Insurance Protection Gap Grows as Premiums Climb and Weather Risks Rise

An article published by The Conversation, authored by Anne E. Kleffner, Derek Cook, and Mary Kelly, examines the growing insurance protection gap in Canada and its disproportionate impact on marginalized populations. Drawing from recent data and trends, the authors report that weather-related financial losses in Canada surpassed $7 billion in 2024, a figure driven by both climate change and increased development in high-risk areas.

The analysis highlights how lower-income Canadians and marginalized groups are more exposed to extreme weather events and less able to recover. These populations are often underinsured or uninsured, and even those with coverage may be unable to afford deductibles or make necessary repairs—leading to unsafe living conditions and prolonged vulnerability to future disasters.

From the perspective of insurance claims adjusters, the findings point to escalating challenges. Claims are likely to become more complex and difficult to resolve in cases involving underinsurance, low policyholder literacy, and inadequate property maintenance. The article also notes that insurance premiums rose 21 percent on average between 2019 and 2023, but by 40 percent for lower-income households—further exacerbating the protection gap and increasing claims pressure in socioeconomically fragile communities.

In addition to identifying the drivers of this disparity, the article outlines potential mitigation strategies relevant to the claims community. These include community-level land-use planning, targeted retrofit subsidies, the expansion of microinsurance products, and improvements in hazard communication and digital access. Each solution represents an opportunity for insurers and adjusters to play a role in closing the gap and improving outcomes post-disaster.

As severe weather becomes more frequent, the authors emphasize the need for coordinated policy, consumer support, and insurance innovation to prevent further deepening of economic and protection inequities. For claims professionals, the article offers both a timely warning and a framework for action.