Average annual insured losses from catastrophic wildfires in Canada have increased to C$706 mn ($509 mn) over the past decade, compared to an average of C$84 mn in the previous period, according to the Insurance Bureau of Canada (IBC).
The IBC reported that wildfires significantly contribute to rising severe weather-related losses, particularly affecting homeowners.
Canadian insurers recorded a historic C$8.5 bn in severe weather-related losses in 2024, highlighting the growing financial impact of such events.
The country plans to expand its housing supply by 35%, or 5.8 mn new residences, within five years. However, hundreds of thousands of these new homes could be built in areas highly vulnerable to wildfire and flood risks.
The IBC criticized the federal government for allocating only C$4.1 bn over the past decade to risk reduction measures, which it views as insufficient.
The IBC recommended restricting development in high-risk wildfire zones or, at minimum, enforcing requirements for disaster-resilient infrastructure and materials.
It urged immediate updates to provincial building codes to mandate fire-resistant construction in these areas, instead of waiting for delayed changes to the National Model Building Code, which will not address this issue until 2030 due to a focus on energy efficiency.
Additionally, the IBC called for government investment in retrofitting existing buildings to improve wildfire resilience, potentially through rebate programs for related upgrades.
The bureau outlined further risk reduction measures, including controlled burns, fire-smart forestry and agriculture practices such as green firebreaks and targeted grazing, enhanced forest management through dead tree removal and vegetation replacement, and homeowner-created ember-resistant buffer zones.
Alberta has suffered the majority of wildfire losses. In 2024, a wildfire complex in Jasper National Park destroyed over one-third of residences and businesses in the commercial center, costing insurers an estimated C$1.23 bn.
A year earlier, British Columbia experienced more than C$700 mn in wildfire losses, setting a provincial record.
Severe weather continues to drive up other insurance claim costs, even as inflation slows. Residential construction costs in Canada have surged 67% over the past five years, far exceeding the 18% general inflation rate.
Over that period, lumber and wood product prices increased by 35%, fabricated metal products and construction materials rose 40%, and cement, glass, and other non-metallic mineral products climbed 38%.
These rising material costs have particularly affected urban areas impacted by major weather events.
A severe storm in the Calgary area, featuring hail, strong winds, heavy rain, and localized flooding, caused C$3 bn in losses, making it the most expensive event in Canada for 2024.
Residential construction costs in Calgary have doubled since 2017, according to the IBC.
The latest industry loss estimate for the August 2024 hailstorm in Calgary stands at C$3.25 bn, according to CatIQ. This fourth estimate, released six months after the event, reflects insured losses for residential and commercial properties, motor vehicles, and additional loss adjustment expenses. The previous estimate, issued 90 days after the storm, was C$2.95 bn.
This trend continued into mid-July 2024, as severe storms with flash flooding further compounded losses.
