The Insurance Bureau of Canada (IBC) is continuing to call on governments and the industry to educate consumers about the costs of severe weather after ten extreme weather events in Alberta, Saskatchewan and Manitoba this summer caused more than $1.8 billion insured damage.
The storms included floods, hail and tornados. The costliest storms occurred over June 9 and 10 when tornadoes, hail, damaging winds, torrential rain and flash flooding occurred in Saskatchewan and Manitoba, causing $900 million in insured losses.
The other nine storms identified ranged in destruction, causing between $40 million and over $270 million in insured damages each.
“Over the last decade, insured losses from extreme weather in Canada have averaged $3.7 billion annually, up from annual losses of $1.4 billion in the previous decade and $883 million in the decade before that,” the IBC noted in a statement about the summer’s figures, initial estimates released by Catastrophe Indices and Quantification Inc. (CatIQ). “Annual losses have increased by approximately 320 per cent since the late 1990s and early 2000s, after accounting for inflation.” In 2024, insured losses exceeded $9.4 billion.
Aaron Sutherland, Western and Pacific vice president with the IBC, agrees that the trends are putting pressure on premiums. “Expect a continued, significant increase in the cost of severe weather,” he says. “The solution is investing today in better resilience; investing today in efforts that will drive down and bend down the cost curve.”
Building resiliency
In conversation with the Insurance Portal, he also noted that it is necessary to change how and where homes are built, taking flooding into account. “For wildfire, it’s about building that resiliency and building those fire breaks. The solutions are multifaceted. They’re different by peril,” he says. “It’s going to be difficult, but these are the challenges we must begin to meet if we want to improve the affordability of coverage for consumers moving forward.”
In this effort, he adds that consumer awareness is key. “What we know from polling and engaging consumers today is that they’re largely unaware of the risk, even when they’re living in a high-risk zone. That’s certainly true of flood. We need to do much more to make consumers aware of the reality of the risk facing their properties.”
In its efforts with governments, meanwhile, the IBC is calling for strengthened land use planning and restricted development in high-risk areas. It encourages the use of incentives by insurers and governments alike and calls for changes to building codes and construction standards to ensure new homes are built with resilient features suitable for current and future climate conditions.
Better land use planning
Discussing the government’s mandate to build new homes quickly, Sutherland says there is a healthy tension between calls for better land use planning and political mandates.
“Governments are keen to support construction and sometimes they’re using government land for that. Government land is where it is and they don’t have more. Sometimes it is in very high-risk areas. So, there’s a tension there. I think all too often we’re seeing continued construction in all the wrong areas and in all the wrong ways,” he says. “We still haven’t quite woken up to the fact that we have to change that.”
And while the national building code is updated only once every five years (the next update is expected in 2030), the IBC is, in the meantime, also calling on other levels of government to leverage the tools they have available to better protect communities in their jurisdictions. Municipalities have a lot of control through their bylaws, for example, Sutherland explains. Provinces too have legislative and regulatory tools at their disposal, as well.
“We’re seeing a rapid rise in the frequency and cost of extreme weather. It’s something we’ve been measuring since the 1980s. What used to cost a few hundred million dollars annually, now regularly exceeds $2 billion on average,” he adds. “We’re going to far exceed that again this year. It’s a further indication of the urgent need for us to better protect our communities.”
