Extreme weather risk changing Canada's insurance industry, raising costs

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Climate change is driving up insurance rates and raising questions about whether private coverage will even be available for some Canadians in the future.

The problem could mean the National Flood Insurance Program that Canada is developing to ensure access to affordable overland flood coverage might have to be expanded to wildfires, wind storms and hurricanes in short order.

Most companies that sell property insurance in Canada turn around and transfer some of the risk associated with their policies to global companies called reinsurers. So when you make a claim to your local insurance agent, that company will in turn cover some of its expenses by buying insurance from a big global backer.Stewart said the reinsurance premiums rose between 25 and 100 per cent in the last year, and while not all of it was passed on to consumers, some of it had to be.

Rather, the costs were spread across the country, including the May derecho in Ontario and Quebec, post-tropical storm Fiona, flooding in Manitoba, and a series of major winter and summer storms in Ontario, Quebec, and British Columbia. Stewart said it is not imminent, but possible, that those conversations might eventually happen in Canada. “The amplification of these events over the last five years just happened quicker than anyone could have imagined, so unfortunately we may be having that conversation sooner rather than later.”

“If we look after our homes, then even with the climate changing you don’t necessarily have to see more damage.”Sign up for the CHEK Now daily email newsletter to get breaking news and the day's top stories sent to your email.He said it has been proven that investing $1 in prevention can save governments, insurance companies and individuals between $5 to $10 when disaster strikes, but getting those investments made can still be a hard sell.

 

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