As severe weather complaints continue to batter Canada, the property and casualty insurance industry is having to evolve quickly in order to remain relevant. In 2024, Canada suffered through a tough summer, with insured losses rising above $7 billion – a 406% rise from the 20-year average – according to IBC.
Speaking to IB, Morgan Roberts (pictured), vice president of RH Insurance at Ratehub.ca, said that these climate issues have led to significant changes in the insurance industry.
"We're seeing rising deductibles," she said, explaining how some companies have begun raising deductibles across different types of coverage. “If you’re in a high flood zone, they could raise your deductible or limit the amount of insurance you are covered for.”
In addition to rising deductibles, Roberts pointeds out that insurance companies are sometimes requiring homeowners to take additional precautions, such as installing sump pumps, before offering coverage for water-related damage.
"We've seen those changes coming out, and the deductibles we've seen going up for all different types of coverages—not just fire but water coverages as well," she said. This focus on mitigating risk through proactive measures underscores a broader trend in the industry, where insurers are not only adjusting coverage but also shifting some of the responsibility onto policyholders.
But rising costs aren't the only concern. Roberts warned that consumers renewing their policies this year may face increases in premiums, though she was hopeful that the hikes wouldn’t be too severe. Still, it's a trend that is hard to ignore, with insurers needing to offset growing losses due to the rising frequency and intensity of climate-related events.
“You're going to see raising premiums as your policies renew this year, hopefully not all of them, but it's something to definitely look out for,” Roberts said.
Roberts acknowledged that while the situation is becoming more challenging, the worst-case scenario of certain areas becoming almost uninsurable hasn’t yet materialized. However, she stressed the importance of working closely with brokers to explore alternative options if premiums become unaffordable.
"If your insurance is getting too expensive or they are taking off coverages, make sure you are speaking to brokers to find out what you can do to keep those coverages on," Roberts said.
One of the most pressing issues in high-risk areas is the financial strain on consumers to maintain adequate coverage. As Roberts pointed out, many are finding it increasingly difficult to afford necessary policies in areas prone to severe weather events.
“The biggest struggle, I think, would be financially to afford some of the coverages,” she said. For those in such situations, she emphasizes the importance of discussing their options with brokers to balance affordability and the need for essential coverage. Roberts advised consumers to “make sure you are talking to the broker to discuss where you live and what you're most susceptible to in a claim.”
The relationship between consumers, brokers, and insurers is becoming increasingly important as the risk landscape evolves. Roberts sees brokers playing a critical role in helping policyholders navigate the complexity of insurance coverage, especially in light of changing climate conditions. This is particularly crucial for ensuring that consumers are fully informed about what their policies cover—and what they don’t.
"There's no point if your policy is way out of your price range," she said. “But then you've got the problem—if there is a claim, it's expensive if you don't have that coverage as well."
Roberts said Ratehub was committed to ensuring clients are informed and educated about their policies. With premiums rising, her team works closely with customers to find affordable options without sacrificing essential coverage.
“We're quoting with multiple markets,” she said. “We offer a bunch of different insurance companies that offer different coverages for different postal codes, different cities, different provinces.”
The increasing number of claims has also created new challenges for the claims process itself, with insurers and brokers facing pressure to handle claims quickly and transparently. Roberts notes that claims are not being processed as rapidly as they were in the past, given the sheer volume of claims being filed.
"They're trying, it's just, there's just so many claims and so much time in the process," she said. This delay has made it essential for brokers and insurers to maintain clear communication with policyholders, ensuring they know what to expect and how to proceed. "Save your receipts,” Roberts said.
Technology has also begun playing a larger role in this process. Roberts pointed to the increasing use of digital tools, which allow policyholders to submit claims and documentation more efficiently.
“You can now submit pictures of what's going on in the house or your car... right online," Roberts said.
But while technology and transparency are critical, Roberts believes the relationship between brokers, insurers, and policyholders is evolving in other ways, too. And the days of setting up a policy and leaving it alone are over.
"It's just making sure that everybody's well-informed," she said.
