Canadian P&C Insurers Seek Ways to Transfer Rising Catastrophe Risk
Morningstar DBRS reports that Canadian property and casualty (P&C) insurers remain financially strong, supported by solid capital reserves and steady growth potential. However, they face increasing exposure to losses from natural catastrophes, which represent a serious and expanding threat.
Climate Risk as the Primary Challenge
At the Credit Outlook Toronto 2026 event, Marcos Alvarez, Managing Director of Global Financial Institution Ratings at Morningstar DBRS, analyzed the Canadian insurance market and stressed that climate-related losses are the greatest obstacle for insurers today.
“While the industry also faces wider challenges from cyber security, geopolitical risks, and artificial intelligence, climate risk remains the number one risk for P&C insurers,” said Alvarez.
Record Catastrophe Losses in 2024
Canadian insurers recorded approximately 9.3 billion dollars in losses last year from natural catastrophes. Among these events, the Jasper wildfires were particularly destructive, ranking as the second-costliest in history after the 2016 Fort McMurray disaster.
Growing Exposure from Expanding Wildfires
The number of acres burned across Canada continues to rise every year, with wildfires moving ever closer to inhabited regions. This proximity dramatically raises potential claims for insurers covering homes, vehicles, and commercial properties.
Impact on Financial Performance
The return on equity for P&C companies remains closely linked to their exposure to catastrophic events. As climate-related disasters become more frequent and severe, both Canadian and global insurers are searching for effective ways to transfer and mitigate this growing risk.
Author’s summary: Canadian P&C insurers face mounting climate-driven losses, with wildfires intensifying and profitability increasingly dependent on effective catastrophe risk management.