Australia's Bureau of Meteorology declared El Niño officially on Tuesday, with forecasts pointing toward a strong to very strong event that could peak at levels among the highest observed since 1950. For Canadian insurers, the timing is notably uncomfortable. The industry is already absorbing the consequences of a decade in which insured catastrophe losses more than tripled, and El Niño is precisely the climate pattern that most directly amplifies the two perils - wildfire and drought - that have driven that escalation.
Between 2016 and 2025, Canada's annual insured losses from catastrophic weather reached $37 billion - nearly triple the $14 billion recorded in the previous decade, according to the Insurance Bureau of Canada. Annual costs exceeding $1 billion have become the norm. The average number of claims has almost doubled. El Niño does not cause that trajectory to reverse.
The Canadian Institute of Actuaries explicitly identifies El Niño and La Niña cycles as key risk drivers in its wildfire risk guidelines for P&C insurers, warning that Canada could face insurance availability and affordability challenges similar to those seen in California if wildfire risk continues to rise unchecked. El Niño conditions - hotter, drier, more settled - are historically associated with elevated fire weather across western and central Canada. The Fort McMurray fire of 2016, which generated approximately $4.8 billion in insured losses in 2025 dollars, occurred during an El Niño year.
The broader affordability context makes this harder to absorb. National home insurance premiums rose 31% between 2021 and 2025, against 15% overall inflation. Alberta premiums rose 9.29% year-on-year in 2026 alone. SGI Canada COO Andrew Voroney has warned that affordability, not capacity, may become Canada's defining insurance crisis. An El Niño-amplified wildfire and drought season would add further upward pressure on premiums in regions already at or near the limit of what policyholders can sustain.
Recovery from the Jasper wildfire is dragging into its second year, with a survey of evacuee households finding more than half had no homeowner or tenant insurance, and 37% of those who did were only partially covered. That protection gap sits directly in the path of any new El Niño-driven wildfire event. The BOM is projecting peak Pacific warming in excess of 3°C above normal - a post-1900 record - with the rate of warming already the fastest since 1943. Canada's wildfire season does not wait for forecasters to agree on the strength of a Pacific weather pattern. The fuel is already there.
