Driving up insurance

Saudi Arabia is slashing oil supply. It could mean higher gas prices for US drivers

Oil prices to swing up?

Photo: The Canadian Press

FILE - The logo of the Organization of the Petroleoum Exporting Countries (OPEC) is seen outside of OPEC's headquarters in Vienna, Austria, on March 3, 2022. Leading oil-producing countries led by Saudi Arabia and Russia are wrestling with whether to make another cut in crude supplies to the global economy as the OPEC+ alliance struggles to prop up sagging oil prices that have been a boon to U.S. drivers and helped ease inflation worldwide. The group is meeting Sunday, June 4, 2023 at OPEC headquarters in Vienna after sending mixed signals about possible moves. (AP Photo/Lisa Leutner, File)

Saudi Arabia will reduce how much oil it sends to the global economy, taking a unilateral step to prop up the sagging price of crude after two previous cuts to supply by major producing countries in the OPEC+ alliance failed to push oil higher.

The Saudi cut of 1 million barrels per day, to start in July, comes as the other OPEC+ producers agreed in a meeting in Vienna to extend earlier production cuts through next year.

Calling the reduction a “lollipop,” Saudi Energy Minister Abdulaziz bin Salman said at a news conference that “we wanted to ice the cake.” He said the cut could be extended and that the group “will do whatever is necessary to bring stability to this market.”

The new cut would likely push up oil prices in the short term, but the impact after that would depend on whether Saudi Arabia decides to extend it, said Jorge Leon, senior vice president of oil markets research at Rystad Energy.

The move provides “a price floor because the Saudis can play with the voluntary cut as much as they like,” he said.

The slump in oil prices has helped U.S. drivers fill their tanks more cheaply and gave consumers worldwide some relief from inflation.

“Gas is not going to become cheaper," Leon said. ”If anything, it will become marginally more expensive.”

That the Saudis felt another cut was necessary underlines the uncertain outlook for demand for fuel in the months ahead. There are concerns about economic weakness in the U.S. and Europe, while China’s rebound from COVID-19 restrictions has been less robust than many had hoped.

Saudi Arabia, the dominant producer in the OPEC oil cartel, was one of several members that agreed on a surprise cut of 1.6 million barrels per day in April. The kingdom’s share was 500,000. That followed OPEC+ announcing in October that it would slash 2 million barrels per day, angering U.S. President Joe Biden by threatening higher gasoline prices a month before the midterm elections.

All told, OPEC+ has now dropped production on paper by 4.6 million barrels a day. But some countries can't produce their quotas, so the actual reduction is around 3.5 million barrels per day, or over 3% of global supply.

The previous cuts gave little lasting boost to oil prices. International benchmark Brent crude climbed as high as $87 per barrel but has given up its post-cut gains and been loitering below $75 per barrel in recent days. U.S. crude has recently dipped below $70.

That has helped U.S. drivers kicking off the summer travel season, with prices at the pump averaging $3.55, down $1.02 from a year ago, according to auto club AAA. Falling energy prices also helped inflation in the 20 European countries that use the euro drop to the lowest level since before Russia invaded Ukraine.

The Saudis need sustained high oil revenue to fund ambitious development projects aimed at diversifying the country’s economy.

The International Monetary Fund estimates the kingdom needs $80.90 per barrel to meet its envisioned spending commitments, which include a planned $500 billion futuristic desert city project called Neom.

The U.S. recently replenished its Strategic Petroleum Reserve — after Biden announced the largest release from the national reserve in American history last year — in an indicator that U.S. officials may be less worried about OPEC cuts than in months past.

While oil producers like Saudi Arabia need revenue to fund their state budgets, they also have to take into account the impact of higher prices on oil-consuming countries.

Oil prices that go too high can fuel inflation, sapping consumer purchasing power and pushing central banks like the U.S. Federal Reserve toward further interest rate hikes that can slow economic growth.

The Saudi production cut and any increase to oil prices could add to the profits that are helping Russia pay for its war against Ukraine. Russia has found new oil customers in India, China and Turkey amid Western sanctions designed to limit Moscow’s crucial energy income.

