In 2024, Canadian businesses experienced a devastating financial blow due to severe weather events, marking the second-highest total of commercial insurance losses in the country’s history. Data from Catastrophe Indices and Quantification Inc. (CatIQ) revealed that insured commercial losses caused by these events exceeded a staggering $1.7 billion. Over a span of just 24 days in summer, wildfires, floods, and hailstorms wreaked havoc on communities across Canada. Jasper, Alberta, was particularly hard-hit, suffering almost $650 million in damages. This sum represented nearly 40% of the overall extreme weather losses reported for the year.
Rising Financial Risks for Canadian Businesses
Liam McGuinty, Vice-President of Strategy at the Insurance Bureau of Canada (IBC), highlighted the significant financial risks that Canadian businesses now face due to catastrophic weather events. He emphasized the crucial role that insurers play in providing necessary financial support and in facilitating the recovery process when businesses are affected by such disasters. McGuinty pointed out that severe weather events not only cause extensive physical damage but also disrupt business operations, compromise supply chains, and obstruct the overall flow of goods and services within the economy.
The costliest severe weather events of 2024 serve as a stark reminder of the vulnerability of Canadian businesses to natural disasters. The wildfire in Jasper alone accounted for a colossal $650 million in losses. This was closely followed by the aftermath of Hurricane Debby, which resulted in $360 million in damages. A severe hailstorm in Calgary also contributed to the extensive financial losses, adding another $280 million to the tally. Flash flooding in the Greater Toronto Area and Southern Ontario further compounded the situation with an additional $190 million in losses.
Increasing Pressure on Insurers
Over the past five years, there has been a significant increase in the cost of insured losses, which has now doubled to reach $20 billion. This trend indicates mounting pressure on insurance premiums and underscores the urgency for Canada to bolster its resilience and preparedness against severe weather risks. The tangible impact of these escalating premiums is evident as businesses are compelled to adjust their financial strategies to accommodate rising insurance costs.
McGuinty called for proactive public policy measures aimed at enhancing resilience to severe weather events. He highlighted the need for targeted investments in flood defense infrastructure to mitigate the impact of flooding. Improved land-use planning was also emphasized to avoid development in flood-prone areas, thereby reducing potential losses. Additionally, adherence to FireSmart practices in zones vulnerable to wildfires was recommended to limit the damage caused by such events. These measures, McGuinty argued, would protect businesses at risk, safeguard the broader community, and maintain a competitive and responsive insurance market.
Strengthening the Insurance Market
In 2024, Canadian businesses faced a devastating financial setback due to extreme weather events, marking the second-highest total commercial insurance losses in the nation’s history. Data from Catastrophe Indices and Quantification Inc. (CatIQ) revealed that insured commercial losses from these events surpassed a staggering $1.7 billion. Over just 24 days during the summer, Canada saw wildfires, floods, and hailstorms causing widespread destruction. Jasper, Alberta, was particularly affected, with damages nearing $650 million. This amount accounted for nearly 40% of the total extreme weather losses reported for the year. The extensive financial impact highlights the growing vulnerability of businesses to climate-related disasters, emphasizing the urgent need for better preparedness and resilience against such events in the future. Effective strategies and measures must be adopted to safeguard communities and mitigate the massive economic burdens inflicted by increasingly frequent and severe weather events.
