P&C insurers feeling like canaries in the coal mine on climate risk

Yellow Canary Walking on the Ground — iStock.com/Ian Fox

Canada’s property and casualty (P&C) insurance industry is ahead of the curve in their first-hand knowledge of climate risk, and the industry is starting to wonder what it will take for governments to get serious about future risks posed by natural catastrophes.

It’s been a tough slog for the industry to close the knowledge gap of Canadians and politicians concerning the impact of increasing natural catastrophes on property insurance.

At the 2025 National Insurance Conference of Canada (NICC) in Gatineau, Que., last Thursday, Insurance Bureau of Canada president and CEO Celyeste Power referred to the damage caused by natural catastrophes throughout the country over the past three years as “nothing short of a national crisis.”

And yet, not even a week after Power urged more government action in Canada on the climate risk file, U.S. President Donald Trump addressed the United Nations, calling climate change “the greatest con job ever,” and telling UN members: “If you don’t get away from this green scam, your country is going to fail.”

Trump’s message to the UN about climate risk is more antagonistic than the approach Canadian governments have taken. In Canada, the IBC is dealing more with government inaction or neglect of the climate file, rather than outward hostility.

All the same, Power’s speech showed some of the urgency Canadian P&C insurance professionals feel about getting the country’s governments to act swiftly on the climate file.

“None of the ideas in our three-point plan are new,” Power told the NICC in a keynote address about the IBC’s strategic priorities on the climate file. “All are just common sense. And yet, here we are still pressing, still advocating, still asking the same questions: ‘Why won’t government act? What’s it going to take?’”

IBC’s 3-point plan

First, IBC wants governments to stop putting people in harm’s way.

“Update building codes, modernize land use policies, ensure that we’re building new homes but not putting them in hazard zones,” Power said. “Think about it. Why are we still approving subdivisions in known floodplains? Why are we still allowing homes to be built in wildfire corridors where the chance of disaster is not just [likely], but inevitable?”

Power then referenced the Liberal government’s election platform to provide more than $25 billion in funding to prefabricated home builders in Canada. That’s part of a plan to double home construction up to 500,000 new units annually.

“As recently as a couple of years ago, the federal government was touting a historic housing plan that made no mention of where new homes should be built or, more to the point, where they should not be built,” Power observed. “Yes, when it comes to housing, affordability is important. But I ask you, what is less affordable than a home that needs to be built twice?”

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Second, Power said, governments need to invest in building resilient communities. That includes financing infrastructure upgrades, developing detailed national and local risk maps, and providing incentives for homeowners to retrofit their properties.

Third, governments need to close protection gaps arising from the changing climate, including more floods and wildfires. That means establishing the long-promised national flood program, which the federal government has hinted may provide the framework for a future earthquake backstop.

These initiatives would allow insurers to lower their premiums and deductibles, which in turn would make insurance premiums more affordable and available in high-risk zones.

Canary in the coal mine

Elsewhere at the NICC, Peter Routledge, superintendent of financial institutions, Canada’s solvency regulator, noted P&C insurers are well ahead of their peers in identifying and quantifying climate risk.

“In this climate study we did, we learned that three-quarters of P&C insurers are already using geolocation data to evaluate financial risk in their products,” Routledge said at the NICC. “Only 25% of banks and life insurers [are doing this]. That’s three to one.

“So what do we know about that? We know that…the P&C insurers are in the front lines of climate change. They’re early, and I think the rest of us should have paid closer attention.”

Local governments more active

At an NICC session on a property insurance ‘crisis’ due to climate risk, Paul Kovacs, executive director of the Institute for Catastrophic Loss Reduction, got up during a Q&A session to say municipal governments may be the place to start for advocating for resilience initiatives.

“For those of us who always look for the glass half full, municipal governments are far more involved in the space, and they’ve been doing things for years,” Kovacs said. “Winnipeg passed a bylaw in about 1979, this is 46 years ago, that all the homes in Winnipeg had to have a backwater valve. And…after 46 years, you’ve got a lot of homes in Winnipeg with a backwater valve. But Manitoba still doesn’t have a law.

“It’s harder at the provincial and the federal level to get agreement on some of the things we want to eventually get them to agree on. I think we have 38 communities right now that have incentives, based on flood reduction programs, where the community pays most of the cost incurred.”

In her speech, Power agreed many local government initiatives are addressing the worst impacts of climate risk. But that’s not enough, she said.

“Some municipalities are leading the way in encouraging homeowners to take meaningful steps to reduce their vulnerability. But we need a more concerted and coordinated effort to step up our resilience game,” she said.

Speaking louder

Power warned California is the ‘cautionary tale’ of our time.

“Government [in California] chose to suppress premiums instead of mitigating risk. The result, 3.6-million policies weren’t renewed between 2020 and 2023,” she said. “Do we want to live in a place where the risks are so pronounced that insurers can in some cases no longer offer coverage? A place where homeowners are left without policies and families are left without financial protection?”

Power closed her speech by urging the industry to be more aggressive about lobbying politicians on the climate risk file.

“Let’s speak louder,” she said. “Let’s make the case in every forum, at every table, until the message breaks through. Let’s say to government, ‘All the warning signs are there — the storms, the growing threats to lives and property.’ We’ve all seen the devastation, lives lost, property destroyed, the heartache, the trauma, the economic impact — all of it is there for us to see.

“So I ask again, what’s it going to take?”