Canada’s record NatCat year sparking more interest in parametric insurance

After natural catastrophes caused $9 billion in insured property losses in 2024, commercial clients are expressing more interest in alternative risk transfer solutions such as parametric insurance, says James Gasco, head of Swiss Re Corporate Solutions in Canada. 

“This was a year where secondary perils really became of primary importance,” he said. “We’re seeing a lot more interest right now from many of our clients in exploring [parametric insurance].” 

Gasco spoke with CU following the RIMS Canada Conference in Calgary. 

Those 2024 loss figures shattered the previous record of $6 billion in 2016, following the Fort McMurray wildfires, according to Insurance Bureau of Canada.  

Though 2025’s year-end property loss figure isn’t likely to reach last year’s record according to current-year outlooks, commercial clients aren’t off the hook from NatCat losses in 2025. Thus far in the year, impacts from extreme heat — such as drought and wildfire — have dominated insurers’ concerns. 

“[Extreme heat] certainly drove a lot of wildfire activity this year, and though it hasn’t always translated to insured losses…it’s looking like it’s going to be set up to be potentially the second worst year for wildfire losses in Canada,” said Gasco. “So there is a concern that this is really becoming the new normal.” 

Alternative advantages

As NatCat risk rises nationally, traditional insurance products may present some gaps or limitations in coverage for clients with exposure to major perils, said Gasco. 

Parametrics or index-based solutions, are a type of insurance that covers the likelihood of a loss-causing event happening. Insureds agree to make a payment once the covered event meets or exceeds a pre-defined intensity threshold. 

Parametric insurance can also “wrap around” or “complement” a traditional policy, which is becoming an important advantage for clients with major NatCat exposures, Gasco said.  

“We’re talking [about this] quite a bit with certain clients who are interested in natural catastrophe such as earthquake out West, and with some of our clients who have hurricane exposure either on the East Coast or in the southeast of the U.S., if they are a [Canada-based] multinational corporation,” said Gasco. “We have parametric covers, and we use these to help round out the coverage, to fill the gaps that traditional coverages miss, and enhance their financial protection.” 

As for how underwriters approach the NatCat risk conversation, “We tend to approach our clients first,” said Gasco. “We leverage our modelling; we have a good sense of the risk. 

“We want to inform our clients what their actual exposures are using our insights, using our data, and then we want to try to guide them as to how to protect best against it.”