Canada’s P&C industry lost money on home insurance in 2023-24

Canadian property and casualty insurers lost money insuring homes against natural catastrophes, according to a TD Economics study of 17 major natural catastrophes between 2008 and 2024.

“Growing insured personal property losses are placing considerable strain on Canada’s home insurance sector,” the TD Economics analysis states. “In both 2023 and 2024, insurers faced underwriting losses in the personal property business, paying out $1.01 for claims and expenses for every $1 collected in premiums.

“The situation was especially severe in Alberta, where claims and operating costs in 2024 exceeded premium revenues by nearly 20%.”

NatCats and premium hikes

TD’s analysis shows by how much flood insurance premiums have increased over five years in Canadian postal code areas that reported more than $10 million in insured losses due to the 17 NatCats analyzed (one was Hurricane Debby, although the others are not mentioned in the report).

In B.C., homeowners in the high-risk postal codes identified paid a 67.6% increase in their home insurance premiums between 2021-25, per TD’s study. Alberta homeowners paid an additional 57.5% in premium during the same period, while residents living in high-risk regions in P.E.I. (54.6%), Nova Scotia (48.5%), and Quebec (46.8%) all paid substantial premium increases.

Canadian postal code regions experiencing less than $10 million in insured losses generally saw reduced premium increases. (Also based on the 17 NatCats analyzed.)

One exception is B.C., where residents living in lower-risk postal code areas still paid out 63.3% in premium increases between 2021-25. Elsewhere, lower-risk postal code areas in Alberta (43.4%), Nova Scotia (44.8%), Quebec (44.5%), and P.E.I. (43.4%) all paid lower premium increases than people in higher-risk postal codes.

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People living in postal code regions with less than $10 million in NatCat losses tend to pay higher premiums if they located adjacent to high-risk zones, compared to living beside lower-risk areas.

In Ontario, residents in areas reporting more than $10 million in insured damage paid a premium increase of 23.8% over 2021-25. In lower-risk areas, they paid a slightly larger premium increase of 24.9%.

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Some property insurers are stripping hail coverage out of the base home insurance policy, TD observes. Instead, they are offering the coverage as an optional add-on for consumers for an additional premium cost.

Still others do not offer hail coverage at all in high-risk areas.

In some high-risk areas where flood insurance is available, Canadians choosing optional flood insurance coverage might add as much as $10,000 to $15,000 to the premium, “which effectively puts the coverage out of reach for many households,” as TD Economics notes.

Rising deductibles

Canadian home insurers have also increased deductibles for insured properties located in areas prone to NatCats.

Deductibles can be negotiated downwards for adding climate-resilient features to a home. For example, property insurers in Alberta have introduced peril-specific deductibles such as hail deductibles in Alberta’s hailstorm alley.

“In parts of Calgary that are most exposed to hailstorms, hail deductibles could be as high as $10,000, although it seems that insurers are also incentivizing homeowners to make their homes more resilient to hail damage by offering lower deductibles for properties that meet specified standards,” TD’s analysis shows.

TD Economics notes the P&C industry and Canadian governments are trying to provide incentives for communities that adapt to the changing climate. For example, weather-proofing buildings — through structural upgrades that improve resilience to severe storms, flooding, and hail, etc. — helps safeguarding homes and communities.

“Insurer-led initiatives, such as lower deductible incentives for homeowners who invest in property upgrades to better withstand hail damage, represent proactive steps toward building climate resilience,” TD states.

And on the government side, “to the extent it is not already happening, disaster recovery programs could also further encourage resilience by tying financial assistance for repairs to the requirement that homeowners incorporate upgrades designed to mitigate future weather-related risks.”

Building (resilient) homes

TD Economics also cites the Liberal government’s election promise to build up the Canadian housing stock. The party’s platform during the election made a commitment to double housing construction to almost 500,000 new units per year.

Insurance Bureau of Canada notes details of where these new homes will be built remain unclear. TD’s report hopes climate resilience is part of the plan.

“[A]s governments focus on accelerating housing construction to address the housing crisis, it is important to ensure that the new housing stock incorporates climate resilient materials and technologies and is built in areas that are less prone to severe weather hazards,” the report states.

David Gambrill

David has twice served as Canadian Underwriter’s senior editor, both from 2005 to 2012, and again from 2017 to the present.