Canadian Underwriter

Category: Risk

What P&C insurers can expect from OSFI next year
Cyber preparedness features prominently in the supervisory strategy of Canada’s solvency regulator for the 2026-27 fiscal year.

The Office of the Superintendent of Financial Institutions (OSFI) released its Annual Risk Outlook last week. Among its insurance priorities for 2026-27 is “conducting targeted supervisory work on cyber preparedness and third-party risk related to critical outsourced operations.”

Third-party cyber risk remains a concern for Canadian businesses, according to research commissioned by commercial insurer QBE Canada last June.

More than half of Canadian businesses (53%) have experienced a cyber event in the past 12 months, QBE’s study found. Fifty-eight percent of those businesses said the events were supply chain- or vendor-related cyberattacks. QBE Canada’s survey included 400 IT departments in Canadian businesses.

For selected property and casualty insurers, OSFI says it will conduct thematic monitoring of cyber insurance underwriting and the emerging coverage of artificial intelligence.

“For selected insurers, we plan to conduct targeted cyber and technology risk reviews as well as ongoing monitoring of business integration and risk oversight of AI,” the regulator says in the report. “We will continue our intelligence-led cyber resilience testing for large insurers.

“For all insurers, we will review their response to cyber incidents and assess their cyber preparedness.”

Malicious cyber activities remain a “significant and evolving threat” to the financial sector and its critical service partners, OSFI notes in its annual risk outlook.

“Reported incidents demonstrate the growing sophistication of threat actors leveraging advanced and AI-enabled tools, which increase both the speed and scale at which cyber threats can materialize,” the regulator says. “Software vulnerabilities in common and required technology are expected to remain the most persistent and high-impact technology risk.”

For 2026-27, OSFI’s other two insurance priorities include a focus on ensuring carriers maintain resilience and sound risk management by:

evaluating insurers’ responses to market volatility, including oversight of investment, liquidity, and policyholder behaviour risks, and

assessing boards’ effectiveness in overseeing the risk appetite framework and alignment to insurers’ strategy as well as financial and capital plans

Continued resilience

For the insurance industry as whole, OSFI says Canada’s federally regulated insurers continue to demonstrate resilience amid persistent structural and cyclical pressures.

“The operating environment remains characterized by geopolitical uncertainty, elevated integrity and security risks, rapid technological change, and ongoing catastrophe-related losses,” the report says. “Competitive forces are accelerating shifts in operating and distribution models, as well as inorganic growth strategies, contributing to increased execution risks.”

Investment risks also remain elevated, OSFI says, reflecting continued market volatility. “This continues to expose insurers to reinvestment and valuation risk across asset classes. In addition, private market assets are playing a greater role in insurers’ investment portfolios, introducing increased opacity, complexity, and potential illiquidity constraints.”

In particular, P&C insurers face ongoing underwriting pressure, OSFI says. “Claims inflation, particularly in auto insurance, and a softening commercial lines market, test financial and operational soundness.”
April 20, 2026
Adjusters preparing for flood Cat after Ontario’s spring thaw
With more rain — and snow — forecast for Ontario this weekend, adjusters are closely monitoring the potential for catastrophic flooding in the province.

“Right now, it’s more of a monitor-and-prepare situation, not a full Cat event just yet. That could change though,” Christine Segaric, director of Cat response at ClaimsPro, tells Canadian Underwriter Friday.

“At this point, we’re watching the northern and northeastern Ontario communities, places like Sudbury and Timmins. We are also paying attention to some of the more remote and lower lying communities like Kapuskasing.

“It still feels a bit early though. We’re not seeing a big spike in claims yet. But based on what’s happening on the ground, I wouldn’t be surprised to see things ramp up quickly over the next week or two as temperatures keep rising and the snowpack starts to melt.”

Parts of northern Ontario received more than 500 cm of snow this winter, The Weather Network reports. And the warm, spring-like temperatures over the past week have led to a rapid thaw, causing several waterways to flood. The Weather Network forecasts more rain in southern Ontario Saturday, and a mix of rain and snow in northern Ontario.

“The freeze-thaw cycle is a big part of it,” Segaric says of reports of serious flooding in several areas of the province. “We came out of a pretty deep freeze earlier this year, and now we’re shifting into warmer weather. That swing tends to create ice buildup, and with frozen grounds it makes it hard for water to drain properly once everything starts melting.”

Also in the news: What the P&C industry can do to keep home insurance affordable

That concern is exactly what Jim Mandeville, senior vice president at First Onsite and disaster recovery specialist, sees play out every spring on the ground.

