This month, Atlantic Canada was confronted with a stark reminder of what happens when fire, hurricane-force winds, storm surge, and limited firefighting capacity collide. In St. Mary’s, Newfoundland, that deadly combination turned a routine industrial fire into an unstoppable catastrophe, reducing a major fish-processing plant to ashes within hours. It was the clearest example yet of how compounding climate-driven hazards can overwhelm local defences – and why insurers, brokers, and communities can no longer treat fire risk and weather risk as separate conversations.
Michelle Laidlaw, associate vice president of national product portfolio at Co-operators, said the St. Mary’s loss highlights one of the most complicated questions in commercial insurance today: how coverage responds when extreme weather and fire converge into a single event.
Laidlaw noted that situations like this blur traditional lines of causation. “This instance is complex because of the combination of extreme weather and fire, making it more challenging to identify a clear determination on causality,” she said. In major storms, fires often emerge as secondary consequences – sparked by power surges, overloaded electrical systems or overheated equipment struggling to operate under extraordinary conditions.
Because of that overlap, the first step in any claim is a detailed investigation to understand how the loss began. “It is not uncommon in extreme weather situations for fire to be the byproduct of other issues like a power surge or a building systems sump pump overheating,” Laidlaw explained.
Ultimately, coverage hinges on what the investigation reveals. “If the insurer deems that the loss is accidental, then the coverage decision would be that of fire,” she said. In other words, even if the storm was the proximate cause, once ignition occurs and fire becomes the destructive force, the fire portion of the policy typically governs the claim.
Laidlaw said the St. Mary’s fire should also be viewed through a broader lens: it reflects a pattern Co-operators has been tracking across Atlantic Canada as climate volatility accelerates. While the discussion often centres on insurance mechanics, she stressed that the larger issue is the region’s overall catastrophe readiness and resilience.
“A general observation… is that many Canadians do not understand the risks they are exposed to,” she said. Despite rising storm intensity, development continues in high-risk zones, often without the infrastructure, resources, or awareness needed to withstand the physical risks.
That disconnect is creating long-term pressure on both communities and insurers. “We need to continue to advance policies and practices that will help shape a climate-resilient future,” Laidlaw noted. She said rebuild decisions following major losses now represent a critical opportunity: choosing resilience-enhanced materials and designs can reduce both environmental damage and the financial impact of future claims.
Without such shifts, affordability becomes a looming concern. “Insurance premiums are priced based on the risk, and if the current trend continues, at a certain point, insurance will become unaffordable for our most at-risk communities,” she warned.
As severe weather intensifies, underwriters are paying closer attention to location-specific exposures, especially in coastal communities. “In recent years there has certainly been more focus on coastal risks due to the increase of severe weather,” Laidlaw said. She added that Co-operators has reinforced underwriting and loss-prevention expectations both nationally and regionally, updating commercial appetite and guidelines as new information emerges.
Maintaining best practice, she said, means continuously reviewing loss trends, internal data, and on-the-ground claims results. “We review our commercial appetite and guidelines continuously, vetting and updating when required,” she explained. “Maintaining best practice as an insurer means monitoring evolving trends and claims… and considering if any actions should be taken, such as changes in our appetite, development or refinement of our internal guidelines, risk mitigation and/or rating adjustments.”
That process is increasingly data-driven, particularly for flood and storm surge exposures. Advances in coastal hazard modelling allow underwriters to refine location-specific risk far more precisely than in previous decades. “There has been more data refinement to ensure we are using the most recent and accurate storm and flood data available,” Laidlaw said. “That gives our Underwriters the most accurate picture of the flood risks across Canada and the risk zone that our client’s location falls into.”
She emphasized that the insurer’s proactive approach extends well beyond internal modelling: Co-operators now places increasing emphasis on education – for its advisors, clients, and community partners – especially in higher-risk regions where risk mitigation strategies can materially reduce loss severity.
