Canadian P&C Insurers Address Rising Catastrophe Risks
Morningstar DBRS reports that Canadian property and casualty (P&C) insurers maintain strong capital positions and growth potential. However, they increasingly face significant threats from 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 an in-depth analysis of the Canadian insurance sector. He emphasized that climate risk is the most critical challenge for P&C insurers today.
“While the industry also faces wider challenges from cybersecurity, geopolitical risks, and artificial intelligence, climate risk remains the number one risk for P&C insurers,” said Alvarez.
Record Natural Catastrophe Losses in Canada
Last year, Canadian natural catastrophe insurance losses reached a record $9.3 billion. This includes the devastating Jasper wildfires, which rank as one of the costliest in Canadian history, second only to the 2016 Fort McMurray wildfire.
- The area burned by wildfires in Canada has increased steadily year over year.
- Wildfires are encroaching closer to populated regions, heightening the risk for insurers covering homes, vehicles, and commercial properties.
Financial Impact on P&C Insurers
Return on equity for Canadian P&C insurers is closely tied to their exposure to natural catastrophe losses, a growing concern internationally and domestically.
Author’s summary: Canadian P&C insurers are financially strong but increasingly vulnerable to escalating climate-related catastrophe risks, impacting their profitability and risk management strategies.