday. The company insures about 2,800 homes and rental units,300 businesses, and an undisclosed number of cars in the greaterFort McMurray area.

Stock impact

Aviva Plc, the No. 2 largest property and casualtyinsurer by written premiums operating in Canada, has mobilizedresponse teams on the ground in Alberta, focusing on directingclaims and issuing checks for living expenses, according to astatement from the London-based company. RSA Insurance Group Plc, the third-largest, isreaching out to policy holders. Company representatives were eitherunavailable or didn’t immediately respond to requests seekingcomment. Insurers reinsure for claims above certain thresholds,seeking to diversify their exposure and risk to just suchevents.

Intact’s stock fell 0.6 to C$87.30 at 12:57 p.m. in Toronto, thefourth day of losses making it the longest losing streak sinceJanuary, after sliding 3.9% Wednesday, the biggest drop sinceNovember. Aviva slipped 1.3% and RSA rose 2% in London.

Roaring flames

"We’ve been monitoring the situation since last weekend andactivated our catastrophic response plan yesterday," Intact ChiefExecutive Officer Charles Brindamour said on a conference callWednesday. He also said the company’s exposure in the current firesis lower than the Slave Lake disaster.

The majority of losses will likely be related to homes andbusinesses, according to BMO’s figures. Certain neighborhoods ofFort McMurray have lost more than half of their homes, includingWaterways, where 90% of homes were destroyed, and Abasand, wherehalf of the homes were destroyed and YouTube videos show walls offlame roaring near roofs.

There’s still no official estimates yet on the number ofhomes and businesses affected, but it will be a significant amountfor insurers, according to Bill Adams, Insurance Bureau of Canada vice president for thewestern and pacific region said by phone yesterday. Most home andbusiness insurance will cover fire damage and the cost ofadditional living expenses during an evacuation, according to theorganization.

Related: Disasters cost insurers $37B in2015

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