With every new season of wildfires, floods and windstorms, questions about what remains insurable in Canada get louder. Are we nearing a point where some risks simply can’t be covered at an affordable price – or at all?
For Deloitte’s Colin Asselstine (pictured right) and Chris Duvinage (pictured left), the picture is more nuanced. There are clear pressure points, especially around flood and earthquake, but they see room to manoeuvre through product design, prevention and better public‑private backstops.
Asselstine, Deloitte Canada’s insurance claims leader, says the focus inside carriers is on how to contain rising risk in a way that’s sustainable.
“Insurers are looking at how to assess this risk and contain this risk and do it sustainably,” he says. “It comes down to products – can you restructure deductibles, limits, those sorts of things. The industry is continuing to evolve, and insurance is always going to exist. Yes, there are limits, but we can find ways around that.”
For him, the biggest lever is still loss prevention.
“It really comes down to prevention,” he says. “How do the private and public sector look at the prevention of flood losses and fire losses? Collectively, investments need to be made to protect and learn from what we’ve gone through, and to spend the money pre‑emptively to avoid the big losses.”
That can mean better land‑use planning in high‑risk flood zones, more robust flood and fire defences, or targeted mitigation measures at the community level. It also includes a growing focus from insurers on helping policyholders reduce their own exposure.
“Insurers are really diving into this,” Asselstine says. “How do I educate consumers? How do I prevent losses pre‑emptively, before loss? How do I do that as a fire is coming in? There’s a lot more happening in that space to make sure the industry is viable, and that we continue to have the robust ecosystem we have in Canada.”
He is clear on one point: “As a society, insurance is a foundation. It’s something we need.”
Duvinage, Deloitte Canada’s national property & casualty insurance segment leader, agrees that the answer varies sharply by peril.
“It also depends on what risk you’re talking about specifically,” he says. “If we’re talking earthquake, depending on the severity of that earthquake, there could obviously be very significant impacts on certain players.”
At the same time, he notes that truly extreme scenarios exist in every region of the world.
“You have those risks anywhere – global economic crises, wars, social‑political issues,” he says. “As an industry, I think we’ve done well to survive over 100 years. It’s very entrenched in society, and it’s been managed appropriately.”
Where Duvinage sees more urgency is around formal public‑private solutions for perils like flood, and potentially earthquake.
“Flood has obviously been a big topic,” he says. “There’s been discussion with the government as to how to backstop some of that. I think there’s some discussion now on earthquake, potentially, on how to progress the conversation there.”
Canada has been talking about a national flood program for years. While the current mix of private insurance and ad‑hoc government support works for now, Duvinage questions whether it will be enough in the long run.
“We’ve been talking about a flood program for quite some time, and I think the industry is okay and comfortable right now with what we have,” he says. “But what is the next step to truly evolve it in a public‑private partnership?”
Those conversations reach beyond insurance mechanics into hard policy questions: whether and how to relocate people from repeatedly flooded, high‑risk areas; what level of residual risk taxpayers are willing to backstop; and how to share costs fairly between homeowners, insurers and governments.
“There are discussions on how we relocate people after a flood in high‑risk areas and so on and so forth, and then ultimately what the backstop solution looks like,” he says. “We are talking, which is a great start. I think we’re not moving fast enough on some of those things.”
Even as those schemes evolve, insurers still have tools of their own. One is to continue refining product structures and pricing to reflect granular differences in risk: higher deductibles and sub‑limits in the most exposed locations, more sophisticated underwriting, and clearer signals about the cost of staying in harm’s way.
“Other risks will remain insurable,” Duvinage says. “There’s no issue in adjusting the way we structure products.”
Another key buffer is global reinsurance. Despite a run of heavy losses in recent years, he says Canada still compares favourably with many markets.
“The reinsurance industry stepped up two years ago when we had those massive losses,” he says. “Obviously, some of the contracting and renewals were a bit different than the year prior, but I think we’re also getting back into steady water.”
“Globally, reinsurers look at Canada as a great market to be in – a profitable market,” he adds. “That will remain a backstop for Canadian insurers, for sure.”
So are we at the limits of insurability? Not yet, in their view. But the boundary is not fixed. It depends on how quickly governments and insurers move on prevention, land‑use decisions, flood and earthquake backstops, and the sometimes uncomfortable question of when rebuilding in the same place no longer makes sense.
If those pieces move, more risks can stay in the realm of “difficult but insurable”. If they don’t, the industry may find itself having sharper conversations about what can reasonably be covered – and at what price.
