Canadian Underwriter

Category: Risk

How insurers can face real-world climate risks

It wasn’t your imagination, 2024 really was a climate risk turning point for insurers and reinsurers in Canada, panellists tell a session on global climate resilience at Insurance Bureau of Canada’s recent 2026 IBC InSight Summit.

“It kind of consolidated and brought to the forefront something that was happening over the years. And a lot of companies…were talking about this for many decades,” says Agis Kitsikis, market head for property and casualty reinsurance at Swiss Re. That ‘something’ is a trend toward multibillion dollar insured losses in Canada spurred by natural catastrophe (NatCat) events.

“This trend became really apparent in 2024,” he says. “Another key element to this is the ratio between losses that are climate related versus the peak risk of earthquake, given that we’re in Canada. [For] these secondary perils…the ratio of the contribution to this entire pool of loss moved from close to 30% in the first decade [of the 21^st Century] to 50% to 55% [in the] second decade, and now we’re close to 70%, 90% of losses coming from secondary peril.”

Risk on the ground

Bringing a client’s perspective to the discussion, Shashanka Suresh, director of sustainability and ESG at real estate developer Dream, says it’s getting harder for property developers and owners to ignore climate risk.

“In the Canadian context, the wildfires out West [have] been a little bit of a wake-up call. And even here in Toronto, wildfires in the northern part of the province have resulted in…smoky skies. That’s not something that we can ignore anymore,” he tells the conference.

“We are thinking about the value of our assets, but also the comfort of our tenants, because that becomes an important consideration for us….We’re sort of at an inflection point where climate risk is being talked about in different spheres.”

Commercial real estate firms have a close eye on how climate shifts will impact the value of certain properties, and how natural hazards directly impact real assets.

“But there’s some softer pieces that are [less tangible],” Suresh adds. “When Toronto had the extreme heat wave last summer, there were some stories of tenants legally going after their landlords because the [heating, ventilation and air conditioning] systems were not efficient enough to service them as tenants. And that’s a legal risk, that’s a reputational risk that we as real estate owners and operators need to be thinking about as an industry.”

In terms of planning, he says historical data is no longer adequate to determine risks to assets in various geographic regions.

“We’re now looking at probabilistic models, thinking through those different future scenarios [and] also looking at different time horizons,” Suresh says. “And the time horizons piece is interesting for real estate, because it can really help you strategize about your acquisitions and dispositions.”

Changing times

Looking at emerging data, Kitsikis says the key thing from an insurance and a reinsurance perspective is the underlying exposure. He notes companies’ concentration of exposure in NatCat-prone areas and economic drivers like inflation are combining to create significant cost issues.

“Forget about climate change,” he says. “If you have the same event happen today [that happened] 15 years ago, it would cost a lot more. And if you add the climate impact…it just amplifies that reality.”

Suresh says he’s seen risk amplification firsthand when visiting buildings that were constructed to building codes in place 20 or 30 years ago. Today, they cannot withstand weather patterns that have emerged in certain regions.

“When [one building I looked at] was built up to code about 23 years ago, it was taking into consideration the precipitation patterns at the time, and even after two or three extreme rainfall events, we are noticing now that…the drainage systems are not effective enough to drain all the additional water that’s now being collected on the roofs, and even this water in front of the building,” he tells the conference.

“We need to think about how climate risks are evolving [and] the pace at which they’re evolving.”

May 20, 2026
Insurers reveal more detail about their proposed quake backstop

Canadian property and casualty insurers are proposing a private-public earthquake backstop along the lines of the terrorism insurance backstop currently employed in the United States, the Insurance Bureau of Canada confirmed Tuesday.

“The industry’s proposed solution is known as the Canadian Earthquake Risk Protection Act (CERPA), and is modelled on the U.S. Terrorism Risk Insurance Act (TRIA),” IBC says in a paper published on the insurer association’s website. “TRIA has supported stability in the U.S. terrorism insurance market for more than two decades, by establishing a clear framework for sharing extreme tail risk between the government and the insurance industry.

“Although terrorism and earthquakes present different risk characteristics and market dynamics, TRIA demonstrates how a transparent, rules-based mechanism can reduce systemic risk and prevent market contagion after a catastrophic event. CERPA draws inspiration from these structural principles, while being tailored to the unique characteristics of earthquake risk in Canada.”

