Canadian insurers are beginning to revise their approach to flood protection and climate change
Property insurance is about to undergo serious changes in Alberta, Canada. Last year, severe weather lead to widespread flooding throughout much of the province, causing an estimated $1.7 billion in insured losses. Severe weather throughout the whole of Canada caused more than $3 billion in financial damage to the country’s insurance industry. These losses are encouraging insurers to revise their approach to flood protection and the coverage they offer for severe weather disasters.
Uncertain nature of climate change makes it hard for insurers to provide adequate protection
While insurers are trying to change their policies to better suit changing weather phenomenon, they are finding it difficult to address issues relating to climate change. Climatic phenomena are leading to powerful storms becoming more frequent throughout Canada. These storms are costly and unpredictable in nature, making it difficult for the insurance industry to adequately gauge and mitigate certain risks. Because the impact of climate change is not fully understood, insurers are having trouble creating policies that address the issues that this phenomenon represents.
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Rates for homeowners protection in Alberta may rise by as much as 20%
While the insurance industry tries to tackle the climate change problem, homeowners insurance rates are expected to grow due to the increased flooding risk. Higher rates are needed for insurers to recover from the losses they experienced last year. This could mean that many homeowners in Alberta will see their home protection become significantly more expensive than it had been in the past. Rates for homeowners protection are expected to grow by an average of 20% throughout Alberta. Those in areas particularly prone to floods could see their rates rise by a more significant margin.
Some insurers have managed to avoid significant insured losses
Not all insurance companies suffered due to severe weather last year. Those that have managed to avoid significantly financial damage are not likely to raise rates on the property protection they offer. These insurance companies may receive an influx of new customers in the coming months as people begin to shop around for affordable coverage that can protect their homes from natural disasters.