Over the past few weeks, devastating wildfires in California have captured headlines and hearts worldwide. The cost of these disasters is staggering, at $30 billion in total losses. While the fires may seem a world away from Newfoundland and Labrador, their ripple effects will reach us here—particularly regarding Newfoundland home insurance rates.
Here in Canada, especially in Newfoundland and Labrador, we’re no strangers to rising insurance costs. Over the past decade, we’ve seen a growing impact from climate-related risks, including more severe storms, flooding, and other weather events (West Coast hurricanes and Labrador wildfires, for example). While our region has avoided disasters on the scale of California’s wildfires, the interconnected nature of global insurance markets means these events can influence Newfoundland home insurance rates through premiums and underwriting practices.
You might be wondering:
“Why could Newfoundland home insurance rates be affected by wildfires in California?”
It’s a fair question.
The answer lies in how reinsurance works. Insurers buy their own insurance—called reinsurance—from global markets to cover significant claims events. When disasters like the wildfires occur, the cost of reinsurance rises. When reinsurance costs rise, insurers increase their rates to cover the costs, and eventually, the increase filters through to policyholders, impacting Newfoundland home insurance rates.
I don’t have a crystal ball, but here is what I see happening in the coming years around Personal Property Insurance in Newfoundland and Labrador:
- Premium Increases: While it’s too early to predict the exact impact, experts anticipate rising premiums across Canada in the coming years, even before the California wildfires. Continuing labour shortages and inflation in building materials will also contribute, affecting Newfoundland home insurance rates.
- Policy Reviews: Insurers may tighten underwriting standards or reassess risk levels, even in areas with historically lower risks like ours. In other words, insurers will get pickier about what they insure and at what premium.
- Proactive Planning: Investing in measures to protect your home—such as proper drainage, wind-resistant features, or wildfire-resistant landscaping (yes, even here)—can help reduce your risk and, in some cases, your Newfoundland home insurance rates. Insurers will likely incentivize this behaviour through rating or underwriting requirements.
- Availability: Areas prone to repeated exposure to extreme events (hurricanes, flooding, wildfires) may find it hard to purchase insurance unless the government provides a backstop. Canada is the only G7 country without an organized backstop for these types of events. The federal government promised to work on this but has failed to deliver at this point.
What is Wedgwood doing about this?
As a broker, our purpose is “Protecting People’s Lives Work”.
We want you to have the right coverage at the right cost and educate you so you can help control your own costs. To say that insurance is not an exciting purchase is an understatement! You can’t touch or feel it, and hope you never need to use it. That’s why an independent advisor like us is so important: helping you navigate the complexity of insurance policies and the daily risk you are exposed to, including Newfoundland home insurance rates.
Here are some specific examples of actions we are taking to help you mitigate these risks and control your costs.
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Educating Clients: In 2024, we wrote 48 blogs and articles about insurance so that our clients could better understand their policies. These articles were viewed (and, we hope, read!) by over 30,000 individuals.
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Insurance Reviews: We invested in AI technology to help us better analyze renewals and compare offerings from multiple insurers. In 2024, we proactively advised hundreds of clients when they could move their renewal to a different insurer, saving hundreds of thousands of dollars in premiums. Many elected to stay with their existing insurer because the coverage was more suited to their needs, even if the price was higher. (smart!)
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Educating Insurers: In 2024, one insurer tried to implement a new “data-driven” rating system. They intended to offer lower rates to individuals with good loss histories in the best areas. When we analyzed what they were doing, we found that it would have the opposite impact and significantly increase Newfoundland home insurance rates for many of our clients. We were able to get them to scrap this proposal and go back to the drawing board. Only a local broker can bring this kind of knowledge to the table. That is because we live here.
While we continue to leverage technology to provide better service, you can rest assured that our commitment to being a local business with people who live here in NL taking care of our clients will continue.
Tom Hickey
CEO, Wedgwood Insurance
About Wedgwood Insurance
Wedgwood Insurance has offices in St. John’s & Corner Brook and is Newfoundland & Labrador’s largest independent insurance broker. We provide straightforward home, auto & business insurance advice.
With over 280 Google My Business reviews, experience the Wedgwood difference with expert advice from our dedicated team. We ensure that every client has the coverage that best suits their needs through upfront complimentary consultations and midterm reviews.
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