Alberta homeowners are facing steep increases in home insurance premiums, driven by a combination of rising construction costs and frequent natural disasters.
Recent data from Statistics Canada revealed that Alberta’s residential construction costs have surged by 73% over the past five years, while home replacement costs have risen 29%. These figures outpace national averages, where construction and replacement costs have increased by 66% and 24%, respectively.
“The cost to rebuild a home in Canada is steadily increasing, and this cost increase has been exerting upward pressure on home insurance premiums,” said Liam McGuinty, vice president of strategy at the Insurance Bureau of Canada (IBC).
The escalation in construction expenses has been amplified by a significant shortage of skilled workers. BuildForce Canada’s March 2024 report projects that Alberta will face a shortfall of up to 28,000 skilled construction workers annually over the next decade. The shortage has led to delays and higher costs for rebuilding homes damaged by natural disasters.
This issue is further compounded by increasing material costs. Homeowners who need repairs or rebuilds after severe weather events are finding it increasingly expensive, which insurers say contributes directly to higher premiums.
Severe weather events have also placed a heavy burden on Alberta’s insurance market. In 2023, insured losses from natural disasters across Canada totalled $3.5 billion. For 2024, this figure is projected to exceed $7.8 billion, marking a new record.
Alberta has been particularly hard-hit, with extreme events such as the record-breaking hailstorm in Calgary last year significantly impacting rebuilding efforts. Craig Stewart, IBC’s vice president of climate change and federal issues, noted the strain these disasters place on insurers and communities.
“Canada’s insurers are playing a leading role in helping Canadians adapt to the impacts of severe weather,” Stewart said. “If Canadian governments fail to take decisive action to create more resilient communities, it is expected that pressures on home insurance premiums will continue.”
The IBC is urging governments at all levels to invest in resilient infrastructure and implement stricter building codes to safeguard homes against extreme weather. Improved land-use planning to avoid construction in high-risk areas is another key recommendation.
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