“If we talk about Southern Ontario, we don’t have consistent very cold temperatures like we do in the West,” Mandeville told CU in mid-February. “So, when we go from hovering around freezing to minus 30, and back and forth, we end up with ice damming like crazy. If you talk about the total volume of [winter-related] claims, especially from an underwriting perspective, it’s ice damming [among the most].”

This week, Segaric says, “losses are a mix of flooding and snow-load related collapses.”

Insurance Bureau of Canada reports “we’re already seeing significant flooding in a number of communities, with many more facing elevated risk,” according to Amanda Dean, vice president of Ontario and Atlantic.

Drone footage shows several roadways in North Bay are washed out. Minden Hills, Ont., a small town in Haliburton County, has closed down roads and declared a state of emergency in response to flood conditions in the community, The Weather Network reports. And Central Manitoulin Island declared a state of emergency earlier in the week following major floods in multiple communities that shut down the Manitoulin Hospital.

“For residents impacted by flooding, IBC’s Consumer Information Centre has activated its Virtual Community Assistance Mobile Pavilion (V-CAMP) program to support home, car and business owners across the region,” says Dean.

Adjusters note that when floodwaters start rising, there is only so much homeowners can do. However, suggestions include:

making sure sump pumps are working (and ideally have a backup)

re-grading driveways to prevent water from pooling near the house

clearing eavestroughs and downspouts

ensuring downspouts direct water away from the house

clearing snow around the home’s foundation.
April 17, 2026
What the P&C industry can do to keep home insurance affordable
Canada’s P&C industry needs to lobby more for public investments in resilience, provide more incentives for Canadians who invest in protection for their homes, and stop re-building damaged homes to their pre-loss condition, according to a new emerging issues paper published by the Insurance Institute of Canada.

Home insurance is currently affordable, adequate, and available for most Canadians, says the report, Home Insurance Affordability: Implications for the Insurance Industry in Canada. But higher residential claims for flooding, wildfire, hail, and severe wind has driven up the price of home insurance significantly over the past 30 years.

“Strain is evident in some Canadian insurance markets,” says the report’s author, Paul Kovacs, the founder and executive director of the Institute for Catastrophic Loss Reduction. “Experience in the United States shows that home insurance affordability will inevitably become an issue if Canadians fail to break the trend of rising severe weather-related home damage and continue to experience rising residential claims.”

Statistics Canada figures cited in the report show the median after-tax income in Canada was “stagnant” between 1996 and 2025, growing by an average of 0.8% per year after inflation. Over the same period, the cost of living in Canada increased by 2.3% a year, driven by increasing costs in housing, food, and energy.

Meanwhile, the price of home insurance in Canada increased by an average of 5.3% per year over this period. “This was more than twice the increase in the cost of living, sustained over three decades,” the report states. “Indeed, Statistics Canada found that home insurance prices increased by more than inflation in 28 of the last 29 years. In this same time period, natural catastrophe–related claims have increased 8.1%.”

Claims costs for insurers ballooned to a record $9.1 billion in 2024 and returned to the more familiar (but high) range of $2.4 billion in 2025. Escalating natural catastrophe claims expenses are the main culprit in the rise of home insurance costs.

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The report states every dollar invested in building resilience in homes reduces claims costs down the road by between $5 and $10.

To prevent a home insurance affordability crisis in 10 years’ time, four opportunities exist for building more damage-resistant homes, the report states:

Homes must be built in the right locations and in the right way during initial construction

Millions of existing homes lack essential protection that should be added through retrofits supported by government incentives

Governments and the insurance industry can partner to build back better after a loss, adding essential resilience measures that will reduce the future risk of damage

Communities must invest to protect homes and public infrastructure.

To this end, the “insurance industry must press with increased urgency for action by governments,” the report states. “Building codes need to include protection from flooding, wildfire, hail, and high wind. Governments should provide financial incentives to homeowners who invest in protection. Governments should invest in resilient community infrastructure.”

Second, the insurance industry “needs to become more effective in communicating present practices in a way that incentivizes homeowners to invest in seismic and climate resilience,” the report recommends. “The insurance industry must improve communications with homeowners about how resilience investments can have a favourable impact on home insurance pricing, terms, and availability.”

And finally, the industry and governments need to invest in “building back better,” meaning they rebuild in a way to prevent damage from happening in the future.

“Governments and the insurance industry need to stop restoring damaged homes to their pre-loss condition,” the report states. “This puts structures and their contents back at risk. Inevitably, homeowners will experience future loss and damage.

