UPS TIME AND COST PLUS
These include higher costs for rebuilding and reinsurance, plus more frequent events like wildfires, he said.īut it’s unlikely Canada will see an insurer make the same move as State Farm any time soon, said Alvarez. Insurers in Canada face the same problems as State Farm, said Craig Stewart, IBC’s vice-president of climate change and federal issues. State Farm isn’t even the first insurer to leave the California market, he noted. The trend where certain risks become less, or completely, uninsurable because of climate change is happening around the world, said Alvarez.
The increasing cost of insuring homes at risk for damage from extreme weather was highlighted this week in California, when insurer State Farm announced it would no longer accept commercial and residential insurance applications in the state due to “historic increases in construction costs outpacing inflation, rapidly growing catastrophe exposure and a challenging reinsurance market.” The Fort McMurray fire put 2016 in the highest spot at almost $6 billion. “When you have a loss, it’s more expensive now than it’s ever been,” he said.Īccording to the Insurance Bureau of Canada’s annual report, severe weather caused $3.1 billion in insured damage in 2022, up from $2.1 billion in 2021, and the third worst year in Canadian history. Larger losses are the biggest contributor to higher premiums, whether those losses are due to natural disasters, inflation or other rising costs, said Daniel Ivans, an insurance expert with Ratesdotca. Over time, these changes on a local level will contribute to the larger trend, he said.Īccording to a July 2022 report by Ratesdotca, home insurance premiums in Ontario had risen around 10 per cent in less than a year, with increasing incidences of severe weather one of several factors contributing to higher costs for homeowners, especially those in smaller population centres.Ī similar report published a year earlier found that home insurance rate growth was well outpacing inflation, with average home insurance rates in Alberta up 140 per cent over 10 years to $1,779 as of early 2021, while in Ontario the average annual rate was up 64 per cent to $1,284.
READ MORE: Officials declare Halifax-area wildfire largely contained as rain brings reliefĪfter a large event like the wildfires dominating Canadian headlines, customers in those geographical areas might see their policies re-priced, said Alvarez, or might see insurers becoming more involved: “When you have losses of this magnitude, you might reassess how you approach your underwriting price.” “Premiums in Canada have been increasing for some time already,” said Marcos Alvarez, global head of insurance at DBRS Morningstar. The wildfires plaguing residents in Alberta and Nova Scotia are part of a larger trend that’s driving up the cost of home insurance as extreme weather becomes more common, insurance experts say.
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