Economics grad connects extreme weather to insurance rates
April 24, 2024
As Canada heads into another wildfire season, UVic economics masters student, Matt Marcoux, is looking at the relationship between extreme weather events, climate change and the financial impact on people and the insurance industry in B.C.
“The costliest insurance losses ever recorded in BC from a single occurrence are due to extreme weather events,” says Marcoux. “Namely, the 2021 Atmospheric River (payouts of $675M) and the Okanagan and Shuswap area wildfires (payouts of $720M).”
Extreme weather events will likely become more frequent as temperatures continue to rise around the world. Marcoux is mostly interested in estimating the impact of climate change on people’s housing insurance. He is measuring the severity and frequency of weather events in BC and the impacts on the insurance industry.
“I am using evidence of insurance claims in BC from 2001-2021, as a data set,” says Marcoux.
He is able to access proprietary data from insurance companies and use a second data set from the National Oceanic and Atmospheric Administration centre. Using modelling from BC Assessment, Marcoux can link weather data to all the properties in BC that filed weather related insurance claims.
“We have strong evidence to show the frequency of insurance claims is on the rise, with a significant connection to rising temperatures and extreme weather,” says Marcoux.
As Marcoux continues his data collection and analysis, he is happy to share some free advice for insurance shoppers. Overall, in BC, people can expect to pay more for insurance. Where you live in BC will also affect the cost of your insurance and if you live in a wildfire zone, you may be unprotected.
“Purchase earthquake insurance if available; even though this coverage can be expensive, I would argue that it is indispensable to have on lower Vancouver Island and the lower mainland,” says Marcoux. “Always insure yourself against losses that you cannot recover from.”
Marcoux adds that insurance markets are highly competitive so it is important to shop around for the best rate. He is careful to add that his advice is not as a licensed insurance broker. Please always consult with a licensed insurance broker before you make any changes to your policy.
Marcoux plans to publish his thesis over the next eight to ten months. His supervisor is climate economist, Felix Pretis in the Department of Economics.
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