CERPA, like TRIA, “is designed to operate on a long-term, cost-neutral basis with no upfront public expenditure, while reinforcing insurer responsibility and preserving appropriate market incentives,” IBC says in a piece authored by Mahan Azimi, the association’s director of catastrophic and emerging risk policy team, and Christina Friend-Johnston, a communications manager at IBC.

Specifically, as in TRIA, taxpayers would be reimbursed for the government’s costs over the long term “by requiring the industry to repay any federal support through a temporary post-event premium surcharge, ensuring no upfront cost to taxpayers or consumers at the outset,” as IBC explains.

In the United States, if a terrorist attack is officially “certified” and industry-wide insured losses exceed the TRIA backstop’s trigger (currently $200 million), the US government reimburses part of insurers’ losses above their deductibles. The US government currently covers 80% of eligible losses above trigger thresholds, while insurers retain 20%. The US government recovers its outlay under a post-event premium surcharge paid by the US P&C industry.

Previously, CU reported information about the model published by the Property and Casualty Insurance Compensation Corporation. In its quarterly newsletter, Solvency Matters, PACICC CEO Alister Campbell says modelling for setting the proper ‘trigger’ would be critical.

“To the extent that any successful design will need to allow insurers ‘to fail’ (as antidote for ‘moral hazard’), there will also need to be accurate modelling to estimate how much failure the system can ‘afford,’” Campbell writes. “It seems very possible that the PACICC Systemic Risk Model (encompassing both federal and provincial insurers) will prove to be invaluable in supporting this modelling work.”

IBC says it’s 30% likely that Canada will see a Magnitude-8 or greater earthquake (“the Big One”) striking in Vancouver within the next 50 years. Plus, Montreal lies within Quebec’s most active seismic zone, which has experienced past earthquakes including a Magnitude-5.8 earthquake in 1732.

IBC cites a damage estimate suggesting a major earthquake in Canada could cause $52.6 billion in catastrophic damage. That’s 11 times greater than Canada’s current record-holding disaster, the 2016 wildfire that burned through Fort McMurray in Alberta.

Also in the news: Is insurance facing its Napster moment?

In previous reports, PACICC has said a damage loss exceeding $35 billion could create a “tipping point” after which multiple P&C insurers could fail.

To put that in perspective, MSA Research says Canada’s P&C insurance industry currently has approximately $66 billion in capital. That breaks down into $23.2 billion of minimum required capital, plus about $42.8 billion in excess capital.

“It’s important not to interpret the full $66 billion as capital available to absorb a single event,” MSA Research CEO Nevina Kishun tells CU. “The majority of this capital is already supporting ongoing risks across all lines of business, and insurers are required to maintain the minimum capital level.

“In practice, the [roughly] $43 billion of excess capital is the closer proxy for loss-absorbing capacity — but even that is not fully deployable without regulatory and market consequences.”

The industry has been calling for an earthquake backstop to prevent P&C insurance company failures for longer than a decade. In its 2025 budget, the federal government included a promise to consult with the industry on a quake backstop. Currently, the industry is calling for federally and provincially licensed insurers to be included in the discussion.

“Canada is the only G7 country with a significant earthquake risk that lacks a formal government-backed financial backstop for earthquake,” says Liam McGuinty, IBC’s vice president of federal affairs at the time the federal government released its budget. “Without a federal backstop, a major quake could trigger widespread financial instability.”

May 19, 2026
Are client supplier cyberattacks increasing in Canada?
Nearly two-thirds (65%) of Canadian companies that suffered a cyberattack in the past 12 months indicate a supplier was involved, according to research from business insurer QBE. That’s up from 58% last year.

In Canada, 57% of businesses experienced one or more cyber events over the past 12 months, slightly higher than last year (53%), QBE Canada says in a press release Tuesday. Among affected businesses, 65% suffered at least one cyberattack that was related to a supplier and 58% experienced revenue loss (up from 51%).

For the study, market research firm Opinium surveyed 400 decision-makers handling IT, administration or insurance at businesses with between 100 and 2,000 employees in Canada. The survey was fielded from March 31 to April 20, 2026. The 2026 global survey covered 15 countries, with a total sample of more than 6,000 businesses.

Canadian Underwriter has heard cyberattacks involving suppliers have been increasing. At the Insurance Brokers Association of Alberta (IBAA) Convention 2026 last week, BOXX Insurance president Jonathan Weekes anticipated this trend would continue. Supply chain or infrastructure-related breaches will increase in Canada as organizations shift toward cloud-based solutions or standardized software platforms to run their business, he says.

And, at its 2025 Insurance Conference in Toronto last November, KPMG said it was seeing more ‘hybrid’ cyberattacks targeting both first and third parties.