However, higher crude prices risk complicating trade by the world’s No. 3 oil producer if they exceed the $60-per-barrel price cap imposed by the Group of Seven major democracies.

Russia has found ways to evade the price cap through “dark fleet” tankers, which tamper with location data or transfer oil from ship to ship to disguise its origin. But those efforts add costs.

Under the OPEC+ deal, Russian Deputy Prime Minister Alexander Novak said Moscow will extend its voluntary cut of 500,000 barrels a day through next year, according to Russian state news agency Tass.

But Russia might not be following through on its promises. Moscow’s total exports of oil and refined products such as diesel fuel rose in April to a post-invasion high of 8.3 million barrels per day, the International Energy Agency said in its April oil market report.

BoC may have to raise rates again this summer given recent momentum, economists say

Another interest rate hike?

Photo: The Canadian Press

Momentum in the Canadian economy is spurring speculation that a rate hike is on the way, but economists don't expect the Bank of Canada to pull the trigger this week.

The central bank will be making its next interest rate decision on Wednesday, just one week after new data showed the Canadian economy is still growing — despite interest rates sitting at the highest levels since 2007.

Statistics Canada recently reported real gross domestic product grew at an annualized rate of 3.1 per cent during the first quarter. The figure beat out what forecasters had pencilled in for the first three months of the year.

Meanwhile, the federal agency's preliminary estimate for April suggests the economy expanded once again.

Even the housing market, which was the first to be hit by rising interest rates, appears to have levelled off as prices rise again.

Economists say the momentum is putting the Bank of Canada in a tough spot: the central bank has argued that a slowdown is necessary to bring inflation back to the two per cent target, but that slowdown hasn't yet come to fruition.

Now, all eyes will be on how the central bank addresses the recent data and underlying strength in the economy.

"The question for us is: how much does the Bank of Canada acknowledge this hot data that's been coming out, which goes against the notion that the economy is slowing," said James Orlando, TD's director of economics.

Orlando said the data suggests a resurgence in growth, rather than a slowdown, especially given consumer spending rebounded during the first quarter.

Canada's strong economic results are at odds with the expectation last year that interest rates would push the economy into a recession. Instead, economists are now speculating the Bank of Canada will raise interest rates in July.

"Hiking next week probably doesn't make much sense," Orlando said, given the central bank typically communicates its moves head of time.

Desjardins chief economist Jimmy Jean agrees that a rate hike is more likely to come in the summer, which would give the central bank some time to assess inflation pressures.

"It's going to be a very close call, (but) ultimately, I think they'll want to maybe accumulate a little bit more data," Jean said.

Earlier this year, the Bank of Canada announced a pause on its rate-hiking cycle that began in March 2022. After raising rates rapidly from near zero to 4.5 per cent, governor Tiff Macklem said the pause would provide the central bank some time to assess the effects of rate hikes on the economy, given a lag exists between the two.

But members of the governing council were already discussing raising interest rates at their last decision meeting in April. According to the summary of deliberations, "the resilience of economic growth" was one of the rationales for a rate hike.

Ultimately, the governing council opted to remain on pause, but Macklem said that the central bank is still leaning toward raising interest rates further, rather than cutting rates this year.

Chief among the central bank's concerns is the Canadian labour market, which has remained remarkably strong. In April, the unemployment rate held steady at five per cent for a fifth consecutive month. That's just above the all-time low of 4.9 per cent reached last summer.

Wages in April were also up 5.2 per cent compared to a year ago, outpacing price growth. The Bank of Canada has argued that the unemployment rate, along with the current pace of wage growth, are not sustainable and will making fighting inflation harder.

In April, Canada's inflation rate ticked up slightly to 4.4 per cent after steadily declining since last summer. Inflation is still expected to continue trending downward, but Jean said there's cause for concern.

He said stickiness in core measures of inflation — which strip out volatility — suggest Canada is not out of the woods just yet.

"When you really take the bigger picture of what's happening in core inflation, I don't think it's something that the Bank of Canada is sleeping comfortably just yet," Jean said.

However, Orlando said there is good news to consider: forecasts of an imminent recession have turned out to be pessimistic. And yet, inflation has still eased significantly.

