Canadians faced an average of 13 additional "risky heat" days this summer compared with historical norms, according to new data from Climate Central. 

These high-temperature days, driven by climate change, increase health risks and strain infrastructure. However, for insurers, they also mark a growing source of financial exposure.

Direct implications

More hot days heighten wildfire ignition potential, accelerate wear on buildings and infrastructure, and trigger health impacts that flow into property, casualty, life, and health claims.

Canada has already recorded its second-worst wildfire season on record in 2025, following 2023’s smoke-related toll of an estimated 82,000 premature deaths. Insurers are bracing for further pressures as climate models suggested Canadian average temperatures could climb another 1.8 to 3.2°C in the next two decades.

Canada’s market has so far avoided the sharp coverage withdrawals seen in parts of the US, where carriers such as State Farm and Allstate have restricted new policies in wildfire-prone California.

In Europe, insurers have similarly pulled back from high-risk regions after heat-fueled wildfires and droughts drove up claims. By contrast, Canadian carriers continue to provide broad availability of property coverage, but industry leaders warn that if severe losses persist, Canada could face the same affordability and accessibility issues already seen abroad.

Insured losses from severe weather in Canada reached a record $9 billion in 2024. With this summer’s data reinforcing the role of climate change in amplifying extreme heat events, insurers may be forced to tighten underwriting guidelines, raise deductibles, or even cap capacity in vulnerable areas.

While most carriers in Canada remain committed to providing coverage, analysts noted that the gap between insured and uninsured losses could widen if governments do not step in with resilience funding.

Industry groups, including the Insurance Bureau of Canada, argue that coordinated action — such as expanding access to cooling, retrofitting public infrastructure, and strengthening community health protections — will be critical to preserving insurance affordability. Without it, the risk is that Canada follows the path of international peers, where climate-driven losses have already reshaped markets.

For insurers, the latest heat analysis underscored that climate change is no longer a future concern but an immediate factor influencing claims costs, pricing strategies, and long-term market stability.