Canada's rising flood and wildfire losses are forcing the insurance industry to confront an uncomfortable question: who carries the cost as coverage in the highest-risk regions grows more expensive, and eventually unaffordable for some?
“The underlying risk conditions for some of the perils like flooding and wildfire are undoubtedly changing,” said Brendan Seale (pictured), assistant vice president and head of ESG at Definity. “We’re seeing that there’s a higher likelihood of extreme weather events occurring with more frequency, and the severity of those events is increasing as well.”
That growing severity is driven not only by a warming climate and more volatile weather, but also by higher asset values and development in hazard-prone areas. As new homes and businesses push further into floodplains and the wildland‑urban interface, the financial impact of each catastrophic event compounds, Seale said.
Traditionally, property and casualty (P&C) insurers have sat squarely in what he describes as “the risk transfer business” – taking on risk for a price. But Definity, like a growing number of its peers, is trying to move more effort upstream into prevention, risk reduction and resilience-building, often in partnership with brokers, customers and governments.
One of the insurer’s central levers is education, particularly through its broker network. Definity offers a course, free of charge to its broker distribution partners, designed to arm front-line advisers with practical risk knowledge they can take straight to policyholders.
“[It’s about] how we can help our policyholders and our brokers better understand the risks that they are exposed to,” Seale said.
By way of example, Seale pointed to some of the risk factors he wants policyholders to understand, ranging from basic site and building characteristics to more technical resilience concepts. On the flood side, that might mean a property's topography, how water is likely to move around it, and the features that make a home or building more or less vulnerable.
For wildfire, fuel and distance are just two of several factors that matter. These can include, for example, the combustible material around a structure and the concept of "defensible space."
“With a commercial property, is there a distance between the brush or the forest and the structures themselves that would prevent embers from transferring and igniting a structure?” Seale said.
The goal is to help brokers move beyond simply selling coverage and toward advising clients on concrete steps to reduce their exposure – and, by extension, the likelihood and severity of future claims.
The education effort sits alongside changes to how the insurer handles claims. It is also reshaping its products and claims practices to hard‑wire resilience into how damaged properties are rebuilt.
The insurer has updated its personal property wordings to include a standard coverage enhancement that effectively serves as a resilience top‑up that can provide up to $10,000 in additional funds to pay for risk‑reducing upgrades during a claim. The extra funding can be used for measures such as hail‑ or fire‑resistant roofing and siding, as well as flood‑mitigation features like sump pumps and backflow valves.
A similar enhancement has now been added to Definity’s standard building and equipment coverage on commercial property policies, extending the same logic to business customers. The aim is to make every reconstruction an opportunity to come back stronger, not just restore the status quo.
Government advocacy and the 'build twice' problem
Definity actively participates in the Climate Proof Canada coalition, a group that includes insurers and other organizations across society with an interest in climate and disaster policy. The coalition has put forward broad recommendations to the federal government on issues such as housing, infrastructure and emergency management. It also comments on federal budgets and economic updates, with a focus on how far new measures support resilience and adaptation.
Seale noted that much of the work happens beyond Ottawa, given the role provinces and municipalities play in land‑use planning and building codes.
The underlying philosophy is simple: the cheapest property is not the one built to the bare minimum in a high‑risk area, but the one that doesn’t need rebuilding after the next event. “The most expensive home will be the one we have to build twice,” Seale said. “Not necessarily the one that is built to a good standard of resilience.”
“We need to do both - the mitigation efforts to reduce emissions in the real economy to reduce the likelihood of future disruption,” he said. “But we know there’s a certain amount of climate destabilization and disruption that’s probably already baked into the system. So we need to increase the investments in adaptation and resilience.”
