Cruel Summer: Brace Yourself – and Your Property – as Experts Predict a Vortex of Volatile Weather

The climate-driven weather whirlwind shows no signs of abating, making it more challenging to both predict meteorological events and insure against them.

In 2023, Canada experienced nearly CAD $7 billion in direct damage from wildfires, floods, tornadoes and other extreme weather events, and experts predict volatile weather could be just as damaging in 2024.¹

Abnormally warm temperatures and an ongoing drought caused wildfires to spark in British Columbia as early as January,² and by May, out-of-control wildfires in Alberta scorched more than 21,000 hectares in the province, leading to widespread evacuations and air quality alerts.³

Flooding continues to pose a significant threat, generating an average of CAD $2.9 billion in damages each year. After the 2023 havoc wreaked by Hurricane Fiona across the Maritimes,⁴ threats of hurricanes remain at the forefront, particularly with predictions of an unusually active season this summer.

With rising sea levels, all-time-high ocean temperatures and a shift from the calming effect of El Niño to the brash, wind-driven La Niña expected this month, flooding from storms and hurricanes in 2024 could be disastrous.

Escalating claims and losses cause carriers to retreat

With devastating storms come unprecedented claims and losses from wind, floods and fire, causing carriers to re-evaluate many regions in both U.S. and Canada. Insurers continue to raise rates where exposures exist, and underwriters are increasing their scrutiny of potential exposures, leaving businesses and homeowners to shoulder more risk.

Elevated inflation and construction costs have increased the challenges for property owners who may have significantly undervalued properties as a result of this economic environment and now face costlier premiums for reduced coverage.

It’s unlikely this climate change-induced weather will significantly shift this summer. That’s why it is essential to work with a broker who has the analytic capabilities necessary to identify and mitigate the most pressing risks. You also need a broker with the carrier relationships to not only find you the insurance coverage you need but also the foresight to get ahead of these potential challenges long before a catastrophic event occurs.

The HUB Edge

It may seem like a no-win situation, but there are things businesses and homeowners can do to manage increasing property risks. It starts with two key elements: proper exposure valuation and risk mitigation. And you must have both.

This is where working with a strong broker pays off, as you can rely on a team of insurance professionals to make recommendations based on your overall risk profile.

To improve your insurability and enhance your resiliency, property owners should:

• Assess property risk. Engage an expert to thoroughly assess your property risk and use modeling when possible to evaluate your exposures. While mitigating exposure to risks such as hurricanes, wind, wildfires and flooding may require investments in roof replacements, landscaping or hardscaping, and property regrading, other measures include installing inexpensive water sensors or automatic shutoff valves, elevating electrical equipment from dangerous areas and adding shutters. One Alberta client installed fire-resistant landscaping and engaged with a wildfire defence services company, which not only helped the business obtain sufficient property insurance coverage but helped them survive a wildfire that burned down several nearby businesses.

• Take inventory of your policies — and decide whether you need everything in them. Once you’ve determined the level of insurance needed to cover current replacement costs and business interruption expenses, look at everything your property policy actually covers and prioritize coverage. Working with a broker who has access to the right analytical tools can help you tailor your insurance program to meet your actual needs. Would you rather lower your limit and shoulder the risk for contents inside the property? Are you carrying more property insurance than needed instead of flood coverage? Evaluating all aspects of your home and business — and taking a critical eye to exposures — will help your broker find the right coverages to protect your property.

• When investing in property, prioritize risk management before signing on the dotted line. What is the best way to protect against exposures? Analyze potential risks before constructing a new building or buying a new property. Questions may include the age of the property and the roof, whether it’s in or near a catastrophe zone, the price and availability of property insurance and the claims history on the property or structures. Learning the answers to these important questions can help you mitigate issues, make changes prior to construction or avoid a potentially unwise purchase. A HUB client that was building a warehouse near a floodplain conducted a risk assessment and realized that if they spent an additional CAD $2 million in construction costs to raise the building a few feet off the ground, they would save on property insurance premiums and potentially avoid multi-million-dollar losses from floods. Likewise, adding a non-flammable barrier zone to a wildfire-exposed building can help slow down or even stop a wildfire from engulfing your property.

More in-depth analysis of how climate change is impacting insurance rates and coverage is coming soon in HUB’s Mid-Year Outlook with practical guidance on way to help you protect what matters most.

¹ Western University, “Weather extremes and adapting to an increasingly dangerous world,” April 22, 2024.
² CBC, “Canada could face more record-breaking heat this year. How can we prepare for wildfires?” January 5, 2024.
³ CBC, “Evacuation order issued as wildfire threatening Fort McMurray draws closer,” May 14, 2024.
⁴ CBC “How Fiona because a record-breaking Canadian storm,” September 24, 2023.