“Insurers and governments should commit to build back better by incorporating resilience protection into recovery efforts.”
April 16, 2026
Do beaver dams really make flooding worse?

Beavers (Castor canadensis) are widely recognized as ecosystem engineers, building dams that reshape water flow and alter the physical structure of rivers and streams.

There is a scientific consensus on the positive impact of beaver dams, for example, in creating landscape-scale wetlands, increasing biodiversity and generating heterogeneity that benefits many species. However, during extreme rainfall, beaver dams are quickly blamed for exacerbating downstream flooding whenever they break.

Together with my colleagues, I explored the topic of beavers at the international Wood in World Rivers 5 Gaspé Conference held in June 2024. That led to the publication of an article in the journal Earth Surface Processes and Landforms.

Real-world consequences

Beaver dams were heavily implicated in major flooding events in the Charlevoix-Est Regional County Municipality in Québec’s Charlevoix region in 2005 (Hurricane Katrina) and 2011 (Hurricane Irene). These events led to Québec Superior Court rulings in 2008 and 2017 that blamed beaver dam failures for downstream property damage.

Both parties had called experts with opposing views: the plaintiffs claimed that destroying the dam would have prevented the flooding, while the defence argued that the river would have burst its banks anyway.

The judge ruled in favour of the plaintiffs, finding that the municipality was aware of the potential danger posed by the dams and had a legal obligation to intervene to prevent the risk of flooding, in accordance with Section 105] of the act pertaining to municipal powers.

This section stipulates: “If informed of the presence in a watercourse of an obstacle that threatens the safety of persons or property, a regional county municipality must carry out the work required to restore normal water flow.”

Dead wood and beaver dams constitute an “obstacle” under these provisions.

In short, because beaver dams constitute a threat, they should be destroyed as a preventive measure. But what scientific evidence supports these claims?

Modelling tools exist that allow us to fully understand the downstream impacts of breaches in human-made dams, such as those belonging to Hydro-Québec, for example. It is precisely these hydraulic modelling tools that the engineer hired by the Québec municipality, Jean Gauthier, used in the report he submitted to the court in 2008. Gauthier was also present at the second trial in 2017.

A new simulation

Since the judge had questioned Gauthier’s estimate of the volume of water upstream of the dam, we decided to contact the engineer to ask him to carry out further numerical simulations using the most recent tools and data available.

To assess the impact of the beaver dam on the water level at a bridge in the municipality — Chemin Port-au-Persil — we used a model that simulated the flood resulting from the August 2011 rainfall.

We carried out simulations with and without a dam breach. To assess the worst-case scenario, we assumed that the dam would breach at the peak of the flood. We also assumed that the breach — the opening created in the dam — would form in just 10 minutes. That’s a very short time frame, comparable to that of a concrete dam, in order to measure the maximum possible impact downstream.

Since the judge had questioned the estimate of the volume of water behind the dam, this was deliberately increased to test an extreme scenario. It was quadrupled (10,000 cubic metres) compared to the volume initially estimated on site (2,500 cubic metres). Finally, a dam height one metre higher than that measured in the field (3.15 metres instead of 2.15 metres) was also tested.

Dams not to blame

The results of our modelling indicated that, even with a fourfold increase in water volume, the impact on the water level at the bridge was very low. That confirmed that the damage caused to the lodge could not be attributed to the beaver dam breaking.

The simulations also highlight that it is the height of the dam, rather than its retention volume, that controls the propagation of flood waves downstream.

In reality, other natural phenomena linked to the torrential floods that occurred are likely responsible for the damage in 2005 and 2011. These include landslides and the transport of sediment and timber resulting from the erosion of the riverbed and banks observed along the Port-au-Persil River in 2011.

Furthermore, the narrowness of the Port-au-Persil bridge may have contributed to the damage caused by the floods. The bridge was rebuilt in 2023.

The importance of rigorous assessments

Our findings challenge the negative perceptions of beaver dams and highlight the importance of rigorous scientific assessments in civil liability cases relating to flooding.

The legal implications of Section 105 of Québec’s Municipal Powers Act, as well as the case law relating to the flooding events in Quebec in 2005 and 2011 — which holds regional county municipalities are liable for damage caused by flooding due to “obstacles” in rivers — expose beaver dams to widespread and unnecessary demolition.

Instead, evidence-based management practices and public awareness campaigns should be promoted to recognize the ecological benefits of beavers while addressing concerns regarding the flood risks they pose.

