The tariff-raising leader of the nation to our South may well have claimed that it was a Chinese hoax, but climate change is real and is wreaking havoc on weather patterns – and on Canada’s insurance market. Examples can be seen as wildfires rip through California, leaving homeowners and insurance companies scrambling.
That’s why the Canadian insurance sector is calling on builders and local governments to take a more strategic approach to urban planning and construction, as extreme weather events become more frequent and destructive. Industry experts warn that without major changes, communities will continue to suffer from costly disasters.
Amanda Dean, of the Insurance Bureau of Canada, has highlighted 2024 as a particularly devastating year for insurers. “To put that in perspective,” she said, “the last few years, insurers have been averaging about $2 billion a year for severe weather claims. And in the decade between 2001 and 2010, insurers were paying about $700 million, on average, annually for severe weather-related claims.” She pointed out that this marks a huge increase in payouts.
According to Dean, catastrophic events such as the Jasper wildfire, a destructive hailstorm in Calgary, and widespread flooding in Ontario and Quebec resulted in nearly $8 billion in claims last year alone. These figures demonstrate the increasing toll of climate-related disasters on the insurance industry.
To address these mounting challenges, Dean emphasized the need for better urban planning, particularly regarding where and how new housing developments are constructed. She warned that outdated infrastructure in some areas is ill-equipped to handle modern demands, leading to preventable damage.
“We need to build better, and take a look at what that means,” Dean stressed. She explained that some new developments are being built in locations where the existing sewer and wastewater systems were designed for much lower capacities. “If those pipes get overwhelmed with more effluent flowing through them, and then you add to that a severe rainstorm… then you’re going to have floods, you’re going to have sewer backups, and it’s all preventable.”
Industry leaders argue that proactive planning, investment in resilient infrastructure, and more stringent building regulations are critical to reducing the financial and human impact of extreme weather events. With disaster-related insurance claims climbing to unprecedented levels, the pressure is on to find long-term solutions that can mitigate the risks of a changing climate.