Orlando said if inflation falls to three per cent this summer without job losses, that would be cause for celebration.

"Inflation has come down to much more comfortable levels. And if we can maintain this economy right now, and get inflation back down to three per cent, that's so much more of a positive outcome than anyone would have thought we would have been in," Orlando said.

Twitter executive responsible for content safety resigns after Elon Musk criticism

Twitter executive resigns

Photo: The Canadian Press

FILE - Twitter logos hang outside the company's offices in San Francisco, Monday, Dec. 19, 2022. Ella Irwin, a top Twitter executive responsible for safety and content moderation, has left the company. Her departure came after owner Elon Musk publicly complained about the platform’s handling of posts about transgender topics. (AP Photo/Jeff Chiu, File)

A top Twitter executive responsible for safety and content moderation has left the company, her departure coming soon after owner Elon Musk publicly complained about the platform’s handling of posts about transgender topics.

The departure pointed to a fresh wave of turmoil among key officials at Twitter since Musk took over last year.

Ella Irwin, Twitter's head of trust and safety, confirmed her resignation in a pair of tweets late Friday. She did not say in the message why she was leaving, but her departure came shortly after Musk criticized Twitter’s handling of tweets about a conservative media company's documentary that questions transgender medical treatment for children and teens.

Musk was responding to complaints by Jeremy Boreing, co-CEO of the media company, the Daily Wire. Boreing said in tweets and retweets of conservative commentators Thursday that Twitter was suppressing the movie by flagging posts about it as hate speech and keeping the movie off lists of trending topics.

Boreing tweeted that Twitter canceled a deal to premiere “What is a Woman?” for free on the platform “because of two instances of ‘misgendering.’" Twitter rules prohibit intentionally referring to transgender individuals with the wrong gender or name.

“This was a mistake by many people at Twitter. It is definitely allowed," Musk tweeted back. “Whether or not you agree with using someone’s preferred pronouns, not doing so is at most rude and certainly breaks no laws.”

Irwin tweeted Friday that “one or two people noticed” she left the company the day before, and she noted speculation about whether she was fired or quit. She teased that she would post 24 tweets to explain her departure.

Then she posted that she was just kidding about the long narrative.

“In all seriousness, I did resign but this has been a once in a lifetime experience and I’m so thankful to have worked with this amazing team of passionate, creative and hardworking people. Will be cheering you all and Twitter as you go!”

Next to Musk, Irwin had been the most prominent voice of the company’s ever-changing content policies in recent months.

Twitter has struggled to bring back advertisers turned off by Musk’s drastic changes and loosening of rules against hate speech since he bought Twitter for $44 billion in October. Twitter also has an incoming CEO, Linda Yaccarino, known for decades of media and advertising industry experience, but she hasn’t started yet.

Irwin and Twitter didn’t respond to requests from The Associated Press for comment.

Twitter has been in turmoil including mass layoffs and voluntary departures since the billionaire Tesla owner bought the San Francisco company and took it private. The company’s head of trust and safety left shortly after the takeover, and turnover in the top ranks has continued. Last month, Twitter fired two more top managers.

One-quarter of Air Canada flights delayed Friday as schedule recovers from IT issue

Delays plague Air Canada

Photo: The Canadian Press

Airline ground crew walks past grounded Air Canada planes as they sit on the tarmac at Pearson International Airport In Toronto on Tuesday, April 27, 2021. THE CANADIAN PRESS/Nathan Denette

More than one-quarter of Air Canada flights experienced delays on Friday as the airline worked to return service to normal following a technical malfunction the previous day.

Air Canada had warned travellers early Friday morning they should be prepared for further flight disruptions. In its daily travel outlook, the carrier said that while its IT system was stable, flights may be affected at nine of Canada's busiest airports, including Toronto's Pearson, Montreal, Vancouver and Calgary.

Thursday's outage led to more than 500 flights — over three quarters of its trips — to be delayed or cancelled on the day, creating what the airline said were "rollover effects" just prior to the weekend.

A total of 144 Air Canada flights, or 27 per cent of the airline's scheduled load, had been delayed Friday as of around 4:30 p.m. EDT, along with 33 cancellations, according to tracking service FlightAware.com.

