The Canadian insurance market heading into 2025 can best be described as both evolving and bifurcated.
In commercial lines, the market is transitioning as capacity becomes available following prolonged hard or firm market conditions characterized by several years of meaningful rate increases, strong profitability and record returns on equity.
The picture for personal lines is somewhat different. After an unprecedented year of weather-related claims in Canada, balanced alongside a healthy global reinsurance market that is adopting a wait-and-see approach (particularly following U.S. hurricane losses), premium pressure will persist. This is especially true in urban centres and regions heavily impacted by secondary catastrophic perils like flood, hail and wildfire.
Abating but persistent inflation remains a factor influencing both claims costs and insurance affordability for clients, which will inevitably impact buying decisions. Adding to the pressure in personal lines are challenges in auto profitability for carriers. We’re seeing this particularly in Alberta as the government curtails rate requirements while it reviews product reform, and with recent optionality measures proposed for Ontario.
More broadly, the industry will continue prioritizing innovation and technological advancement. Consolidation will be an ongoing theme as scale and diversification become increasingly critical long-term strategies.
It’s unlikely these trends will shift direction in 2025; it’s more a question of how quickly they take shape. From a market cycle perspective, the key question, especially in commercial lines, will be the speed at which the market transitions and softens. Insurers and reinsurers remain well-capitalized, and Canada continues to be a stable and attractive market for capital deployment despite a challenging claims year.
Brokers will continue to play a critical role as the Canadian insurance landscape grows more complex. This is not just about price considerations. It’s about ensuring clients secure comprehensive and dependable coverage with committed insurers who stand by their promise of partnership and deliver prompt, frictionless claims support when the most challenging moments are faced.
