Quarterly Review | Summer 2026

According to the Insurance Institute’s new Home Insurance Affordability report, citing statistics from the Insurance Bureau of Canada, home insurance claims paid due to catastrophic weather have increased from $400 million to $4 billion over the past 30 years. 2024 marked a record-breaking year with $9 billion in insured damage, due to fires, floods and hailstorms across Canada. During the same period, homeowners have seen insurance costs rise 5.3 per cent while income has only increased by 0.8 per cent. And a high cost of living puts a strain on households and can ultimately impact how affordable home insurance is to policyholders.

The conversation around how climate volatility, extreme temperatures and flood, negatively impacts insurance premiums and coverage availability and adequacy is not new. Insured loss trends have been called a “canary in the coal mine" because weather related loss patterns emerge earlier than the impact reaches public awareness, as it has now. The government has reacted to some alarm bells raised by the insurance industry to better protect Canadians. The industry has also adapted to better serve policyholders with new insurance products that enhance Canadians’ resiliency where possible.

Maximilien Roy is Vice President of Strategy at the Insurance Bureau of Canada. His work concerns severe weather events and climate and how it affects the insurance industry and policyholders.

He says a big positive in the last decade or so has been the introduction of overland flood insurance, a major innovation to protect Canadians from flood events. Prior to overland flood insurance being available, homeowners were underinsured as severe events and major losses were increasing in frequency and severity. Today, some homeowners in areas at high risk of extreme flooding cannot access overland flood insurance, but most can.

“Flood insurance barely existed in Canada over a decade ago and today there’s about 94 per cent of Canadian homes that are eligible for flood insurance so that’s part of the work the industry has done,” Roy said.

Roy said there have been these positive changes that keep Canadians safer from extreme weather events, but there is still a long way to go to enact further changes.

“At least now we have the products and capacity to underwrite the risk which wasn’t the case before. The industry evolved to provide that to consumers,” Roy said.

This innovation is an example of what has been done well in Canada in the last decade to help policyholders mitigate risks associated with climate change. It could help inform future decision-making to avoid a U.S.-style quagmire where some homeowners’ only option is to access insurance through the Fair Access to Insurance Requirements (FAIR), a government-run market of last resort.

Cameron Copeland, President and CEO of Managing General Agent SPG Canada, said a competitive MGA market covers risks that general insurers will not.

“Risks that are out of the appetite of the standard insurers, we fill that gap,” Copeland said.

SPG Canada operates coast to coast and serves all insurance verticals: industrial and specialty personal lines, and a lot of standard homes in wildfire and natural catastrophe exposed areas. Copeland said they tend to cover underserved niches and homeowners who have challenges with multiple mortgages and prior losses.

Copeland explained that MGAs work with a number of insurance companies that give underwriting authority up to certain limits. They pool coverage together to provide products for consumers, often in high risk regions, through brokers. It’s the broker who decides whether to take risks to one insurer or to an MGA under subscription.

“MGAs insure risks that insurers don’t want to write 100 per cent of. But the rates that we charge still have to carry the loss costs, it’s not subsidized by the government,” Copeland said. “It’s still competitive, there are other MGAs that do what we do, so it’s not like a facility.”

Despite ballooning insured losses linked to extreme weather, Canadians are buying insurance in a markedly different market environment than in the U.S. The insurance business here is much more competitive, which guards against these worst-case scenarios of no available private insurance, unavailability and unaffordability.

“We are lucky that in Canada our system is quite different and we are far away from what we see in the U.S.,” Roy said.

He said that because of a highly competitive market, there is not a big risk of homes becoming uninsurable like in the U.S. where there is more directive on how to price insurance products or oversight on what products can be sold.

“If the business model is not there for insurers, it doesn't work,” Roy said. “Canada has to remain vigilant but it’s not comparable to the U.S.”

Copeland echoes this opinion: “In Canada, property insurance is highly competitive. It’s not an oligopoly, nobody is protecting profits, in a normal year in the industry lost underwriting income is made up in investments. So, the consumer is primed to win because of the competitive structure of the Canadian market.”

