Feb. 25, 2025 — The CEO of Zurich Canada says the increasing frequency and severity of climate-related disasters are reshaping insurers’ underwriting practices and risk management strategies.

“Events that were once considered emerging, low probability or once-in-a-lifetime are now more frequent and interconnected, challenging conventional tools like building codes, hazard maps and insurance pricing models,” Saad Mered told Thompson’s.

“This shift necessitates a new approach to risk management.”

He said Zurich will aim to help protect its customers in the face of increased climate-related events by strengthening resilience with product offerings, introducing advisory resources and risk engineering services, supporting a low-carbon transition with tailored services and developing specialized underwriting to address emerging risks and sectors.

“As climate-related events increase in frequency and complexity, insurance should serve as the last line of defence in risk management,” Mr. Mered said.

“By implementing resilience measures, businesses can make insurance more affordable and reduce the severity of impacts — ensuring quicker and more effective recovery.”

He said that with inflation and supply chain disruptions continuing to affect rebuilding costs and claims payouts, insurers must adopt strategies that balance financial sustainability with providing affordable and comprehensive coverage to customers.

“Persistent inflation can lead to undervalued insured assets, leaving our customers vulnerable,” Mr. Mered said.

“To address this, we are conducting regular coverage reviews. By working closely with our customers to assess exposure valuations, we can adjust coverage levels to match current market conditions — minimizing the risk of underinsurance.”

And he said that given current inflation levels, this may require increasing coverage amounts.

“Additionally, we are collaborating with industry partners to streamline supply chains and manage costs more effectively. This approach reduces delays and helps our customers rebuild without added stress.”

Mr. Mered said he expects that as technological advancements such as AI and data analytics will significantly impact risk assessment, claims processing and customer engagement.

“We’re witnessing a significant shift in insurance from detect and repair to predict and prevent,” he said.

Beneva is another insurer that is adapting its underwriting practices, premium pricing and coverage strategies in response to the growing frequency and severity of climate-related disasters.

Christian Fournier, the Quebec City-based company’s executive VP of p&c insurance, said the influence of climate-related events on influencing underwriting practices, premium pricing and coverage availability has been growing for several years.

This is due to various extreme weather events and the resulting claims volume.

“There’s no doubt that insurers and brokers must do better when it comes to raising awareness and getting their clients to adapt their buildings and property in order to maintain insurability.”

He said this can be done by reinforcing best practices for buildings, such as requiring check valves or specific roofing materials.

Mr. Fournier said insurers should also consider introducing new coverages to encourage building adaptation through build-back-better initiatives.

“Fortunately, in Canada, insurance for most perils — wildfire, wind and hail — is widely available for the time being,” he said.

“The main problem pertains to buildings in high-risk zones, where there may be an insurance gap. In that context, insurers and governments must work together to fulfill the increasing needs with respect to natural disasters.”

Mr. Fournier said the increasing frequency of natural disasters is often overlooked as an operational challenge not just for insurers but also for the restoration industry.

He said that while the supply chain for auto parts and construction materials has stabilized in Quebec and Ontario, repair costs are unlikely to decrease.

“One major contributing factor is the increase in sophisticated, high-tech automobiles, which have had a tremendous impact on the cost of claims.”

(For more independent coverage of Canadian p&c industry news and trends, please choose the ‘Subscribe’ tab on our main page or email mpub@rogers.com for more information).