Canadian P&C Insurers Confront Growing Catastrophe Risks
Morningstar DBRS reports that Canadian property and casualty (P&C) insurers continue to show resilience with solid capital positions and room for growth. However, they are increasingly challenged by the rising frequency and severity of natural catastrophes that threaten profitability.
Climate Risk as the Main Threat
At the Credit Outlook Toronto 2026 event, Marcos Alvarez, Managing Director of Global Financial Institution Ratings at Morningstar DBRS, emphasized that climate-related threats remain the most serious issue confronting Canadian 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 Catastrophe Losses
The year prior saw unprecedented catastrophe-related insurance losses in Canada, totaling approximately $9.3 billion. The devastating Jasper wildfires ranked among the most expensive in history, second only to the 2016 Fort McMurray blaze.
Growing Exposure and Financial Risks
- The number of burned acres in Canada has climbed steadily each year.
- Wildfires are encroaching on populated areas, heightening potential damages and insurer liabilities.
- Return on equity for P&C firms is strongly tied to their exposure to natural catastrophe losses, a concern with global and national implications.
Author’s Summary: Canadian P&C insurers remain financially sound but face mounting pressure from escalating climate threats that directly influence profitability and risk management strategy.