Editors Note: In a previous version of this article, the IBC incorrectly estimated that insurance premiums could rise by five to 50 percent. This has since been corrected, and the IBC now estimates that premiums could increase between five and 15 percent. Below are the rewritten sections with improved syntax, tone, and SEO:
Residents returning home after evacuations caused by wildfires and other natural disasters don’t know what to expect. They are uncertain whether their homes will still stand, as blazes across the country have destroyed hundreds of homes and even entire towns. The city of West Kelowna lost nearly 200 houses, and Enterprise, N.W.T is practically nonexistent now.
According to the Insurance Board of Canada (IBC), flooding in Nova Scotia last month caused over $170 million in damages. This increase in severe weather events, attributed to climate change, is making insurance more expensive. Craig Stewart, the IBC vice-president for climate change and federal issues, estimates that premiums could rise between five and 15 percent. He emphasizes that this increase is not driven by a single event but rather by long-term trends that have been observed over the past decade.
Stewart reveals that Canadian insurers have been handling claims totaling around $2 billion each year since 2018. Speaking from Mahone Bay, N.S., he mentions that 2023 is anticipated to be consistent with previous years. In the past, the highest costs were typically associated with massive, isolated events rather than a series of catastrophes like those seen this year.
With the rise in fires and floods, insurers are now considering a community’s preparedness when setting premiums. Factors such as the presence of fire hydrants, trained fire response, and volunteer firefighters are taken into account. Those living in high-risk communities with inadequate defense measures can expect to see premium adjustments.
Anne Kleffner, a professor of risk management and insurance at the University of Calgary, adds that construction costs have also contributed to the increase in premiums. Although some insurers in California have stopped offering coverage for fires due to the high costs incurred from devastating fires, Kleffner clarifies that Canada is not at that point yet. However, she acknowledges that it could be a long-term concern.
While insurance companies may be receiving more claims than usual, government regulations require them to maintain sufficient resources to handle a higher number of claims. Companies also manage their exposure by bringing in staff from different regions or even other countries to handle larger influxes.
Kleffner states that all-home insurance covers fire incidents and advises anyone evacuating their home to familiarize themselves with their insurance policy and carry a copy in case a claim needs to be made.
By Global News, a division of Corus Entertainment Inc., 2023.
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