Cyber insurance take-up increases

The good news from a cyber insurance perspective is that more Canadian businesses are purchasing cyber coverages. Seventy-two percent now have cyber insurance, compared to 67% last year.

QBE also reports Canadian businesses are taking various steps to safely roll out artificial intelligence (AI) within their operations, from training staff on responsible AI use, to checking data quality or monitoring outputs for bias. However, these businesses worry their vendors might not be taking similar measures. Indeed, 63% of Canadian businesses are concerned about potential risks arising from how their suppliers use AI.

“AI risk doesn’t stop at the internal perimeter,” Kyle Gray, underwriter team lead at QBE Canada, says in the release. “Organizations need the same level of discipline and oversight across their third-party ecosystem, because weaknesses in the supply chain can quickly become risks to the business itself.”

To mitigate third-party vulnerabilities, QBE suggests businesses should:

Implement strong identity and access management (IAM) protocols, which control who can access technology resources and what they’re allowed to do once granted access

Run regular configuration audits

Encrypt sensitive data across all cloud environments

Evaluate the security posture of third-party providers

Establish clear protocols for managing supply chain exposure.

Emerging AI threat

According to QBE’s research, one in three Canadian businesses (33%) also experienced cyber incidents in the past 12 months that they believed leveraged AI, with phishing among the most frequent methods.

And 16% of polled Canadian businesses experienced a cyber event in the last 12 months that resulted in business interruption of one working day or more (down from 18% in last year’s study).

The research found two in three respondents (65%) are concerned about cyber threats their business may experience over the next 12 months, a smaller proportion than last year (78%), but still prompting investment.

Most Canadian businesses say their IT cybersecurity budget is going to increase over the coming year (31% say these investments will be in line with inflation and 31% say it will exceed the inflation rate). More than eight in 10 (83%) have an incident response plan, up from 79% in last-year’s survey.

AI is becoming ubiquitous in the Canadian economy, with 97% of businesses using it (83%) in 2026 or looking into using it (14%), up from 94% last year.

Increasing operational efficiency and productivity are among the top motivations for deploying AI, with more than half of businesses rolling out the technology mentioning these objectives.

“As new technologies such as AI become embedded in operations, effective risk management remains fundamental to ensuring sustainable and resilient growth,” Gray says.
May 19, 2026
Is insurance facing its Napster moment?

Artificial intelligence (AI) is the canary in the coal mine for the insurance industry, and the industry needs to prepare for what’s coming, speakers said May 11 at Insurance Brokers Association of Alberta’s Convention 2026 in Banff.

“This is the insurance Napster moment,” says Pete Tessier, president of MGA Taycon Risk and the Canadian Association of Managing General Agents (CAMGA), referring to the music sharing service that faced a copyright infringement lawsuit and was shut down in 2001.

“All of you in your offices have clients, that’s your music library,” Tessier says while moderating a Carrier CEO Panel at the conference. “You’re going to have to decide if you’re going to let AI come and take it from you, or if you’re going to own the AI and the technology.

“That’s the mistake the music industry made, and now they give away a million streams, and they get 12 cents for it.”

As an example, Tessier says he helped build an AI underwriting assistant, which took 28 minutes and could compare inspection reports against submission forms to see what was accurate.

“And if you put your heads in the sand and ignore it, there are going to be changes that you don’t want happening,” Tessier says. “It’s coming…it scares me a lot, because I don’t think we get the wave of this…”

Number 1 topic

Evan Johnston, president and CEO of Wawanesa, says he was in Europe about two weeks ago, talking to approximately 20 insurance company CEOs about what was happening in the industry and what we could probably expect to see in Canada. The topics ranged from talent to climate change and others, but the Number 1 topic was AI, Johnston says.

“It’s very clear to me that AI is going to change this industry, and it’s certainly going to change our organization,” Johnston says. “And when I talked to that group of leaders…there were some that were way ahead of us [and] some that were completely denying that this was happening.”

He adds Wawanesa hasn’t really used AI to “change customer experience, but that’s coming.

“The examples and the models that we saw just completely blew my mind,” Johnston says. “So to deny this is going to change our industry, I think, is negligent.”

Louis Gagnon, CEO of Canada for Intact Financial Corporation, recommends the industry use AI as much as possible — “test it, call places where you know that they’re using AI, look at what they do, how they do it, if the experience is good or the experience is not good…

“Ask your accountant to do a little exercise on how much he’s going to charge you, and do it on AI to see what’s the outcome,” Gagnon says. “And I’m not teasing here.”

