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Wildfires have become one of Canada&rsquo;s most severe and unpredictable natural catastrophes, posing escalating challenges for the insurance industry. Unlike &nbsp; 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&mdash;identifying exposures, implementing mitigation strategies, and leveraging advanced technologies to stay ahead of emerging threats.
<h4>Why Wildfires Are Different from Other Natural Catastrophes</h4>
<ul>
<li>Rapid Spread &amp; Volatility: Wildfires can change direction without warning, complicating evacuation efforts and asset protection.</li>
<li>Long-Term Business Impact: Even if flames never reach a facility, smoke damage, road closures, and utility outages can halt operations for weeks.</li>
<li>Cascading Secondary Risks: Hazards like landslides, water contamination, and reduced insurability in fire-prone areas compound the challenges of recovery.</li>
</ul>
<h4>Wildfire Outlook for 2025</h4>
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.&sup1; 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.
<h4>New Vulnerabilities in Manufacturing &amp; Warehousing</h4>
For manufacturing, warehousing, and distribution operations, wildfires represent not just a physical threat&mdash;but a severe operational disruptor. Key vulnerabilities include:
<ul>
<li>Concentrated Assets: Large volumes of stock and high-value equipment housed in centralized facilities increase potential losses.</li>
<li>Outdoor Inventories: Items like trailers, pallets, or vehicles stored outside are highly exposed to radiant heat and embers.</li>
<li>Operational Disruption: Wildfires can trigger widespread delays in production and logistics due to shutdowns, road closures, and equipment downtime.</li>
</ul>
Additional secondary risks include:
<ul>
<li>Smoke Infiltration:&nbsp;Smoke can damage sensitive manufacturing processes, spoil goods, and pose health risks to employees.</li>
<li>Utility Failures: Power outages may idle production lines, affecting fulfillment timelines and revenue.</li>
<li>Logistics Gridlock: Transportation and distribution operations may be halted by evacuation orders or impassable routes.</li>
</ul>
<h4>How Insurers and Brokers Can Help Clients Mitigate Wildfire Risk</h4>
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&mdash;even in the face of disruption.
Sovereign provides tools to help clients strengthen continuity strategies and protect their people, property, and operations.
<a href="https://www.sovereigninsurance.ca/advice-and-tools/managing-risk/5-steps-for-developing-a-business-continuity-plan" title="" target="">5 Steps for Developing a Business Continuity Plan</a> <a href="https://www.sovereigninsurance.ca/advice-and-tools/tools/safeguarding-your-equipment-in-challenging-times">Safeguarding Your Equipment in Challenging Times</a>
<h4>Stay Ahead with Nat Cat Radar Alerts</h4>
In 2024, Sovereign launched Nat Cat Radar&mdash;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&rsquo;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.
<h4>Risk Assessments Before and After the Fire</h4>
Even after a wildfire has passed, brokers should remain vigilant for ongoing risks like structural damage, supply chain delays, and utility disruptions.
<ul>
<li>Prioritize High-Risk Locations:&nbsp;Facilities near forests or on sloped terrain may benefit from site-specific engineering assessments.</li>
<li>Identify Coverage Gaps: Review business interruption, contingent BI, and extra expense coverages to ensure they reflect current needs.</li>
<li>Leverage Risk Engineering Support: Sovereign&rsquo;s Risk Engineers are available to conduct customized resilience assessments for high-exposure clients.</li>
</ul>
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&rsquo;re committed to helping build a stronger Canada&mdash;by supporting the businesses and communities we serve.
Want to learn more about wildfire mitigation strategies or Nat Cat Radar? <a href="https://www.sovereigninsurance.ca/contact-us">Contact us!</a>

Source: &sup1; Public Safety Canada &ndash; <a href="https://www.canada.ca/en/public-safety-canada/news/2025/06/ministers-present-2025-wildfire-season-forecast.html" title="" target="">Ministers Present 2025 Wildfire Season Forecast</a>

Wildfires Do More Than Burn

Wholesale Warehousing and Transportation,Manufacturing,Construction and Contracting,Energy and Resources

