Canada’s home insurance sector is raising premiums as extreme weather risks intensify, even as the industry reports stronger profits. With wildfire season approaching and forecasts pointing to one of the hottest years on record, rising insurance costs are adding new pressure to an already strained housing market.
Rising Premiums Add to Affordability Concerns
Home insurance premiums in Canada increased by roughly 6 percent last year as insurers responded to growing claims from wildfires, floods and severe storms. While these increases are often framed as necessary, they are hitting homeowners at a time when affordability is already a major concern.
Insurance is no longer a minor expense. For many households, it is becoming a significant monthly cost alongside mortgages, property taxes and utilities. As climate risks continue to grow, there are concerns that rising premiums could further limit access to homeownership, particularly in regions more vulnerable to extreme weather.
Profits Climb Despite Claims Pressure
At the same time that insurance rates are going up, Canada’s property and casualty insurance industry has reported strong financial results. Net income rose sharply last year, even as companies pointed to climate-related losses as a key reason for higher premiums.
This contrast has raised questions about whether premium hikes are fully tied to risk, or if they are also contributing to higher margins. Insurers maintain that strong profits are necessary to maintain capital reserves and manage long-term uncertainty, but critics argue the increases are difficult to justify for homeowners already facing rising costs.
Get the Green Building Project Checklist
Use this handy checklist on your next project to keep track of all the ways you can make your home more energy-efficient and sustainable.
WATCH || Property insurance premium hike likely in 2026 after wildfires: expert
Housing Push Raises Climate Risks
The federal government’s plan to build millions of new homes is also drawing concern from insurers. Industry groups warn that a significant portion of planned developments could be located in areas at high risk of floods or wildfires.
Insurers are urging Ottawa to place greater emphasis on climate resilience as part of its housing strategy. Recommendations include stricter building codes, limits on construction in high-risk zones and more investment in flood protection and natural infrastructure.
Without these measures, there are concerns that new developments could increase exposure to costly disasters, further driving up insurance premiums over time.
Push for More Resilient Homes
In response to rising risks, insurers are investing in programs that encourage homeowners to strengthen their properties. This includes offering incentives for fire-resistant roofing, improved drainage systems and other upgrades designed to reduce damage during extreme weather events.
Some companies are also incorporating resilience upgrades into claim settlements, encouraging homeowners to rebuild with future risks in mind. These efforts reflect a shift towards prevention, though they often require upfront investment that not all homeowners can afford.
Few Alternatives for Homeowners
For homeowners, options remain limited. Insurance is essential, and in most cases, there is no realistic way to opt out. While Canada has so far avoided widespread coverage withdrawals seen in other countries, continued losses could change that over time.
In the meantime, homeowners are being encouraged to take practical steps to reduce risk. Clearing vegetation, reinforcing roofing and improving drainage can help limit damage and may even lead to lower premiums.
Read more on this topic in Rates Up, Coverage Down: The New Reality of Home Insurance in Canada.
Images from Depositphotos