Full transformation

Within five years, Gagnon predicts AI will transform the ways consumers are shopping. It will also transform the industry through claims and broker relationships, as well as provide industry professionals a chance to spend more time on value-added activity, he suggests.

“I think it’s also going to cut jobs,” Gagnon says. “I think it’s going to reduce the number of people in [an] organization…and it’s going to transform the workforce.

“So, I really think we cannot put our head in the sand and just think that, ‘Well, we’re going to be okay. Things are going to be a bit different. We’re going to be better,’” he says. “I think it’s going to be a bigger change than that.

“So, I think it’s fundamental that we test it, we try it, we play with it, and we try to see in our business where we can implement it,” Gagnon says, adding that some things will go wrong with AI.

“I also think that people in general are going to be very hungry and thirsty for human contacts,” he says. “They are going to be very, very happy to talk to people, to shake hands, to [look] people in the eyes. There’s going to be also that aspect that will not go away.”

Nav Dhillon, CEO of Aviva Canada, agrees the relationship element of insurance will not disappear.

“When a customer has just gone [through] a devastating event and wants to talk to somebody and ensure that their most-loved possessions are back with them or their home [is] rebuilt, [that] won’t go away.”

Dhillon also doesn’t see an end of the industry because of the core purpose of insurance — to help get people back on track.

“This industry has been around for centuries,” he says. “Aviva has been around for over 325 years. It will be around for another 325 or more.”

May 15, 2026
What U.S. budget cuts mean for NatCat forecasts

Deep cuts to U.S. government funding for climate research and forecasting by the National Oceanic and Atmospheric Administration and other agencies will impact catastrophe modelling going forward, Daniel Raizman, global head of client engagement, Climate Risk Advisory at Aon, tells attendees at Insurance Bureau of Canada’s recent 2026 IBC InSight Summit.

“I get asked this question all the time,” he says in response to an audience question. And the short answer is, “Yes.”

Since January 2025, insurers have been framing their messaging around impacts of climate data defunding in terms of how brokers and insurers rely on the data, he says. And this narrative addresses the importance of those data sets to banking and industries that drive key economic sectors.

“We’re notably facing a big setback in terms of research [organization] and potential threat of this data [disappearing], but we’re trying to come at it from a business perspective and say, ‘Hey, we personally rely on this data every day. This is how risk is transacted day-to-day across the insurance and reinsurance industry,’” he tells the audience. “We really care about the preservation of this data.”

Raizman adds the data creates significant value in catastrophe risk management, even without application of a climate lens.

“I would say, 90% of the work I do and the questions I get asked are around, ‘What’s my flood risk today? What’s it look like tomorrow?’” he says, adding clients are less likely to ask what 2050 will look like.

“And I think we have a challenge in managing that as well, because…the language of certain climate modeling is often mid-century, end-of-century. But the reality is that most people care about, ‘What does the next five years look like? What do I face today? How did I get yesterday wrong and [how can we] be better tomorrow?’”

Related: Environmental risks take backseat on list of business leaders’ concerns — in the short term

Much of the conference session’s main portion addressed Canada’s protection gap between what’s covered and what could or should be covered by policies. Panellists spoke to risks around wildfires and flooding that have exposed gaps for Canadian insurers and insureds, as well as inflation’s impact on restoration and replacement costs when customers have claims.

That sparked an audience question on the viability of a future public policy role in closing that gap.

There is work underway with the federal government on building a public-private partnership to help address that gap, notes Ravi Mahabir, vice president of climate at Intact Financial Corporation.

He says such public-private partnerships exist in other jurisdictions, including France and the U.K.

“There are many different constructs that have been deployed in terms of those public-private partnerships to address protection gaps. There are lots of lessons. That’s a good thing,” he tells the summit.

“Public policy is important; a blend of public and private partnership in deploying insurance mechanisms to provide affordable insurance to those high-risk areas. And that should really be a time-bound offering, in that those public private partnerships should really facilitate not just an insurance solution but also risk mitigation, such that those partnerships have phased out period over time.”

There also are misunderstandings within the general public around why insurers might need to reduce coverage or pull out of specific areas where risks are too high, adds Raizman.

“We often get in a blame game…when there’s lack of understanding around the risk that they face, and in realizing that these are businesses at the end of the day.”