Claims,Equipment Breakdown,National Risk Engineering Services,Property

Wildfires do more than burn

Hot Topics

In today&rsquo;s competitive commercial insurance landscape, success isn&rsquo;t only measured by how long a company&rsquo;s been around &mdash; it&rsquo;s measured in how it thinks, adapts, and innovates.<o:p></o:p>
After more than 70 years in the industry &mdash; and a few reinventions along the way &mdash;&nbsp; Sovereign Insurance&rsquo;s journey has proven one thing: staying relevant requires a challenger mindset.<o:p></o:p>
Rather than playing it safe, the insurer embraced bold thinking &ndash; modernizing its products, redefining how it collaborates with partners, and building a culture that values purpose and innovation.<o:p></o:p>
Focus fuels advantage<o:p></o:p>
It&rsquo;s a mindset that&rsquo;s equipped Sovereign to think big-picture &ndash; and recognize that standing out meant honing in, says Colette Taylor, Sovereign&rsquo;s COO.<o:p></o:p>
&ldquo;Rather than trying to be everything to everyone, we chose to be a top niche carrier,&rdquo; she says.<o:p></o:p>
The company made a deliberate shift to sharpen its focus on midsize to large commercial industries including manufacturing, construction and contracting, wholesale, warehousing and transportation, and energy and resources.<o:p></o:p>
Sharper focus enabled Sovereign to deepen its underwriting expertise and deliver greater value where it matters to their partners and clients the most. This gave the company the foundation it needed to innovate upon.<o:p></o:p>
Innovation reflects adaptability<o:p></o:p>
Because when you think like a challenger, innovation becomes habit &mdash; and complacency doesn&rsquo;t stand a chance.<o:p></o:p>
That&rsquo;s core to how Sovereign approached modernizing its products in 2023 and 2024, when it launched a new suite of base wording &mdash; comprehensive, bilingual, digitally accessible, and customizable. &ldquo;The goal wasn&rsquo;t just modernization; it was creating meaningful solutions that reflect the realities Canadian businesses face today,&rdquo; Taylor says.<o:p></o:p>
These product updates weren&rsquo;t a one-time effort either &mdash; they were part of a larger shift in how Sovereign views its role in a constantly evolving market: proactive, adaptive, and responsive to real-world needs.<o:p></o:p>
Collaboration drives growth<o:p></o:p>
Sovereign&rsquo;s challenger mindset also reshaped how it collaborates externally.<o:p></o:p>
It redefined relationships with broker partners &ndash; moving beyond traditional models to focus on deeper listening, faster responsiveness, and co-creating solutions that anticipate client needs.<o:p></o:p>
&ldquo;Our claims model, risk engineering services, and program development were directly shaped by what we heard from our partners,&rdquo; says Taylor.<o:p></o:p>
Programs like Sovereign&rsquo;s concierge claims and risk engineering for top partners aren&rsquo;t just service upgrades &mdash; they&rsquo;re evidence of a mindset that prioritizes agility, mutual trust, and meaningful partnership over rigid processes.<o:p></o:p>
Culture builds resilience<o:p></o:p>
Internally, Sovereign&rsquo;s Employee Value Proposition is another example of challenger thinking at work.<o:p></o:p>
Facing a highly competitive talent landscape and retiring Canadian workforce, Sovereign invested in creating a strong culture where innovation, collaboration, and purpose-driven work could thrive.<o:p></o:p>
&ldquo;Because market challengers recognize true resilience begins with its people,&rdquo; Taylor says. &ldquo;Our partners and clients benefit directly from our talented team. When you like what you do, who you work with, and feel part of building something special, it makes a big difference and it shows up in everything we do.&rdquo;<o:p></o:p>
Mindset matters most<o:p></o:p>
Reflecting on the company&rsquo;s rich Canadian history and evolution over the past seven decades, Taylor says the journey hasn&rsquo;t always been smooth.<o:p></o:p>
&ldquo;Competing against larger players for talent and market share hasn&rsquo;t been without its challenges,&rdquo; she says.&nbsp; &ldquo;Like the rest of the industry, we&rsquo;ve faced numerous challenges &ndash; from regulatory changes and economic fluctuations to the evolving expectations of clients and partners.&rdquo;<o:p></o:p>
But challengers know resilience isn&rsquo;t just about weathering change &ndash; it&rsquo;s about embracing it, she adds.<o:p></o:p>
&ldquo;Throughout it all, the one constant that has set us apart is our ability to question the status quo and seek out innovative ways to add value. Being future-ready means it&rsquo;s the intangibles &mdash; mindset, culture, relationships &mdash; that matter most.&rdquo;<o:p></o:p>
Looking ahead, Sovereign is poised for growth: focused on leveraging innovation and technology, creating new opportunities for partners and flexible solutions that meet evolving client needs &nbsp;&mdash; all grounded in the challenger mindset that brought it here.<o:p></o:p>
&ldquo;We&rsquo;re ambitious about doing things better &mdash; not just bigger,&rdquo; Taylor says. &ldquo;Mindset isn&rsquo;t something we talk about once a year. It&rsquo;s how we navigate change every day, and how we&rsquo;ll keep moving forward.&rdquo;<o:p></o:p>

How did a challenger mindset redefine Sovereign's Journey?

