Canadian P&C Insurers Seek Ways to Transfer Rising Cat Risk
Rising Impact of Natural Disasters
Morningstar DBRS reported that Canadian property and casualty (P&C) insurers remain strong, supported by solid capital positions and continued growth. However, these insurers are increasingly exposed to the financial impacts of natural catastrophes and the resulting losses.
Insights from Credit Outlook Toronto 2026
At the Credit Outlook Toronto 2026 conference, Marcos Alvarez, Managing Director of Global Financial Institution Ratings at Morningstar DBRS, provided an overview of the Canadian insurance market. He emphasized that climate-related threats are the most pressing challenge for the P&C sector today.
“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 and Growing Exposure
In the previous year, Canadian insurers recorded approximately $9.3 billion in natural catastrophe losses. Among the most destructive incidents were the Jasper wildfires, second in cost only to the 2016 Fort McMurray disaster. The area of land burned in Canada continues to rise yearly, heightening threats to nearby communities and increasing potential losses for insurers covering residential, vehicle, and business properties.
Financial Implications for Insurers
Return on equity among P&C companies remains closely tied to the extent of their exposure to catastrophic losses. This growing dependence on climate-related events is emerging as a critical concern across both the domestic and global insurance landscape.
Author’s Summary
Canadian P&C insurers stay financially sound yet face mounting risks from escalating natural disasters, forcing them to adapt strategies against increasingly severe climate losses.