Pascale Biron received funding from the NSERC (Natural Sciences and Engineering Research Council of Canada).
Maxime Boivin is a co-holder of the Research Chair in Exploited Aquatic Species (CREAE) and a member of the Boreal Research Centre (CREB). He has received funding from the Natural Sciences and Engineering Research Council (NSERC).
Thomas Buffin-Bélanger has received funding from the Natural Sciences and Engineering Research Council (NSERC).

This article was originally published on The Conversation, an independent and nonprofit source of news, analysis and commentary from academic experts. Disclosure information is available on the original site.

This article is republished from The Conversation under a Creative Commons license. Disclosure information is available on the original site. Read the original article: https://theconversation.com/do-beaver-dams-really-make-flooding-worse-research-casts-doubt-on-beavers-as-flood-culprits-276848

Article courtesy of The Canadian Press

April 15, 2026
What higher energy prices mean for Canadian P&C insurers

Spikes in oil and natural gas prices will have knock-on effects on a variety of areas touching Canadian property and casualty insurers — including the prospect of economic recession, positive investment returns, escalating claims costs, and supply chain disruption, a reinsurance exec told Swiss Re’s 40th annual Canadian Insurance Outlook Breakfast Tuesday.

“The knock-on effects of energy issues for inflationary impact — not just on energy, but lots of other things [as well] — is substantial,” John Dacey, former group chief financial officer of Swiss Re, said in his keynote address to the Canadian P&C leaders attending the breakfast. “Worst-case scenarios are worth thinking about…

“If the Strait of Hormuz does not open, and if there’s more material damage done to the infrastructure in the Gulf region over the coming months, the spike of oil prices and natural gas prices is going to be far in excess of what people have seen today. And the likelihood of that triggering a global recession cannot be ignored.”

Dacey qualified that he was not predicting this. He believed the warring parties would “muddle along” and come to some sort of resolution to the conflict, claiming “victory on both sides,” sooner rather than later.

Although higher energy costs contribute to inflation, that may prove to be a boon for insurers’ investment returns.

“Interest rates, as a result of the inflation impacts, are going to remain higher than people thought at the beginning of this year,” Dacey said, noting that U.S. interest rates would likely be between 4.2% and 4.5% between now and 2027. “It could go higher, because inflation could go higher.”

Since Mar. 18, 2026, the Bank of Canada’s interest rate has been 2.25%, unchanged since October 2025.

Neither the US Federal Reserve nor the Bank of Canada seem likely to lower interest rates in the current environment, Dacey said. “As a result, on a worldwide basis, the inflation is already hitting Europe thanks to energy cost. You’re going to continue to see interest rates relatively high to what we’ve seen in the last decade, ever since 2008.

“That’s not bad news for insurance companies. Your fixed income portfolios should be just fine.”

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However, the increase in oil and gas prices could disrupt supply chains, which were just recovering from the pandemic shock between 2020 and 2023. That happened during a hard market in Canada, when insurance premiums rose to account for higher claims costs.

Due to the higher energy costs, “if you have to worry about paying claims and replacement values,” Dacey said, “you need to start thinking yesterday about, ‘Are we going to have a similar situation to 2022, where the cost is going to outstrip any premiums that we were able to get on board?’”

Canada, a supplier of oil and natural gas, may not be as hard-hit by inflationary energy prices as other countries, Dacey noted.

However, even though North America may not be as affected by spiking energy costs as Europe, and Europe would feel the shock less than in Asia, the energy prices would have a downstream effect on key suppliers in the global supply chain, Dacey said.

“There are economies today in the Philippines, Vietnam and Thailand, where the day-to-day activities are being constrained dramatically by the absence of natural gas and to a lesser degree oil,” Dacey said. “This is not going to fix itself in two weeks if the Strait of Hormuz were to open tomorrow. This is going to be longer-lasting.

“And these are exactly the countries which, thanks to…policies put in place a year ago, are more important for supply chains than they have been.”

April 15, 2026
Where to find commercial cover for wartime risks if the U.S.-Iran ceasefire fails

First ‘they’ were bluffing, then it was supposed to be ‘over in a week,’ now warring parties in the Middle East are butting heads over which of them truly holds the cards in the blockade of the Strait of Hormuz.

Since the Apr. 8 break in hostilities between the U.S. and Iran, marine experts estimate about 40 ships have transited the Strait. Crude oil prices continue to swing. And Israel’s continued actions against Lebanon threaten to shatter the fragile ceasefire.

What happens if the ceasefire doesn’t hold? Will insurance capacity dry up if the war in the Middle East continue? And where can commercial clients find coverage for their risks during wartime?

