Insurance availability in Canada’s high-risk areas is becoming an increasingly pressing issue as climate change intensifies and more communities face the brunt of severe weather events.
Floods, wildfires, and hurricanes are rising in frequency and severity, challenging the insurers and exposing gaps in risk mitigation and community preparedness. As the climate continues to evolve, so too must strategies to protect lives, livelihoods, and the stability of the insurance market.
According to Maryam Golnaraghi (pictured below), director of climate change and environment at The Geneva Association, addressing these challenges requires a coordinated effort. "This is not an issue that can be solved by insurance companies alone,” she told Insurance Business.
The availability of insurance in Canada’s high-risk areas hinges on a comprehensive, all-of-society approach.
While the insurance industry plays a pivotal role by providing risk data, funding research, and offering financial incentives for mitigation, governments, communities, and private stakeholders must also collaborate to implement risk reduction measures, update building codes, and educate the public.
"We need an 'all-of-society' approach to mobilizing risk reduction and prevention,” said Golnaraghi, who served as the chief of disaster risk reduction at the United Nations' World Meteorological Organization between 2004 and 2014.
Canada, like many other nations, has developed and expanded in areas prone to natural disasters. These high-risk zones include floodplains, wildfire-prone forests, and coastal regions susceptible to hurricanes.
This poses a significant part of the problem, according to Golnaraghi. “It is all about how we continue to build. A large portion of people and assets are concentrated in high-risk zones, and we continue to build in these areas,” she said.
Adding to this challenge, outdated building codes in many regions fail to account for evolving climate conditions. Without updated regulations, Golnaraghi said new constructions may not withstand future hazards.
Canada’s insurance industry has taken proactive steps to address these challenges by investing in research, collaborating with governments, and incentivizing risk mitigation. Golnaraghi named two notable examples: the Intact Centre on Climate Adaptation and the federal government’s flood risk mapping initiative, which is supported by the Insurance Bureau of Canada.
“The insurance industry is investing in research on how to reduce and prevent risks for homes and businesses and translating it to guidelines on what stakeholders, such as homeowners, local governments, communities, SMEs, can do,” she said.
Collaboration between public and private entities will also be vital to ensuring insurance availability in high-risk areas. One innovative example is Flood Re in the UK, a government-backed, solidarity-based insurance pool designed to provide affordable flood coverage. Canada is pursuing a similar initiative to develop a low-cost national flood insurance program for high-risk households.
Golnaraghi highlighted such partnerships, as well as broader collaboration, as not only providing immediate solutions but also long-term resilience. “Insurers have also been sharing their risk data with governments, and this has led to several initiatives to reform Canada’s flood risk management system,” she said.
Community education is the second piece of the climate resilience puzzle. Programs supported by the insurance industry and research institutions in Canada have broadened the knowledge of homeowners and small businesses about practical mitigation strategies such as installing flood barriers, retrofitting homes to withstand wildfires, and developing emergency preparedness plans.
However, low-income communities are often the hardest hit by natural disasters due to limited resources for mitigation and recovery, and therefore, addressing their needs is crucial for equitable resilience.
The Geneva Association, a think tank for the global insurance industry, is developing a framework for incentivizing investment in long-term risk mitigation, particularly in the most vulnerable communities.
“One of the issues discussed in Canada is the reform of post-disaster aid programs to avail funding to vulnerable communities for ex-ante resilience measures,” Golnaraghi said. “We are taking a close look at the interlinkages of valuation, mortgage and lending, insurance and risk-reduction and -preventive measures.”
One positive point is that the growing urgency of climate adaptation is sparking innovation across industries. For Canadian insurers, advancements in data analytics and risk modelling are improving the accuracy of risk assessments. At the same time, investments in carbon removal, hydrogen solutions, and renewable energy signal a broader shift toward sustainable practices.
Golnaraghi acknowledged the momentum, stressing that broader collaboration to build resilient structures and empower local Canadian communities will be key to sustainable insurance coverage.
“Actions by a wide range of stakeholders impact the risk profile of a home,” she said. “This will require homeowners, community-based organizations, local governments, utilities, infrastructure owners and state and federal to work in better alignment to implement risk reduction and risk prevention measures.”
What are your thoughts on this story? Please leave a comment below.
