Canada’s home insurance market remains broadly competitive, but mounting climate-related losses are pushing insurers to tighten terms and rework portfolios, leaving many households facing higher costs and patchier coverage.
Carriers are still writing business across the country and Canada has so far avoided the outright “coverage deserts” seen in some US states. But insurers are raising premiums faster than inflation, increasing deductibles, narrowing coverage and reducing exposure in higher‑risk regions.
In a November report, Morningstar DBRS said the Canadian market is “showing early signs of coverage tightening” as companies respond to escalating catastrophe losses and higher reinsurance and rebuilding costs.
Insurers have not staged wholesale withdrawals, but several large players have acknowledged scaling back in catastrophe‑prone zones.
“We’ve rebalanced in some of the higher severe weather regions,” TD Insurance chief executive Raymond Chun told analysts on the bank’s most recent earnings call. “Where we had a higher concentration in some of the high severe weather zones, we’ve moderated.” TD is targeting growth in regions with lower catastrophic risk instead, he said.
Definity Financial has also adjusted its footprint. CEO Rowan Saunders told analysts in November that the company had “churned” its portfolio, steering new business to less cat‑exposed areas and reducing concentration in high‑peril zones. He described the shift as “ongoing good portfolio management,” even if the heaviest changes are largely complete.
The pressure to rebalance has intensified after several expensive years, capped by a record $9.4 billion in insured losses in 2024. A TD report found average personal property losses between 2020 and 2024 were nearly double the prior period, while the number of catastrophic weather events averaged about 15 a year, up from roughly two in the 1980s.
“Growing insured personal property losses are placing considerable strain on Canada’s home insurance sector,” TD economist Likeleli Seitlheko wrote.
Higher reinsurance prices and tighter treaty terms are also feeding into primary market behavior. Global reinsurers have repriced Canadian hail and wildfire exposure in recent renewals, pushing up retentions and limiting aggregate coverage. That has left primary carriers retaining more risk per event and reinforced moves to raise deductibles, tighten wordings and reduce line sizes in high‑risk areas.
Some insurers have tapped alternative capital, such as catastrophe bonds, to diversify protection for wildfire and severe convective storm risk, though such structures remain a small share of overall capacity.
At the consumer level, premiums for home and mortgage insurance rose 31% between 2021 and 2025, according to Statistics Canada, compared with 15% for overall inflation. In provinces with heavy claims, increases have been steeper: TD estimates averaged five‑year rises of 68% in British Columbia and 58% in Alberta.
Insurers are also raising deductibles, in some cases to $10,000 for specific perils such as hail, imposing percentage deductibles for wind and quake, reducing limits and declining to offer coverage for certain risks, Seitlheko said. Roof coverage in hail belts, for example, is increasingly subject to actual cash value settlements or lower sublimits. “In worst case situations, insurance coverage is simply not available for certain perils,” he noted.
Flood insurance, introduced in Canada only about a decade ago, remains patchy. Public Safety Canada estimates Quebec has the most properties at flood risk, followed by Ontario and B.C. The Insurance Bureau of Canada (IBC) said around 1.5 million households cannot get flood coverage, and for those that can, premiums can add up to $15,000 a year.
Ottawa is investing hundreds of millions of dollars in new flood maps and working with provinces and insurers on a national flood insurance program for the highest‑risk households, but key design details and carrier participation are still being hammered out.
Brokers and MGAs are on the front line of these shifts, reporting more declinations, higher deductibles and tighter terms at renewal, especially in Alberta and B.C. In some communities, placing even modest homeowners limits now requires more granular risk data, mitigation measures and, at times, layering capacity from multiple markets. Similar pressures are emerging in commercial property, particularly for small and mid‑sized businesses in cat‑prone regions.
Despite the headwinds, Morningstar DBRS sector lead for global insurance Nadja Dreff said the industry remains financially sound. She described 2024’s losses as a “stress test” that showed carriers had done enough to absorb shocks, largely through higher pricing and exposure management.
“When you’re looking at it from a consumer, especially personal insurance perspective, the story is not so good, right?” Dreff said. “Because for insurance companies to weather these losses, well, it means they are increasing premiums on personal lines, and that has been the case. And we predict it to be again the case in 2026.”
Longer term, Dreff and others argued that only broader investment in resilience can break the cycle of rising losses and premiums. IBC vice president of federal affairs Liam McGuinty said strengthening building codes, retrofitting existing housing and tightening land‑use planning will be critical as Canada ramps up homebuilding.
“We’ve got to put the brakes on worsening the problem and really take a serious approach to building a more resilient country,” he said. “All those costs ultimately have to be borne somewhere, and ultimately it’s policyholders, it’s premium payers that bear that cost.”
