Secondary perils – wildfires, floods, hailstorms – now drive nearly 90% of insured catastrophic losses in Canada, far outpacing primary perils like earthquakes and hurricanes. That shift, according to Swiss Re’s Canada reinsurance CEO Jolee Crosby (pictured), signals a permanent change in risk modeling and insurance pricing.
“In Canada last year, secondary perils accounted for nearly 90% of total insured losses, compared to just over 60% globally,” Crosby said. “This is the new normal.”
Canada has seen nine separate secondary peril events each costing over $1 billion in the past decade. That trend is expected to continue annually, pushing the industry to reevaluate how it measures, manages, and prices risk. And while secondary perils have historically been defined as more frequent, lower-cost events, their severity is now on par with primary catastrophes.
“There is nothing low about the losses anymore,” Crosby said.
Three key forces are driving this shift: accelerating climate change, rapid urbanization, and soaring construction costs.
Canada’s climate is warming at nearly double the global average – and over three times faster in the Arctic – intensifying wildfire risk even in historically low-risk regions. “We’re seeing these events more frequently, and in more places,” Crosby said.
Urban development compounds that risk. Between 2016 and 2021, Canada’s population grew 5%, with major cities expanding by more than 10%. Urbanization is expected to reach 88% by 2050. “We see the impact in Calgary, which was the fastest-growing city in 2023 and 2024,” she said. “It was severely impacted by the hailstorm last year.”
The third pressure point is the cost to rebuild. Since mid-2020, construction costs in Canada have surged over 65%, and by more than 80% in the Greater Toronto Area – far outpacing the general CPI. “This makes disaster recovery more expensive and increases insured losses,” Crosby said.
This rising risk profile has forced reinsurers to play a more proactive role beyond capital provision. “We’re supplying the data, the models, and partnerships that make Canada’s risk system more resilient,” Crosby said.
Swiss Re recently provided flood hazard datasets to the federal government to support climate scenario planning. It also partnered with Bellwether, a project by Alphabet’s Moonshot Factory, to improve wildfire forecasting. That collaboration aims to integrate real-time public data into Swiss Re’s CatNet hazard atlas, giving insurers sharper tools to underwrite wildfire risk.
“The thought is, we’re able to help insurance companies underwrite in wildfire areas with more confidence and offer more coverage to more people,” she said.
Crosby said current disaster preparedness measures are no longer sufficient. “Natural disasters are increasing in frequency and intensity,” she said. “The status quo is not working.”
She outlined three priorities: understanding risk, mitigating it, and transferring it.
Improving risk quantification starts with better data. “Our technology and models can help us not only understand the risk but quantify it – especially around secondary perils, where modeling has been limited,” she said. This also enables faster post-event response and helps consumers make more informed decisions.
Mitigation, however, is where Crosby sees the greatest immediate potential. She cited research from the Institute for Catastrophic Loss Reduction (ICLR), where she serves on the board, showing that mitigation measures have a measurable impact. Following the Fort McMurray wildfire, ICLR found that 81% of surviving homes had been built using fire smart guidelines.
“Every dollar spent to make a new home fire resistant saves $35 in claim costs,” she said.
Insurers can use that data to differentiate risk and adjust premiums or deductibles accordingly. “There is clear evidence these mitigation actions work,” Crosby said.
On risk transfer, Crosby emphasized the foundational role of insurance as a shared-cost mechanism. But she warned that conventional tools may fall short as events become more chronic and predictable. “Insurance remains viable where losses are random,” she said. “When they become chronic, other financing tools and risk reduction measures must take the lead.”
Looking forward, Crosby said Canada’s continued insurability hinges on modernizing how it approaches risk.
“To keep Canada insurable, we need to continue to strengthen secondary peril modeling, scale up mitigation, manage accumulations dynamically, and give clear market signals,” she said.
She praised Canada’s collaborative approach to public-private partnership and risk-sharing but urged the industry to stop delaying. “It’s time now, as an industry, for us to stop talking about it and start acting on the problem,” she said.
