Michael Giligson

Canada has experienced around 300 catastrophic weather events since 1983, with both the frequency and cost of these disasters rising significantly in recent years. Over 60% of total insured losses caused by weather disasters between 2008 and 2024 stemmed from damage to personal property. Average insured personal property losses have nearly doubled in the past five years compared to previous years, putting significant pressure on Canadas home insurance sector for both insurers and households faced with rising home insurance rates. The increase in home insurance costs was generally higher in areas that have experienced greater insured damages from weather disasters. As well, some highly-impacted areas also face rising deductibles or reduced coverage for certain perils like hail or floods. Fiscally-constrained governments are also rethinking the level of financial assistance provided through disaster recovery programs to support communities recovering from uninsurable losses as costs of weather disasters rise. Canada has had over 300 catastrophic weather events since 1983. These are currently defined as weather disasters that cause at least $30 million in insured losses, though lower thresholds were used prior to 2022. The average number of annual catastrophic events has increased over time as have insured losses associated with these events. Insured losses vary by province with Alberta accounting for the largest share of total insured losses between 1983 and 2024, followed by Ontario and Quebec. The three provinces are the only ones that have been hit by billion-dollar-plus catastrophic events so far, with Alberta alone having had five as of 2024. More than 60% of insured losses from 2008 to 2024 were due to damage to personal property. In addition, the costs have increased substantially in recent years with insured damages to personal property during 2020-2024 being almost twice their level in the previous decade. Moreover, the insurance industry in Canada incurred underwriting losses in the personal property line of business in 2023 and 2024 as insured damages and operational expenses exceeded revenue earned from premiums. These changes have contributed to rising home insurance premiums, especially in areas hardest hit by severe weather, with Alberta being the most notable example of the variation in insurance cost increases between more and less vulnerable areas. Additionally, high-risk areas face other adjustments to home insurance policies including higher deductibles for example, for hail coverage in areas that have experienced substantial damage from hailstorms. In worst case situations, insurance coverage is simply not available for certain perils such as overland flooding in areas of the country deemed most at risk of flooding. Meanwhile, as households that are most vulnerable to severe weather are feeling the squeeze from the private insurance market, government disaster recovery programs, which have historically acted as an insurer of last resort, are also beginning to restrict the level of support provided to impacted communities as these programs are also contending with rising costs of extreme weather. https://economics.td.com/ca-extreme-weather-and-insurance