Canadian P&C 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 potential. However, they confront increasing threats from natural catastrophes and the resulting losses.
Industry Analysis at Credit Outlook Toronto 2026
Marcos Alvarez, Managing Director of Global Financial Institution Ratings at Morningstar DBRS, emphasized climate risk as the foremost challenge for P&C insurers in Canada. He noted other challenges such as cyber security, geopolitical risks, and artificial intelligence, but stated:
“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.”
Record Natural Catastrophe Losses in Canada
Last year, Canadian natural catastrophe insurance losses reached approximately $9.3 billion. This included the severe Jasper wildfires, which rank as the second costliest wildfire event after the 2016 Fort McMurray wildfire.
The area burned by wildfires in Canada has steadily increased annually, elevating proximity risks as fires spread closer to populated regions. This trend causes substantial losses for insurers covering home, auto, or commercial policies.
Impact on Financial Performance
Return on equity for P&C companies is closely linked to their exposure to natural catastrophe losses, a pressing concern in both Canada and worldwide.
Author's summary: Canadian P&C insurers remain financially stable but must address growing climate-related catastrophe risks that threaten their profitability and long-term stability.