Advocates call for more transparency in home insurance rates amid rise in extreme weather

As home insurance costs rise sharply amid increasing extreme weather events, one advocacy group is calling for more transparency from Ontario's financial services regulator into the increasing rates. 

Investors for Paris Compliance says the rising frequency of floods and wildfires due to climate change is pushing rates toward unaffordable levels, and the province's home insurance sector needs to be investigated.

"There's been open-ended rate hikes, while at the same time there's been shrinking coverage due to the escalating costs of climate change," said Kiera Taylor, senior policy analyst at Investors for Paris Compliance. 

"There's a lot of ripple effects, which really contribute to an affordability crisis and just more general instability in our financial system," she said.

Data shows, in 2024, insured losses from severe weather across the country exceeded $9 billion, said Brett Weltman, spokesperson for the Insurance Bureau of Canada (IBC). That figure is nearly three times higher than insured losses recorded in 2023, and more than 12 times the annual average of losses between 2001 and 2010, he said. 

"Year over year, severe weather losses are rising at an alarming, exponential rate," he said in an email to CBC Toronto. 

Investors for Paris Compliance has made a submission to the Financial Services Regulatory Authority of Ontario (FSRA) — an agency of the government of Ontario that protects the rights of consumers — asking for more transparency, including considering public disclosure of rate changes as is done with auto insurance. 

The advocacy group is also asking the FSRA to make climate risk data public, such as flood maps, which insurers use to price risk. Currently, consumers only have access to public flood risk mapping which is often out of date, Taylor said.

The FSRA said in a statement its authority under Ontario's Insurance Act includes licensing insurance agents, setting conduct standards and approving auto insurance rates — but not home insurance rates, as home insurance is not mandatory in Ontario.

But Taylor said the FSRA can require insurers to publicly disclose rate changes, even if it doesn't have the authority to regulate or cap them. 

Still, the FSRA says it has significantly increased its oversight of the property and casualty insurance sector. This sector includes insurance protecting people and businesses from financial losses due to property damage, theft, natural disasters and legal claims, according to the agency.

The FSRA published a report in June 2024 reviewing home insurance claims practices across the top 20 insurers in Ontario. The agency said it identified "several areas of concern" that were addressed directly with insurers. 

These included irregular or insufficient communication with customers, and some companies not adequately tracking the reasons why claims are denied.

Homeowners need better access to risk information, Weltman said. The IBC is working with the FSRA "to determine mechanisms to share risk information," he said.