An additional 56 flights with Air Canada Rouge saw delays, one-third of its daily load, plus 23 cancellations.

"Air Canada has stabilized its communicator system and it is functioning normally. However, due to the effects of Thursday's IT issues on our schedule, some flights may be delayed this morning as we reposition aircraft and crew," it said in an emailed statement.

"Customers are advised to check the status of their flight before going to the airport. Our flexible travel policy remains in effect for customers to change their travel plans at no charge."

The airline did not clarify when it expected its flight schedule to fully return to normal.

Thursday's disruption, sourced to the system used by the airline to communicate with aircraft and monitor their performance, came one week after Air Canada grounded its planes for about an hour when the same system experienced a separate issue.

That day, 241 Air Canada flights — 46 per cent of its trips — were delayed, according to FlightAware. Another 19 flights were also cancelled.

Air Canada said it has been in the process of upgrading the communicator system.

YouTube changes policy to allow false claims about past US presidential elections

YouTube changes policy

Photo: The Canadian Press

FILE - The YouTube app is displayed on an iPad on March 20, 2018, in Baltimore. YouTube will stop removing content that falsely claims the 2020 election or other past U.S. presidential elections were marred by “widespread fraud, errors or glitches," the platform announced Friday, June 2, 2023. (AP Photo/Patrick Semansky, File)

YouTube said Friday it will stop removing content that falsely claims the 2020 election or other past U.S. presidential elections were marred by “widespread fraud, errors or glitches."

The change is a reversal for the Google-owned video service, which said a month after the 2020 election that it would start removing new posts that falsely claimed widespread voter fraud or errors changed the outcome.

YouTube said in a blog post that the updated policy was an attempt to protect the ability to “openly debate political ideas, even those that are controversial or based on disproven assumptions.”

“In the current environment, we find that while removing this content does curb some misinformation, it could also have the unintended effect of curtailing political speech without meaningfully reducing the risk of violence or other real-world harm,” the blog post said.

The updated policy, which goes into effect immediately, won’t stop YouTube from taking down content that tries to deceive voters in the upcoming 2024 election, or other future races in the U.S. and abroad. The company said its other existing rules against election misinformation remain unchanged.

The announcement comes after YouTube and other major social media companies, including Twitter and the Meta-owned Facebook and Instagram, have come under fire in recent years for not doing more to combat the firehose of election misinformation and disinformation that spreads on their platforms.

Net benefits to Canada went unquestioned in big forestry buyouts

Net benefits unquestioned

Photo: Glacier Media file photo.

The Catalyst paper mill in Powell River was indefinitely shut down not long after Paper Excellence purchased it.

Earlier this year, Paper Excellence capped off an unprecedented series of multibillion-dollar buyouts to become the largest forestry company in Canada.

Members of Parliament investigating the company’s business ties and corporate structure learned Friday that Industry Canada did not conduct a net benefit analysis to see if company’s recent US$3-billion purchase of Domtar and US$2.7-billion buyout of Resolute Forest Products were in the economic interests of Canadians.

NDP natural resource critic Charlie Angus said he was “absolutely gobsmacked.”

“How is it possible the government could say that there wasn't an obligation to question the net benefit to Canada?” said Angus.

“I certainly can't see there's any benefit in turning over our forests, our environment to a company that's a series of shell companies, and they refuse to tell us who owns it.”

The federal probe follows the release of a journalistic investigation by the International Consortium of Investigative Journalists (ICIJ) that found a series of links — including leaked emails, corporate documentation, shipping records and interviews with former employees — connecting Paper Excellence, ostensibly owned by Jackson Wijaya, and APP, headed by Wijaya’s father.

The committee motion to investigate Paper Excellence, passed in March, called on Wijaya and Minister of Innovation, Science and Economic Development Francois-Phillipe Champagne to answer questions. Neither Wijaya nor Champagne have appeared before the committee.

On Friday, officials from Champagne's ministry told MPs net benefit reviews of foreign acquisitions only occur in cases where they meet certain guidelines — including whether they are linked to military supply chains, espionage, critical minerals, sensitive technology, or are near a sensitive site or military base.

