Home insurance premiums are rising as extreme weather events lead to the year with the largest records of insurance claims.
In 2025, household insurance premiums rose by 5.28%, much higher than inflation, according to a report released by My Choice Financial, Canada Insurance Summary and Comparison Website.
This was the growth of the previous year, when interest rates rose 7.66%.
While there are several factors, insurance experts say climate change is the main driver.
“Especially in 2024, we have a very serious single quarter, and in a single quarter last summer we saw more than $7 billion in insurance losses.”
The Insurance Agency of Canada reported that it paid $8.5 billion in record losses in 2024, tripled in 2023, 12 times the annual average between 2001 and 2010.
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Meanwhile, after the Fort McMurray wildfire in Alberta, it also surpassed the record set by $8 billion in 2016.
“Whether it’s the threat of the Canadian Atlantic hurricane, the hailstorm in Alberta or the wildfires across the county,” Clark said.
Clark said about 1.5 million homes in Canada are not eligible for flood insurance because the flood risk is too high.
The Canadian government’s national flood insurance scheme for high-risk families has been spent several years in the 2024 budget, but Clark said it has not been implemented because parliament has been ruled.
Mary Kelly, a finance professor at Wilfrid Laurier University, said that with the increase in weather events, “everywhere in Canada can be dangerous areas”, leading to higher insurance rates nationwide.
“Insurance companies say that even if you live in a safe place, you can have one of these micro-stores that these sewage treatment systems can’t cope with rainstorms and your home can be flooded. So, I think it’s the reality, there’s nowhere in Canada right now, and it’s really safe.”
Kelly is also a major proponent of the government’s need to fill gaps that private insurance cannot fill.
“We are one of the few countries in the world where governments do not have any coverage insurance,” she said.
Kelly pointed to California’s role model when the government planned to step in to help people in need of earthquake coverage think the risk is too high.
“What we need to see insurers continue to offer products in the future is to have some kind of government commitment to say that if things are really bad, we will provide the backend so you don’t go bankrupt,” Kelly said.
Kelly also advises homeowners to take a positive approach to make their homes more climate-oriented and to understand potential risks by looking at the advice of catastrophic losses reduction sites.
But Kelly and Clark both believe more action is needed to address climate change and invest in governments at all levels from it to mitigate potential disasters.
“We collectively urgently need to focus on climate adaptation and focus specifically on governments at all levels to invest in risk protection in communities,” Clark said. “This is the rise in risks due to changes in weather, which is a series of challenges we are seeing and the result of these expensive and serious events that people have experienced across the country.”
& Copy 2025 Global News, a division of Corus Entertainment Inc.
