Insurers and claimants under strain as weather-related disasters mount in B.C.

Arctic outflow winds that swept across Western Canada in mid-Januaryled to long wait times for those who neededpipe repairsand set anew record for energy usage in B.C., as people cranked up the heat.

It also led tomore than $180 million in insureddamages in B.C.,Alberta and Saskatchewan, according to estimates from the InsuranceBureau of Canada(IBC).

B.C. incurreda lion's share of that amount,rackingup about $140millionin insured damages, according to Rob de Pruis, the bureau's national director of consumer and industry relations.

He said70 per cent of insuranceclaims related to the cold snap were for personal property and damage caused by frozen and burst water pipes.

LISTEN| How to prepare for extreme weather:

The Early Edition7:39January's cold snap amounted to $180M in insured damages for Western Canada

Rob de Pruis, the national director for Insurance Bureau of Canada, is advising people to be proactive in preventing property damage in anticipation of future extreme weather events.

"An extreme cold snap ... causing this much damage, that's pretty unusual," de Pruistold CBC's The Early Edition.

Temperatures plungedbelow 45 C in some parts of B.C., breaking a number of weatherrecordsbetween Jan.11 and 15.

It isthe latest in aseries ofsevere weather events over the last few years, which hasunderscoredconcerns about the growing economic cost of weather-related disasters and the rising cost of insurance coverage for insurers and taxpayers,de Pruissaid.

Between 2001 and 2010, Canadian insurers averaged $675 million a year in losses related to severe weather, but now exceed $2 billion annually, according to IBC.

WATCH|The Nationalreports on the high cost of severe weather events:

Extreme weather makes Canadian homes harder, more expensive to insure

8 months ago

Duration 2:05

Climate change has made extreme weather more common in Canada. And the accompanying disasters such as floods and fires have made home insurance more expensive if you can get it at all.

In 2023, insured damages from severe weather exceeded $3.1 billion nationally, making it the fourth most expensive year on record.

Among these events, the wildfires in B.C.'sShuswap and Okanagan regions stood out as the most expensive, accounting for a combined total of $720 million.

"We're not only seeing more of these events, but they're more severe and we are seeing homes and businesses being impacted significantly," de Pruis said.

Strain for homeowners, insurers

Fire damage, including damage from wildfires,is covered under most home insurance policies, according to IBC.

Likewise, if a vehicle has been damaged by fire, flood or weather, customers are covered by optional insurance coverages comprehensive or specified perilsaccording to theInsurance Corporation of British Columbia (ICBC).

If the insurance provider doesn't offer coverage for extreme weather-related events, British Columbianscanopt in tothe federal Disaster Financial Assistance Arrangements (DFAA) programif the provincial government declares the event eligible.

The program has been available forcommunities in the B.C.'s Fraser Valley that were affected by devastating floods and landslides in November 2021.

Andrew Janzen, chair of the Insurance Brokers Association of B.C.,says the federal government is coveringdamages to homes that are not insurable due to their location in a flood plain.

The federal government estimates it will need to pay almost $3.4 billion for its share of the disaster recovery bills.

"Only 40 per cent of [thefederal governmentcompensation] amount has been paid," Janzentold CBC News.

A Canadian Pressanalysis of data on the DFAA programshows it takes on average seven years for all disaster aid to flow and as long as 10 to 15 years in several cases.

As climate disasters become more frequent, the insurance market is coming under increasing strain, saysJanzen.

"Extreme weather is definitely creating challenges from an insurance standpoint ... this does translate to less options and increased costs for consumers," he told CBC News.

Home insurance and mortgage insurance have climbed an average of 33 per cent over the five-year period from April 1, 2018, to the same month in 2023,according to Statistics Canada.

Janzenaddsinsurance companies are increasingly limiting or hikingrates for the kinds of damages they'll cover.

"We have observed insurers withdrawing capacity from areas they see as high-risk."

This has been the case for overland flooding insurance, whichis usually available forhomeowners outside of flood-proneareas but not to those whose property falls within an area that isconsidered high-risk.

Last year, Ottawa committed$31.7 million in funding for Public Safety Canada the federal ministry of public safety and the Canada Mortgage and Housing Corporation to set up Canada's first National Flood Insurance Program.

It aims tohelp protect homes at the highest risk of flooding,but the program hasn't made much progress, according to Brad Vis,the Conservative MP for the riding of MissionMatsquiFraser Canyon, who said many people in his riding are anxiously watching the weather for future disasters.

In an email to CBC News, Tim Warmington, a spokesperson for Public Safety Canadasaid the government will be reconvening a task force to engage with the insurance industry, provinces and territories on the development of a flood insurance program "with the objective of outlining market conditions required to successfully implement the program in Canada."

Preparation to mitigate risks

In its February budget, the B.C. governmentallocated $405 millionover the next four yearsto managethe impacts of climate change and related emergencies.

That includes$18 million for response and recovery programs and $234 million in funding to increase flood and drought resiliency.

Amine Ouazad, an expert on climate risk in mortgage markets, saidthe province must spend more on disaster risk preparedness and disaster recovery.

"This is a good start but only a moderate amount given the evidence about the cost of previous natural disasters in B.C.," said Ouazad, an associate professor in finance and economicsat Rutgers Business School in New Jersey.

It's prudent for homeownersto"adapt your houses" in anticipation of floods and wildfires,Ouazardsaid.

"For wildfires, cut trees around your house, allocate defensible space around the house to avoid the accumulation of flying embers," he said.

"For floods, depending on your area, install a sump pump, a backwater valve, and waterproof your basement."

Meanwhile, with the global El Nio weather system,forecastssuggest 2024 could be even hotter.

"There doesn't really seem to be any downtime for severe weather," said de Pruis.