California’s paralyzed insurance market – where more than 3.6 million home policies have gone unrenewed and major carriers have pulled back – is becoming a cautionary tale for Canada, industry leaders warned at the National Insurance Conference of Canada (NICC). With $505.9 billion in insured catastrophe losses across the US since 2020, executives said Canada faces similar risks if governments, builders, and homeowners continue ignoring obvious climate exposures.
Amanda Dean (pictured right), vice-president at the Insurance Bureau of Canada, read notes prepared by Robert Neill of the American Property Casualty Insurance Association, who was unable to attend. Neill highlighted that the US accounted for 73% of global insured catastrophe losses between 2020 and 2024, with construction and labour costs still running 40% higher than pre-pandemic levels.
California’s struggles, he noted, are magnified by outdated insurance frameworks and a regulatory approval process that can take more than a year to raise rates, often resulting in less than insurers requested. The wildfire surge has only added financial strain, stalling reforms and pushing more carriers to de-risk their portfolios.
Amanda Dean was recognized as one of the Women Leaders in Insurance in Canada. Read the Elite Women special report here.
Evan Johnston (pictured centre right), president and CEO of Wawanesa Insurance, said his company sold its Southern California business 18 months ago after 30 years in the state. The decision, he explained, was driven largely by the regulatory environment.
Regulators, he added, wouldn’t even consider communications with insurers, making it “very hard to justify the long-term negative return on capital that would have been required to hold out hope for some logical response.”
He noted that Wawanesa was fortunate to find a buyer for the business, which helped ensure continuity for employees and policyholders, but said the episode underscored how restrictive regulatory frameworks can make markets unsustainable.
Kevin Lea (pictured centre left), vice-president of the Insurance Brokers Association of Alberta, warned that Canada risks drifting toward California’s crisis if it continues to ignore well-known hazards.
“At the end of the day, the property market is a math problem,” Lea said. “The cost of risk keeps going up, whether that’s carried by insurers, policyholders, banks, or governments. And yet we keep making the same mistakes.”
He pointed to Alberta’s “hail belt” as an example. “Thirty years ago there were almost no houses in northeast Calgary. Now we’ve built thousands – in the most hail-prone area in the country. In southern Calgary, they’re building a massive new subdivision right next to the Bow River, in a floodplain. And in Jasper and Banff, the forest goes straight into town, with wooden buildings and no fire breaks. We know how that story ends.”
Lea said the result is spiralling costs for homeowners, many of whom face $10,000 deductibles every few years alongside 20%-50% annual premium hikes. Some insurers, he added, are effectively withdrawing by pricing policies out of reach. “That’s not good for policyholders, and it doesn’t make the market more sustainable.”
Lea argued that focusing on rate regulation, as California did, only masks the problem. “It’s not about downloading costs onto policyholders with higher deductibles, or about governments pouring billions of taxpayer dollars into disaster recovery,” he said. “It’s about thinking smartly and proactively: how do we spend less money together on events we know will keep happening?”
He highlighted mitigation successes in British Columbia, where some property owners near Kelowna have invested in fire breaks and sprinklers. “Compared with historic wildfires, the losses there were reduced,” Lea said. “Proactive measures work – but they require collective will.”
David Sorensen (pictured left), deputy superintendent of insurance for Alberta, stressed that meaningful solutions cannot rest on insurers alone. “The solution is to encourage policies that address the root risk,” he said, emphasizing that the conversation around resilience must expand beyond pricing and rate approvals.
Sorensen described the challenge as a “whole of society issue,” involving federal, provincial, and municipal governments alongside insurers, regulators, and homeowners. He cautioned that resilience comes with a price tag. “There’s no cheap solution,” he said. Investments in prevention and adaptation will require coordination and long-term commitment, but in his view, “rate regulation is not the solution.”