Keeping insurance competitive and politics out of the products can go a long way to serve Canadian home insurance policyholders so that the product doesn’t become unavailable or unaffordable.

John Taylor, President and CEO of the Ontario Mutual Insurance Association, said stakeholders coming together and working productively can protect against a slippery slope.

“We need to retain our Canadian common sense and work productively together on a non-political basis to address policy issues,” Tayor said. “When regulators cap rates or do things that take away the ability of the insurance company to break even or be profitable then you are going to have an availability crisis—it’s going to happen and that has been seen time and again in the U.S. with rate caps on property.”

As the federal government makes moves to boost housing availability across the country, insurance experts warn that while speed is important, so is location. New builds need to be constructed to ensure that homes are safe, resilient and out of high-risk areas. This raises questions about where developers should be able build and what governments can do to solve the housing crisis now and minimize damage to or loss of property in the future.

“We are now in a housing crisis, and the industry understands the need to build fast but you have to think more than acting fast; you need to build smart and stop putting people in harm’s way,” Roy said. “For the sake of wanting to build fast we cannot build homes in higher risk areas where you know houses will face severe weather events in coming years.”

He adds that infrastructure across the country is getting older and less resilient to extreme weather events. Sewer backup mitigation, for example, is something governments can help install in areas where risk has changed for the worse.

“The risk has evolved and now is the time to put it in place before something major occurs,” Roy said. “These are concerning elements.”

Taylor is concerned about governments being shortsighted in land use planning. Ontario is where most of OMIA members are located and where he said conservation authorities have left a positive mark for proper land use planning and advocated against building in high-risk areas or areas that serve an important ecological purpose for natural water drainage. But their roles might be changing.

“I believe our land use planning should consider the types of land we develop on and where we develop and what we allow,” Taylor said. “I think we are shooting ourselves in the foot if we continue to develop on environmentally sensitive areas and continue to develop farmland. There is a finite capacity of it in Southern Ontario if we continue to take farms out of production.”

He said the problem goes beyond how taking farms out of production impacts food security and the economy. Farmland contributes to drainage, sustainability and absorbing greenhouse gases, all important elements in climate regulation.

This is not to take away from the fact that there is a housing crisis, he adds. But the solution for that shouldn’t be to the detriment of sound land use planning practices and potentially putting homes in unsuitable areas.

“It’s not just about homes being resilient,” Taylor said, “The entire infrastructure and environment where we don’t live and don’t have things has to be resilient. Land use planning is a big consideration and needs to be viewed through a more long-term lens of where we want things to be in 50 to 100 years—we can’t get that buffer space back.”

The government also has work to do regarding updating building codes to reflect today’s realities of volatile weather. An already reliable building code in Canada lacks standards for flood, hail, wildfire and earthquake risk, leaving property vulnerable to these major risks. And Canadians have witnessed first hand how much disruption weather events can bring, especially as news headlines continue to highlight floods and wildfires.

Updating building codes that can protect property from natural catastrophes and ensure that new builds and retrofits are up to safety standards to bolster resilience is less about politics and more about policy changes. And Taylor, Copeland and Roy all emphasize the importance of modifying building codes to enhance resilience.

“Overhauling building codes is one of the levers that belong to governments and on our end, IBC has been adamant for over a decade to push for change,” Roy said.

Area-specific building codes would be ideal, said Copeland. B.C. introduced seismic codes in Vancouver, Victoria and other parts of the province and codes to protect from wildfires were introduced in Alberta and B.C.

“It’s something we can do to address the loss costs,” Copeland said. “Canada has one standard building code nationally and fewer examples of custom building codes. I think that work could be done and should be done to tailor building codes for regions where we know they have different exposures.”

Taylor said that as governments change, some resiliency issues like land use planning become political. Adapting building codes, however, could be less of a heavy lift.

“In both cases government ministries need to have a clear vision and articulate that they wish to be resilient and want Canadians to live in resilient homes and structures that are going to stay resilient in 2050 and 2075,” Taylor said. “From a land use standpoint, they need to understand that our world has a finite capacity to withstand changes in weather and [anecdotally] we reduce that capacity by development in the wrong areas.”