May 14, 2026
Environmental risks take backseat on list of business leaders’ concerns — in the short term

Societal polarization, geopolitical tension, and economic slowdown are all dominating risk professionals’ heat maps right now, but insurance leaders see a lot of concern about environmental risks looking 10 years ahead.

With the Strait of Hormuz in the Middle East effectively shut down by naval blockades, a tenuous ceasefire in place in a war between the United States and Iran, and global energy prices escalating as a result, insurance leaders in Canada are noting the current pace of global crises is bewildering.

One insurance CFO joked with Canadian Underwriter at a recent conference that rare global risks — events that used to happen only once or twice in decades — now happen on a weekly, if not daily basis.

A former CEO of AIG in Canada, Lynn Oldfield, made a similar point in a recent keynote address at the Insurance Institute of Canada’s 2026 annual symposium in Toronto. She referenced a recent study by Global Risk Institute of 11,000 business leaders representing 116 economies around the world.

“What was the Number 1 takeaway when they amalgamated all that data and all those questions? Uncertainty. From every corner of the globe, in every possible way,” Oldfield said. “This is an unprecedented time….Why? It is characterized by so many risk files.

“But it’s not [just] that. It’s the pace, and the fact that they’re all happening at the same time. And that’s what’s really frustrating.”

Only 10% of business leaders in the GRI survey predicted a calm and stable global outlook over the next two to 10 years. Fifty-seven percent said it’s going to be turbulent or stormy.

And the environment, once a top political priority as of the Global Paris Agreement in 2015, seems to have fallen by the wayside, taking a back seat to other global risks.

Also in the news: ‘Right now means right now:’ How urgency reshapes broker workflows

“Risks are spiraling in scale, intensity and velocity,” Oldfield said. “And I think it’s the velocity we’re feeling right now. Tech risks are growing unchecked. Societies are on edge, and environmental concerns, which is a big one for our industry, are being deprioritized.”

Oldfield showed a slide with “top risk concerns” over time.

Between 2020, and 2023, environmental risk dominated the minds of business leaders.

For example, in 2021, ‘climate action’ and ‘biodiversity’ were two of three top concerns out of five. And in 2022, three environmental risks rated among the Top 5 concerns, including climate action, extreme weather events and biodiversity. In 2023, the two environmental concerns listed are a ‘failure to mitigate climate change’ and ‘natural disasters.’

But between 2024 and 2026, only one of the top five concerns were environmental in nature, with technological concerns beginning to dominate, and polarization remaining a top societal risk. State-based armed conflict is a top political risk in 2025 and 2026.

“We know that green [colour-coded] risks matter to our business, and you will see throughout catastrophic weather events. It really matters to us.”

Over the longer term, out of 10 global risks identified, five environmental risks are of the greatest concern, including extreme weather events, biodiversity loss, and critical changes to Earth’s systems — all ranked one through three out of 10 — followed by natural resource shortages (6) and pollution 10).

“Look at 10 years out, look at all that green,” said Oldfield. “Look at how worried business leaders are. That’s a lot of green, and that means we’ve got to get at it.”

May 12, 2026
Brokers’ next big E&O risk

Cyber insurance will likely factor heavily into broker errors and omissions risk in the near future, BOXX Insurance president Jonathan Weekes said Sunday at the Insurance Brokers Association of Alberta (IBAA) 2026 Convention in Banff.

“I think…the lack of advising clients around cyber insurance and cyber risk will probably be a leading factor [in] broker E&O over the next several years,” Weekes says during a cyber risk session.

As such, he recommends brokers move the discussion about cyber earlier into their conversations about renewals or when taking on a new client.

In a separate session, Grace Leung, a claims expert and vice president at Swiss Re Corporate Solutions, also used the example of cyber as a potential E&O risk. For her company in recent years, ‘recommend coverage type’ is a leading alleged E&O risk.

“So, that’s situations where, for example, you have a business, and your client asks you for the whole package, and you give them everything, but you forget to mention cyber coverage,” Leung says. “And unfortunately, that’s when a cyber incident happens.”

To illustrate the potential cyber E&O risk, consider a case where a client has both a standalone crime policy and standalone cyber policy, Weekes says. It can become a question of which policy responds first, and how the broker outlines policy coverages to the client.

The problem is that a lot of small businesses don’t think they need cyber insurance coverage, because “they’re not important enough for a hacker to care about them,” Weekes says.

“That’s been proven wrong time and time again,” he says. “Actually, small businesses are the most likely organizations to be hit by a cyberattack because they have the least amount of resources.”

