Weathering the Storm:Insurance in a Changing Climate

Storm damage on White Lake 2012

by Ross Fraser of Cade Associates Insurance Brokers, FOCA’s ‘Cottage Champion’ sponsor

Unfortunately, many readers of this magazine will have had first-hand experience of the striking damage caused by the prolonged winter storm between March 28th and 31st this year. In the hardest-hit areas of the Kawarthas, Muskoka, and Haliburton, freezing rain fell for more than 35 hours encasing trees, power lines, and homes in thick ice.

Insured losses are already estimated at more than $400 million, making it one of the costliest spring weather events in Ontario’s history.

It’s a stark reminder that the impacts of a changing climate are no longer a conversation for a distant future; it is already affecting our properties, communities, and insurance policies. This is just the continuation of an already stark trend. According to the Insurance Bureau of Canada (IBC), 2024 set a new national record for insured catastrophic losses, with damages totaling more than $8.5 billion.

To put that in perspective, this is nearly triple the losses recorded in both 2022 and 2023, and more than twelve times higher than the annual average just a decade ago. In the span of just one month in 2024, four separate weather events devastated the country, from Calgary hailstorms, to flash flooding in Ontario, and wildfires in the west. Each of these events individually exceeded a billion dollars in insured damages.

What is driving such a dramatic rise in claims? Like so many other issues, a mix of factors are at play. A changing climate is intensifying storms and increasing the frequency of extreme weather events. At the same time, the cost to repair and rebuild has skyrocketed due to many factors that include

supply chain issues, skilled labour shortages, and rising costs of materials and transport. Combined, this creates a volatile situation for insurers and policyholders alike

What Cottagers Need to Know

Ice storm damage courtesy Deanna Forgie

In Ontario, many cottage properties are in areas that are increasingly exposed to the effects of our changing climate including, but not limited to, wildfires in forested or remote regions, ice storms that bring down trees or cut power for days, and heavy rain that overwhelms local systems in low-lying areas.

These developments are present risks worthy of additional consideration by the insurance industry, and by property owners.

Insurers are responding in several ways.

First, as carriers adjust to the growing cost of annual claims, premiums with many insurance providers are increasing. In higher risk areas, insurers may opt to restrict or remove coverages altogether.

Certain water coverages, for example, may be excluded in regions prone to flooding or too close to a body of water. It is more important than ever to

read and understand your insurance policy. Know what is and is not covered.

It is in your best interest to work with an insurance broker who understands seasonal and secondary homes, and who can help you identify gaps in your protection.

Consider Climate Resilience

While no one household can stop a catastrophic weather event, there are steps you can take to make your property more resilient.

Simple landscaping choices can create defensible space around buildings, reducing wildfire risk. FOCA offers excellent digital materials about FireSmart principles to reduce the risk of wildland fires impacting structures on your property.

Installing impact-resistant roofing materials like cement fibre, metal, or asphalt shingles can help guard against wind and hail damage from major storms.

Consider the installation of a backup power supply, even a small one to sustain the essentials.

For homes with a below-ground lower level, the installation of a backwater valve and/or a sump pump with a backup power supply can help to manage water intrusion.

Even relatively simple steps can help.

Regular maintenance — such as cleaning eavestroughs, securing patio furniture before a storm, trimming dead tree limbs, moving piled wood supplies away from structures, and so on — can help protect your property during extreme events, and may prevent or reduce damage claims.

What’s Next?

Industry-wide, efforts are underway to ensure insurance coverage stability in the face of

increasingly significant weather events. Following massive flooding in 2013 in Alberta and Ontario, the insurance industry launched new coverages such as overland water protection that were previously unavailable to most consumers.

More recently, the federal government has continued to work with insurers towards the creation of a national flood insurance program, which would be designed to protect properties that otherwise might not be able to secure coverage through traditional means.

Provincial building codes and municipal planning guidelines are also under review to reflect these new realities. The Institute for Catastrophic Loss Reduction, created by Canada’s property and casualty insurance industry and affiliated with Western University, has grown into a significant resource promoting disaster resilience research and public education.

For individual property owners, the message is clear: while we can’t control the weather, we can control how we prepare for it.

Whether by updating infrastructure, safeguarding natural shorelines, or stepping up property maintenance habits, it’s up to everyone to plan for the future, and to be ready for tomorrow. Investing in property-level resilience is one of the most effective ways we can adapt to our changing climate.

The more we do today, the better positioned we will be to weather whatever comes next