Capacity

Although re/insurer risk appetite can reduce substantially during a conflict, it doesn’t necessarily go away, says James Lloyd, a senior vice president specializing in political violence and terrorism at Marsh Risk.

“There’s still appetite. The political violence market’s quite robust in terms of its ability to underwrite during live conflicts,” he tells Canadian Underwriter. “So, while appetite is cautious…it’s certainly not closed to accepting new business and renewal business within those territories for war risks.”

Even though the Middle East could currently be described as “on fire,” insurance companies are still offering cover within certain countries in that region, says Tarique Nageer, terrorism placement advisor at Marsh Risk.

‘“It’s not completely devoid of cover. It’s just [that] everything is done on a case-by-case basis, and obviously it’s priced appropriately.”

Adds Lloyd: “As a benchmark, rates increased probably tenfold [compared to] pre-conflict in territories such as the United Arab Emirates.”

Affordability risks

Meanwhile, affordability risk for Canadian insureds is “concentrated rather than system-wide,” says Marcos Alvarez, managing director of global financial institution ratings at Morningstar DBRS.

He notes Canada’s broader commercial market was relatively soft at the start of 2026 as property capacity was abundant. Where affordability pressure may appear, he adds, is in specialty placements as opposed to property cover for small- and medium-sized enterprises.

“In the current environment, the most exposed buyers are Canadian firms that rely on London market capacity for terrorism, political violence, marine war, aviation war, or political risk cover,” he tells CU.

“If the conflict is prolonged, the issue will be higher retentions for local carriers, narrower wording, and selective capacity withdrawal for sensitive risks rather than a broad-base insurance shortage across Canada.”

Commercial coverage shifts

However, continuation of the war may have Canadian commercial insurance clients with operations in the region rethinking their insurance coverage purchases.

For one thing, clients that had not previously purchased the full political violence suite of perils are starting to include more coverage. “We’re seeing clients upgrading their coverage from terrorism to include war,” says Lloyd. “That’s certainly a trend that we started to see.”

Another trend relates to clients with exposures historically covered within the cargo (land-transit) market, but that have since received notices of cancellation. They are looking to buy back that coverage, to some degree, within the political violence market.

“Also, we’re talking to clients a lot about active assailant insurance,” Nageer adds. “That is a separate product, but also within concerns for a lot of clients because the active assailant cover is a blend between a property plus a casualty policy. It gives a lot of extra expenses in crisis-management services, which clients find valuable in this day and age.”

From a Canadian insurance perspective, adds Alvarez, “the bigger issue is not a surge in domestic claims overnight, but the way a global conflict can tighten specialty capacity and reprice risks that are largely underwritten through London.”

April 13, 2026
What’s in store for Canada’s 2026 wildfire season?

Wildfire season may get off to a relatively quiet start in Canada but lingering drought and a warm summer could tip the scales towards another severe year, experts say.

Wildfire expert Mike Flannigan says this year will be his “litmus test” for whether Canada’s wildfire seasons, already in uncharted territory and fuelled by human-caused climate change, have entered a “new reality.”

“My narrative used to be, there’ll be bad fire years and there’ll be quiet years. I’m now beginning to think at a national scale most years are going to be bad fire years,” said Flannigan, a professor of wildland fire at Thompson Rivers University in Kamloops, B.C.

No one can precisely predict in April how Canada’s wildfire season will play out. A seasonal forecast can’t account for a fire’s ignition, such as a lightning strike, or the hot, dry and windy weather conditions that fuel individual fires and arrive on short notice.

Yet, some indicators can help experts describe broad wildfire risks. And Flannigan sees some cause for concern heading into this season.

Parts of Canada emerged from winter under abnormally dry or drought conditions, including historic wildfire hot spots in British Columbia’s southern interior, northern Manitoba and eastern Northwest Territories.

El Niño effect

Long-range forecasts suggest much of Canada could be hotter than normal over the coming months. And El Niño, the warming phase of a recurring climate pattern tied to shifting waters in the Pacific Ocean, is expected to take hold this summer.

Yet, much of Canada enters wildfire season in better shape than some of the worst years in recent memory. A stormy winter has left a fairly deep snowpack lingering across a large part the country, especially in areas farther north, said Richard Carr, a wildfire research analyst with Natural Resources Canada in Edmonton.

“We’re not really seeing too many signs of unusual activity through April,” said Carr.

There are some exceptions, such as southern B.C. into southern Alberta and southwestern Saskatchewan. Those areas have already seen some wildfire-conducive conditions emerge, Carr said.

Carr also has his eye on drought-stricken New Brunswick and areas around Hudson Bay and eastern Northwest Territories where there was lower than normal snowfall.

