Canadian Property and Casualty Insurers Face Rising Catastrophe Risks
Morningstar DBRS reports that Canadian property and casualty (P&C) insurers remain financially strong, with solid capital margins and growth prospects. However, they encounter increasing risks from natural catastrophes and the associated losses.
Industry Analysis at Credit Outlook Toronto 2026
Marcos Alvarez, Managing Director of Global Financial Institution Ratings at Morningstar DBRS, emphasized that climate risk poses the greatest challenge to P&C insurers in Canada. He noted other challenges such as cyber security, geopolitical tensions, and artificial intelligence but identified climate risk as the top concern.
“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.”
— Marcos Alvarez, Morningstar DBRS
Record Natural Catastrophe Losses
Last year set a new record for Canadian natural catastrophe insurance losses, amounting to approximately $9.3 billion. This total includes the Jasper wildfires, one of the most expensive wildfire events in Canadian history, second only to the 2016 Fort McMurray wildfire.
Increasing Wildfire Risks
The extent of acreage burned by wildfires in Canada has steadily risen annually. As wildfires draw nearer to populated regions, the risk to insurers covering homes, automobiles, and businesses grows significantly.
Impact on Financial Performance
Return on equity for Canadian P&C insurers depends heavily on their exposure to natural catastrophe losses, a concern that is intensifying both in Canada and worldwide.
Summary: Canadian P&C insurers remain financially sound but face escalating climate-driven catastrophe risks, with wildfire losses increasingly threatening their profitability and risk management.