With Canada coming out of a second year in a row when insured losses from severe weather and natural catastrophes exceeded C$3 billion, an insurance industry representative says 1.5 million households can no longer get affordable coverage for one of the most common weather and climate risks.
“People are frankly living on flood plains across the country,” Craig Stewart, vice-president of climate change and federal issues at the Insurance Bureau of Canada, told CBC last week, and “we’re already seeing a shift in the insurance market for flooding. There are about 1.5 million homes across the country that simply cannot get affordable flood insurance today.”
Stewart was commenting on a January 8 Insurance Bureau report that tallied the cost of natural disasters in 2023—a year of record-breaking wildfires, combined with flooding in most parts of the country—and renewed calls for a national flood insurance program. “The increasing frequency and severity of climate-related disasters should be of concern to all Canadians, even if they have yet to be directly affected,” he said.
It was the second year in a row when insured losses across all weather and disaster risks came in above $3 billion, and Stewart said the annual tally now routinely come in above $2 billion, most of it due to water-related damage.
Based on a survey of insurers by Catastrophe Indices and Quantification Inc. (CatIQ), “IBC sees no change in the availability or affordability of wildfire insurance coverage across the country,” the bureau said in a release.
“However, as a result of escalating losses and revised risk modelling, Canada is viewed now as a riskier place to insure. Consequently, numerous Canadians cannot access flood insurance. It is also becoming harder for some households to obtain insurance for earthquakes and related hazards.”
Citing Statistics Canada, CBC says the cost of home and mortgage insurance rose 33% between April, 2018 and April, 2023.
The report to IBC by CatIQ, a Toronto subsidiary of Zurich-based PERILS AG, lists 2023 as Canada’s fourth-most expensive year for insured losses. The worst ever was still 2016, when the wildfire known as “The Beast” scorched much of Fort McMurray, Alberta and drove insured losses for the year up to $5.96 billion.
The top severe weather events in 2023 were:
• The Okanagan and Shuswap area wildfires, August 15 to September 25: $720 million
• Severe summer storms in Ontario, July 20 to August 25: $340 million
• The spring ice storm in Ontario and Quebec, April 5 to 6: $330 million
• Summer storms in the Prairies, June 18 to July 26: $300 million
• Nova Scotia flooding, July 23: $170 million
• The Tantallon, Nova Scotia wildfire, May 28 to June 4: $165 million
• The Winnipeg hailstorm, August 24: $140 million
• The Atlantic Canada cold snap, February 3-5: $120 million
• The Behchokǫ̀-Yellowknife and Hay River, Northwest Territories wildfires: $60 million
After seven years of study and negotiations, IBC is urging the federal government to release details of a national flood insurance plan in its 2024 budget, after promising but failing to do so last year.
“Progress has stalled, leaving too many Canadians vulnerable to the effects of our changing climate,” Stewart declared. “Once launched, this program would provide Canadians living in high-risk areas with affordable financial protection and peace of mind when a flood strikes.”
But “details of the program must be shared with our industry and the provinces this winter if it’s to be operational before the next federal election.”
Joanna Kanga, a spokesperson for Emergency Preparedness Minister Harjit Sajjan, told CBC the government “continues to engage provinces and territories, industry stakeholders, and Indigenous representatives on the development and implementation of the low-cost flood insurance program.”
Last fall, the Coalition for Disaster Resilient Infrastructure (CDRI) estimated global infrastructure losses due to climate change as high as US$845 billion per year, or 14% of global GDP growth in 2021-22, based on the Global Infrastructure Risk Model and Resilience Index (GIRI).
