Climate change adaptation was a key focus for the property and casualty insurance industry in 2025.
In February, the Canadian Climate Institute published a report on housing affordability with a clear takeaway: building affordable housing in areas vulnerable to natural disasters is not a good idea.
The addition of a roof condition endorsement to Intact’s home insurance policies at the end of 2024 sparked debate among distribution intermediaries. According to the Regroupement des cabinets de courtage d’assurance du Québec (RCCAQ), the insurer’s requirement conflicts with the Code of Ethics governing damage insurance representatives.
In late spring, the Commissioner of the Environment and Sustainable Development, part of the Office of the Auditor General of Canada, submitted a report to Parliament identifying shortcomings in the National Adaptation Strategy launched in 2023. The report pointed out the lack of specific targets to reduce risks to human health, notably highlighting the impacts of Lyme disease and wildfire smoke.
Municipal infrastructure planning is also a central component of climate change adaptation, researchers at the AdapT Institute, affiliated with the École de technologie supérieure, underlined. A new research chair on the topic was launched in collaboration with the Union des municipalités du Québec (UMQ).
Another chair, partly funded by three insurance companies, was created in 2025 and is headed by Mathieu Boudreault, actuary and professor in the Department of Mathematics at the Université du Québec à Montréal (UQAM). His work on the actuarial modelling of physical and transition risks aims to help institutions better prepare for climate challenges.
Resilient construction
Wildfires that caused massive damage in the Los Angeles metropolitan area in January 2025 raised questions around insurability and its impact on the real estate market. It becomes difficult to find a mortgage lender when a property cannot be insured.
A special report published in the first quarter of 2025 confirmed the existence of many ideas and innovations to make homes more resilient to future weather events. Policyholders can help reduce damage by adopting these best practices, and insurers also have a role to play.
A workshop held during the Journée de l’assurance de dommages specifically addressed resilient housing.
In 2025, the Institute for Catastrophic Loss Reduction (ICLR) held a webinar on resilient construction. The issue of like-for-like rebuilding was discussed—a delicate matter for insurers. If a structure is rebuilt using the same materials that failed during the previous event, the next storm could cause the same damage. Another webinar on a similar subject was held at the end of the year.
The tipping point
The issue of a tipping point—the scale of severity from a major disaster that could jeopardize the insurance ecosystem—was also raised in 2025. Early in the year, the Property and Casualty Insurance Compensation Corporation (PACICC) warned of the protection gap that looms over Canadians in the event of a major earthquake in large urban centres.
And in its budget tabled in early November, Prime Minister Mark Carney’s government confirmed it was concerned about the risk of a major earthquake. However, PACICC’s CEO Alister Campbell noted that this concern had already been acknowledged in three previous federal budgets since 2017, with no progress made.
“Canada needs a liquidity backstop now. It’s time to move from promises of consultation to concrete action. Many effective programs already exist in comparable earthquake-prone jurisdictions,” Campbell wrote in a recent exchange with a news agency, a copy of which was provided by PACICC to Insurance Portal.
Additionally, the creation of a backstop insurer—long requested by the PACICC—was approved during the summer of 2025.
Meanwhile, the Insurance Bureau of Canada (IBC) is calling on the federal government to establish a national emergency management agency to improve preparedness and recovery measures in the wake of major natural disasters. While flood-related damage has a major impact on home insurance costs, the effects of the 2023 and 2025 wildfires are just as concerning, IBC added.
Before the courts
In 2026, more information will emerge about the legal saga surrounding TruStar Underwriting, a managing general agent (MGA) based in Ontario that was placed under receivership in November 2024. The firm is suing its former CEO, Daniel Moses, along with two other individuals and two companies allegedly involved in a fraudulent scheme.
Moses is alleged to have issued insurance policies that were not backed by an insurer. At the same time, he allegedly pocketed premiums paid by clients, depositing them into his personal account instead of holding them in trust or remitting them to the insurer.
Brokers, policyholders and insurers involved had until December 12, 2025, to submit claims to the accounting firm mandated in connection with the case.
Other litigation involving insurers, and still awaiting court decisions, could conclude in 2026. Among those to watch is a series of lawsuits filed by the families of victims against property owner Émile Benamor—and Benamor’s own lawsuits against his insurer, Lloyd’s Underwriters, as well as the City of Montréal—in connection with the fatal fire that occurred on March 16, 2023, in Old Montréal. The seven victims had rented units via the short-term rental platform Airbnb.
