Extreme Weather Drives Sharp Rise in Alberta Insurance Premiums

Alberta residents are facing steep hikes in home insurance premiums as extreme weather events become more frequent and destructive. Industry experts warn that this trend is unlikely to reverse without significant changes to how homes are built and where they are located.

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The reality is that Alberta is the natural disaster capital of Canada. Flood, wildfire, hail, Albertans face all of it.

Over the past two decades, the cost of home insurance in Alberta has surged dramatically, with premiums rising by approximately 400%. This increase is attributed to insurers grappling with a growing number of claims tied to natural disasters such as floods, wildfires, and hail. Some Calgary residents have reported substantial annual premium increases, with one homeowner's premium rising by $500 to about $4,000, while another now pays around $3,600 annually.

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Because of climate change, we do expect that to continue. The frequency of intense systems moving through is only going to increase.

Liam McGuinty from the Insurance Bureau of Canada described Alberta as "the natural disaster capital of Canada." He noted that due to climate change, the frequency and intensity of severe weather systems are expected to increase. McGuinty explained that the rising costs are borne by all Albertans, as the claims of a few are covered by the premiums of many.

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We’re all paying more for heightened natural disasters because the claims of the few are paid for by the premiums of the many.

Experts emphasize that rebuilding after each disaster is unsustainable. McGuinty proposed several solutions: incentivizing homeowners to protect their properties through retrofit programs, halting construction in high-risk areas, implementing stricter building codes for safer homes, and investing in resilient infrastructure. The Alberta provincial government stated it is collaborating with the insurance industry to explore options for reducing premiums, focusing on improving home resilience as a key factor in affordability. A cross-ministerial working group is examining potential strategies, with further details to be released upon completion of their work.

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One, you need to make sure that homeowners are incentivized to take steps to protect their homes through retrofit programs and the like. Two, we need stop building in high-risk areas. We also need building codes that result in more safe homes. And third, we need to invest in resilient infrastructure.