Wholesale Warehousing and Transportation,Manufacturing,Energy and Resources,Construction and Contracting

Managing Risk

As accountability in corporate leadership continues to broaden across a wider range of issues, legal challenges remain a significant concern for businesses. In Sovereign Insurance&rsquo;s annual Q&amp;A series, <a href="https://www.sovereigninsurance.ca/our-team/toronto/eduard-lecker" title="" target="">Eduard Lecker</a>, Senior Underwriter, &nbsp;Management Liability, shares his insights on key loss trends and exposures in this area in 2024 and what organizations should be aware of in 2025 as new risks take shape.&nbsp;
What were the key loss trends and exposures you saw in 2024?
The key loss trend in 2024 remained consistent with the previous year: an increasing number of claims focused on environmental, social and governance (ESG).1 These legal actions&mdash;which can be initiated by consumers, shareholders and investors, and environmental advocacy groups&mdash;are typically centred on allegations related to greenwashing and climate change. For example, a company might make misleading claims about its environmental strategies or fail to disclose climate-related risks, which can expose them to significant legal and financial risks.&nbsp;
What are some emerging risks to keep an eye out for in 2025?&nbsp;
One emerging risk is claims related to artificial intelligence (AI). As more companies use AI, there&rsquo;s a growing risk of misrepresentation about what these systems can do. Some tech companies may overstate AI&rsquo;s capabilities. Companies using AI for hiring, financial reporting, or ESG decision-making are especially vulnerable, as they could face legal action if the technology doesn&rsquo;t live up to expectations. For example, AI systems that filter job applicants can have unintentional biases, and companies may claim that AI can replace human decision-making&mdash;when, in reality, there&rsquo;s still a lot of human oversight involved. If AI tools generate inaccurate reports&mdash;like pulling up the wrong numbers&mdash;and those figures influence critical decision-making, legal claims can arise. Similarly, when companies use AI to track their environmental impact, inaccurate data could also expose them to risk.
There are a couple of emerging issues in the U.S. to keep an eye on, as developments there often follow suit in Canada. Under the new U.S. &nbsp;leadership, there are rollbacks in climate policies and diversity, equity and inclusion initiatives. For example, the U.S. has pulled out of the Paris climate agreement, which could prompt companies to scale back their own sustainability effects. This could expose them to legal challenges from groups that feel misled by these changes.&nbsp;
With the current trade war between the U.S. and Canada, there&rsquo;s growing sentiment around &lsquo;Buy Canadian,&rdquo; but labelling what qualifies as Canadian-made is complicated. For instance, a product might contain American apples processed in Canada but is labelled as being made in Canada. If a product doesn&rsquo;t meet legal definitions of terms like &lsquo;Product of Canada&rsquo; or &lsquo;Made in Canada,&rsquo; this could lead to claims. &nbsp; For example, if incorrect labels lead to misrepresentation of a product or its origin, it could lead to claims of misrepresentation or breach of contract.&nbsp;
We&rsquo;re also keeping an eye on U.S. cases in which directors and officers are facing personal liability in lawsuits. Holding directors personally liable for their decisions could lead to more legal challenges and impact decision-making at the top level. &nbsp;
How can organizations mitigate these risks?&nbsp;
For AI, it really comes down to transparency. Don&rsquo;t overstate, misrepresent, or overpromise what AI can do, and understand the legal consequences of any claims you make. It&rsquo;s similar to how companies should approach environmental strategies&mdash;be transparent about your actions and results. Like the saying goes, &lsquo;understate, overperform.&rsquo;
For the developments that we&rsquo;re watching in the U.S., it&rsquo;s difficult to say how to mitigate against them because there are still a lot of unknowns. When it comes to labelling Canadian products, it&rsquo;s important to be aware of the legal requirements. Transparency is key here, too&mdash;if there&rsquo;s any uncertainty, you can direct customers to your website where you outline your process, which some companies are starting to do. If you&rsquo;re not misrepresenting your actions, you&rsquo;re far less likely to face legal issues.&nbsp;
Sources 1 Jan. 31, 2025: Moodys, &ldquo;D&amp;O series &ndash; Evolving risks in the boardroom: A new era of D&amp;O liability &ndash; Part 3&rdquo; 1 Aug. 22, 2024: McCarthy Tetrault &ldquo;Greenwashing and AI Washing: Emerging Trends in D&amp;O Claims Across North America&rdquo; 1 Oct. 22, 2024: &ldquo;The Insurer: Greenhushing &ndash; An emerging D&amp;O liability?&rdquo;

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Bob Lawlor

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Jeff Bower

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Associate Vice President, Commercial Solutions, Eastern Region