Wildfires have been ravaging British Columbia and the Northwest Territories, while Manitoba has been facing floods, and Eastern Canada is experiencing heat waves, all in the early days of July. These extreme weather events not only bring devastation to the affected communities but are also taking a toll on Canadians’ finances, as per a recent report by Statistics Canada.
According to StatsCan analysts, rising insurance premiums are increasingly influenced by extreme weather occurrences like floods and fires. The Insurance Bureau of Canada’s Pacific vice-president, Aaron Sutherland, pointed out that Canada is witnessing a new weather reality with hotter, drier summers and warmer, wetter winters leading to more intense wildfires and flooding.
Insurers in Canada used to pay out a few hundred million dollars annually for storm, wildfire, and flood-related claims. However, in recent years, these payouts have surged to over $2 billion annually, nearing $10 billion a couple of years ago, consequently driving up insurance premiums nationwide.
The report highlighted that climate change exacerbates these events, making extreme weather a dominant factor reshaping Canada’s home insurance market. Alberta has been particularly impacted, being dubbed the ‘catastrophe capital’ in 2024 due to record-breaking catastrophic weather claims totaling $8.6 billion, including events like the Calgary hailstorm and wildfires in Jasper.
Floods have emerged as the most common natural disaster causing insured losses in recent years, with flooding being the costliest disaster in Canada. These events have contributed to a continuous rise in home insurance premiums, with insurers shelling out $9 billion for flood damages in the past decade, nearly half of which occurred in 2024 alone.
The costs outlined in the report cover insured losses, while uninsured losses, including damage to municipal infrastructure, are typically covered by various levels of government. The federal Disaster Financial Assistance Arrangements Program has paid out over $14 billion since its inception in 1970, with estimates projecting a significant increase in costs in the coming years.
Despite some relief from extreme weather in 2025, experts like Sutherland predict more challenging years ahead due to shifting weather patterns. Adaptation is deemed crucial to managing costs, with a focus on building resilient infrastructure to mitigate future disasters effectively.
Federal disaster assistance funding has increased to support disaster mitigation costs in high-risk areas, aiming to incentivize provinces and regions to invest in future-proof infrastructure. The emphasis is on proactive measures to avoid rebuilding with outdated materials and designs that may be vulnerable to worsening weather conditions.