In Canada, 2022 will go down as the third-worst year for weather-related insurance losses in history – so far. Catastrophes spanned the country, from late-winter storms in the Atlantic provinces to Manitoba’s spring flooding, Ontario/Quebec’s derecho windstorm in May, summer storms on the Prairies, Hurricane Fiona in September, and B.C.’s “king tide” winter storm in December.
Aware that climate change is increasing the severity and frequency of extreme weather, governments are developing strategies to mitigate the damage caused by future floods, hurricanes, wildfires, droughts, heat events and rising seas.
Closely watching this situation are Canada’s insurance companies, which shouldered weather-related claims last year of $3.1 billion. “Canada is increasingly a riskier place to live, work and insure,” said Craig Stewart, vice-president of climate change and federal issues for the Insurance Bureau of Canada (IBC), in a January press release.
The problem is about to hit Canadians in the pocketbook. Global reinsurers – the financiers who insure the insurance industry – are shifting away from climate-risky countries, Stewart says. “We’ve seen reinsurance rates rise up to 40% in some areas of the country.” He predicts that consumers with policies up for renewal will start seeing insurance prices jump around midyear.
But insurance industry players seem to be shying away from sharing this news with consumers. In February, Jason Storah, CEO of Aviva Canada, one of the country’s largest property-casualty insurers, told industry news site Canadian Underwriter he’s worried about “many consumers being underinsured for their risks” – due to both worsening climate events as well as families’ personal financial constraints. When asked how that message should be communicated, Storah implied that’s not his company’s job: “It really is just about making sure that brokers have that dialogue with their customers to ensure that they are getting the right level of coverage that’s appropriate for their needs.”
You might expect brokers – who claim to have their clients’ best interests at heart – to be eager to discuss the growing impact of climate issues when renewal time comes along. But as Storah noted, “If we’re all really honest with ourselves about renewals, sometimes the renewal can be a light touch.”
Ironically, in January Canadian Underwriter surveyed its broker-readers about their biggest challenges for 2023. “Natural catastrophes and climate change” ranked as only the number-two issue facing the industry – behind the perennial problem of “talent acquisition and retention.”
Corporate Knights reached out to Storah for comment, but he was not available.
In 2021, Aviva published a report called How We Live, documenting consumers’ attitudes and behaviours after two years of the pandemic. The 20-page study didn’t mention climate change.
Growing weather risks raise many important questions for consumers – from rising coverage costs to mitigating storm impacts. Canadians deserve more productive communications from the industry at the eye of the storm. Stewart says the IBC is working on a campaign to raise awareness of the changing risks caused by climate change and hopes to involve its industry partners. “We have to do a much better job of elevating this issue,” he says. “We need to get our collective act together.”
