Based on coverage from The Globe and Mail and Toronto Star.
Canada’s home insurance system is getting pricier and a bit pickier as extreme weather losses pile up. Canada still has a competitive market and hasn’t seen the kind of “coverage deserts” spreading in parts of the U.S., but insurers are clearly tightening the screws: higher premiums, bigger deductibles, more exclusions, and less appetite for the riskiest neighbourhoods.
Morningstar DBRS flagged this shift back in November, saying the Canadian market is showing “early signs of coverage tightening.” The industry is holding together financially, but for homeowners, the direction of travel is pretty obvious.
Canadian home insurance premiums outpace inflation
Home insurance costs have risen much faster than inflation in recent years. Statistics Canada data shows home insurance costs (grouped with mortgage insurance) climbed 31 per cent between 2021 and 2025, compared with overall inflation of 15 per cent.
TD’s own reporting suggests the pain is even sharper in provinces that have been hammered by claims. TD’s report says average increases over that five-year stretch were 68 per cent in B.C. and 58 per cent in Alberta.
Morningstar DBRS sector lead Nadja Dreff said 2024’s massive losses acted like a stress test, and insurers proved they’d prepared, mostly by raising prices. From the consumer side, she said, “the story is not so good,” adding Morningstar DBRS expects premium increases to keep coming, including in 2026.
Insurers reduce exposure in high-risk regions
Rather than pulling out of communities entirely, some insurers are thinning out where they write new business and how concentrated they are in higher-risk zones.
TD chief executive Raymond Chun said on the bank’s most recent earnings call that TD has “rebalanced” in higher severe-weather regions, moderating where it had higher concentrations and aiming for growth in areas with lower catastrophic risk.
Definity Financial Corp. is also shifting its book. After closing a $3.3-billion takeover of Travelers last month, CEO Rowan Saunders told analysts the company had been “churning” its portfolio by moving new business toward less catastrophe-exposed areas and reducing concentration where “peril scores” are higher. He said the heavy lifting is mostly done, but described it as ongoing portfolio management.
Extreme weather losses hit record $9.4 billion
The pressure behind all of this is simple: claims are exploding.
Canada saw a record $9.4 billion in insured losses in 2024. TD’s report says average personal property losses from 2020 to 2024 were nearly double the previous stretch, and catastrophic weather events averaged 15 per year, compared with around two per year in the 1980s.
TD economist Likeleli Seitlheko said growing insured personal property losses are straining the home insurance sector. Insurers’ responses include raising deductibles to as high as $10,000 for perils like hail, reducing coverage, or not offering some coverages at all. In “worst case situations,” Seitlheko said, coverage “simply is not available for certain perils.”
Flood insurance gaps in Quebec, Ontario, BC
Flood insurance, only introduced in Canada about a decade ago, remains patchy, especially in higher-risk areas. Public Safety Canada says Quebec has the highest number of properties at risk of flooding, followed by Ontario and British Columbia.
The Insurance Bureau of Canada (IBC) estimates about 1.5 million households, roughly 10 per cent, can’t get flood insurance. For households that can get it, IBC says flood coverage can add as much as $15,000 a year to premiums.
But David Nickerson, who studies property economics at Toronto Metropolitan University, argued the availability is worse than the industry suggests. He said the claim that flood insurance is available to 90 per cent of Canadians is a “gross exaggeration,” and that effectively it may be closer to 50 per cent because of uneven offerings and redlining of high-risk areas.
Nickerson also pointed to data problems, saying risk information can be patchy and outdated. He said that’s why the federal government is spending hundreds of millions of dollars to upgrade flood maps.
Alberta hail and wildfire drive insurer costs
Alberta has become a major loss centre. TD’s report points to events including a $3-billion hailstorm and the $1.1-billion Jasper wildfire in 2024. TD says industry operating costs in Alberta exceeded premium revenues by nearly 20 per cent that year.
Nickerson said TD got caught with concentration risk during the 2024 Calgary hailstorm and then pulled back to rebuild financial reserves.
IBC vice-president Liam McGuinty says the real long-term fix is resilience: build and repair homes to withstand harsher weather, and avoid putting new housing in flood-risk areas as Canada ramps up construction. The alternative is straightforward but ugly: more losses flowing through to higher premiums paid by Canadians.
Support Independent Canadian News Analysis
The Canada Report is supported by readers like you. If this article helped you understand what’s happening, you can support our work with a one-time tip.
Support The Canada Report
