Climate disasters lead to billions in insurance losses. Could they trigger a financial crisis? [Video]

Vicious hurricanes in the southeastern United States. Massive flooding in Ontario and Quebec. Wildfires in Los Angeles.

What these events have in common — besides the fact that climate change has made them more extreme — is that they are pummelling insurance companies.

Preliminary estimates suggest the fires that devastated L.A. — already the costliest wildfires in California history — could put insurers on the hook for between $28 billion and $45 billion US ($40 billion to $65 billion Cdn). 

Meanwhile, the Insurance Bureau of Canada recently reported that as a result of events like the Jasper wildfire and flooding in eastern Canada, 2024 set a record for insurance payouts in Canada: $8.55 billion. 

This will inevitably lead insurers to raise rates as they try to manage the broader risk. But as premiums rise and some regions become uninsurable, it could have a cascading effect that could lead to a financial crisis, says Gary Yohe, Huffington Foundation professor emeritus of …