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How local weather change is affecting home insurance tariffs in Canada – Insurance Enterprise Canada

Experts say that at this rate, the coverage of such damage is "completely unsustainable".

A recent report from financial services firm DBRS Morningstar predicts that insurance providers may begin to discontinue property insurance in areas deemed too costly or, worse, avoid certain risks altogether if circumstances don't change. This could put enormous financial pressure on the government.

Continue reading: Climate change, disasters and why the hands of home insurance are tied

How is climate change affecting Canada's insurance industry?

With climate change causing extreme weather conditions to increase in frequency and magnitude, many insurance industry insiders fear that the situation could drive premiums to unaffordable levels.

Using data from IBC, Public Safety Canada, Cat IQ, and local media reports, Reuters recently published a list of the country's largest natural disasters in terms of insured damage. Interestingly, eight of the ten disasters on the list occurred in the past decade, as the effects of climate change were increasingly being felt. The list does not include this year's massive floods in British Columbia as insurance loss estimates have not yet been finalized, despite industry experts predicting significant damage.



Insurance damage

May 2016

Forest fires, Fort McMurray, Alberta

$ 3.58 billion

June 2013

Flooding, Southern Alberta

$ 1.7 billion

January 1998

Ice storms, Ontario and Quebec

$ 1.3 billion

June 2020

Hailstorm, Calgary, Alberta

$ 1.2 billion

July 2013

Flooding, Toronto, Ontario

$ 940 million

May 2011

Wildfire, Slave Lake, Alberta

$ 700 million

May 2018

Storm, Ontario and Quebec

$ 680 million

August 2005

Tornado, flooding, Toronto and southern Ontario

$ 625 million

April 2020

Ice jam, flooding, Fort McMurray

$ 562 million

August 2014

Hailstorm, Airdrie, Alberta

$ 450 million

Source: Reuters

Continue reading: Insurers need to take climate change into account when managing flood risk

How is climate change affecting home insurance tariffs in Canada?

Canadian homeowners are among those hit hardest by the financial effects of climate change. Over the past decade, average home insurance premiums have risen more than three times the rate of inflation as property damage claims rose 42% across the country, according to a recent analysis by financial comparison site RATESDOTCA.

During the reporting period, Alberta saw the largest increase in home insurance, with average rates increasing 140% from $ 741 in 2011 to $ 1,779 this April. Ontario premiums also saw a significant increase, increasing 64% in April from $ 782 in 2011 to $ 1,284. The inflation rate for the past 10 years is less than 17% based on the Bank of Canada figures.

"For those who argue that the cost of stronger action against man-made climate change is too expensive, consider this: The cost of inaction for Canadian homeowners has increased every year," wrote Jameson Berkow, editor-in-chief of RATESDOTCA, in his analysis .

Berkow cited IBC data showing that total net personal injury claims nearly tripled in more than two decades from around $ 2.3 billion in 1996 to nearly $ 7.2 billion in 2019.

“For a more detailed comparison of apples to apples, let's look at the last 10 year period beginning in 2009, when personal property claims across Canada totaled $ 5.1 billion. That number grew by more than $ 2 billion, or 44%, or about three times faster than inflation over the next decade, ”he added.

“That can only be the result of more and more homes across Canada suffering increasingly expensive damage and / or destruction every year. With the increasing effects of climate change causing property-damaging extreme weather events to become more frequent and severe, this appears to be the most likely explanation for Canada's rapidly increasing home insurance costs. "

Continue reading: Revealed – Ontario's Most Expensive, Cheapest Home Insurance Cities

How can Canadian homeowners protect themselves from the risks of climate change?

To help homeowners keep premiums down in the future, Berkow also gave tips on how to avoid weather-related damage. Here are some of them:

  • Consider installing a check valve or sump pump in the basement of the house. Informing the insurance company can also help homeowners get a discount.
  • Install smart water alarms that instantly recognize when water is seeping through the house. Not only does this help protect the home from flood damage, but it can also lead to a discount.
  • Regularly clean your gutters and pipes.
  • Set downspouts outside the house and on the street.
  • If you only clear three feet of vegetation around the house, the risk of the house being destroyed by wildfire can be cut in half.
  • Use impact-resistant materials for the roof, especially if the house is in a hail zone.
  • Avoid planting conifers as they are highly flammable. Consider planting deciduous trees instead.
  • Cut off weak or dead branches, as these can cause damage from debris, especially in strong winds.
  • Get coverage against water floods in your policy. Most providers have to purchase this separately.

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