As Canada’s wildfire seasons grow longer and more destructive, the Canadian Institute of Actuaries (CIA) has released new guidance to help property and casualty (P&C) insurers better assess, price, and underwrite wildfire risk.
The report, Wildfire Risk Considerations for P&C Insurance Pricing and Underwriting, was developed by members of the CIA’s Property & Casualty Practice Committee and climate risk professionals. It comes as the insurance sector faces mounting financial pressure from wildfires, which have increased in both frequency and severity.
According to the CIA, Canada experienced its most destructive wildfire season on record in 2023, with fires consuming 16.5 million hectares, more than double the previous record and nearly seven times the historical average.
That season forced approximately 200 communities to evacuate and generated more than $1 billion in insured losses for the P&C sector. A single week of wildfire smoke in June 2023 was estimated to have cost Ontario more than $1.2 billion in health impacts.
“Wildfire risk is no longer a remote or episodic concern for insurers. It is a growing and systemic challenge that requires a proactive approach,” said Shayan Sen, chair of the committee. “This resource is intended to help actuaries and insurance professionals strengthen their approaches to pricing and underwriting as wildfire risk continues to evolve.”
The document notes that approximately 5.8% of Canadian buildings – representing 283,200 people – sit in high fire-risk zones, with another 0.6%, or 30,500 people, in very high fire-risk zones. Climate shifts in British Columbia and Alberta have driven four of the most active wildfire seasons in 100 years since 2017.
The guidelines outline key risk drivers, including ignition sources, fuel types, terrain and climate patterns such as El Niño and La Niña. They also address how insurers can use internal property data, external meteorological and vegetation datasets, hazard maps, vendor risk scores and catastrophe models to estimate both average annual losses and probable maximum losses.
The CIA cautioned that Canada could face insurance availability and affordability challenges similar to those seen in California if wildfire risk continues to rise unchecked.
The document suggests insurers consider incentivizing policyholders to adopt fire mitigation measures and engaging governments to develop a more comprehensive wildfire insurance framework. California’s Fair Access to Insurance Requirements (FAIR) Plan, which serves as an insurer of last resort, is cited as one possible model for provincial or federal adoption.
Canada’s 2025 wildfire season burned more than 7.2 million hectares – second only to 2023 – forcing the evacuation of roughly 85,000 people, nearly half of whom came from First Nations communities. Over half of the total burned area was concentrated in Saskatchewan and Manitoba, while Alberta, British Columbia, and Ontario all recorded fires above their annual averages.
Severe weather insured losses across all perils exceeded $2.4 billion in 2025, according to Catastrophe Indices and Quantification Inc. (CatIQ), making it the tenth costliest year on record for weather-related insured damage in Canada. That came on the heels of 2024, when insured catastrophe claims hit a record $9.4 billion, according to CatIQ – shattering the previous record set by the 2016 Fort McMurray wildfires.
“Severe weather events continue to intensify. Two decades ago, insured losses seldom surpassed $500 million in a year. Today, annual costs exceeding $1 billion have become the norm,” said Celyeste Power, president and CEO of the Insurance Bureau of Canada (IBC), in a January statement. “This shift demands that we fundamentally rethink how we build, plan, and restore communities across our country.”
