The soaring cost and difficulty of insuring against climate risks may force people to relocate, the head of Canada’s main financial regulator warned.
Rising damages from extreme weather don’t seem to be a regulatory problem, but rather a cost problem, Peter Routledge, the country’s superintendent of financial institutions, told an audience in Vancouver.
“Part of it may be recognizing that some areas are higher cost, and businesses or homes that are there in those areas may have to endure higher costs, or they may have to move,” he said on stage at the National Insurance Conference of Canada on Monday. “That’s a harsh thing to say, but that is the reality of climate change.”
Asked whether property in certain parts of Canada might become prohibitively expensive or impossible to insure, Routledge said there’s been a pullback in the availability of earthquake insurance in British Columbia, and certain flood insurance products may be tightened.
But there’s “nothing as big” in Canada as the so-called “insurance deserts” that now affect parts of Florida and California, Routledge said in an interview.
Canada has been hit by several natural disasters in 2024: flooding in Toronto and parts of Quebec, a devastating hailstorm in Calgary, which hit almost one in five homes, and wildfires in the country’s western provinces that burned down a portion of the town of Jasper, Alberta. Insurers received 228,000 insurance claims in July and August — more than they’ve had in any summer over the past 20 years, according to the Insurance Bureau of Canada.
Catastrophic losses are “well above expectations” in the third quarter for Intact Financial, Canada’s largest property and casualty insurer. The weather also hit Toronto-Dominion Bank’s insurance unit, with costs 20% higher than a year earlier, denting its latest financial results.
“We just had the largest natural catastrophe losses in Canadian history. In five years, it won’t be the largest anymore,” Routledge cautioned the room full of insurance professionals. His Office of the Superintendent of Financial Institutions regulates banks and most property and casualty insurers.
“The risk environment isn’t going to feel any less burdensome or intense. I’d hate to leave you with the idea that ‘Hey, everything’s fine, we can exhale.’ There is no exhaling in this risk environment.”