Canada’s property insurance sector is warning that resilience cannot remain the sole responsibility of insurers, as climate-driven catastrophes transform one-off events into a punishing new normal. Affordability and availability pressures are converging, and executives argue that only multi-party solutions – spanning governments, regulators, and homeowners – will keep coverage sustainable.
Evan Johnston (pictured centre right), president and CEO of Wawanesa Insurance, told delegates at the National Insurance Conference of Canada (NICC) that carriers are struggling to reconcile record losses with consumer expectations for affordable coverage.
“What we thought at one time were going to be one-time catastrophic events now appear to be routine and the new normal,” Johnston said. He recalled that a single Quebec flood event produced losses greater than the combined total of the previous five years.
“You heard me reference the $9 billion number last year. Hopefully, we don’t get anywhere close to that this year, but the number is still going to be high. We have to accept it as the new normal,” he said.
Those realities, Johnston added, create a “perfect storm” of availability and affordability issues. Insurers face sharply rising claim costs, compounded by tariffs, labour shortages, and supply chain bottlenecks. Consumers are left with higher premiums and fewer options. “It’s not good for consumers,” he said.
For decades, the industry’s model has been built around transferring and absorbing risk after the fact. Johnston argued that the paradigm must change.
“As a collective stakeholder group, resiliency has to be part of the answer,” he said. “As an industry, we focused on responding to catastrophes and transferring risk, whereas there needs to be more focus on building resiliency.”
But insurers alone cannot carry that shift. Pricing signals and policy incentives can play a role, he acknowledged, but their effect is limited without broader collaboration. “There’s only so much a single carrier can design. We need a multiparty solution,” Johnston said.
Johnston pointed to Manitoba Hydro’s now-defunct Power Smart program as an example of the kind of innovation insurance might emulate. The program incentivized homeowners to retrofit their properties for energy efficiency. Though it reduced electricity consumption, Manitoba Hydro was able to sell the resulting surplus power to the United States at a premium, offsetting costs while rewarding homeowners.
“That was a program that worked for the consumer, the government, the owner of Hydro, and ultimately the buyer of Hydro in the US,” Johnston said. “That’s the type of out-of-the-box thinking we need to consider when we’re thinking about this problem.”
To make resilience real, Johnston argued, governments must be involved in incentivizing homeowners, insurers must innovate in product design, and policyholders themselves must invest in risk-mitigation upgrades. “The government has to be there, and the insured has to be there at the same time,” he said. “This is not going to be solved by insurers alone.”
Kevin Lea (pictured centre left), vice-president of the Insurance Brokers Association of Alberta (IBAA), supplied the local reality check. He warned that homeowners in parts of Alberta are being crushed under the cost of increasingly frequent hail and wildfire events, compounded by outdated building codes and rebuilding constraints.
“For 30 years, building codes in Calgary suggested that it was totally OK to use thin vinyl siding and the cheapest asphalt shingles you could source,” Lea said. “Insurance companies are now having to replace those same cheap materials every three to five years.”
The result, he added, is spiralling costs for homeowners in northeast Calgary, a region with lower average incomes. “Being forced to pay a $10,000 deductible every few years, plus having to pay 50% more annually for your home insurance, which is probably already up 20 to 30% from the year before, is really starting to strain finances,” Lea said.
Some carriers, he noted, have responded by hiking prices to uncompetitive levels or quietly pulling back from the Alberta market.
“That’s not good for the policyholder,” he said.
Lea also highlighted the aftermath of the Jasper wildfire. While less serious in damages than the Calgary hailstorm that followed weeks later, its impact on residents has been prolonged by regulatory complexity and cost inflation.
“As of a couple of weeks ago, there have only been five structures rebuilt in Jasper since the fire,” Lea said, citing overlapping federal, provincial, and municipal red tape. Remote location and labour shortages have also pushed rebuild costs to “two and a half times” what standard replacement cost calculators projected.
Making matters worse, National Park rules prevent homeowners from leaving their sites vacant. “The homeowners are forced to rebuild in Jasper – they have to do it,” Lea said. “If you can’t even rebuild more than five houses in a year, it’s going to be a very long time until they’re back in place.”
