Why insurers want the Commonwealth to step up on insurance gaps

The insurance protection gap caused by worsening extreme weather is so dire, the top insurer bodies of the Commonwealth countries have banded together to put this issue on the agenda of their respective leaders. 

The Insurance Bureau of Canada (IBC), along with the insurer associations of Britain, Australia and New Zealand agree that, as extreme weather intensifies, the insurance protection gap will respectively widen. 

That means less Canadians will be insured, yet their property risks will get worse. 

Though not a Commonwealth country, Hurricane Helene is estimated to have cause 95% or more in uninsured damage in the U.S as an example.

The hurricane, which made landfall in the southeastern U.S., was the strongest hurricane on record to strike certain regions of Florida. And that state in particular has seen countless insurers withdraw from the market due to its intensifying extreme weather exposure over the last few years — a prime example of the insurance protection gap.  

Closer to home, matters are no better.  

“In the span of just five weeks this past summer, Canada saw five natural catastrophes: three major floods, a devastating wildfire, and a destructive hailstorm resulting in $7 billion of insured losses,” says Celyeste Power, IBC’s president and CEO. 

“This isn’t an anomaly. It isn’t bad luck. It’s part of an escalating trend of severe weather events that is making Canada a riskier place to live, work and insure.” 

Power and other insurer association leaders of the Commonwealth nations recently met at the Global Insurance Protection Gap Forum. On top of mounting protection gap risks, they agreed that:  

Flood risk is often concentrated in particular areas, but the widespread nature of flood risk is going to increase. 

Governments and insurers have a critical opportunity to collaborate across global markets to build a shared view of current and future hazard risk. 

We must stop locking further risk into our economies by building homes in the wrong places. 

Applying excessive taxes and levies to insurance premiums can directly affect the affordability of insurance coverage. 

Feature image by iStock.com/DNY59