The Insurance Institute of Canada's CIP Society has warned that home insurance in Canada is moving into a more acute affordability phase as climate losses rise and household finances come under strain.
In its latest Emerging Issues Research Report, Home Insurance Affordability: Implications for the Insurance Industry in Canada, the CIP Society found that affordability, adequacy and availability are all under pressure as flooding, wildfire and severe storms become more frequent and more costly – and as premiums outpace general inflation.
Industry data cited in the report showed that 2024 was Canada’s costliest year on record for insured losses from natural catastrophes, with weather-related claims running into the high single-digit billions and far above long‑term norms. A cluster of major floods, wildfires and severe convective storms drove those losses and demonstrated that exposure is no longer confined to a few high‑risk regions.
At the same time, average home premiums rose materially in 2025, with a clear majority of Canadians reporting higher insurance costs. Home and auto now account for a growing share of after‑tax income in key provinces, and housing cost indices from Statistics Canada indicated insurance is becoming a more prominent contributor to overall shelter costs alongside mortgage interest and property taxes.
Peter Hohman, president and CEO of The Insurance Institute of Canada, said the report is meant to be a practical tool for the industry.
“The report is another critical resource we have created to support Canada’s p&c professionals in their roles assisting Canadians protect what matters most to them. It also provides insight for use in implementation of recommended loss avoidance actions including building codes, homeowner resilience incentives, and protection of community infrastructure,” Hohman said.
The research is structured around six core questions: what home insurance affordability actually means; what is driving prices higher; what is constraining homeowners’ ability to pay; and, in turn, the roles of homeowners and government, and how the insurance promise and resilience solutions should fit together.
By taking this approach, the report moved past headline price increases to examine the underlying drivers -- climate and weather trends, land‑use planning, construction and repair cost inflation, reinsurance pricing and household income constraints. It also distinguishes clearly between levers that sit with insurers and those that require action by governments or individual property owners.
One of the key findings for insurers is that even in record catastrophe years the private market has largely absorbed losses and kept coverage in place – but only by tightening underwriting standards and increasing rates in higher‑risk areas. Meanwhile, for homeowners, the study highlighted the growing importance of maintenance and mitigation, and questions whether many households can afford resilience upgrades such as backwater valves, fire‑resistant roofing or lot regrading, even though these measures can reduce both claims costs and long‑term premiums.
A central plank of the report is its comparison with Florida and California. In both states, escalating catastrophe losses, political and regulatory resistance to risk‑based pricing, heavy litigation and years of underpricing combined to produce insurer insolvencies, market exits, widespread non‑renewals and reliance on residual market mechanisms. Affordability became a political flashpoint as premiums spiked and capacity shrank.
The CIP Society stressed that Canada’s regulatory and market structures are different, but argued that the presence of similar risk factors should be treated as a warning sign. Without coordinated action on adaptation, land use and infrastructure, the report concludes, parts of Canada could face more acute availability and affordability issues over the next decade.
On the public policy side, the research feeds into active debates on a national flood insurance program for high‑risk households, climate‑resilient building codes and federal‑provincial investment in adaptation. Industry bodies, including the Insurance Bureau of Canada, have repeatedly argued that private insurance alone cannot solve the affordability problem without parallel investment in risk reduction and infrastructure, calling for faster adaptation spending after what they describe as a “decade of climate catastrophe”.
The emphasis on disaster risk reduction reinforces a shift toward loss prevention – from advising on flood and wildfire retrofits at property level to working with municipalities on community‑scale defenses.
Ultimately, the CIP Society framed home insurance affordability as a shared challenge for insurers, governments and homeowners. Its core conclusion for Canada’s P&C sector is that maintaining a sustainable home insurance market will depend as much on shaping the risk as on pricing it.
