Wildfires do more than burn:

Wildfires have become one of Canada’s most severe and unpredictable natural catastrophes, posing escalating challenges for the insurance industry. Unlike   floods or earthquakes, wildfires can spread rapidly, affect vast areas, and lead to prolonged business interruptions. While floods and earthquakes present different types of risk, wildfires are uniquely volatile. They can shift direction quickly, cover vast terrain, and lead to long-term business interruptions.

While sectors such as tourism, forestry, mining, and agriculture are traditionally seen as vulnerable to wildfires, manufacturing, warehousing, and distribution operations are now facing similar risks.

This 2025 wildfire season, insurers, brokers, and insureds must adopt a proactive, risk-aware mindset—identifying exposures, implementing mitigation strategies, and leveraging advanced technologies to stay ahead of emerging threats.

Why Wildfires Are Different from Other Natural Catastrophes

• Rapid Spread & Volatility: Wildfires can change direction without warning, complicating evacuation efforts and asset protection.
• Long-Term Business Impact: Even if flames never reach a facility, smoke damage, road closures, and utility outages can halt operations for weeks.
• Cascading Secondary Risks: Hazards like landslides, water contamination, and reduced insurability in fire-prone areas compound the challenges of recovery.

Wildfire Outlook for 2025

This year, Canada is on track to experience its second-worst wildfire season on record. Rising temperatures and dry conditions have already led to significant wildfire activity across British Columbia, Alberta, Saskatchewan, Manitoba, and Ontario.¹

According to Public Safety Canada, wildfire risk across western Canada is expected to rise sharply in July and remain well above average through August - particularly in southern B.C. Eastern Canada may see near-normal conditions, though late-summer projections remain uncertain.

New Vulnerabilities in Manufacturing & Warehousing

For manufacturing, warehousing, and distribution operations, wildfires represent not just a physical threat—but a severe operational disruptor. Key vulnerabilities include:

• Concentrated Assets: Large volumes of stock and high-value equipment housed in centralized facilities increase potential losses.
• Outdoor Inventories: Items like trailers, pallets, or vehicles stored outside are highly exposed to radiant heat and embers.
• Operational Disruption: Wildfires can trigger widespread delays in production and logistics due to shutdowns, road closures, and equipment downtime.

Additional secondary risks include:

• Smoke Infiltration: Smoke can damage sensitive manufacturing processes, spoil goods, and pose health risks to employees.
• Utility Failures: Power outages may idle production lines, affecting fulfillment timelines and revenue.
• Logistics Gridlock: Transportation and distribution operations may be halted by evacuation orders or impassable routes.

How Insurers and Brokers Can Help Clients Mitigate Wildfire Risk

Wildfire is a complex risk that demands collaboration. Brokers can play a unique role in educating clients, assessing exposures, and activating risk mitigation strategies with insurer support.

Build Business Resilience

A solid business continuity plan (BCP) is a cornerstone of operational resilience. Whether the business is large or small, a BCP ensures that critical functions can continue—even in the face of disruption.

Sovereign provides tools to help clients strengthen continuity strategies and protect their people, property, and operations.

5 Steps for Developing a Business Continuity Plan
Safeguarding Your Equipment in Challenging Times

Stay Ahead with Nat Cat Radar Alerts

In 2024, Sovereign launched Nat Cat Radar—a digital tool that integrates satellite imagery, government data, and policyholder information to help identify clients at risk from active wildfires.

Brokers who subscribe to Nat Cat Radar Alerts receive notifications when a client’s property is within 100 km of an out-of-control wildfire. Alerts include timely mitigation resources to support emergency planning, site protection, and activation of BCPs.

Brokers have already used Nat Cat Radar to prompt proactive site evacuations and risk prevention steps during the 2024 season.

Risk Assessments Before and After the Fire

Even after a wildfire has passed, brokers should remain vigilant for ongoing risks like structural damage, supply chain delays, and utility disruptions.

• Prioritize High-Risk Locations: Facilities near forests or on sloped terrain may benefit from site-specific engineering assessments.
• Identify Coverage Gaps: Review business interruption, contingent BI, and extra expense coverages to ensure they reflect current needs.
• Leverage Risk Engineering Support: Sovereign’s Risk Engineers are available to conduct customized resilience assessments for high-exposure clients.

As the 2025 wildfire season intensifies, Canadian businesses face mounting uncertainty. But with thoughtful planning, the right tools, and strong partnerships, resilience is within reach. At Sovereign, we’re committed to helping build a stronger Canada—by supporting the businesses and communities we serve.

Want to learn more about wildfire mitigation strategies or Nat Cat Radar? Contact us!

Source:
¹ Public Safety Canada – Ministers Present 2025 Wildfire Season Forecast