What is the impact of wildfires on the Canadian insurance industry?

With files from Jessica Ho 

This post was originally published on August 8, 2024, and was updated on  May 27, 2026.

As we enter the 2026 wildfire season, residents living in high-risk areas are likely bracing for a smoky summer. Typically, wildfire season runs from April to October, with the warmer summer months seeing the most activity. 

In the past, Canadian wildfires have caused serious destruction and devastation for homeowners and insurers, including property losses, evacuations and millions of dollars in insured damage. 

For example, in 2025, two major wildfires cost $300 million in losses, while 2024’s Jasper wildfire cost $1.3 billion. However, this is still far from the costliest wildfire known to Canadians,  the Fort McMurray disaster of 2016, where insured losses hit an astonishing $4.4 billion (around 4.8 billion in 2025 dollars). 

Let’s take a look at how these unfortunate events impact the insurance industry across the country.

What is the history of wildfires in Canada?

Below is a table outlining Canada’s history of wildfires from 2011 to 2025 (along with each event’s insured damages) sourced from the global credit rating industry, Morningstar DBRS the Insurance Bureau of Canada (IBC). Note that the numbers for 2011, 2016, and 2017 have been adjusted for inflation.

Typically, regions in Western Canada, particularly British Columbia and Alberta, have been the most affected by wildfires. However, in 2025, the two major events took place in Manitoba and Saskatchewan, provinces that are typically not affected by catastrophic fires. 

While wildfire season is starting slowly in 2026, Environment and Climate Change Canada predicts this year will be one of the hottest on record. This article will be updated as new information becomes available. 

What do wildfires mean for the cost of home insurance in Canada?

As wildfires become more severe, an increase in claims will raise the cost of home insurance for everyone. In Q1 2026, premiums rose by 8.6% nationally compared to the previous year. Most provinces also experienced increases, with Alberta’s rates rising by 16.2%, the Atlantic Provinces by 10.8%, and Saskatchewan and Manitoba by 11.2%. 

Climate change and natural disasters are among the many factors contributing to rising home insurance costs across Canada, and wildfires are only one aspect of it. As insurers take on more claims, rates will rise to help them recoup their losses. While insurers need to balance overall risk, those living in high-risk areas will see the worst of it. 

Also read: What Canadian homeowners need to know about wildfire season

Will Canadian home insurance companies deny fire coverage?

It is unlikely that home insurance companies will deny fire coverage in Canada. However, as wildfires continue to ramp up, California is one relevant case worth looking at. Back in 2023, major US providers – including State Farm and Allstate – pulled back from offering home insurance coverage to Californians as a result of costly wildfire claims. ABC News also reported that seven of the top 12 companies either paused coverage or placed harsh restrictions on policyholders. Some homeowners even saw premiums nearly 10 times higher than before. 

This can also be compared to flood insurance in Canada, where some companies have either denied coverage to high-risk homes or made it prohibitively expensive, which led to the development of Canada’s National Flood Insurance Program. It’s important to note, however, that unlike fire insurance, flood insurance isn’t included in standard home policies to begin with. Instead, homeowners need to add the protection through endorsements, such as overland water and sewer backup.

How do insurance companies deal with the aftermath of wildfires? 

When severe wildfires occur across Canada, insurance companies receive claims that they must pay out. Thousands of claims costing billions of dollars can put insurers in a position where they lose money. However, the industry is designed to safeguard insurers and help them absorb costs.

In general, Canada’s P&C industry has a well-diversified product line (e.g. auto insurance, property insurance, commercial insurance), and it’s also well-diversified geographically.

This means that the risk profile of insurance companies is balanced enough that severe disasters can be compensated for by the premiums paid elsewhere. For instance, Canadian insurers may need to pay an extensive amount of claims for home insurance in Alberta, but this may be offset by the limited number of claims for car insurance in Ontario.

The Canadian insurance industry is also backed by reinsurance, which is essentially insurance for insurance companies. The risk is transferred from one company to another, and in the case of the 2016 Fort McMurray wildfire, reinsurance was able to cover 85% of the losses.

That’s not to say that the impact on the industry as a whole isn’t significant. As wildfire season has and is expected to become more severe over time, home and business insurance are two coverage areas that will see significant consequences.

What are insurance companies doing to protect against wildfires?

When it comes to loss prevention, policyholders look to insurance companies for solutions. In fact, a 2026 Climate Resilience and Adaptation survey reveals that 81% of Canadian insurance shoppers expect their providers to help reduce risk and prevent losses. This includes offering incentives and mitigation strategies to help communities recover after wildfires. 

In 2026, many Canadian insurers partner or invest in programs which offer free resources to help homeowners better protect their homes. For example, the Cooperators are a partner of the FireSmart program.

Other insurers, including Economical, Aviva, Intact, Gore Mutual and TD Insurance, have partnered with Wildfire Defense Systems, a professional wildfire mitigation service. The goal of this partnership is to offer preventative measures to properties located in high-risk areas, including sealing homes, installing sprinklers and applying fire retardants to limit the spread of fire. 

What do wildfires mean for commercial insurance in Canada?

Wildfire destruction isn’t limited to residential homes. Unfortunately, commercial businesses located in the affected areas will also suffer. And of course, this means the losses will trickle down to the commercial insurance industry. 

According to the IBC, 2024 was the second-highest year on record for commercial losses due to severe weather, totalling more than $1.7 billion. This was the most destructive year in nearly a decade. Jasper, Alberta, was hit the hardest by severe weather and accounted for about 40% of losses to commercial property. The largest weather event in 2024 was the Jasper wildfire, which cost $650 million in commercial insured losses.

Similar to homeowners, business owners can expect their commercial insurance premiums to rise as providers need to pay out a large number of claims. Those who operate in wildfire hotspots will see the most expensive premiums.

The bottom line

The wildfire crisis in Canada doesn’t appear to be ending anytime soon. As fires become increasingly frequent and destructive, the insurance industry will continue to be impacted overall, particularly in premium costs. While well-diversified product lines and geographic locations can help with balancing risk, only time will tell as to how insurers will adapt to the ongoing challenges.

Also read

• How fire insurance works in Canada
• The average cost of home insurance in Alberta
• Does insurance cover damage from fallen trees?
• How does inflation impact my insurance premiums?