Ottawa, ON (Sept. 1, 2026) – Increasing global temperatures coincide with a significant rise in the frequency and severity of adverse climatic events over the past decade. Events such as wildfires, dangerous heat, flooding and ecosystem degradation are exhibiting signs of regime change, reflecting a transition to a new, persistent pattern of risk rather than historical variability.
The Canadian Institute of Actuaries has published a practice resource document addressing the significant implications of these climate risks for the property & casualty insurance sector. The document is structured to provide actuaries and financial practitioners with a framework of questions and considerations for integrating climate risk into core insurance activities, including pricing, reserving, capital management and investment strategy.
Climate impacts and risks
Actuaries are increasingly concerned with climate change, as it represents a non-linear increase in the risk profile that is not adequately captured by historical experience. These changes can affect multiple perils and risk dimensions, including drought, wildfire, flood, tropical and extra-tropical cyclones, severe storms and extreme heat. As a result, climate-related risks fundamentally impact a wide range of actuarial activities.
Although the relationship between greenhouse gas emissions and temperature increase is well established, less attention has been given to how climate change may alter frequency, severity and correlation of adverse events. While increases in temperature have generally been gradual, their effects may manifest in a non-linear manner through climate-related hazards and losses.
In particular, some adverse events may exhibit signs of regime change – a transition to new, persistent patterns of risk that differ materially from the past. Understanding these shifts is important when assessing the stability of data, assumptions, models and methods used in actuarial work.
Consideration for pricing and underwriting
The impact of severe weather events on the frequency and severity of insured and non-insured losses necessitates a re-evaluation of traditional pricing and underwriting approaches. Actuaries will need to enhance their toolkits to account for unusual events that may represent a growing share of future losses. It is also important to note that the severity of such events is driven in part by changing demographics in high-risk areas as well, therefore these adverse impacts are not solely attributable to climate change alone.
Society will continue to face the effects of these events for a long time, with implications for the estimates developed by actuaries. Accordingly, practitioners need to explain the basis for their assumptions and estimates.
Actuaries would determine how best to integrate the increasing frequency and severity of severe weather events into both historical experience periods and future projections.
Climate considerations will not affect all lines of business or exposures equally. Underwriting and risk segmentation may need to adapt to the non-linear nature of climate risk, where event frequency and severity can increase disproportionately following a climate-related shock.
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About the Canadian Institute of Actuaries
The Canadian Institute of Actuaries is the qualifying and governing body of the actuarial profession in Canada. We develop and uphold rigorous standards, share our risk management expertise, and advance actuarial science to improve lives in Canada and around the world. Our more than 6,000 members apply their knowledge of math, statistics, data analytics, and business in providing services and advice of the highest quality to help Canadian people and organizations face the future with confidence. For more information, visit www.cia-ica.ca.
SOURCE: Canadian Institute of Actuaries
Tags: actuaries, climate change, Natural Catastrophes, Property/Casualty (P&C) insurance, severe weather, tips, whitepaper
