Canadian P&C Insurers Confront Growing Catastrophe Risks
Morningstar DBRS reported that Canadian property and casualty (P&C) insurers remain financially strong, supported by healthy capital margins and continued growth potential. However, they increasingly face challenges from natural catastrophes and the resulting financial losses.
Industry Assessment and Key Risks
At the Credit Outlook Toronto 2026 conference, Marcos Alvarez, Managing Director of Global Financial Institution Ratings at Morningstar DBRS, analyzed the sector’s current state and highlighted its main concerns.
“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.
Rising Impact of Natural Catastrophes
Canada recorded approximately $9.3 billion in natural catastrophe insurance losses last year, a new record driven largely by the destructive Jasper wildfires—one of the most expensive events after the 2016 Fort McMurray wildfire. The area affected by wildfires continues to expand annually, bringing fires closer to urban regions and amplifying the risk exposure of insurers offering home, auto, and commercial policies.
Financial Implications
Insurers’ return on equity has grown increasingly sensitive to natural catastrophe events. This dependence underscores the urgent need for the Canadian P&C sector to explore strategies for transferring or mitigating these mounting risks, both domestically and on a global scale.
Author’s Summary: Canadian P&C insurers remain stable but face intensifying climate-related losses, highlighting their urgent need for more resilient catastrophe risk management.