Paper Excellence — a foreign-owned company, controlled through a number of shell companies — does not meet that bar because its acquisitions dealt in the purchase of pulp and paper infrastructure and logging concessions now totalling more than 22 million hectares (roughly seven times bigger than Vancouver Island).

“I want to know if anybody representing the Canadian government thought there were red flags when turning over such a massive amount of forest,” said Angus.

“Because if they didn't think any of that mattered, then God help Canada.”

Bloc Québécois MP Mario Simard questioned senior department officials whether its national security review of the deals revealed Paper Excellence was ultimately controlled by Asia Pulp and Paper (APP).

“The link that we're trying to see is the link between Mr. Wijaya and another firm,” Simard said through an interpreter.

“My question is quite simple: do you have the result of an analysis, which yes or no… does establish a link between Mr. Wijaya and Asia Pulp and Paper?”

Mark Schaan, the department’s senior assistant deputy minister of strategy and innovation policy sector, said Jackson Wijaya was found to be the beneficial owner of Paper Excellence. Schaan declined to comment on any links it found between Paper Excellence and APP, citing confidentiality agreements under the Investment Canada Act.

A day before the meeting, Glacier Media and other ICIJ media partners reported on a 2017 briefing note provided to the Nova Scotia government affirming Paper Excellence was ultimately controlled by APP.

On Tuesday, a Paper Excellence executive told MPs ties had been cut with APP in 2015, two years earlier.

Dan Albas, Conservative MP for B.C.’s Central Okanagan-Similkameen-Nicola riding, asked Schaan to provide any documentation that would refute the links drawn in the Nova Scotia government briefing note. The department official once again said the confidentiality agreement prevented him from doing so.

Angus later put the committee on notice. In addition to summoning Wijaya, he would request ministerial briefing notes and documentation related to national security reviews conducted in Paper Excellence’s acquisitions of Domtar and Resolute.

Earlier this week, Conservative MP and natural resources critic Shannon Stubbs said she would back Angus’s motion to summon Wijaya, and would submit her own motion to summon Minister Champagne to answer questions before the committee.

Since the investigation was announced, Angus said Paper Excellence lobbyists had put “heavy pressure” on a number of MPs with mills in their ridings. He said he was concerned “scaring local communities” would get in the way of the committee’s obligation to carry out due diligence.

“This is not a witch hunt. This is about giving Canadians accountability and answers,” Angus said.

“My message to Mr. Wijaya is ‘you got a good story to tell? Then come and tell it,’ because what was done behind the scenes under the protection of the confidentiality agreements doesn't cut it.”

They investigation is scheduled to continue June 6.

'Good riddance' or 'don't unfriend us'? Publishers torn over Meta move to block news

Publishers torn over Meta

Photo: The Canadian Press

Kerry Benjoe, editor of Eagle Feather News, poses for a photo at First Nations University of Canada in Regina on Wednesday March 15, 2023. THE CANADIAN PRESS/Michael Bell

Independent publishers across Canada are expressing mixed feelings about Meta's decision to temporarily block news on Instagram and Facebook for some Canadian users. 

The company says it's a response to the Liberal government's Bill C-18, which would require tech giants to pay publishers for linking to or otherwise repurposing news content, and it plans to block news in Canada completely if the bill passes in the Senate. 

Kerry Benjoe, president of Eagle Feather News Media in Saskatchewan, says she relies on Facebook to grow her newspaper's audience, which she uses to grow her ad revenue. 

She says her team of four heavily relies on social media as a tool to reach people they wouldn't otherwise reach, especially in remote Indigenous communities. 

But William Pearson, co-publisher of Peterborough Currents, is against the online news bill because he believes he won't benefit from it, and he says publishers need to develop ways to reach people that aren't mediated by tech companies.

He says while he relies on Facebook to promote his digital platform, he's more focused on growing the business through subscriptions, newsletters and interacting with his community in person. 

Vancouver home sales rise in May, nearing 10-year average

Home sales, prices rising

Photo: The Canadian Press

The Real Estate Board of Greater Vancouver says May home sales rose 15.7 per cent from a year earlier.

