Murray Wood: Who's hot... and who's not
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According to the Insurance Bureau of Canada, the 2025 wildfire season brought 228,000 insurance claims and over $8 billion in insured damage.
A hail storm that slammed Regina on June 9 brought 10,000 auto claims and an additional 800 property claims, with costs expected to exceed $80 million.
Jason Thistlethwaite, professor at the University of Waterloo’s School of Environment, Enterprise and Development, joined guest host Brent Loucks on The Evan Bray Show this week to discuss the increasingly expensive problem of severe weather and its impact on insurance availability and premiums.
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The following transcript has been edited for length and clarity.
BRENT LOUCKS: What will happen when it comes time for people get insurance renewed?
JASON THISTLETHWAITE: It certainly seems that both Saskatchewan and Manitoba, the Prairies in particular, are becoming a bit of a ground zero here for some extreme weather events since 2021.
There have been 30 catastrophic weather events. That’s adding up to about $2.5 billion in insured losses – that’s almost $1,000 per person over five years, and 140 per cent higher than in the previous five years.
Insurance is a business; those losses will have to be recouped, and ultimately, it’s going to be Canadians that will be holding the bill for those losses. And that’ll happen through higher premiums that they’ll see in their annual renewals, and possibly coverage exclusions, which are becoming a lot more frequent and are more impactful.
Things like if you are in a higher risk flood zone and you have a basement, that is not going to be insured. You may see restrictions on coverage for things like wildfires as well.
We’re coming into an era now where insurance is significantly outpacing the rate of inflation, and the costs in Canada have increased about 100 per cent over the last 10 years or so, making us have some of the highest rates in the OECD.
LOUCKS: Can you explain a little bit about how the insurance world works?
THISTLETHWAITE: The way property insurance works is it’s going to take a look at risk across a defined geographical area. Oftentimes in Canada they will use postal codes.
How they price that risk is they’ll look at the last 100 years of claims and they’ll add them all up, divide it by 100, and then divide it by the number of properties in that area, and that is more or less the premium that you are likely to pay. What that constitutes is a measure of what your average annual risk is likely to be, and we each pay a premium that is then pooled.
In the event of a claim, those resources can then go back to those people who have suffered damage. The issue is insurance has historically worked more or less by driving down the road by looking at the rear-view mirror. We’re looking at past events to better understand the future, and then it’s no longer really applying with things like climate change, infrastructure that is aging, poor land use decisions, building in higher risk areas.
When losses happen in a particular area, the insurers are going to try and recoup from that similar risk profile. So, if you live in a high-risk flood zone in Saskatchewan and one particular area has contributed to those claims, other areas with similar risk profiles are also likely to see those premiums go up.
LOUCKS: You don’t really have a choice as a homeowner, do you?
THISTLETHWAITE: Increasingly no. One of the issues in Canada that we face is a lot of confusion around what insurance does and does not cover.
People who suffer flood damage from a river exceeding its banks, they would think they were insured for that when in fact there really is not a lot of overland flood insurance coverage available in Canada, or if it is, it doesn’t cover very much. Maybe $50,000 worth of damage.
People can take for granted what is in the fine print of their insurance policy and should really have a good look at what is and what isn’t covered, and talk to a broker about getting some better information.
Ultimately, we need to tell people about their risk, and this is something that governments in Canada, for some reason or another, just refuse to do. It is very, very difficult for me to plug in my address into a website and get a good understanding of what my risk is.
Should I be buying more insurance? Should I cut down some trees around my property that may be dead and dying because it could be contributing to wildfire risk? Should I be investing in better sump pump infrastructure?
Ultimately, governments and insurers don’t want to be in the business of paying billions of dollars for recovery, and very slowly over time policies are receding as the losses go up.
We are really coming to an era where we’re on our own, and we need to start thinking about our properties, not just as sort of an investment and a place where we’re going to be living, but also as a site of protection, some type of climate fortress.
LOUCKS: For Canadian looking at housing budgets, how much are they going to be paying for their property insurance?
THISTLETHWAITE: This is the framing I think we need to be adopting, that insurance is becoming a part of the affordability crisis in this country, and we need to be paying attention to those costs just as much as we are paying attention to other costs.
Most of our focus in Canada is on response. We wait for the fire to happen and then we throw some water on it. What we need to be doing is taking the steps, which are a lot cheaper, to make sure the fire or the flood doesn’t happen in the first place.
That involves significant investments in risk reduction, and this is another area that our governments are not doing a good job. We need risk information for our communities and property owners.
Most risk is quite concentrated. For example, one per cent of homes in Canada contribute to 40 per cent annually of the damages. Let’s put some money towards those homes and defend them properly, so that in the event that something does happen, they’re protected.
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