With an increase in natural disasters, Canada's traditional home insurance model is being reexamined.
What's happening?
According to an article in Insurance Business Magazine, extreme weather emergencies that were once sparse are now a regular occurrence. In turn, insurance companies are reassessing their policies to account for rising, unavoidable disasters.
The outlet interviewed Square One Insurance CEO Daniel Mirkovic, who said, "We're going to see even more innovation in how insurers underwrite, price and distribute insurance."
Why are these insurance changes important?
The need for insurance policy reform comes from very stark fluctuations in our environment. Data from between 1900 and 2019 shows a tenfold increase in natural disasters globally. This uptick can be largely attributed to rising planetary temperatures, exacerbated by carbon pollution and deforestation.
In turn, according to Insurance Business Magazine, "The average cost per natural disaster in Canada has surged by 1,250% since the 1970s, escalating from approximately $8 million to over $110 million per event."
Moreover, construction costs have surged, thus further increasing underinsurance.
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What's being done about climate issues affecting insurance?
According to Mirkovic, per Insurance Business Magazine, "The system is being reshaped from the inside out."
Homes with weather-resistant features built in are offered discounts by the insurers, and Canada's guaranteed building replacement ensures homes destroyed will be rebuilt, regardless of the policy's maximum coverage amount.
Insurance options in Canada are broad, and Mirkovic suggests looking into different policies to find the optimal one for you, your home, and the area you live in — with weather events top of mind as you choose.
He explained in the article, "At the end of the day, home insurance remains the best and often only viable way for people to protect themselves from catastrophic loss."
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Definitely 💯 While imperfect, these policies can be the difference between being able to recover from a disaster and losing everything.
While the need to address individual financial burdens caused by natural disasters is apparent, assessing the broader issue of what is causing them is equally so.
Though these environmental challenges exist at a large scale, implementing renewable practices into your own life is a small step toward rerouting the problems. More so, some of these options — like solar and wind power — come with incentivized discounts, making your green choices more affordable.
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