What's Happening?
Extreme weather events in Canada are causing significant financial losses, exceeding $7 billion in 2024, largely due to climate change and increased asset accumulation in high-risk areas. These events disproportionately affect lower-income and marginalized
populations who have fewer resources to prepare or recover. The insurance protection gap is widening, with insurance becoming more expensive and less accessible, particularly for those in remote areas. Between 2019 and 2023, home insurance premiums rose by 21% overall, with a 40% increase for lower-income Canadians. This gap leaves many without adequate protection, increasing their vulnerability to future disasters.
Why It's Important?
The widening insurance protection gap poses a significant risk to societal equity and resilience. As extreme weather events become more frequent, the inability of marginalized communities to afford insurance exacerbates their vulnerability, potentially pushing them further into poverty. This situation underscores the need for better insurance options and community-level mitigation strategies to reduce inequities. Addressing this gap is crucial for ensuring that all communities can recover from disasters and maintain their basic needs, thereby strengthening overall societal resilience against climate change impacts.
What's Next?
Efforts to close the insurance protection gap could include the development of microinsurance products and embedded tenant insurance to provide affordable coverage. Digital tools and public support for income-tested premium subsidies could also help make insurance more accessible. Community-based catastrophe insurance, where local governments arrange coverage, offers another potential solution. These measures, combined with increased awareness and community support, could help mitigate the unequal impacts of climate-related disasters and protect those most at risk.
