Climate risk has already become a systemic problem for Canada's insurance industry, but the provincial regulators responsible for overseeing it are sharply divided – with Alberta, the province arguably most affected, refusing to even name the problem, according to Kiera Taylor (pictured), senior analyst at Investors for Paris Compliance.
"If you can't address the root problem of a systemic issue, then you're going to really struggle to implement the correct solution," Taylor said.
Her assessment comes from I4PC's final report, Behind the Curve: Canadian Financial Regulators and Climate Risk, which for the first time grades more than a dozen federal and provincial regulators on how they are managing climate risk. The organization is winding down after five years of tracking corporate progress on net-zero commitments.
The numbers behind the report are stark. Taylor said climate-related damages in Canada exceeded $9.1 billion in 2024. Property and casualty insurers, on average, paid out more in personal property claims than they collected in premiums over the past two years, pushing the combined ratio above 101%.
"On both sides, the consumer is losing and also the provider," she said. "While the alarm bells are starting to ring, they're not as loud as maybe needed."
The report found a clear hierarchy among provincial regulators. Quebec's Autorité des marchés financiers is the furthest along, having issued a Climate Risk Management Guideline that sets expectations around product design, underwriting and consumer disclosure. British Columbia's BCFSA has done consultations and outlined plans for disclosure, but has not yet put any of it into action. Ontario's FSRA sits further back.
"They have basically done nothing on climate," Taylor said of FSRA. "They don't require any disclosures, they don't require any action to be taken by the regulated entities the way that the AMF does."
Alberta is the starkest case. The province faces severe and escalating climate-related losses – hail, wildfire, flooding – yet its Superintendent of Financial Institutions has avoided publicly connecting its work on home insurance viability to climate change.
"There's this weird contradiction where Alberta is actually where we see perhaps the worst effects of climate change on the insurance industry and the consumers of insurance products," Taylor said. "And while there's been some inquiry into how to ensure the viability of home insurance in Alberta, it's never actually publicly connected to climate change."
She said even Ontario, despite its inaction, has at least acknowledged the growing risk. Alberta has not.
"They're both lagging, to be honest," she said.
Taylor said the most effective next step for provincial regulators is not new legislation but embedding climate considerations into fair treatment of consumer guidance that already exists. The AMF has taken the initial steps, and the framework is replicable.
"The guidance already exists," she said. "It's really a matter of replicating the steps that the AMF has already begun to take."
She said that guidance should extend beyond consumers to address a growing information gap affecting mortgage lenders. Insurers operate on one-year policy cycles, but mortgage lenders carry exposure for 30 years or more. If a lender has no insight into how an insurer is pricing or assessing the climate risk profile of a property, they can be left exposed to a risk they had no way to evaluate.
"These mortgage lenders are on the hook for 30-plus years," Taylor said. "If the mortgage lender has no insight into how an insurer is pricing or assessing the risk profile of a given property, then they can be left holding quite a big bag."
Taylor said the industry's own role in the problem deserves more scrutiny. Insurers have been vocal in lobbying governments for adaptation spending and a national flood insurance program, but the same companies continue to invest in and underwrite high-emitting projects and firms.
"While they're asking the government to increase spending due to increased climate damages, they're actually still financially supporting the problem that's actually harming their business," she said.
She said the regulator lever that could address both sides – consumer protection and industry accountability – is the same: fair treatment of consumer guidance, updated to reflect the reality that climate risk is no longer a future scenario but a present cost.
