Insurtech companies joining forces have produced a new report showing that wildfires are reshaping home insurance costs and housing affordability. A recently released industry report, meanwhile, delves into the causes driving property premiums higher.
In the first report, MyChoice, a rate comparison website, in partnership with Wahi, a digital real estate platform, compares quotes to those generated two years ago to come up with a picture of rapidly rising premiums – payments that are increasingly rising notably relative to consumers’ mortgage payments.
They say Medicine Hat, Alberta stands out as the least affordable market for insurance, with annual premiums rising 24 per cent to $3,875. “Insurance payments now equal 19 per cent of a typical mortgage – the highest ratio among all cities analyzed,” they write.
The top three cities for home insurance inflation in the study were Kamloops and Kelowna, British Columbia where home insurance was 98 per cent higher and 52 per cent higher, respectively and Regina, Saskatchewan where home insurance inflation between 2023 and 2025 was 59 per cent.
For a look at the pressures, in addition to wildfire, that are contributing to property premium inflation, a separate report from the Insurance Bureau of Canada (IBC) agrees that signs of stress are showing up in high-risk regions of the country. “Canada must act before the situation reaches a crisis, as it has in other jurisdictions,” they write.
The report, entitled State of the Home Insurance Market: Healthy but Pressure Is Building, calls on governments to improve how and where housing is built, invest in resilience, help communities mitigate their risks and address market gaps while avoiding policy interventions that reduce market capacity.
Construction costs
In addition to the natural catastrophes themselves, which are rising in frequency and severity, rising construction costs, labour shortages in the skilled trades, tariffs and rising reinsurance costs are all contributing to the problem, the report suggests.
In construction costs alone, building costs have risen 68 per cent between 2019 and 2025, according to Statistics Canada. The IBC report says since 2019, Canada has experienced a 24 per cent increase in home replacement costs. Lumber has increased 30 per cent, fabricated metal products and construction materials are up 43 per cent, machinery and equipment has increased 23 per cent and the cost of cement, glass and other non-metallic mineral products increased 41 per cent.
“These trends are leading to higher personal property claims costs, most acutely in those parts of the country that are subject to a greater frequency and severity of natural catastrophes,” the report states.
In Alberta, insurers reportedly paid out $1.18 in claims and operating costs for every $1 collected in personal property premiums in 2024. “These increasing costs contributed to a -11 per cent return on equity for Alberta personal property insurance.”
Catastrophe fire losses
In a recent speech to the Fire Chiefs’ Association, Liam McGuinty, vice president of federal affairs with the IBC points out that insured catastrophe fire losses – that is those event which have surpassed the threshold to be declared a natural catastrophe ($25-million in years past, $30-million today) – have increased from $72-million on average between 2005 and 2014, to more than $746-million, on average, in the past 10 years.
“We’re becoming an increasingly risky country, period, when it comes to natural disasters,” he told the Insurance Portal in a discussion about property insurance premium drivers.
He points out that under current policies, the country is poised to build 200,000 homes in wildfire exposed regions and more than 500,000 homes in flood exposed regions. Although the federal government has committed to making sure that federal funds for housing don’t support building in high-risk areas, McGuinty says it remains important to make sure there is follow through on that commitment. (The IBC is also calling on the government to update building codes and help municipalities invest in infrastructure.)
The four key drivers of home insurance increases, he concludes, include the natural disasters themselves, the cost of rebuilding which has vastly exceeded the rate of inflation, skilled labour shortages which are especially acute in rural areas and public policy decisions about where homes are built. “We need to start making smarter public policy decisions that are reflective of this country’s growing risk profile,” he says.
