Canada’s P&C financial results weathered the 2024 storms

Canada’s record-setting, $9-billion natural catastrophe season may have been “the end of the world as we know it,” as the song goes, but, financially at least, the country’s property and casualty industry came out of it just fine.

“We were initially concerned about potential erosion of the capital base of some PACICC members, given that the third quarter results [in 2024] were significantly worse than those over the same period in 2023,” Property and Casualty Insurance Compensation Corporation (PACICC) board chairman Dave Oakden announced at the organization’s annual general meeting in Toronto last week.

“However, I am pleased to report that the industry was able to survive everything that Mother Nature could throw at Canada. Industry-wide return on equity in 2024 was 15.1%, virtually the same as that in 2023. Some 149 insurers reported profits in both years.

“On balance, and in spite of the numerous catastrophic losses, 2024 was a good year for the industry.”

PACICC is an industry-funded, not-for-profit fund that compensates Canadian policyholders in the rare event that a Canadian P&C insurer becomes insolvent. There have been no insurer insolvencies in Canada since 2002, when Markham General Insurance was ordered to wind up its business under Canada’s Winding-up and Restructuring Act.

Canadian P&C insurers faced extraordinary financial pressures last year. The industry responded to more than 278,000 claims in 2024, with 228,000 of those claims coming in the span of a month.

In July and August 2024 alone, flooding in Ontario ($940+ million) and Quebec ($2.5 billion) cost almost $3.5 billion in claims losses, the Insurance Bureau of Canada reported, citing figures from Catastrophic Indices and Quantification Inc. (CatIQ). A wildfire that burnt down one-third of Jasper, B.C., resulted in $1.23 billion in claims payouts, and a record-breaking hailstorm in Calgary cost a further $3.25 billion.

Despite it all, federally regulated Canadian P&C insurers reported a combined profit of $4.13 billion by the end of 2024 Q4, according to year-end data from the Office of the Superintendent of Financial Institutions.

The industry’s financial result in 2024 is based on more than $66.5 billion in total insurance revenue; about $61.1 billion in insurance service expenses; $1.37 billion of taxes owing; and a net investment result of $2.044 billion.    

“This perhaps surprising, positive overall result can be attributed both to our industry’s prudent risk management and financial expertise, while our industry’s investment portfolios have also benefited from the Bank of Canada’s interest rate reductions over the course of the past year,” Oakman said at PACICC’s AGM. “A better understanding of asset liability and investment risk can self-stabilize results and will continue to benefit us in the future.

“The P&C industry that I joined over 50 years ago would not have done so well. While changes have been gradual, it is amazing how far this industry has come. And we can all take pride in what we have achieved.”