Every year, extreme weather events wreak havoc across C
anada, disrupting the lives of tens of thousands. Financial losses from these events have surged, surpassing $7 billion in
2024, due in part to climate change, asset accumulation and more people living in high-risk areas.
Evidence from Canada, the United States and Europe shows that w
eather-related disasters aren’t experienced equally. The people hardest hit are often those with the fewest resources to cope.
Lower-income and marginalized populations face greater exposure, hav
e fewer resources to prepare or recover and incur a higher proportion of losses not covered by insurance.
Even if they are insured, many people have difficulty covering the deductible because they lack emergency s
avings. This means damage is not repaired, people live in unsafe or unhealthy conditions and the financial and personal risk of future events is increased.
Insurance helps households recover and can prevent them from falling — or falling deeper — into poverty after a disaster. But across Canada, insurance is bec
oming costlier and, in some places, harder to get. Between 2019 and 2023, average home insurance premiums rose by 21%
overall. For lower-income Canadians, that increase was 40%.
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Widening Protection Gap
Canada’s growing insurance protection gap is a serious concern, and it’s widening at a time when weather-rela
ed disasters are becoming more frequent and more severe.
When households are uninsured, losses can strain household bu
dgets and leave people unable to meet their basic needs. As extreme weather escalates, so does the likelihood that more families will find themselves unable to recover.
Affordability is the primary driver of the protection gap, but it is not the only one. Many Canadians do not unders
tand the benefits of insurance, or underestimate the probability and cost of suffering a loss.
Accessibility to insurance is also a challenge, especially in remote areas where it is usually purchased in person. While the growth of digital purchasing channels
helps, it is not a solution for those without reliable internet or sufficient digital skills.
Finally, the market itself does not always meet the needs of low-income or otherwise marginalized groups. There
is a lack of insurance products designed for these groups, leaving many without the protection they need.
Strengthening Community Resilience
Better insurance options, stronger investments in mitigation and better support for consumers can help reduce inequities and strengthen resilience.
Community-level mitigation is a good starting point. Land-use planning that steers development away from high-risk areas can prevent future losses. Programs like FireSmart, which reduces wildfire losses, and infrastructure designed for a changing climate also help limit damage as severe weather becomes more frequent.
National assessments show that making housing more resilient reduces exposure for lower-income and marginalized households that are more likely to live in older or poorly maintained homes, putting them at greater risk.
While major retrofits can be costly, even small upgrades such as improving drainage, installing backwater valves or fire-resistant materials can help prevent damage. Many municipalities provide targeted subsidies and incentive programs that support these upgrades, particularly for households facing greater financial constraints.