The B.C. board says Vancouver's housing market is showing signs of heating up heading into the summer, as prices increased for the sixth consecutive month.

The board says sales for the month totalled 3,411, which was 1.4 per cent below the 10-year seasonal average of 3,458.

The composite benchmark price for all residential properties in Metro Vancouver was $1,188,000 last month, down 5.6 per cent from a year ago but up 1.3 per cent from April.

There were 5,661 new listings last month, an 11.5 per cent decrease compared with a year ago and 4.3 per cent lower than the 10-year seasonal average of 5,917.

Andrew Lis, the board's director of economics and data analysis, says in a release that prices are increasing because there are more buyers than sellers in the market, keeping resale homes in short supply.

Lis says the higher sales in May nearing historical averages were a "surprising twist" amid higher interest rates and slower new listing activity.

"If mortgage rates weren’t holding back market activity so much right now, I think our market would look a lot like the heydays of 2021/22, or even 2016/17," he says.

Vehicle sales rise in May; hope for strong summer

Vehicle sales climb

Photo: The Canadian Press

DesRosiers Automotive Consultants Inc. says May brought hope after several years of disrupted sales patterns, as vehicle sales rose.

The consultancy firm says total light vehicle sales in May were up 13.5 per cent from a year ago.

Sales totalled 159,705 units in May, up 10.9 per cent from April.

However, sales were still 21.0 per cent below pre-pandemic levels.

But the firm says that with the economy proving resilient and a predicted recession not yet in sight, there is optimism that the market could see a stronger summer for sales.

DesRosiers managing partner Andrew King says in a statement that the seasonally adjusted annual rate for May was 1.54 million units, breaking a three-month run of consecutive declines.

Air Canada says to expect further travel disruptions following Thursday's IT issues

More AirCan disruptions

Photo: The Canadian Press

Air Canada says travellers should be prepared for further flight disruptions as it works to return service to normal following a technical malfunction Thursday. 

In its daily travel outlook, the carrier said that while its IT system is now stable, flights may be affected at nine of Canada's busiest airports, including Toronto's Pearson, Montreal, Vancouver and Calgary.

Thursday's outage led to more than 500 flights — over three quarters of its trips — to be delayed or cancelled on the day, creating what the airline says are "rollover effects" that may lead to further delays Friday. 

"Air Canada has stabilized its communicator system and it is functioning normally. However, due to the effects of Thursday's IT issues on our schedule, some flights may be delayed this morning as we reposition aircraft and crew," it said in an emailed statement.

"Customers are advised to check the status of their flight before going to the airport. Our flexible travel policy remains in effect for customers to change their travel plans at no charge."

The source of the disruption was in the system used by the airline to communicate with aircraft and monitor their performance, which Air Canada has been in the process of upgrading.

On May 25, it grounded its planes for about an hour when the system experienced a separate issue, causing delays for nearly half of Air Canada's flights that day.

A total of 89 Air Canada flights, or 17 per cent of the airline's scheduled load, had been delayed Friday as of around 11:30 a.m. EDT, along with 32 cancellations, according to tracking service FlightAware.com.

An additional 40 flights with Air Canada Rouge saw delays, plus 19 cancellations.

Wildfires, extreme weather driving insurance costs up over time

Driving up insurance costs

Photo: Alberta Wildfire

The wildfires plaguing residents in Alberta and Nova Scotia are part of a larger trend that’s driving up the cost of home insurance as extreme weather becomes more common, insurance experts say.

“Premiums in Canada have been increasing for some time already,” said Marcos Alvarez, global head of insurance at DBRS Morningstar.

After a large event like the wildfires dominating Canadian headlines, customers in those geographical areas might see their policies re-priced, said Alvarez, or might see insurers becoming more involved: “When you have losses of this magnitude, you might reassess how you approach your underwriting price.”

Over time, these changes on a local level will contribute to the larger trend, he said.

According to a July 2022 report by Ratesdotca, home insurance premiums in Ontario had risen around 10 per cent in less than a year, with increasing incidences of severe weather one of several factors contributing to higher costs for homeowners, especially those in smaller population centres.