Cyber as a risk transfer tool

But cyber insurance should be looked at as a strategic risk transfer tool, Weekes says.

Similar to cyber insurance, many small businesses also don’t buy a standalone crime policy, as they don’t see the value, he says.

To add to the complexity, social engineering/funds transfer fraud and invoice manipulation coverage, for example, has started to work its way into a traditional crime policy. But Weekes recommends that brokers try to get the coverage through the cyber policy as well.

But what about those clients that do buy standalone crime and cyber policies, with coverage for financial crime (specifically cyber exposures like social engineering/funds transfer fraud, invoice manipulation, etc.)?

“You need to have a conversation with [clients] about which one responds first,” Weekes advises. “And I say this because both of these policies will have other insurance clauses.”

If there are two relatively similar coverages, that client will then be in a battle with those carriers as to who is going to pay, Weekes says.

“And the most awkward position to be in is actually the broker position, because you’re either fighting with the carriers or you’re fighting with the client to remain patient as you figure it out,” he says.

But if the client is out, their patience with the broker will be “zero,” Weekes says. And this could lead to a potential broker E&O exposure.

The client could say something like, “You should have known that this could have happened, and you should have figured out how to admit coverage to reduce the likelihood of it happening, or eliminate it,” Weekes says.

What he recommends to brokers — and what he did when he was a broker — is have an endorsement drafted and attached to one of the two policies. “And it would say that this policy is primary for these specific exposures or coverage [areas].”

Larger carriers will likely have such an endorsement ready but may not offer it unless it’s specifically requested.

“You have to take those steps to see where the overlap is and make sure…[to] address it,” Weekes says.

May 12, 2026
AI company sued, accused of illegally holding its chatbots out as licensed doctors

HARRISBURG, Pa. (AP) — Pennsylvania has sued an artificial intelligence chatbot maker, saying its chatbots illegally hold themselves out as doctors and are deceiving the system’s users into thinking they are getting medical advice from a licensed professional.

The lawsuit, filed Friday, asks the statewide Commonwealth Court to order Character Technologies Inc., the company behind Character.AI, to stop its chatbots “from engaging in the unlawful practice of medicine and surgery.”

The lawsuit could raise the question as to whether artificial intelligence can be accused of practicing medicine, as opposed to regurgitating material on the internet.

And with a growing number of wrongful death or negligence lawsuits targeting AI companies, it could help propel court decisions as to whether AI chatbots are protected by a federal law that generally exempts internet companies from liability for the material users post on their services.

Gov. Josh Shapiro’s administration called it a “first of its kind enforcement action” and it comes amid growing pressure by states on tech companies to rein in its chatbots’ potentially dangerous messages, especially to children.

Pennsylvania’s lawsuit said an investigator from the state agency that licenses professionals created an account on Character.AI, searched on the word “psychiatry” and found a large number of characters, including one described as a “doctor of psychiatry.”

That character held itself out as able to assess the investigator “as a doctor” who is licensed in Pennsylvania, the lawsuit said.

“Pennsylvanians deserve to know who — or what — they are interacting with online, especially when it comes to their health,” Shapiro said in a statement. “We will not allow companies to deploy AI tools that mislead people into believing they are receiving advice from a licensed medical professional.”

Character.AI said in a statement Tuesday that it prioritizes responsible product development and the well-being of its users. It posts disclaimers to inform users that characters on its website are not real people and that everything they say “should be treated as fiction,” it said.

Those disclaimers also say users should not rely on characters for professional advice, it said.

Derek Leben, a Carnegie Mellon University associate teaching professor of ethics who focuses on AI, said the ethical questions facing Character.AI might be different from other AI platforms like ChatGPT and Claude. That’s because Character.AI explicitly markets itself as a fictional, role-playing site, and not a general purpose chatbot site, Leben said.

Still, Pennsylvania’s lawsuit raises a question as to whether chatbots can be accused of practicing medicine, Leben said. And, as lawsuits against AI companies proliferate, courts are trying to figure out whether chatbot makers are supposed to be liable for things the chatbots say.

“It’s exactly the question that these cases right now are wrestling with,” Leben said.

Increasingly, AI companies are defending themselves against charges of liability by saying they simply provide information available elsewhere on the internet, Leben said, and the question could become whether they are protected by a federal law that also shields social media companies.

Even before Pennsylvania’s lawsuit, state policymakers had raised concerns about chatbots impersonating medical professionals.

