2024 was a record year for insured losses related to extreme weather and natural hazards in Canada, amounting up to $8.55 billion. This number marks an all-time high, especially when compared to the cost of insured damage in 2023, totalling $3.1 billion, only confirming a trend in the domain. Extreme weather-insured damage has drastically increased over the past decade: out of the ten most costly years for extreme-weather induced damage, nine have occurred after 2011, with a total cost of over $27 billion. Furthermore, 2024 is not an exceptional annus horribilis: already, in 2016, insured losses had amounted to over $6.2 billion due to the devastating Fort McMurray wildfire that summer. The escalation of weather-related insured losses all over Canada pressures the insurance sector and has a disproportionate effect on home insurance prices. Craig Stewart, Vice President of the Insurance Bureau of Canada (IBC), confirms that “[a]s insurers price for risk, this increased risk is now impacting insurance affordability and availability.” While these effects have certainly impacted people with insurance, they are even more devastating for those who are not covered by insurance, including vulnerable communities.
The Quebec government is also feeling the repercussions of extreme weather events and the economic consequences they have provoked. The province witnessed an increase overall in extreme weather phenomena ranging from droughts, heat waves, and storms with heavy rains and violent winds, to drastic drops and rises in temperature leading to freeze-thaw – all of which affect the stability and durability of buildings, roads, and runways. Quebec is not an isolated case: Canada as a whole is experiencing this. The summer of 2024 alone led to $7.1 billion in insured losses, mostly due to floods in Southern Quebec and Southern Ontario, wildfires in Alberta, and a hailstorm in Calgary. This catastrophic summer led to 228,000 insurance claims, a 406 per cent increase compared to the average over the past 20 years, according to Celyeste Power, President of the IBC.
Due to climate change, both the frequency and intensity of weather-induced catastrophes increased, as can be observed through the augmentation of insured damage. If the increased cost of insured damage is a problem in itself, it also undeniably serves as an alert signal to remind us of the many risks these extreme weather phenomena pose. This increase in extreme weather phenomena also threatens energy production, transportation, and, most of all, agriculture, where productivity is directly altered by climate change and extreme weather. The question of our health and safety is also important: extreme weather affects everyone, as seen through the availability and quality of drinking water. However, it unequally threatens weaker or more exposed populations, such as the higher mortality of elderly populations seen during heatwaves.
The US National Institute of Environmental Health Sciences (NIEHS) has established a causal link between poverty and exposure to risk. Communities with less resources are feeling the burden of damages caused by extreme weather; they are shown to be more exposed and susceptible to suffering from mental and physical health issues, injury, and even death due to environmental disasters. Those that don’t have home insurance aren’t accounted for in these figures, implying that the situation is even worse than what the insurance sector is warning us about.
Climate change operates on such a broad scale that it is almost impossible to grasp the full extent of extreme weather-related damages and the damages that are slowly occurring as time progresses. To help us track estimates of costs, the Canadian Climate Institute developed a tool accessible to all at the website ClimateChangeCosts.ca.
This situation is not bound to get any better. Power ominously recalls that “what we have to remember is this isn’t an anomaly. It’s not bad luck. This is our new normal.” Philippe Gachon, hydroclimatology professor at the Université du Québec à Montréal (UQAM), predicted that the flood risk would only increase in Quebec due to high intensity downpours and storms. The increased frequency and intensity of natural disasters will make Canada, as Jason Clarke, national director of climate change at the IBC, says, a “riskier place to live, work, and insure” if no action is taken against climate change.
To limit the risks of both extreme weather phenomena and the damage they cause, the NIEHS explains a government may take action in three ways. First: preparation, or building infrastructure in advance, as well as informing and educating the population on the issue. Second: adaptation, which means changing the way we manage our forests and build our cities. Third: mitigation, where the objective is to limit climate change itself by reducing greenhouse gas emissions through sustainable development programs, engaging governments and states in the long-term.
Solutions have been proposed along these lines. Montreal, for example, took the effects of long-term climate change into account and planned to halve its greenhouse gas emissions by 2030. They have also proposed creating underwater reservoirs and greenspaces for draining excess rainwater to avoid overloading the sewer system – as what happened in 2023 and 2024 summer floods.
Even if the Canadian government has invested $6.6 billion in climate adaptation initiatives since 2015, it is not sufficient, and Power urgently calls for governments to “take action to reduce the risk,” as climate change effects will only worsen if nothing is done to prevent it further.