Severe Weather: Taking the Insurance Industry by Storm

Last Updated:
August 29, 2019
Karen Spencer
Time to Read:

Flooding in the Spring of 2017, extreme wind damage in May of 2018, the tornadoes in September of 2018, flooding in the Spring of 2019! And that’s just the Ottawa area over the past couple years.

Catastrophic losses for property insurance are on the rise, therefore it’s critical that the government, insurance companies, insurance brokers, and property owners are all doing their part to help mitigate losses to help prevent a drastic increase in property insurance premiums.

The severity of extreme weather events is having a huge impact on homeowners insurance across Ontario. Most recently, the Spring flooding forced the City of Ottawa to declare a state of emergency as water levels rose on the Ottawa river to levels not seen since 1960.

As you can imagine, it has been challenging for insurance companies to manage risk meanwhile adjusting premiums to reflect the changing weather patterns.

Typically, you can expect an increase of 2 to 4 per cent but recently it’s not uncommon to see an increase upwards of 10 to 15 per cent.

Since extreme weather events are becoming more common and more severe, there has been a direct increase in the number and overall total cost of claims. According to the Insurance Bureau of Canada (IBC), severe weather has contributed to $1.9 billions of insured damage.

Not only are the number of claims increasing, but the amount of each claim is increasing too.

How the Insurance Industry is Managing Severe Weather

With changing weather patterns, it’s expected that changes in insurance coverages, limits, rates, territories, etc. will also be updated.

In order to cover the increasing cost of claims, insurers are forced to pass on some of the cost to consumers. That’s why we are now seeing some premium increases over 10 per cent.

That’s not all! Insurers are now being pickier with what coverages will be available to certain homeowners. While overland water coverage has been available for a few years now, some territorial regions will have restricted limits and some regions will not even have the option for overland water coverage at all.

As a property owner, there are a number of mitigation steps you can take to avoid water damage loss. These include installing a sump pump with battery backup, installing a backflow valve, being vigilant during riskier seasons (Spring), etc.

It may also be worth considering, now more than ever, to avoid purchasing a home or property near a flowing body of water. At the very least, ensure the property is at an altitude much higher than the water level.

The reality is, severe weather events are occurring more often and seem to be resulting in more insured damage. Flooding is not the only risk in the Ottawa area as we have also seen wind/tornadoes, ice storms, snow storms, and severe summer storms having an impact on the industry.

It’s important we all do our part to protect our property and ourselves from these risks. We’re here to help you so please keep your insurance broker up-to-date on any changes to your mitigation strategies or property insurance.