The connection between flood risk and housing affordability in Ontario

Flood risk is making housing less affordable in Ontario by driving up home insurance premiums, according to a new joint study by insurtech MyChoice and digital real estate platform Wahi.

The study analyzed how flood risk is influencing the true cost of homeownership across 39 Ontario cities.

“What we found is a growing disconnect between purchase affordability and ownership costs,” MyChoice tells Canadian Underwriter.

Each city was assigned a flood risk score on a scale of 1 (lowest) to 5 (highest). Comparing 2024 and 2026 data using a standardized homeowner profile, the information was combined with RPS-Wahi Home Price Index data and MyChoice insurance datasets to examine how premiums are evolving in higher-risk areas, and what that means for housing affordability.

According to the study, Ajax (4.6/5) is the province’s highest flood-risk city. It saw premiums rise 26%, from $1,022 to $1,290 between 2024 and 2026. “While insurance still represents a smaller share of mortgage payments at 3%, the rate of increase highlights how quickly affordability dynamics can shift in high-risk urban markets,” the report says.

Ottawa (4.5), Mississauga (4.4) and Toronto (4.3) also recorded steady premium increases, ranging from 12% to 18%. But higher home values in these markets continue to keep insurance-to-mortgage ratios relatively low (between 3% and 4%).

Sarnia (4.1) presents a similar pattern, with insurance costs making up 6% of mortgage payments, despite more moderate premium growth (up 9%). Brantford (4.2) and Brockville (3.8) also fall into this category, with insurance accounting for 5% to 6% of monthly costs.

The situation is different in Northern Ontario. “While flood risk scores are lower on average, cities such as Thunder Bay, North Bay, and Sault Ste. Marie are seeing some of the fastest premium increases and highest insurance-to-mortgage ratios in the province,” MyChoice says.

Study methodology

For consistency, the study focused on quotes reflecting a standardized homeowner profile: a 35-year-old male or female with a clean claims history, currently insured, non-smoker, living in a semi-detached or detached three-to-four bedroom home (2,000–2,500 sq. ft.). Each property was assumed to have monitored fire and burglar alarms, at least one fire extinguisher, a $1,000 deductible, $1 million liability coverage, and an Enhanced Water Protection package. 

To illustrate how flood risk translates into changes in insurance costs and overall housing affordability pressures across Ontario markets, the report calculates the monthly insurance-to-mortgage ratio for each city. It factored in local home values, standard mortgage assumptions (five-year fixed term, 20% downpayment, and prevailing interest rates in 2024 and 2026), and average home insurance premiums — “providing a clear picture of how rising insurance costs affect homeowners’ monthly budgets.”

Based on the survey results, a clear divide is emerging across Ontario, MyChoice says. In higher-priced markets, rising insurance costs remain diluted by home values. In more affordable markets, particularly those with elevated flood risk, insurance is already taking a significantly larger share of monthly housing costs.

“Affordability isn’t just about what you pay for a home anymore, it’s increasingly about what it costs to protect it. Rising home insurance rates in flood-prone areas might be pushing potential home buyers out of those markets,” MyChoice CEO Aren Mirzaian tells CU. 

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Climate implications

This shift is being driven by climate exposure and unlike in the U.S., Canada still lacks a national flood insurance backstop, leaving more risk priced directly into premiums, MyChoice says. 

Quebec has been gradually rolling out provincial flood maps since March. Nationally, Canada’s emergency management minister, Eleanor Olszewski, told Canadian Press last week she can’t guarantee the government will launch the promised National Flood Insurance Program “in the near future.”

Insurance Bureau of Canada’s vice president of federal affairs, Liam McGuinty, told CU the federal government continues to engage the P&C industry, provinces and territories on the design of the national program. The work includes exploring how a backstop would function alongside expanded flood coverage by Canada’s private home insurance market.

Jason Contant

Jason has been an award-winning journalist with Canadian Underwriter for more than a decade, including the past three years as associate editor and, before that, as digital editor for seven years.