“It looks like we’re expecting fairly warm conditions through the summer and the rest of the country might start to get fairly active by sometime in June or July,” he said, though he downplayed the influence of El Niño on the wildfire season.

Canada heads into this season in uncharted territory, coming off three consecutive severe fire years. Last season was the second worst, behind only 2023 when wildfires burned through about 150,000 square kilometres of land.

Climate change acceleration

Accelerating climate change, driven by the burning of fossil fuels, is loading the dice for longer and more intense wildfire seasons, scientists say. A warmer atmosphere can suck more moisture out of twigs and pine needles and turn the forest floor into a tinder box waiting for a spark. It also increases the likelihood and severity of fire-fuelling heat waves and droughts.

Canada’s managed forests have in recent years started to release more carbon they absorb, reinforcing a climate feedback loop. In the most striking example, the 2023 wildfires released more planet-warming emissions than almost any country on Earth, save for China, India and the United States, a NASA study found.

Extreme wildfire behaviour is also becoming more common, Flannigan said. Wildfires such as the Jasper 2024 complex can burn so intensely they generate their own thunderstorms that spawn lighting strikes and start new spot fires. The 2023 season saw the most fire-generated thunderstorms recorded in a season, with more than 140 in Canada alone, Flannigan said. The previous global record was 100, set two years earlier.

Fires exact their toll in many ways. Tens of thousands people across Canada have fled from wildfires during recent seasons and studies document high rates of post-traumatic stress among evacuees.

Even far from a fire, smoke poses a serious health risk. A recent Health Canada review estimated that smoke exposure during the 2023 wildfires could contribute to around 400 acute and 5,400 chronic premature deaths. The study estimated that could translate into billions of dollars in medical costs, reduced productivity, and pain and suffering.

As the country emerges from winter, it’s easy for people to forget they need to stay vigilant to wildfire risks when they venture onto the landscape, said Derrick Forsythe, a wildfire information officer with Alberta Wildfire. He said there have already been reports in southern parts of the province of some abandoned campfires, though thankfully none that spawned larger fires.

“This is a volatile time of year for us, because there is so much potential fuel out there,” Forsythe said, referring to the dead vegetation exposed once snow melts.

“Make sure everything’s out and cool to the touch. You know, just do that part to help keep the risk of new wildfires down in the spring season.”

April 13, 2026
Could Middle East war spark attacks on Canadian soil?

Tensions across the Middle East continue – with fighting dragging on in Lebanon even as a U.S. ceasefire with Iran appears to be holding.

Such tensions can spark violence far beyond the conflict zone, as evinced by recent attacks and threats against both the Islamic and Jewish communities and their institutions in Canada and elsewhere.

Which sadly begs the question, could more serious and possibly deadly attacks take place on Canadian soil?

“You definitely see those tensions exacerbated, and you find individuals who are taking up an extremist ideology, whether that’s Islamist, antisemitic extremism, or right wing-extremism. We have also seen attacks against mosques in Canada in the past,” says James Lloyd, a senior vice president specializing in political violence and terrorism at Marsh Risk.

He cites the Montreal synagogue firebombing and Toronto school shooting in the wake of the Israel-Hamas war as examples of such incidents. And, in 2021, there was a truck ramming attack on a Muslim family in London, Ont. that claimed four lives.

“In terms…of insurance coverage, for an incident to be deemed as a terrorism attack, there has to be a religious, political [or] ideological motive established,” he says. “In most of these cases that we reference, there’s a clear religious connotation to the motive behind those attacks. But they do tend to be low-capability, often lone-wolf actors, which results in limited damage to actual physical property.”

For attacks occurring outside the Middle East region, he adds, “the impact is more to cause mass disruption and fear, and unfortunately human life casualties and injuries.”

Related: How the Iran war affects insurance coverage for terrorism

Like Lloyd, Marcos Alvarez, managing director of global financial institution ratings at Morningstar DBRS, says the more plausible spillovers for Canada are diffuse, smaller-scale and less predictable actions like cyber activity, threats against soft targets, vandalism or politically motivated attacks on community and religious institutions.

Other potential loss risks stem from protest-related property damage and precautionary closures in the face of threats.

“That is consistent with Canada’s current terrorism threat level of Medium – which has not changed for some time – and [the Canadian Security Intelligence Services’] statement that violent extremism remained at a heightened level, and the Canadian Centre for Cyber Security’s assessment that Canada is very unlikely to be a priority Iranian cyber target but could still be a collateral victim of activity aimed at the U.S.,” he adds.

