The CAT paradox: How to keep Canadians insured without encouraging riskier rebuilding
SPG Canada’s Nathan Tjandrawinata explains why the system is backwards – and how underwriting must change
By Branislav Urosevic
When insured losses from severe weather topped $8 billion in 2024 – triple the previous year and Canada’s costliest total ever – it confirmed what the industry already knew: catastrophe exposure is escalating faster than pricing models can absorb.
Nathan Tjandrawinata (pictured), executive vice president of personal lines at SPG Canada, told Insurance Business that this isn’t just a profitability issue, but a paradox. In some instances, the insurance market’s current structure can even make it harder for Canadians to rebuild safely.
When a home is destroyed in a flood or wildfire, logic would suggest that rebuilding in a safer location should be rewarded. Yet in much of the Canadian market, it’s the opposite.
“Right now, if you choose to rebuild elsewhere, you’re penalized because the payout is based on ACV. Under most insurers’ same-site clauses, depreciation applies if the insured does not rebuild on the original location,” Tjandrawinata said.
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How to keep Canadians insured without encouraging riskier rebuilding
