Could a resilience insurance approach help Canadian insurance providers recognize and support the valuable benefits provided by natural assets?

Climate change hazards are increasing the frequency and severity of losses faced by property and casualty insurers, while urban development and industrial activity continue to degrade the natural assets that can mitigate these risks. 

Although ecosystems such as wetlands, forests, and floodplains can materially reduce damage from floods, fires, and storms, their risk-reduction value is rarely quantified in ways that are meaningful for insurance underwriting or pricing. Financial and governance challenges persist, but the key barrier is informational: existing evidence does not link natural assets to insurer-relevant metrics such as expected losses or premium loss ratios, meaning benefits from nature remain underrepresented in standard risk models. As a result, investment in nature-based solutions to reduce risk remains limited, despite its potential to improve insurance performance and resilience.

Part of a joint project between NAI and the Risk and Insurance Studies Centre (RISC), this report provides Canadian property owners and property & casualty insurers with insight into how natural assets—and their management through natural asset management (NAM)—can contribute to natural hazard risk reduction, and proposes path to address key data and evidence gaps, as well as a proposed resilience insurance framework to support the recognition of  risk reduction values provided by green infrastructure.

Project Team

Lead author: Robert Stewart, Ph.D., Risk and Insurance Studies Centre Inc., York University

Project Co-Directors: Roy Brooke, Natural Asset Initiative, and Edward Furman, Ph.D., Risk and Insurance Studies Centre Inc., York University

Reviewers: Informal Insurance Sector Advisory Group (IISAG) members (see Annex 1 in report)

Acknowledgments

This project was made possible through funding from the Natural Science and Engineering Research Council of Canada (NSERC) and Mathematics of Information Technology and Complex Systems (MITACS) under the grant ALLRP 580632 -22 entitled “New order of risk management: Theory and applications in the era of systemic risks” and through funding from: Toronto Dominion Insurance; Municipal Insurance Association of BC; Insurance Bureau of Canada; Wawanesa; World Wildlife Fund Canada; Definity Financial Corporation; and Ducks Unlimited Canada.