From 2010 to 2020, the average number of catastrophic events per year almost doubled in Canada, while the average annual reported insured losses quadrupled (from $0.5 billion per year in 2000-2009 to $2.02 billion per year in 2010 to 2018).
At the same time, investment yields on the most capital-secure securities like government bonds–where insurance companies traditionally hold funds to match with projected payout needs–have fallen from 6% in 2000 to less 2% today.
Not surprisingly, insurance companies are responding to higher claims and lower yields with higher deductibles and premiums and, increasingly, an absence of coverage.
Through significant consolidation over the past 20 years Intact is today Canada’s largest provider of property and casualty insurance. As such, the company is keenly focused on sober assessments of environmental and climate-related risks in Canada. CEO Charles Brindamour’s recent interview in the Globe and Mail articulates the case for action:
“The business community needs to think more proactively about the impact climate change has on their businesses and the opportunities that come with it. It’s not just all downside.
…We need to act. We need to mitigate the impact of human influence, but more importantly, we need to protect ourselves against the consequences of change. And those consequences are here. We are on the front line.
…Pricing is a powerful behaviour changer, yes. But I think it’s not just about raising premiums, because there’s a point at which affordability becomes a problem. The sophistication of pricing drives behavioural changes.
…I’m optimistic when I see governments putting more emphasis on adaptation. I’m optimistic when I see that a portion of the solution is green infrastructure. I think that as a nation, in the next decades, we’ll be in a very good position to face these changes. But it’s all hands on deck. And it shouldn’t be seen as a constraint for businesses. It should be a core part of one’s strategy.”
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