Last year, California lawmakers passed a California Medical Association-backed bill that authorizes state agencies to sanction AI systems, such as chatbots, that represent themselves as health professionals. In New York, similar legislation is pending.

States are skeptical that AI self-regulation will work, said Amina Fazlullah, the head of tech policy advocacy for Common Sense Media, which pushes for protections for children online.
“We haven’t seen it work particularly well with social media, specifically for kids,” Fazlullah said.

In December, attorneys general from 39 states and Washington, D.C., wrote to Character Technologies and 12 other AI and tech firms — including Anthropic, Meta, Apple, Microsoft, OpenAI, Google and xAI — to warn them about a rise in misleading and manipulative chatbot messages that violate state laws.

In the letter, they said “it is illegal to provide mental health advice without a license, and doing so can both decrease trust in the mental health profession and deter customers from seeking help from actual professionals.”

Character Technologies has faced several lawsuits over child safety.

In January, Kentucky filed a consumer protection lawsuit against Character Technologies, while Google and Character Technologies agreed to settle a lawsuit from a mother who alleged a chatbot pushed her teenage son to kill himself.

Last fall, Character.AI banned minors from using its chatbots.

Follow Marc Levy at http://twitter.com/timelywriter

May 8, 2026
A homeowners’ dog bites the dog-walker. A liability riddle: Who owns the dog?

A dog-walker bit by a dog in her care was the “owner” of that dog at the time of the attack under the Dog Owners’ Liability Act (DOLA) and therefore can’t claim $1 million in liability against the dog’s true owners, the Ontario Court of Appeal has found.

The case highlights nuances in how insurance covers liability associated with dog-walking.

Michael and Amanda Luciano hired a dog-walking company to look after their two dogs, a large male boxer named Forrest Gump and Benny.

Amanda Nigro, who worked part-time at the dog-walking company, began walking Forrest in November 2021. She looked after the dogs at the Lucianos’ house about three times a week and had a key to the house.

Forrest developed an infection in his foot in February 2022. The vet advised the Lucianos that Forrest was not to come into contact with mud or anything that could cause infection. It was recommended that Forrest wear rubber booties when walking in wet areas.

Nigro attended the Lucianos’ residence to look after the dogs on Mar. 24, 2022. Alone in the home, she let the second dog, Benny, outside to use the washroom, and Forrest refused to go. A bit later that morning, Nigro wanted to let Forrest out in the backyard; since mud and snow covered the backyard, she decided to put booties on Forrest before letting him out. It was the first time she tried to put booties on Forrest.

As she approached Forrest with the booties in one hand, the dog lunged at her, bit into her left arm and started shaking it. After she got her arm loose, Forrest continued to attack her, biting various parts of her body. Nigro suffered injuries to her abdomen, left upper thigh, and both arms.

There was no history of aggressive behaviour by Forrest in Nigro’s presence or otherwise.

Nigro sued the Lucianos for general damages of $350,000 and special damages of $650,000, for a total of $1 million.

The Ontario Superior court dismissed her claim, finding that Nigro possessed or harboured the dog at the time of the attack. The DOLA defines “owner” in s. 1(1) of the Act as follows: “’owner,’ when used in relation to a dog, includes a person who possesses or harbours the dog and, where the owner is a minor, the person responsible for the custody of the minor.”

Nigro appealed to the Ontario Court of Appeal, which upheld the finding in the lower court.

Also in the news: Canadian insurtech launches insurance shopping app within ChatGPT

“There can be no doubt that [Nigro] was an owner of Forrest for purposes of the DOLA,” the Court of Appeal for Ontario ruled in a decision released on Apr. 17. “[Nigro] was the sole person in the company of the dogs at the time of the incident.

“She was employed by the [Lucianos] and had attended at the house to care for the dogs three times a week. She had been in possession of the dogs on prior occasions, just as she was in possession of them on the day of the incident. As was found by the motion judge, she was unquestionably the person in a position to control the behaviour of the dogs at the critical time.”

The Appeal Court similarly rejected Nigro’s claim that the Lucianos were the true owners of the dog because the attack occurred in their home.

“Lest there be any doubt, the DOLA expressly ousts application of the Occupiers’ Liability Act…in relation to the liability of the owner, when the dog bite occurs on the premises of the owner,” the Appeal Court found. “This reflects a policy choice to base liability on something other than ownership or possession of the building in which the incident occurred.

“The DOLA seeks to promote responsibility and accountability in those who are best able to prevent dog bites and attacks, wherever they occur. It would defeat this legislative objective if someone meeting the definition of owner could escape liability merely because they were in someone else’s home at the time of the incident.”

