OTTAWA — Wildfires in northern Ontario do not appear to be translating into severe losses for Canada’s insurance industry, but the situation warrants close monitoring, Morningstar DBRS said in a new report.
The report, released last week, said the largest fires remain concentrated in remote areas, which limits the direct effect on property and commercial insurance claims. As a result, direct property claims are expected to remain contained while claims from evacuation orders, additional living expenses and business interruptions are anticipated to be manageable.
“Canadian insurers remain well positioned to absorb moderate wildfire losses, given the current development of the wildfire season,” said Steve Liu, assistant vice-president of global insurance and pension ratings.
“A more severe accumulation of major wildfire and other severe weather-related losses would likely be required to exhaust insurers’ annual catastrophe budgets, trigger reinsurance protection and increase reinsurance reinstatement costs.”
Additionally, the credit rating agency said provinces where wildfires have historically been more costly, including B.C. and Alberta, have seen little wildfire activity so far this year.
However, Morningstar DBRS said the ultimate effect on insurance providers depends less on the total area burned and more on whether the fires threaten major population centres or areas with large amounts of insured property.
Property and casualty insurers are well positioned to absorb moderate losses from wildfires due to several factors, including strong underwriting profitability, capital buffers and adequate personal-property pricing, Morningstar DBRS said.
“Several years of premium increases in personal property have helped insurers respond to rising claims costs, inflation and higher catastrophe frequency. The 2025 and Q1 2026 financial results of major publicly traded Canadian (property and casualty) insurers demonstrate their pricing discipline, with combined ratios below 95 per cent,” the report reads.
Early estimates suggest the flames have ravaged more of Ontario’s forests this season than any previous year on record, burning through more than 7,250 square kilometres so far.
Morningstar DBRS said Canada’s overall area burned has reached 29,500 square kilometres, coming in higher than the 10-year average of about 25,500 square kilometres.
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