How California Wildfires Spark Concerns About Canadian Insurance Stability
Canadians are beginning to question whether their property insurance coverage might face similar challenges as California is experiencing with the January 2025 wild fires.
The increasing frequency and intensity of California wildfires have not only devastated communities in the United States but also raised alarms north of the border. Canadians are beginning to question whether their property insurance coverage might face similar challenges if catastrophic events continue to escalate.
A growing concern that while the federal government provides disaster response and recovery assistance, it is the provincial governments that oversee insurance regulations, including requirements and coverage limits. Without provincial government intervention or a structured backstop for major natural disasters such as earthquakes, floods, and wildfires, Canada could experience the same market instability seen in California. Alarmingly, Canada stands alone among G-8 nations in lacking a national flood insurance program, leaving both insurers and homeowners vulnerable.
Insurers operate under a cautious framework. When underwriters cannot accurately assess the full extent of exposure to catastrophic risks, their standard practice is to assume the worst-case scenario. This precautionary approach leads to higher premiums as companies seek to safeguard their financial stability against unpredictable disasters.
The call for government-backed insurance solutions is not new. Proponents argue that when private insurers have a clear limit to their exposure—with the government absorbing losses beyond that threshold—they can offer more affordable premiums. This predictability allows insurers to manage their loss costs effectively, ultimately benefiting consumers.
In California, insurers have been retreating from high-risk markets or drastically increasing premiums due to mounting wildfire losses. Without a similar safety net, Canadian insurers might follow suit as climate change amplifies the frequency of extreme weather events.
The conversation around implementing government support for catastrophic insurance coverage is becoming increasingly urgent. Provincial governments, in collaboration with federal authorities, could develop programs to provide much-needed stability, ensuring that Canadians remain protected without facing prohibitive insurance costs. It may also encourage private insurers to remain engaged in high-risk markets, preventing potential gaps in coverage.
As Canada grapples with its own environmental risks, the lessons from California serve as a stark reminder that proactive measures are essential. Without action, Canadians may soon face the same difficult choices between affordability and adequate coverage in an unpredictable climate landscape.
Jenny is a business insurance broker with Waypoint Insurance. She can be reached at 604-317-6755 or jhansen@waypoint.ca. Please connect with Jenny on LinkedIn at https://www.linkedin.com/in/jenny-holly-hansen-365b691b/.Please connect with Jenny at BlueSky: https://bsky.app/profile/jennyhollyhansen.bsky.social
Jenny Holly Hansen is a cohost with Chris Sturges of the Langley Impact Networking Group. You are welcome to join us on Thursday’s from 4pm to 6pm at: Sidebar Bar and Grill: 100b - 20018 83A Avenue, Langley, BC V2Y 3R4
Jenny Holly Hansen is a co-publisher with Chris Sturges of the WRN News - Langley Edition
Tags: #Insurance Solutions #Risk Management #Industry Insights #Reinsurance #Wildfires #Claims Service #Jenny Holly Hansen
Members Discussion