Both Lloyd and Tarique Nageer, terrorism placement advisor at Marsh Risk, note that within the suite of terrorism and political violence insurance products, there is active assailant coverage. It’s designed to respond to events that might cause limited physical damage but will impact business and civil order – often shutting down part of a town or city where an attack occurs.

“But then also the human impact in terms of additional expenses that might be incurred for funeral costs, expenses like additional security costs that insureds find themselves having to take out following an incident,” says Lloyd.

Related: Where Middle East war creates risks for Canada

The coverage pays for organizations or municipalities to engage a crisis management response team to help people cope with these incidents. Coverages can also facilitate the hiring of a family or press liaison if needed. “I’ve seen that product be very useful for insureds,” he adds.

In Canada, Lloyd says, the Tumbler Ridge school shooting in February has led to client interest in this insurance product area.

Nageer adds it’s also important for businesses or governments to be prepared with security and business continuity procedures that can respond to terror threats.

“Insurance is important. But does that completely take away the risk?” he asks. “Knowing what those risks are, and making sure you have the right training and contingency plans in place in place for your employees may override any of the insurance aspects.”

Looking specifically at the aviation segment, Alvarez tells CU, “Transport Canada already advises Canadian airlines not to fly over Iran or Lebanon and imposes restrictions or heightened risk assessment for Iraq and Israel, so the aviation system is already operating with conflict-zone controls.”

He adds the credit rating agency’s base case for Canada does not include the potential for a 9-11 style loss emerging from the current conflict.

April 10, 2026
Insurers urged to keep on their toes, despite muted 2026 hurricane forecast

Reinsurer Swiss Re is warning against complacency after Colorado State University (CSU) on Thursday forecasted a lower-than-average 2026 hurricane season.

CSU predicts 2026 will have 13 named storms, six hurricanes, and two major (Category 3-4-5) hurricanes, all below the 20-year historical average.

The probability of a hurricane making landfall along the U.S. east coast, including Florida, is 15%, CSU says, down from the 20-year average of 21%.

That’s significant for Canada, since hurricanes along the U.S. east coast often recurve through the western Atlantic, putting Atlantic Canada at risk. The remnants of these tropical storms often bring a risk for flooding rains, high winds, and tornadoes as they move north across the border.

Last year, no hurricane-related tropical storms hit Atlantic Canada despite the forecast for an ‘above-normal’ hurricane season, with four to seven major hurricanes projected in 2025.

However, despite the lower risk for a major hurricane this year, CSU forecasters caution: “Coastal residents are reminded that it only takes one hurricane making landfall to make it an active season for them. Thorough preparations should be made for every season, regardless of how much activity is predicted.”

Monica Ningen was previously Swiss Re’s representative in Canada. She is now CEO of property and casualty reinsurance for Swiss Re in the US. She noted Hurricane Andrew is a prime example of what can happen, despite the forecasts.

“Last season may have felt relatively quiet, and this forecast points in a similar direction, but we have to be very careful not to let that create complacency,” Ningen said in a statement following the CSU’s forecast. “It only takes one storm, in the wrong place at the wrong time, to define a season.

“Hurricane Andrew is a classic example, forming during what was otherwise a quiet year, yet ultimately becoming one of the most consequential loss events in our industry’s history. We’ve seen time and again that a single event can reshape both loss experience and market dynamics, regardless of how the season looks on paper.”

In 1992, the U.S. National Hurricane Center projected Hurricane Andrew was weakening as it approached southern Florida. Instead, it rapidly intensified into a Category 5 hurricane before it hit Florida as a Category 4 storm with 270 km/h winds.

At the time, it caused estimated insured damages of US$15.5 billion and was directly linked to the insolvency of nine US insurance companies, according to a paper published by National Academies.

And so, Ningen highlights CSU’s caution about the forecast.

“According to today’s Colorado State University forecast, which is calling for a below-average Atlantic hurricane season, it would be easy to interpret that as a signal to ease off,” Ningen says. “But in our business, averages can be misleading because they don’t capture impact….

“We can’t control how many storms form, but we can control how ready we are. That includes practical steps like strengthening roofs, improving building standards, and making smart investments that may cost more upfront but save significantly in the long run.”

CSU is forecasting a quieter hurricane season primarily because of a potentially strong El Nino event in the Atlantic ocean during the summer and through the end of 2026.

“El Nino” refers to a 12-18-month period during which anomalously warm sea surface temperatures occur in the eastern half of the equatorial Pacific. It’s often associated with a strong vertical wind shear, which is the measure of winds higher in the atmosphere.

