As Canada’s wildfire seasons become longer and more destructive, the Canadian Institute of Actuaries (CIA) has issued new guidance to help property and casualty (P&C) insurers improve how they assess, price, and underwrite wildfire risk.
The report, Wildfire Risk Considerations for P&C Insurance Pricing and Underwriting, was developed by the CIA’s Property & Casualty Practice Committee alongside climate risk professionals. It aims to strengthen actuarial approaches as wildfire losses continue to rise across Canada.
Canada’s Record-Breaking Wildfire Losses
Wildfire risk in Canada is no longer seasonal or isolated — it is increasingly systemic.
In 2023, Canada experienced its most destructive wildfire season on record:
- 16.5 million hectares burned, which is more than double the previous record
- Nearly seven times the historical average
- Approximately 200 communities were evacuated
- Over $1 billion in insured losses for P&C insurers
In addition, a single week of wildfire smoke in Ontario in June 2023 was estimated to have caused more than $1.2 billion in health-related economic impacts.
According to the CIA, around 5.8% of Canadian buildings, representing 283,200 people, are located in high fire-risk zones, while 0.6% sit in very high-risk zones.
British Columbia and Alberta have recorded four of the most active wildfire seasons in the past century since 2017, reflecting the growing influence of climate change.
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Key Wildfire Risk Drivers Identified
The CIA guidance highlights several critical wildfire risk drivers insurers must consider:
- Ignition sources (human and natural)
- Fuel types and vegetation density
- Terrain and topography
- Climate patterns such as El Niño and La Niña
- Meteorological conditions
The report encourages insurers to leverage:
- Internal property-level exposure data
- External weather and vegetation datasets
- Hazard maps
- Vendor wildfire risk scores
- Catastrophe models
These tools can help insurers estimate both average annual losses (AAL) and probable maximum losses (PML) more accurately.
Insurance Affordability Concerns
The CIA warns that Canada could face insurance availability and affordability challenges similar to those seen in California if wildfire risk continues to escalate.
The report suggests insurers:
- Incentivize homeowners to adopt fire mitigation measures
- Collaborate with governments on broader wildfire insurance frameworks
- Explore public-private partnership models
California’s FAIR Plan, an insurer-of-last-resort model, is cited as a possible example that Canadian provinces or the federal government could evaluate.
Natural Catastrophe Losses Continue to Rise
Wildfire losses are part of a broader trend of escalating natural catastrophe claims in Canada.
In 2025:
- More than 7.2 million hectares burned (second only to 2023)
- Approximately 85,000 people evacuated, nearly half from First Nations communities
- Severe weather insured losses exceeded $2.4 billion, according to CatIQ
This followed 2024, when insured catastrophe losses reached a record $9.4 billion, surpassing the previous high set by the 2016 Fort McMurray wildfires.
According to the Insurance Bureau of Canada, annual insured losses exceeding $1 billion have now become the norm — a dramatic shift from two decades ago when losses rarely surpassed $500 million in a year.
Why This Guidance Matters for P&C Insurers
For Canadian property and casualty insurers, wildfire risk is evolving into a core underwriting challenge rather than a secondary peril.
The CIA’s guidance underscores the need for:
- Advanced modeling techniques
- Improved data integration
- Pricing discipline in high-risk zones
- Proactive collaboration with policymakers
As climate-related catastrophe losses increase, actuarial standards and underwriting frameworks must adapt to ensure long-term insurance market stability.
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Company Profile: Canadian Institute of Actuaries (CIA)
The Canadian Institute of Actuaries is the national professional body representing actuaries in Canada. The organization sets actuarial standards, promotes research, and provides guidance on risk management, insurance, pensions, and climate-related financial risks.
Through research reports, practice guidance, and public policy engagement, the CIA supports evidence-based decision-making across Canada’s financial and insurance sectors. Its work on wildfire risk reflects a growing focus on climate resilience and the long-term sustainability of the insurance market.