How would the dog-walker be covered?

Would the dog-owner’s injuries be covered under insurance for the incident?

It depends.

CU research on broker websites shows most Canadian home insurance policies include personal liability coverage, which can apply if the homeowners’ dog injures someone (including a hired dog-walker).

However, home insurance policy exclusions for animals may apply, including for breed restrictions, a known aggressive history of a pet, a business arrangement, or liability related to animals.

If a dog-walker owns a commercial general liability (CGL) policy, that might cover a dog-walker if someone else was bitten while the dog was in his or her care.

That said, a standard CGL policy may exclude animal-related claims, and so a dog-walker would need either a specialized pet insurance package or a CGL with an explicit endorsement for pets or animal care.

But what happens if a dog bites the dog-walker?

Typically, a CGL would not cover dog walkers if dogs attack them while in their possession.

Coverage for medical expenses in that case may fall under Workers’ Compensation (WSIB in Ontario), personal accident or injury insurance, or health insurance.

May 5, 2026
How Canada’s commercial liability market is shifting

Canada’s commercial liability market has shifted decisively in favour of buyers in 2026, according to Aon’s Spring 2026 Canadian Insurance Market Update.

“After several years of constrained capacity and firm pricing, insurers are now competing actively for quality accounts, particularly in primary casualty,” the report says. “New entrants and established markets are broadening appetite, stepping up line sizes, and sharpening terms.”

Clients with strong risk profiles are seeing more choice and competitive pricing, Aon says. These clients are also seeing opportunities to enhance wording, expand coverage, and optimize program structure to align with current operations and contractual risk transfer.

The shifting commercial liability market is particularly visible in excess casualty, Aon says.

“Competition for participation on towers that were previously difficult to build is driving meaningful rate reductions and, in many cases, broader coverage for many industries,” the report says. “Capacity is generally accessible, but insurers remain mindful of aggregation and jurisdictional risk, often preferring smaller layers than were typical before the hard market.”

Accounts with heavy U.S. exposure, challenging loss experience or higher-hazard profiles are seeing more measured improvement, Aon says, highlighting the importance of targeted risk improvement, credible data, and clear risk narratives.

For many buyers, this landscape supports a fresh look at limit strategy and structure, including reassessing adequacy in light of social inflation and verdict severity, rebuilding or smoothing towers, and calibrating retentions to balance volatility with balance sheet strength. In many cases, a portion of savings can be redeployed into additional limits, better layering, or expanded protection.

That said, several structural challenges persist, despite broader softening.

U.S. jurisdictional risk remains a central concern, with social inflation (such as nuclear verdicts, or those exceeding $10 million) and litigation funding “sustaining elevated severity expectations,” Aon says. In addition, higher hazard classes, complex product manufacturers, and large fleet or transportation risks continue to attract close underwriting scrutiny and more cautious capacity deployment.

Coverage terms are generally stable and even “improving at the margins” in some cases, Aon reports.

Exclusions for per-and-fluoroalkyl substances (PFAS, also known as ‘forever chemicals’) and other emerging contaminants, wildfire, and specific geopolitical exposures remain commonplace, the brokerage says. But underwriters in 2026 are more open to tailoring language for well-controlled risks. And clients that can show strong governance, mature safety culture, and disciplined loss control are best positioned to negotiate refinements and, where appropriate, limited carve-backs.

Underwriting discipline has evolved rather than disappeared, Aon says. “Carriers are still selective, but the stance is more solution oriented, with a greater willingness to differentiate between risks and to adjust pricing, structure, and wording when presented with comprehensive, data rich submissions, clear risk narratives, and credible improvement plans.”

Liability underwriters continue to track a widening set of emerging exposures, including ongoing social inflation, changing litigation trends, environmental, social and governance related scrutiny, cyber and technology driven risks, and environmental liabilities.

2026 is a constructive time for organizations to reassess the design and performance of their casualty programs, Aon says. Priorities include improving exposure data (such as fleet, driver, and contractual information), strengthening safety and claims management practices, reviewing limit structures in light of verdict trends, and fine-tuning retentions and attachment points to reflect true volatility appetite.

Buyers that take a more strategic, data-driven approach in this phase of the cycle will be better positioned to navigate future shifts in capacity, pricing, and liability risk.

As one measure of underwriting profitability, the Canadian commercial liability market ended 2025 with a Net Insurance Service Ratio of 81%, Aon’s report says.

May 5, 2026