A similar report published a year earlier found that home insurance rate growth was well outpacing inflation, with average home insurance rates in Alberta up 140 per cent over 10 years to $1,779 as of early 2021, while in Ontario the average annual rate was up 64 per cent to $1,284.

Larger losses are the biggest contributor to higher premiums, whether those losses are due to natural disasters, inflation or other rising costs, said Daniel Ivans, an insurance expert with Ratesdotca.

“When you have a loss, it's more expensive now than it's ever been,” he said.

According to the Insurance Bureau of Canada’s annual report, severe weather caused $3.1 billion in insured damage in 2022, up from $2.1 billion in 2021, and the third worst year in Canadian history. The Fort McMurray fire put 2016 in the highest spot at almost $6 billion.

The increasing cost of insuring homes at risk for damage from extreme weather was highlighted this week in California, when insurer State Farm announced it would no longer accept commercial and residential insurance applications in the state due to “historic increases in construction costs outpacing inflation, rapidly growing catastrophe exposure and a challenging reinsurance market.”

The trend where certain risks become less, or completely, uninsurable because of climate change is happening around the world, said Alvarez. State Farm isn’t even the first insurer to leave the California market, he noted.

Insurers in Canada face the same problems as State Farm, said Craig Stewart, IBC's vice-president of climate change and federal issues. These include higher costs for rebuilding and reinsurance, plus more frequent events like wildfires, he said.

But it’s unlikely Canada will see an insurer make the same move as State Farm any time soon, said Alvarez. For one, home insurance prices in California are regulated, meaning insurers have limits on how much they can charge, while in Canada insurers don’t have the same barriers.

The California situation is extreme, Stewart said, with fires becoming not just more common, but essentially a predictable event.

“Living in California is akin to living on a floodplain in Canada,” he said. “We know that the disaster is going to happen.”

Ivans said while insurers in Canada sometimes pause new business amid a disaster, this happens rarely and is only a matter of days or weeks.

Alvarez said while homeowners are currently covered for wildfires as part of standard home insurance, they’re underinsured for other risks, including flooding.

When a segment becomes uninsurable, it’s a public policy problem, he said. That’s often when the government steps in, which it did with flooding, promising to create a national low-cost flood insurance program in the latest federal budget.

Alvarez thinks we could see the Canadian government getting more involved in insurance in the future if other natural disasters become increasingly difficult to insure against.

“Wildfire could be a potential candidate for some sort of public program if this becomes more and more prevalent,” he said.

As weather events become more extreme, it is becoming more challenging for insurers to keep coverage affordable without government partnerships, said Stewart.

The National Flood Insurance Program, once developed, can be used as a framework for covering other types of extreme weather, said Stewart.

“So it’s a national flood insurance program now, but built to be multi-peril in the future,” he said.

However, Stewart said it’s clear Canada needs more than just insurance for weather events, as the current wildfire situation is showing a lack of preparation and investment in certain areas, he said.

Extreme weather is highlighting the need for risk mapping, awareness campaigns, infrastructure improvements and other elements making up a “holistic game plan” for natural disasters, said Stewart.

“We’re seeing these events now year after year after year,” he said.

“We're having catastrophic events several times a year in some parts of the country, and so these aren't flukes. We now have to realize that this is now going to be the trend moving forward.”

S&P/TSX composite jumps more than 200 points, U.S. stock markets also climb

TSX jumps 200+ points

Photo: The Canadian Press

Canada's main stock index leaped more than 200 points in late-morning trading as gains in energy, industrials and base metal stocks drove the rise, while U.S. stock markets also shot up.

The S&P/TSX composite index was trading up more than one per cent or 217.66 points to 19,889.91.

In New York, the Dow Jones industrial average was up 505.32 points to 33,566.89. The S&P 500 index increased by 51.86 points to 4,272.88, while the Nasdaq composite grew 133.52 points to 13,234.50.

The Canadian dollar traded for 74.39 cents US compared with 74.17 cents US the day before.

The July crude contract was up US$1.57 at US$71.67 per barrel and the July natural gas contract was up seven cents at US$2.22 per mmBTU.

The August gold contract was down US$14.30 at US$1981.20 an ounce and the July copper contract was up two cents at US$3.73 a pound.