Canadian Insurers To Foot The Bill For Catastrophic Natural Disasters.

In recent years, Canada has seen a surge in extreme weather events, leading to record-high insurance claims in the property and casualty (P&C) insurance market. In 2024 alone, more than $8 billion has been paid out by Canadian insurers for claims associated with property damage and liability, with over $7.1 billion in claims resulting from natural disasters this summer. The summer of 2024 was particularly severe, with major events like the hailstorm in Calgary, flooding in Quebec and Toronto, and the devastating wildfires in Jasper accounting for much of the losses. In fact, 60% of the 50,000 claims processed by insurers this year were related to these four events alone.

The hailstorm in Calgary inflicted widespread damage on homes, vehicles, and infrastructure, creating a significant burden for insurers. Similarly, both Quebec and Toronto experienced substantial flooding, with water damage severely impacting residential and commercial properties alike. The wildfires in Jasper not only destroyed homes and forests but also presented complex liability issues due to the risks faced by firefighters, residents, and businesses in the region. Together, these events have placed a considerable financial strain on the Canadian insurance industry.

The high volume of claims underscores the increasing frequency and intensity of extreme weather events in Canada, which are largely attributed to climate change. Climate scientists and industry analysts alike have warned that as the effects of climate change intensify, Canada will likely experience more severe storms, fires, and floods in the coming years. This trend is reflected in the escalating insurance claims that are now surpassing even the Canadian federal government's budget for its climate adaptation plan, designed to address infrastructure resilience and disaster preparedness.

With Canadian insurers paying out more in claims than the government has allocated for climate adaptation, the financial challenges are becoming critical. Insurers are beginning to adjust premiums and revise risk models to account for these heightened risks, but these adjustments may not be enough. As costs rise, there are concerns about affordability and accessibility of insurance coverage for Canadian residents and businesses. This situation also highlights the urgent need for collaborative efforts between the government, private sector, and communities to strengthen climate resilience measures and mitigate future losses.

Ultimately, the unprecedented payouts in Canada’s P&C insurance market reflect a broader, pressing need for climate resilience and adaptation. Insurers are facing an increasingly volatile landscape, with a growing urgency to address the impacts of climate change not only on the industry but also on Canadian communities and the economy as a whole.

Jenny Holly Hansen is a senior commercial insurance broker with Waypoint Insurance.

Jenny Holly-Hansen

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