The hidden, truer cost of NatCats in Canada

Total societal losses from natural catastrophes are heading into unsustainable territory, according to a new report from the Institute for Catastrophic Loss Reduction (ICLR).

Societal Loss from Historic Natural Catastrophes in Canada examined insured losses, uninsured losses and insurance penetration, as well as private sector losses where insurance is not available. It also considered public sector costs to repair utilities and transportation infrastructure, deaths and injuries, and environmental impacts.

The report found the total estimated losses from catastrophic natural disasters between 1983 and 2024 are $130 billion. It estimates that Canada’s insured Cat losses since 1983 account for less than half its total Cat loss — meaning that insurance picks up less than half the cost of Cats.

At about $9.2 billion per year, Canada’s total losses equate to roughly 3% of annual construction spending, ICLR found. (This $9.2 billion total loss number is not to be confused with the insured loss estimate of $9.1 billion for NatCats in 2024 alone.)

“Natural disasters absorb about two weeks of construction spending per year,” ICLR says in the report. That means about two weeks of every year’s construction spend is used to repair damage from the previous year’s disasters.

“Losses increase approximately 9.4% annually in constant dollars, doubling every eight years,” the report says. “That growth rate equates with nine times population growth, five times real gross domestic product growth, and three times real construction spending growth.”

In addition, losses as a fraction of construction spending grow 5.4% per year, doubling every 12.5 years. “Disasters cost an unsustainably increasing fraction of wealth: two weeks of annual construction now, one month per year in 2038, two months per year in 2050, and so on…,” the report says.

“Such losses are unsustainable.”

ICLR’s report used a variety of data sources, including exposure and Cat loss data from Catastrophe Indices and Quantification Inc. (CatIQ), Insurance Bureau of Canada Cat loss data, the Canadian Disaster Database for deaths and injuries, and population, housing, business and automobile data from Statistics Canada, among other sources.

It found total societal losses average about 2.2 times that of insured losses. The majority of this (54%) is attributable to personal property losses, about half of which are uninsured.

Of the remaining 46% of losses, half (23%) are attributable to commercial property. The balance derives from indirect business interruption (8%), auto losses (7%), utilities and transportation infrastructure repairs (4%), embodied carbon involved in repairs (3%), and the acceptable cost to avoid deaths and injuries (1%).

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“It would aid ICLR’s mission to compile and disseminate all these categories of loss with a single, consistent, transparent methodology,” the report says. “The sum would represent something approaching total societal loss.

“One could examine the sum and its components for trends over time or differences between locations or perils. We could then use trends and differences to examine underlying causes, with the ultimate goal of reducing catastrophic losses, ICLR’s eponymous goal.”

Jason Contant

Jason has been an award-winning journalist with Canadian Underwriter for more than a decade, including the past three years as associate editor and, before that, as digital editor for seven years.