Heading into 2025, our Canadian markets are fragmented. We’re seeing very different stories when you compare personal lines and commercial lines. And when you factor in the broad range of product mixes existing within the commercial space, you see bifurcated stories across the board.
One prevailing dynamic common to both commercial and personal lines this year is that Canada experienced record losses related to extreme weather — over $7.6 billion to date. This weighs heavily on the minds of insurers as we head into the new year.
A majority of these losses were felt in the personal lines space. Given that new and competitive capital keeps entering the Canadian commercial insurance space, it is fair to assume a divergent market will once again be in play.
Certain specialty products remain incredibly competitive. With new capital entering the market, it is unlikely we will see any trends causing big swings towards a firming pricing environment. Product-specific and risk-specific concerns, such as U.S.-exposed casualty risks and unprotected property risk exposures, will continue to be addressed.
At a global level, we’ve seen the first decrease in commercial insurance rates in seven years — a 1% decline in Q3, as measured by our own global market index. This experience aligns with what we’ve been seeing in Canada, where insurance rates declined 3% in Q3. We have seen declining rates going back to 2023 in Canada, first with casualty and financial and professional lines, and more recently with property lines.
Given the increasing number of NatCats each year, we anticipate insurers will continue to focus on understanding the impacts of these events and their exposures to them. This could take shape in the form of managing their exposure to these events, such as capacity deployed, attachment points and adjusted pricing.