The risk of earthquakes in Canada is real and significant. Updating building codes to ensure earthquake-resilient homes is a key consideration but the problem goes beyond protection of property. The insurance industry wants to see a federal backstop for the indirect impacts of an earthquake, Roy said. Canada is the only G7 country without one. The government is still exploring a financial backstop mechanism.

Society and the economy are interconnected coast to coast. And the impetus for a backstop is that in the event of a major earthquake the economy needs to keep running and businesses need continuity.

“The federal government started consultation this spring which signals there is an interest to move forward with a backstop,” Roy said. “I believe the government is aware of this as an issue and that if we want to make sure Canada remains competitive in the case of a major earthquake, we need federal financial support. It’s been an ongoing issue but there has been some positive movement.”

Some government policies and safeguards that impact home insurance affordability in Canada are out of the federal and provincial governments’, policyholders’ and insurance industry's hands. Volatile geopolitics are less predictable than weather trends and, in many cases, out of Canadians’ sphere of influence. But it’s an important indicator of home insurance affordability. Basic household expenses, like energy, begin affecting homeowners’ ability to pay for insurance. Fluctuating gas prices due to geopolitics, for example, can further strain an already high cost of living. Trade with the U.S. is changing as tariffs on building materials such as wood and steel now range from 10 per cent to 50 per cent . These changes are increasing construction and rebuilding costs and impacting supply chains.

Roy said when it comes to global issues and its influences on the Canadian economy, like tariffs and gas prices, a lot of it is beyond the scope of where the insurance industry can directly influence change.

“The consumers feel this — and we are right there with them,” he said. “The cost of reconstruction is going up and supplies are being disrupted.”

The real impact on the cost of living is large, Roy adds.

“We do look at this, and we keep ourselves informed but in terms of influence, the insurance industry doesn’t have so much.”

Given the right information and incentives, policyholders can do their part to mitigate climate-related risk. Take flood for example. The federal government is driving the effort to create an online flood risk portal, where policyholders can access information about their flood risk. This can inform the property owners’ level of flood risk to a certain extent.

Roy said it’s a multi-level government effort to give policyholders access to this risk information.

“We see some openness from the federal government to come up with solutions like this, and a big portion is consumer education around risk to their own property,” Roy said. “We are seeing this as a very positive and good sign. What matters at the end of the day is Canadians and the protection of their homes which is usually their biggest asset.”

Copeland suggests that real estate agents are a powerful asset to help educate property owners on risk. If there are known risks, it could be a matter of due diligence on the part of agents to inform potential buyers of any risk to the property in which they are interested.

“If we don’t require real estate listings to show the flood, hail or earthquake return period for a property I think, as a professional standard, real estate agents have a duty of care to their consumers to support informed choice,” Copeland said. “Consumers make their own choice at the end of the day, but professionals need to make them aware of the risks and exposures that go along with it.”

But the insurance industry might have a communication problem. How a volatile climate directly impacts insured losses and product pricing is an intuitive trend that’s understood by most and mitigated by many.

Copeland emphasized that product price is heavily influenced by market cycles, hard to soft then hard again, sometimes revealing major fluctuations in home insurance prices. And these changes in pricing, especially when a soft market yields lower prices for policyholders, could mask the underlying cost drivers that haven’t changed — extreme weather, vulnerably situated homes and catastrophic losses that disrupt lives and impact insurers’ bottom line.

The soft-to-hard market cycles create a problematic, artificial dampening of concern among policyholders. They might think: home insurance prices are going down, why worry?

“There’s a danger that people get lulled into a false sense of security because prices are falling but the fundamentals—weather trends and building costs—are increasing and when there is an event that pricing is going correct fast,” Copeland said. “If home insurance prices double on the next renewal, that could leave people struggling with price.”

He emphasized that the fundamental risk exposure is growing and soft market pricing can distract consumers.

Taylor at OMIA said the industry needs to double down on effectively communicating risk, mitigation and coverage using plain, common-sense language.

“No one is ever going to love insurance; the industry is always going to have our baggage that way,” he said. “We are in a fairly simple business. The money that comes in has to pay for the claims money that goes out. We have to be honest and stick with our customers and really be able to explain why we are charging what we are charging.”