A similar fire in October 2024 in the same area—in a building owned by the same individual—claimed two more lives and triggered an investigation by the Chief Coroner’s Office. Its work will begin once the courts have ruled.
Auto theft
Smart key hacking is at the heart of a class action lawsuit filed against auto manufacturers. A Québec Superior Court ruling authorized the lawsuit in summer 2025. However, the Québec Court of Appeal paused the case in a ruling handed down at the end of November, agreeing to hear the manufacturers’ appeal.
Progress was made in 2025 in the fight against vehicle theft. One year after the national summit held in Ottawa in February 2024, authorities reported an increase in vehicle seizures at port facilities and a drop in thefts.
At Équité Association, 2025 brought encouraging developments. Information sharing among stakeholders was improved to combat paper-based fraud—vehicles purchased and then resold abroad using forged documents.
Bill C-2 was tabled in the House of Commons in June and includes numerous provisions aimed at enhancing authorities’ powers to fight organized crime, including the export of stolen vehicles. The legislation has not yet been passed by federal MPs in Ottawa.
Public Safety Canada released an update on the progress of its National Action Plan on Combatting Auto Theft in early fall.
However, one key piece of the puzzle remains unresolved: the long-awaited modernization of anti-theft system standards required by vehicle manufacturers, which falls under the purview of Transport Canada. On December 27, 2025, the federal department published a draft regulation on the matter, which is open for consultation until March 12, 2026. If adopted, the regulation would require car manufacturers to upgrade their immobilizer systems by the end of 2027.
Merger of the Chambres
One of the most significant mergers in 2025—and one that made headlines in Québec —was the creation of the Chambre de l’assurance, which brings together the two self-regulatory organizations in the insurance sector.
Québec’s Finance Minister introduced Bill 92 on April 8. Adopted on June 3, the bill became Chapter 16 of the 2025 statutes.
Members of the Chambre de la sécurité financière (CSF) and the Chambre de l’assurance de dommages (ChAD) will meet on January 20, 2026, at a special general assembly in order to appoint the members of the organization's board of directors.
Insurers and the war in Gaza
Just before Christmas 2025, several European media outlets reported that insurers Allianz and Aviva had cut business ties with Elbit Systems, believed to be one of the largest subcontractors to Israel’s Ministry of Defence.
A report published earlier in 2025 by the group Boycott Bloody Insurance listed insurers providing liability coverage or holding investments in 16 companies supplying or transporting equipment, technologies or weapons for the Israeli defence effort in the Gaza Strip and West Bank.
A trend to watch
The year 2025 ended on a positive note, according to Roger Pielke Jr. in his blog The Honest Broker published on December 31: the number of deaths caused by extreme weather events may have reached a historic low in 2025.
According to the American political scientist estimate, around 6,100 deaths were caused by climate-related natural disasters—thus excluding earthquakes and volcanic eruptions. This would translate to fewer than 0.8 deaths per 100,000 people globally in 2025. Pielke Jr. emphasized that this result is not exceptional, as the downward trend has been observed since the early 2000s. Since 2014, there have been six years when the ratio was below one death per 100,000 people.
“Underlying this trend lies the successful application of science, technology, and policy in a world that has grown much wealthier and thus far better equipped to protect people when, inevitably, extreme events do occur,” he writes.
In a series of critical articles on the insurance industry published in December, Pielke Jr. referenced the 2013 Special Report on Extreme Events by the Intergovernmental Panel on Climate Change (IPCC), which he says remains valid. Despite global warming and shifting temperature patterns, scientific data still does not show a correlation with the frequency of extreme events such as hurricanes, tornadoes, floods, or droughts.
He argues the report confirms his longstanding conclusion: “The increase in disaster-related losses is primarily due to vulnerability and exposure, not changes in hazard.” His fourth text on imperfections associated with climate risk modelling is due to be published in January 2026.
2026 outlook
In a commentary published in December on the outlook for Canadian property and casualty insurers, Morningstar DBRS notes that both domestic and international carriers operating in Canada have maintained solid liquidity and underwriting discipline. This, the agency says, is helping the industry remain profitable despite increased variability in catastrophic losses across the country.
The authors point to intense competition in the commercial insurance market—evident since the second half of 2024—as a signal that premium rates may decline across several segments. This “soft market” is expected to persist for another one to two years. Morningstar DBRS emphasizes that large accounts are the most likely to benefit from the current pricing environment.
