The increase in insurance premiums in Canada’s property insurance market is part of a broader trend driven by inflation and the growing frequency and severity of catastrophic weather events, according to the Insurance Bureau of Canada. Consumers face challenges with affordability of coverage.
In 2024, insured losses from severe weather events totaled over $8.5 billion, resulting in approximately 273,000 claims. This figure is 188% higher than the historic average for total claims in a year. The losses recorded in 2024 are nearly three times the insured losses from 2023 and 12 times the annual average of $701 million between 2001 and 2010.
Beyond the financial figures, individuals, families and communities continue to experience uncertainty and frustration when recovering from severe weather events. While insurance provides financial resilience, delays in claim resolutions add to the challenges faced by policyholders.
Despite a recent easing of inflation in Canada, data from Statistics Canada show that key factors affecting home insurance costs remain high. The agency’s Building Construction Price Index indicates that residential building construction costs have risen by 67% over the past five years, significantly exceeding the 18% increase in general inflation over the same period.
Several essential construction materials have experienced notable cost increases over the last five years. The price of lumber and other wood products has risen by 35%, fabricated metal products and construction materials by 40%, machinery and equipment by 23%, furniture and fixtures by 18%, and cement, glass, and other non-metallic mineral products by 38%.
In Toronto and Calgary—two cities significantly affected by severe weather in 2024—the impact on claims costs has been particularly pronounced.
Toronto, which experienced two major floods causing over $1 billion in damage, has seen residential building construction costs rise by 114% since 2017. Calgary, where the most expensive hailstorm in Canadian history resulted in $3 billion in insured losses, has recorded a 100% increase in construction costs over the same period.
As severe weather-related losses continue to increase, home insurance costs are disproportionately affected. Additionally, uncertainty over a potential trade dispute between Canada and the United States may further influence the cost of essential materials needed for property repairs and rebuilding.
Insurers are managing higher claim payouts and extended claim resolution times, while the cost of home insurance continues to rise at a rate exceeding overall inflation.
This environment makes it difficult for insurers to balance their own financial sustainability with the ability to provide affordable coverage to homeowners.
As more Canadians face rising home insurance costs or difficulty accessing coverage, government intervention and industry collaboration are increasingly necessary. Without action, the risk of homes becoming uninsurable will continue to grow.
Governments and policymakers can take steps to mitigate risks, including investing in infrastructures that reduce flood risk, enforcing land-use planning regulations, and updating building codes to improve property resiliency.
Investments in risk reduction can help ensure that insurance remains accessible and affordable, even as the frequency and severity of severe weather events continue to rise.
