Canadian regulators are digging deeper into how insurers are handling catastrophic weather risks, with new data from Alberta offering an early glimpse into how hail coverage is evolving under mounting consumer and market pressure.
Speaking at the "American Insurance Crises – Could Canada be Next?" panel during the National Insurance Conference of Canada (NICC) in Gatineau, David Sorensen, deputy superintendent of insurance for the Government of Alberta, previewed findings from a survey conducted earlier this year on residential hail coverage. The survey was prompted by a wave of complaints from homeowners in Calgary and surrounding communities, who told brokers, insurers, and policymakers that hail premiums were skyrocketing or coverage was becoming unavailable.
“What we were hearing from the government’s side was, ‘My insurance has doubled. I can’t get coverage. What are you going to do about it?’” Sorensen said. “So we decided to ask every insurer writing in the province for specifics.”
The survey was conducted on data from 38 insurers offering residential hail coverage across Alberta. Sorensen stressed that while every company has risk-based underwriting restrictions, the scale of withdrawal was less than consumer anecdotes had suggested.
“All insurers selectively refuse to insure based on some risk factors – poorly maintained homes, frequency of claims, things like that,” Sorensen said. “And three insurers have full blackout territories in the highest-risk areas, which was fewer than we expected based on what consumers were telling us.”
Still, the survey revealed important shifts in how hail protection is being structured. Every insurer surveyed now applies higher deductibles to hail, and all have introduced limited payment terms – particularly on roofs and siding. Replacement cost coverage that once meant a brand-new roof after every storm has largely disappeared.
“For a long time, homeowners could essentially wait for the next hailstorm to get a new roof,” Sorensen said. “That’s not how we want consumers to behave, and the industry is moving away from that.”
Perhaps most concerning to regulators: a handful of insurers have pulled hail out of the base homeowners’ policy and turned it into an optional add-on.
“That’s something that raises challenges,” Sorensen said. “It changes the broker and agent conversation with customers. While it was fewer insurers than we feared… for me it is the thin edge of the wedge.”
Optional coverage could leave some consumers unknowingly underinsured – or choosing not to buy hail protection at all. Sorensen said the regulator will be watching closely to ensure these product designs do not erode consumer protection.
At the same time, Sorensen commended insurers for experimenting with product design that actively rewards risk-reducing behavior. Deductibles and premiums are increasingly being tied to whether a home is deemed “resilient” to hail.
“In our conversations, we saw some really good things happening,” Sorensen said. “For example, a $2,500 deductible for a resilient home compared to a $10,000 deductible for a non-resilient one, or significant premium differences on the hail component depending on the resilience of the property.”
The shift marks a significant departure from legacy coverage that treated resilient and non-resilient homes alike. By sharpening the financial difference, insurers are giving homeowners stronger incentives to invest in fortified roofing, siding, and other loss-prevention measures.
But Sorensen acknowledged that even with these changes, consumer buy-in remains uneven.
Even with stronger financial incentives, not all consumers are willing to invest in resilience upgrades. Some may see limited savings and opt to reinstall basic asphalt shingles, hoping their insurer will step in after the next storm.
“That’s not the behavior we want to encourage,” Sorensen said.
The larger question, Sorensen argued, is how to share the costs of resilience between homeowners, insurers, and possibly governments.
“We’re having conversations about how to pay for resilience, but we’re not at the end of that road,” he said. Consumers need incentives, insurers need to design products that reward the right behavior, and regulators need to ensure companies remain financially sound, he added.
For regulators, balancing those priorities is critical. Aggressive discounts cannot come at the expense of solvency or capacity, Sorensen warned, because an insurer in financial trouble ultimately harms consumers through reduced availability and higher prices across the market.
“Making sure companies remain financially sound is essential,” he said. “If that’s compromised, it’s bad for capacity, bad for pricing, and bad for everyone in the long run.”
