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Canadian 2026 wildfire outlook seen as limited risk for insurers
Morningstar DBRS estimates Canada has burned about 2.95 million hectares year to date, above the 10-year average, but says it does not expect a significant loss event given stronger insurer finances and reinsurance terms.
Morningstar DBRS says Canada’s 2026 wildfire season is unlikely to create a significant loss event for the country’s property and casualty insurance sector, despite evacuations and smoke concerns tied to major fires.
The credit ratings firm pointed to current year-to-date burned area of about 2.95 million hectares, above the 10-year average of around 2.55 million hectares. It also noted that roughly 900 wildfires are currently active, with the most significant activity largely concentrated in remote parts of northwestern Ontario and northern Québec, areas it said have lower population density and fewer insured properties.
Morningstar DBRS added that Canadian insurers are entering the season in a stronger financial position than in recent years, citing improved underwriting performance, stronger capital reserves, and more favourable reinsurance conditions. It said the impact will depend more on whether fires reach major population centres or heavily insured regions than on total area burned.
The firm expects claims related to evacuation orders, temporary accommodation, and business interruption to remain manageable, while also warning that provinces such as British Columbia and Alberta can have a different risk profile. It said wildfire activity has been relatively limited in those higher-risk provinces so far in 2026, with about 43,000 hectares burned in British Columbia and 18,000 hectares in Alberta versus 10-year averages of roughly 373,000 hectares and 380,000 hectares, respectively.