Canada has entered a new era of natural catastrophe risk, with wildfires, floods, hailstorms and other extreme weather that were once seen as rare and localized now recurring as high‑severity events with national economic implications.
Public Safety Canada has described 2025 as the second‑worst wildfire season in Canadian history.
A report from MNP noted that more than 6,000 wildfires affected nearly every province and territory and burned over 8.3 million hectares. In March 2025, prolonged freezing rain in Ontario and Quebec caused major ice buildup, snapping power poles and tree branches and leaving hundreds of thousands without power. Those events were accompanied by drought, powerful thunderstorms, heatwaves and even an Arctic Ocean storm surge.
In 2024, Canada recorded its costliest weather‑related disaster year on record, with insured losses from severe weather exceeding $8.5 billion. The total, compiled by Catastrophe Indices and Quantification Inc. (CatIQ) for the Insurance Bureau of Canada (IBC), surpassed the previous record of $6.2 billion set in 2016 during the Fort McMurray wildfires and was nearly triple the 2023 total. A Calgary hailstorm on August 5, 2024, alone generated an estimated $2.8 billion in insured damage. In Quebec, flooding from the remnants of Hurricane Debby produced insured losses of roughly $2.7 to $2.8 billion, becoming the province’s costliest insured weather event and the most expensive tropical cyclone impact in Canada on record.
Taken together, these and other events pushed total insured and uninsured catastrophe damage in 2024 into the estimated $14–$16 billion range, highlighting a widening protection gap even as insured losses hit record levels. For Canada’s P&C sector, 2024 marked a clear shift in catastrophe frequency and severity. Carriers and global reinsurers have responded with higher premiums, tighter underwriting appetites and, in some high‑risk areas, reduced limits or withdrawals of coverage. IBC and industry leaders have warned that, without greater investment in mitigation and adaptation, some communities could become difficult or impossible to insure for certain perils.
Scientific assessments link a warmer atmosphere, which can hold more moisture, to heavier rainfall and increased flood risk, while prolonged heat and drought raise the likelihood and intensity of wildfires. Global attribution studies connect the rising probability and severity of extreme events to human‑driven climate change, and Canadian regulators now reference those trends in guidance to financial institutions. Climate‑related threats are increasingly influencing insurability, asset values and long‑term investment decisions.
According to the report, natural catastrophe risk now affects every major sector of the Canadian economy, with both direct and knock‑on impacts. For insurers, climate risk has become a material driver of loss experience, capital requirements and client risk profiles.
Energy and utilities face greater exposure to physical damage and service disruption. Mining and resource companies are exposed to flooding, wildfire‑related evacuations and transportation bottlenecks. Manufacturers can experience plant damage, workforce displacement and supply chain interruptions when transportation networks or utilities fail. Agriculture and agri‑food operations remain highly sensitive to droughts, frosts, floods and heatwaves, with downstream consequences for processors and distributors.
Financial institutions and insurers are also absorbing second‑order impacts, including higher loan defaults in affected regions, declining property values and sustained pressure on underwriting margins.
IBC has reported that most of the costliest insured‑loss years on record in Canada have occurred in the last decade, prompting carriers to re‑examine catastrophe modeling assumptions, reinsurance programs and capital allocation.
Governments at all levels are under pressure to step up climate adaptation spending, while regulators, investors and rating agencies increasingly expect private‑sector organizations to invest in their own resilience and continuity planning, the report said.
Climate risk has become an operational, financial and strategic issue that recurs annually rather than a distant scenario. Its impact can be seen in catastrophe loss ratios, reinsurance renewals and the spread of coverage restrictions and non‑renewals in high‑hazard regions.
In response, many Canadian organizations are integrating climate scenarios into enterprise risk management, stress‑testing assets and portfolios and upgrading facilities. Some are reassessing the location of critical infrastructure, the concentration of assets in high‑risk areas and the viability of long‑term investments in regions facing rising wildfire, flood or storm surge exposure.
Companies that invest in resilience are also increasingly viewed by insurers, lenders and investors as lower‑risk counterparties. Under OSFI’s B‑15 guideline, financial institutions are being asked to reflect climate risk in their risk appetites, pricing and client engagement, linking resilience investments more directly to access to capacity and cost of capital, the report said.
More businesses are also incorporating climate scenarios into capital planning and site selection decisions and working with municipalities and utilities on community-level resilience and restoration priorities.
For insurers and brokers, the direction is clear: climate risk is now a balance-sheet issue for both clients and carriers, and the market is beginning to differentiate between organizations based on the credibility and depth of their climate risk management.
