Last year, the Insurance Bureau of Canada reported a staggering 400-percent increase in weather-related claims, underscoring the scale of the challenge climate change now poses for the industry.
Carolyn Murnaghan (pictured), sustainability and climate risk leader at Deloitte Canada, said the spike reflects a broader shift in both the type and frequency of climate-driven events across the country.
“Here in Canada, we are exposed to one of the broadest ranges of climate threats,” Murnaghan told Insurance Business.
“We are exposed to threats both from heat and from the cold, and we are impacted in similar ways as other parts of the world by the increasing severity of wind and hail, wildfire and flood events.”
That breadth of exposure, she explained, makes Canada particularly vulnerable as global temperatures rise. While annual claim totals will fluctuate depending on weather systems, the trendline points to mounting risks – and a rising burden for insurers managing claims and customer expectations.
To cope, insurers are rethinking both underwriting and operational strategies. In flood-prone areas, some carriers are scaling back coverage, drawing clear geographic boundaries around where they are willing to assume risk. Others, she says, are turning to partnerships with specialized firms that can provide rapid wildfire response services, aiming to mitigate damage before it escalates into major losses.
The operational side of the business is also under strain. A higher volume of severe claims means mobilizing large teams quickly, stretching internal resources and testing insurers’ ability to maintain service levels during catastrophe events. “This increasing frequency and severity of events is resulting in higher claims volumes,” Murnaghan noted, adding that insurers are under pressure to balance efficiency with client support.
Technology is becoming a central part of the response. From advanced underwriting platforms to AI-powered claims systems, carriers are experimenting with ways to provide faster updates, accelerate claims handling, and reduce stress on both staff and customers in the aftermath of disasters. “This use case around accelerating the ability to manage claims and provide updates to clients… is one of those use cases that we’re seeing used more prominently,” she said.
For that reason, much of the insurance sector has invested heavily in modernizing technology infrastructure and building teams equipped to handle climate-related surges in demand. Yet, Murnaghan pointed out that catastrophe events still put enormous pressure on organizations, which are typically optimized to operate under steady-state conditions.
“When there is a peak of claims, it does put strain on the organization,” she said. “What we're finding is these new ways of using technology are relieving some of that strain.”
Integrated systems that connect policy, underwriting, and claims data are helping insurers better manage the flow of information during crisis situations, she explained. By linking back-end processes with customer-facing tools, carriers are able to provide faster updates and more transparent communication at a time when clients are often stressed and uncertain.
Despite clear signals of urgency, progress on modernization across the Canadian insurance sector has often been gradual. Murnaghan said the reasons are largely practical: technology upgrades are expensive, require specialized expertise, and usually demand years of phased implementation before benefits are fully realized.
“Working on the technology side of things is oftentimes very expensive, so those costs need to be split over a number of years,” she said. “These large technology transformations tend to be slower in nature, incremental in the way they adapt and adjust.”
Insurers also face the challenge of integrating new systems with existing infrastructure, both internally and with external service providers. This integration work, she added, is time-consuming and resource-intensive, requiring not only investment but also the right skillsets to manage complexity.
Asked whether large insurers or smaller players are better placed to take on such demanding projects, Murnaghan said both face trade-offs. Large companies may have deeper pockets and broader workforces, but their legacy systems add layers of complexity. Smaller firms, while nimbler and more agile, often lack the in-house expertise to design and execute multi-year technology overhauls.
In both cases, she stressed, partnerships are key. Whether migrating legacy systems or building entirely new digital-first capabilities, insurers benefit from working with external partners who bring prior experience and the ability to scale resources as needed. “Finding a partner who has the experience of having done it before and the ability to scale their capability is a very important attribute,” Murnaghan said.