“Tropical cyclones need relatively calm winds in order to develop and thrive,” as The Weather Network explains. “Increased wind shear can shred apart thunderstorms before they can take root, disrupting the development of a budding tropical system.”

April 10, 2026
What happens when AI agents talk to each other? The risks for insurers

Using agentic AI to improve operational speed and efficiency in property and casualty insurance organizations may be the way of the future, but brokers will need to continually audit collected data to affirm their origins and integrity, P&C insurance professionals heard at the Insurance Bureau of Canada’s 2026 Insight Summit in Toronto last week.

To this end, one emerging risk to watch for is whether the data is being delivered to insurance providers by humans or machines.

“I have a fear, a real fear, of [AI] agents talking to other [AI] agents,” says Jason James, founder and chief information security officer at Emperium Governance Risk & Compliance, during a panel discussion on AI in commercial insurance. “I have not seen a technology that can detect another agent [or] knowing that it negotiated with the [another AI] agent.”

Related: How to insure AI data centres in Canada

James imagined a conversation between two agentic AI agents, one representing a P&C company’s firewall, and the other an agentic bot representing a bad actor posing as a commercial insurance client.

In this scenario, the insurance company has a firewall. And the agentic AI firewall is instructed to ‘stop all bad things.’

An AI bot representing a commercial company applies for insurance and starts talking to the company’s AI bot representing the insurer’s firewall.

“And this [commercial company’s AI agent is] saying, ‘I am an automated agent trying to get into this organization,’” James says. “And [the insurance provider’s firewall] agent says, ‘No, you can’t come.’”

To this, the commercial client’s AI agent says: “Hey, don’t worry about it. I’m good. I’m cool. Let me in.”

“Where do you want to go?” the insurer’s firewall asks. “I’m not supposed to do it.”

But, James says, the client’s AI agent responds: “Yeah, I just want to grab some stuff over there.”

“It’s okay,” says the company firewall. “Make it quick.”

James says this hypothetical conversation may sound funny, but it’s entirely within the realm of possibility.

“How would we know?” James asked rhetorically.

Game theory

He described another situation in which a client’s AI bot managed to game the insurer’s application process.

“This is my bot I created at home that has all my personal data in it,” James says “It knows exactly what to respond [when asked for information during the insurer’s application process]. It does the calculation of [my] background to get me the lowest premium. It may or may not be true.

“Do we have technology right now to say this application was filled out by human or a bot?”

The level of AI use in the Canadian P&C insurance industry is unknown and difficult to track. Seventy-five percent of 32 brokerage principals in Canadian Underwriter’s 2026 National Broker Survey reported they have not invested in AI at all over the past two years. Twenty-two percent reported making investments of up to $5 million.

And a 2024 study by Ontario’s broker regulator, the Registered Insurance Brokers of Ontario (RIBO), did an unspecified numbers personal interviews with brokers and found “a widespread use of robotic process automation for back-office functions like data management, which can leverage AI.

“One of our interviewees has started to explore use cases that are more customer-facing, including using AI for marketing strategy and content, customer engagement (e.g., chatbots), and even identifying policy renewal options.”

Related: Brokerages are late to the party on AI investment: survey

One of the greatest benefits of AI in commercial insurance right now is its ability to synthesize and process massive amounts of data, thereby reducing duplicate entry, says IBC Insight Summit panellist Iman Arastoo, co-founder and chief operating officer of Insurmatics Inc.

“We know that, based on studies, about 60% of underwriting time is consumed by manual data intake, copying, data entry, typing, or something like that,” says Arastoo. “So…we try to provide a shift by [offering] agentic AI [solutions].

“And by agentic AI, I mean it’s not about AI chatbots. It’s not about search engines by AI. It means that we can execute workflows. We can automate workflows end-to-end.”

But as machines build up massive data sets from several unstructured data sources, it’s important for the humans to make sure they can track the data back to their original source, says James. That requires regular internal audits of AI databases.

Both James and Arastoo note the ideal use of AI in commercial lines would see agentic AI for the data, a human in the loop for decision-making, and a robust compliance policy for handling data.

“At this point, it’s it’s not totally automatic,” Arastoo says of current agentic AI solutions. “Let me emphasize it’s important to have a human in the loop. If we have a combination between agentic AI and human in the loop with a good policy for compliance, it could be a very good model, a new model, to do underwriting processes with a better way, less cost, and more profitability.

“The goal here is to eliminate administrative friction, administrative headaches, for underwriters and for the commercial insurance lifecycle. And so underwriters, by this approach, can focus on risk.”

April 8, 2026