Canada is experiencing its second-worst wildfire season on record, but unlike past years, the destruction has been concentrated in the Prairies and Atlantic Canada rather than in the fire-prone West, according to a report from The Guardian.
The shift underscores the evolving nature of catastrophe risk, raising fresh challenges for insurers already grappling with mounting climate-related claims.
So far in 2025, nearly 7.5 million hectares have burned, with Saskatchewan and Manitoba accounting for more than 60% of the total area. Atlantic Canada, typically less exposed, is also under pressure, with Newfoundland and Labrador and Nova Scotia enforcing bans on off-road vehicles and outdoor activities to reduce fire risks.
For the insurance sector, the change in geography highlights a key concern: risk is spreading beyond traditional hot spots. Paul Kovacs, executive director of the Institute for Catastrophic Loss Reduction, noted that more buildings have been destroyed this year compared with 2023, Canada’s worst wildfire season. Insurers fear the trend may continue as more communities across the country confront the same vulnerabilities once thought to be limited to British Columbia and Alberta.
The insurance industry has long priced wildfire risk with Western provinces in mind. But with fires now erupting in areas such as Ontario’s Kawartha Lakes and Nova Scotia’s forests, underwriters face increasing difficulty in assessing exposure.
“This is a national issue. This can show up anywhere,” Kovacs said, adding that the scale of recent smoke and evacuations has shifted the perception of wildfire from a regional to a countrywide threat.
Climate change is expected to exacerbate the problem. Warmer, drier conditions are extending droughts and lengthening fire seasons, making once low-risk areas more vulnerable. For insurers, this may accelerate adjustments to pricing models, increase reinsurance costs, and force more emphasis on loss prevention and resiliency measures such as home “hardening” against fire.
The federal government has already pledged multimillion-dollar investments in risk research and adaptation. But for insurers, the immediate challenge is financial: growing wildfire claims, broader exposure across Canada, and the prospect of repeated large-loss years. Industry experts warn that if the current trajectory continues, availability and affordability of coverage in wildfire-exposed regions could come under strain.
This challenge is not unique to Canada. Southern Europe has also faced devastating wildfires this summer, with Greece, Spain, and Italy recording thousands of evacuations and extensive property damage. Insurers across the region are contending with rising claims and heightened reinsurance costs, while governments have been called on to provide backstop funding. In some markets, wildfire is being treated more like flood or earthquake risk, where state-backed insurance pools are considered necessary to maintain coverage availability.
