The departure of Farmers Insurance from British Columbia last month marked another in a concerning exodus of foreign property and casualty insurers from Canadian shores. Walking away from approximately $100 million in annual premiums, Farmers joins a growing list of international insurers—including AIG, Allianz, and CNA—who have scaled back or completely abandoned their Canadian operations in recent years.
This retreat isn’t happening in a vacuum. Insurers face mounting pressures from climate-related claims, which surged to $3.1 billion in 2023 alone, according to the Insurance Bureau of Canada. Catastrophic flooding in Nova Scotia and unprecedented wildfires in British Columbia have stressed insurance portfolios beyond sustainable levels, creating what industry insiders call “a perfect storm” of risk escalation.
“The Canadian market presents unique challenges that some foreign insurers simply aren’t equipped to navigate long-term,” explains Marcus Chen, insurance analyst at Deloitte Canada. “We’re seeing a fundamental reassessment of risk appetite across the industry.”
The regulatory landscape compounds these challenges. Foreign insurers often find themselves struggling with Canada’s provincial patchwork of insurance regulations, creating compliance costs that domestic competitors—with their established infrastructure—can more easily absorb. Auto insurance regulations in Ontario and British Columbia have proven particularly problematic for international players lacking the local expertise to navigate these complex markets profitably.
For Canadian consumers and businesses, this contraction means fewer options and potentially higher premiums. With reduced competition, domestic insurers gain pricing power in specialized markets like commercial property and professional liability. Small businesses in particular face a narrowing field of insurers willing to underwrite their operations at affordable rates.
The industry consolidation also creates opportunities for Canada’s insurance giants. Intact Financial and Definity Financial have stepped in to acquire business lines from departing foreign insurers, strengthening their market dominance. Intact’s acquisition of RSA Insurance’s Canadian operations in 2021 represented a watershed moment in this consolidation trend.
“What we’re witnessing is a recalibration of the Canadian insurance landscape,” says Patricia Menard, insurance industry consultant. “Foreign insurers are increasingly viewing Canada as a challenging market that doesn’t align with their global growth strategies, especially when more profitable opportunities exist elsewhere.”
Climate change remains the most significant driver of this exodus. With Canadian property damage claims from severe weather events quadrupling since 2008, insurers face difficult decisions about long-term viability in high-risk regions. Even as major sporting events and tourism bring economic benefits to coastal and wildfire-prone areas, the underlying insurance infrastructure supporting these economies grows increasingly fragile.
For Canadian policyholders, the timing couldn’t be worse. As climate risks intensify and property values rise, access to affordable insurance becomes more critical yet more challenging to secure. Industry experts predict further market contraction before any stabilization occurs, suggesting Canadians should prepare for a fundamentally altered insurance landscape in the coming decade.
The foreign insurer exodus from Canada represents more than just corporate repositioning—it signals a profound shift in how global financial institutions view climate risk in North America. As the market continues to evolve, the question remains whether Canadian domestic insurers alone can fill the growing protection gap or if government intervention will ultimately become necessary in this essential financial sector.
