Canadians may find it more difficult to secure affordable insurance coverage as the country continues to be battered by natural catastrophes that are becoming increasingly frequent and severe.
Recent data from the Insurance Bureau of Canada (IBC) revealed that the severe weather events of 2023 led to insured damages exceeding $3.1 billion.
This total includes the record-breaking wildfires of the past year, as well as several storms that led to widespread flooding.
According to IBC, 2023 was the fourth costliest year for insured weather-related losses. It also marked the second consecutive year that losses surpassed the $3 billion mark.
Matt Hands, vice president of insurance at Ratehub.ca, said insurers would have to raise home and auto insurance premiums in order to keep up with the ballooning costs stemming from weather-related claims.
“Insurance providers will need to balance these losses on their books, potentially leading to a rise in premiums for everyone,” he said.
Hands noted how severe weather events like wildfires and storm surge flooding have historically led to incremental increases in insurance premiums for regions most prone to such catastrophes due to the large volume of claims in these areas.
Aside from the escalating number of claims, Hands said that insurance companies consider various factors in determining rates, including the location of consumers, claim frequency within an area, and individual claims history.
He also highlighted the influence of current market conditions. For example, housing market inflation and the costs of materials and labour in Canada also have a hand in the pricing of home insurance.
Ultimately, both businesses and consumers are being impacted by the large volume of weather-related claims, according to Hands.
“It has become challenging for individuals seeking insurance to find affordable rates for the coverage they need,” he said. “Some may even find it difficult to qualify for coverage, such as overland water and sewer back up insurance.”
But even as insurance coverage becomes less affordable for many Canadians, Hands said it is crucial to never forgo having such a crucial safety net.
“The average Canadian may not be able to afford the cost to cover a claim themselves,” he said.
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