Piles of belongings line the curb, as part of emergency fire-smarting efforts to save structures in Jasper, Alta., after a wildfire devastated the community on July 26, 2024.AMBER BRACKEN/The Canadian Press
Insured damage from severe weather events in Canada hit a record $8.5-billion last year, a warning bell that certain regions in the country may be at risk of becoming uninsurable, an industry association says.
In a report released on Monday, the Insurance Bureau of Canada said the tally of natural disaster claims in 2024 shattered the previous record of $6-billion set in 2016, when the Fort McMurray, Alta., wildfire caused $3.6-billion in damages. And while the IBC said insurance coverage for wildfires remains “widely available,” the increased frequency and severity of weather-related losses continue to create claims cost pressures that will affect the cost of insurance.
“As we watch the devastating wildfires in California where insurability of homes is at real risk, Canada’s property insurers are raising the alarm that regions of Canada could potentially face similar challenges,” the IBC warned.
The 2024 tally was triple the losses recorded in 2023, and 12 times the annual average of $701-million in the decade between 2001 and 2010, according to calculations by the Catastrophe Indices and Quantification Inc.
“Canada is clearly becoming a riskier place to live, work and insure,” said Craig Stewart, IBC’s vice-president of climate change and federal issues. “As insurers price for risk, this increased risk is now impacting insurance affordability and availability. Canadian governments must be more pro-active to properly manage and mitigate risk.”
Mr. Stewart added that governments need to invest in infrastructure that defends against floods, adopt land-use planning rules that ensure homes are not built on flood plains, facilitate fire smart education in communities in high-risk wildfire zones, and implement long-delayed building codes that better protect homes and livelihoods.
In the 2024 budget, the federal government flagged it was still committed to launching a national flood plan for Canadians who were living in high-risk flood zones. However, the government appeared to stall its plans in the fall economic statement, saying it still needed “targeted conversations” with the provincial and territorial governments on the plan design, drawing criticism by the insurance industry.
With Parliament prorogued soon after the release of the economic statement, and with an election coming this year, Blair Feltmate, a climate professor at the University of Waterloo and head of the Intact Centre on Climate Adaptation, says the flood insurance program transitioned from “very slow progress” to an “indeterminant standstill.”
In recent years, the property and casualty insurance industry has seen insured losses skyrocket globally, as back-to-back annual natural catastrophes have driven companies to pay out more than $100-billion in damages around the world. Many of Canada’s largest insurers have become more active in conversations on climate adaptation, and are promoting measures that homeowners can take to help mitigate the risk of weather-related damage to their properties.
The summer of 2024 stands out as the most destructive season in Canadian history for insured losses owing to wildfires, floods and hailstorms. In just July and August, four catastrophic weather events resulted in over $7-billion in insured losses and more than a quarter of a million insurance claims – 50 per cent more than Canadian insurers typically receive in an entire year, IBC said.
In addition to these losses, about $24-billion more in uninsurable damage was absorbed by governments, businesses and individuals, Mr. Feltmate said.
“Canadians must recognize that climate change is irreversible, and that known solutions to limit future impacts of flooding and wildfire – Canada’s two most costly climate perils – need to be mobilized at the level of the individual house and within communities,” he added. “Canada has the tools to limit extreme weather risk – the problem is that we are not deploying known solutions nearly fast enough.”
While the single most-destructive weather event in 2024 was the August hailstorm in Calgary – with about $3-billion in insured losses in just over an hour – flooding continued to cause significant damage in nearly every region across the country.
Flooding in the Greater Toronto Area in July caused just under $1-billion in insured damages, while remnants of Hurricane Debby in August hit Quebec with insured losses of $2.7-billion. This compared with $1.1-billion in damages from the Jasper, Alta., wildfire.
“Sadly, beyond the staggering financial losses are hundreds of thousands of Canadians whose lives and livelihoods have been upended,” IBC chief executive officer Celyeste Power said in a statement.
The IBC also stressed in its report “the disproportionate impact” catastrophic weather events are having on home insurance costs. Since 2019, Canada has experienced a 115-per-cent increase in the number of claims for personal property damage, and a 485-per-cent increase in the costs for repairing and replacing personal property. Canada’s largest property insurer, Intact Financial Corp., has increased home insurance premiums in 2024 by 9 per cent.
Mr. Stewart said if Canadian governments fail to take decisive action to create more resilient communities, he expects that pressures on home insurance premiums will continue.
“The protection gap is growing and costs are increasing, affecting affordability and even availability of insurance coverage,” he said. “Canadians need governments and the private sector to collaborate on solutions to protect them from the severe weather of today and tomorrow.
“If that doesn’t happen, we should all get ready to live in an uninsurable country a decade from now.”