Canadian P&C Insurers Address Increasing Catastrophe Risks
Morningstar DBRS reports that Canadian property and casualty (P&C) insurers continue to show strength through solid capital margins and growth prospects. However, they are increasingly challenged by the rising impact of natural catastrophes and the resulting financial losses.
Industry Analysis at Credit Outlook Toronto 2026
Marcos Alvarez, Managing Director of Global Financial Institution Ratings at Morningstar DBRS, presented insights on the Canadian insurance sector, emphasizing that climate risk is the foremost threat for P&C insurers.
“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 Losses from Natural Catastrophes
The previous year set a record for Canadian natural catastrophe insurance claims, totaling approximately $9.3 billion. This figure includes damages from the Jasper wildfires, one of the most expensive disasters in Canadian history, second only to the 2016 Fort McMurray wildfire.
Increasing Wildfire Impact
- The area affected by wildfires in Canada has grown steadily each year.
- Wildfires are increasingly encroaching on populated regions, raising risk exposure.
- These trends result in significant losses for insurers with home, auto, and commercial policies.
Financial Implications for P&C Companies
Return on equity for P&C insurers heavily depends on their susceptibility to natural catastrophe losses, which is becoming a critical concern both in the Canadian market and globally.
Author’s summary: Canadian P&C insurers remain financially solid but face escalating climate-related risks, driving the need for innovative risk transfer and management strategies.