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Climate change: A new reality for homeowners
As extreme weather events become more frequent and severe, homeowners across Canada are feeling the financial pinch. In 2025, home insurance rates surged by 5.28%, significantly outpacing inflation. This increase follows a staggering 7.66% rise the previous year, highlighting a troubling trend that is reshaping the insurance landscape.
Experts agree that climate change is a major factor behind these rising costs, as it leads to unprecedented insured losses.
Jason Clark, the national director of climate change and federal issues at the Insurance Bureau of Canada, emphasizes the gravity of the situation.
“We experienced over $7 billion in insured losses in just one quarter last summer,” he notes. Such figures are not just alarming; they reflect a broader pattern of escalating risks associated with climate-related disasters.
Record-breaking losses and their implications
The Insurance Bureau of Canada reported a staggering $8.5 billion in insured losses for 2024, a figure that is triple the losses recorded in 2023. This dramatic increase underscores the growing threat posed by climate change, as events like hurricanes, hailstorms, and wildfires become more common.
Flooding, in particular, stands out as the most costly and severe event faced by Canadians.
Clark points out that approximately 1.5 million homes in Canada are ineligible for flood insurance due to high-risk assessments. While the government has been working on a national flood insurance program, progress has stalled, leaving many homeowners vulnerable.
The urgency of the situation cannot be overstated; as Mary Kelly, a finance professor at Wilfrid Laurier University, states, “Everywhere in Canada can now be a danger zone.” This reality is forcing insurance companies to reassess risk levels, leading to increased premiums nationwide.
The need for government intervention
With the insurance market under strain, experts like Kelly advocate for government involvement in providing coverage where private insurers fall short. She cites California’s approach to earthquake insurance as a model, where government programs step in to assist homeowners when private companies deem the risk too high. “We need some sort of government commitment to backstop insurers in extreme situations,” Kelly argues.
In addition to advocating for policy changes, both Kelly and Clark stress the importance of proactive measures for homeowners. They recommend that individuals enhance their homes’ climate resilience and stay informed about potential risks. Resources like the Institute for Catastrophic Loss Reduction can provide valuable insights and recommendations for homeowners looking to mitigate risks.
Ultimately, addressing the challenges posed by climate change requires collective action from all levels of government. As Clark puts it, “There is a pressing need for us to focus on climate adaptation and invest in community risk protection.” The rising costs of home insurance are not just a financial burden; they are a reflection of the urgent need to confront the realities of a changing climate.
