The increasing severity and frequency of climate change-related events in Canada and the resulting property-insurance issues are changing how homebuyers and real-estate developers look at land and buildings. It’s also a growing factor in how real-estate investment, development and urban-planning strategies are being reshaped from coast to coast.

While there are climate-risk insurance options available, the premiums are high and rising. Governments must therefore embark on a range of solutions – such as beefing up infrastructure, backstopping insurance plans or mitigating risk through better research and analysis.

The insurance-availability challenge is exacerbated because it’s often difficult for residential and commercial landlords to pass increased costs to tenants, who are already facing the high cost of living.

The interplay between the cost and availability of climate-related insurance is already influencing real-estate development decisions at the investment stage, with many previously viable projects now facing greater scrutiny for risk.

Adding to the problem is that many lenders, including Canada Mortgage and Housing Corporation (CMHC), are taking a hard look at underwriting mortgages on floodplain properties. This means that even if developers have technical solutions to mitigate flood risks, it can be nearly impossible for homebuyers to secure a mortgage – effectively rendering the........

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