2023, the United Nations University, a Japan-based institution, published a study referring to the concept of a tipping point. It described six disasters threatening our societies. The sixth is an uninsurable future—the growing inability to insure people and property against increasingly frequent and intense climate risks.
According to the study, some parts of the world may have already reached this point, potentially triggering a cascade of unpredictable socio-economic consequences, leaving citizens without a financial safety net.
Canada hasn’t reached that point yet, but it has experienced extreme climate events in recent years that have come at a high cost to citizens, insurers and governments, said France LeBlanc, Strategic Advisor for External Affairs at Beneva, during the annual symposium hosted by Université Laval’s Financial Services Laboratory on October 30, focused on climate change.
The 2024 hailstorm in Calgary cost $3.3 billion in insured losses, while damage from Hurricane Debby in Quebec amounted to $2.8 billion.
In Calgary’s case, a major contributing factor was urbanization, as authorities had allowed development in a high-risk area.
“Almost 50 per cent of the costs incurred in 2024 would not have been incurred in the past, because the city has expanded into the hail corridor. At some point, we need to help ourselves and stop putting ourselves in harm’s way when the risks are already known,” said LeBlanc.
Major natural disasters on the rise
Massive wildfires, like those seen in several Canadian provinces in the summer of 2025, and exceptional spring and summer flooding in Quebec affecting thousands of residents—major natural disasters are intensifying coast to coast.
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According to the Canadian Climate Institute, the number of extreme weather events has increased significantly over the past decades, and the trend is expected to continue. “The annual number of disasters in the [Canadian Disaster Database (CDD)] has steadily increased since the 1970s, fluctuating between a low of eight in the early 1970s to a high of 27 per year in 2016,” the Institute wrote in a 2020 report on the cost of natural disasters. This increase, the authors add, “however, is small compared to how the costs of disasters have ballooned—rising from an average of $8.3 million per event in the 1970s to an average $112 million in the 2010s”.
Me Jannick Desforges
“We need to reflect on consumer protection—it’s about protecting their assets,” said Jannick Desforges, Director of Legal Affairs and Regulation at the Chambre de l’assurance, during the panel, chaired by Mathieu Boudreault, an actuarial science professor in the Department of Mathematics at the Université du Québec à Montréal (UQAM).
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In her presentation, Desforges raised concerns about consumer confusion around insurance contract language, climate risks, and available coverage options. She also emphasized the important advisory role of both agents and property and casualty insurance brokers. At present, she said, many policyholders are discovering too late that they weren’t covered for certain disasters they believed were included.
“If the next climate event is an earthquake,” she suggested, “consumers are in for an unpleasant surprise, since 38 per cent of Quebecers mistakenly believe they are covered, when in fact only 7 per cent have purchased the rider, according to the Insurance Bureau of Canada (IBC).”
“When it comes to climate events, the better consumers understand the risks and the coverage available, the more empowered they are to make informed decisions to protect their assets,” she added.
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High-risk zones
Currently in Quebec, 50 per cent of home insurance claims involve water damage—half of which result from weather events. According to the IBC, 20 per cent of Quebecers are exposed to flooding, but half of those properties may not be insurable, while flood-related basement losses across Canada have tripled over the past 10 years.
Victims don’t always learn from previous disasters. For example, most of the claimants in Calgary chose to rebuild exactly as before, as they couldn’t necessarily afford more resilient materials.
“Unfortunately, the same story may repeat itself during the next hailstorm,” warned Desforges.
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Another major challenge for insurers is the steep rise in the cost of renovations and building reconstruction. Since the pandemic, these costs have nearly doubled, according to France LeBlanc from Beneva.
The “invisible” consequences
In the case of basement flooding, the damage extends well beyond property, said Michaël Bourdeau-Brien, a professor of finance and insurance at Université Laval.
“Insurance-related disaster impact analysis tends to focus on material losses, but it overlooks less visible consequences: effects on physical and mental health, the sense of losing one’s home, and the loss of personal satisfaction,” he explained.
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These invisible impacts, he believes, are at least as significant as the material losses. To address them, he suggests new types of coverage within insurance contracts, such as a “well-being” rider that would kick in following a natural disaster.
“Responsibility must be shared”
In terms of prevention and resilience around major natural disasters, “the burden can’t fall on a single actor,” said Desforges. “Responsibility must be shared among all parties—consumers, insurers and governments.”
She believes government should play its part by offering “resilience renovation” grants, investing in adaptive public infrastructure like sponge streets and parks, prohibiting reconstruction in very high-risk zones, and updating the Building Code to reflect new realities.
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Everyone has a role to play, she added—and waiting too long could be costly. “Just look at what’s happening in the United States,” she warned, pointing to insurers withdrawing from certain regions due to wildfires and flooding, reducing policy limits, refusing coverage or renewals, and even exiting entire markets.
Adaptation is key
So, what can be done to avoid reaching that tipping point?
“The key word is adaptation,” responded France LeBlanc.
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The insurance industry has observed that much of the current investment is focused on fighting climate change—but now, she says, it’s time to invest in adaptation.
According to her, insurers are already moving in that direction and have taken significant steps:
Improving risk assessments to refine mapping and offer protection at certain price points while excluding clients who can no longer be insured.
Offering differentiated deductibles for water damage, which encourages insureds to take preventive action—particularly if faced with a $5,000 deductible instead of $2,500 on a future claim.
Providing discounts for installing preventive systems.
Creating new coverage options that promote resilient reconstruction using water-resistant materials. This, she noted, is a new and growing trend in the industry. “There’s work to be done on evolving our insurance contracts,” LeBlanc said.
Integrating circular economy principles. These allow significant savings by avoiding landfill waste through drying techniques and offering to repair lightly damaged items instead of replacing them.
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